Retire Rich.

[mossie3]

Agree with this. I just retired at 59, and will begin withdrawing some IRA money this year, mostly for fun money. My pension should mostly cover basic living expenses. One thing I see is people being so disciplined at saving over the years, that they can't adapt to spending any of their retirement. Then there are those that are ok with spending only earnings, but cringe if they touch any principal, even though they would never run out. You can't take it with you, and you will have less opportunity to enjoy it as you get older. If you don't spend it someone will irresponsibly spend it eventually, unless it's specifically earmarked in your will.

I saved for years, retired at 58, now I spend. I tell everyone that my plan is to have the last check I ever write BOUNCE.

[TRCM]

I have already forwarded your info to AOC.

Occasional-Cortex ??

Pensions and Employer Funded Retirements are almost a thing of the past unless you work in the public employees sector for a school district, state or federal government agency.

401K's or a version of it are the only option and some have employer matching on a percentage of your deductions. My wife has a Iowa Public Employees Retirement as well as her 403B she put money in.

I had a 401K at various employers and always maxed them out and in my later 50's during one of the Stock Market Surge converted a percentage of the funds into guaranteed annuities with a 5% return. When I retired started drawing the 5% a year on them and have it deposited monthly.

I had a friend back in the 80's that was putting $475.00 a month in his IRA he quit thinking he'd have more in his paycheck only to discover it only increased it by $165.00 after he paid all the extra taxes.

People don't think about the effect on your check and how to set money aside and not totally kill your pay.

There are a lot of 'calculators' out there that you can use to see how it affects your pay.

Let's say you make 5000/mo, get paid 2x a month, and pay 30% in taxes.

Your check should be ~ 1750 per check. with no other deductions.

Now, you choose to put:

5% in a 401k....so now, you are putting 250/mo into your 401k, and your check drops to ~1663. You get paid ~88 less per check, but are putting 250 in your 401k

10% in a 401k....so now, you are putting 500/mo into your 401k, and your check drops to ~1575. You get paid ~175 less per check, but are putting 500 in your 401k

20% in a 401k....so now, you are putting 1000/mo into your 401k, and your check drops to ~1400. You get paid ~350 less per check, but are putting 1000 in your 401k

30% in a 401k....so now, you are putting 1500/mo into your 401k, and your check drops to ~1225. You get paid ~525 less per check, but are putting 1500 in your 401k

Notice the amount your check drops is less than the amount your 401k gains, and this is not even counting any employer match money.

This example doesn't even account for the fact that as your check gets smaller, so do the taxes they take out.


Once you bite the bullet and get use to not having that money in your check, it's easier to keep doing it.

[Tritonal186]

The key is starting early and stay the course and not do anything stupid like some of my friends. One took a 401K loan to build a in ground pool and another cashed out in 2008.

Nothing wrong with cashing out early if you know how to invest . I cashed out $ 350,000 back in 2000 and bought some properties, these properties are now worth over 8 million dollars. If I just sell one worth 1.5 million , I should be able to retire this year and that's what the wife and I are planning on doing. The rest I will pass on to both of my sons. Now I hope it works out as planned.

[flyingwillie]

I’ll be 70 next month and get my first SS check in May. I haven’t had to touch my 401k or IRA money. But at 70.5 I have to begin taking minimum withdrawals .....about 4% but that increases each year. However I expect my investment growth will cover that and my balances will remain the same or better. I’m hoping I never have to touch it and can live off my stock dividends and SS. Kids and grandkids will be happy if it works out!

BTW, my employer didn’t begin a 401k plan til I was 39. So you can start a little late....just try and max out on the contribution or at least up to the employer match level.

[Bob G.]

