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Wednesday, February 5, 2014

The impossible math of retirement

I was playing around today with CNN's retirement calculator. In order to live comfortable, I would have to save about 15% of what I earn every year, get small raises every year, and invest in something that gets at least a 6% return. That's also assuming Social Security doesn't break down and inflation does not get worse.

I would type my reaction to the above statement, but I'm afraid I would break the A and H keys of my keyboard.

Even if I could somehow manage to save the required amount every year, what on earth could I invest in to get the 6% return? The inflation-adjusted return of the Dow long-term is about 2%, and after taxes, it drops to 1%.

I can see why so many of my coworkers play the lottery. My current retirement plan is to work until I'm dead. You might recognize this as the default retirement plan for the vast majority of the human race.

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