The real question in this article is whether $4 million will be enough. It is said that in 2042, "$160,000 would be the equivalent of about $88,000 today." I think that is crazy and a little scary. The only way that the money today will be worth the same as in 2042 would be for the entire economy goes through a sustained deflation, which is almost impossible. Inflation will slowly keep going up and money will slowly become less and less.
This article makes me want to start thinking about my retirement, and I'm only 17! This article makes it clear that to retire comfortably, one needs to "...focus on getting a realistic idea of how much you should be saving and how you should be investing to retire in comfort..."
Remember that Aragon Hitchhikers! We are getting old fast.
Remember that Aragon Hitchhikers! We are getting old fast.
5 comments:
Although, this article has a point in starting earlier to plan for the future, I think its best not to worry yet. After all, it's incredibly hard to get an accurate fix on how much we will be needing to save for a retirement that won't begin for more than a few decades. We don't know how much we will be earning or what lifestyle we'll be living, or how much we will be able to save as a result of layoffs or higher living expenses. Life and the economy are all but predictable.
I think planning ahead and doing the most you can now to ensure a good future for yourself are very important, but I also think things take time. As Kimi said, a lot of our future is uncertain at this time, and it might be hard, and a bit early, to be planning for retirement when we don't even know what our career path will look like. Also, while inflation and the decrease in the value of money may seem scary and threatening, keep in mind that it is no novel concept. Prices for goods may increase, but most likely, wages will as well. For example, prices for goods now are much higher than they were when our parents were growing up, but minimum wage is also much higher now than it was before. I think thinking ahead and preparing for the future is important but for some things that are unpredictable, it might be best to just see how everything plays out.
I agree that the future is anything but predictable and declaring that someone should save a specific amount of today's money for their retirement is a bit absurd. There's no way that we can predict what the 2042 economy will look like. Maybe we'll be burning money in the fireplace because it's economically smarter than going out to buy actual firewood. I think it's more realistic to say that I'm going to put away a certain percent of that year's income for a retirement fund. This way, instead of a defined goal amount to save, we will be saving inflation-adjusted amounts of money. Especially with the near certainty that Social Security funds will have all but been depleted by the time our generation retires, starting to save now seems like a smart idea, regardless of the true value it will have in the future.
One can only hope we get paid more in 2042, but alas the financial future becomes cloudier with each passing day.
I agree with Alex that people will be getting paid more in the future. However, if this article is accurate, then in 30 years, people's salaries should be 200% of what they are today. Currently, employers raise salaries only several percent annually to account for inflation so I don't think that in the long run it will keep up with the rising costs. Furthermore, the future of retirements and pensions are really dependent on what will happen to Social Security with the ageing baby boomers, more so than inflation.
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