Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I don't understand how people are say, in their 40s, with roughly a $200k income (assume didn't earn that the whole time) and have multiple millions of dollars in investments....? Were you able to max 401ks or something from day 1 at age 21?

Even if you max your 401k from age 21, it would take 20+ years to get to "multiple millions" with compounded interest

"Were you able to max 401ks or something from day 1 at age 21?"

Married at 23, and then...yes.

"it would take 20+ years to get to "multiple millions" with compounded interest"

Correct.

Well dang, hats off to you. Got till my 30s before even starting a 401k or accruing much savings at all (and then.... kids and daycare).

This is why 20 somethings need to learn the importance of starting early. My kid has been maxing their Roth since Age 17 and now out of college, at least 15% into their 401k as well. They are quickly realizing that if they were to stop "retirement savings" at age 30, they will still have over $4M at retirement. Obviously they won't stop, but the compounding advantage is HUGE. Now when they marry and start having kids, they wont have to worry as much about retirement---they can focus on college savings and living life with the kids. Sure they could have spent it all and not saved, but they are frugal and understand the advantages of early investing.

Sure. I honestly was clueless in my 20s. Raised by a single parent who didn't graduate highschool, but I went to college and got a first job earning $30k and literally had no idea what I was doing. My mom didn't even bother to file taxes on her barebones income.

Folks like me are not uncommon. I think it's great that 401k enrollment is now automatic as it will help those of us who release didn't have a clue and took awhile to figure it out. I felt rich having $20k savings (and that's it) by my late 20s along with a paid off car and minimal loans. The tiny amount of savings I put into a retirement account, I wound up completely withdrawing to do a down payment on a $200k fixer upper house with my spouse in 2010. After purchase fees, our equity was less than one percent and we fixed it up with most of the rest of my $20k savings to a slightly more livable condition, albeit using family and never doing permits and probably illegal work.

I agree with the poster that people don't realize how much simply having knowledgeable family who can help in any way - through paying even half your college tuition, helping you get a car, and most importantly, TEACHING you about saving (what to prioritize) and interest rates, etc helps people get ahead. I'm now trying to do this for my couple teen/young adult nephews who, like me, are growing up with a single, uneducated parent who earns minimum wage.

I am a big proponent of making basic financial education mandatory in public schools. I don't know why school districts don't. Forget home ec.

So I put in the following in a compound interest calculator: $3000/month ($36,000/year) compounded annually for 20 years at a 6% return and I get $1.3mm not $3.5mm. There's something else at play with PP, you don't get to $3.5mm in your mid 40s by maxing out 401ks. Sorry.

$412k on two incomes, on track to save $120k this year thru 401's, brokerage and deferred comp. One kid launched and one has a year of college left. We are in hyper save mode as we get close to punching out of the game.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I don't understand how people are say, in their 40s, with roughly a $200k income (assume didn't earn that the whole time) and have multiple millions of dollars in investments....? Were you able to max 401ks or something from day 1 at age 21?

Even if you max your 401k from age 21, it would take 20+ years to get to "multiple millions" with compounded interest

"Were you able to max 401ks or something from day 1 at age 21?"

Married at 23, and then...yes.

"it would take 20+ years to get to "multiple millions" with compounded interest"

Correct.

Well dang, hats off to you. Got till my 30s before even starting a 401k or accruing much savings at all (and then.... kids and daycare).

This is why 20 somethings need to learn the importance of starting early. My kid has been maxing their Roth since Age 17 and now out of college, at least 15% into their 401k as well. They are quickly realizing that if they were to stop "retirement savings" at age 30, they will still have over $4M at retirement. Obviously they won't stop, but the compounding advantage is HUGE. Now when they marry and start having kids, they wont have to worry as much about retirement---they can focus on college savings and living life with the kids. Sure they could have spent it all and not saved, but they are frugal and understand the advantages of early investing.

I love this.

You really think your kids are saving due to virtue and not generational wealth.

When I was 17 I was saving every penny for college tuition. Worked all through college to pay for tuition, housing, and food. When I was in my early 20s I managed to scrape together a $5k emergency fund living like a pauper. I didn’t have any wiggle room for investments.

Your kids have that money because YOU have money.

+100000

+1 My kid contributes to his Roth IRA from his HS jobs too, but I know it's because we're paying for college and we also paid for his car insurance etc. When I was that age my HS job money went to paying for the car that I shared with my sister and car insurance that took me to that job and saving for college with a little left over for pocket money. I started saving in a Roth in my 20s once I had finished paying off my student loans. My employer didn't have a 401k and no match. He will be better off, but it's not because he's so virtuous or anything, he just is coming from a more UMC background.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I don't understand how people are say, in their 40s, with roughly a $200k income (assume didn't earn that the whole time) and have multiple millions of dollars in investments....? Were you able to max 401ks or something from day 1 at age 21?

