Comment by wisty
16 years ago
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.
16 years ago
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)