Retirement planning

[Parkanzky]

Thanks. I didn't know there was a 401k Roth.

They haven't been around very long. I'm guessing six or eight years. Companies have to opt to offer them. I think it's becoming much more common as people realize the advantages and bug their employers to offer them. My wife's employer was an early-adopter and we've taken advantage of it for her from the start. About 2.5 years ago, I got a job at the same place she's at so I'm also on board now.

 

[Citydude]

They haven't been around very long. I'm guessing six or eight years. Companies have to opt to offer them. I think it's becoming much more common as people realize the advantages and bug their employers to offer them. My wife's employer was an early-adopter and we've taken advantage of it for her from the start. About 2.5 years ago, I got a job at the same place she's at so I'm also on board now.

Makes sense why I didn't know about them. Where I worked didn't offer it. Just the tax defered 401k. Thanks!

 

[MossRoad]

$1000 a month wouldn't even cover my property taxes.

We are very fortunate..... ours are about $500 per year. 1300 sq ft house, 2 bed one bath. 1 acre. It's one of the costs that would go up 4-5X if we built a new house. Just things you have to think about when considering where to live.

 

[MossRoad]

MossRoad I laughed very hard when I read the beginning of your post. here I was thinking I was the only one who would do something that just looked impossible. when my wife and I got married we had left the preacher's house [no wedding] got in my pickup and we was ridding down the road and she ask where are we going on our honey moon and I said honey where ever $13 will take us that was every penny I had to my name, she said well I guess we better go home. this is off subject but just had to mention that was 38 years ago and still going strong.

NICE!!! Here's to at least 38 more for you and your spouse! :thumbsup:

 

[MossRoad]

Thanks. I didn't know there was a 401k Roth.

It may not be available to you. Not every employer offers one. Mine just started offering ROTH version of the 401K a few months ago. Up until then, it was just traditional 401K. Check with your payroll dept., H.R., or whoever handles that where you are employed.

 

[MossRoad]

I see you already got your answer.

 

[Danny C]

It may be true that 55 is too early but if I save enough why stay at work when I can be home and still be young enough to work on the projects I don't have time for now, spend time with my kids/grandkids. I may be very wrong but I don't want to have to be at work a day longer than necessary.

Being able to work on your own terms doing the things you want to do when you want to do them is my dream. I think that's what you're saying? It could also mean not working for someone else a day longer than necessary?

 

[Danny C]

My advice is to live below your means and save 10-15% of your gross income. Most pension plans (that I know of) max out at 70% of average of your last 5 years (and sometimes best 5 years) wages. I think your pension plan should be included in that 10-15% figure. But then again, I don't know the details of your pension plan. It sounds like you're on the right path. P.S. Be ware of depreciating assets (my cryptonite) for they will consume your money faster than a divorce! lol :2cents:

 

[Danny C]

There are also ways to use your 401k saving to start your own business if that is something that interests you. PM me and I can connect you with some folks that can set that up. https://www.guidantfinancial.com/financing-solutions/401k-business-financing/

 

[Gator6x4]

The things I miss most about retirement are vacation days, holidays, comp - time, overtime and most of all "Sick Days". :laughing: :laughing: Nothing like calling a grumpy old sick man and telling him you are sick.

 

[Gator6x4]

Fidelity's rule of thumb is that you need 8x your ending salary for retirement. You'd be able to reduce that to 8x your ending salary minus your annual pension benefit.
However, that's based on the rule of thumb that you need less income in retirement. 85% of your ending income is a common figure. Personally, I think that's way low. With all the free time I'll have in retirement and our love of travel, I want access to more money than we make now.

We have Roth 401k's, which means that the money is tax-free for us at retirement. Still, we're targeting ~20x our current salary (which will probably be ~15x our ending salary). What we're doing to get there is saving extremely aggressively (maxing both Roth 401k's and putting money into a taxable investment account) until we have enough to let it go on autopilot. Then we'll cut our contributions down to the minimum required to get the maximum company match and spend like there is no tomorrow.

Might want to read this on 401 (k's) before you retire.

 

[joecoin]

My parents had six children and we all have at least four years of college. They weren't wealthy, but they were very good to us. What they did, and what I'd have done had I had children, was as follows:

1) We got a savings account as soon as we got a social security card. Gifts from relatives all went into this account from day one.
2) When we got old enough to understand the concept of money (and wanted to spend it), half of anything we got (e.g. allowance, gifts, lemonade stand profits, or pay from our jobs) went into the savings account. They'd eventually start making me make the deposits myself.
3) When time for college rolled around, we were responsible for paying for one year and they covered the rest. They helped with fixed expenses (they paid for a car and insurance, and provided room and board while I was on campus), and I worked summers and part time during the year to pay for books, gas, eating out, and eventually my room and board when I moved off campus.

Amazing, you must be my brother! Exact same circumstances, including 5 siblings. I called my dad "The Extortionist" (not to his face of course).

