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Or you could keep maxing for an extra 5 years and end up with a significantly higher amount. Or hell, go freelance for a decade from 60-70 before you truly retire. Only withdraw from retirement accounts if you need to, while they hopefully continue to grow. Take 3 months off if you feel like it.
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Apr 24, 2014 20:40
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38 years, 4%, and $15,000 a year (+8 years, -$8,000 saved/year) does get you almost the exact same amount at $1,289,555. I was just thinking 30 because most people take several years to get their careers going and have enough money to save, and maybe there will be a few years in which you don't contribute due to things like student loans, having a baby/losing an income, and kids' college tuition.
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Apr 24, 2014 20:42
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If you have the means to save $23k a year on top of everything else, yeah, I think you can call yourself 'wealthy'. From here: http://money.cnn.com/2014/02/13/retirement/401k-balances/ The average balance in IRAs and 401ks combined of people age 55-64 is $261k. If you're looking to retire with $1.2m, you're far less boned than most people in this country.
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Apr 24, 2014 20:56
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Daremyth posted:The average balance in IRAs and 401ks combined of people age 55-64 is $261k. If you're looking to retire with $1.2m*, you're far less boned than most people in this country. *In 2014 dollars, even  My parents are 56 and their 401ks combined are under 250k. I'm not sure what their plan is, but I had to pay rent from age 23(and was going to college on scholarships before that) so I'm not planning on paying for them 
Nail Rat fucked around with this message at 21:03 on Apr 24, 2014 |
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Apr 24, 2014 20:58
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I've been maxing my 401k and my Roth, so I feel ok about retirement (which won't be for another ~35 years). I just discovered that we get a pension too. I've never even thought about pensions before, and I'm struggling to translate the language here:quote:[The employer] uses two methods to calculate the amount of your Pension Plan benefit, and you receive the greater of the two amounts. If I understand this correctly, there's some virtual account that accumulates 5% of my salary. Then when I retire that amount undergoes a conversion factor (of what?) into a monthly payment. Is this significant?
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Apr 24, 2014 21:50
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Re: complementing S&P 500 with mid-/small-caps in your 401k: If you have comparably-priced options (though they are always going to be at least slightly more expensive), you should supplement the S&P 500 to more closely approximate the total market. If you see an "Extended Market Index", these are funds designed specifically for this purpose. A 4:1 ratio of S&P 500 to Extended Index is appropriate. If you have to slice-and-dice with separate mid-cap and small-cap funds, do some trial-and-error with different mixes in Morningstar Instant X-ray until you get a "Stock Style Diversification" box that looks like the Total Stock Market one (VTSMX).
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Apr 25, 2014 03:41
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Nail Rat posted:Keep in mind that 51,600 inflation-adjusted is about 23% non-taxable(so it becomes more like a 55k income). Also, while social security will probably not have the trust anymore and so payments will be reduced, assuming an extra 10k a year (inflation adjusted) for social security seems a safe assumption for someone who was working that long. Of course, that's not taxable...so under that scenario again, you're looking at a real inflation-adjusted income equivalent to about an 70k salary. Yeah, plus if you subtract a mortgage payment in 2014 money of say $1300/month * 12 months = $15.6k. Now since you pay your mortgage with taxed money, that $15k at 25% taxes is really $20k before taxes. Now you're talking about living the life of someone making $90k a year in 2014 with a mortgage/rent. But not just someone making $90k. Someone making $90k and spending ALL OF IT. I bring home ~$50k after taxes/401k, and I save about $20k of that, and to be quite honest it feels like I do what I want. I'm no Millionaire Mike Mustache or whatever, although I'm down with all of that. I spend whatever I want on travel/food/alcohol/fun/electronics/clothes. If you were to tell me that I no longer had to pay rent, sock away 401k dollars, or save money, I don't know what'd I'd do with myself. It'd be a spending orgy. Could I buy a $100k Porsche? No, but I'm not a douche, I wouldn't even want to. I could still almost literally do whatever the gently caress I want: travel bi-monthly, drink and eat like a drunken sailor, buy whatever clothes, electronics, books and various knick knacks suit my fancy.
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Apr 25, 2014 07:07
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If I currently don't own a home but want a little exposure in real estate, the best way to go is by putting money into an REIT, correct? What about these different calculators that also recommend international REITs? Is that exposing myself to a high-level of risk?
