28 year old needs retirees help! (55, pension plan, financial advisor, vacations)

[tigerjack88]

I would like to get some advice/suggestions from retirees (recent and not) on how one could retire early. What I would like to know is: what one did in order to retire early (before retirement age 62)? I am a single 28 year old female and will begin working in government (county-sector) and would like to know what to do in order to retire in 15, 20,25 years. I don't plan on having children---any time soon anyway, nor a husband . I have a couple of suze orman books and a david bach book...Any advice and stories are helpful. Thank you

[Sgoldie]

Buy an affordable house asap with a mortgage that will be paid off by the time you want to retire. If it's one you can put sweat equity into to gain value, and/or a multiple family, all the better. Learn how to fix everything yourself. Get roommates to share the expense.

Check into your pension plan at work to find out at what age you can start collecting. Work to move up to the highest paying position you can so that it will pay out as much as possible. Medical benefits are the biggest stickler to early retirement. See if your employer provides that till medicare kicks in.

Make, and stick to a budget that lets you live on the least possible amount of money, and then invest the rest agressively (stocks, real estate, rentals, etc). Stay away from debt unless it's something that's guaranteed to make you money.

Never buy a new car. Two to four years old is better and make sure you maintain it. Keep it for ten years unless it starts costing for repairs. Don't take out a loan for one either, save up the money first. Buy one that gets good mileage and is cheap to insure.

Don't buy life insurance if you have no dependents, and never those insurance products that are touted as investments by financial advisors. Educate yourself about every aspect of money and look out for opportunities all the time.

Start a small business on the side and/or take a second job now to bring in as much money as you can. Make sure it pays well. Use all that money to put away in addition to what you're putting away from your main job. This will also leave you little time in which to spend. Keep doing this until you retire.

[OREGONRAIN]

Well what I did basically was all because of world events. I don't think you will be duplicating what I did, but there are other ways for you to do it also. For me, I was in the air force at 18, it was vietnam time, and I enlisted as my draft number was coming up. On my discharge I was eligible for a vietnam veterans readjustment appointment for employment with the federal gov't. By the time I was 47 I had enough time to be eligible to retire but only because the agency was downsizing. I got my pension, health and life insurance for the rest of my life, but however I do need to work part time. You could perhaps try to find employment witha state or county agency or federal, retirement can be possible with any of them usually that is before one is 55, especially if downsizing is coming up. Purchase property when you are young, and let it built equity, cash out on your investment should you want to relocate after retirement, or if you stay, you are mortgage free. I am 57 now, and have the time to travel, while I am still young enough to enjoy it the most. You are smart to be thinking of this subject now that you are so young, I believe many are not and many are in their 50's and older, I hate to think of the consequences some will find themselves in.

[OREGONRAIN]

Sorry didn't see you are going to start in the county sector, good for you, it will definitely pay off with a decent pension and benefits. You would be in your early 50's with 25 years I guess at retirement. Try to put the maximum employee contribution they allow u into your pension fund, and make sure you understand what the county will be contributing, adjust your contribution as needed.

[jhlcomp]

Everything here is great advice. I am nearing retirement (and some are already there) - max your govt pension and then invest in a mutual fund IRA or ROTH) - begin reading everything you can get your hands on - join Morningstar and get educated. As time goes by you will diversify your portfolio, but you'll get there.

I started saving and investing in my 20's and it has paid off big time. You just need to stick with it and be consistent. Good luck to you!!

[killer2021]

Originally Posted by Sgoldie

Buy an affordable house asap with a mortgage that will be paid off by the time you want to retire. If it's one you can put sweat equity into to gain value, and/or a multiple family, all the better. Learn how to fix everything yourself. Get roommates to share the expense.

Check into your pension plan at work to find out at what age you can start collecting. Work to move up to the highest paying position you can so that it will pay out as much as possible. Medical benefits are the biggest stickler to early retirement. See if your employer provides that till medicare kicks in.

Make, and stick to a budget that lets you live on the least possible amount of money, and then invest the rest agressively (stocks, real estate, rentals, etc). Stay away from debt unless it's something that's guaranteed to make you money.

