Comments on: Retirement Saving In Your 20s http://20smoney.com/2009/12/04/retirement-saving-in-your-20s/?utm_source=rss&utm_medium=rss&utm_campaign=retirement-saving-in-your-20s Aggressive Yet Responsible Wealth Building For 20-Somethings Thu, 24 May 2012 00:19:14 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Garrett http://20smoney.com/2009/12/04/retirement-saving-in-your-20s/comment-page-1/#comment-16669 Garrett Sun, 29 Apr 2012 08:55:19 +0000 http://20smoney.com/?p=1156#comment-16669 Oh god, first I see you talk about $85/mo turning into a million with a ridiculous 12% avg return. And then you top that sucker off by discounting all professional advisers by saying 8-10% return isn't probable? You want a 5% return? buy a fixed annuity. Even in this interest environment you'll get that guaranteed 5% return and an unlimited income payout for life. 5% is easy. Investing in stocks looking for just 5% is pointless. You missed the most important part about investing when you're young. ROTH IRA. The power of a Roth is staggering, for some people even if they have a match, if its too costly to get the full match I'd even suggest opting for a 5k Roth contribution & a grand in an emergency fund over a 6k 401k contribution that gets them $200 more. Oh god, first I see you talk about $85/mo turning into a million with a ridiculous 12% avg return. And then you top that sucker off by discounting all professional advisers by saying 8-10% return isn't probable? You want a 5% return? buy a fixed annuity. Even in this interest environment you'll get that guaranteed 5% return and an unlimited income payout for life. 5% is easy. Investing in stocks looking for just 5% is pointless.

You missed the most important part about investing when you're young. ROTH IRA. The power of a Roth is staggering, for some people even if they have a match, if its too costly to get the full match I'd even suggest opting for a 5k Roth contribution & a grand in an emergency fund over a 6k 401k contribution that gets them $200 more.

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]]> By: Wojciech Kulicki http://20smoney.com/2009/12/04/retirement-saving-in-your-20s/comment-page-1/#comment-3051 Wojciech Kulicki Tue, 08 Dec 2009 11:51:35 +0000 http://20smoney.com/?p=1156#comment-3051 My Mom opened my first retirement account for me the day I turned 18, which turned out to be the best thing I ever did financially. By the time I got out of college and entered the workforce, I was well on my way to retirement savings. We're going to start our kids even earlier. The 10% assumption, as you point out, is dangerous. It's unfortunate that even very minor swings in that percentage make a huge difference in your ending balance, so dropping that to 5% means you need to save much, much more. But I do like taking this conservative approach, because if you're wrong about how low that return is, you'll just have some extra money to enjoy. My Mom opened my first retirement account for me the day I turned 18, which turned out to be the best thing I ever did financially. By the time I got out of college and entered the workforce, I was well on my way to retirement savings. We're going to start our kids even earlier.

The 10% assumption, as you point out, is dangerous. It's unfortunate that even very minor swings in that percentage make a huge difference in your ending balance, so dropping that to 5% means you need to save much, much more. But I do like taking this conservative approach, because if you're wrong about how low that return is, you'll just have some extra money to enjoy.

]]> By: Daniel http://20smoney.com/2009/12/04/retirement-saving-in-your-20s/comment-page-1/#comment-3008 Daniel Fri, 04 Dec 2009 12:12:01 +0000 http://20smoney.com/?p=1156#comment-3008 10% definitely isn't enough. If you save 10% in a 401k or other retirement savings account, and in addition to that own a home, have investments, and other savings, then you're in a good position. Planning for a 10% return is really dangerous. If you invested $5,000 a year for 20 years and got a return of 10%, you'd have $286,375. But if you only got a 7% return, you'd have $204,977, That's a huge difference, and the longer time horizon, the larger that difference is. If you planned on having $80,000 and suddenly you didn't have it...how would you respond? 10% definitely isn't enough. If you save 10% in a 401k or other retirement savings account, and in addition to that own a home, have investments, and other savings, then you're in a good position.

Planning for a 10% return is really dangerous. If you invested $5,000 a year for 20 years and got a return of 10%, you'd have $286,375. But if you only got a 7% return, you'd have $204,977, That's a huge difference, and the longer time horizon, the larger that difference is. If you planned on having $80,000 and suddenly you didn't have it…how would you respond?

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