Retirement

[mmrmnhrm]

I'm 32 and my wife is 36. We currently have only $18,000 saved for retirement, but by living below our means, we are now saving over $26,000 a year for retirement (Maxing my Roth and 401k + match)

 

My income is $64,500 and my wife has her own business that is growing well and makes us probably $15,000 a year right now while allowing her to take care of our child.

 

I think we are doing pretty damn well.

 

However, I'm very concerned that with all this financial mess the banks have put us in, that either stock market returns or inflation are going to not make us as 'rich' at retirement as we are all taught.

 

I have a nagging suspicion that the conventional wisdom of saving and investing in index funds, which has 'always returned at least 8%' is suddenly going to stop working. And/or the inflation rate will keep us lower to mid middle-class forever...I don't know if this is irrational but I just can't shake the feeling that 'the man' isn't going to let us peons become rich - this easily.

 

I guess I'm just scared and need some reassurance that this really, really will actually make us rich, putting all that money away for the future instead of enjoying it now.

 

Incidentally, we also have a mortgage and student loan debt, that we aren't paying off more quickly currently, however we plan to use any likely and future growth of my wife's business income to pay those down faster instead of doing even more investing.

 

I just don't know what to do, I feel like I'm doing everything the financial gurus say to do and that I can't shake the feeling that the rules are going to be changed on us and we'll wish we had 'enjoyed it while we can.'

 

Put me at ease! What can I do to not worry about inflation and changing rules hosing us?

Absolutely nothing. I'm 30, have about $30k saved in the 401k, zero debt apart from a CC I pay off monthly, and feel exactly the same as you. This country (our parents) have dug such an insane hole for us to bail them out of that we ought to just say "You know what? Medicare, it's gone. Medicaid, it's gone. Social security, it's gone. Quit whining, you already spent your retirement." Year after year of deficit spending, pork barrel giveaways, and massive trade imbalances have basically turned us from a country of possibility to a country of hopelessness. You see all that money in 401k plans? You better believe the government's going to take as much of it as they can. Same goes for Roths, traditional IRAs, and just about any other investment mechanism. Our parents, our grandparents, and the politicians they've been electing have bankrupted us and mortgaged the country to the world. Welcome to reality.

Discuss.

[phil]

that was soooooooooo much to read. me eyes hurt.

[LPFSTheFett]

The economy just like anything else. It's going to have it's ups and downs. The only thing you can do is continue to save at the rate you have been and 30 years from now when your ready to retire you'll have enough saved up. Right now the market is way down and I personally feel it's going to go down even further. However, understand that you are buying while the market is down. So when the market does go back up, even if it's 5-10 years from now, your money will start to multiply. I certainly wouldn't take the approach there is no point in saving now as I don't see me hitting my long term goals. Just do what you can and it will all fall into place.

 

Plus when you do retire you wont need as much money as you will be making at the time you retire. Let's say your making 200k/yr at 60 and you want to retire. Understand your only goinig to be clearing 120k, now take out the commute, clothing and other job related expenses and your down to 100k, maybe 90k. Plus by this point in time, your probably going to own your home and not have that monthly mortgage expense. Anyway, to clear 90k a year in retirement, you'll need about 2,000,000 even at a very reasonable 6% and you wont be cutting into your principle at all(thats 120k total minus 30k in taxes) If your willing to cut into your principle amount then you could have $1,000,000 and be making 45k cleared in intrest and take 45k in principle out and that would last you until your probably 100.

 

Putting in your max contribution at your current income levels will easily net you an easy retirement. Also understand if Obama gets elected and his tax hikes that he wants to impose go into effect forever, your number will be double. As he wants to take away the SSI cap of 95k, which will cost you 7.5% of your money yearly(15% if your self employeed), plus he wants to count interest/dividen income as regular income so instead of having the reduced rate you'll be paying full taxes on your interest. Though, people that support Obama say his changes will positively effect the value of the dollar and turn around the economy in such a way it will make it easier to hit "your number".

 

Then you have to play the game. A lot of people that retire move to states like Texas, Nevada, and Florida because your not going to be sending 7-9% of your money to the State or City.

 

FWIW, putting 7k/yr away (+3% for annual increases) with a 7% apr, will net you just under 1 million in 30 years.

[TTQ B4U]

Times are only as bad as you let them be. Sure prices are high, but there are plenty of low spots in the market that are great places to buy into right now.

 

My suggestion is to work with a good financial investor that can run the numbers and get you a firm plan that can be reviewed often. I want to retire between age 50-55 with roughly 10-12k mo. in today's money. At that point we won't have kids in expensive schools, a morgage nor likely much of any auto expense so that's very much more than enough for two old folks.

 

We have a number that we need to put away to achieve that and we meet every quarter to review my wife's practice and our family investments and progress. So far we're on track. All we need to do is keep an eye on how much to save and invest and track the progress. All in all, with all the ups and downs, we have stayed the course. We had to bump it from age 50 simply because two kids and college ain't cheap.

 

Get a plan and remember that it's not what you make it's what you save. Some think $1M in retirement is gravy. For me, that's less than 10yrs worth of fun...and I don't plan on kicking over at 65. We too will likely move to Florida, likely Texas though....maybe the burbs of Nevada. We have property in Oregon so maybe the NW area even. Vancouver has no sales tax.

