OT: Retirement Total Amount: How Much Do You Think You'll Need?

[saab2000]

Originally Posted by SlackMan

Hope this doesn't get me hated , but I thought it might be useful to help some people think about trading off buying something now for how much money it might be worth in the future.

Suppose that you could spend $3,000 today on bike stuff, or invest it at 8% instead. At 10 years, the investment would be worth $6,477, at 20 years it would be worth $13,983, and at 30 years it would be worth $30,188.

At a 10% return (which is about average stock market return over last several decade): At 10 years, the investment would be worth $7,781, at 20 years it would be worth $20,182, and at 30 years it would be worth $52,348.

One can see from these figures how much larger the 30 year value is than the 20 year value, and then the 20 compared to the 10. This illustrates the importance of staring early!

We can always spend less. I read an article just the other day on how if we spent $5/day less on coffee (many people easily exceed this) we could work a year less of our lives. I believe this.

It never occurred to me that I might want a budget bike. I've always wanted the fanciest stuff. But lately I've been more and more satisfied with the stuff I have and less lustful towards new stuff, in part because the 'new' stuff is 'old' in about 2 years.

I'm not kidding when I say that my next bike might be a Giant TCR Advanced with a 105 groupset and reasonable hand built wheels and be done with it. Or just get nothing and keep the old 10-speed stuff going.

I'm older than 33 but younger than some of the other folks here.

As for the 33-year old with the debt and baby coming, at least you're contributing to your 401(k) to receive maximum matching. Many don't do that. Again, if able, try to increase that at regular intervals, even if it's just a few dollars or 1% every year. The compounding effect will make you happy.

Same with your loans. If you can swing extra payments of even $100 here or there it makes a huge difference over time.

But pay down that mortgage to get out from under the PMI.... that's your biggest waste right there. Your PMI is probably a few hundred a month, right? Think of what you can do with that money towards your other debt.

Oh, and never carry a balance on a high-interest credit card. That is deadly.

I'm going for a ride on my 10-year old 10-speed stuff.