What do I aim for?

Discussion in '401k, IRA and Retirement' started by Gavin, May 27, 2014.

  1. Penny

    Penny Well-Known Member

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    My bottom line is to not be indigent in America which is a pretty specific simple goal all things considered. I want to establish that baseline and work upwards.

    I obviously cannot plan for unexpected health problems, and I do not have to account for any other person whatsoever--just my earnings and just my expenses, and no hope of a big inheritance either.
     
  2. Rosyrain

    Rosyrain Senior Investor

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    That is great the you and your wife survived the great recession intact with out job or home loss. I am in a simian boat as you are in with the amount of money in my account, and I am a couple years older than you are. We will not be buying our house for another couple of years though.

    The best thing to do is start talking to a financial planner now while you are still young to help you figure out what to aim for. The good thing about being relatively young is that we are able to invest in a little more aggressive stocks because we can recoup quickly if a little money is lost. The older you get the more conservative you have to be.
     
  3. Corzhens

    Corzhens Senior Investor

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    Pardon me for butting in your territory. I am also thinking of my retirement pay but we don't have that 401K here. I was just curious about that $65K a year that you mentioned. If my understanding is correct, that would be $5k a month as pension? Gee, that's already a fortune here for the middle class. When American citizens would be coming over, they are just so glad to know that their pension of $!,000k is more than enough. But I understand that in the US, that amount is a pittance and would need food coupons to augment it.
     
  4. JR Ewing

    JR Ewing Super Moderator Staff Member

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    Yeah, I remember when I was younger and first went overseas how far the US dollar would last. :D

    Of course places like Singapore and Aus are pretty similar to us. But the US dollar went a long way in most of SE Asia for sure.
     
  5. coloradogy

    coloradogy Active Member

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    JR, sounds like you used the proverbial 4% Rule? I think its a great start but you later mentioned one item that needs to be accounted for, inflation. But other things that can put a damper on retirement are adviser fees and taxes. These would favor a lower percentage, say 3-3.5%. However, depending on the retiree's investments, the yield on those investments (dividends etc.) might provide enough funds to make up for the taxes, fees, and inflation effects.
     
  6. JR Ewing

    JR Ewing Super Moderator Staff Member

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    Yeah, I did mention inflation also in the next post - $65k in 30 years won't buy what $65k will today. And investments such as Roth 401ks and municipal bonds can be good ways to minimize one's tax burden.
     
  7. Corzhens

    Corzhens Senior Investor

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    That cost of money is hard to predict. In fact, that cost of money would ruin your computation particularly the pension plan or retirement money you are thinking. About 10 years ago, the 500 pesos here (about $10) can buy food for the day for a family of 4. Now it still can but you have to downgrade the quality because of the cost of money. But for a 20-year comparison, hmm, the 500 in 1994 can make that family of 4 eat for a week and with good quality food at that. Do you see the effect of inflation in 20 year's time?
     
  8. norms options

    norms options Well-Known Member

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    Sounds like y'all are off to a great start. If you can ramp up your savings, you should be able to achieve your goals and then some. A few things you need to always keep in mind are fees, taxes, and inflation. In regards to taxes, I would recommend that you and your wife both open a
     
  9. norms options

    norms options Well-Known Member

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    OOPS--having editing issues so I will continue here. I was saying that I would recommend you and your wife each open a ROTH IRA and both max those out before using other investment vehicles. This will allow you to save 11k combined per year and in a ROTH, all of your growth is tax free. To help keep fees low, I would recommend looking at Vanguard online for you investment accounts. They have some of the lowest expense ratios I have found anywhere and they also have a ton of high quality funds to choose from. Finally, to help with the inflation issue, you could consider selling covered calls on the individual stocks that you are holding long term to help boost your returns.

    Hope this helps..
     

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