09-07-2016, 11:41 AM
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#31
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Quote:
Originally Posted by amalik
I'm not judging you but, just a thought...
You may have $1 Million by Age 55 and enjoy that, but you'll never know what it's like to pick your kid up when he/she crawls up to your leg, looks up, and gives you a huge smile.
Happened to me 3-4 times with my 9 month old today and I can tell you it's priceless.
And hell, I hope I have a mill too by retirement, but if it doesn't happen it doesn't happen.
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Quite frankly, having $1M at retirement isn't enough.
Using the following assumptions:
- 25 year lifespan at retirement (say, 65-90)
- 3% annual inflation
- 6% annual interest ROI
- $100K Salary during your last year of employment
- Retirement withdrawal rate of 90% of your last year's salary
...my magic spreadsheet says I need about $1.6M saved up to ensure I won't hit rock bottom before I kick the bucket.
The math is kinda sobering. Save as much as you can while you can and don't forget age discrimination - it'll become increasingly difficult to lock down a good paying job as retirement age approaches. The time to save big is *now*.
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09-07-2016, 11:51 AM
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#32
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Elite Member
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Join Date: Aug 2010
Location: Seattle, WA
Posts: 7,712
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Quote:
Originally Posted by AKmoney
My retirement/savings plan involves not having kids. They're seriously expensive.
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Quote:
Originally Posted by amalik
I'm not judging you but, just a thought...
You may have $1 Million by Age 55 and enjoy that, but you'll never know what it's like to pick your kid up when he/she crawls up to your leg, looks up, and gives you a huge smile.
Happened to me 3-4 times with my 9 month old today and I can tell you it's priceless.
And hell, I hope I have a mill too by retirement, but if it doesn't happen it doesn't happen.
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Quote:
Originally Posted by Victor_inox
having a kid was/is most wonderful investment of my life so far.
You childless egocentrics wouldn't understand.
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They definitely are expensive! But above all else, they are a lot of TIME. And for me, that is something that I am just too selfish with to give up. I above money or anything else value personal time. I don't need a lot of money, but will always want the flexibility to do things when I want to do them. This world definitely doesn't need anymore humans on it. So one could make a strong argument that having them is very egocentric.
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09-07-2016, 11:59 AM
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#33
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Join Date: Jul 2012
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Quote:
Originally Posted by MtnT4R
Other than that, does anyone use State Farm? They offer a lot of great investment strategies- one of my favorites are the LifePath funds that diversify your contributions across various markets, but roll that money back into much safer vehicles(bonds, for example) the closer you get to your anticipated year of retirement. I know a lot of people who had to postpone retirement quite a few years after the housing market crashed and the stock market followed, and LifePath funds were designed to avoid those pitfalls in the future.
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I think most people will be well served by opening an account with someone like Vanguard or perhaps trying an automated/algorithm-driven investment service like Betterment or Wealthfront. Personally I use Betterment; it's convenient and it has a tax-loss harvesting feature that manages to scrape up some losses each year due to typical market oscillations. I have it set up to auto-deposit every two weeks coincident with paydays so I don't have to think about it. This is on top of my company 401k plan. Remember, play the long game.
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09-07-2016, 12:04 PM
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#34
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Moderator
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Join Date: Feb 2011
Location: Southern Appalachian Mountains
Age: 61
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Join Date: Feb 2011
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Quote:
Originally Posted by AKmoney
Quite frankly, having $1M at retirement isn't enough.
Using the following assumptions:
- 25 year lifespan at retirement (say, 65-90)
- 3% annual inflation
- 6% annual interest ROI
- $100K Salary during your last year of employment
- Retirement withdrawal rate of 90% of your last year's salary
...my magic spreadsheet says I need about $1.6M saved up to ensure I won't hit rock bottom before I kick the bucket.
The math is kinda sobering. Save as much as you can while you can and don't forget age discrimination - it'll become increasingly difficult to lock down a good paying job as retirement age approaches. The time to save big is *now*.
