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Old 04-13-2007, 12:14 PM
 
Location: Northern California
3,681 posts, read 13,170,045 times
Reputation: 1835

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Not all 401k's are totally invested in the stock market. I had a choice of putting my 401k in my company stock (a stupid idea), placing it in a S&P 500 fund (a collection of 500 different stocks - which spreads the risk and is better than putting it all in your company stock) or I could have put my 401k in a bond fund (10 year treasuries are now getting about 4.75% interest and are virtually risk free) or a combination of stocks and bonds.

401k's are not enough. Working for a company that has a defined pension plan is a good idea, but fewer and fewer companies now offer that (unless you have a government job). Take up on the company 401k and max it out as is allowed. Remember many companies offer to match 401k contributions up to a limit. This is free money! Also start your own personal IRA and max that out each as best you can.

So start saving Cut back on the $4 Starbucks coffee and the $7 a gallon bottled water. I'm not saying to live like a pauper. But if you don't save now, you might end up deciding at age 65 whether to spend your money on food, or your meds or for heat in the winter.
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Old 04-16-2007, 04:43 PM
 
124 posts, read 616,714 times
Reputation: 93
Default Here's a site that might help

Scott Burns was the personal financial writer for the Dallas News for several years. He has a wonderful web site [urlModerator cut which contains all of his articles for the past several years. He has an approach to investing called Couch Potato investing -- it started with just splitting one's money two ways. Through the years, he has added to these two "building blocks" as he calls them and now he offers several different approaches. He shows the returns one would have made using each of these approaches and they are all enviable.

For the past five years, I have taken a very conservative approach to investing by keeping our money in the fixed income part of our 401k (I did this because we were unsure about my husband's continued employment and couldn't afford to lose any of our money). When my husband retires in the near future, we plan to roll our 401k into an IRA and use Mr. Burns' Couch Potato approach.

Last edited by Waterlily; 04-16-2007 at 05:38 PM.. Reason: No advertising
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Old 04-21-2007, 06:12 PM
 
Location: denver
161 posts, read 675,294 times
Reputation: 89
Quote:
Originally Posted by MoMark View Post
I still don't trust the stock market, though I can't see how throwing money you're willing to live without into it and taking a chance can hurt if you can afford to lose it. Maybe it will grow, maybe it won't, that's the chance you take. Just remember that the biggest hump of the population is doing the same thing and will be retiring about the time you do...which means that tens of millions of people will be selling 401K stocks to draw income at the same time you are....think about what that would do to the market values of your stocks.... It's wonderful if you aren't part of the wave, but most of us will be in that wave and you can't have millions of people pulling money out and expect those stocks to retain value or grow.
I agree real estate is the way to go. I've made a lot of money in real estate without really knowing what I was doing. It was more than enough for me to buy my current home with cash, carry no debts, put a big chunk in savings, and take two years off! I just went in to investigate a job in my industry Thurday after almost two years off enjoying myself!
I intend to take year breaks now and then into the future as well. Real estate has made that possible for me.
I'm also 44 and seen too many people work so hard to prepare for life at 65 that they miss a lot of the fun between 40 and 65. I've also seen a lot of people in that 40's age group who sacrificed for the future kick the bucket for a number of reasons.
I think we have to prepare, but we have to live now too. We will never get back our (40's) youth and when you're 65, you're not going to want to do the things you wanted to do at 45.
Save, invest wisely, but live now too. Life can throw a monkey wrench at you at any time and you might be gone.
MoMark,,,this is so true thanks
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Old 05-07-2007, 05:39 PM
 
64 posts, read 297,244 times
Reputation: 51
I too have several options available at retirement (pension, 401k, mutual funds, maybe soc sec) but one thing that really worries me is health care cost projections. In 10 years, they could easily be charging premiums that are much, much higher than what I am paying out now while still working. It is scary to think that you have put away money for years and then have to plop a large chunk over for health care.
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Old 05-07-2007, 05:54 PM
 
16,092 posts, read 36,591,693 times
Reputation: 6277
Scott Burns still writes for the Dallas Morning News - he's wonderful. When my Daddy died we wrote to him for advice and it was handled very professionally, promptly and in a friendly manner.

I have made most of my money in Real Estate single-family rentals...but I bought when they were cheap (started in '83) and paid them off fast. All while having a full-time job and socking away in the 401K.

I would say pay off your house, max the 401K and fund an IRA. If you get a RE opportunity go for it, but be of the right temperment if you want to go that way..it's not for most people. Beyond that rather stringent regimen, spend your money on 'experiences' which equal future 'memories'.

And yep, 1 - 2 million is just not enough. I used to say 3-5 but now I see that 5 is much better if you want to do a lot of travel and stay in nice places. I really don't care about having a house which will impress people, but I do want to live in close to downtown and the trendy restaurants and theaters. I probably will buy a Porsche though, when I retire - at 55 or so in 6 years or so...a long term goal/reward.
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Old 05-19-2007, 07:47 AM
 
124 posts, read 367,830 times
Reputation: 67
In my opinion the absolute major thing to do before you retire is pay off all your bills and own your home. I retired at 59 and my savings are in IRAs. I have been retired 5 years and we have pulled money out of our IRA but I actually have more money in savings today than I did 5 years ago. Also, I have moved twice in those 5 years and each time paid cash for the home. No, I don't have millions stashed away.

