I know it's never too late to start....

Discussion in '401k, IRA and Retirement' started by Hyperion, Aug 29, 2015.

  1. Hyperion

    Hyperion Well-Known Member

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    ...but I still do not have any retirement fund and I am 26. Is this bad? I have been unable to establish a stable career, or finish my education. I know I am not in a good place financially currently, or heading into the future, but does anyone have some advice? I can not even afford to repair my car, much less start saving for the future. I budget every single dollar I make too. I know where my money is going and what I am spending it on. It's not stupid stuff.
    I never wanted to complain and moan about the state like some Occupy lout, but it is really rough out there right now. I'm on Worker's Comp right now too, and both my jobs let me go. Fuck America. I would have posted links, but the system is not allowing me to for some reason.
     
  2. baudwalk

    baudwalk Senior Investor

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    Unfortunately my suggestions are pretty broad-brush and probably too obvious, so I'll apologize in advance. Completing your education is important. Some community collegss have low-cost or free courses. Does your state have career training programs or aptitude testing as part of career guidance? Would volunteer work at a hospital or medical care facility or community center lead to a position? As a last resort would relocation to another location or state be a consideration? Think (as best you can) outside the box and don't be afraid to ask about career resources and ask for help. If one person says "no" ask where or who else you might seek guidance from. Network with friends and acquaintances. Ask those who know you about your strengths and weaknesses, adjust accordingly. Most good jobs are found by indirect referrals, not pounding the pavement or answering want ads. There is a science to networking leading to jobs and careers, and how to interview; your library and the 'net should flesh out the how-to. Good luck and let us know your progress.
     
  3. crimsonghost747

    crimsonghost747 Senior Investor

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    It's not that bad. Most 26 year olds don't have a big retirement fund, it's normal. And to be honest, I wouldn't worry about it so much right now. Sort out the job/education stuff first and then once you get a stable job start contributing to your retirement fund each month.
     
  4. FrankieD

    FrankieD Well-Known Member

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    I will give you my honest feelings: yes, it's bad. By "bad" I mean not good because you want to get any reasonable system set up so the snowball starts growing and you are in the habit. I don't care if it is $25 a month. If you are in a situation where you can't spare $25 a month, then yeah, that's bad.

    Now as for your poor financial situation I am truly sorry about that, I know that isn't a happy place to be. As you consider what baudwalk says, perhaps take on side jobs to make up the income - jobs you can walk, carpool, or bike to, to save gas money and not have to repair your car right now. At least fill up your weekend with some side work so you are free during the week to network and go on interviews.

    You have to really want it and do what you can to move forward. Think about something you love doing and consider starting a small side business with it. We tend to be successful doing the things we really enjoy. Hopefully you can come up with something you enjoy AND have skill or talent with. Good luck my friend, hang in there but be an animal with your effort starting today.
     
  5. JR Ewing

    JR Ewing Super Moderator Staff Member

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    Very good advice as usual from our Elder Statesman. ;)

    It's never too late to start, and 26 is very young. If you start putting away money before you're 30, you'll be ahead of most people.

    If you start putting away $100 a week or $5k or so a year into an IRA / Roth, after 40 years you'll likely have a couple of million if you keep expenses down and don't take any money out during that time. This assumes you average the ~ 10% total return during that time that the S&P has averaged over the last 50 or so years.

    And if you find a good job with a 401k or similar plan, you'll be smart to also try to put $100 or more a week into that if you can - particularly if they offer matching. You could easily accumulate another several million or more here, particularly if such a plan can be maxed out - 401k plans have much higher contribution limits than IRAs.

    https://401k.fidelity.com/public/content/401k/Home/VPContributionLimits

    Frugal living will be important, at least early on. Many (if not most) young people skip on the retirement planning in lieu of buying as much car and other stuff as they can. Don't be like them. Put your retirement first, a home second, and expensive cars and any other luxuries a distant third. Wait until you're making well into 6 figures and have a nice nestegg before you start buying luxury autos and rolexes.
     
  6. FrankieD

    FrankieD Well-Known Member

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    Hyperion, let me throw this in as well, because it was one of the first concepts I read about when I started gaining financial literacy: compounding interest. The reason it is so important for you to start asap isn't just because of the power of habit I referenced in my earlier post, but the compounding action you benefit from later on. Check out this classic chart comparing two people who contributed the same amount of money per year when they did invest, and averaged a 9% return (typical of stock market type returns long-term, historically). Check out their very different contribution histories, though.

    Person "A" contributed $2k per year for only 8 consecutive years when they were young, then STOPPED for the REST OF THEIR LIFE.

    Person "B" also contributed $2k per year, only they started when Person A stopped. Person B then proceeded to contribute for 37 consecutive years, collecting dividends and interest, while Person A only collected the dividends and interest.

    A - 8 years of investing
    B - 37 years of investing

    When asked to name the greatest invention in human history, Albert Einstein simply replied "compound interest."

    Here is the power of compounding interest:

    riskology.co/compound-interest/
     
  7. baudwalk

    baudwalk Senior Investor

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    Elder Statesman? Heh. I just had a head start on the younger generation here..
     
  8. Onionman

    Onionman Senior Investor

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    In the bigger scheme of the world 26 is not old at all. Yes, ideally you should have started (and half of US households do not have any retirement savings), but it really does depend on a lot of variables.

    For all we know you might be planning on living a single life living on an island in Thailand working as a consultant into your 80s. In other words, you may be looking at lower family expenses and living and health costs, while running a business until the end. Ultimately, it really does depend on what retirement is meant to look like for you. There are always going to be off-the-shelf solutions that might suit and you should start working towards something, but don't assume that these will meet all your lifestyle needs and intentions.
     
  9. baudwalk

    baudwalk Senior Investor

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    So, Hyperion, inquiring minds want to know. What steps have you taken or what have you decided to do in bootstrapping yourself up?
     
  10. JR Ewing

    JR Ewing Super Moderator Staff Member

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    I just turned 46 - I don't look it, but sometimes I do feel old as hell. :D


    Yes, the power of compounding is where it's at. And the ability to defer or even eliminate taxes on any realized capital gains, dividends, and interest over that time via traditional or Roth IRA / 401k instruments will be a big help as well.
     

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