1. Agreed that people today banking on returns of 10%, or even 6%, are quite likely to be disappointed. I'd plan with a 3% real return assumption, and put in a substantial buffer, and also plan with at most 3% safe withdrawal rate (see Trinity study [1]).
2. This in turn means that you have to accumulate, say, at least $1m (in today's dollars) at retirement, to live on a modest $2500 a month.
3. This in turn means that you have to put aside basically $1100 a month for 40 years.
3b. In other words, whatever your target retirement income stream is, you'll have to set aside about half of that over your working life.
3c. Another way of looking at it is that you should put basically a quarter to a third of your income into retirement saving.
4. Disagree that startups are the best option for most people. While the average return might be high, this is skewed by a few super successful ones. I posit that the median return is rather mediocre. Thus, startup might maximise your chance to retire super early and opulently. However, to maximise your chance to reach a certain (more modest) level of retirement income, living frugally with a "normal" well paying job might be best.
5. A further problem I see with your "startup" suggestion is that it cannot work for everyone - if everyone pursued startups, there'd be no one to run the actual economy.
However, if everyone reduced their consumption and ramped up their savings rate as much as I'd suggest, the economy would most likely collapse, as well. So, I dunno.
Disagree that startups are the best option for most people.
Right, it is definitely not a good option for "most people." What I was saying is, "startups make a lot of sense for people who are talented."
To draw an analogy, if you are a highly talented athlete, then pursuing a career in professional sports might make a lot of sense for you, even though the expected payoff in pro sports is quite low for most people. Similarly, if you are a particularly talented artist, then that career path might make a lot more financial sense than a traditional corporate job. It seems obvious when we talk about sports and arts, but I think it is less common for people to think about their corporate careers in this way.
Fair enough, and I agree with your qualification to highly talented and would add highly motivated and very lucky.
It does not seem prudent to recommend that people become singers or actors or soccer players on the basis that Madonna and George Clooney and David Beckham have reached and exceeded their retirement saving goals.
2. This in turn means that you have to accumulate, say, at least $1m (in today's dollars) at retirement, to live on a modest $2500 a month.
3. This in turn means that you have to put aside basically $1100 a month for 40 years.
3b. In other words, whatever your target retirement income stream is, you'll have to set aside about half of that over your working life.
3c. Another way of looking at it is that you should put basically a quarter to a third of your income into retirement saving.
4. Disagree that startups are the best option for most people. While the average return might be high, this is skewed by a few super successful ones. I posit that the median return is rather mediocre. Thus, startup might maximise your chance to retire super early and opulently. However, to maximise your chance to reach a certain (more modest) level of retirement income, living frugally with a "normal" well paying job might be best.
5. A further problem I see with your "startup" suggestion is that it cannot work for everyone - if everyone pursued startups, there'd be no one to run the actual economy. However, if everyone reduced their consumption and ramped up their savings rate as much as I'd suggest, the economy would most likely collapse, as well. So, I dunno.
[1] https://en.wikipedia.org/wiki/Trinity_study