Generation X and Y: Do you plan on retiring?
 

http://redwoodage.com/content/view/134362/49

I plan on retiring using 100% of my own money. I'm not counting on a government to help me at all, considering how quickly and Social Security was derailed by a stupid administration. I'll probably have to retire at 70, depending on my health (the healthier I am, the longer I have to work). I'll likely live into my late 80s, which means 15 years of change. That means about $4m in the bank and maybe $1.5m in investments (adjusting for projected inflation).

I can't imagine wanting to retire...unless I just give up on life and accept a career I hate.

What about traveling the world and stuff?

That's not incompatible with a good career.

I have no idea when I will be able to retire. I still have at least 25 years to save enough for a retirement at 65. That said, I don't know what I will be doing in two years, let alone 25. It isn't like our generation is a one career for life generation.

Not planning on it. Planning FOR it but not planning ON it. I have very little actually saved, I seriously screwed up 2 years ago (I'm no businessman!) and had to start at zero again. Not quite bankruptcy but I might as well have.

I have a little metal in a safety deposit box and that's all. Not counting on any entitlement programs, that's for sure. Want to build a sustainable and secure house somewhere cheap (South Dakota maybe) and winterize it then do the semi-retirement thing in about 10 years, maybe fulltime RV around the continent, maybe get jobs on cruise ships and drop off at ports we want to see, don't know yet.

I'll always do something that will at least be a self sustaining hobby, maybe cars or airplanes, maybe art-ish metalwork to sell to tourists, dunno. Might just sell painted seashells on a beach somewhere.

I'll be working myself into the grave.

no.

I plan on having a passive income where in my job is to go to the mailbox and open envelopes with checks in them, if I even have to do that. The best will just be to look at my online banking and verify that money transfers have been completed and credited.

I alread derive some of my income in this manner. My goal is to grow that more over the next few years.

That's true. So really, no retirement at all?

Dude, you must love your job. :thumbsup:

Soo... every administration since FDR counts as one?

As for me I'm putting away 10%, with a matching 5% into my 401k. I don't think I'll have too much of a problem... Social Security will be nothing more than cake icing barring any economic collapse.

Discounting Clinton(1?), every president since and including Grampa Ronald, but I'd really rather not have this thread be about SS. I'm a uniter (in that we all have to deal with this reality eventually)!
I dunno about 10% a year. Assuming one makes $60k a year, that's $60k saved every ten years from now until you're in your mid 60s (let's say 40 years, right?). That's only $240k + $401k + maybe some SS. Is that going to be enough?

I love the job I'm working towards, although I'm not there yet.

That's awesome. All I can say is best of luck and enjoy it when you get there.

Me? I've gotta go back to school to get my dream job.

SS is already a ponzi scheme and it's only going to get worse. I"m already an old fart (I turn 49 tomorrow) but I'm not expecting to get SS. So I'm not retiring. I'll keep fighting until they take me out of my office feet first.

Being an old, stubborn attorney.... you could be Denny Crane! :thumbsup:

SS isn't dead yet, and both Obama and Clinton are interested in keeping it alive. That'll probably last you at least to 57. If we get a few liberals in office in a row, it might just last you. Still, in the interest of pragmatism it'd certainly be best to have a nest egg.

Me being 24 (the tail end of genx or the beginning of gen y?), though, means the retirement time is slightly farther off, and it's even less certain.

I'm not even thinking what the government will do for me. I'm powerless in that regard, so why fret?

I have a good 30 or 40 years until retirement (I think), but the next 5 to 10 years is debt-repayment/income increasing mode for me.

That gives me 20 to 35 years for wealth building. I have the know-how, just not the resources at the moment. I have basic means. I think I can do it.

Compound interest can either be your best friend or a millstone around your neck. I intend to be a value investor when the time comes. I've edited several books on personal finance and investing, and I'm currently reading Benjamin Graham's Intelligent Investor. I'm learning bucketloads. I'll be ready.

