Is retirement doable?

Of course – with discipline and perseverance

Let’s say a person begins saving and investing (in stock index funds) at age twenty-four. They save $400 a month and never increase that amount. Their investments earn an average 8% per year.

NOTE: The average yearly return of the S&P 500 is 10.53% over the last 50 years, as of the end of April 2023. This assumes dividends are reinvested. Adjusted for inflation, the 50-year average stock market return (including dividends) is 6.327%.

At age 64 the person would have $1,364,501.78. This amount may be insufficient if the goal is retirement in one’s 50s, but that’s another story.

Social Security will add an additional income stream.

Imagine the possibilities if that $400 is modestly increased as income rises or extra income is added to investments periodically – part of a bonus or overtime pay, gifts received, tax refunds, etc.

Imagine if a working couple each saved the $400 or perhaps only $300 each – now we have $2,060,249.26.

An income of $50,000 means saving $400 a month is less than ten percent and how about the possible added value of a employer 401k match. A 3% match on $40,000 per year would add an additional $343,394.47 not even counting increasing pay over the years.

So now the question is, is it feasible to save $400 a month? For someone starting out, perhaps that’s a strain, but doable. As time goes by and if lifestyle creep is managed it seems quite possible for most people.