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We just went through this with my wife. Her parents are 90 and 88 respectively. We didn't use the actual numbers but we (me) analyzed their overall spending habits from age 65 til 90. When they both retired, they immediately spent less and less. Not on purpose, but because the kids were grown, didn't need to buy work dress clothes, didn't buy a new vehicle as often, traveled but liked staying home, etc. In the past 10 years, from 80 til 90, they have spent hardly any money other than utilities, taxes, healthcare and basic living expenses. Maybe $20K/yr. That's less than half what they projected. Now, one crisis could wipe them out but even if you saved $5M USD one crisis could wipe that out too. Bottom line is you need to use linear regression and best guess if you want to find out how much you need. On average, from age 75 on you are not going to spend much money on anything other than meds and healthcare.
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09-07-2016, 12:14 PM
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#35
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Join Date: Jul 2012
Location: SoCal
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Quote:
Originally Posted by 1engineer
We just went through this with my wife. Her parents are 90 and 88 respectively. We didn't use the actual numbers but we (me) analyzed their overall spending habits from age 65 til 90. When they both retired, they immediately spent less and less. Not on purpose, but because the kids were grown, didn't need to buy work dress clothes, didn't buy a new vehicle as often, traveled but liked staying home, etc. In the past 10 years, from 80 til 90, they have spent hardly any money other than utilities, taxes, healthcare and basic living expenses. Maybe $20K/yr. That's less than half what they projected. Now, one crisis could wipe them out but even if you saved $5M USD one crisis could wipe that out too. Bottom line is you need to use linear regression and best guess if you want to find out how much you need. On average, from age 75 on you are not going to spend much money on anything other than meds and healthcare.
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This is great data. Trying to project future spending is a huge mystery and the biggest wild card is the cost of health care. That's the one thing that scares the crap out of me. Maybe I should just move to socialist country like New Zealand when I retire
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09-07-2016, 12:23 PM
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#36
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Senior Member
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Join Date: Oct 2010
Location: Naples, Florida
Age: 73
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Real Name: Chris
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Join Date: Oct 2010
Location: Naples, Florida
Age: 73
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Quote:
Originally Posted by AKmoney
I think most people will be well served by opening an account with someone like Vanguard or perhaps trying an automated/algorithm-driven investment service like Betterment or Wealthfront. Personally I use Betterment; it's convenient and it has a tax-loss harvesting feature that manages to scrape up some losses each year due to typical market oscillations. I have it set up to auto-deposit every two weeks coincident with paydays so I don't have to think about it. This is on top of my company 401k plan. Remember, play the long game.
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Agreed, we just switched to Vanguard from a company we used for 10 years. While we'll have to see how our investments do in the long run we're saving thousands/year on management fees.
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09-07-2016, 12:24 PM
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#37
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Senior Member
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Join Date: Nov 2011
Location: Wake Forest
Posts: 1,562
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Quote:
Originally Posted by CXS
Anyone subscribe to the belief of dying with the biggest mortgage possible? My father, an economist, did.
How about the statistic that the average American adult has $6,000 of credit card debt?
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I know of someone that is in retirement age and has their housr and vars mortgaged to the hilt. The idea is that they have several fireproof safes hidden throughout their home that when they die. The banks get the house and the cars and the kids walk away with the cash tax free.
Honest? Not really. Legal? Probably not. Smart? Maybe...
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09-07-2016, 12:27 PM
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#38
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Senior Member
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Join Date: Nov 2011
Location: Wake Forest
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Quote:
Originally Posted by AKmoney
Quite frankly, having $1M at retirement isn't enough.
Using the following assumptions:
- 25 year lifespan at retirement (say, 65-90)
- 3% annual inflation
- 6% annual interest ROI
- $100K Salary during your last year of employment
- Retirement withdrawal rate of 90% of your last year's salary
...my magic spreadsheet says I need about $1.6M saved up to ensure I won't hit rock bottom before I kick the bucket.
The math is kinda sobering. Save as much as you can while you can and don't forget age discrimination - it'll become increasingly difficult to lock down a good paying job as retirement age approaches. The time to save big is *now*.
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But if you own your home and vehicles. How much do you really need? Food, utilities and maintenance on your home. At some point you will get too old to drive. So no new car needed.
You really only need a little bit to survive. Everything else is quality of life...
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09-07-2016, 12:35 PM
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#39
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Quote:
Originally Posted by Morphyne
But if you own your home and vehicles. How much do you really need? Food, utilities and maintenance on your home. At some point you will get too old to drive. So no new car needed.
