04-18-2008, 08:59 AM | #41 (permalink) | |
Young Crumudgeon
Location: Canada
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Unfortunately I don't have the option of running to mummy, either. It's not always bad planning. Sometimes it's just bad circumstances.
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I wake up in the morning more tired than before I slept I get through cryin' and I'm sadder than before I wept I get through thinkin' now, and the thoughts have left my head I get through speakin' and I can't remember, not a word that I said - Ben Harper, Show Me A Little Shame |
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04-18-2008, 09:04 AM | #42 (permalink) | |
I Confess a Shiver
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... As a broke-ass middle class college student who spent two tours in the desert... I feel the pain of sending $5k to a place I won't see for another four decades, but I know that in the long run it'll keep me fat and happy when I lose bladder control and Viagra is chased every morning by a Centrum Silver. Sadly, the poor will still be poor. Government programs should take care of them, instead of trying to take care of everybody, including the haves who had-it back in the day instead of saving it like they should have. Last edited by Plan9; 04-18-2008 at 09:09 AM.. |
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04-18-2008, 09:10 AM | #43 (permalink) |
Addict
Location: Where the music's loudest
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I have just finished reading Wealthbuilding by Kurt Rosentreter. It's an excellent book on how to work with financial experts to create your financial plan.
An interesting distinction made in the books was defensive versus offensive debt. Debt is okay if it builds your net worth, such as maximizing your RRSP contribution. I am definitely inspired to visit a financial planner soon. It's unfortunate that the importance of financial planner was not stressed earlier in my generation's life.
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Where there is doubt there is freedom. |
04-18-2008, 07:27 PM | #44 (permalink) | ||
warrior bodhisattva
Super Moderator
Location: East-central Canada
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* * * * * CandleInTheDark, I work for the company that published that book (just before my time). The book isn't very useful to me at this point, as I would classify as the income increasing, debt reducing category it talks about. I haven't read it thoroughly for that reason.
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Knowing that death is certain and that the time of death is uncertain, what's the most important thing? —Bhikkhuni Pema Chödrön Humankind cannot bear very much reality. —From "Burnt Norton," Four Quartets (1936), T. S. Eliot |
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04-18-2008, 08:24 PM | #45 (permalink) | |
Junkie
Location: Fort Worth, TX
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"Smite the rocks with the rod of knowledge, and fountains of unstinted wealth will gush forth." - Ashbel Smith as he laid the first cornerstone of the University of Texas |
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04-18-2008, 08:48 PM | #46 (permalink) | |
... a sort of licensed troubleshooter.
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Wait, how old are you? |
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04-18-2008, 09:53 PM | #47 (permalink) |
warrior bodhisattva
Super Moderator
Location: East-central Canada
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There's a question I should ask you, willravel:
Why would you have $4m sitting in cash and only $1.5m in investments?
__________________
Knowing that death is certain and that the time of death is uncertain, what's the most important thing? —Bhikkhuni Pema Chödrön Humankind cannot bear very much reality. —From "Burnt Norton," Four Quartets (1936), T. S. Eliot |
04-19-2008, 03:19 AM | #48 (permalink) | |
Junkie
Location: Fort Worth, TX
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"Smite the rocks with the rod of knowledge, and fountains of unstinted wealth will gush forth." - Ashbel Smith as he laid the first cornerstone of the University of Texas |
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04-19-2008, 03:24 AM | #49 (permalink) | ||
Tilted Cat Head
Administrator
Location: Manhattan, NY
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I don't care if you are black, white, purple, green, Chinese, Japanese, Korean, hippie, cop, bum, admin, user, English, Irish, French, Catholic, Protestant, Jewish, Buddhist, Muslim, indian, cowboy, tall, short, fat, skinny, emo, punk, mod, rocker, straight, gay, lesbian, jock, nerd, geek, Democrat, Republican, Libertarian, Independent, driver, pedestrian, or bicyclist, either you're an asshole or you're not. Last edited by Cynthetiq; 04-19-2008 at 03:26 AM.. Reason: Automerged Doublepost |
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04-19-2008, 07:02 AM | #50 (permalink) | |
... a sort of licensed troubleshooter.
