Quote:
Originally posted by CamB
$40k isn't the "poorest americans" - it isn't far below the median household income, plus someone's ability to save $4k/month declines pretty quickly below that $40k.
Owning your own home can help, but over 30years you'd be lucky to beat inflation by 5% (ie, say 8%).
Mutual funds don't get 12% average - I've seen numbers more like 6-7% real (<10% nominal).
And every little percent helps.
I guess at the heart of the problem is the statement above "I consider it an entitlement if 90% of people get out more than they put in". This tends to suggest that it is very very difficult for lower income people can ever save entirely for their retirement...
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Cam, it's not $4k per month. It's $4k/yr. Virtually ever American pays 12.4% of their pre-tax income (under ~$90K/yr) to Social Security, so 10% of $40k ISN'T ridiculous. In addition, I calculated a 30 yr investment period. Most lemmings, I mean Americans, start bleeding into SS around age 16 and start withdrawing around age 65. That's nearly 50 years of compounded growth. If I run the numbers AGAIN, I'd probably laugh myself silly.
Cam, take a look at
http://ww4.janus.com/Janus/Retail/FundsHomeEquityFund
Janus Fund mutual fund has provided 13.91% since inception (1970).
Scudder Large Company Value Fund has yielded 12.92% since 11/1966.
None of my numbers are ridiculous. This is truly possible for the average Joe. Worst case, wouldn't it be better for Americans to get the 12.4% to invest as they wish? Wanna pay off your home quicker, go for it. Wanna invest in Nigerian scams? Go for it. Why let Bush and Kerry bathe in your hard-earned dinero?
Just my opinion,
Jürgen