Comment by gvb
16 years ago
They think they will retire in their thirties, but they never have enough.
"At a party given by a billionaire on Shelter Island, Kurt Vonnegut informs his pal, Joseph Heller, that their host, a hedge fund manager, had made more money in a single day than Heller had earned from his wildly popular novel Catch 22 over its whole history. Heller responds, "Yes, but I have something he will never have...
Enough."
http://www.johnboglemedia.com/component/content/article/1-la...
Their fixed costs keep rising. When you are 22, you think that $100,000 a year (rising with inflation) is heaps. But by 30, you buy your first yacht, and it takes $50,000 a year just to keep it in the dock.
While that's true, the cause of this is a salary that compounds faster than inflation. If you make 10% more each year it's almost impossible to retire anywhere near the salary you had 5 years ago without saving a huge percentage of your income.
EX: Ignoring inflation, if you get a 10% rase a year and get a 10%ROI on your investments every year then you need to save 40% of your income to for 35 years to retire on what you made 5 years before you retired. (Assuming you can live safely on 4.5% of your capital / year)
LOL. There's a huge difference between a hedge fund manager and a management consultant. Perhaps the billionaire will never think he has enough, but the consultant will actually, in legitimate and reasonable terms, not have enough. They really don't make much money for the hours they put in. Factoring travel, they work as much as an investment banker and essentially earn what a banker would earn without his bonus.
Hedge fund managers are to management consultants what wolves are to sheep. Please don't compare the two. One is a master, the other nothing but a slave.