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At 26 through somewhere in my 30s I was not concerned about retirement, I was concerned about how to pay todays bills. After paying the bills, I was concerned about how to have some fun while I was still young. I had a financial advisor tell me I would need to have $8 million to retire. I realized I would never have $8 million so why bother anyway? The same financial advisor convinced me to buy some whole life insurance which I cashed in to cover costs when we bought our first house.
When I was in my 30s, someone convinced me to at least put in as much as my employer would match. It didn't amount to much. In my mid 30s our firm would put in about 20K or more per partner because they could for some reason. We had the choice of leaving it in or taking it out and paying the penalty. I left it. That is when the 401K really started to build. I put it all in aggressive funds. In 2008 I lost about 65% of it in one month. Basically I lost everything that I had earned in interest/growth. I still had roughly the same amount that I had paid in. Since I was making good money then and I figured stock prices were low, I put in as much as I could. Still, I will have about half of what the realistic financial advisors say I will need to retire. So I will live on less.
Now they are saying social security will begin to run out in 2033 (three years after I will probably retire). I guess I will just live on less and avoid the doctor. I will try to get a many joints replaced as possible before retirement.
At 26 through somewhere in my 30s I was not concerned about retirement, I was concerned about how to pay todays bills. After paying the bills, I was concerned about how to have some fun while I was still young. I had a financial advisor tell me I would need to have $8 million to retire. I realized I would never have $8 million so why bother anyway? The same financial advisor convinced me to buy some whole life insurance which I cashed in to cover costs when we bought our first house.
When I was in my 30s, someone convinced me to at least put in as much as my employer would match. It didn't amount to much. In my mid 30s our firm would put in about 20K or more per partner because they could for some reason. We had the choice of leaving it in or taking it out and paying the penalty. I left it. That is when the 401K really started to build. I put it all in aggressive funds. In 2008 I lost about 65% of it in one month. Basically I lost everything that I had earned in interest/growth. I still had roughly the same amount that I had paid in. Since I was making good money then and I figured stock prices were low, I put in as much as I could. Still, I will have about half of what the realistic financial advisors say I will need to retire. So I will live on less.
Now they are saying social security will begin to run out in 2033 (three years after I will probably retire). I guess I will just live on less and avoid the doctor. I will try to get a many joints replaced as possible before retirement.
Rather than rely on that original financial advisor's number, have you tried any other calculators yourself or for a second opinion. Fidelity has a really good calculator.
Another way to figure out what you'll need, is multiply your
Annual expenses by 25. This is the amount that you'd withdraw 4% from.
Was the whole life insurance product appropriate for you to have since you sold off? If not, I'd also question other things the advisor told you
Rather than rely on that original financial advisor's number, have you tried any other calculators yourself or for a second opinion. Fidelity has a really good calculator.
Another way to figure out what you'll need, is multiply your
Annual expenses by 25. This is the amount that you'd withdraw 4% from.
Was the whole life insurance product appropriate for you to have since you sold off? If not, I'd also question other things the advisor told you
Agree with this. An advisor I read a lot who always writes about retiring claims that you only need about $500k to retire. I say he's dead wrong, as my number is closer to $1.5-$2 million. The other challenge for those of us who have another decade or more to work is what will the economy be like then? We could be in for a long term downturn, particularly the way we're currently headed. Unlimited spending by the government and a move toward socialism will be disastrous for our futures. But thats another thread. So using the 4% rule, which I believe in also, on $1 million, you can take out $40k per year. If you invest in mostly high dividend paying, profitable companies, you could be able to increase that % in good years and still not dip into the principle. Your return bogey is 4% and the historical long term S&P return is 10%. Of course you will also need some bonds and hopefully you make more than the current 1% on those. So a blended average annual return could be 5-7%, depending on how you're invested.
Add to that about 75% of what your social security would have been at full retirement and you can make it. Of course, its best to have no mortgage if possible by then and really no debt at all. Then it's really easy except for the unknown medical expenses, which could blow it all up I guess. But lets say you're healthy, your expenses will be minimal and you can travel, pursue other things, and learn new hobbies. That would be my goal. The alternative is if you can't save up that much, move to a cheaper country where you can live on $20k a year. There's plenty of those. That's my plan B.
Rather than rely on that original financial advisor's number, have you tried any other calculators yourself or for a second opinion. Fidelity has a really good calculator.
Another way to figure out what you'll need, is multiply your
Annual expenses by 25. This is the amount that you'd withdraw 4% from.
Was the whole life insurance product appropriate for you to have since you sold off? If not, I'd also question other things the advisor told you
Well that was 30 years ago or so, so yes. I have tried other calculators and advisors. None of the others said $8 million, but they all say a number that I will never attain. However my annual expenses today have no relationship to my annual expenses on retirement.
