Retiring Rich is Harder Thank You Might Think!

[ducky19]

https://www.msn.com/en-us/money/investing-50s-and-60s/retiring-rich-is-harder-than-you-might-think/ar-AAstE6Y

One gem:

"Median earnings for those with only a high-school education in 2015 were just over $2,500 per month.

Student loan debt amounts to between $30,000 and $35,000 for recent graduates on average. That takes between $300 and $400 per month to repay over a 10-year period.

Average rent for a one-bedroom apartment in U.S. cities ranges from $525 in Cleveland to $1,100 in Austin, $2,000 in Miami, and $3,600 in San Francisco.

Add to that all the other regular living expenses you have, and it can be hard to free up any money at all -- let alone the several hundred dollars per month that a 10% commitment would entail. At certain times of your life, just being able to put anything toward savings is a major victory, and you should celebrate it as such."

First, way to mention that the average high school grad only earns $2500/mo and then jump right into student loan debt... without mentioning that the average college graduate can expect to earn $4000/mo....

The article continues to stress why it's so hard to save, but my favorite is the end:

"Do what you can

Preparing for retirement isn't easy, and no matter how simple a set of rules might seem, following it can be next to impossible. In situations in which you can't reasonably follow an ambitious strategy, see if you can get at least part of the way there. That way, you can get a measure of success, knowing that you've done the best you can and keeping you aware of your financial situation for future use."

Seriously? Saving 10% is "next to impossible" and "an ambitious strategy"??? If getting part of the way to 10% is the best I can do, I would not feel any measure of success. I absolutely hate the Motley Fool...

[zephyr911]

Ahh, the Fools. I read pretty much their entire website in the summer of 2000 when I was about to graduate from college. They were an extremely principled DIY-mentality group back then, eschewing stock advice, emphasizing personal due diligence and teaching a man to fish. They would tell you what they bought or sold, and why, and then analyze successes and failures later to help the reader learn to do all these things on their own.

After the dot-com bubble and near-failure, they did a complete 180, and their sliver of meaningful public content is now geared toward selling their overpriced stock picking services.

Also, so much complainypants about competing priorities. What do you mean I have to make hard choices to achieve great things? WAAAAAH!!!!!!!!!!!!!!!!!!!!

Small-f fools, is what the original version of them would call today's MFs. But hey, it made them rich doing what they love, so more power to 'em.

[MrsPete]

Why would you have student loan debt AND only a high school education? 

[TheGrimSqueaker]

Why would you have student loan debt AND only a high school education?

My first guess would be that the student washed out without completing a degree and graduating. There have been some extreme cases where schools shut down and the students were unable to transfer the credit to another program of study.

[Paul der Krake]

Tons of people don't graduate college. They will get a couple of semesters, and the bills haunt them for years.

[ixtap]

Tons of people don't graduate college. They will get a couple of semesters, and the bills haunt them for years.

That does not change the fact that this article references the salary of a high school grad and the debt of a recent college grad.

[MrsPete]

Tons of people don't graduate college. They will get a couple of semesters, and the bills haunt them for years.

Then they'd have a little more than a high school diploma.  Sure, not nearly as good as a degree. 

[EricL]

The sad irony is I used to subscribe to the old Motley Fool and used a lot of their recommended stock choices. Most of them were good and materially helped me FIRE.  One of them, HDFC Bank Ltd, would easily have made me rich on its own if it had been my sole investment, having gained 212% in the 9 years or so I’ve owned it.  The Fool also used to affirm Index Funds could make you rich too on a regular basis, a voice of sanity in a crowd of bogus financial advisors. 

[SwordGuy]

The sad irony is I used to subscribe to the old Motley Fool and used a lot of their recommended stock choices. Most of them were good and materially helped me FIRE.  One of them, HDFC Bank Ltd, would easily have made me rich on its own if it had been my sole investment, having gained 212% in the 9 years or so I’ve owned it.  The Fool also used to affirm Index Funds could make you rich too on a regular basis, a voice of sanity in a crowd of bogus financial advisors.

I understand that the historical average rate of return for the US market has been 10%.  (7% after you take out historical rate of inflation.)

According to the rule of 72, a 10% compounding rate of return should double about every 7.2 years.     
A 7% rate of return would take a smidge more than 10 years.

So doubling in 9 years isn't that big a deal. :)   It's pretty much par for the market.

[ixtap]

The sad irony is I used to subscribe to the old Motley Fool and used a lot of their recommended stock choices. Most of them were good and materially helped me FIRE.  One of them, HDFC Bank Ltd, would easily have made me rich on its own if it had been my sole investment, having gained 212% in the 9 years or so I’ve owned it.  The Fool also used to affirm Index Funds could make you rich too on a regular basis, a voice of sanity in a crowd of bogus financial advisors.

I understand that the historical average rate of return for the US market has been 10%.  (7% after you take out historical rate of inflation.)

According to the rule of 72, a 10% compounding rate of return should double about every 7.2 years.     
A 7% rate of return would take a smidge more than 10 years.

So doubling in 9 years isn't that big a deal. :)   It's pretty much par for the market.

But gaining 200% would mean that it has tripled, not doubled.

[Werthless]

My pet peeve: Saving 10% is viewed as hard/easy, when it is a different number for each person. It should be flipped... is it hard to live on $50k where you are? If the answer is no, and you make $100k, then what is the savings rate that can be achieved? It's much more than 10%...