That’s awesome! For the retirement Gurus, approximately what percentage do you recommend taking out of each paycheck for the 401k? Right now I’m doing 12% and my employer matches 3% to make a total of 15% of every paycheck goes into the 401k. I’ll be the first to tell you that I’m absolutely clueless when it comes to investing so I just set it up for a moderate risk return and haven’t touched it since. I plan on retiring in 35yrs but if the rate stays the same, by the time I’m 62 it’ll only be up to 250k or so

Guessing that you are young if you have 35 years left to work. The max for 401k contributions is $19,000 per year for 2019 if you are under 50. At 50 and over, you can add another $6000 per year for catch up. You should contribute as much as you possibly can because waiting until you are late 40s and 50s will be tough to get enough to retire. 401k contributions could be your biggest tax break. With the new tax laws with the standard deduction at $12k for a single person, I was not able to itemize for the first time since I purchased my house. I upped my 401K last year to $18k from $12k and it saved me at tax time. I upped it this year to >$20K.

That all said, if you are young, you should have your 401k invested in the most aggressive funds with the financial institute that your company uses. You are young enough to ride out the market fluctuations and make some serious money. Think a few million $, not $250k! Most 401k institutions, like Fidelity, have a planning section on their website to walk you through where to invest for a given investing strategy.

I'm 58 and have my 401k set up for Growth with Income. 30% to 35% in bonds to protect some of my funds but still have domestic and foreign stock funds for continued growth. I can't afford a big down turn as I want to retire in a few years.

[juice780]

So you worked 3-4 jobs at the same time? How did you have time for that.

[Cajunhunter67]

Its a fact! Start young. Put away in your 401k. Don't touch it. It doesn't mean dont move your money around in your 401k. Just dont take money out it or loan against it.
When the crash hit in 08, I moved my money from stocks to bonds and only lost a few thousand. Many of my buddies lost 10's of thousands. Once it hit bottom, I loaded it back in stocks.

Nope I'm not a millionaire like the OP. You can always do your best in financial decisions, divorce however can throw it in the trash.
I lost 100's of thousands due to it. I am now putting 1000's away monthly in my 401k trying to make up for lost money. At my rate I will be able to retire 70!!
But if your young and read the OP's advice. Take it!! Its fact! All you can do is give life your best.

[Cajunhunter67]

So you worked 3-4 jobs at the same time? How did you have time for that.

I believe what he meant is they have worked 3-4 jobs over their life that had 401k's. They didn't cash them out but rolled them into IRA's. Left them alone to grow.

[juice780]

I believe what he meant is they have worked 3-4 jobs over their life that had 401k's. They didn't cash them out but rolled them into IRA's. Left them alone to grow.

Oh ok. I have one from my previous employer and I have one from the employer I have now. I put as much as I can in it and increase 1% every year.

[alanhore]

You wont be alone.

Man I made too many mistakes in my life. So much stuff I regret. I’m afraid I’m gonna have to work till I just kill over.... I hate. Not a day goes by I don’t think about all the stuff I screwed up, and how that’s gonna prevent me from enjoying myself as I get older.

Congrats to you man. I’m happy for you that you set yourself up right!!!!

[keeferfish]

Can’t believe the people at my company that don’t take advantage of a Great 401K plan or quit to cash it out.

They match 50% up to 6% plus an automatic 3% match. You put in 6% and get 12%. WOW!

Congrats to you!

[Fishing Flyer]

Congrats to the OP, you followed what is essentially a fail-proof formula. Invest in the stock market for a long time and don’t do anything - don’t freak out when it crashes. Let it ride.

To everyone who has made comments in this post like, “I’ll never have that much”, “I don’t know what I’m doing”, “I don’t like the thought of those high-fee advisors”, and so forth, take the time to read this blog: https://jlcollinsnh.com/about/

The blog is “The Simple Path to Wealth”. Simply put, invest as much of your income as you are willing over as much time as you can in low cost stock indexes. The percentage of your income you invest per year dictates the number of years you have until retirement for the same standard of living. From there, you make the choices that dictate when you can retire.

To the guy who lost money between 2008 and 2016 - the S&P 500 grew by over 60% in that time. Not remarkable, but not a loss, and there were years of buying in at a good price. You would have had to have sold out of some of your investments and come back in at a high cost to lose, or take some other action that lead to your loss.

Also, I’ve said this before, but long term investing is why I didn’t pay cash for my boat. I’ll gladly make a monthly payment at a low interest rate to keep the cost of a boat invested. I put a high priority on investing for retirement. No major purchase is made until I’m confident my goals are not impacted. That’s my choice, it’s not for everyone. To each his own.

