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Reading all of the posts here has made me very nervous about my ability to retire at some point. Currently I make around $30k a year and contribute 6% of my pre-tax pay to my company's 401k (2% match). I only have around $1k in there so far - the kicker is that I'm 39, so I'm looking at maybe 31-33 years before retirement age, and all my projections show me accumulating a little over $1m in that time. I initially thought that would be a good amount, but after reading some of the posts here I'm feeling decidedly anxious about having enough to even die with dignity. About the only thing I feel good about is that I only have a $2500 loan as my debt and that my credit score is in the 790-800 range. I rent, paying $450 a month, and I own my truck and some furniture, but that's about it for me. At the end of the month I have about $300-350 to stash in savings, but I'm using it to build up my emergency fund so that I have 3-6 months expenses saved up. Of course, that means it will be at least a year, probably two, before I have enough money to put into a Roth IRA, which over 30 years will cost me quite a bit in earned interest. What more could I be doing to accelerate the increase of my retirement nest egg (aside from living like a homeless person since I already live like a pauper)?
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Jun 15, 2011 20:42
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Daylen Drazzi posted:What more could I be doing to accelerate the increase of my retirement nest egg (aside from living like a homeless person since I already live like a pauper)?
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Jun 15, 2011 21:02
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I'm thinking about taking a year off in 4-5 years. Where I work, you can take a 25% paycut for four years and then have a year off at full pay. I'm worried about how this will affect my retirement savings. Right now I've got $25k in my RRSPs (I'm Canadian). I make about $80k/year and contribute $200 biweekly, plus ~$2k top up once a year. On the plus side, it won't be 25% less in net income because my tax % will be lower, but it's still going to be a fair chunk of change. My plan is to either try to do a house exchange with a family or rent out my house and try living in a couple different places for the year. Rental rates here are very high and will probably not drop in five years. Has anyone done something like this? Any tips? I'm mostly worried about keeping my RRSP contributions up for those four years because consistency is key. If nothing else it's probably a great opportunity to learn how to tighten my belt.
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Jun 15, 2011 21:50
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Daylen Drazzi posted:What more could I be doing to accelerate the increase of my retirement nest egg (aside from living like a homeless person since I already live like a pauper)?
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Jun 15, 2011 23:02
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Bozart posted:If you have direct deposit (because you have a job) then you don't have account minimums or fees. OK, I see now. I guess you were implying that he was successful in entering the workforce not just the job market. These days that's not a foregone conclusion.
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Jun 16, 2011 17:00
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This is the opposite of the idea of this thread, but I need to access some of the money in my Roth IRA to cover some unexpected (large) bills. I've read a couple articles that say I can withdraw my contributions at any time, without penalty. For example: http://www.fivecentnickel.com/2006/05/02/withdrawing-your-roth-ira-contributions/ The linked article is a little old, can anyone confirm if this is still true and if there are any limitations I should be aware of?
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Jun 21, 2011 18:43
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taqueso posted:This is the opposite of the idea of this thread, but I need to access some of the money in my Roth IRA to cover some unexpected (large) bills. I've read a couple articles that say I can withdraw my contributions at any time, without penalty. For example: http://www.fivecentnickel.com/2006/05/02/withdrawing-your-roth-ira-contributions/ true after 3 years of initial deposit. Otherwise I believe there is a penalty.
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Jun 22, 2011 02:49
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I have said before here that the CPI is worthless and inaccurate. I believe I have been criticized for it. Consult the following: http://www.nasdaq.com/aspx/stock-ma...dget-talksaides Pay very close attention to how this unfolds. I am sure most if not all of you have something in your portfolio that is linked to this wonderful instrument of measuring "inflation".
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Jun 22, 2011 22:38
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abagofcheetos posted:I have said before here that the CPI is worthless and inaccurate. I believe I have been criticized for it. Consult the following: Still a better rate than tbills or a moneymarket or a savings account.
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Jun 23, 2011 03:10
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taqueso posted:This is the opposite of the idea of this thread, but I need to access some of the money in my Roth IRA to cover some unexpected (large) bills. I've read a couple articles that say I can withdraw my contributions at any time, without penalty. For example: http://www.fivecentnickel.com/2006/05/02/withdrawing-your-roth-ira-contributions/ I'm pretty positive the penalty only applies to earnings, not your original contributions. So any interest on the account has to remain in there for at least 5 years, and until you're 59 1/2 to avoid the tax penalty. But you can take the actual amount you have contributed to the account out at any time.
