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Comment by seymour333 | Hacker News Reader

If you could go ahead and just outline that program in point form as a reply to this that'd be great

There are lots of ways, but the simplest is to take 10% of your income and invest it in an S&P 500 index fund. Also take maximum advantage of any 401k plan your employer offers.

For most tech people, 10% of your income in an index fund is not going to get you out of the middle class.

Most tech people are not in SV.

Pretty much this. I can't afford to commit that level of income to investments, and even if I could, the impact on my financial standing would not be significant (probably? I have no idea what kind of % return you get on an index fund)

Rule of thumb is often an average 10% growth for index fund return (e.g. S&P 500) - this would be over many decades. If you can't put in 10%, at least put in up to what an employer matches - unless you are very low income, it's worth it and once it's sequestered from your day to day budget you won't feel the difference of 1-5%.

10% after tax + 401k max should be more than enough for a cushy retirement. If you dont have 401k-like benefits, 15-20% will get you there.

Oh, great so someone just needs to save $18k per year plus an extra ten percent of their income. That will be easy to accomplish for a typical person making the median wage of approximately $30k per year.

Median household wage in the U.S is 58k. 20% savings rate is hard to get but achievable.

That's the median household income which often includes multiple workers and non-wage income. Median wage is about 30k according to the Social Security Administration[1] and they should know since they are supposed to get the wages for every single worker in the country reported to them.

[1] https://www.ssa.gov/oact/cola/central.html

Can a person earning 30k save 20%? I think its possible, and that would almost guarantee a safe retirement. Thats not even counting social security, which is very significant at that wage level.

You said max a 401k plus 10%. For someone making 30k that's 18.5k + 3k = 21.5k which is virtually impossible for someone making 30k.

Write a simple computer program to calculate your return over time. Assume 7% average real return of the S&P 500. See for yourself.

I did:

>http://blog.nawaz.org/posts/2015/Dec/pay-down-mortgage-or-in...

I'm not saying saving 10% is bad. It may be good enough to retire depending on when you start out. But it won't take you out of the middle class.

For most developers in my city, 10% means saving $7-10K a year.

It'll make you a millionaire easy. But really, this is just a basic strategy, sort of like the "Dealer's Strategy" in blackjack. As you become a more sophisticated investor, you can invest in things that pay off better.

To become a more sophisticated investor, you'll need to start reading books (uh-oh!) on investing, accounting, and business.

>It'll make you a millionaire easy.

That wasn't in dispute. The issue in contention is moving out of the middle class.

Having $1.3 million in retirement when you're 65 puts you squarely in the middle class, if you go by the 4% withdrawal rate.

Scott Adam's advice (reposted by Matt Cutts) is pretty popular: https://www.mattcutts.com/blog/scott-adams-financial-advice/

I'd add:

* buy a car you can pay cash for, not one you have to make payments on

Fully agree with this. I got rid of any major debt almost a decade ago and it's the only way I keep myself afloat. No car loans, not furniture or electronics that I can't pay cash for, and I keep a credit card only for functional aspects (online purchases, credit rating etc)

> furniture ... electronics

It turns out that your local thrift store is a great place for both of those cheap. I bought a very nice sound system for about $40 including speakers, one that a couple decades ago would have cost a couple grand. You can get real nice flat panel TVs from the pawn shop for next to nothing, too, as well as computer equipment.

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