[Bamaman]

Guessing that you are young if you have 35 years left to work. The max for 401k contributions is $19,000 per year for 2019 if you are under 50. At 50 and over, you can add another $6000 per year for catch up. You should contribute as much as you possibly can because waiting until you are late 40s and 50s will be tough to get enough to retire. 401k contributions could be your biggest tax break. With the new tax laws with the standard deduction at $12k for a single person, I was not able to itemize for the first time since I purchased my house. I upped my 401K last year to $18k from $12k and it saved me at tax time. I upped it this year to >$20K.

That all said, if you are young, you should have your 401k invested in the most aggressive funds with the financial institute that your company uses. You are young enough to ride out the market fluctuations and make some serious money. Think a few million $, not $250k! Most 401k institutions, like Fidelity, have a planning section on their website to walk you through where to invest for a given investing strategy.

I'm 58 and have my 401k set up for Growth with Income. 30% to 35% in bonds to protect some of my funds but still have domestic and foreign stock funds for continued growth. I can't afford a big down turn as I want to retire in a few years.

Finally, someone has spoken the truth about retirement savings. Forget about all those projected 12-20% ROE's on your investments are they are not going to happen.

Time is your ally, so start saving when you are young.
So is compound interest your friend.
Save as much in a 401K as your employer matches.
Then fund Roth IRA's to the max.
When you're young, play the stock market aggressively and watch your investments closely. Forget CD's and money market accounts.
Live below your means--and save until it hurts.
If your ego allows, drive old cars and trucks that are paid for.
Pay your credit cards off every month.
When you buy a home, keep it to a 15 year mortgage. A paid for home is your ace in the hole if you expect to retire young.
Never finance any toys if you have any other debts.

I was one of the last to get in on a defined pension. And I saved 10-14% for my IRA with the company matching me 5%--for 36 years. My MegaCorp decided to retire anyone 55 years or older, as of the economic downturn of 2008--when I was 58. I was very fortunate to have executed my long term financial plan perfectly. Ended up with a 5000+ square foot home in town and a lake house--both paid for. We keep a 36' fifth wheel trailer in the Blue Ridge Mountains of N. Georgia--paid for. We are going to have to start withdrawing 4% RMD's on our IRA Rollover accounts in another 2 years even if I won't need any of the money for another 5 years.

We spend a month a year in Europe and on cruises, and the 7 year old granddaughter is going to start going with us now that we have permanent custody. I have to stay fiscally strong because our little girl has to be provided for in the long run.

[Bassin08]

To the person who said the market was up 20% in 2018. Actually 2018 was the worst year since 2008, with the S&P500 being down -6.2% and the Dow being down -5.7%.

If I could go back and have a do-over, I would never invest in C class shares and I would pay very close attention to the expense fees on mutual funds. We also put my wife’s IRA in a five year fixed annuity in 2008 that was at 5% decreasing to 3% by the third year. It is still there today at 3%, but we have 90% of our money in fixed income. Too old to lose now!

The one thing that you can do for retirement success, is to have your home paid for and stay debt free.

[K_Mac]

I've had a 401K since I was 19. Been with the company long enough that they match 125% up to 6%

Was 75% to 6% first ten years, 100% to 6% years 10-15

Haven't touched it and don't plan to

[contium]

This generation will be paying off education debt until they die. Will be lucky they manage to buy a house. Let alone save for retirement. At least for those in areas like SoCal, SF etc.

[Rangerman2006]

Why are all of you guys saving money? Global warming is going to end the earth in less than 12 years

[Axkiker]

So what kind of % are you all making on your 401k when you go to aggressive investments ?

[AustinV]

I’m 24 and between my amazing work annuity and personal investing/retirement I too will be a multi millionaire when it comes to retirement. Hopefully I can find a way to become a millionaire long before then though lol. Saving and investments are amazing.

[FishFish]

So what kind of % are you all making on your 401k when you go to aggressive investments ?

Most years I'm well over 10% return. 100% aggressive stock.