Stocks, bonds, cash. These are your tools; use them wisely.

This is easily the most scary or most absurd thing I've seen you type. Are you going to unite through force or consensus?

I will have no problem retiring at 50 if I continue at my current lifestyle. I have run out of stuff to buy except for necessities. If I do buy something, it will be electric car parts to build an electric truck that could last 50 years. Add in some solar panels to reduce my monthly bills some more and if I own my home outright ($110k left, 29.5 more years to pay). The only thing I will need to pay for in retirement is property taxes and some other normal stuff.

I think the keys to being able to retire is living a manageable lifestyle, being self-sufficient and debt-free. I mean right now, I save around $20k/year probably which will last 3 or 4 years of basic expenses, and I make a lot of the stuff I need. Unless the currency goes to hell, which it probably will it looks like, I will be fine. Even if the currency goes down a lot, I still should be ok.

We're all in the same boat. SS is unsure, and the economy is a problem. Retirement for people of my generation is a serious issue right now because of uncertainty. That concern crosses party lines.

i'm working towards retirement by 34 at this rate. that said, i'll still do the same things then as now as far as 'work' goes...i just hope to not do it so hardcore for the money :)

I did not receive any sort of education that was relevant to dealing with money, or banking, or stocks, or investments, or the legal system, there are lots of flaws in public educations curriculum. (i think instead of rehashing different kinds of advanced math/making you write extra long essays they should have been pushing these kind of "real world" success items)

I still don't know wtf to do.

in fact the only information I have is that I should be making more money than I am if i want to make enough to retire since i don't make enough over what I spend to put in to savings really.

So I can't say that I plan on it.

I'm going to make sure I stay good friends with Baraka, then reap all the benefits. I'm going to be that fun loving, scruffy, wise-cracking, care-free (played by Robert Downey Jr. when they make the movie of my life) friend who sneaks into the exclusive country club where Baraka is a member. We'll muse on the strange coincidences existence brings us on this crazy ride called "life," then I'll ask to borrow money before security chases me across the the golf course to a jump blues soundtrack.

Seriously, though, I am still worried about getting some initial property, let alone retiring. There are really two questions here:

1. Do we think we're secure enough to stop working for income?

2. Do we want to stop our vocation when we hit a certain age?

I want to be making music for the rest of my life, so my answer to question one would be NO, but to question two would be NO.

My plans for retirement are going to depend entirely upon where I end up career-wise. If I ever figure out a way to make money off of my music, my answer will be identical to aberkok's (except for the sponging off Baraka_Guru thing). If I end up somewhere else I'll probably want to retire eventually, and will have to start planning for it.

Thinking about retirement is a luxury given to those who have settled on a career and have enough disposable income to save for it. I meet neither criterion.

Does suicide by cop count?

I find it funny people who support social programs like social security are looking out for their own retirement. 'I find your lack of faith disturbing' :P

Can't we just end the ponzi scheme and let people handle their own money?

I have no plan to retire. Currently the government won't let me keep enough of my own money to pay for what I need to now, let alone the future. Additionally, I have no faith the money I put into social security will ever come back to me. How awesome is this?

I have faith in Social Security. I have no doubt that it will be there when I retire, which could be anywhere from 10-20 years from now.....since its projected to be fully funded through 2040.

I have also contributed to a private personal retirement fund for 25 years, with matching funds from employers, so SS will only be a very small percentage of my retirement income. I also wouldnt be upset if SS became means tested and I got less then I put in.

And after the baby boomers like me go to a better place, SS will be back on track with contributions meeting payouts....and its purpose to serve as a safety net will continue for those who are unwilling or unable to plan for their retirement.

I'm looking forward to retirement.....lots of things I would like to do.

