Why aren't we all getting rich from compound interest?

This doesn't need to be a 20 minute video.

While money in a bank does technically grow exponentially, the real value (what you can buy with that money) of the account grows slower than the economy.

Meaning each year you can actually buy less with the money you keep in a bank account. This is why retirement accounts are typically tied to the stock market, to try to tie their growth more to the economy.

Most of the video applies to a Millennial and younger audience. These generations got screwed on the necessary components for compounding to work. Forced to pay for exponentially more expensive education than generations prior put them deep into debt right out of the gate. Further, they entered the workforce during the Great Recession which forever put them 10 to 15 years behind in earning power. Lastly, saddled with the two other things, it prevented many from buying homes which appreciate in value.

In short, the younger generations got totally screwed. The compound interest promise still works for X-ers and above.

I agree with the very ending premise: We need to massively tax the ultrawealthy.

He's talking about his grandparents ending up at 0 or below as well. Whatever we manage to save before retirement isn't adequate to pay for elder care (unless you're lucky enough to drop dead randomly), and most of us can't build generational wealth to pass on. Basically the wealthy will end up buying whatever assets you have accrued over your lifetime.

That's because what it takes is time, a resource we are all limited on. The only way to accelerate it is to have a head start like already being rich or having money seeded from family or have enough spare income early on to front load it for growth. Instead, most start with nothing, make the least when we're young, often not being able to even start saving and accruing interest until we're older, and when we make the most money is near our retirement when that money has the least amount of time to accrue interest before we start eating into it to live off of. If you front load it with a lot of money you could line just off interest alone.

No amount of time will make you wealthy through compound interest with the current economic system.

While your money does grow in a savings account, the rate of growth is lower than the economy or real value of the money.

Just think about what a million dollars could have bought you in the 80s vs 00s vs now.
- Yes your interest does also need to outpace inflation. Not seen a savings account that pays interest of anything like that right now. Nothing low risk is keeping up with inflation.
That’s because what it takes is time, a resource we are all limited on.

And patience, a quality most people lack.
- Systemic failures aren't character flaws.

I don't want to watch the 20 minute video but yeah, I started 30 years ago when it was possible to pay rent and put aside a little. I'm no longer putting any aside, my $75k a year job just keeps the lights on now

Millionaire doesn't even feel very rich these days. I can't retire right now but I'm worth a million bucks

Could you elaborate on that? At $1 million, that would be your yearly salary for over 13 years. At 5% yearly interest (from something like Discover) would generate $50k/yr. Why would you not be able to retire?
- lol. 5% interest is a rarity now. The moment it starts approaching that, interest rates get cut. It never lasts. Discover is currently at 3.7%.
- Kids.
  
  Plus, $350k is just equity in my house.
  
  edit: I guess I shortchanged my wife in that statement. We are full partners so half of it is hers
- Could you elaborate on that? At $1 million, that would be your yearly salary for over 13 years. At 5% yearly interest (from something like Discover) would generate $50k/yr. Why would you not be able to retire?
  
  I'm not the poster you're responding to, but I've know the same math they used.
  
  Here's the flaws in that argument. 5% interest is possible today in some money market accounts, but there was about a 17 year gap between now and the last time it was 5% was in 2007. These interest rates have a high correlation to Treasury Bills. So you can't count on getting that 5% on the regular over the 40 years of your working life. Here's a graph of the T-Bills yields over time.
  
  Even if you could, inflation will eat away at the value of your money especially over decades. So while $50k/year sounds like a decent amount of income in retirement, you'll need substantially more money to maintain the same buying power. Example:
  
  "$50,000 in 1995 is equivalent in purchasing power to about $104,222.77 today, an increase of $54,222.77 over 30 years. The dollar had an average inflation rate of 2.48% per year between 1995 and today, producing a cumulative price increase of 108.45%." source
  
  And that example is only over 30 years.
  
  That poster is right. Being a millionaire these days doesn't feel rich. This is especially true with the current administration attacking the social safety net with new restrictions on Medicaid and now Social Security is in his crosshairs. Lots and LOTS of us are going to be totally screwed in retirement. Even those that have enough for themselves and their immediate family are likely going to be sharing that with a close circle of extended family or friends to keep them out of starvation and exposure to the elements from poverty. None of us except the ultra wealthy are going to have a safe and happy retirement.
- I have not gotten anywhere near 5% interest the last 15 years. Best I did was around 3% and there have even been years with negative interest

I need compounds for there to be interest.

Gary's Economics is an incredible channel