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Apr 25, 2014 18:09
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My fiancee, who is currently working a poo poo fast food job, is possibly going to get a teaching job at a Catholic school soon(ugh). The pay will be poo poo, probably 30k or maybe even a little less, but I was kind of surprised at how good the 503(b) is - Vanguard funds, matching half of the first 4%, and 3% of salary contributed quarterly as a special deposit. So she just would have to contribute 4% to get 18%  If she gets that, she'll also max her Roth IRA, so cumulatively we'd be investing about 31k per year with 11k of it being post-tax 
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Apr 25, 2014 20:29
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Nail Rat posted:My fiancee, who is currently working a poo poo fast food job, is possibly going to get a teaching job at a Catholic school soon(ugh). The pay will be poo poo, probably 30k or maybe even a little less, but I was kind of surprised at how good the 503(b) is - Vanguard funds, matching half of the first 4%, and 3% of salary contributed quarterly as a special deposit. So she just would have to contribute 4% to get 18% 3% of total salary deposited or 3% of her quarterly salary deposited?
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Apr 25, 2014 21:27
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Bloody Queef posted:3% of total salary deposited or 3% of her quarterly salary deposited? Well, I initially read it as 3% of annual salary deposited, but I'll have to look again. Either way, an effective 5% match on putting 4% in would still be nice. edit: Upon looking through another document, it looks like it is 3% of quarterly earnings. Well, make that like 28.5k invested per year then...I'll take it if we can keep that up. Nail Rat fucked around with this message at 21:36 on Apr 25, 2014 |
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Apr 25, 2014 21:30
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Your math is fuzzy... She effectively had a 5% matching 401k on 30k salary. So you would earn an extra 1.5k in matching funds. Contributing 4% of salary would gross 2.7k per year, plus maxing Roth ira is 8.2k per year. The max she could possibly contribute including Roth ira and matching is 17.5 + 1.5 + 5.5= 24.5k per year. Check if she can do a Roth 401k. At her income it is tough to justify using a traditional over a Roth.
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Apr 25, 2014 22:57
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The 28.5 is what we will be investing combined. At my current rate, I'm investing a little over 20k per year myself. By the time the teaching job starts we'll be married so Roth 401k won't be as clearcut(25% bracket for sure). Close to 40% of that 28.5k will be Roth IRA money from the two of us anyhow. Nail Rat fucked around with this message at 23:12 on Apr 25, 2014 |
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Apr 25, 2014 23:10
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How about a little fund selection help? I currently contribute to a 457(b) deferred compensation plan through work. The plan offers about 50 funds through Vantagepoint. When I started 11 months ago, I wasn't really thinking critically about retirement savings, so my contributions were sent by default to the Milestone 2050 Fund. Now that I'm paying more attention, I see that the fund has an expense ratio of 1.10%. I'd like to get out and move into one of more of Vantagepoint's low-expense index funds: -500 Stock Index Fund (expense ratio: 0.21%) -Broad Market Index Fund (expense ratio: 0.22%) -Mid/Small Company Index Fund (expense ratio: 0.22%) Any thoughts about how I should split between these, or whether it makes sense to just move into one of them?
