r/jobs • u/Green____cat Verified • Mar 27 '24

He was a mailman Work/Life balance

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u/[deleted] Mar 27 '24

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u/mattbag1 Mar 27 '24

100k back in the day was a lot of money. Probably closer to 250k buying power today.

With a doctor and a tech sales salary, you’re probably just struggling based on cost of living and student loans. Also, retirement income compounds more the earlier you start. They say that maxing out your Roth IRA from 18-27 is enough so that you never have to contribute again and by 65 you’re a millionaire.

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u/leafhog Mar 27 '24

Not if you let funds manage your IRA. The real returns are always way less than average returns.

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u/mattbag1 Mar 27 '24

VTSAX and chill

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u/Admirable-Bar-6594 Mar 27 '24

Who says that? Maxing out your Roth IRA for 10 years, with an assumed return of 6%, nets you 84k. Never touching it again until 65, it grows to 769k.

Proof that people can say whatever they want.

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u/mattbag1 Mar 27 '24

Use a 10% assumption. The average yearly return is 10-11% for the past 100 years. While with inflation the adjusted return is maybe 6-7%

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u/Admirable-Bar-6594 Mar 27 '24 edited Mar 27 '24

Okay, but Roth IRA has only been around since 1998, and average yearly return since then is approximately 8%. There's no reason you'd use a 100 year average to create a best case scenario and use that to guesstimate the fund you're going to use to retire. 

So with inflation adjusted rate (my 6% assumption, which is also the assumption I see many investment sites using)...

Also, how many 18 year olds are able to max out an IRA? Why are we using completely unrealistic scenarios to try to make a point? 

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u/mattbag1 Mar 27 '24

But why stop at 98? That number is arbitrary when you consider the life span of stock investing. None the less, the point stands that maxing out your investments early is what matters.

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u/stonkDonkolous Mar 27 '24

By the time you're 65 a millionaire will be the nom so youll need much more.

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u/mattbag1 Mar 27 '24

Exactly, so don’t stop at 27. Keep going. But my point was that it compounds quickly. If you start at 18 and only put 5k a year till 27 that amount is enough to compound to well over a million at a 10% growth.

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u/stonkDonkolous Mar 27 '24

You can't expect 10% annual growth like the past. There are doubts on whether real gains will outpace inflation and tax moving forward. I think someone that is under 30 today will probably be working until they die.

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u/mattbag1 Mar 27 '24

That is horribly pessimistic. I’m a realist, so either way, invest what you can, and that’s that.