Originally Posted by Waverider
If you religously do this your nest egg will grow to approximately $5 million (returns of 8% and 2% inflation). These numbers assume you are both 25 and working until you are 60.
Waverider, thanks for the numbers. Five million sounds impressive.
When I've "run the numbers," I can also produce pretty big sums, but then they drop as other factors are put in. In the US, I've down-shifted my growth projections to 6-7 percent a year, and I normally add in a 3 to 3.5% inflation estimate. That means a million dollars in 2027 is quite a bit less in today's dollars once 20 years of inflation is figured in.
The other item that seems to throw things off is the cost of health care in the US increasing at well above the cost of inflation, meaning that the $1000 a month we pay now for family coverage (via our employer) may be quite a bit higher in the future, even with medicare coverage for retirement. (I wonder what will happen in other countries in regards to health care costs...)
Real estate has also been rising at higher than inflation, so it's hard to predict what a rental will be in the future... In fact, I wonder if more retirees in the future won't be spread around the globe.
All this aside, it's hard to imagine what will happen next. The US stock market might continue a decent climb, or it might not. A major international event could cause a set back for a lot of us. A new discovery (similar to personal computers) could mean a boon for all of us. Who knows.
Half of me thinks a slow and steady investment plan as you describe is the safe and best way to go, and the other half of me says to "go now, while you know the numbers and know your heath." It's a weird predicament, but fun and interesting.