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I certaily hope I have made a critical matematical or formula error in my quick spreadsheet. But here are the assumptions, results, and comparisons.
New employee starts job at 22 with $35K annual pay and works for 45 years until age 67.
Employee's pay increases by an average of 4% per year. (this is probably too high)
Employee contributes 10% of their pay to a 401(k) and their employer provides a 6% match. (the 6% may be low)
Their self-managed 401(k) returns an average gain of 8% annually.
According to my calcualtions this hypothetical employee will retire from a job paying them ~$196,500 annually, with a 401(k) balance of ~$729,350.
The ration between pension savings and ending pay is ~3.71
The current recommendation is for this ratio to be between 10:1 and 20:1 for a worker to continue living their same life style after retirement.
I sure hope I am wrong, or retirement will only be a historical myth in the future.
->Posting last edited on Sun, 5 Jan 2014 08:39:43.
_______________________________________
Saabs owned:
2008 9-5 Aero Sedan, sold at 227K miles
2006 9-3SC 2.0T - Wife's daily driver
2000 Viggen Convertible - Sold May, 2022
1964 Quantum IV Formula Car - Retirement project
2000 9-5lpt Sedan, sold at 318K miles
Posts in this Thread:
- OT: Feasibility of 401(k) accounts as sole pension source, MI-Roger
, Sat, 4 Jan 2014 17:02:44 <-- Viewing This Message- Started Late.... Real Estate..., Mike Lynch
, Tue, 7 Jan 2014 10:56:41 - Found my error and ran other scenarios, MI-Roger
, Sun, 5 Jan 2014 09:02:17 - Deja vu?, andym, Sun, 5 Jan 2014 06:33:13
- Re: OT: Dismal failure of 401(k) accounts as sole pension source, Tom G
, Sun, 5 Jan 2014 03:08:35 - Re: OT: Dismal failure of 401(k) accounts as sole pension source, eric, Sat, 4 Jan 2014 20:46:50
- Re: OT: Dismal failure of 401(k) accounts as sole pension source, Name Left Blank, Sat, 4 Jan 2014 17:28:37
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