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Comment by altacc | Hacker News Reader

Finance news is for rich people and this article proves it, talking like it's a choice whether you retire with $1 million or not. If you're thinking you're not rich but still interested in finance, then you're probably rich! ;)

The article breezes past that the median retirement saving is actually $164,000, which makes sense as the median salary is ~$60,000.

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> The article breezes past that the median retirement saving is actually $164,000, which makes sense as the median salary is ~$60,000.

Anyone who tells you that the middle class should expect a meager retirement is an ignoramus who should be ignored at all costs.

The median household income is ~75K/year. If this household started saving (from zero!) at age 35, saved 10% per year and got a 6% return for 30 years, they would have ~$600K saved for retirement by 65.

The simple truth is almost everyone can retire in reasonable comfort and with peace of mind if they follow a few simple rules: - Avoid high-interest debt like the plague. - Get in the habit of saving 10% as early as possible - Have an emergency fund in cash, but don't keep more than ~3 months expenses in cash. Invest! - Use tax-advantaged vehicles like 401K/IRA - Invest in broad-based funds with low fees (ex: VO, VOO) - Don't pick individual company stocks. If you must, never invest more than 5% of your portfolio. If you do, know that you're not "investing", you're gambling! - Don't try to time the market. Dollar cost average. Buy and hold. - When you hit 100K, meet with a financial advisor who is a fiduciary and who charges by the hour. Not a stock salesman, not a portfolio manager, an advisor. Heed their advice. Check in every 5 years.

10% before or after taxes? I'm in Canada, so the difference is enormous.

Also, usually the problem I encounter is that people need all that money to live "middle class" level, and the expenses are all upfront.

Don't get me wrong, I agree with you. They could pass onto the 50K wedding and repeated very expensive holidays.

Who exactly is projecting 6% returns? Vanguard is projecting 10 year returns of 5.2% U.S. returns before inflation and 8.1% international stocks before inflation. At 2% inflation that's 4.56% real returns if you assume 2% inflation and went 50/ 50 on U.S. and international stock. (Non inflation adjusted returns tell you nothing about readiness for retirement so should be avoided).

And that's at 100% stock, which isn't recommended before retirement.

6% is the average inflation-adjusted annual return of the US market over the last 150 years.

The specific rate of return will of course vary, year to year and decade to decade but the fact remains that cushy nest eggs aren't only for the rich. Middle class folks can retire in relative comfort and without making drastic sacrifices in the short term.

Price to earnings ratio's are about twice what they were historically, https://www.multpl.com/shiller-pe

which would suggest 3% inflation adjusted returns. This isn't a serious prediction, just an observation that it takes a lot of optimism to tell people they'll get 6% returns because of their preferred data point.

A McDonald’s worker who starts today aged 18 who makes $15/hr and joins the McDonald’s 401k plan and contributes 4% of their income to it and works at McDonald’s for 50 years never receiving a raise should expect to have very close to $1 million by the age of 68.

And that’s just 4%. McDonald’s has a 6% match.

I’m not if they don’t take out any funds out of the 401k for health, housing, education

because there’s not a lot left over on $15/hour

1M is the target today. What does that have to do with 50 years from now?

That was just a silly little example of how if someone saves $24 per week over the course of a lifetime it can expand into great sums of money through the miracle of matching and compound interest.

And that was at 7% returns. Over the last 50 years the market has averaged 11% so if half a century ago (let's pretend 401ks are that old they're only 46 years old) an 18-year-old entry level worker emptied trash cans at an amusement park that had a 401k with employer match for 50 years they would have a vast sum of money today.

There are some people who cannot afford to save 4% of their income.

There are so few people who can genuinely not afford to save 4% of their (pre-tax) income that they are irrelevant to discussions about retirement saving.

In 50 years, $1 million will be worth around $225,000 (assuming 3% inflation).

Speaking as someone who's not there but can also see it (I recently learned that I'm in the "mass affluent" - those with $100K to $1M in net worth), I don't think it's "a" choice, but many of them. I've never made anything like some of the developer salaries I see bandied about on this site, but I do OK and live modestly; small house, beater car, only eat out on special occasions, etc... But I think the biggest thing is not having children. The estimates of their costs sans college is already in Lambo territory just for one. I often wonder how much that sort of thing has to do with the decline in fertility.

> median retirement saving is actually $164,000, which makes sense as the median salary is ~$60,000

That includes ALL retirements accounts - ranging from those of people who are early career to those who are at retirement age.

I haven't seen data about median retirement savings for those at retirement age.

Edit: I'm wrong!

That number is retirement age and I gave the mid-late career median for salary.

> The Federal Reserve data shows that 65 to 74-year-olds have a median of $164,000 in their retirement accounts while those 75 and older have $83,000 saved for retirement.

Retirement age is not a fixed number. Quick search says about 10-19% of over 65s are still working. Some through choice, others not.

Thanks for the heads up!

A bit pedantic but it looks like it's $204k now based on the Fed Reserve survey.

But by and large I think your argument still holds.

> Retirement age is not a fixed number. Quick search says about 10-19% of over 65s are still working. Some through choice, others not.

Agree with ya on that!

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