Precisely. As I get older, I see that the stuff I want is mainly for experiences and for gratifying other desires, not to get STUFF. I want to give more to charity, I want to spend more time with my family -- more than anything, I want to have time. Not just more time, but better time. Time to read, time to learn, time to write, time to travel. Oh yeah, and time to play golf! :D

I don't need fancy cars or fancy clothes, though it pleases me to give my wife nice things; thankfully she is a "quality over quantity" person (what Ayn Rand, bless her soul, called the wealth of selection rather than accumulation). I do want to be able to support causes I think are important, and money would help with that.

That's the general feeling I get from most baby boomers. They are just looking out for themselves and want to ensure they get their cut before it all goes to hell. My parents don't care that Social Security is inept and immoral, they just want their check to be there when they get old. Baby boomers haven't done much to make this country a better place and are leaving quite a mess for gen x and y.

Enjoy your social security check, unfortunately I'll be footing your bill and likely won't ever see a dime of it.

Samcol, I have been saying that for years, and I'm quite a bit older than you.

On the other hand, I'm quite happy to see my parents, who are in their 70s, getting regular checks. The system does suck, though. It's a gigantic Ponzi scheme.

If you honestly believe the boomer generation has done nothing to make this country a better place and only care about getting their cut, despite the fact that I said I would not have a problem if SS was to become means tested in my time (many boomers I know feel the same way, but its ignorant to generalize)....then we really have nothing to discuss.

I'm serious about this. This is about planning for the future, not "let's dump on social security". There are plenty of threads for that.

This is a politics forum. I dont see how you can talk about retirement in a politics thread and not bring up social security. They are very related.

Bring up ≠ bashing. If one is to bring up SS in the thread, I'd like it to be connected to retirement, and not just dogma based on political philosophy. We know you're a libertarian, samcol.

Isn't it connected to retirement? I decide I'd like to keep more money for me to invest than to let the Government take it and decide what to do with it?

How is it not connected?

I don't expect the government to take care of me, I expect that the monies I use to be "helpful" to those that didn't plan or didn't have enough, just like all the other social programs that exist.

But again, I'd rather I take care of it, and pay the taxes and keep ALL the monies that I contributed towards SS.

c'mon Will, you're falling into the "bitter" mindset. Don't write off different opinions as dogma.

What exactly is wrong with having people control their own retirement?

SS is connected to retirement, just like a thousand other things. All I'm saying is that shooting off dogma based on political philosophy isn't going to get us anywhere. This thread shouldn't be "Should SS exist based on your libertarian views?". It's more general than that and I'd rather not have it devolve.

If you're going to mention SS, maybe mention 401ks. IRAs. Stocks. Bonds. Retirement locations.

I started a Roth IRA at 24 and have been maxing out the contribs ($4k and now up to $5k) ever since.

Can't beat your own money. I'm retiring eventually. Call me Old Man Crompsin.

Crompsin....you are wise beyond your youth.


No reason why you cant do both.

Thats how I stared...maxing out my contributions as soon as I started working, particularly since it brought matching contributions from employers.

Along with other investments, thats why I can consider retirement before 65.....and if SS becomes means tested in the next 20 years and I get less than I put in, I wont bitch about it and it wont impact my retirement decision...and I will know that someone else may benefit.

Exactimundo. In my opinion, IRAs are what will save my generation (kids from the 80s) from Uncle Sam's broken system of limp-dick dollars. I think young people should invest in them (IRAs) starting as early as possible (college years or immediately after), even if their parents have to help get them the initial boost to max out the first 3 to 5 years. If you start an IRA at 18 you can essentially stop putting money in it at 35, or so I was told by a few financial gurus when setting up my own account.

IRA logic: Start early, max out early, and keep it rolling as much as you can. Roth IRAs seem to be better than traditional IRAs, but I don't know all the nuances.

Having an employer that matches contributions is extremely useful, especially if they'll match up to max.

I guess I do have a savings sytem. With my extra money I buy gold double eagles and silver dollars with. Got about $5k worth now.

Can IRAs and the like even keep up with the rate of inflation and cost of living increases? I mean it used to take .$90 to buy a euro a few years ago now it's like $1.45.

