In today’s installment, we preview an article I will publish on Medium this Saturday.
It’s in response to a Motley Fool piece, which further illustrates how we have resigned ourselves to just go through the motions on traditional retirement.
That’s all you need!
The right savings strategy. It’s that simple.
Here’s the “savings strategy this Motley Fool article suggests:
If you make $50,000 per year and stash 15%, or $625 per month, in a retirement account every year that earns a 10% average annual rate of return, you'll have close to $1.3 million after 30 years of savings. And if you save for an additional five years, you'll wind up with over $2.1 million.
We won’t even address the $625 a month part here. We’ll save that for Saturday’s Medium article. You could end your protest there and confidently rest your case.
However, the kicker has to be the assumption of a 10-percent average annual return.
This is one of the scary parts of the times we’re living through, especially if you’re young. We’re used to seeing both out-sized returns in broad market indices, such as the S&P 500, and people apparently making a ton of money in individual stocks.
It’s tempting to fall into the trance that this trend will continue unabated—it probably will not—and that you have the investing acumen to continue to make it happen in your portfolio.
When you combine the stretch you’d have to make every single month for 30 years to save $625 regularly with the uncertainty of continued 10-percent average annual returns, you put yourself in a precarious position on the road to an increasingly elusive traditional retirement.
Anyhow, I expand on this in Saturday’s Medium article.
You can receive a notification every time I publish on Medium by clicking here.
Also, today I am putting the finishing touches on part three of our four-part working in retirement series where I distill the academic research on the effects working in retirement has on physical and mental well-being and related factors.
You can view parts one and two here and here.
Expect part three in your inbox later today or tomorrow.
The working in retirement series is for paid subscribers only. A paid subscription gives you access, plus it’s a way to help support my work as a freelance writer.
As always, thanks for reading. I appreciate it.
Rocco