Even if you max your 401k from age 21, it would take 20+ years to get to "multiple millions" with compounded interest

"Were you able to max 401ks or something from day 1 at age 21?"

Married at 23, and then...yes.

"it would take 20+ years to get to "multiple millions" with compounded interest"

Correct.

Well dang, hats off to you. Got till my 30s before even starting a 401k or accruing much savings at all (and then.... kids and daycare).

This is why 20 somethings need to learn the importance of starting early. My kid has been maxing their Roth since Age 17 and now out of college, at least 15% into their 401k as well. They are quickly realizing that if they were to stop "retirement savings" at age 30, they will still have over $4M at retirement. Obviously they won't stop, but the compounding advantage is HUGE. Now when they marry and start having kids, they wont have to worry as much about retirement---they can focus on college savings and living life with the kids. Sure they could have spent it all and not saved, but they are frugal and understand the advantages of early investing.

I love this.

You really think your kids are saving due to virtue and not generational wealth.

When I was 17 I was saving every penny for college tuition. Worked all through college to pay for tuition, housing, and food. When I was in my early 20s I managed to scrape together a $5k emergency fund living like a pauper. I didn’t have any wiggle room for investments.

Your kids have that money because YOU have money.

yes, that is a given that they did not have to spend what they earned in HS/college. But now they are on their own and still saving.
I grew up poor and spent summers and college year working to pay for everything. I still immediately started saving for retirement once out of college. Married right out of college and lived off of 1 income and banked the rest via retirement and regular investment vehicles. WE choose to live frugally to pay off high student loans in 1.5 years and save. We lived in a decent place but nothing fancy. WE drove older basic cars for several years. Our vacations were drive 3-8 hours and stay in a cheap hotel/with friends--we budgeted $1.5K for vacations when we were making $85K. We did not have family money, we simply made it a priority to save, knowing we would live much nicer in a few years if we paid off debt, and built a 6-9month emergency fund and 20%+ for a downpayment. If we got raises, 75% went to savings and 25% for spending. We knew that living frugally in our 20s would lead to having a much nicer lifestyle in our 30s+. Most recent college grads do NOT do that--they want to live now.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We make 360k and save 3k per month.

That seems rather low. You make 30K/month. Even with 401K and taxes, you are bringing home 15K.

OP probably lives in a $2M house and has kids at big 3 privates.

I'm sure they do. Just don't complain later that you have nothing saved for retirement. With what they are making, they should be saving $5-6K/month, easily.

Spot on. Future donut hole whiner right here.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I don't understand how people are say, in their 40s, with roughly a $200k income (assume didn't earn that the whole time) and have multiple millions of dollars in investments....? Were you able to max 401ks or something from day 1 at age 21?

Even if you max your 401k from age 21, it would take 20+ years to get to "multiple millions" with compounded interest

"Were you able to max 401ks or something from day 1 at age 21?"

Married at 23, and then...yes.

"it would take 20+ years to get to "multiple millions" with compounded interest"

Correct.

Well dang, hats off to you. Got till my 30s before even starting a 401k or accruing much savings at all (and then.... kids and daycare).

This is why 20 somethings need to learn the importance of starting early. My kid has been maxing their Roth since Age 17 and now out of college, at least 15% into their 401k as well. They are quickly realizing that if they were to stop "retirement savings" at age 30, they will still have over $4M at retirement. Obviously they won't stop, but the compounding advantage is HUGE. Now when they marry and start having kids, they wont have to worry as much about retirement---they can focus on college savings and living life with the kids. Sure they could have spent it all and not saved, but they are frugal and understand the advantages of early investing.

I love this.

You really think your kids are saving due to virtue and not generational wealth.

When I was 17 I was saving every penny for college tuition. Worked all through college to pay for tuition, housing, and food. When I was in my early 20s I managed to scrape together a $5k emergency fund living like a pauper. I didn’t have any wiggle room for investments.

Your kids have that money because YOU have money.

+100000

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We make 360k and save 3k per month.

That seems rather low. You make 30K/month. Even with 401K and taxes, you are bringing home 15K.

OP probably lives in a $2M house and has kids at big 3 privates.

I'm sure they do. Just don't complain later that you have nothing saved for retirement. With what they are making, they should be saving $5-6K/month, easily.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I don't understand how people are say, in their 40s, with roughly a $200k income (assume didn't earn that the whole time) and have multiple millions of dollars in investments....? Were you able to max 401ks or something from day 1 at age 21?

Even if you max your 401k from age 21, it would take 20+ years to get to "multiple millions" with compounded interest

"Were you able to max 401ks or something from day 1 at age 21?"

Married at 23, and then...yes.

"it would take 20+ years to get to "multiple millions" with compounded interest"

Correct.

Well dang, hats off to you. Got till my 30s before even starting a 401k or accruing much savings at all (and then.... kids and daycare).