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Apr 26, 2014 00:30
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Nail Rat posted:The 28.5 is what we will be investing combined. At my current rate, I'm investing a little over 20k per year myself. I missed that, good for you guys! My wife and I are in a relatively similar position. I'm the higher earner, but she brings about 50k. I highly suggest investing ALL of your wife's income. Make it a goal to save a reasonable amount from your paycheck, 10% or so, and then save 100% of your wife's pay. It may sound crazy, but this way there is minimal adjustment/shock if one of you losses a job for whatever reason (baby?) Your cash flow will be the same as from before she got a good job, but your savings will turbo charge. My first 5 years of marriage was mostly me making money while wife finished school. During that time we saved up about 60k total. Since my wife got her job we now save 60k per YEAR. It's intoxicating watching our retirement balance go up so fast and we are on track for an early retirement. The one thing that took some major relationship effort was getting my wife to recognize the fruits of her labor. It was demoralizing for her to work a professional job and bring home 250/week take home! It takes a unified couple to make this work and think of it all as our money. Do what you can to make her feel valued and cherished beyond just adding to the 401k balance (speaking from experience here). All the best. Velochis fucked around with this message at 01:57 on Apr 26, 2014 |
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Apr 26, 2014 00:35
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pig slut lisa posted:How about a little fund selection help? Broad market = cap weighted proportions of the 500 fund + mid/small fund Option 1: Buy only broad market. Admit that you cannot beat the market and accept market returns. Option 2: Believe that smaller stocks are riskier (demonstrably true) and therefor should have a higher return than large stocks (probably true). You would then overweight small/mid stocks relative to their market cap. The end result is a riskier portfolio, but higher expected returns. The market cap of big vs small is about 80-20, so you could tilt up to a 70-30, or 60-40 to theoretically increase your returns (and risk). Both of these are fine options. A lot of people would argue for a strictly market cap three fund portfolio, but others believe overweighting small cap is justified for a younger investor with a long horizon. However, your portfolio should never be just US stocks. You also want some international exposure, most folks suggest 30% off your stock allocation. The overseas equity index fund would work fine. Also depending on your risk tolerance you probably want to buy some of the core bond fund. Here are a couple options you could do (adjust percentages according to your risk tolerance and international exposure desire). Option 1: Market Cap (85/15 stock-bond split, US-Intl split is 70-30) 15% core bond 60% broad market index 25% overseas index. Option 1: Overweighting small Caps (85/15 stock-bond split, US Big-Small split is 60-40, US-Intl split is 70-30) 15% Core bond 36% 500 Stock Index Fund 24% Mid/Small Company Index Fund 25% overseas index. Major edits: typed first draft on cell phone and it looks like crap! Velochis fucked around with this message at 02:17 on Apr 26, 2014 |
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Apr 26, 2014 01:00
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Velochis posted:stuff drat, 60k a year is pretty awesome! The prospective job isn't a gigantic raise for her after retirement contributions(about 900 a month more than she's getting now) so we wouldn't invest all of her salary - but it's very possible we'd invest all of that pay increase, as she'd start a Roth and max it, and I'd probably take the money I give her for groceries now and add it to my 401k. That'd put it at about 36k a year invested, plus about 6k to savings. If we had to go back to one income for awhile, I think I could easily dial that back and feel okay about how much was going in still. It was a battle at first but she's all in on budgeting and investing now so that's nice. Nail Rat fucked around with this message at 20:06 on Apr 26, 2014 |
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Apr 26, 2014 12:12
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Nail Rat posted:drat, 60k a year is pretty awesome! The prospective job isn't a gigantic raise for her after retirement contributions(about 900 a month more than she's getting now) so we wouldn't invest all of her salary - but it's very possible we'd invest all of that pay increase, as she'd start a Roth and max it, and I'd probably take the money I give her for groceries now and add it to my 401k. That'd put it at about 36k a year invested, plus about 6k to savings. If we had to go back to one income for awhile, I think I could easily dial that back and feel okay about how much was going in still. It was a battle at first but she's all in on budgeting and investing now so that's nice. At 36k/ year you are way ahead of the curve. Just don't neglect your significant others needs or make her feel marginalized for earning less than you (ask me how I know!). It happens slowly over a long period of time. You have to consciously make an effort to cherish her and make her feel like more than an extra paycheck.
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Apr 26, 2014 20:17
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How far back in this thread do I need to go to figure out what I should be doing with about $50k that is currently earning a crap 0.75% interest? My Roth & 401k are maxed each year and I will still have a healthy emergency fund after this. Not currently saving for a big expense (e.g. a house) and wouldn't expect to for at least 2-3 more years.
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Apr 27, 2014 15:08
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the littlest prince posted:How far back in this thread do I need to go to figure out what I should be doing with about $50k that is currently earning a crap 0.75% interest? My Roth & 401k are maxed each year and I will still have a healthy emergency fund after this. Not currently saving for a big expense (e.g. a house) and wouldn't expect to for at least 2-3 more years. http://www.ally.com/bank/savings/
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Apr 27, 2014 16:04
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I realize that low interest rates are meant, intentionally or otherwise, to induce people to spend, but 1.6% APR locked in for 5 years, geh.
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Apr 27, 2014 16:08
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You could also open a taxable investment account. With 50k you could even do admiral shares with vanguard with 20% bonds, 60% total stock market and 20% international or something.
