hear, hear! This! Unfortunately you have to have that surplus to invest, but if you do, and you go with SPY's or other indexes, you MOST LIKELY will be able to retire... presuming you can put away money reliably every year, over 30 - 40 years. If, Like me, you had no one to teach you this shit and had to figure it out on your own in your 30's, you will still have some good nest-egg bucks, just maybe not what a smarter person who started int heir 20's would have, the secret is COMPOUNDING.
Most definitely, compounding is one of those math things that seems strange to people until they take a hard look at it. The biggest deterrent is that it takes time. But damn! it does work.
One of the things with saving is also living within your means - and as long as you understand the element of time, it's not that hard. After getting married, we kept our cars longer, furniture longer, and here's the part where I lose people - we lived in a mobile home as I was saving money for a house. Then bought a decent place with a big down payment, and paid it off over 12 years.
People don't seem to understand the concept of total outlay. In the event that it might help someone, let's assume a 500,000 dollar house with a 20 percent down payment at 5 percent interest.
Okay, so the person decides to do a 30 year mortgage. The payments are 2542 a month so over 30 years, you would have paid back 915,120 dollars.
You would have paid the bank 415,120 dollars over the 500,000 purchase price.
If you paid off the same loan at the same interest in 15 years, you would have paid back 640,440 dollars.
You would have paid the bank 140,440 dollars over the 500000 dollars, or 274,680 dollars less.
Now, imagine what you could have realized if you put that 274,680 dollars to work for you, and the fact that after 15 years, you wouldn't be paying any mortgage at all after 15 years.
You could really kick the compounding into overdrive.