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Jun 23, 2011 05:38
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I started my 401k way late in life (about 3 years ago, I just turned 30) so it's small and piddly right now. I have a good chunk of money in my savings account, so I want to make a "Catch up" deposit into my retirement funds. Is it better to just make a deposit (I'm thinking of doing about $5k) into my 401k account, or open a separate IRA, either traditional or Roth? If I deposit into my 401k, how does that work? Would I deposit it directly from my savings account, or ratchet up my contribution to 100% for a couple paychecks and live out of my Savings Account while it's happening? EDIT: 401k.com says I can only contribute up to 50% pre-tax, so I guess an option would be to contribute 50% for a month or two. But is that the best option? syphon fucked around with this message at 22:14 on Jun 23, 2011 |
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Jun 23, 2011 22:08
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You can't directly contribute to a 401k account from a bank account, must be through payroll deductions. You can however increase your 401k to something unsustainable from a budget perspective and withdraw money from savings to cover the difference. This effectively is transferring money from your savings into your 401k.
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Jun 23, 2011 22:21
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So it sounds like my two options are... 1) up my contribution to 50% for a couple months 2) dump $5k into an IRA (that's the taxable limit, right?) then maybe another $5k next year. I guess i'm looking for some advice on which is a better strategy. I know the rough overview of the differences in the accounts, but I don't know enough to know which is better in my situation when it comes to tax implications. Lastly, do you guys know if there's any penalty for changing your 401k Contribution Amount multiple times a year?
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Jun 23, 2011 22:29
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If your 401(k) options are not very good (higher expense ratios) then you may want to put the $5k in a Roth IRA. Your 401(k) is likely pre-tax dollars though and the Roth would be after-tax so if you upped your 401k contributions for a few months, your taxable income would be decreased and you will pay less taxes this year. You'd be taxed when you withdrew the 401k money however so you have to consider whether you think you'll be taxed higher whenever that is or taxed higher now. I personally aim for around 40/60 in pretax/post tax retirement, just another way to diversify. I don't think there is any penalty for changing your 401k contributions multiple times per year. There may be a limit imposed by your employer, but I don't think Uncle Sam cares one bit.
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Jun 23, 2011 22:39
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syphon posted:So it sounds like my two options are... First off, you aren't way late on your 401k. You are a little late. That's just a bump in the road, and you missed out on a period where you would have had serious losses, so you might even consider it a good thing, in hindsight. You'll have to look at your 401k plan to see if there are any limitations or fees. I would suggest the IRA simply because it will have more flexibility.
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Jun 23, 2011 22:39
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Thanks, I think that answers my questions! I guess i just need to decide if I want to pay the taxes now or pay them later.
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Jun 23, 2011 22:40
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syphon posted:So it sounds like my two options are... Do you have a match on your 401k contributions? Conventional wisdom is to contribute in this order: 1) 401k up to the amount you receive a match 2) IRA up to legal limit ($5,000 in 2011) 3) 401k up to legal limit ($16,500 in 2011) IRA's are something you individually (the I in IRA) setup and are done totally outside of your company. This means you can pick a good custodian with good funds to chose from (e.g. Vanguard of Fidelity) instead of whoever your 401k is through. Some companies have lovely 401k offerings, other ones have decent ones. The decision on whether or not you should do Roth or not is more of an art than a science but generally if you expect your income tax rate to be lower now than in retirement, do a Roth, otherwise do a traditional.
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Jun 23, 2011 22:45
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I didn't realize 401ks were limited to $16.5k annually, so I guess that makes the decision for me. I think my "catch up deposit" plans would have exceeded $16.5k this year
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Jun 23, 2011 22:48
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You can contribute 100% of a paycheck or bonus, but the total cannot exceed 50% of earned income. Also 16.5k excludes the match. If you are 30 and could exceed 16.5 pre-match by adding an extra 5k you are not behind (or won't be for long). Look at your strategy/options in your 401k. You would likely benefit from a lower expense ratio or different asset class. Goons like vanguard for their exceedingly low expenses.
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Jun 24, 2011 00:33
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KennyG posted:You can contribute 100% of a paycheck or bonus FYI - this is mostly plan specific.
