> The people with insufficient 401k balances aren't making the max.
That may be true, but even maxing out probably isn't sufficient anymore for most people.
It's not just starting to be broken now; it's been broken for a long time. The 7% average stock market return is completely irrelevant to how people actually invest. And I'm not even talking about irresponsible investing. I'm talking about allocation models (put x% of your portfolio in bonds; more when closer to retirement), and I'm especially talking about how people tend to have less money to invest when times are bad and prices are low, and more money to invest when times are good and prices are high. What use is stocks being on sale if you've been laid off at the same time?
I think if everyone had a practice of tracking the dates and amounts of all their retirement contributions, and calculated APY from their balances, we'd be a lot closer to exposing the huge lies that are at the root of the investment advice communities. If anyone here is deeply embarrassed about barely beating inflation after 20-25 years of investing, you shouldn't be.
My favorite resource lately is earlyretirementnow.com, particularly the Safe Withdrawal Rate series and their spreadsheet. It basically either expands upon or rebuts every other commonly-recommended financial advice resource people tend to suggest.
The basic mindset is you have to understand your expenses ie spend rate. People flush with income tend to forget that, thinking it's just for people living paycheck-to-paycheck and needing a budget. But it's essential for being able to project retirement reliably. And of the income/performance/expense triumvirate, it's the one that you have the most control over (assuming you're already investing responsibly).
That may be true, but even maxing out probably isn't sufficient anymore for most people.
It's not just starting to be broken now; it's been broken for a long time. The 7% average stock market return is completely irrelevant to how people actually invest. And I'm not even talking about irresponsible investing. I'm talking about allocation models (put x% of your portfolio in bonds; more when closer to retirement), and I'm especially talking about how people tend to have less money to invest when times are bad and prices are low, and more money to invest when times are good and prices are high. What use is stocks being on sale if you've been laid off at the same time?
I think if everyone had a practice of tracking the dates and amounts of all their retirement contributions, and calculated APY from their balances, we'd be a lot closer to exposing the huge lies that are at the root of the investment advice communities. If anyone here is deeply embarrassed about barely beating inflation after 20-25 years of investing, you shouldn't be.