I have a question about retirement projections from 401(k) companies.

>>1763229
I think 401ks are supposed to be invested in a way that beat inflation, but then again I do not pay much attention to them as I expect to be dead long before I could withdrawal penalty free anyhow.

>>1763229
For whatever reason, most retirement calculators online don't seem to account for inflation.

Easiest way to deal with this is to ignore inflation entirely and adjust your expected rate of return accordingly. Ex. if your investments have an expected rate of return of 7% and you expect inflation to average 3%, use 4% as your expected rate of return in calculations.

File: calculator.jpg (80KB, 786x912px) Image search: [Google]

80KB, 786x912px

>>1763263
Here's an example. Vanguard is nice enough to call out the fact that they don't account for inflation.

That said, I think a lot of people are misled by these calculators, put in their 401k's 10 year average return without adjusting for inflation, and end up saving way less than they'll eventually need.

>>1763229
If you are in the 10% or 15% income tax bracket, if you sell stock after holding it for 1 year you don't pay taxes on it anyways. Nothing that great about 401ks besides taxing you if you withdraw it early.

Also us poor people don't pay taxes on dividend income either.

>>1763263
7% returns annum is oft quoted figure factors in 3% average inflation a year. Not sure if that factors in the dividend yield you get from an SP500 index fund though, which is around 3%.

>>1763270
If you're invested solely in the S&P 500, sure, but most people shift their asset allocation as they get closer to retirement. You can do more complex calculations that account for changing returns over time, but most online calculators don't support that.

Regardless, 7% was just an example. Use whatever numbers fit your situation.