[Main General Bulletin Board | BBFAQ | Prev by Date | Next by Date | Post Followup ] Member Login / Signup - Members see fewer ads. - Latest Member Gallery Photos OT: Feasibility of 401(k) accounts as sole pension source Like This Post: - Subscribe to Daily Digest for this Bulletin Board Posted by MI-Roger [Email] (#882) [Profile/Gallery] (more from MI-Roger) on Sat, 4 Jan 2014 17:02:44 Alert me when someone posts in this thread: Members do not see ads below this line. - Help Keep This Site Online - Signup

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

• 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
    • Re: Found my error and ran other scenarios, EGD , Sun, 5 Jan 2014 21:08:11
      • Remember the special advantage of 401(k) over IRA, MI-Roger , Mon, 6 Jan 2014 05:12:47
        • Re: Remember the special advantage of 401(k) over IRA, EGD , Mon, 6 Jan 2014 08:21:52
          • Sent PM, MI-Roger , Mon, 6 Jan 2014 09:09:14
    • I think that 8% avg. ROI is optimistic, Bill Homer , Sun, 5 Jan 2014 09:45:57
  • 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
    • Intentionally tried to keep it simple, MI-Roger , Sun, 5 Jan 2014 06:10:10
  • 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
    • Those are in the range of what I was expecting to see, MI-Roger , Sat, 4 Jan 2014 17:30:21
      • Re: Those are in the range of what I was expecting to see, pete , Sun, 5 Jan 2014 06:15:34

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• Prev by Date: icons, Snowmobile, Sat, 4 Jan 2014 16:53:27
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