Quote:
Originally Posted by opendoor
But like I said, you wouldn't have needed to save 20% or have any kind of employer matching. The numbers are based on saving 11%, which is about what teachers contribute now.
And yeah, $55K is generous. I went with that because the backtesting relies on inflation-adjusted contributions, so I just reduced the salary by inflation as well. But even if the contributions are reduced to account for lower early career earnings (which would put them at about 8-9% contributions in the later years), it doesn't change things all that much; it still ends up over $1M.
And the same largely holds true over other periods assuming you invest 9-11% of income over the period (numbers assume salary was equivalent to $100K today):
1975-2005: $1.4M in today's dollars; enough to cover ~65% of pre-retirement income
1980-2010: $1M in today's dollars; enough to cover ~45% of pre-retirement income
1985-2015: $1.2M in today's dollars; enough to cover ~55% of pre-retirement income
So over the last 50 years, it would have been relatively simple for anyone to set themselves up for 50% of their pre-retirement income if they were able to save the amount that teachers are currently required to contribute to their pension plan.
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Yeah and for most people the rule of thumb is ~10% for long-term savings, so that's not surprising. Like I say, the point of this thread is discussing teachers who are at the end of their rope though...which is why we were talking about 20%.
Retirement planning in general for people is a different ballgame.