Only major difference is, I'm the only one without 4 years of college. I do have a 2 year degree and had several fits and starts that almost add up to 4 years. I'm the only one self employed of the 6. Do I make the most ? Nope, I have a sister who is a VP of an extremely large well know corporation. But, I have my own building, 6 full time employees and some rental property. And I lease land to the phone company that has a cell tower on it. We call that the money pump.

To tie this in with the OP, don't limit yourself to your 9 to 5 job. There are tons of opportunities out there and you can make your own break. Keep your eyes open and trust no one, especially yourself. Always get professional advice before jumping into anything.

And throw away your TV set.

 

[gsganzer]

I'm 48. Our financial advisor told my wife and I that we should plan to have $2M in savings by the time we retire.

 

[dave1949]

This decision tree and associated advice is in the current TRowePrice monthly newsletter. It's called: Prioritizing Your Contributions to Retirement Accounts.


General rules of thumb:
Save 15% or more of your income annually, including any employer contributions.
If you have an employer match to a retirement savings account, use it up to the maximum matching amount.

1. Do Roth account contributions make sense for you?
YES if: You are under age 50 and expect your tax bracket to decrease significantly in retirement. Go To 2.
NO: First contribute the maximum to a Traditional 401(k), then contribute the maximum to a Traditional IRA account. The End.

2. If YES to 1. above, does your company offer a Roth option for its 401(k) plan?
YES: Maximize your contribution to the Roth 401(k) account up to the IRS limit. ($18K in 2015, $24K in 2015 if you reach age 50 or over in 2015.) Go to 3.

(Roth 401(k) plans are subject to RMDs beginning at age 70-1/2. Once you leave your employer, and are not yet 70-1/2, Roth accounts can be rolled over to a Roth IRA which do not have RMD requirements.)

NO: Go to 3.

3. Are you eligible to contribute to a Roth IRA?
(For 2015: AGI of $116K or less if single, AGI of $183K or less if married filing jointly.)

YES:
If your employer offers a Roth 410(k)
then first: contribute the maximum to a Roth 401(k), second: contribute the maximum to a Roth IRA
else (no Roth 401(k) offered) first: contribute enough to a Traditional 401(k) to earn any company match, second: contribute fully to a Roth IRA account, third: direct any remaining contributions to the Traditional 401(k).

NO: Contribute the maximum to your Traditional 401(k), then contribute the maximum to a Traditional IRA.

 

[ultrarunner]

Seems like most retirement planning revolves around pension, social security and equities/bonds/annuities.

I know quite a few seniors that own rental property... not in my family... just friends.

Not much is said about owning an income producing asset that might also provide an inflation hedge or that can be sold for an income stream.

I bought 3 properties where the owners were retiring and carried the note... it was a win/win... they get above market interest and I could buy a property that needed some work at a price that made sense.

 

[dave1949]

I wouldn't touch being a landlord around here with a ten foot pole. I think the value of that depends a lot on the local market.

 

[ultrarunner]

Depends... I still have some residential and agree it is a job.

On the other hand I have exchanged into some commercial and R & D property that is a dream in comparison...

Know quite a few that simply will not own anything with a bed... period. I can't blame them.

Call me skeptical of entrusting my financial future to banks, brokers and insurance companies.

 

[Steppenwolfe]

Being able to work on your own terms doing the things you want to do when you want to do them is my dream. I think that's what you're saying? It could also mean not working for someone else a day longer than necessary?

That is a great point. I work 8 to 9 months, hard core, then play around the rest. Let's me make the money I want and still enjoy life. Hopefully can do that another 10 years, then only work 5 to six months a year. The thought of retiring isn't a priority, I really enjoy my career.

 

[RobA]

Let me see...
My 1913 Model T cost $500 when new... today it is worth about 10k on a good day...
So it is worth about 20x more in today's dollars.... or 2000 percent more?
Looks like my old Model T turned out to be an OK investment.
Now a 1913 $20 gold piece is $1200 +/- today and has my old Model T beat by a longshot...

The Dow Jones Industrial average is up about 32,300% for the same period...

 

[dave1949]

Depends... I still have some residential and agree it is a job.

On the other hand I have exchanged into some commercial and R & D property that is a dream in comparison...

Know quite a few that simply will not own anything with a bed... period. I can't blame them.

Call me skeptical of entrusting my financial future to banks, brokers and insurance companies.

I say that because a person can buy a livable house around here in a safe neighborhood, (everyone attends the same schools) for $70K-$80K, monthly mortgage payment under $400. If people can't afford that, how can they afford the $600/month minimum (guessing, probably low) I would have to rent it for? $80K @ 4.5% interest is $3,600/year with no tenants or midnight calls.

I see used doublewides setup and rented on the outskirts of town by landlords, they don't attract the sort of people I would like to rent to.