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04-19-2008, 09:36 AM | #54 (permalink) | |
warrior bodhisattva
Super Moderator
Location: East-central Canada
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Having that much cash sitting in a savings account will only earn you around $100,000/year (assuming 2.5%, though even a more generous 3.5+% would only earn around $150,000). Your portfolio of $1.5m would reasonably earn you around $90,000 to $100,000/year (assuming around 6%). This is quite a bit shy of your desired $330,000/year. How did you do your math? If I were your advisor, I'd tell you to do this with your assets: 10% cash, 25% stocks, 65% bonds This is rather conservative. And depending on the bond market, you might want to shift some of that into stocks. An alternative shift in a poorly performing bond market (due to inflation) could be: 10% cash, 35% stocks, 55% bonds Still rather conservative. The bonds would be guaranteed income, and the stocks would protect you from inflation. I would suggest some foreign ownership too if you haven't considered that. I would divy up your cash holdings with a savings account, CDs, and treasury bills. This 10% would still be $550,000, which would be far more than one year's income if you consider your $330,000/year. Isn't that more than enough for emergencies? When you have bonds that are continually becoming due, you will always have cash to move around. EDIT: There are those who would argue that 10% in cash is too high, that 6% to 8% would be more ideal. What say you?
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Knowing that death is certain and that the time of death is uncertain, what's the most important thing? —Bhikkhuni Pema Chödrön Humankind cannot bear very much reality. —From "Burnt Norton," Four Quartets (1936), T. S. Eliot Last edited by Baraka_Guru; 04-19-2008 at 09:43 AM.. |
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04-19-2008, 09:46 AM | #55 (permalink) | |||
... a sort of licensed troubleshooter.
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04-19-2008, 09:54 AM | #56 (permalink) | |
warrior bodhisattva
Super Moderator
Location: East-central Canada
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Anyway, where you'd be sitting in your scenario would work, in theory. But how will you climb into that position by retirement without a less cash-oriented strategy? What is your plan?
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Knowing that death is certain and that the time of death is uncertain, what's the most important thing? —Bhikkhuni Pema Chödrön Humankind cannot bear very much reality. —From "Burnt Norton," Four Quartets (1936), T. S. Eliot |
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04-19-2008, 10:09 AM | #57 (permalink) | ||
... a sort of licensed troubleshooter.
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I know that either by chance or by ability I've been able to find myself in relatively lucrative positions since I graduated. Considering that I'm going to be pursuing a career in the law in the next few years, I believe I can make a decent living between maybe 32 and 70. I already know a lot of people in the business now, and they've suggested that while I'll probably made as much after I graduate as I make now (about $80k a year), it's likely to increase a great deal if I follow a few bits of advice I've been given. A good friend of mine who has his own private practice earns around $500k a year. I'm hoping to make about $250k (or it's equivalent based on inflation) by 45-50. If I can maintain that income for a solid 15 years or so, I should be fine. |
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04-19-2008, 10:25 AM | #58 (permalink) | |
warrior bodhisattva
Super Moderator
Location: East-central Canada
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*Baraka_Guru kneels down and begins bashing his head on the floor for having chosen a career based on his interest in the arts, thus ignoring his seemingly natural ability for business mathematics.*
__________________
Knowing that death is certain and that the time of death is uncertain, what's the most important thing? —Bhikkhuni Pema Chödrön Humankind cannot bear very much reality. —From "Burnt Norton," Four Quartets (1936), T. S. Eliot |
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04-19-2008, 10:32 AM | #59 (permalink) | |
Young Crumudgeon
Location: Canada
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__________________
I wake up in the morning more tired than before I slept I get through cryin' and I'm sadder than before I wept I get through thinkin' now, and the thoughts have left my head I get through speakin' and I can't remember, not a word that I said - Ben Harper, Show Me A Little Shame |
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04-19-2008, 10:36 AM | #60 (permalink) | |
warrior bodhisattva
Super Moderator
Location: East-central Canada
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__________________
Knowing that death is certain and that the time of death is uncertain, what's the most important thing? —Bhikkhuni Pema Chödrön Humankind cannot bear very much reality. —From "Burnt Norton," Four Quartets (1936), T. S. Eliot |
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04-19-2008, 10:43 AM | #61 (permalink) |
Eat your vegetables
Super Moderator
Location: Arabidopsis-ville
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I'm working to develop a lifestyle that allows me to live far below my means.