I should have something over a million if we do not have a massive crash. Maybe 1.5. I will have equity in our house, or I will have sold the house and bought a smaller house with no mortgage, lower taxes, lower utility costs, less maintenance, lower insurance costs, possibly no tolls to pay,
Last edited by Coldjensens; 09-02-2021 at 04:13 PM..
Try out the fidelity calculator. You can adjust the expenses in retirement to what you think it'll be and fidelity will recalculate. It's completely free and you don't have to have a fidelity account.
To answer the OP's question, I didn't have access to a 401k until my mid-30s. I did put money in an IRA, but the cap you could put in one, at the time, was $2000 a year. So saying $6K in a 401k wasn't an option. And not all 401ks match.
Without getting into too much detail, I will be fine when I retire. I assume a conservative 4% rate of return and with that, I should have about $1.5 million saved in retirement accounts by the time I am 65. I would be able to retire earlier than that, but I need health insurance. I might semi-retire and downsize to a less stressful, full time job with benefits from 60 to 65 (if I can). You know, something like Wal-mart greeter or Starbucks barista. Just enough for spending money and to get health insurance. If I can still work after 65 I might just do that. Not only for the money, but to help stay young. Besides, the women in my family tend to live into their late 90s and I am in great health. So I need my money to last a long time so income as long as I can get it would be good.
I am a good saver and started saving for retirement right after I got my first job out of college. I always saved first then would spend from what was left. Even recently, when I turned 50, and could do it, I started making catch up contributions to both my Roth and 401k. I am the first employee where I work to do catch up contributions (and I am not the oldest). I know this because they had to figure out how to do it since it have never been done before at our workplace.
There were some hiccups on the way where I had to reduce savings (layoffs twice for example and a divorce). And I did make a huge mistake at one point going to a financial advisor (his bad advise set me back a few years I think). But I will be more than fine. Staring to save for retirement in my early 20s and saving the most I could was key. One trick I did was any pay increase I got, went right into retirement. Then I never "missed" the money. I think I will be able to continue my way of life into retirement. And since I am happy with my quality of life, it should be nice.
By the way (and edited to add) I learned the power of savings from my dad and his brother, my uncle. I will never forget when I was 10 years old and my dad told me all he wanted for Christmas was one penny. But then, he wanted two pennies on December 26, then four on December 27, etc. He had me figure out how much I would be giving him in a year. Great lesson. He also got me interested in putting my allowance money (that I squirreled away) in CDs in the 80s when interest rates were high. Although the big influence was when I was out of college and my uncle sat down with a calculator and showed me how I could have a million dollars by the time I retired if I just saved $2K a year in an IRA. He was assuming a huge, 10% rate of return, but it was still a good lesson. I was lucky to come from a financially savvy family. I teach my daughter the same values.
Last edited by WalkingLiberty1919D; 09-03-2021 at 08:47 AM..
With the run up on the market the last few years, from January 2019 to today, the balance in my workplace retirement account has more than doubled. It helped that in 2019 I did 28.04%, 2020 I did 22.98% and so far in 2021 I'm at 18.88% ytd.
My individual brokerage account has done even better. It's 5.2x larger from January 2019. 2019 I did 37.16%, 2020 I did 37.11% and 2021 I'm at 20.18%ytd so far
I realize it's not like that every year, but it's amazing what compounding can do during a hot market. I'm 41 years old so I have lots of time for more "doubling" to take place.
Last edited by oneasterisk; 09-03-2021 at 09:29 AM..
I can't underscore how much I feel I hit the financial jackpot by entering the government as a GS-13 this year at 31. Not to mention being vested in my prior job so I will get a small check $500/month from there too.
As a soon-to-be retiring Fed employee, let me pass along one tidbit of advice: put as much as you can into your TSP and don't follow the crowds when the market swings (they generally sell low and buy high).
Future you will thank yourself, particularly when you notice that the returns in your TSP are greater than your salary.
Plenty of people are terrible at saving and this is at all income levels. I do hear stories of people living paycheck to paycheck, including some relatives of mine. But, you peel back the onion, you find it's more about satisfying our consumer driven economy and instant gratification. You'll see folks who are "poor", and not investing much, yet they buy the latest/greatest gadgets, do daily Starbucks runs or a lot of dining out. If they really wanted to prioritize retirement savings, they could meet these requirements.
I see this also at higher income levels. People have to get fancy cars, McMansions and designer clothes, just to keep up with the Jones'. They also don't have much saved for retirement because they think this income stream will last into perpetuity.
It is the materialistic nature of the American culture and the lack of proper financial education that causes most folks to behave this way. This has nothing to do with their income and everything to do with their planning and prioritization.
I love the latest gadgets and daily Starbucks speech.
You forgot the covered in tattoos and smoking tropes.
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