That's a pretty massive loss of dollar value.

Not everyone in that age group has the option. I'd love to max out my RRSP contributions, but as I do enjoy eating, I find the actual execution difficult.

Unfortunately I don't have the option of running to mummy, either.

It's not always bad planning. Sometimes it's just bad circumstances.

Oh, I'm with ya on that Martian... but I live outside D.C. and see all these rich college kids blowing their money on silly stuff with no idea of how to plan for the future. They'll be poor by the time they're 35. My point is that if you have the money... use it for something good instead of buying another Acura.

...

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.

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.

There's plenty of room on these coattails, my friend. :)

You will be that kind of pianist they wheel up to the keys in your wheelchair to hear music "as it was played 'back then'." :p Kind of like a living relic.

* * * * *

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. :)

10% plus the matching 5% = 15. In addition, you're not taking into consideration the investment interest it builds during the whole time (compound at that).

I'll be generous, then. Let's say you have $650-700k + $401k + SS. Is that enough? In order to maintain my lifestyle, I calculated that I'd need over $5m if I retired around 68-70 and lived 15 years (which is about my life expectancy). I'll be retiring a little after 2050, and assuming the dollar somehow stabilizes in the next few years 330k a year will be able to provide the equivalent to a $70-80k a year lifestyle now, if we're damned lucky.

Wait, how old are you?

There's a question I should ask you, willravel:

Why would you have $4m sitting in cash and only $1.5m in investments?

I'm 25. I'm also pretty damn sure I can live comfortably well below the 70k mark by that point.

great question. you can't have $4M in cash just laying about in your house or even simple bank accounts. There just isn't enough banks for you to make sure you're FDIC covered, and then after that why lose value of those dollars every day, every month, every year????? that makes absolutely no sense... unless you got that cash via illegal handling and can't launder it in any way...

and yes, that's the trend as well... your current lifestyle will only be a shadow of the retirment lifestyle as it declines in the twilight years. the only increase in monies is healthcare related like assisted living or old aged home.

The $4m would be in a savings account with a reasonable interest rate (not cash). I'd have more invested, but I've found in the past that having too much of my worth tied up in investments can make for trouble if there's an emergency and I need it. I had to take a rather alarming loss on some of my investments a year and a half ago. It left an impression.

Is that not considered cash?

I wanted to clarify in case anyone thought I'd have $4m in $100 bills in a safe.

Oh, lol.

This shouldn't prevent you from having much of that in fixed-income investments such as long-term and short-term bonds. $4m out of $5.5m in assets is rather high. That's nearly three quarters (75%) of your "portfolio" sitting in cash. What will you do if inflation runs amok? Your $4m could be decimated in one or two years. As a retired senior, it makes sense to have a low proportion of stocks, since there are few short-term benefits to holding them, but one benefit is that they protect your money from inflation.

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:


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:


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?

Then I shift. It'd be pretty easy to move money out of a savings account and into investments. I'm taking a pragmatic approach to the whole thing. Liquidity is important when you're only income is based on interest from savings and various investments. Should something happen to disappear that $1.5m, I need to be able to quickly move things around. Moving around investments is difficult. Moving around money in the bank is quick and easy. In other words, I wouldn't have to wait 1-2 years over the course of the inflation. I could move things around in a matter of days and not take a loss at all.
I'm counting on the $5.5 total dwindling. It'd be nice to have enough to live on interest and earnings, but it may not be possible.
I don't do debt security. When I say investments, I mean investing in something real, never stocks and never bonds. I'm much more likely to be investing in currency and goods. They're easier and I don't feel hypocritical for damning the stock and bond system while simultaneously using them. I only have Apple stocks now because I find it amusing.

Wow, that sounds risky. Where do you draw the line between investing and speculation? I guess it's a good thing you have less than 30% of your assets there. Would this be your retirement hobby? Tracking pork belly futures?

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?