The goal is to invest more than half of my income for the next twenty-five years, to no longer depend upon a steady income age 50.
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"Sometimes I have to remember that things are brought to me for a reason, either for my own lessons or for the benefit of others." Cynthetiq "violence is no more or less real than non-violence." roachboy |
04-19-2008, 10:54 AM | #62 (permalink) | |
... a sort of licensed troubleshooter.
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Besides, I'll be playing piano long after I stop practicing law, assuming all goes to plan. |
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04-19-2008, 10:55 AM | #63 (permalink) | |
Young Crumudgeon
Location: Canada
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I already do live simply and am comfortable on an income of $20 000 per year. I plan on getting an education and advancing into a proper career path in the near future, at which time I will hopefully be able to bring that up; should I ever pass from the noble bachelor ranks I expect to require a family income of at least $50 000 and preferably closer to $100 000 per year, and will need to accommodate that. I honestly haven't even considered retirement planning at this point. Thinking that far into the future is one of the many luxuries my simple lifestyle does not afford me.
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I wake up in the morning more tired than before I slept I get through cryin' and I'm sadder than before I wept I get through thinkin' now, and the thoughts have left my head I get through speakin' and I can't remember, not a word that I said - Ben Harper, Show Me A Little Shame |
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04-19-2008, 11:06 AM | #64 (permalink) | |
warrior bodhisattva
Super Moderator
Location: East-central Canada
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Mind you, as an editor, I can reasonably make between $80,000 and $100,000 in my latter years if I play my cards right (i.e. get some long-term corporate clients). But that will take a while. I'd be lucky to make between $30,000 and $40,000 in the low end for now, especially if much of my income is dependent on freelancing. It's difficult to get a cushy, full-time, in-house gig, especially in Canada. I'd be more financially sound if I followed my head instead of my heart and became a managerial accountant or market forecaster or something. But maybe you're right. Maybe I can do both. It just seems that now I've essentially chosen this path, that other path seems to have barriers to entry.
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Knowing that death is certain and that the time of death is uncertain, what's the most important thing? —Bhikkhuni Pema Chödrön Humankind cannot bear very much reality. —From "Burnt Norton," Four Quartets (1936), T. S. Eliot |
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04-19-2008, 11:54 AM | #65 (permalink) |
... a sort of licensed troubleshooter.
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Look at it this way. I already have a degree from a decent school and a career, and I'm shifting by direction drastically in the next few years. It's never too late to forge a new path. It just takes a lot of planning and a lot of drive, both of which I'm sure you're capable of.
