With year end coming, I've been once again thinking about how another year has passed and wondering if we're on track with retirement savings. I'm getting old, which means I've been saving for retirement for a while at this point (since 2000); not the oldest in here, but all the folks posting about just getting started has made me realize just how long it's been, and I thought I'd offer a bit of perspective from someone who's been doing this for a while (and made my share of mistakes along the way).
Back in 2007 I built a dead-simple compounding savings table, showing what I thought we'd be investing per month and then extending it out for 25 years (my desired retirement age, from that point). It assumes the standard 8% growth.
A lot has changed in our priorities, how much we put in, how the market has done, etc. since I made the file. But I still go back to it, assumptions unchanged, as it gives me a simple goal to check our progress against. As months and even years go by, it has often felt like we're making very little progress, so it's been nice to have a measuring stick to see how we're doing. It ends with my desired age and savings. Here's how it looks right now, after a bit over nine years:
I wanted to post this given the recent discussion about market timing. I did this in 2007, but my wife and I opened our Roth IRA's in early 2000 - talk about bad market timing. We've now been through two crashes, and through it we've never timed the market. We just kept investing automatically every month, with extra bits as income allowed. Rode the market down, rode it back on up, investing both directions.
Two market crashes later, we're right on track. I don't feel confident saying I could have done better if I tried to time the market (and I'm 13 years into a finance career). I just do what I do in other parts of my life: just kept plugging away one bit at a time. It's working out just fine.
This is totally anecdotal, but there's a wealth of research indicating this anecdotal experience is very much the norm. Start saving when you can, and stick to your plan as the market does its thing.
(As an aside, it's a little nerve-wracking to be over 1/3 of the way to the end of the goal in time, but only <20% of the way there in raw savings. Ah, the power of compounding returns. Here's hoping it keeps playing out.)
The thread is nearly 3 years old and I'm feeling a wee nostalgic. Hope everyone is doing okay.
