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I'm always shocked at how little most people have according to what you hear. I'm one of 6 kids of a middle middle class family and all 6 (maybe 1 exception) of us have the ability to retire comfortably before age 60 so I guess we learned from our parents.
People who had the most disposable income and the folks who were/are dutiful retirement-fund savers, I would say not impossible to have $1 mill. I was forced to live off my savings quite a bit in the past 20 years or more and ended up with absolutely zero today. So if you have a million good for you!
People who had the most disposable income and the folks who were/are dutiful retirement-fund savers, I would say not impossible to have $1 mill. I was forced to live off my savings quite a bit in the past 20 years or more and ended up with absolutely zero today. So if you have a million good for you!
I think there are too many who don't consider this fact. I also went through a lot of my 401K because of not having a job, or having a job that paid so little I had to fall back on the 401K. And my situation was not a short term thing, it went on for several years. Finding a job (I was in my mid 50s) was not easy in a world of company layoffs. And just because we lose our job doesn't mean we don't have to keep up with our bills.
Our lower income situations do not mean we were slugs. I wanted my job but it wasn't my decision.
I have nothing in a 401k account because I've never had a 401k .
I do however have a lot of money in a regular IRA and some in a Roth IRA (although a heck of a lot less than Mitt Romney)
I think the utility of various flavors of "retirement accounts" can vary a lot person by person. In my case - as someone who was self-employed - I contributed the maximum possible to qualified defined contribution pension and profit sharing plans starting in the early 1970's. About 25% of income. It wasn't hard to do it when I was young and recently out of school. I wasn't used to a high standard of living - or anything close to it. Didn't have a bunch of debt. Etc. Also - Roth IRAs didn't exist then. And it wouldn't have made sense for me to use them then even if they existed because I was in a 50% marginal income tax bracket.
I stopped contributing in 1985 and wound up rolling the money over into an IRA a few years later. And have just let the money accumulate since then - investing pretty conservatively. I now have about 8-9 times what was in the accounts in 1985. Sounds impressive. But the rate of return is about 7.3% compounded annually - and a lot of the growth took place in decades when investing was a lot easier than it is today (especially in fixed income).
By the time Roth IRAs came into existence - there was enough money in the account that it didn't make sense to do a total conversion. The taxes would have been ludicrous. At the beginning of Roths - you could do a partial conversion and spread the tax bill over 2 years IIRC. So I converted an amount that made sense tax-wise then. And left it at that.
I've never taken a penny out of a retirement account. When I hit 70 1/2 in a couple of years - I will have to start taking RMDs out of the regular IRA. Those should be in the mid-5 figure range annually. All of our income other than SS comes from municipal bonds (we don't have a pension). So I don't think the tax hit will be that awful - especially the way our health care expenses/deductions have been going lately.
I have thought about Roth IRA conversions the last few years. And - for me - they don't make much sense since the returns I'm getting on conservative fixed income investments are about the same whether they're taxable (best for IRAs) or tax free. We don't have any estate planning considerations that enter into this - but other people may - and their MMV. If I was going to take out money today from the regular IRA (just to make the smallest dent in the RMDs) - I'd just withdraw the money - not convert.
I guess there are a few morals of my story. The first and certainly most important is contribute as much as you can as early as you can. Compound interest is pretty much the 8th wonder of the world. The more time you give it the better. Note that I am far from the first person to observe this. There are all manner of articles/calculators that show this is a fact.
Second - you don't have a be a hero investing in an IRA. Even relatively modest rates of return in conservative investments can work over the long run (although today's interest rate environment certainly sucks by any historical standards). It is very nice not worrying about taxes eroding returns when you're investing in an IRA. One caveat here is if you're basically generating qualified dividends/long term capital gains in your investments - because of the nature of your investments - you will lose the benefits of those in a regular IRA. Because all income comes out as ordinary income. And you lose the benefit of capital loss deductions. I do some short to intermediate equities trading in my IRAs. My capital gains are mostly short term - and I tend to make money overall (if I were losing money consistently - I'd abandon that part of the portfolio ). So those investments work ok for me in my IRA.
Third - the regular IRA isn't better than the Roth - or vice versa - for anyone. You have to look at your individual tax situation at any given point in time.
Fourth - it is better to be lucky than good. There are times when it's easier to make money than others. Other times when it's easier to lose. I am glad I was lucky. Robyn
Hi, I really appreciate what you have written here and in some other posts on this thread.
Sometimes I think it's a comparison game here on this thread, who's got the most and some don't mind telling it. When I was a lot younger, I compared stuff too, but as I've gotten older I believe it is all about being happy with what you have. It's not about your neighbor having a million bucks. Big deal. I'm not terribly impressed. Does it make that person a good person? Do they deserve more respect than those of us with a lot less? I don't think so. And, God forbid, what happens to that millionaire if they have the misfortune of coming down with a deadly disease and end up spending that million in the hopes of being cured.
One of your other posts talked about how spoiled we are. Boy, have you got that right.
Money is not the cure for everything. Old saying..... money is the root of all evil.
I don't have a problem with people who have money or being spoiled a bit if you have the money. What I take issue with is the promotion of the idea that anything less than retiring with a large nest egg is failure.
The apostle Paul, in his first letter to his young disciple, Timothy, had this to say: “For the love of money is a root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs” (1 Timothy 6:10). Now this verse is often misquoted as saying, “Money is the root of all evil.” Notice how “money” is substituted for “love of money” and “the root of all evil” is substituted for “a root of all kinds of evil.” These changes, while subtle, have an enormous impact on the meaning of the verse.
There are plenty of examples that wonderful things can be achieved with money such as the Bill and Melinda Gates Foundation, William and Flora Hewitt Foundation, John D. and Catherine T. MacArthur Foundation etc.
I think the first part..... money is the root of all evil....... can stand as it is with the first words from the bible "the love of money" being "understood" as in many cases of the written word (some words not needing to be spelled out).
There are plenty of examples that wonderful things can be achieved with money such as the Bill and Melinda Gates Foundation, William and Flora Hewitt Foundation, John D. and Catherine T. MacArthur Foundation etc.
Yes, there have been wonderful things done by people like the Gates and MacArthur, but not everyone has that kind of money. Some who are poor can chase after schemes to find more of it and make their situation even worse (gambling?, stealing?). IMHO, that is when money can become the root of all evil.
And keep in mind that not everyone agrees with the bible and what it says. And that in itself does not mean that person is bad.
The thing is you can go back 15 years and dig up data and it was just as gloomy; over half the retirees were certain to be in poverty. Yet it has remained steady at about 10% for the over 65 population:
Demographically that makes sense. Successively, retirement outcomes improved for the Lost, GI and Silent Generations.
Boom is a mixed bag. Early Boom (aka Aquarians) are generally in good shape having rode the asset / real estate appreciation trends of the 80s and 90s. Later Boom (aks Discos) are experiencing or will experience less and less positive outcomes, late 1950s cohorts will have challenges.
X and Millennial will experience successively worse outcomes.
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). So those investments work ok for me in my IRA. 