"At the end of the day, just do what makes you happy so long as it's not rape or something." - Willravel, 2008 |
04-19-2008, 01:05 PM | #66 (permalink) | ||
immoral minority
Location: Back in Ohio
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As a single guy, I have done this on $55,000 year before taxes. $12,000 goes to mortgage, $3,000 prop taxes & HOA (no income tax here), $2500 food, $500 utilities, $300 cell phone, $20 Linux DVR, $0 OTA antenna, $0 internet. Ok, I don't have MS Money right now to tell me the exact figures and everything else I spend money on. But most things I have bought before and don't need to buy again. It is definitely possible and I live a pretty good lifestyle right now. I don't need to change anything. But part of this planning is becoming self-sufficient and not relying on the government or corporations. But, I was able to buy a really nice house for $142,000. And I will have enough saved up in 2-3 years to pay it off just out of my savings. I already own 25% of it, and have a possible 40% in savings/stocks/401k right now. But it makes a big difference where you live and how much you can make there as to the possibility of retiring. Last edited by ASU2003; 04-19-2008 at 01:09 PM.. |
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04-19-2008, 08:08 PM | #67 (permalink) | ||
Eat your vegetables
Super Moderator
Location: Arabidopsis-ville
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I currently use about $5,000/year and I live in yuppie Berkeley. The school hands me $6,000- $10,000/semester (grants are random). People tell me it's not humanly possible to live off so little here. I laugh. I do plan on having a child. I also plan on living the next 5 years in Ohio, where I will be earning $25,000/year (teaching fellowship, grad school). Looking at cost of living... and the fact that Tt will be contributing to the household... Quote:
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"Sometimes I have to remember that things are brought to me for a reason, either for my own lessons or for the benefit of others." Cynthetiq "violence is no more or less real than non-violence." roachboy Last edited by genuinegirly; 04-19-2008 at 08:14 PM.. |
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04-19-2008, 08:53 PM | #68 (permalink) | |
Young Crumudgeon
Location: Canada
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As I said, I live fairly simply myself. I have a small bachelor apartment, which is cheap to rent and also cheap to heat. I don't drive anywhere that's less than two miles from home. I don't eat out very often, and my only luxuries are my musical instruments (which I don't include in regular budgeting, since they're a special type of expenditure). At this level of income, I don't have enough money to save any significant amount for retirement funds. I can and do save, but my savings exist to cover more immediate concerns. As I said, I don't have the luxury of thinking forty years or more into the future right now. Therefore, if I wanted to put away 50% of my income and maintain my admittedly simplistic lifestyle, I would need to make at least $40 000 per year. All of this assumes just myself to support. When you're single and in your twenties it's easy to get by on a relatively low income. Once you hit your thirties and start a family things get more complicated. Children are a major expense, plus there's mortgage payments and car payments and little league and education funds and all the other sundries that go along with having a family. My estimate of $60 000 - $90 000 per year being the minimum income level necessary for your strategy assumes that supporting a family will require a minimum household income of $30 000 per year, and at least $45 000 for a comfortable 'average' lifestyle. Consider ASU2003's numbers; those are for a single (I'm assuming relatively young) man with no dependants. He's accounted for $20 000, and doesn't have any numbers posted for a car, heating, electricity, water or any of the other 'real world' expenses that seem to get discounted so often. Add those in, plus the cost of dependants, then double it so that you can invest 'more than half' of your income and suddenly you've got a pretty big number. I am dealing strictly in household income, here and anywhere else in this thread. In regards to spouses, boyfriends or any other sources of income, I will simply point out that proper strategic planning dictates relying on those other people as little as possible. That revenue stream may not always be there, and it would be best if you treated it that way.
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I wake up in the morning more tired than before I slept I get through cryin' and I'm sadder than before I wept I get through thinkin' now, and the thoughts have left my head I get through speakin' and I can't remember, not a word that I said - Ben Harper, Show Me A Little Shame |
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04-19-2008, 09:05 PM | #70 (permalink) |
Tilted Cat Head
Administrator
Location: Manhattan, NY
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but you know martin.. .there are people who do raise families on less than $40,000 a year. I don't know how they do it, I don't get it myself, but it is possible and it can and does happen.
