recently had one of his Xitter posts cross my feed claiming that, the average annual household income was $79k, and that if you saved 15% of that until retirement, you'd have $11.6m
It left out so many details and made some horrible assumptions.
To get anywhere near those results, the market would have to return roughly 12% annually (which is borderline ridiculous) for 40+ years. Even the most aggressive (100% equities rather than a mix of bonds for stability and income preservation) broad-based funds out there tend to yield 7–8% annually
• no consideration regarding raises ($79k for the 40+ working years of your life?)
• no consideration that, if you're starting at 20yo, you're likely making FAR LESS than the national average, so 15% of that isn't nearly the principle they're making it out to be
• no consideration for the future value of $11.6m (okay, if 1995–2025 is an indicator, it's likely ~$3.8m in today's dollars…certainly nothing to scoff at, but not the jaw-dropping buying power $11.6m feels like today)
• starting when? I'm pushing 50, so retiring at 65 would only give me 15yr of growth on contributions of $11850/year…even if I was earning an absurd 25% compounding annually, it wouldn't come anywhere near $11m. Not even remotely near $0.5m
At the core, the "save a decent percentage of your income at market rates for a long period of time" is sound advice, but DR's assumptions are dangerously misleading.
#personalFinance
Tim Chase
npub1n5…ucr3d
2025-09-03 17:13:50 UTC
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2025-09-03 17:13:50 UTCEvent JSON
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"content": "recently had one of his Xitter posts cross my feed claiming that, the average annual household income was $79k, and that if you saved 15% of that until retirement, you'd have $11.6m\n\nIt left out so many details and made some horrible assumptions.\n\nTo get anywhere near those results, the market would have to return roughly 12% annually (which is borderline ridiculous) for 40+ years. Even the most aggressive (100% equities rather than a mix of bonds for stability and income preservation) broad-based funds out there tend to yield 7–8% annually\n\n• no consideration regarding raises ($79k for the 40+ working years of your life?)\n\n• no consideration that, if you're starting at 20yo, you're likely making FAR LESS than the national average, so 15% of that isn't nearly the principle they're making it out to be\n\n• no consideration for the future value of $11.6m (okay, if 1995–2025 is an indicator, it's likely ~$3.8m in today's dollars…certainly nothing to scoff at, but not the jaw-dropping buying power $11.6m feels like today)\n\n• starting when? I'm pushing 50, so retiring at 65 would only give me 15yr of growth on contributions of $11850/year…even if I was earning an absurd 25% compounding annually, it wouldn't come anywhere near $11m. Not even remotely near $0.5m\n\nAt the core, the \"save a decent percentage of your income at market rates for a long period of time\" is sound advice, but DR's assumptions are dangerously misleading.\n\n#personalFinance",
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