Comments on: The Millionaire’s Retirement Plan Is Backwards

By: Financial Samurai

Financial Samurai — Sun, 18 Jul 2010 22:59:52 +0000

@Daniel-san, the $200/month is a good goal, b/c it is very feasible. You know, don’t go out for 3 or 4 nights, and voila, you got the extra $200 bucks.

Maxing out the IRA and the 401K should be a given. After that, then try and save $200 or more a month should be the goal, b/c that is tangible money you can touch. Your IRa and 401K could literally go to zero!

By: Shane

Shane — Sat, 17 Jul 2010 01:51:48 +0000

@Danielle, Holy crap! How much do you make? There’s no way I could afford that.

By: ZFarls

ZFarls — Fri, 16 Jul 2010 13:21:57 +0000

I like this idea, the more you can dump in while you are young, the better. (Obviously) but just because you have more time doesn’t mean you should hold up. You should be attacking this thing full throttle the whole way and not use time as a barrier. Never leave for tomorrow what you can do today, plus when you get older and make some more cash, you can invest it in other things like real estate if your long term market investments are buttoned up.

By: Daniel

Daniel — Fri, 09 Jul 2010 13:26:16 +0000

@Benjamin Bankruptcy, Nope, it was just a retirement plan for people who want to become millionaires. I agree it’s easier to save when you start earlier for two reasons:

1. Compounding Interest is frickin amazing.
2. More importantly, you are already in the habit so it’s not a burden!

By: Daniel

Daniel — Fri, 09 Jul 2010 13:24:34 +0000

@Financial Samurai, So a 25 year old making at least $25,000 should be fully funding their Roth IRA. I agree, setting number goals are wrong, but getting a headstart is so important!

By: Financial Samurai

Financial Samurai — Fri, 09 Jul 2010 13:22:12 +0000

Nothing is set in stone. And anybody who says save X amount and then retire doesn’t really know for sure.

I say save as much as you can, with the minimum of 20% every year, and pray for the best!

Best,

Sam

By: Benjamin Bankruptcy

Benjamin Bankruptcy — Fri, 09 Jul 2010 04:38:04 +0000

Was the point of the article to show you can invest less if you start early? Just a possibility and I agree it’s a lot easier to save early rather than latter when you have bills

By: Daniel

Daniel — Fri, 09 Jul 2010 01:56:51 +0000

@Early Retirement Extreme, Damn, that’s a bunch for young people, even I can’t come close to approaching that. But I love the idea. I just hope that I can continue my savings patterns for years to come!

By: Flexo

Flexo — Thu, 08 Jul 2010 23:12:07 +0000

As you age, you will likely have more cash flow to allow investing larger amounts each month, but in a perfect world, nope, it’s not the most effective way to build wealth.

By: Early Retirement Extreme

Early Retirement Extreme — Thu, 08 Jul 2010 23:06:06 +0000

Whoever made up those numbers probably just set a fixed target (a million bucks) and divided up contributions based on how many years of work the person still had to perform under the assumption that everybody retires at 65.

Obviously I am a strong proponent of accumulating ALL of your retirement savings before age 30 which means saving something like $2000/month or more.

Then you have the rest of your life to enjoy.

By: Daniel

Daniel — Thu, 08 Jul 2010 20:18:07 +0000

@Danielle, That’s amazing, you have no idea just how far ahead you are. I think it’s probably more important that you have the habit than the actual dollar amount. By saving now, there won’t be too much that will derail your awesome plan to be in financial control. Good job!

By: RetirementInvestingToday

RetirementInvestingToday — Thu, 08 Jul 2010 19:27:43 +0000

I agree that $200 sounds very low although I also hear what kt-lifedividend is saying to a point. I think the big mistake is ramping your salary and standard of living as you earn more. Peoples salaries tend to rise with time as they gain more experience and so if people simply held their spend (or at least ramped it at a lower rate than the increase) and saved the rest then retirement (or at least work becoming optional) would be closer than I think some people realise.

Personally I’m now at the point in my mid to late 30′s where I am saving on average 60% of my net salary. I’ve reached this point by living frugally. Compared to my peers and friends I’m also not that much different. Sure I don’t have the 50″ LED/LCD TV, sure they see me in the same shirts at social events rather than always being in the latest fashion, sure I rent rather than having a massive mortgage but I think my enjoyment in life is every bit the same. The added advantage is that every month when I calculate my financial situation and post it on my blog a little smile appears knowing that I am one month closer to optional work.

By: Little House

Little House — Thu, 08 Jul 2010 17:07:02 +0000

Your plan seems more financially sound. However, when I was 25, I barely had enough money to cover rent, and that was with working two jobs around the clock. There’s no way I could have scraped together $400 a month for retirement. I’m only now able to invest about $300 a month towards retirement (hopefully this will increase in the next year or two.) Your plan sounds great, but would be hard to realize for many young people, which would discourage them.

Actually, a percentage of income might be a better solution overall. Saving 10-15% of your income may be much more doable than trying to meet a set figure since everyone’s income varies. For instance, 15% of $30,0000 is $4,500 a year,which comes to $375 a month. Or 10% of this same amount is $3,000 a year or $250 a month. Perhaps a better approach to getting people to save money.

By: Danielle

Danielle — Thu, 08 Jul 2010 16:53:56 +0000

$200 is NOT enough, obviously… but getting that age group to save anything is hard enough so I think Yahoo is trying to appeal to that reason. I’m 25 and I max out my 401(k) at the $16,500/yr and an additional $400-500 in a savings account, and STILL don’t feel like i’m saving enough.

By: Dr Dean

Dr Dean — Thu, 08 Jul 2010 15:04:50 +0000

I agree totally. The idea of being able to save more as you payoff your home, and have less need for new “stuff” may be true. Also your income hopefully will increase as you gain experience and move up in your career.

However, compound interest and time is your best asset-so sacrificing when you are young will pay huge “DIVIDENDS!”

By: kt- lifedividend

kt- lifedividend — Thu, 08 Jul 2010 14:49:52 +0000

$200 a month is enough for a person on his early twenties; most of us do not have that $200 to start with so if you can spare it, save and invest it, good for you. I would save more if i could because financial prudence is high on my to do list; i dont want to be 50 and still have no financial security and nothing to show that i was ever young and energetic