 

That's my thoughts...get a good planner and stick with his plan. If you can swing it, live on strictly one income. We've occasionally tapped into my wife's income from her law practice, but mostly we've saved and invested just about all of it and will continue to do so. That's the best thing we have going for us as a family.

[Mensan]

that was soooooooooo much to read. me eyes hurt.

 

Apparently so does the finger that types "me" instead of "my".

 

Being the youngest ITT, you should pay closer attention. About ten years from now you are going to wonder why you didn't save more. The OP is one of the most responsible (albeit conservative) people I know with his money.

[mmrmnhrm]

The OP is one of the most responsible (albeit conservative) people I know with his money.

I learn from the best....

 

"Rule No.1: Never lose money. Rule No.2: Never forget rule No.1." -- Warren Buffet

 

"I made a fortune getting out too soon." -- JP Morgan (who was something of a Machiavelli)

 

"You’re going to hear a giant sucking sound of jobs being pulled out of this country." -- Ross Perot

 

"As usual, if I'm wrong, I'll have lost opportunity, not capital." -- Bennet Sedacca

[Linc5.0]

SEP Ira ftw...you can put up to 46k a year in it... I wish I could max that out each year!

[Buckeye1647545503]

Eli ITT? OP?

[Mensan]

Eli ITT? OP?

 

ITT=In This Thread

OP=Original Poster

[jeffmeden]

ITT=In This Thread

OP=Original Poster

 

Ah the wisdom of age

[copperhead]

ITT=In This Thread

OP=Original Poster

 

OP can also = Online Pussy. Make a note to not confuse the two.

[HotCarl]

Apparently so does the finger that types "me" instead of "my".

 

Being the youngest ITT, you should pay closer attention. About ten years from now you are going to wonder why you didn't save more. The OP is one of the most responsible (albeit conservative) people I know with his money.

 

As the second youngest in this thread I'll say i hope i learned my lesson soon enough. Tim is right, its not neccessarily what you make but what you save. (of course this only goes so far) Now that I've squandered my first few earning years im definitly saving alot but still not sure if its enough. And honestly after reading the original post some of this shit stresses me out.

[HotCarl]

Times are only as bad as you let them be. Sure prices are high, but there are plenty of low spots in the market that are great places to buy into right now.

 

My suggestion is to work with a good financial investor that can run the numbers and get you a firm plan that can be reviewed often. I want to retire between age 50-55 with roughly 10-12k mo. in today's money. At that point we won't have kids in expensive schools, a morgage nor likely much of any auto expense so that's very much more than enough for two old folks.

 

We have a number that we need to put away to achieve that and we meet every quarter to review my wife's practice and our family investments and progress. So far we're on track. All we need to do is keep an eye on how much to save and invest and track the progress. All in all, with all the ups and downs, we have stayed the course. We had to bump it from age 50 simply because two kids and college ain't cheap.

 

Get a plan and remember that it's not what you make it's what you save. Some think $1M in retirement is gravy. For me, that's less than 10yrs worth of fun...and I don't plan on kicking over at 65. We too will likely move to Florida, likely Texas though....maybe the burbs of Nevada. We have property in Oregon so maybe the NW area even. Vancouver has no sales tax.

 

That's my thoughts...get a good planner and stick with his plan. If you can swing it, live on strictly one income. We've occasionally tapped into my wife's income from her law practice, but mostly we've saved and invested just about all of it and will continue to do so. That's the best thing we have going for us as a family.

 

 

Your wife is a lawyer right? Does she have any sister's by chance? maybe a decent looking cousin, or wealthy female co-worker that needs the attention of a strapping young lad? Just curious.

[Crossle]

As the youngest in this thread so far, I would like to say thanks for the posts. That was really informative. Thanks to my parents, I have pretty good saving habits already, I have been able to pay for all my college so far out of my own pocket, plan on being able to make a down payment on a condo here in a couple years as well. Retirement is something I have been thinking about myself since you are going from your income, to almost zero income. My question was always, how much is enough to live through the rest of your life? And how much do you need to put away each year to achieve that. I want to start young, but with school I can't put away as much as I would like because of less work hours and school costs.

[HotCarl]

As the youngest in this thread so far, I would like to say thanks for the posts. That was really informative. Thanks to my parents, I have pretty good saving habits already, I have been able to pay for all my college so far out of my own pocket, plan on being able to make a down payment on a condo here in a couple years as well. Retirement is something I have been thinking about myself since you are going from your income, to almost zero income. My question was always, how much is enough to live through the rest of your life? And how much do you need to put away each year to achieve that. I want to start young, but with school I can't put away as much as I would like because of less work hours and school costs.

 

Start young. It doesnt matter if its the lint and change out of your pocket on a weekly basis it will all compound over the years (depending where it is)and the longer you save the better off you are. I started at 23 and I still think I started too late.

[jeffmeden]

Start young. It doesnt matter if its the lint and change out of your pocket on a weekly basis it will all compound over the years (depending where it is)and the longer you save the better off you are. I started at 23 and I still think I started too late.

 

True that. Every year earlier you start is more time you can enjoy with your grandkids. If you are on your way by 25 and save smart there's no reason you can't retire by 55. What our generation has to worry about (those of us with parents retired or a few yrs from retiring) is how we will tell them nicely that they can't live off social security any more. A lot of people are getting ready to retire that are NOT in any way prepared for it, they worked their whole lives under the impression that either SS or a company pension was going to take care of them, and pretty soon even if they are lucky and get both they will be kissing it all goodbye on health care and utility bills.