Retirement Is a Math Problem
Retirement planning means saving and investing enough today so your money can support you when you stop working. The earlier you start, the easier it is — thanks to compound growth.
The Power of Compounding
$500/month invested at 7% average return:
- 10 years → ~$86,000
- 20 years → ~$260,000
- 30 years → ~$610,000
- 40 years → ~$1.3 million
The 4% Rule
A common guideline: you can safely withdraw ~4% of your retirement portfolio yearly, adjusted for inflation. So a $1M portfolio supports roughly $40,000/year.
Priority Order
- Capture full 401(k) employer match
- Max HSA (if eligible)
- Max Roth IRA ($7,000/yr under 50; higher if 50+)
- Max 401(k) ($23,000 under 50 as of mid-2020s)
- Taxable brokerage for additional investing
Social Security
A US worker who pays FICA for 10+ years becomes eligible. It is a supplement, not a full replacement for savings.
Don't Forget
- Update beneficiaries on all accounts
- Diversify across account types (tax buckets)
- Plan for healthcare costs (Medicare starts at 65)
For Diaspora Families
Remember that supporting parents abroad is part of your retirement plan, for them and you. Build it in.
Practice tip: Set one automatic retirement contribution today. Increase by 1% every raise.