This is why 20 somethings need to learn the importance of starting early. My kid has been maxing their Roth since Age 17 and now out of college, at least 15% into their 401k as well. They are quickly realizing that if they were to stop "retirement savings" at age 30, they will still have over $4M at retirement. Obviously they won't stop, but the compounding advantage is HUGE. Now when they marry and start having kids, they wont have to worry as much about retirement---they can focus on college savings and living life with the kids. Sure they could have spent it all and not saved, but they are frugal and understand the advantages of early investing.

I love this.

You really think your kids are saving due to virtue and not generational wealth.

When I was 17 I was saving every penny for college tuition. Worked all through college to pay for tuition, housing, and food. When I was in my early 20s I managed to scrape together a $5k emergency fund living like a pauper. I didn’t have any wiggle room for investments.

Your kids have that money because YOU have money.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I don't understand how people are say, in their 40s, with roughly a $200k income (assume didn't earn that the whole time) and have multiple millions of dollars in investments....? Were you able to max 401ks or something from day 1 at age 21?

Even if you max your 401k from age 21, it would take 20+ years to get to "multiple millions" with compounded interest

"Were you able to max 401ks or something from day 1 at age 21?"

Married at 23, and then...yes.

"it would take 20+ years to get to "multiple millions" with compounded interest"

Correct.

Well dang, hats off to you. Got till my 30s before even starting a 401k or accruing much savings at all (and then.... kids and daycare).

Most people are like you PP. If I would have maxed out my 401k at my first job out of college (at age 22), it would have been 42% of my gross salary. That's not realistic for most of us without parental help.

But you likely could have done 5-10%. If you start that way, it's just a part of your budget and you pick your apt, vehicle, and everything else you do accordingly. It's just like so many 20 somethings don't do the 401K and often leave employer match untouched---if your employer has a match, you must at minimum maximize it. And then most people will do best with maxing their Roth IRA first, then returning to 401k above the match amount.
So while you may not do 25-40%, you could have likely done some, even if it was only the $6K for Roth

$400k and save somewhere between 25-40k right now, including 401k contributions. Wish it was more but we are in tight years between daycare x2 and finishing grad school loans.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We earn $225k and save about $50k. And then whatever earnings are generated off of $3.5M in investments also get "saved."

I point that out not to brag, but only to comment that, at some point when you start accumulating actual wealth, the savings from your earned income become increasingly irrelevant.

How do you have $3.5M in investments? How old are you and how long at $225k?

I'm 45. We married right out of college, which DCUM insists is a horrible idea and makes us trashy. We always lived on just one income, and we had some very fortunate real estate timing for buying, selling, renting, and buying again surrounding the 2008 crash.

Excellent job. Living off of one income is an amazing way to get ahead. We did the same thing .

Kids or no kids? just curious

3 of them.

$440k income (two salaries, military pension and disability), save $11.5/month. Our AGI was $220k up until last year before DW’s big promotion and my military retirement (now a GS-13). We hope to retire in 10 years when our youngest is a college freshman (current ages 43/47). NW is $3.5 million. Three kids, and we live in an expensive West Coast city.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I don't understand how people are say, in their 40s, with roughly a $200k income (assume didn't earn that the whole time) and have multiple millions of dollars in investments....? Were you able to max 401ks or something from day 1 at age 21?

Even if you max your 401k from age 21, it would take 20+ years to get to "multiple millions" with compounded interest

"Were you able to max 401ks or something from day 1 at age 21?"

Married at 23, and then...yes.

"it would take 20+ years to get to "multiple millions" with compounded interest"

Correct.

Well dang, hats off to you. Got till my 30s before even starting a 401k or accruing much savings at all (and then.... kids and daycare).

This is why 20 somethings need to learn the importance of starting early. My kid has been maxing their Roth since Age 17 and now out of college, at least 15% into their 401k as well. They are quickly realizing that if they were to stop "retirement savings" at age 30, they will still have over $4M at retirement. Obviously they won't stop, but the compounding advantage is HUGE. Now when they marry and start having kids, they wont have to worry as much about retirement---they can focus on college savings and living life with the kids. Sure they could have spent it all and not saved, but they are frugal and understand the advantages of early investing.

Anonymous wrote:44 and 41. Currently earn 420k hhi, but that's recent, and we both started earning late because we got professional degrees after working inconsequential jobs for a few years out of college. It's also unlikely to get much higher since we are both close to topped out in our current jobs.

We max our 401ks, so with match, about 60k per year. We also do 1 backdoor Roth per year, and currently an additional 1k per month into brokerage. So about 78k per year before 529s.

We have 3 kids, 10, 7 and 1. We put 3k per month total (not each-and biased to the older child) into those. Although it seems like we save a decent amount, all account balances are very modest because we only started saving this much recently.

So in total we save about 115k per year? Would like to do more but both older kids are in parochial, and the littlest has a nanny.

It's crazy how numbers that should look good on paper feel very insufficient in real life.

As someone who can barely save outside of a 401k, to be able to save 115k per year would make me feel rich. Like, set for life, I'm cruising.