Thank you. Increasing income will be difficult for us. I have a gov job with a pension and only get tiny yearly pay bumps (will never be making 200k plus in my career if I stay) but tradeoff is job security. My wife has a decent job, at a fintech company on the account management side, but she is not career minded and has no desire to climb the corporate ladder. She makes 60k plus 6-7k bonus and 9% 401k match which is fully vested, but she won’t ever be bumped up to 75-85k or anything. We get tint raises each year but we are not a Boglehead story I see on here a lot due to higher income earners who sell a business or get these massive pay bumps and go from 400k to 1m overnight. Any additional income would only be had if we started something on the side, and we do not have skills for a side hustle that would really move the needle (we could door dash, I give guitar lessons once a week etc. for extra spending money, but that is it). If I transitioned back to the private sector I may make more but my pension and job security go away.The short answer is that nobody knows. As a ball park, historical nominal returns of the S&P500 (with dividends reinvested) have been about 9.3%, and historical real returns about 6.5%. If you want to do some modeling, you will need to take a best guess at your real returns, your spending patterns, and future tax rates in 20 years. By all means make those guesses (XL modeling is fun), but recognize that each of those input variables have large variability, your output will multiply the variability of each input, and and you are compounding that variability over a long period of time, which magnifies errors.That was my hunch as well. Thank you. What percentage return should we use when hsing the calc to show real value and not nominal value? If 100% equities, are you using 5%, 7%, I see some use 2% and even 0%.I wouldn't worry about it at your age, just save what you can when you can, the earlier the better. Absolutely no calculations you make now are going to be right in 10 years, let alone 25.
If your goal is to do some modeling to motivate you and your spouse to keep on track, go ahead. A better approach would be to set some near term goals and reward yourself with a treat when you do. "If we live on x% of our net income for the year, we upgrade our next vacation..".
Looking back, the biggest factor that influenced my net worth now (apart from just staying the course with low cost index funds), was the increase in my income in the 30s and 40's. Focus on that.
Statistics: Posted by BizarroJerry — Wed Jul 03, 2024 8:09 am — Replies 9 — Views 512