Never buy a new car. Two to four years old is better and make sure you maintain it. Keep it for ten years unless it starts costing for repairs. Don't take out a loan for one either, save up the money first. Buy one that gets good mileage and is cheap to insure.

Don't buy life insurance if you have no dependents, and never those insurance products that are touted as investments by financial advisors. Educate yourself about every aspect of money and look out for opportunities all the time.

Start a small business on the side and/or take a second job now to bring in as much money as you can. Make sure it pays well. Use all that money to put away in addition to what you're putting away from your main job. This will also leave you little time in which to spend. Keep doing this until you retire.

Translation: Live below your means and dump money into retirement investment accounts.

[tigerjack88]

thank you all so much for the kind words and wisdom. Well I should have looked to you all first before I went and cashed out my 457(b). but i figured i would have less stress with no debt and start over saving for retirement. I managed to snag a county position and i want to do it right this time ya know? I was laid off my state job and decided to cash out and pay off debt, but now I am worried how much I will have to pay next year in taxes. But we will see. Sgoldie&OregonRain THANKS

[Mike from back east]

Get a house, early. SFH's are a better choice if you can afford one, make sure it's in a good area. Second choice is a good TH. Talk to one or more realtors about good areas with long term potential. Use a Buyer's Broker, they look out for YOUR interests, not the seller's interest like most agents must do. The glorious thing about a home with a fixed rate mortgage is that the payment stays about the same and after 5-6 years starts looking small as a percentage of income. Imagine the joy of being in a home for 15 years and your 15-year-old mortgage is half of what even an apartment would cost you at that time....that puts a smile on your face...but you gotta buy in early. In some markets, it may be good to move up to a new home every 7 or so years, but I'm not sure if that old scheme works any more.

If you plan to invest in stocks, join Amer Assoc of Individual Investors, just $29/year and you get great help & tuturials on their website. Local chapters have great members and regular meetings that are free or very cheap. If you own stocks, do NOT pay a percentage of assets to a manager, that eats up a ton of YOUR money. Read about it in The Big Investment Lie by Michael Edesess. Manage your own account at any discount broker.

Don't over insure. If you have spouse/kids, some TERM LIFE is okay to have. Don't bother with whole life, the kind that builds up cash value. Just about anything is a better investment than whole-life and easier to get cash out.

Restaurant meals are both expensive and usually deadly with fat & calories. Eat simple and healthy items. Brown-baggit most days. Drink water, not the sugary drinks that cost a lot. Iced tea is great and cheap and the new 'cold brew' bags don't require boiling anything.

Drive a small efficient car and try not to speed too much, it eats gas. Cars are a huge expense.

Be ultra careful with credit cards, they hook people with low initial rates, but be late once and you can be in a world of hurt...rate goes up to 23% and all sorts of late fees and penalties may apple. Ouch Ouch Ouch. Pay cash if you can, it will teach you discipline.

Shop second hand stores, yard sales, Goodwill and Salvation Army stores. Lots of good stuff there, both clothing and household items. You can be tastefully dressed without being a clothes horse or fashionista. Get on www.freecycle.org to find FREE stuff people in YOUR neighborhoods are giving away so it doesn't fill up the landfills.

Try not to buy books you want to read. Use the Public Library, there are a TON of resources there, not just books to borrow. Second hand book stores or ebay can be a bargain for some titles.

Same for music, listen to free internet radio, don't buy CD's or Sirius or XM. We like the free side of http://www.live365.com. Some libraries loan music. Go easy on the gadgets too, do you really have to have a new Ipod every other year to listen to a million songs? Not me.

Kids are expensive, plan for them carefully. Get established first. Only have a family if you truly desire one, not because Mom & Dad want to spoil some grandkids. Kids are forever, to your grave in old age.

