Retirement Calculator Growth

[TOGIE]

man, does it have to be more complicated than just throw a shit ton of money at your 457 and 401 and get all the employee matching you can get?

then toss as much as you can after that into your fidelity IRA and be slightly more aggressive in that but not foolish?

stay out of stupid debt and save even more for emergency funds?

and while doing all that if i can't retire at 65 or earlier then damn, guess i'll work a little longer. probably be less bored anyway.

 

[huntandfly]

Correct. All 500 stocks weighted equally rather than market cap.
my initial reaction is Dave Ramsey is an idiot and don’t listen to him. He picked the absolute highest return over the period for the assumption. That is not smart if you are planning for the future. But occasionally he gives good advice, so…. As with anything, you get what you pay for and buyer beware.

You just have to take Dave Ramsey at face value: he helps people understand the value of getting out of debt. That’s his most important function, I don’t think he is as well versed in the finer points of the investment portion

 

[SAJ-99]

You just have to take Dave Ramsey at face value: he helps people understand the value of getting out of debt. That’s his most important function, I don’t think he is as well versed in the finer points of the investment portion

I get your point, but even that but of advice requires some nuance. @VikingsGuy pointed out credit card debt is horrible, auto debt is bad, housing debt is acceptable. The people that follow Ramsey also worry too much about inflation. If you think inflation is coming, borrow money. The money you pay back will have less value in the future than it has now. The formula for building wealth is the same. Borrow money at a lower rate than you can earn on it by putting it to good use.

 

[VikingsGuy]

I get your point, but even that but of advice requires some nuance. @VikingsGuy pointed out credit card debt is horrible, auto debt is bad, housing debt is acceptable. The people that follow Ramsey also worry too much about inflation. If you think inflation is coming, borrow money. The money you pay back will have less value in the future than it has now. The formula for building wealth is the same. Borrow money at a lower rate than you can earn on it by putting it to good use.

I have seen very little of Ramsey, but I saw a rant on "there is no reason of any kind to possess a credit card". That's just damn stupid. A properly managed credit card the quickest way to establish credit for younger folks (thereby saving money on better rates for your mortgage), and there are cashback perks that have real value. Then there is a convenience for travel (good luck renting a car without a credit card), and they are safer than travelling with a lot of cash, plus online purchase fraud protection, etc.

His basic premise appears sound, and his ranting on bad debt has merits for folks who somehow don't get that without being yelled at, but his stark hyperbolic black and white views on several topics make him someone I wouldn't spend too much time on.

 

[davidganthony00]

anyone knows how compound interest really works ?

 

[VikingsGuy]

anyone knows how compound interest really works ?

you'd like to say many (covered by 7th-8th grade math in most states), but if you look at US credit card debt stats I would guess fewer than there should be

 

[gwhunter]

anyone knows how compound interest really works ?

I thought I remember hearing a quote that was supposedly from Einstein calling compound interest the 8th wonder of the world.

 

[Pucky Freak]

I saw a rant on "there is no reason of any kind to possess a credit card". That's just damn stupid.

 

[AlaskaHunter]

man, does it have to be more complicated than just throw a shit ton of money at your 457 and 401 and get all the employee matching you can get?

then toss as much as you can after that into your fidelity IRA and be slightly more aggressive in that but not foolish?

stay out of stupid debt and save even more for emergency funds?

and while doing all that if i can't retire at 65 or earlier then damn, guess i'll work a little longer. probably be less bored anyway.

Boring? I retired a couple years ago and for me its the most exciting time of my life (NOT boring).
When I worked, I had the money, fitness, but not enough time.
Now I have all three. Life is great and definitely not boring!

 

[tim629]

my 2 cents: dave's 12% is overly optimistic, i was listening to a podcast today that was quoting vanguard and saying the next few years could be a bit more sporadic and lower returns than normal but as the podcast was pointing out the past 12 months have been better than expected so it's all speculation which we won't know until it's done.

right now I go with 10% because that is a bit under what my returns (after expenses) have been for the past 10-12 years, if your investments are conservative and only getting you 8% then the 6-7% is probably appropriate but then I would say you need to change your investment strategy at 35, i'm 33 and feeling as though my 13% in bonds is too much but for me that is also house down payment $$ so i'm not getting too worked up over it

realistic I would shoot for 8-10% for your figures

 

[Allenkoz]

What percentage does everybody use when projecting growth on a retirement calculator?

Ramsey has 12% on his online calculator as the historical 30-yr average for the S&P, but I don't believe that's annualized. It also doesn't account for inflation.

I've been using 6.7% to figure for annualized returns and inflationary loss... because I want to know how much money I'll have in numbers I can understand and apply to my quality of life. I don't care that my parents bought their first home for $43,000, a new F-350 is nearly twice that much now. I need my retirement to be in dollars I can use, not dollars that are worth pennies when I need them.

Am I crazy to use 6.7%? If so, too conservative or not conservative enough?

___________

For example, a 35 year old starting today and putting away $500/month at 6.7% would have $670,098 at age 67, according to Ramsey.

The same person using 12% returns would see $2,232,323 on Ramsey's calculator.

Obviously a massive difference in quality of retirement.

So which number is more correct?

7% is a pretty conservative guestimate and save to use. My opinion is based on investing in solid index funds or the S&P 500.