So if you haven't read the millionaire next door, I highly recommend it. In the book the authors provide metrics for the amount of money you should have saved based on your age. The book indicates you are either a UAW (Under Accumulator of Wealth), AAW (Average Accumulator of Wealth), or a PAW (Prodigious Accumulator of Wealth). From these different descriptions they provide interesting stereotypes about each. I found the book very entertaining and well worth the read. My main complaint about the scale is that it is biased toward the later years of retirement. New graduates should not be expected to meet these marks, but over time the scale should come into a more manageable number.
The Targeted formula from the book is:
Target Net Worth = Age X Annual Pretax Income /10.
Successful Retirement Planning and Investing.
That's not a pick up line. That's the question not just baby boomers should be asking themselves. The national numbers of retirees is skyrocketing as an aging boomer population begins to retire. Government resources have been net insoluble since they began and no one should plan to rely on the governments backing of Social Security or Medicare for their golden years. Many Gen X'ers, Gen Y'ers, and Millennials will either not have the benefits of current and past retirees or they will be significantly reduced by the time they plan to retire. What can you do to make sure your retirement is as pleasant as possible? Save Save Save and with those savings, Invest, Invest, Invest.
At a bare minimum you should be paying yourself at least 10% of every dollar you make. That is only .10 cents of every dollar. If you are able to save more do so. The more you are able to put away early the more you will have in retirement and the sooner you'll be able to not have to worry about money.
The best strategy is one that you will stick with and works for you. There is no one right way to invest. No one should go into investing expecting a money machine. The average return of the S&P 500 is 8% a year since 1957 when it expanded to its current form of 500 stocks. The S&P has had very turbulent years where it went up 40% and down 20% so if these types of roller coaster gains and losses bother you please do not bother investing in the market. The winners in the market buy and hold. Market timing is one of the worst things to do when investing.
From BREXIT to the recession of 2008 the market and investing in general can be a scary proposition. Interest rates continue to remain extremely low which makes saving money in standard savings accounts or CD's less desirable. There are many alternatives to investing. From dividend paying stocks, and index funds to REITS, muni bonds and indexed bond funds.
Investment brokers claim to be able to consistently beat the market (the S&P 500) year after year. However on a 10 year average these professionals consistently fall far short. Plus they typically charge at least 1% or more management fees. This is why I personally believe in a well diversified portfolio of low cost index funds, bonds and REIT's.
Some great books listed above and to the right to look into that talk about some of the investment strategies I follow. Hope you get a chance to check them out. They have allowed me to learn and grow and provided a solid path for income and earnings potential.
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