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Old 11-23-2016, 10:03 AM
 
Location: Jacksonville, FL
11,145 posts, read 14,138,333 times
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Quote:
Originally Posted by Aredhel View Post
And that's what I am encouraging you to do. If you're putting 18% of your gross income into retirement accounts, you're saving adequately for retirement. Have some fun with the rest of your money! (And remember, despite what the TV commercials try to tell us, fun doesn't have to be expensive. You can learn to travel on a shoestring, and lots of really neat hobbies cost very little.)
Right. Another habit that I developed long ago is to keep things for a long/sufficient lifespan. For example, keeping my car for 10 years, keeping my TV for 10 years, keeping my computer for 5 years, using my jackets for 4+ years, etc., to the extent that it's practical to do so. Lately, I have been getting more in the habit of looking for groceries that are on sale, while grocery shopping, while trying to maintain a healthy and tasteful diet, of course. Much of personal finance is about HABITS.

It boggles my mind how many Americans "have to" buy a new TV every Black Friday or constantly buy clothes or a car every 3-5 years. Or vacations. I know so many people making $30K or $40K who refuse to own a car worth less than $30K (or always lease cars) and somehow have to buy clothes all the time and go out to eat, etc.
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Old 11-23-2016, 10:31 AM
 
Location: Jacksonville, FL
11,145 posts, read 14,138,333 times
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I have to admit though...aggressively saving for retirement poses a HUGE barrier to saving up for a home. The more I contribute to retirement, the harder it is to accumulate enough savings for an appropriate down payment, especially in a higher cost of living area like where I live (Connecticut).

At this rate, I won't be able to purchase my first home until the age of 50, at best.
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Old 11-23-2016, 10:57 AM
 
Location: Omaha, Nebraska
7,324 posts, read 4,169,633 times
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Quote:
Originally Posted by nep321 View Post
I have to admit though...aggressively saving for retirement poses a HUGE barrier to saving up for a home. The more I contribute to retirement, the harder it is to accumulate enough savings for an appropriate down payment, especially in a higher cost of living area like where I live (Connecticut).

At this rate, I won't be able to purchase my first home until the age of 50, at best.
For what it's worth, I didn't buy my first house until I was 40.

Having money in the bank for retirement is more important than owning a home. But I can certainly understand the desire to own one! You might try looking at townhomes and condos as well as single-family houses, and once you're reasonably sure your job is stable, you can consider putting less then 20% down. Just be careful you don't end up house-poor, and that you're not buying into a bubble.
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Old 11-23-2016, 01:01 PM
 
Location: Jacksonville, FL
11,145 posts, read 14,138,333 times
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Quote:
Originally Posted by Aredhel View Post
For what it's worth, I didn't buy my first house until I was 40.

Having money in the bank for retirement is more important than owning a home. But I can certainly understand the desire to own one! You might try looking at townhomes and condos as well as single-family houses, and once you're reasonably sure your job is stable, you can consider putting less then 20% down. Just be careful you don't end up house-poor, and that you're not buying into a bubble.
That's very, very hard for a single income person to in CT, given my own income. Even on houses as cheap as $150K, the annual property taxes are roughly $5,000!

But the average house here is priced around $250K. I can only afford like $140K on my own. I'm just hoping that certain favorable situations change over the coming years, such as pay raises, better employee benefits for me, maybe even marriage or **gulp** maybe even a housing bubble bust that causes a HUGE drop in home prices.
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Old 11-23-2016, 02:08 PM
 
Location: Omaha, Nebraska
7,324 posts, read 4,169,633 times
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Quote:
Originally Posted by nep321 View Post
That's very, very hard for a single income person to in CT, given my own income. Even on houses as cheap as $150K, the annual property taxes are roughly $5,000!
That's one of the drawbacks to being single: you have to earn double the income to have the same material standard of living as a two-income couple. There's no way around that math apart from getting a roommate, unfortunately.

But after you retire you won't be tied by your job to a high cost of living area - so if you have a decent amount saved up for retirement, you can always move to a low cost of living area and buy a house there. So have hope! Even if you can't afford a house now, that doesn't mean you'll never own one.
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Old 11-23-2016, 02:21 PM
 
Location: Jacksonville, FL
11,145 posts, read 14,138,333 times
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Quote:
Originally Posted by Aredhel View Post
That's one of the drawbacks to being single: you have to earn double the income to have the same material standard of living as a two-income couple. There's no way around that math apart from getting a roommate, unfortunately.

But after you retire you won't be tied by your job to a high cost of living area - so if you have a decent amount saved up for retirement, you can always move to a low cost of living area and buy a house there. So have hope! Even if you can't afford a house now, that doesn't mean you'll never own one.
Are you saying that I may have to wait until I retire just to afford a decent house?