You really only need a little bit to survive. Everything else is quality of life...
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I agree, this is part of the struggle in terms of calculating how much one really needs. Health care costs are the wild card. Under our current system, it doesn't take much to get wiped out. Insurance and pharmaceuticals are expensive.
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09-07-2016, 12:50 PM
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#40
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Senior Member
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Join Date: Oct 2010
Location: Naples, Florida
Age: 73
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Real Name: Chris
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Senior Member
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Quote:
Originally Posted by AKmoney
I agree, this is part of the struggle in terms of calculating how much one really needs. Health care costs are the wild card. Under our current system, it doesn't take much to get wiped out. Insurance and pharmaceuticals are expensive.
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That's always a concern but Medicare + a "medigap" policy covers lots more than I ever would have thought. Knowing what I do now I should have waited to get some parts fixed until turning 65.
BTW, thanks to all of you for covering my medical expences
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09-07-2016, 02:37 PM
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#41
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Join Date: Jan 2016
Location: Denver, CO
Posts: 94
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Quote:
Originally Posted by LittleCaesar
Put at least 20% away of net income in savings. Once a certain fiscal target number is hit for emergencies, then invest it. Look at the janitor who died with $8 million to his name. He invested for the long run and for the most part very wisely.
Get off Facebook.
If one has a hobby in which money can be made, start a business and use such as a tax shelter to some degree.
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That poor bastard. I'd die again knowing I left $8 million on the table......
On a serious note, this is always a struggle for me. Live for today or sea for tomorrow, and what's a good balance between the two. I've always had a very clear picture that you can't take it with you when you die, so why die with massive amounts of leftover wealth (other than if your intent is to pass on to family/children, of course)?
I fully grasp that retirement is expensive and is something I'd like to do one day, so I save for it and prepare. I'm certainly always thinking about where the line is as far as what to save/what to spend.
This is a really thought provoking thread and thanks to the OP for posting. There really are some excellent points of discussion here.
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09-07-2016, 03:56 PM
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#42
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Senior Member
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Join Date: Jun 2012
Location: washington
Posts: 4,990
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Quote:
Originally Posted by Hepar
I'm certainly not going to set the world on fire with my savings and investments, but I feel like I'm doing an OK job. I also feel like I don't live above my means. Many people think that (or think I have way more money than I do) because I'm always going on trips and buying toys for myself. But the reality is that I'm definitely not. I just prioritize where and what I spend my money on. I have no kids and no plans for any. As well as I feel just fine spending money here or there on my Runner as it's completely paid off, wasn't much to begin with and something I use as my DD.
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this is similar to how I am. I make a modest living. however all of my vehicles are paid for(last payment on the 4runner 2 weeks ago) and live in a poor neighborhood, in a tiny little house. I have little to no credit card debt, though im in the process of getting a zero interest loan off my credit card for a somewhat of emergency/unexpected tire purchase. but that will be paid off within 12 months. long before the interest starts up.
we have a bit in an IRA, very little in personal savings account, and some cash on hand. though we do have some silver and a "couple bullets" laying around.
I understand this question is more in regards to sudden job loss or injury, and financial planning. but "end of days" type preparation applies as well, think natural disaster, flood earthquake. like altering types of things. we are fairly prepared for that as well....
Quote:
Originally Posted by Okie81
Most people, as they get older, tend to become more fiscally conservative, hoarding every penny for the golden day of retirement. As a penny pincher myself I get so much enjoyment though from big tires, isolated wilderness and rubber on a gravel road. That's more valuable to me than a hefty bank balance.
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oh, I love that sound. slowly rolling down a gravel road, listening the crunch and grind of the gravel. love it!
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09-07-2016, 04:59 PM
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#43
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Senior Member
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Join Date: Oct 2010
Location: Naples, Florida
Age: 73
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Real Name: Chris
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Quote:
Originally Posted by Ellis_McPickle
I've always had a very clear picture that you can't take it with you when you die, so why die with massive amounts of leftover wealth (other than if your intent is to pass on to family/children, of course)?
