30K to invest. Retiring in 20 yrs so what can it make?

[Erica]

Work 401k has some kind of admiral shares (25%) and the remaining is invested in s&p 500.

It won't nearly be enough in retirement.

Can anyone tell me what a realistic number would be if I invested 30K in s&p 500 via Fidelity or Vanguard starting now for the next 20 yrs when I turn 70? Thank you

[secondcor521]

People have widely different opinions on what the return of the S&P500 will be over the next 20 years.

Personally I think the best estimate is the long-range historical average, which is a bit better than 10%.  If you want to adjust for inflation so you can think of it in terms of today's dollars, I think 7% is a good number.  (Many people are more pessimistic than me, and I'm sure some will chime in on this thread.)

Plugging those numbers in to the first growth calculator I found at

  https://mdm.ca/tools/compound-growth

gets about $121K in today's dollars.

You might also qualify for Social Security or a pension.

[Erica]

Thanks so much

Dave Ramseys calculator was much lower. I read somewhere it's not the most accurate but wasn't sure why

$121K would be great. It would easily pay off our mortgage by age 70  which should be paid off in 10 yrs.

Yet you never know what life will throw at you. We are behind mostly due to medical bills accumulated many years ago

I am taking SS at age 70, working until then.

No pension. Only some retiree health benefits of free dental, eye & prescription plan starting at age 65

[secondcor521]

I plugged the same numbers into the first Dave Ramsey calculator I found and it came up with about $116K.  The difference would be due to the assumption about compounding frequency:  Dave's calculator probably assumes you earn that 7% yearly - which is reasonable but underestimates a bit - and the other calculator I cited specifically used a monthly compounding frequency.

Honestly, since we're just making educated guesses here the difference between $116K and $121K is within the noise.

Also, you shouldn't rely on SGOTI (me) for your retirement.  You should learn to calculate these numbers yourself.

[Erica]

I plugged the same numbers into the first Dave Ramsey calculator I found and it came up with about $116K.  The difference would be due to the assumption about compounding frequency:  Dave's calculator probably assumes you earn that 7% yearly - which is reasonable but underestimates a bit - and the other calculator I cited specifically used a monthly compounding frequency.

Honestly, since we're just making educated guesses here the difference between $116K and $121K is within the noise.

Also, you shouldn't rely on SGOTI (me) for your retirement.  You should learn to calculate these numbers yourself.

I must've been using different numbers then, good to know.
Yes I need to learn to calculate the numbers myself, thank you

[BTDretire]

Here's the compound interest calculator I always go to.
http://www.moneychimp.com/calculator/compound_interest_calculator.htm
With $30k and 20 years, I get $116,090 using 7% and $201,825 using 10% interest rate.
 A little more if you add the compound interest more than once a year.

To give you some idea where we pick up annualized growth rates like 10% see,
http://www.moneychimp.com/features/market_cagr.htm
https://www.investopedia.com/ask/answers/042415/what-average-annual-return-sp-500.asp
https://www.marketwatch.com/story/understanding-performance-the-sp-500-in-2015-02-18

https://www.google.com/search?client=firefox-b-1&q=average+stock+market+return+last+20+years&sa=X&ved=0ahUKEwiahtSjrLTdAhUOuFMKHdlYB9MQ1QIIpAEoAQ&biw=1440&bih=690

[Erica]

Thank you BTDretire !

[swampwiz]

My advise is that in the long run, everything reverts to the mean.  I see the USA stock market & currency as being very expensive right now.  When will the rest of the world wake up and realize that they don't have to give us more stuff in return for our Federal Reserve Bitcoins?

[marty998]

Assume for example you are paying that difference of 3% in fees,

It's amazing how 3% over 20 years on a $30k investment can add up to $84,000...

[boarder42]

My advise is that in the long run, everything reverts to the mean.  I see the USA stock market & currency as being very expensive right now.  When will the rest of the world wake up and realize that they don't have to give us more stuff in return for our Federal Reserve Bitcoins?

You gave 0 advice here. The mean for historical us return is 7-8% after inflation and 10-11% pre inflation so if your advice is the same as previous posters awesome.

[COEE]

I'm not clear on if you intend to invest 30k each year or not so I've run both numbers.

The initial 30k investment would be worth ~115k @ 7% (inflation adjusted) and ~200k @ 10% (non-inflation adjusted) - based on historical returns of course - as everyone has pointed out. 

However, reading the question, I believe you are really asking how much the account will be worth with 30k invested each year - this ends up being $1.3M @ 7% (inflation adjusted) or $1.9M @ 10% (non-inflation adjusted).