I agree that retirement is more important than owning a house though. At least I can live comfortably as a renter and save plenty of money.
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Old 11-23-2016, 02:36 PM
 
Location: Coastal Georgia
37,143 posts, read 45,685,601 times
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You are too young to decide this yet. A lot of factors will come into play by that time. Will you be eager to retire, or will you love and miss your job? Will you be in great shape physically, or will you be ill?
Will the difference in the amount of SS if you retire early be a significant factor in your budget?
As a retired person in pretty good health, I do not tolerate idleness well. If you retire, will you have other things fulfilling to do?
If I had a profession like an architect or a lawyer or a contractor, I'd love to do the occasional project. Remember you still get your full SS after 67, even if you work.
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Old 11-23-2016, 04:10 PM
 
Location: Central Massachusetts
4,800 posts, read 4,853,880 times
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Quote:
Originally Posted by nep321 View Post
Hi. I'm 32 years old and trying to figure out the best way to plan for retirement. I am confused as to what age I should aim to retire. According to the Social Security Administration, my normal retirement age is 67 in order to receive the full benefit. Also, according to the SSA, my life expectancy is 82.3. Now, according to my 401k plan, I can start withdrawing at the age of 59.5 without penalty, but am required to make withdrawals by the age of 70.5, and of course, the required minimum distribution (RMD) rules that apply thereafter.

So, what is considered the normal age to retire in this country, for someone who is now 32 years old (I was born in 1984)? How on earth do I know what age to plan for? It matters, because it affects how much I need to contribute to my 401k now.

Am I supposed to retire at 67? 59.5? 63? 70? Help!

Also, how am I supposed to know when I'm going to die?!


You have asked a lot of questions I hope others have answered for you. I will give you a couple that they didn't toss in the mix. First you are doing just fine. The most important thing to do is know that there is something you have to do. Of course save as much as you can but my tip here is do not forget to live today as well. When it is time to retire you will know. It will just come to you. All you can do is work to be ready when that happens. Just to let you know you have at minimum 27+ years to go for an early one provided you have set up some income streams for your retirement. That can be from your savings and or pensions. Some pensions can start as early as 56 but those are becoming fewer and farther between. You more than likely will be looking at 62 as your early retirement. It also could go up to 67 if you are going to wait until SS kicks in. Yes it is too long from now to think on that but that is the way of things.

You are doing just fine. You should put as much as you can in 401k. It will allow you to save up to 18k per year as opposed to an IRA or Roth IRA is 5500 a year. Huge difference in savings rate. Just remember my tip. Live for today as well. Do not let life pass you by because you are saving so much that you do not get to enjoy life with family.
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Old 11-23-2016, 06:40 PM
 
Location: VT; previously MD & NJ
2,207 posts, read 1,351,512 times
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Quote:
Originally Posted by nep321 View Post
I already did/started all that stuff you listed! I have a $10,000 emergency fund that is cold hard cash. Some people might think $10K is low, but I'm debt free, have no dependents, and am renting an apartment and would qualify for unemployment insurance if I lost my job. But in reality, in addition to the $10K, I actually have $54K in cash anyway.

I just dont know if I should plan to retire at 67, 65, 60, 55, 70, or never. Obviously, the earlier the better.

My friend has an 84 year old neighbor who refuses to retire. He runs a masonry business and said that if he retired, he'd probably die.

Also, sometimes I wonder...what is the purpose of retirement anyway and why is it such a big deal? Is it hard for someone over 60-65 to go to work everyday? Or is the purpose of retirement just to enjoy the last years of your life without having to work? I dont get it.
If you love your job it's hard to imagine just quitting because you reach a certain age. But the reality is that over the course of your life you will have some jobs you love, some you hate, some that are just plain boring. It will keep changing and so may not always be so much fun. This can happen even if you stay with the same company over the years.

If you do physical work, retirement will become necessary when you get older and cannot keep up physically. If you do a desk job, you could develop back problems that prevent you from sitting for 8 hours at a time. Or you could get tired of staring at a computer screen for 30+ years. Or you could just get tired of office politics. Or just tired of working. Or you can decide you have better things to do with your life - and since you've been saving/investing, you will have the money to be able to quit work and go.

The 84-year old either didn't save/invest enough to retire, or he has no life or interests outside of his business, or both.

If I were you, I wouldn't obsess so much now over the actual age you will retire. Just continue to sock away the money now, while you can. It will grow over the years. At some point, your life may change (dependents may appear in your life even if not planned) and you may not always be able to put away as much money as you do now. But the money you put away early on will continue to grow.

Good luck to you.
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Old 11-23-2016, 11:30 PM
 
6,886 posts, read 7,295,373 times
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Quote:
At this rate, I won't be able to purchase my first home until the age of 50, at best.
Quote:
For what it's worth, I didn't buy my first house until I was 40.
I bought my house at 42.

Quote:
That's one of the drawbacks to being single: you have to earn double the income to have the same material standard of living as a two-income couple. There's no way around that math apart from getting a roommate, unfortunately.
I had a teeny bit of trouble accepting that. I'm single, no kids, never married (OMG I'm a SPINSTER!). And slowly I had to accept that I just wasn't going to have the saving-, buying-, or spending options that two people with more -- let's say double my income have. Even if it's not "double" as long as that second income more than makes up for the "cost' of that other person -- they come out ahead.

BUT, I was able to console myself with the fact that I DO make more as a singe than SOME people with kids. So I have more discretionally income than they do. I have to take the consolation where I find it.

I if were in a couple with each of us making what I do. OMG that would be sweet.
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