Pets are wonderful for many people, but can drain your pocketbook. Do you really need one? No, not really.

s/Mike

[tigerjack88]

Well, Mike from out East, I will have my car paid off at the end of this month and my credit bill paid off the next month. All I will have left is a $4000 student loan bill, but zero savings, emergency fund and zero retirement saved ...If i see one more Ameriprise commercial...It's only me so no life insurance, nor term insurance needed as of yet anyway. And too late, i been with XM for a year now and it is my only vice. I need to lose weight so I don't go out much to eat, I am on a health kick as of right...NOW. My uncle says he knows this guy I should marry (good luck with that), so no kid pressure from my parents thank god, but I know they are secretly thinking of it. I am a dog phobic, so there goes the pet aspect. Now, my question is what should my plan be? Should I pay off my student loan(in four months) and then begin retirement savings, or pay off student loan(in 8 months) and save retirement the same time but then I would not start ER savings until after the student loan is paid off? I do plan on investing in what I don't know that is where you all come in. As far as SFH, I am too high maintenance so it will be TH /Condo, thus I won't have to do yard work. It's just me. Maybe the SFH will grow on me. thanks for the suggestions/advice

[mrgoodwx]

Tigerjack, I am assuming you plan to commit to working with your county government for your career, and you know what their retirement rules are. That is, minimum age they will let you retire, and what the benefits are? I recently retired from federal service a few months ago when I turned 55. At the same time, I had the mandatory 30 years service for my job category. Others have given you some good advice, so I'll just toss in my comments for your consideration.

1. Do you know what the benefits are in your county government retirement plan? For me, I paid 7 percent of my income to the civil service retirement plan for 30 years. I was fortunate enough to retire at the top of the federal pay scale, so my retirement annuity check is enough to live on. If you decide to go into the private sector, I would strongly advise you to do everything to make sure you take care of yourself retirement wise. I have several friends my age (mid 50s) who had great jobs in the private sector, only to get dumped by corporations in the past year. These were professional guys who graduated near the tops of their classes and had outstanding performance ratings in their careers. But...the gap between CEO and worker pay continues to widen, corporations are getting rid of retirement plans, paying less on health insurance, etc.

2. If you pay into a retirement fund, do you also have an option of saving additional money in a 401k type plan? We didn't get this in the federal government until the Thrift Savings Plan came along in the mid to late 1980s. But, I began putting additional money into that plan, and now I have a nice bundle tied away in that plan, sitting there drawing interest until I decide what I want to do with it.

3. Buy (wisely) real estate early, like now if you haven't done it. Think of it as long term. Like someone else said, you want to have a house paid for before you retire if possible. I doubled up on payments, and now have a pretty nice home without a house payment. I also purchased 10 acres in a resort community some time ago. That money is tied up, but the resort town is growing and so is my equity.

4. Someone mentioned staying away from buying new cars. I agree with that advice, but for me, I never got over the experience of my first car when I was a teenager. It was a VERY used VW bug, and it broke down every time I tried to travel. Consequently, I have purchased a new car every 4 years or so. However, I haven't had a car payment in 20 years. I use the car's equity and pay cash for the remainder each time. This way, we always have one car I feel confident traveling in. Meanwhile, the "new" car we purchased in 1978 became our 2nd car in the early 1980s, and it remains our second car. It's a 1978 280Z that runs great! We spent almost nothing on it for the first 27 years, then I had a machine shop build me a new engine and transmission for it, and it's like a new car.

5. Always pay credit cards off fully without carrying over balances that are subject to finance charges.

6. Don't live (spend) like the average American. I also know many people who drive much nicer cars than my wife and I do, they have newer, bigger houses, take expensive vacations, have their credit cards maxed out, and are always about 2 or 3 paychecks away from being bankrupt. Sometimes it just makes sense to hold off on purchases. As **** Jagger said, "you can't always get what you want, but if you try, sometimes, you get what you need."

7. When it comes to retirement consider your own needs and wants as the unique individual you are. I read lots of publications (mainly written by those who want to make money off of you) telling me how much money I needed in retirement. It just so happens my wife and I think a "great time" is taking the pop-up camper down to our 10 acres in the Sacramento Mountains, hanging out, hiking, mountain biking, and reading in the shade of the Ponderosa pines on our property. It just doesn't cost too much to do the things we enjoy the most. If your pleasures are more expensive, you need to take that into account.

8. Don't buy insurance you don't need...whether it's life, health, home or auto. We keep our deductibles fairly high, but at a level we are comfortable with.

It's great you are thinking this far ahead. I never had thoughts about retirement at your age, so you're ahead of me already!