lowendlinux
macrumors 603
The key for me was marrying someone who believes the same things I do about money.
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Why aren't you saving money for retirement?
- Thread starter ActionableMango
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So I obviously think that something like a second mortgage is a bad idea in a lot of cases, but I'm not sure you should worry too much about liquid savings.
The unfortunate fact of the matter is that money sitting in your bank account, save a 6 month emergency fund, is actively losing you money. Not only are you losing because of interest, but also because of opportunity cost. Ideally you want to take advantage of very low interest loans (let's say, .05 on a new car) and pay those off as slowly as possible, and use your cash to invest in retirement or some broad/large cap index fund.
[doublepost=1489943578][/doublepost]Also, I'm absolutely astonished that so many people don't save money. It just doesn't make any sense to me. I can see the point of view of somebody who saves their whole life, lives within their means, then has their retirement money taxed to fund programs for people who were complete idiots and didn't save.
capandjudy
macrumors member
You only have to look back to 2008. Housing started the landslide that brought down the entire world economy.
Volusia
macrumors 6502
I paid 10.5% of my salary into my pension for 35 years. Our pension fund was self funding until the market crashed. Back to being fully funded now. However, the City no longer offers a pension, just a 401K program. It will come back to bite them. City (government) jobs for the most part do not offer a very competitive salary - you must make it up with good benefits to attract good employees.
Zombie Acorn
macrumors 65816
"Self funding" is a little disengenuous as it's a pay as you go system that accrues liabilities as more people enter the system. When you have an influx of workers into the system "self funding" is easy, when you don't the shortfall is going to hit hard.
https://www.google.ca/amp/s/amp.bus...overnment-7-trillion-pension-shortfall-2016-4
If you were truly self funding it wouldn't be a defined contribution plan.
Meanwhile our city's parks director makes a little over $225K... He's also a close friend, but I digress.
sorcery
macrumors regular
Excellent plan. Even a small monthly amount invested in a Nasdaq 100 or technology fund should be worth a fortune in 30 years.
Curious what most people think a 42 year old married guy with one dependent should have stashed away. I have a retirement account, an annuity, a few mutual funds, and a few stocks, in addition to my bank account. I do not work for an employer full time, so a 401k isn't really a viable option. All in all, I think I have a pretty decent amount set up. But, what would be normal for someone to have? Note...I'm not talking about millions. Very few people can retire with that much.
Plutonius
macrumors G4
If you have a college degree and invest in retirement from when you start work, there is no reason why you can't retire with a million unless you are paying for children's college education 🙂.
I went to school late (graduated in my mid 20's) and my first job didn't offer any retirement options. I saved some here and there but ended up using the savings as a down payment on a house. My rent was $850 a month for 800 sq feet apartment in a pretty scary and dangerous neighborhood while my mortgage ended up being $825 the first 7 years, and $600 after that for 1500 sq feet and was in a MUCH nicer and safer neighborhood so it seemed like a better investment. I recently left the first job and though my new company is small they still do offer a 3% match for an IRA. I do earn less per year though so while I'm ultimately in a better environment, stronger company, and have benefits, I don't make as much each year. If I put in my 3% and the company matches, in a year I'll barely have a months salary saved. In 35 years assuming no salary change, no other investments, and no inflation, that's less than 4 years of salary saved.
I would put away more, but since I wiped out any emergency money I had on the house I also have to put some of my money into that account. I currently have about $8000 in that one which is about 5 months of expenses (my goal is 6 months or roughly 12k). Luckily my only student loan debt is about $90 a month but when it's all said and done I don't have much left each month. I don't eat steak dinners, I don't have a wife or kids, I don't have a brand new car, don't have big internet or cable package, don't have Netflix and HULU subscriptions...I don't even have pets. Things I do buy, I buy the mid/high quality items so I'm still very happy with what I have now even if it's nothing fancy. Many people I know aren't as debt free as me and make even less than I do, so when I struggle to find extra money to put away, I know they do too.
I recently opened a high yield savings account (1.05% - not much but beats the .01 I got before) and may do a little investing as my next project to put some more money towards retirement.
