Seems a little negative. Even if a person is spending 40% it doesn’t mean those are fixed expenses that can’t be cut if lost income incurs. Maybe it is on travel. Also, moreover, the OP sounds like they were talking about investing 20% each pay period into a retirement plan and weren’t necessarily ruling out setting aside money for other things from remaining take home pay. In that context 20% can indeed be rather significant over 30 years. Results will vary but average case is likely decent.Why are you assuming zero growth?OP,
It is very simple.
A) If someone is saving 20% of gross income and assuming 30% taxes, the person is saving 20%/50% = 40% of their annual expense every year.
B) Every year, the person is saving 4.8 months of expense.
C) If the person is unlucky and unemployed in any of the multiple recessions across 20+ years, the person will be wiped out.
D) In 20 years, the person only save 20 X 0.4 = 8 years of expense of the person is fully employed continuously.
KlangFool
Statistics: Posted by upwind — Tue Apr 30, 2024 8:30 pm — Replies 73 — Views 4633