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Jun 24, 2011 00:36
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what are the best resources out there for Canadian investors? Despite a brief crash-course in investing to beat the RRSP deadline earlier this year, I still feel totally overwhelmed. I'm 30, and have an RRSP set up with q-trade - it's $10k in two mutual funds. I have about $35K in the bank otherwise, and make between $50K-$60k/year on contract... so no employer contributions to anything at all. I graduated university when I was 23, worked for 3 years, returned to grad school and completed it without any loans - I have remained debt-free so far but it was basically like hitting the reset button on my savings. In other words, I have been saving since I turned 28. Aside from a few luxury purchases and a recent bank-busting vacation, I keep my expenses low and don't frivolously spend. When I do want something (like said vacation, or a new camera) I do work on the side to offset the cost. I buy most things with my credit card but have never carried a balance or paid any interest on it - in other words, I'm adamant about living within my means. So the big question for me is - what the hell should I do with my money? I live in downtown TO and have tossed around the idea of buying a house with a few friends, renovating it and flipping it (we're all pretty handy, and architects). This may or may not pan out. I would kind of like to just assume that it won't, but put my money somewhere that I can make a return and get it back without a penalty if we do move ahead. What's the best way to set up a TFSA? Is that even a good idea? What are other options - stock market? I feel like having it sit in a meager "high interest" savings account isn't really the way to let it grow, and even though I'm unsure what I'll be doing in the next 2 years I feel like I should do *something*
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Jun 24, 2011 00:56
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Guitarchitect posted:what are the best resources out there for Canadian investors? Despite a brief crash-course in investing to beat the RRSP deadline earlier this year, I still feel totally overwhelmed. Don't buy and flip a house in Toronto with your friends... especially with the housing market (Canada in general, Toronto even more so) like it is right now. If you might need the money in <2 years there's not much better you can do than a "high interest" savings account without running the risk that it won't be there when you need it. Some links to get you started: http://www.canadiancapitalist.com/ - Reasonably good blog discussing investing and finance for Canadians, it is what it sounds like. http://www.financialwebring.org/ - Decent but low-traffic content and forum for Canadians discussing financial matters. http://www.bogleheads.org/ - Mostly focused on the US but many of the concepts are pretty fundamental. The forum is also worth looking at. http://www.theeconomicanalyst.com/ - Awesome blog (also Canada-focused), some of the same topics as Canadian Capitalist but it's more focused on economics and less on the logistics of saving and investing but it talks about real estate in Canada a lot.
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Jun 24, 2011 01:47
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mister itchy posted:Don't buy and flip a house in Toronto with your friends... especially with the housing market (Canada in general, Toronto even more so) like it is right now. Thanks for the links - going to get started! I am in a pretty lucky position regarding the house thing - to fund my vacation I did a set of design+permit drawings on the side, a group of 3 guys that bought a house, are renovating/adding to it, and are planning to sell it for a profit in the fall. So I'll see first-hand if it's worth attempting - they bought at $350K, have a budget of $150K, and are looking to sell around 650K-700K... it's technically in Scarborough but easily accessible (and on a street where the houses are half-poo poo and half-750K), so I'm really curious to see how they do in the current market. Personally I'm waiting for a correction before jumping in, all signs are pointing to something around 15-25% downwards (though they have been saying that about the condo market here for 6-10 years, and it continues to rise)
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Jun 24, 2011 02:11
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Guitarchitect posted:Thanks for the links - going to get started! Things to think about : 1) are they friends that you are willing to lose? It really doesn't take much to make people hate each other over money. You might have to choose between talking to them ever again and getting paid. If you don't already know the answer to that question, you need to figure it out, and if you aren't ready to choose the money, don't go in with them. Most importantly - don't trust them without proof. If they say they're selling for big money, check their numbers! They may be presenting a more rosy picture to you than what is really happening, either through embarrassment, self-deception, or flat out greed. 2) what sort of additional liquidity do you have for this work? You might buy it for 350, have a budget of 150, and have a house worth 650 - and then have some unexpected costs and a long wait selling it. Can you afford to pay taxes, upkeep, etc. on this property, to wear the pain and wait for a payoff? You might have to sell it in a hurry if you don't have adequate capitalization. What happens if a contractor fucks up and then tells you that you owe him money anyway? What happens if you find something horrifically wrong with the house? Are you willing to sell a lovely house with some work covering up deeper problems to a new buyer? 3) You and your friends are architects, which is great. My father graduated from columbia architecture school, and probably learned more about building houses from this old house than from school. Do you actually know anything about the day to day of building a house? What is your advantage over a typical house builder? Are other builders making money, or is this a time for tight margins? (probably!) 4) Do you know any real estate agents? How are you going to market the house, other than telling the world, "here we are, come buy it?" Are you going to furnish it before selling it? Your optimistic case is that you sell it for 150k profit, but a real estate agent's commission can be almost a third of that. If things don't turn out as planned, you could be in the red. You don't have to give me the answer to these questions - but you should have the answers before you give them your time or money or credit.
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Jun 24, 2011 04:10
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Bozart posted:Things to think about : sorry, I guess I wasn't clear: I was the designer/draftsperson for some guys that are doing it (with the numbers I mentioned) - I just did the drawings and got paid, and that's the end of my involvement. I mention it because I think it'll be good to watch and see how well they do in the current market (not to mention how well they do with costs/construction), before considering it for myself. I have nothing at all invested in their venture. Regardless, all good advice/questions!  The friend in question (and his brother) that I'm going to do it with has built two dozen houses with his brother (who is a master carpenter/framer and contractor)... which is a good start.