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Apr 27, 2014 16:17
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Nail Rat posted:You could also open a taxable investment account. With 50k you could even do admiral shares with vanguard with 20% bonds, 60% total stock market and 20% international or something. Stated time was 2-3 years, way to short a horizon for that mix. A super safe option would be 6 month cds so that when interest rates jump up, you'll be able to take advantage.
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Apr 27, 2014 16:29
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Check out your local credit unions. Some may offer something well above 1% APY. I have two accounts, one of which yields 3% up to $10,000 and an associated savings account that yields 1.5% up to $10,000.
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Apr 27, 2014 16:41
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I am a fan of I bonds for your short term needs. They pay a fixed rate (currently 0.2% plus the rate of inflation. They are much like TIPS but never go down in value. the current overal rate for ibonds is 1.4%. You are locked in for one year then you can withdraw. You pay a three month interest penalty if you withdraw before 5 years. Also look at the penalty for CD early withdrawal. It might be that 1.6% - penalty is still pretty good. That said, you aren't saving for any big purchase why not accept some risk and open a taxable brokerage?
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Apr 27, 2014 16:45
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the littlest prince posted:How far back in this thread do I need to go to figure out what I should be doing with about $50k that is currently earning a crap 0.75% interest? My Roth & 401k are maxed each year and I will still have a healthy emergency fund after this. Not currently saving for a big expense (e.g. a house) and wouldn't expect to for at least 2-3 more years. It also depends on your investment window, if you want short term withdrawals something more liquid like a CD makes more sense. I also like Muni bonds, (MUB) for a decent ETF since they are federal tax free and also even state income tax free depending on where you live right now.
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Apr 27, 2014 17:23
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the littlest prince posted:How far back in this thread do I need to go to figure out what I should be doing with about $50k that is currently earning a crap 0.75% interest? My Roth & 401k are maxed each year and I will still have a healthy emergency fund after this. Not currently saving for a big expense (e.g. a house) and wouldn't expect to for at least 2-3 more years. This is a bit of a tricky question because 2-3 years out for a house isn't very long and what you do with the $50k will depend on how much house you're going to want to buy and how much $50k is to you. For example, suppose you think you want to buy a $300k house. You'll want $60k (20%) down, and another $20k or so to give you some room for closing costs, add some negotiating power via paying points, and for moving/renovation costs. If your saved $50k represents a single year's savings, then put it in a taxable account and don't worry about it because you can get the $80k in cash you would need very quickly. If your saved $50k represents 5 years of savings, then you should follow what others are saying with regard to short term, near risk-free investments because you'll need to keep saving like that and not risk your money.
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Apr 27, 2014 17:41
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ETB posted:Check out your local credit unions. Some may offer something well above 1% APY. I have two accounts, one of which yields 3% up to $10,000 and an associated savings account that yields 1.5% up to $10,000. The best one I can find is one that does 3% up to $500, and then far crappier rates than what I have now. Velochis posted:I am a fan of I bonds for your short term needs. It looks like I Bonds and an Ally CD are decent options (with I Bonds probably being better). I Bonds only allow purchases up to $10k per year per person though. I might do that and then put the rest into Ally. What kind of time frame is a brokerage best for, and what kind of effort level would one require? It looks like I can't buy Vanguard funds with one. 
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Apr 29, 2014 15:56
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Dude, just buy a mutual fund from Vanguard directly. They probably have one that's perfect for whatever your time horizon is.
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Apr 29, 2014 18:32
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slap me silly posted:Dude, just buy a mutual fund from Vanguard directly. They probably have one that's perfect for whatever your time horizon is. Or a brokerage account directly with Vanguard and buy their ETFs. Make sure to read this: http://www.bogleheads.org/wiki/Principles_of_tax-efficient_fund_placement I'd still max out an I-bond for the 2-3 year time horizon though.