[LadyDividend]

Well now I give up.....

Just kidding. It could be true that, depending on your definition, retiring rich could be difficult to do. But I don't want to retire rich. Hitting 25 my monthly spending is good enough for me. Much less than one million.

[ixtap]

Well now I give up.....

Just kidding. It could be true that, depending on your definition, retiring rich could be difficult to do. But I don't want to retire rich. Hitting 25 my monthly spending is good enough for me. Much less than one million.

25x monthly? Is that a typo or new retirement math?

[MgoSam]

Well now I give up.....

Just kidding. It could be true that, depending on your definition, retiring rich could be difficult to do. But I don't want to retire rich. Hitting 25 my monthly spending is good enough for me. Much less than one million.

25x monthly? Is that a typo or new retirement math?

25x monthly? Sweet, that means I only need a little more than 2 years expenses saved up. Hell I could have retired like 8 years ago!

[Tass]

"Median earnings for those with only a high-school education in 2015 were just over $2,500 per month.

I make less than that with a college degree in a HCOLA and still save 30%. And give 10% to charity. I fail to see the problem...

[physdude]

Ahh, the Fools. I read pretty much their entire website in the summer of 2000 when I was about to graduate from college. They were an extremely principled DIY-mentality group back then, eschewing stock advice, emphasizing personal due diligence and teaching a man to fish. They would tell you what they bought or sold, and why, and then analyze successes and failures later to help the reader learn to do all these things on their own.

After the dot-com bubble and near-failure, they did a complete 180, and their sliver of meaningful public content is now geared toward selling their overpriced stock picking services.

Also, so much complainypants about competing priorities. What do you mean I have to make hard choices to achieve great things? WAAAAAH!!!!!!!!!!!!!!!!!!!!

Small-f fools, is what the original version of them would call today's MFs. But hey, it made them rich doing what they love, so more power to 'em.

The discussion boards on the fool site are a completely different story though. There are some seriously smart people over there, particularly on the Berkshire Hathaway board, and I have learnt a lot of finance from them (and I have a finance PhD from on the top US business schools). It is a complete contrast to the main site itself.

[EngineeringFI]

Back in college I found The Motley Fool Investment Guide on the shelf at a local thrift store for $1 and bought it on a whim. I still have it and love that book for its down to earth explanation of investment concepts. The version I have was published in '96 and it still makes me laugh how prophetic it was without them knowing anything about the upcoming .com crash or the financial crash. It's disappointing to hear that their site doesn't live up to that level of quality anymore.

One thing that's starting to drive me crazy in these types of articles is the passive voice that everyone takes. Statements like, "no one told me I should pick a major in college that actually prepares me for a career that's in demand..." really drive me nuts. I can sympathize to an extent, but its not realistic to expect everyone around you to provide you with all the knowledge you'll need in life.

[Just Joe]

Is that passive voice just a way to relate to their readers? I hear alot of people speak like that these days.

"I didn't know I was supposed to check the oil in my car's engine... How was i supposed to know?"

Read the darn owner's manual! Talk to someone. Investigate the topic yourself.

Will there be a point where the method to financial stability and later early retirement ever be mapped out so well that these websites will become redundant?

I'll always see the forums as useful but I seldom read the articles anymore. 

[EngineeringFI]

Is that passive voice just a way to relate to their readers? I hear alot of people speak like that these days.

"I didn't know I was supposed to check the oil in my car's engine... How was i supposed to know?"

Read the darn owner's manual! Talk to someone. Investigate the topic yourself.

Will there be a point where the method to financial stability and later early retirement ever be mapped out so well that these websites will become redundant?

I'll always see the forums as useful but I seldom read the articles anymore.

I think becoming an active participant in your own life is probably the first step to a lot of positive changes.

To your second point, I think the path is already laid out fairly well. The continued discussion about the process towards early retirement often revolves around things that are changing in the near term, such as taxes and healthcare costs, but the overall path to retirement isn't really changing.

Unfortunately, vast majority of the population doesn't want to hear it. This path is like the financial equivalent of a healthy diet, regular exercise, and getting plenty of sleep. Sure, it's pretty much guaranteed to work if you stick to it, but most people would rather hunt for a magic pill that lets them keep doing what they're doing.

[Just Joe]

Yeah, a magic potion that allows them to be rich without the studying...

[clarkfan1979]

I don't like it when people complain that life is really expensive. It can be expensive when you make expensive decisions.

I lived the San Diego area from 1998 to 2005. I was a grad student and rented a room in an expensive part of town for $550/month, utilities included. I probably lived on 18-20K/year. I was renting a room from a guy who was going through a divorce. He made about 100K/year, but made very bad financial decisions. In 2005, I moved to Colorado for grad school and a lower cost of living. I ended up buying a house close to campus and rented out 3 rooms.

He told me that he was thinking of moving as well. He said that he needs to make 200K/year to be able to buy a house and feel comfortable. If he's not making 200K/year by the time his youngest graduates from high school, he is moving to a lower cost of living area. Really, 200K a year to feel comfortable? I was making 20K/year and wasn't starving.

[CoffeeR]

The Fools.... it does bring back memories of yesteryear. A different time of my life. Back in the day their forums were great and very active. I frequented them often and learned much. No idea if they are still active or worthwhile checking out.