I've found that I'm pretty damn good at it, so it'd be part hobby and part income.
The whole thing? It's a bit complicated. I'll give you the summarization:
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.

Yes, you should be fine, indeed. Good on you.

*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.*

And with this, my retirement plan of breaking into the safe in will's basement has been scuppered.

Dude, he still keeps his gold bullion in there.

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.

Can't you do both? My interest in music isn't damaged by my being involved in business.

Besides, I'll be playing piano long after I stop practicing law, assuming all goes to plan.

That's very aggressive. I would contend that this will be difficult with an annual income of less than $90 000 per year and impossible with an annual income of less than $60 000 per year, unless you plan on living very poorly or being single for your entire life and never having a family.

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.

I'm an editor by trade because of my love of books. I would consider writing if my editor's mind hasn't ruined that as an option. Either way, these aren't the same as a career that employs a heavy dose of decimals, percentages, and statistics, especially when you consider income potential.

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.

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

Another thing that is perfect about genuinegirly. :)

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.

Awww, thanks ASU.

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...

Honestly, I don't see my goal as unrealistic in the slightest. Where do you live, Martian, and what kind of lifestyle do you lead? I can't imagine spending $10,000/year on myself, much less $60,000.

You will most assuredly not be able to live off of $10 000 per year once you're finished college. Please don't make plans based on that assumption. My rent alone is half of that.

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.

$10k US a year might work in Zimbabwe.

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.

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.

I was raised in a family where this was the case.

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.

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.
I'm pretty hopeful about the potential for currency deflation revaluation since the report last week that there's a minimum of 200 billion barrels of recoverable oil under North Dakota, maybe as many as 500 billion.
I don't know how anyone can manage that. 30k would barely cover health insurance if there were 4 kids in my family.

$500/year utilities is the electricity and heating bill. Most people would use $1000 if they wanted a 'normal' temperature all the time. Water used to be covered in rent, now it is $360/year.

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.

My rent alone is over $14,000/year. And that's reasonable for the area. It's a modest apartment, comfortable for two people.

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.

What in the world is the problem with the American economic system if someone, anyone, is sinking $30k/year into health insurance for their family!!?!?!?! What a nightmare. I feel for anyone who pays that.

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.

Start a thread, please! I spent the first 15 years of my adult life living as a typical American, processed food, eating fast food for lunch every day, air conditioning, striving for a new work truck all the time, etc, etc, etc.

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.

Oooh. We could call it Tilted Frugality. Is there no such thread yet? If not, yeah, one should be started.

My attempts to understand your statement have utterly failed. You seem to imply that the president, and no presidential candidates other than the Democratic ones are interested in maintaining the viability of SS. Only liberals can save it, apparently. :confused:

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.

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.

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. :)

Social security is, by it's very nature, something that goes with Dem philosophy and against GOP philosophy. It's not fiscally conservative at all, so it tends to split right down the middle.

Clinton never tried to privatize SS.

I don't understand what the fear of privatizing it is. The Federal Government has already failed terribly at managing it. For example the hundreds of billions it has raided from social security. The Democrats started this program off on the wrong foot from the beginning.

The plague of social security rests on the shoulders of Democrats. They started it and haven't fixed it.

I don't even agree with privitization, but are any of those really worse than robbing $600,000,000,000 from social security or the fact that it will bankrupt in just 30 years.

taking just one point there

By this very point then isn't ROTH IRA, IRA, 401(k), and 403(b) in jeopardy? It's private, it's managed by the owners who make bad decisions. Yet, I know people who's retirment programs listed above which are doing much better than any contribution they have listed in their SSI account.

Cynth, wouldn't you want a Roth IRA that was inflation-proof?

In 1980, social security was in good shape, right?

In 1992, social security was in horrible shape, right?

In 2000, social security was in better shape than in 1992, right?

In 2008, social security will be in worse shape than it was in 2000, right?

I'm just checking if we agree on the basic facts of the matter.

Sure and I would also wish that I had a Porsche 911 GT2 in my parking garage with the requisite buxom blonde mistress.

