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View Diary: If 80% of us are in or near poverty than THERE IS NO MIDDLE CLASS. (83 comments)

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  •  Do the math (16+ / 0-)

    Assuming a person goes to college and gets a decent job at age 25, they have around 40 working years in which to save 1M dollars.

    There are 2,000 working hours in a year and during their lifetime they will work 80,000 hours.

    $1,000,000 / 80,000 = $12.50 per hour that they need to save in order to have a secure retirement.

    That means that the vast majority of people will never be able to earn and save enough money so that they can retire.

    The only trouble with retirement is...I never get a day off!

    by Mr Robert on Mon Sep 16, 2013 at 11:25:00 AM PDT

    [ Parent ]

    •  bingo; the only way to accumulate enough (5+ / 0-)

      wealth is through survivor life insurance or hitting the lottery (if you can afford the insurance premiums)

      However, one article I linked noted that bank savings accounts used to pay 4%-5.5%. (I am not even considering such instruments as EE bonds or other possibilities).  Now they are paying .5%.  If someone has $1M in savings account, in 1976, the income would have been $50K instead of $5K today (take into account inflation and in today's dollars that would be the same as $205,761)

      •  I remember when Passbook Savings (2+ / 0-)
        Recommended by:
        splashy, peregrine kate

        Accounts paid over 7 percent. Of course, that was back in the dark ages--I mean the 1970s.

        At this point people who save money and seniors trying to live off the income from their savings are being killed by the Fed's Zero Interest Rate Policy. So the only way of making anything is by risking your money in the stock market and that's not something that older folks like me should be doing--it's just to risky.

        So not only would a person have to save $100 per day from their paychecks to accumulate $1M they would barely make enough in yearly interest to put a down payment on a new car.

        I figure that in order to live off your interest the way people were able to do at one time, you'd have to have at least $10M in the bank.

        The only trouble with retirement is...I never get a day off!

        by Mr Robert on Mon Sep 16, 2013 at 02:26:44 PM PDT

        [ Parent ]

        •  my broker had it pegged at $3M (2+ / 0-)
          Recommended by:
          Mr Robert, splashy

          assuming that the individual lived frugally, received $2K/month in SS and invested in munis at 4%.  (which are about the only "safe" investment left)
          You have to remember FDIC only insures to $250K should there be another run on the banks and $10M makes for a  lumpy mattress

    •  You forgot... (2+ / 0-)
      Recommended by:
      ER Doc, peregrine kate

      The miracle of compound interest.  Run this through the PMT function of your favorite spreadsheet:

      Future Value:  1,000,000
      # of Periods: 12 * 40 = 480
      Interest Rate:   0.05/12 = .004167
      Present Value: 0

      Monthly Payment turns out to be $655.  If you divide this by 160 hours in a month, that's 655/160 = $4.09  per hour.

      I agree with your basic point, but your math is wrong.

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