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On Retirement Savings (sh.itjust.works)

submitted 1 year ago by akilou@sh.itjust.works to c/personalfinance@lemmy.ml

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I'm almost 40 and according to the wisdom found everywhere on the internet, I don't have enough saved for retirement. Which worries me because I've been saving for as long as I've had a proper job with access to a retirement vehicle. But also because the internet wisdom doesn't make sense or sound feasible.

According to what I've read, you're supposed to have:

1x your income when you're 30
3x your income when you're 40
6x at 50
8x at 60
10x when you retire

I'm almost 40 and I have just barely over 1x saved. So it feels like I'm 10 years behind. However, my income has grown substantially over the course of my 30s, more than doubling. So accounting for growth in income, I do have almost 3x my salary in my late 20s. But similarly, the above advice could be interpreted as needing 6x the income you had when you were 30 by they time you're 40. And by that metric, I'm doing even worse!

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[–] Thorny_Insight@lemm.ee 3 points 1 year ago (1 children)

infinite 7-9 percent stock market growth, but the modern market crashes every decade or so now.

My savings into index funds has seen an average growth of 9% a year for the past three years. 11% since the start of this year. Granted I jumped in at the bottom of the corona dip.

[–] nottelling@lemmy.world 2 points 1 year ago (1 children)

Yeah, and you'll lose a shitload when the next crisis pops off in a few years, taking a few more years to recover that loss. The 401k management firms only ever seem to rebalance quarterly or semi annually, so there's no way to react to those downturns in time to mitigate.

I got hit by 9/11, 2008, and Covid, plus I've seen my SS benefits reduced a couple times.

[–] Thorny_Insight@lemm.ee 7 points 1 year ago (1 children)

React? You're not supposed to react, that's how you lose money. When the next crisis hits it just means I get more for the same price.

[–] nottelling@lemmy.world 0 points 1 year ago (1 children)

You know, that's what they say, and it makes sense. You can't play the market. But I'm not saying play the market. I'm saying that when crises come up, the indexes should rebalance before those crises flush our savings, rather than 3 months later.

Send to me that's what the rich people with big portfolios seem to do. The market tanks, they all move somewhere safer.

Meanwhile, us chumps absorb the losses.

[–] Thorny_Insight@lemm.ee 4 points 1 year ago* (last edited 1 year ago) (1 children)

I'm saying that when crises come up, the indexes should rebalance before those crises flush our savings, rather than 3 months later.

I don't even know what that means. Market crashes don't flush anyone's savings. You only lose money if you start selling when they're going down. You don't. You just hold and wait untill it comes back up again. It has always came back up again no matter how deep it dips.

When you hear stories about people losing their savings during market crashes it's either people who got nervous watching the value of their investments going down and they started selling at a loss or they were invested into individual companies that went bankrupt.

[–] Cryophilia@lemmy.world 1 points 1 year ago

Or they lost their job and their emergency fund wasn't enough to tide them over. A lot of people were out of work for YEARS after 08.

But yes, your overall point is correct, can't lose if you don't sell.