Another major cost could be health care. We are in fairly good shape but we both have high blood pressure. That one little thing means we pay over $700 a month for health insurance that doesn't pay anything unless it is a major illness and we have paid the first $5000 dollars. Routine and preventive care are not covered.

We can't travel as much as we would like but we have managed two trips to Europe with the 3rd coming up this year. We have taken a cruise and a number of USA vacations.

As I said, we have no bills other than those required for normal living. Over the years we have each had small part time jobs that we took more for something to do than for the small amount of money they paid.

You can retire comfortably and not have millions socked away but you have to prepare for it properly.
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Old 05-19-2007, 08:50 AM
 
Location: New Orleans, LA
1,730 posts, read 3,144,006 times
Reputation: 2955
I am not retired quite yet, but I think that having several sources of income in retirement ought to encourage a more stable income.

Social security will provide a little bit.
My pension will provide a little bit less.
My Roth IRA could provide a little, though my tentative plans are to let it sit and grow for the first 20 years or so.
My 401K (TSP) has a diversified allocation, including 40% government securities, and will provide another source of income. It should provide more than the other income sources, but still less than half.
I plan to keep ten years worth of "bare bones" expenses in the bank, to help get through market plunges and such.

My expenses should be minimal. My home is paid off, and in retirement I plan to grow my own vegetables and do a lot more walking than driving, to encourage good health. I have zero desire to travel, and I actually prefer a small, simple home that is easy to maintain, so my expenses should be manageable. My employer (federal govt) will continue my group health insurance participation into retirement, for life.

I will probably move from New Orleans to Springfield, Missouri to get away from the devastation and dangers here. The lower housing costs in Springfield should just about pay for the move and any necessary remodeling and redecorating so I think I will net about $0 from the move, other than peace of mind.

Like the previous poster, I am not among the super-wealthy, but I truly believe I will have a happy and contented retirement. Now, I need to keep my nose to the grindstone for the next three or so years until I can get there! I can hardly wait.

Last edited by NOLA2SGF; 05-19-2007 at 09:10 AM..
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Old 05-19-2007, 09:06 AM
 
911 posts, read 3,250,533 times
Reputation: 178
Thumbs up Good Plan

Quote:
Originally Posted by NOLA2SGF View Post
I am not retired quite yet, but I think that having several sources of income in retirement ought to encourage a more stable income.

Social security will provide a little bit.
My pension will provide a little bit less.
My Roth IRA could provide a little, though my tentative plans are to let it sit and grow for the first 20 years or so.
My 401K (TSP) has a diversified allocation, including 40% government securities, and will provide another source of income. It should provide more than the other income sources, but still less than half.
I plan to keep ten years worth of "bare bones" expenses in the bank, to help get through market plunges and such.

My expenses should be minimal. My home is paid off, and in retirement I plan to grow my own vegetables and do a lot more walking than driving, to encourage good health. I have zero desire to travel, and I actually prefer a small, simple home that is easy to maintain, so my expenses should be manageable. My employer (federal govt) will continue my group health insurance participation into retirement, for life.

Like the previous poster, I am not among the super-wealthy, but I truly believe I will have a happy and contented retirement. Now, I need to keep my nose to the grindstone for the next three or so years until I get there! I can hardly wait.
Sounds Good
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Old 05-19-2007, 10:07 AM
 
13,773 posts, read 33,926,841 times
Reputation: 10562
I retired at 60 when my employer said 'we are going to make you a deal' to all of us olde timers who qualified to retire. I could not have done it if I didn't get the health ins. from them at a reduced rate. That being said.. the health insurance has gone up every year and the pension amt stays the same. I do get SS along with the pension which I need to live comfortably. I sold my house in FL and bought a house in N. AL (cash). Nothing fancy but comfortable and it suites me just fine.
Could I use more money.. of course, do I need more money to be happy, I don't!!! I belong to a food network where I can purchase a box of food worth more than $60.00 for $25.00. I do have to buy some things at the store but it sure helps my food bill. At the end of the month I still am able to put money into savings for those purchases that I really don't need but want.
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Old 05-20-2007, 06:55 PM
 
646 posts, read 1,661,794 times
Reputation: 155
Like many others have states, 401k is only a part of your retirement package. I think it's important to take advantage of it, especially if your employer provides a match. I make sure I put away enough in my 401k to get the maximum match, then we put money into Roth IRAs. If you don't qualify for a Roth, I would suggest that you max out your 401k or open an IRA.

I'm not counting on social security to be there when I retire (I'm 27), even though I don't think it will go away completely. It will just be extra money for us if it's there when we retire.

I would disagree though that real estate is the money maker. Yes, it's been in the last ten years, but look at the slump now and how many people are/will be burned. Over the long-term, stocks have always outperformed real estate by a sizeable margin and are most likely to continue to do so.
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