U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Retirement
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Reply Start New Thread
 
Old 11-22-2016, 10:54 AM
 
Location: Jacksonville, FL
11,145 posts, read 14,143,519 times
Reputation: 7075

Advertisements

Just curious, do you factor in future rates of return when planning for retirement and deciding how much you should contribute to your retirement accounts? Typically, I never have, because I feel like past performance is not guaranteed, nor is it necessarily an indicator of future performance, at all. The YTD rate of return on my 401k is 3.98%. But I think it would be foolish to reduce my contribution % under the assumption that the 3.98% rate of return will be realized in all future years. Unless maybe I'm wrong. But for now (and always has been), I assume 0% growth when projecting my final retirement savings. However, if I assumed x% growth over the years, then I could reduce my contribution % from my paycheck, in anticipation of the growth factor. What do you think?
Reply With Quote Quick reply to this message

 
Old 11-22-2016, 11:30 AM
 
662 posts, read 480,288 times
Reputation: 1690
Quote:
Originally Posted by nep321 View Post
Just curious, do you factor in future rates of return when planning for retirement and deciding how much you should contribute to your retirement accounts?
You might ask "DID we".

I didn't. But I've just become un-retired, and will contribute again (since one can only contribute when one is working). Again, I will not count on future returns. But then again, I have a pension too, and am of the sort to only look at the bottom line. No doubt, because I can. Anything else is gravy.

YMMV.
Reply With Quote Quick reply to this message
 
Old 11-22-2016, 11:36 AM
Status: "Re-edit status" (set 24 days ago)
 
Location: Was Midvalley Oregon; Now Eastside Seattle area
4,205 posts, read 1,915,270 times
Reputation: 3217
When we were younger, I assumed 6% over inflation rate for contributions to be held to retirement.
As we got closer to retirement age, current contributions and growth of that contribution became minor to retirement assets.
At retirement, it became a new ballgame.
With minimum retirement income assured plus a comfortable income for a nice retirement, rates of return become highly variable because I trade the excess assets in the Market. In the Discretionary accounts, I target 10% growth in the active account portion to 3% growth in the leave it alone/Emergency/slush accounts portion.

now 66/69. Comfortable retirement incomes.

YMMV.
Reply With Quote Quick reply to this message
 
Old 11-22-2016, 11:54 AM
 
Location: Jacksonville, FL
11,145 posts, read 14,143,519 times
Reputation: 7075
Yeah i'm not going to concern myself with rate of return and inflation, etc. It's extremely hard to predict what will happen over the next 30-40 years (I'm 32 now). The strategy that I am taking assumes no growth/decay and no inflation/deflation. However, AFTER the fact of growth over the years, I may then decrease my contributions as I get older, in order to reach my target savings goal. I just hope I'm doing this right.
Reply With Quote Quick reply to this message
 
Old 11-22-2016, 12:41 PM
 
100 posts, read 65,470 times
Reputation: 377
I take a different approach. Instead of shooting for a certain target amount to have at retirement, I just contribute 15% of my gross income every year. When we paid off the house that amount was increased. It keeps it simple.
Reply With Quote Quick reply to this message
 
Old 11-22-2016, 01:39 PM
 
Location: Omaha, Nebraska
7,330 posts, read 4,174,565 times
Reputation: 18397
Keep contributing as much as you can afford (ideally, up to the maximum amount allowed yearly). As you noted yourself, future rates of return are not predictable, and no one ever feels they have too much money saved for retirement!
Reply With Quote Quick reply to this message
 
Old 11-22-2016, 02:11 PM
 
Location: SoCal
13,294 posts, read 6,362,704 times
Reputation: 9932
I always put 2% at most. I want to be conservative.
Reply With Quote Quick reply to this message
 
Old 11-22-2016, 02:20 PM
 
Location: Central Massachusetts
4,800 posts, read 4,856,396 times
Reputation: 6379
Quote:
Originally Posted by nep321 View Post
Just curious, do you factor in future rates of return when planning for retirement and deciding how much you should contribute to your retirement accounts? Typically, I never have, because I feel like past performance is not guaranteed, nor is it necessarily an indicator of future performance, at all. The YTD rate of return on my 401k is 3.98%. But I think it would be foolish to reduce my contribution % under the assumption that the 3.98% rate of return will be realized in all future years. Unless maybe I'm wrong. But for now (and always has been), I assume 0% growth when projecting my final retirement savings. However, if I assumed x% growth over the years, then I could reduce my contribution % from my paycheck, in anticipation of the growth factor. What do you think?
In truth no. You don't consider future rates of returns. Your only concern is to put as much money regardless of what you might get in the future. The reason is your investment choices will change once in retirement which is what I assume you are thinking about. In your early years be in the more aggressive funds to match your risk tolerance. The higher your tolerance be prepared to ride the ups and downs. When you get closer to retirement and into that mode you will shift to less aggressive funds and adjust the portfolio as needed.

If you are young there are a couple of forums here that deal with funds choices that will be able to help there.
Reply With Quote Quick reply to this message
 
Old 11-22-2016, 02:48 PM
 
Location: annandale, va & slidell, la
7,403 posts, read 3,056,313 times
Reputation: 6224
Quote:
Originally Posted by newbiehere View Post
i always put 2% at most. I want to be conservative.
lol.
Reply With Quote Quick reply to this message
 
Old 11-22-2016, 04:59 PM
 
Location: VT; previously MD & NJ
2,214 posts, read 1,354,565 times
Reputation: 6392
Another thing to consider is that regular contributions will result in dollar-cost-averaging over the years you are saving. For example, in 2008 I continued to contribute while the market was down until I retired at the end of 2010. Thus, I bought quite a few shares while the market was down. The next few years after I retired, all those extra shares (and all the ones I bought in previous years) paid off as the market kept going up and up. So the general trends can have a large effect on your bottom line.
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Retirement
Similar Threads
Follow City-Data.com founder on our Forum or

All times are GMT -6.

2005-2019, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top