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Jun 24, 2011 04:23
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Guitarchitect posted:sorry, I guess I wasn't clear: I was the designer/draftsperson for some guys that are doing it (with the numbers I mentioned) - I just did the drawings and got paid, and that's the end of my involvement. I mention it because I think it'll be good to watch and see how well they do in the current market (not to mention how well they do with costs/construction), before considering it for myself. I have nothing at all invested in their venture. Those were questions to answer before you got in the game yourself - I didn't think you were already committed.
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Jun 24, 2011 04:38
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alreadybeen posted:FYI - this is mostly plan specific. I meant legally. Someone said that you could only contribute 50% of your earned income to a 401K - This rule is a federal tax law, but it appies only to the aggregate tax year. It is allowable to permit 100% of any single check but some plans (the ones with lovely accounting software) restrict it to the general rule. KennyG fucked around with this message at 16:44 on Jun 28, 2011 |
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Jun 28, 2011 16:40
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I've been hearing of people where my wife work contributing their ENTIRE SALARY toward retirement because they have other income sources and are basically working for the love of the field but are getting paid when they didn't expect it to. They're in their 60s and above I believe, but for basically anyone in this thread, you probably can't put in 100% of your paycheck into a 401k (nor should you even if you had the option to).
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Jun 28, 2011 17:53
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necrobobsledder posted:I've been hearing of people where my wife work contributing their ENTIRE SALARY toward retirement because they have other income sources and are basically working for the love of the field but are getting paid when they didn't expect it to. They're in their 60s and above I believe, but for basically anyone in this thread, you probably can't put in 100% of your paycheck into a 401k (nor should you even if you had the option to). Are they working for minimum wage? Because they'd hit $16,500 annual cap and no longer be able to contribute.
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Jun 28, 2011 18:04
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To be fair he said they're putting 100% toward retirement, not 100% into 401k. Nothing illegal about putting all your income into a normal brokerage account.
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Jun 28, 2011 18:50
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I'm putting most of my leftover money after my regular retirment into a Vanguard fund that's mostly stock and a little bit of bonds. I'm planning on keeping the money there for a very long time. I've got a question about how Vanguard shows the return on their funds. Do the historical returns include dividends or just the cost of the share? Edit: Never mind, I found the return by scrolling down on the fund's information page. They show returns before taxes and after taxes. Yaos fucked around with this message at 14:12 on Jun 29, 2011 |
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Jun 28, 2011 19:09
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Does anyone have any advice or reading material on what ETF's I should invest my shiny new Roth IRA into? At this point, the only thing I can think of doing is googling "good ETF to invest with a roth ira", which probably wouldn't steer me too wrong, but also wouldn't give me the best of advice.
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Jun 28, 2011 19:11
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moana posted:This one since it's the lowest fee and you're going to want something close to an index fund anyway for retirement savings. Increase the bond holdings in your Roth to make everything match closer to your desired allocation (maybe switch to a Target Fund that's much sooner like 2030?). If you need help figuring out the numbers for everything, feel free to PM me or post them here. gvibes posted:My wife had similarly lovely options in her 403(b), and I ended up just dumping everything into the S&P 500 index, as it was the cheapest (State Street Equity 500 Index for you). What numbers do you need to help me balance this?
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Jun 29, 2011 18:26
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Can someone please explain to me why I should ever invest in something other than target retirement funds? I feel like there are whole teams working on coming up with the best fund composition, how can I have a better knowledge of the markets to make a better decision?
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Jun 29, 2011 18:36
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Pinkied_Brain posted:Can someone please explain to me why I should ever invest in something other than target retirement funds? Welcome to BFC. 1) Budget with positive cash flow. 2) Eliminate debt. 3) Low cost index funds.
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Jun 29, 2011 18:42
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Pinkied_Brain posted:Can someone please explain to me why I should ever invest in something other than target retirement funds? If you only have lovely target funds with high expenses (got to pay that whole team somehow!), there might be better options. It's why I went with index funds instead of whatever fidelity TR stuff was on offer.
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Jun 29, 2011 18:42
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I have Vanguard 401K. Are those TR funds better than just plain indexes?
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Jun 29, 2011 19:49
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Crazak P posted:What numbers do you need to help me balance this? I just looked this up, so I am going to write it down here so I don't have to look it up again: TR2050 is 63% VTSM, 27% total international, and 10% total bond. VTSM is about 78% (by market cap) S&P500, with the remainder in small and mid-caps.
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Jun 29, 2011 20:00
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Pinkied_Brain posted:I have Vanguard 401K. Are those TR funds better than just plain indexes?
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Jun 29, 2011 20:00
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Pinkied_Brain posted:I feel like there are whole teams working on coming up with the best fund composition, how can I have a better knowledge of the markets to make a better decision?
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