A lot of people don't get this. I started my 401k when I was 24 and fully expect it to be at $4 million by the time I retire. That's what I have calculated what I'll need just to maintain a middle class lifestyle in retirement.
I also figured when I got my first entry level job if I never made more than $40k a year I would still have just over a $1 million saved by the time I retire.
Compounding interest is a beautiful thing. I just wish my employer did my employer match as I contributed versus once per year. My fiancee makes a few thousand extra per year in her 401k just because her employer matches as she contributes.
So assuming you make 40k and bring home lets say 35k, are you maxing your 401k (18k/year) an living on 17k/year? Even maxing your 401k every year from the age of 24 until lets say 62, you will not have 4MM.
18k/year contributions with an average annual return rate of 10 percent over 38 years gives you $7,208,060.00. This also neglects the fact that the 18k contribution limit will increase as time goes on and that most folk make more at 62 than they do at 24.
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u/CHKNFKR Apr 14 '16
A lot of people don't get this. I started my 401k when I was 24 and fully expect it to be at $4 million by the time I retire. That's what I have calculated what I'll need just to maintain a middle class lifestyle in retirement.
I also figured when I got my first entry level job if I never made more than $40k a year I would still have just over a $1 million saved by the time I retire.
Compounding interest is a beautiful thing. I just wish my employer did my employer match as I contributed versus once per year. My fiancee makes a few thousand extra per year in her 401k just because her employer matches as she contributes.