By: Revanche

Too Broke to Stop Investing?

July 18, 2008

Now there’s a funny title. Not such a funny article, though.

According to this article, for my age (25 is such a nice cut off), I need to have between $119k to $282k right now if I were to stop investing in order to maintain a 1 million dollar portfolio by age 70, assuming an 8% annualized return and inflation between 3-5%.

Alternatively, assuming my goal is to have a portfolio of 1 million dollars by retirement, and the chart isn’t clear if they’re using age 70 here too, or if they’re using age 65, I’m going to need to save $8,985,008 assuming 3-5% inflation. I guess they’re also assuming an 8% annualized rate of return?

I’m not sure, there seems to be a whole lot of assuming going on here, and you know what that means!

Means we don’t really know what-all’s going on.

To be perfectly honest, I haven’t decided what magic number I’d be comfortable with. I don’t think there is one. After all, I’m 25 and while I’ve been saving diligently, there are a whole lot of other factors that I’d been focusing on. My savings and retirement numbers are just that right now: numbers. I’m doing my best to maintain a higher rate of savings for as long as I can, but that’s because I’m playing catch-up.

If I had to pick a number, I’d ballpark about 2-3 million by the time I’m ready to retire, or go part-time. It seems like enough to provide for a relatively comfortable lifestyle. Nothing terribly extravagant is necessary, but I think it’s good enough for me to be self-sufficient with regards to medical care and daily life, and some travel.

Ultimately, though, I want to enjoy the journey to that point as much as I expect to enjoy life from that point on. I plan to enjoy the next forty years, not spend them anticipating how much fun I’ll have after these pesky in-between years are over!

2 Responses to “Too Broke to Stop Investing?”

  1. Sometimes I think they go too far with their articles. Really, what are the chances of a 25-year-old never saving anything for retirement ever again?

    At our age, there is too much that could change with respect to our retirement. There could be no social security or we could become communists or Djibouti will rise up and overtake the world. A whole lot of assuming, indeed.

  2. Revanche says:

    paranoidasteroid: I know, it’s so unlikely that a 25 year old who had already been saving diligently would suddenly and irrevocably stop doing so.

    I’m not including SS in my plans at all, but also keeping in mind that diversity and flexibility in future plans is just as critical as saving well now.

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