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I don't care if you are black, white, purple, green, Chinese, Japanese, Korean, hippie, cop, bum, admin, user, English, Irish, French, Catholic, Protestant, Jewish, Buddhist, Muslim, indian, cowboy, tall, short, fat, skinny, emo, punk, mod, rocker, straight, gay, lesbian, jock, nerd, geek, Democrat, Republican, Libertarian, Independent, driver, pedestrian, or bicyclist, either you're an asshole or you're not. |
04-19-2008, 09:11 PM | #71 (permalink) | |
Eat your vegetables
Super Moderator
Location: Arabidopsis-ville
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Martian, I appreciate your concern. Rest assured, I plan to have a million in an account before I retire. Please don't preach about what you think I will spend. As I said, people assume it's not humanly possible to live with expenses as low as we keep them. It's a mix of bargain hunting, coupon clipping, community living, hand-me-downs, freecycle, lentils, beans, rice, potatoes, and low personal needs.
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My sister is raising her family (4 kids) on about $30,000/year, in Southern California. They want for nothing, except maybe a little more space in their home.
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"Sometimes I have to remember that things are brought to me for a reason, either for my own lessons or for the benefit of others." Cynthetiq "violence is no more or less real than non-violence." roachboy Last edited by genuinegirly; 04-19-2008 at 09:19 PM.. |
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04-19-2008, 10:21 PM | #72 (permalink) | ||
The sky calls to us ...
Super Moderator
Location: CT
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I will be starting a Roth IRA and 401k when I get a real job after graduation and we don't have to make monthly decisions of who to borrow money from and whether power, water, or phone will be shut off for a few days until another paycheck comes. I consider it an investment in the overly optimistic hope that my generation will get old rather than annihilating the human race. Either way I'll be set.
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04-20-2008, 05:51 AM | #73 (permalink) | |
immoral minority
Location: Back in Ohio
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My car is 13 years old, I paid it off a long time ago, and I don't need a new car until I get a reliable basic electric car. I need to add that my car insurance is $260/year. I will say that I pay $80/month ($960/year tax free) for healthcare/dental insurance (HSA). So, if I don't use it, I still get to carry over money from year to year. For three years, I tracked every penny, but I've been slacking in the past year because a lot of stuff was happening in my life. But, I know I am still made more than I spent. |
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04-20-2008, 06:31 AM | #74 (permalink) | |
warrior bodhisattva
Super Moderator
Location: East-central Canada
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It really does matter where one lives. I could cut my rent in half by living in a small town, but I'd likely need to find another career path.
__________________
Knowing that death is certain and that the time of death is uncertain, what's the most important thing? —Bhikkhuni Pema Chödrön Humankind cannot bear very much reality. —From "Burnt Norton," Four Quartets (1936), T. S. Eliot |
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04-20-2008, 08:01 AM | #75 (permalink) | |
Eat your vegetables
Super Moderator
Location: Arabidopsis-ville
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Health insurance, through some employers, is free to workers and their family. 30 hours/week working for the local school district will throw free health insurance your way. You just need to be tuned into these kinds of opportunities. I feel this is becoming a threadjack. PM me if you feel like continuing the conversation.
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"Sometimes I have to remember that things are brought to me for a reason, either for my own lessons or for the benefit of others." Cynthetiq "violence is no more or less real than non-violence." roachboy Last edited by genuinegirly; 04-20-2008 at 08:43 AM.. |
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04-20-2008, 09:03 AM | #76 (permalink) | |
Crazy
Location: West of Denver
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We're currently working on it and have been seriously cutting back for a couple years. I'd love to hear a detailed explanation of how you are so frugal.
