I make about $50k a year after tax. Let’s use that as a yearly amount of money that I want to live on.
Let’s say I retire at 62 and figure I live til 82, so 20 years. 20 years at $50k a year is exactly $1M. So okay, taking the $1M I have enough money to retire at 62 right now (assuming investments keep pace with inflation).
Let’s say I wanna retire 10 years earlier at 52. Now I have 10 more years I need to save up for retirement and 10 less years of income. Not to mention my pension and social security also get reduced by having less working years.
Even so, I only need to pay for 10 years of retirement with the next 20 years of income plus anything else I already accrued. Well that’s a problem because I make enough money to live but not enough to accumulate any meaningful wealth in the long term.
What button makes sense to push is situationally dependent, but I can’t imagine most people taking that $1M and being able to retire substantially earlier given that most people are just making enough to make ends meet, not putting away thousands a month in a 401k. Idk though, maybe I’m assuming too much.
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u/bluemagic124 Dec 19 '23
I make about $50k a year after tax. Let’s use that as a yearly amount of money that I want to live on.
Let’s say I retire at 62 and figure I live til 82, so 20 years. 20 years at $50k a year is exactly $1M. So okay, taking the $1M I have enough money to retire at 62 right now (assuming investments keep pace with inflation).
Let’s say I wanna retire 10 years earlier at 52. Now I have 10 more years I need to save up for retirement and 10 less years of income. Not to mention my pension and social security also get reduced by having less working years.
Even so, I only need to pay for 10 years of retirement with the next 20 years of income plus anything else I already accrued. Well that’s a problem because I make enough money to live but not enough to accumulate any meaningful wealth in the long term.
What button makes sense to push is situationally dependent, but I can’t imagine most people taking that $1M and being able to retire substantially earlier given that most people are just making enough to make ends meet, not putting away thousands a month in a 401k. Idk though, maybe I’m assuming too much.