99% can't save a million in 20 years - Adrian reports.

Comment

Comment by Scott on July 19, 2009 at 9:30am

Check out the investing calculator on Dave Ramsey's site. I use it a lot because it has some pretty cool features. He also has a mortgage calculator on his front page that has a lot of neat options all in one as well:


http://www.daveramsey.com/etc/investmentcenter/?Fuseaction=dspInvestmentCalculator&ictid=Useful_Tools


http://www.daveramsey.com/etc/realestatecenter/?FuseAction=dspMortgageCalculator&strMode=dspMortgageCalculator&ictid=Useful_Tools

Comment by Adrian on July 18, 2009 at 6:19am

I agree; however, those articles seem to the talking more about owning rental property and living off the income ... not a terribly bad MM301 idea :)

Comment by KC on July 18, 2009 at 5:23am

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Yes, believing that your retirement will intrinsically be funded by the "value" in your home for those who can actually get onto the home mortgage ladder (and loads of people can't, either through not having sufficient money to laydown as the deposit; or can't afford the monthly payments) does seem suspect to me.

It's almost a lazy way of saying:

"I know I can't afford to save anywhere near enough for my retirement as currently my bills equal my income, so I darned well hope my house will fill that hole when the time comes".

Some commentators (admittedly before The Crash) on UK MSN Money give a vaguely favourable treatment on backing this hope:

Is property the new pension?

Property pension myth

What really bothers me is that such a high proportion of working people only earn enough to pay the bills - they don't have any possibility of saving for retirement, or anything.

Average earnings in the UK haven't increased in the last 20 years - this must be true, because 20 years ago a family with children could live on just the father's wages; today both parents have to go out to work, and can only afford children if a relative will care for them for free while they're at work.

This is called the "rise of the working poor" - today, although you may have a job, that doesn't mean you can be free of poverty, as so many jobs pay very low hourly rates.

KC

Comment by Adrian on July 18, 2009 at 4:44am

Great question, KC!

You could try using the 30 year 'guaranteed' stock market return (now in jeopardy, btw) of 8.5% ... but, the reality is that most people still can't do it ...

What you may be missing is the value of their home: which is almost guaranteed to net more that $1 mill of many people in 20 or so years: this is what most people base their retirement hopes on.

Yet, I wonder: where do they intend to live when they sell their home to fund their retirement? ;)