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That's a point of disagreement between my wife & myself. She wants to leave something for our kids but I don't feel the same. We've raised them, given them gifts to help buy houses, provided them with college educations, etc and figure they are able to care for themselves and don't need any more cash from us. If it happens, good for them. If we live beyond our money it'll be payback time. The nice thing is my kids agree with me. That's all the evidence I need to tell me that we raised a couple good kids.
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09-07-2016, 05:06 PM
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#44
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Join Date: Jan 2016
Location: Denver, CO
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Quote:
Originally Posted by CXS
That's a point of disagreement between my wife & myself. She wants to leave something for our kids but I don't feel the same. We've raised them, given them gifts to help buy houses, provided them with college educations, etc and figure they are able to care for themselves and don't need any more cash from us. If it happens, good for them. If we live beyond our money it'll be payback time. The nice thing is my kids agree with me. That's all the evidence I need to tell me that we raised a couple good kids.
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Those are the best gifts you can give. Sounds a lot like my parents. Teach a man to fish, so to speak.
I'm constantly grateful for the job they did raising me and encourage them to go live it up. I'm good to go on my own and don't need "inheritances" from them. I'd rather they enjoy it and live life well while they can, as I intend to also.
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09-07-2016, 05:06 PM
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#45
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Join Date: Mar 2016
Location: CO
Posts: 81
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Quote:
Originally Posted by CXS
"...how ready are you to handle an emergency expense, rainy day fund or retirement?
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Very well-positioned for an emergency, to include the outlying catastrophic circumstances, and I have a structured ‘ go-to-Hell’ financial plan well-resourced. And…yeh…life has kicked me hard-in-the-ballz a few times along the way.
And Come six-twenty-six-twenty-twenty-six (6/26/2026 - I do have logic behind this chosen date ) I’m out of the race at the age of 62, full-stop. My plan to bail at that age will not require me to tap SS until the age of 70 should I so choose, I’ll self-fund until I apply (I have never relied upon SS as part of my financial modeling for a host of reasons but if the money I was forced to contribute over the decades is there…that’s gravy).
There’s two things I’ve always scratched my head about when it comes to people and specifically, fellow Americans. The first is the constant degradation of society and collective and individual behaviors we exhibit that seem to get rewarded since the 60’s (“ its ok, or good even, to be an obnoxious, selfish f***-head in everything we do these days versus tracking towards the greater good.” – Topic for another thread). The second, I’m stunned at the absolute ignorance, carelessness and extremely poor financial management capabilities that the greater percentage of individuals wallow in. It blows my mind when I read the statistics (pick any) and observe financial behaviors in-practice. I just ask myself “ how can one be so foolish and make such poor decisions, or make no decisions, and not control their destiny?”
In 1984 I showed-up on the door-step of Fort Dix New Jersey with $17 in my pocket and the clothes on my back. A little over 3 decades later I can write the above, I feel pretty good about that. No magic to it. I sold my soul, busted my ass (still doing both of those things), made sacrifices, made some mistakes, made some good career & life decisions, etc. but the one specific thing I did do at an early age was educate myself about managing financials and building wealth. I can’t emphasize that enough, and that education never stops. Every day I make it a point to learn something, revisit something, monitor something that either protects or improves my net wealth. Not fanatical, no rash moves or shifts in position, just step-improve every day.
I’m not going to lay out what I do or what others should do, doesn’t matter as everyone’s circumstances are unique, but the bottom-line is the fundamentals under-pinning building wealth never change. Apply them, “ toss in some financial management finesse” as the world ebbs-n-flows year-over-year, use common-sense and sound decision-making and as was said earlier in this thread… be in it for the long-haul. You don’t have to start rich, you don’t have to make huge money (that certainly helps), you don’t have to hope for a wind-fall, just be plan-full, consistent and well-informed. You’ll look-up in 30 or 40 years and say…" holy-s***…I did pretty good!" Or, if not, like many you’ll look at the financial carnage around you, think about the lost opportunity/time, probably blame somebody else for your pathetic situation you are responsible for creating and shuttle-off to a job ya’ hate until the day you die.
Very good thread, glad to see this. My hope is that the younger members here take serious stock in some of what you read (and ignore s***-house lawyers everywhere) and apply it. Be financially savvy for yourself and the benefit of those you are responsible for.
I’ll never hit the 1%, I’m a workin’ dog, but I’ll never find myself where the vast majority of people slot on the scale.
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