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smoore |
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04-20-2008, 09:48 AM | #77 (permalink) | |
warrior bodhisattva
Super Moderator
Location: East-central Canada
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Knowing that death is certain and that the time of death is uncertain, what's the most important thing? —Bhikkhuni Pema Chödrön Humankind cannot bear very much reality. —From "Burnt Norton," Four Quartets (1936), T. S. Eliot |
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04-20-2008, 05:02 PM | #78 (permalink) | |
Upright
Location: Lesbian trapped in a man's body
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The SS "trust fund" (a gallows-humor name if there ever was one) has been raided annually for decades--that will be hard to blame on the Bush administration. dc_dux got it right--by the time the piper comes calling, those of us who have contributed will be told that we don't "need" our money back. Of course, it won't matter, because there won't be any money to give back, since it is presently being given to many people who haven't contributed any of their earnings to it. That is an unsustainable business plan if there ever was one. The biggest question for older Americans will be: Should they begin collecting SS as early as possible, in order to get SOME of their money back, or wait utnil such time as their payments would be maximized, and "trust the government." I'm not expecting a dime back, and yes, I'm angry about it. |
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04-22-2008, 08:09 AM | #79 (permalink) |
Sauce Puppet
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My idea of retirement depends on who I am with. If I'm happily with someone my retirement will be a mesh of what she likes and I like. I imagine I would become more of a consultant, and still work, but more and more would travel for pleasure and have longer periods of time off between working. If I'm single. A bike, a journal, and a sense of adventure will take me wherever I want to go.
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In the Absence of Information People Make Things Up. |
04-22-2008, 08:38 AM | #80 (permalink) |
Wehret Den Anfängen!
Location: Ontario, Canada
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X$ per year, at Y% real interest, both growing at inflation as well...
Define K = 100%+Y% X * (K^0 + K^1 + K^2 + ... + K^n) if you do this for K years, = X * [K^(n+1) - 1] / (K-1) Say 3% real return, 10,000$ per year, 30 years: 10,000 * [1.5] / [.03] = 1/2 a million dollars in today's money. Increase K to 1.04%: 600,000$ in today's money. K to 1.05%: 700,000$ in today's money. K to 1.06%: 850,000$ in today's money. Every 1,000$ put in today -> 2500$/3300$/4500$/6000$ in 31 years. (3%/4%/5%/6% real return) Increase savings from 10,000$ to 20,000$ per year: double the result. Boost savings period to 40 years: (10000$ per year) 780,000$ @ 3% 1,000,000$ @ 4% 1,250,000$ @ 5% 1,650,000$ @ 6% At 1,000,000$ (todays dollars -- in 30 years @ 3% inflation, that's 2.5 million then)... At 3% return with a 40 year "run to zero" target, you can manage 42,000$ per year (inflation adjusted). (roughly the same equations) So aiming for 1 million dollars in liquid savings for a 40 year retirement-before-death doesn't leave you destitute. Half half a million? ~21,000$ per year over 40 years. 1/4 a million? ~10,500$ per year over 40 years. Want to hit that 1 million dollar savings target? Let's be cautious and assume 4% real return (after inflation). Aiming for a 1 million dollar nest egg: Over 40 years: 10,000$ per year, -1000$/year every ~20k in savings you have invested Over 30 years: 16,500$ per year, -1100$/year every ~20k in savings you have invested. Over 20 years: 31,000$ per year, -1400$/year every ~20k in savings you have invested. Over 10 years: 74,000$ per year, -2300$/year every ~20k in savings you have invested. Note that there is the additional, hard problem of managing a consistent return of 4% over inflation when you need it. As an example, investing all of your money in one country is a bad idea, both due to local economic problems and currency effects. A simple version of some of the above math: Let C(x,y) be the compound equation: (x^(y+1) - 1) / (x-1) Then we have: R * C(1.04, 30) * 1.03^40 = I * C(1.03,40) for a 30 year savings period @ 4% and a 40 year retirement period. R * 193.5 = I * 78.66 R * 2.46 = I If you already have savings "S", it becomes: [R * C(1.04, 30) + S*1.04^30] * 1.03^40 = I * C(1.03,40) You can change the real returns pre and post-retirement, the periods of each, etc with relative ease.
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Last edited by JHVH : 10-29-4004 BC at 09:00 PM. Reason: Time for a rest. Last edited by Yakk; 04-22-2008 at 09:04 AM.. |
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