I saw something in another thread that made me think about retirement savings, something I think is ludicrous, don't get me wrong, nothing wrong with saving, but I just laugh when I see all these "financial experts" talking about retirement savings, or my favorite the Edward Jones commercial where it pans out from the guy sitting in the office talking to his "expert" and how to ride out the bad economy. I know one of the foundations MJ laid here was why spend the next 40yrs trying to "finish rich" when you can live the life you want while you're still young enough to enjoy it?
The fact is, most of these experts like the Fidelity's and Edward Jones' of the world use numbers that sound good in today's money versus what you would really need to retire on such as "oh if you save $100/month from the age of 25 to 65 you'll have $600k to retire on", which sounds great now, I mean that's $50k/yr for 12yrs(more than today's average salary) which gets you to about the average life expectancy of 77 living "comfortably". Again, though, that is in today's dollars. Just look at how much has changed in the last 40yrs with 1969(40yrs ago), 1999(10yrs ago) and 2008 as a reference:
Cost of Living 1969
How Much things cost in 1969
Average Cost of new house $15,550.00
Average Income per year $8,550.00
Average Monthly Rent $135.00
Average Cost New Car $3,270.00
Gas per Gallon 35 cents
Cost of Living 1999
How Much things cost in 1999
Average Cost of new house $131,750.00
Average Income per year $40,810.00
Average Monthly Rent $645.00
Average cost of new car $21,050.00
Cost of a gallon of Gas $1.22
Cost of Living 2008
How Much things cost in 2008
Average Cost of new house $238,880.00
Average Income per year $40,523.00
Average Monthly Rent $800.00
Average cost of new car $27,958.00
Cost of a gallon of Gas $2.05(May 2009)
So looking at those numbers your Edward Jones or Fidelity guy was probably saying 40yrs ago that if you put away $10/month for 40yrs you'd have say $120k to live off of, which comes out to $10k/yr for 12yrs, not bad for 1969 money, but try living off of $10k/yr in 2009 and add to it being over 65 where one of your biggest costs is healthcare, which can easily top that $10k/yr alone.
The fact is, most of these experts like the Fidelity's and Edward Jones' of the world use numbers that sound good in today's money versus what you would really need to retire on such as "oh if you save $100/month from the age of 25 to 65 you'll have $600k to retire on", which sounds great now, I mean that's $50k/yr for 12yrs(more than today's average salary) which gets you to about the average life expectancy of 77 living "comfortably". Again, though, that is in today's dollars. Just look at how much has changed in the last 40yrs with 1969(40yrs ago), 1999(10yrs ago) and 2008 as a reference:
Cost of Living 1969
How Much things cost in 1969
Average Cost of new house $15,550.00
Average Income per year $8,550.00
Average Monthly Rent $135.00
Average Cost New Car $3,270.00
Gas per Gallon 35 cents
Cost of Living 1999
How Much things cost in 1999
Average Cost of new house $131,750.00
Average Income per year $40,810.00
Average Monthly Rent $645.00
Average cost of new car $21,050.00
Cost of a gallon of Gas $1.22
Cost of Living 2008
How Much things cost in 2008
Average Cost of new house $238,880.00
Average Income per year $40,523.00
Average Monthly Rent $800.00
Average cost of new car $27,958.00
Cost of a gallon of Gas $2.05(May 2009)
So looking at those numbers your Edward Jones or Fidelity guy was probably saying 40yrs ago that if you put away $10/month for 40yrs you'd have say $120k to live off of, which comes out to $10k/yr for 12yrs, not bad for 1969 money, but try living off of $10k/yr in 2009 and add to it being over 65 where one of your biggest costs is healthcare, which can easily top that $10k/yr alone.
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