But I'm dealing with reality based information. All the contributions you make to the investment vehicles I mentioned all outperform SSI if people are attentive to their holdings. Nowadays, there are many retirement funds that are pegged with proper aggressive holdings based on retirement date minimizing the risks.

Just because I'd like something to be "recession proof" doesn't mean that because it's private means it isn't or can't.

That's a social security program we can all get behind.
The risk of having a recession or inflation damage your investment is there when your investments are private. Social Security is supposed to be an investment without those risks.

How is that possible? Social Security is in US dollars. The dollar is no longer pegged to the Gold standard. Social Security will and is being affected by inflation. That's what my question was earlier. Can any retirement program possibly keep up with the inflation we've seen since 1933 (besides outright speculating which is basically gambling)? The only thing I know of is hard assests like land or precious metals.

That's why I'm sticking with gold for savings/retirement.

Yes? Just buying the DJIA will kick the crap out of inflation from 1933 to say 2002. If you where smart and diversified internationally you could be doing even better.

Land, to the start of the current bubble, gave worse returns than the DJIA.

Gold moves randomly, fueled by speculation more than demand.

That's gambling. :)

I understand you benefit from talking up your bet to other people, but things that have far less value than their marginal utility to people don't make good investments at any time.

This is pretty much what Dad does, and he loves it! He travels for work, then travels for fun with Mom. Mom still works, but part-time in a job that she loves.

Sounds like an ideal retirement. What makes you think the most important person in your life wouldn't want a similar lifestyle?

On the short term gold markets are speculative or gambling, on the long term gold does nothing but go up in relation to US dollars. I'm not buying gold to try and make money, I'm buying it to maintain value. And my point is I don't see any of these retirement accounts with the ability to keep up with inflation. Sure you'll see the dollars in your account racking up with intrest, but the buying power of those increases doesn't out weigh the devaluing dollar (short of risky speculation).

100 years ago I could buy a nice middle class house for about 100 Double Eagle Gold Coins (approx. 1 ounce gold, $20 dollar face value). Today I could buy a similar middle class home at today's standards for the same 100 Double Eagle Gold coins. The home from 100 years ago was $2000, today that home is closer to $100,000.

Gold has held it's value for thousands of years. Fiat currencies don't. I don't see how gold is a gamble.

Someone has to pay for that increase or lack of risk. It doesn't just poof out of nowhere.. Otherwise I'd have that Porsche key in my pocket right now...

:checks pockets: nope...

Don't you have to convert the gold into a fiat currency at some point in time? You can't just take a coin 1 ounce gold and just use that to pay for your groceries and or medical bills.

Yes you would, unless the confidence in the dollar got so low that people started using the barter system again or accepting gold and silver coins outright.

If I bought an ounce five years ago at $350, I could sell it for well below spot of $920 today and still be better off compared to savings accounts or banking systems.


On another note, buying real government issued gold coins from pre-1933 have advantges over bullion. They basically have three different values, 1. the face value 2. the gold melt value and 3. a collector value. Even if gold goes down, there were so only so many gold coins minted in that time so they maintain a collector value as well.

Sure, and if I bought 2000$ in stock 100 years ago, I would be able to buy 7 houses today at 2% real interest rate.

The value of gold has collapsed at a number of times in history. Spain had a huge inflationary collapse of a gold currency, for example.

In the period where it hasn't been used as a currency (the last 30 years), it has behaved pretty much randomly in real-value, somewhat correlated with other resources.

...

5 years ago:
1 USD = 0.92630 EURO
Today:
1 USD = 0.63070 EURO

Hey look! It went up 46%, clearly Euros are a great investment. I'll just buy Euros, and have them sit around, and earn 8% return per year.

...

Or, I'll invest in things that are denominated in Euros, like bonds that produce a return, and earn 8% plus the return on the bond.

Yes, the US currency is tanking. That doesn't mean all securities or bonds are tanking.