Quote from: TDoS on Mar 15, 2025, 05:15 PMHow does a 401k fit into your world of "work"? It isn't obvious, but aren't market investments, including purchasing real estate, fair game for everyone, including the $30/hr working man?
No. At $30/hr there isn't enough surplus income to effectively invest in RE or the SM. It translates to $50K/yr, which is below the median household income. If you are a frugal person you can just about live on the median income and save a little for emergencies and medical bills.
15 years ago when I left the working world I was making $40K, the median income at the time. I am very frugal and was able to save around $3K/yr. If you extrapolate over 30 years of saving $300/mo invested with an average ROI of 7%/yr. That gives you $500K in assets. Retire, 7% gets you a retirement income of $35K. You might just squeak by with this if you never have a big medical bill or floods, fire, tornado and your kid didn't need braces or need some help with college tuition. This also assumes a very good average ROI. You don't get 7% on T-bills or CDs, you need some riskier investments in your poortfolio to get there.
Realistically these days, you need to be making 6 figures before you have enough surplus to do investing. Frankly it takes 6 figures just to afford that 1 big investment, your McMansion. Plus the first 5 years you're not saving for retirement, you're saving for the down payment. My general rule is that whatever the median income is, you need to make about double that to join the Investor Class.
Social Security is a means to insure the society as much as the individual. Prior to the invention of such systems by Otto von Bismark, the cities were full of beggars who either died or got stuffed into debtors prisons. Younger people could work faster at lower wages, so by the time they hit 60 with no job security they were on the street. It's not an investment system to make people rich, it's society's insurance against having impoverished old people begging on the street. That's currently all it does, for a comfortable retirement you need ADDITIONAL sources of income like Pensions & 401Ks. You have to be a pretty high earner through most of your life to achieve that.
RE