I would put away more, but since I wiped out any emergency money I had on the house I also have to put some of my money into that account. I currently have about $8000 in that one which is about 5 months of expenses (my goal is 6 months or roughly 12k). Luckily my only student loan debt is about $90 a month but when it's all said and done I don't have much left each month. I don't eat steak dinners, I don't have a wife or kids, I don't have a brand new car, don't have big internet or cable package, don't have Netflix and HULU subscriptions...I don't even have pets. Things I do buy, I buy the mid/high quality items so I'm still very happy with what I have now even if it's nothing fancy. Many people I know aren't as debt free as me and make even less than I do, so when I struggle to find extra money to put away, I know they do too.
I recently opened a high yield savings account (1.05% - not much but beats the .01 I got before) and may do a little investing as my next project to put some more money towards retirement.
heehee
macrumors 68020
It really depends on where you live. Try buying a place in any big city and you would be lucky to have left overs for food.
I read an article a few months ago it will take a college graduate over ten years to save enough for a down payment on an average house where I am. A tear down house is over a million and that's not even close to the city.
As for myself, I don't have any savings in retirement because housing is absolutely insane here. The house i bought three years ago literally doubled in value. I'm hoping to pay that off in a few years, in my early 40s, sell it, buy something bigger far away and have lots left to semi-retire.
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To be fair, I said millions (plural). But anyway, you would have to have some pretty solid and safe investments to garner even a million. You'd have to average more than $20,000 per year each year going towards retirement, over and above your living costs (obviously, this would include returns on investment). Since more than 60% of tax filers make less than $50,000 per year, I'd say it's harder than just having a college degree to save up a million dollars.
Maccster
macrumors newbie
I try to save a little every month. What helped me was to set a weekly budget for stuff like food and clothing, that I carry around in cash, no credit card. A credit card only makes you buy stuff you don't need in moments of weakness. If you don't have that amount of cash with you anyway, you can't succumb to your own weakness. What's left of the weekly buget goes to a special account, and it's almost a challenge to spend as little as possible for me.
kilcher
macrumors 65816
This is what surprises me more than anything. For reference, I'm 42. The days of employers and/or the government taking care of you in your old age are well past. Anyone 40 or younger should be saving under the assumption they're solely responsible for their retirement. And as a result give some strong consideration to what type of life they want to live in retirement. There is just no confusion any more - you alone are responsible for saving for your retirement.
My employer still offers a pension but I save as if there isn't one. I'm virtually guaranteed to get it but I'm not going to rely on anyone else for my retirement. If I get it then that'll just be icing on the cake.
Apple fanboy
macrumors Ivy Bridge
Good advice. But a weekly budget for clothes? If I buy clothes once or twice a year I'd be surprised!
That said I probably have jeans I wear that are older than half the people on here!
rhett7660
macrumors G5
Apple fanboy
macrumors Ivy Bridge
You should be approaching 3x your annual income within the next few years. The general rule of thumb is:
- 35: 1x your annual income
- 45: 3x
- 55: 5x
- 67: 8x
kazmac
macrumors G4
I am making a game of saving every week now (beyond my usual bi-weekly deductions into my savings and 401k.) Anything I can put into my Savings from my checking account, I do now.
Working on my impulse buys (foreign movies are a big thing for me, but when the chase is better than the catch, I am reevaluating this.) After a certain point, stuff loses meaning.
Working on my impulse buys (foreign movies are a big thing for me, but when the chase is better than the catch, I am reevaluating this.) After a certain point, stuff loses meaning.
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Apple fanboy
macrumors Ivy Bridge
I hate to be the bearer of bad news, but even my lowly Vanguard index fund is up 28% over the last year. That's just an index fund. That is to say, your RobinHood investment is performing incredibly poorly.
You should immediately pull your funds out of your Robin Hood account and start an IRA and regularly contribute to it. Robo-traders like Robin Hood will eat you alive in fees once you have any significant amount of money invested.
kazmac
macrumors G4
LOL, thankfully no. I've only paid 3 digits once, won't do that again. I now keep a strict budget for posters/images: if it's over $45 including postage, I seriously question it. More often than not it's no.
Melrose
Suspended
Yes, I'll pull $500 out of RobinHood and go pay some Investment Strategist 25% of my investment to "invest correctly" and propagate the system.
nah thx. This isn't investment money anyway, it's hobby money. 🙂