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Apr 29, 2014 19:03
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Taxable brokerage acct can come from any provider including Vanguard! Different brokerage houses have differing rules regarding fees and what you can purchase. I use Fidelity for conveniences (they have my 401k/ira). You can use whomever you want. If you want to purchase Vanguard funds you are definitely better of with Vanguard ad your brokerage custodian. However, you can also go with whoever runs your ira. Timeframe is really just a proxy for risk tolerance. Someone with a 30 year timeframe can afford to ride the highs and lows much more than someone who is saving for a house in 3 years. Consider both the timeframe for when you will need the money and your personal risk tolerance before you invest. In my case my taxable is a combination retirement and emergency fund. I hope to not use out till I'm old, but can liquidate if needed. This absolutely isn't for everyone, and I only carry 2 months living expenses in cash. I realize that I may lose my job the precise moment the market tanks, but I am comfortable with carrying the risk in search of higher yield. Again, what is an appropriate risk for me (DINK,no debt aside mortgage) isn't for everyone. Only after a detailed look at yourself and your situation can you decide how much risk to assume. Some rough guidance I've read is 10+ years for stocks and 5+ years for bonds otherwise use CDs or ibonds. In assessing your risk tolerance: what would you regret more. 1. Losing half your principle due to market crash. 2. Gaining 2% in a CD while the market doubles in value (lost opportunity cost)
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Apr 29, 2014 20:12
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I job-hopped a bit over the last few years, and as a result I have a couple 401k's from various employers. I rolled my very first one into a Roth IRA, so I have I think 3 401k's. Part of it is just getting calls/emails/mail from these people all the time, the other part is I'd rather just have it in one drat account. Is there any reason I shouldn't roll them all into one? The HR lady at my old job said if I leave the money with them, I could make more because they charge the company lower fees etc than my Roth.
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May 5, 2014 15:21
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Bob Morales posted:I job-hopped a bit over the last few years, and as a result I have a couple 401k's from various employers. I rolled my very first one into a Roth IRA, so I have I think 3 401k's. Part of it is just getting calls/emails/mail from these people all the time, the other part is I'd rather just have it in one drat account. Numbers don't lie. What are the fees? You'll want to roll it over almost without question.
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May 5, 2014 15:22
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quote:I could make more because they charge the company lower fees etc than my Roth. If your IRA, be it Roth or traditional, is charging you any fees you're doing it wrong. The whole benefit of an IRA is that you can use a brokerage that charges no account fees and then have access to a wide world of very cheap, low-ER funds. At best your 401k offers some of the same very cheap funds, and at worst it is costing you a lot more than an IRA with someone like Vanguard or Fidelity. My current 401k with my employer through Fidelity is pretty decent, we just got a bigger selection of low cost index funds, and yet I still wish I could roll it all over to an IRA without quitting my job. 99.9% of the time an IRA is better than a 401k in terms of freedom, flexibility, and low costs. Guinness fucked around with this message at 17:51 on May 5, 2014 |
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May 5, 2014 17:47
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I wouldn't be surprised if they're saying that they can get you John Hancock's Target Retiremend funds at 1.45% rather than 1.57%, rather than saying that they can get you Vanguard funds with reduced expenses. Your IRA and Roth should have NO fees other than the expense ratio, but its'a 401k provider's job to try and keep your assets with them so they can gradually transfer them to themselves.
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May 5, 2014 17:50
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John Hancock commercials "we just want to know...the RIGHT thing to do  " piss me off so much.
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May 5, 2014 17:55
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Nail Rat posted:John Hancock commercials "we just want to know...the RIGHT thing to do Truly criminal. "Investing is HARD and SCARY so pay us money to do it right."
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May 5, 2014 18:07
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My parents have nothing for thier retirement and it scares the poo poo out of me. In 2004, I started my 401K at the company I'm still working for and I chose my contributions to be 50% in an S&P Index, and 50% in a 2045 Target Retirement Fund. Without changing anything, I find it funny that the balances are like 50.2% and 49.8% between the two funds after 10 years.
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May 5, 2014 19:51
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That makes a fair amount of sense as a 2045 target date fund would be pretty aggressive in stocks and equities in 2004-2014, 40+ years out from retirement. Also yes it is frightening how many Americans, especially people in their 40s and 50s, there are that are woefully unprepared to retire. A whooooole lot of elderly people are going to be living essentially on SS alone. Better than abject poverty, but hardly a comfortable life especially if you don't have a paid off home by then and aren't debt-free. Guinness fucked around with this message at 20:04 on May 5, 2014 |
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May 5, 2014 20:02
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LorneReams posted:Without changing anything, I find it funny that the balances are like 50.2% and 49.8% between the two funds after 10 years. I think you'll find that the 2045 fund itself is at least 60%+ an S&P/other domestic index fund, so it makes sense that they'd perform similarly.
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May 5, 2014 21:11
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