Retirement in America

Nax5

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How's everyone's 401ks doing?

I've been reading over the last few years how dire the retirement situation is in America. I think back to my time in high school and college, and there was little-to-no-help in financial education (unless your degree was in Finance). I grew up poor, so my family never taught me about it. I eventually learned the basics on my own. But that always weighs on me, as I know I missed several years of potential gains.

25% of Americans have no retirement savings. And for many who do, they were taught to put in the minimum from each paycheck. Maybe just enough to get your employer match. But if you crunch the numbers, that's not a lot in 30 years on most incomes. If you can, you should put every extra dollar into retirement.

I would be interested to hear how others journey to retirement has gone. Failures? Successes? Learned lessons?

 

GopherJake

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Put in the max every paycheck and forget about it. Make your selections, based on your age and only adjust infrequently. Look up 20 years later and you have something.
 

stocker08

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Fund an IRA. Max per year is only $6,000. Might not be possible for everyone....but everything saved now helps later.
 

stocker08

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Put in the max every paycheck and forget about it. Make your selections, based on your age and only adjust infrequently. Look up 20 years later and you have something.

And this. If your employer matches contributions up to a certain point....it is silly not to take advantage. Unfortunately many people don't have the foresight until they are way behind the eight ball.
 

Ogee Oglethorpe

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Put in the max every paycheck and forget about it. Make your selections, based on your age and only adjust infrequently. Look up 20 years later and you have something.
I agree with this, 100%. The 401k match I have for my employees is absolutely obscene, exceeds just about anything out there; our plan managers have literally said they mention our plan when they talk to other companies. It blows me away that I have a few people that don't at least contribute enough to get the full matching contribution, especially when almost everyone that works for me got a decent raise when they made the move. Unfortunately, sometimes all it takes is that 90 days (the period before you can begin contributing, at least for us) to get comfy with that bigger paycheck and then they don't want to go back down.

My own account, I think I look at it maybe once a year, twice at the most. I care more about what my property is doing, which is strange because I'm not doing anything with any of that any time soon either.
 


Spoofin

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I like Jake's response. That is pretty much my strategy - but I would add to buy a reasonable house and pay it off as fast as you can. Interest rates are low, but cash flow has a lot of power as well. I have preached to my kids to start saving early from day 1. My son is only 18 and has already saved up 5-figures (hard worker) that he invested into an IRA. Bright Future!
 

Wally

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I like Jake's response. That is pretty much my strategy - but I would add to buy a reasonable house and pay it off as fast as you can. Interest rates are low, but cash flow has a lot of power as well. I have preached to my kids to start saving early from day 1. My son is only 18 and has already saved up 5-figures (hard worker) that he invested into an IRA. Bright Future!
Some I know say you should mortgage your house to the hilt at these interest rates and invest the money instead, I'm with you tho, like having the house paid for.
 

Spoofin

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Some I know say you should mortgage your house to the hilt at these interest rates and invest the money instead, I'm with you tho, like having the house paid for.
I've been given that advice many times. I get math and I'm not going to say they are wrong --- but I could give a lot of reasons it makes sense to get the house paid off too. Cash Flow has power.
 

kg21

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I'm guessing that teaching finance in high school would be racist. So let's not do it.
 



kg21

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I can't tell you how many people I know say they would have liked to retire sooner, but didn't take the necessary steps when they were young.

When you are young, you rarely think of ever being old.
 


kg21

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Thank you for your brilliant contribution :rolleyes:
White people are holding others back. How can you teach finance to the class without it being racist? Enlighten me.

I don't want finance taught. It could offend someone, and we can't have that. There are people in that class that have advantages that others don't have.

After thinking on it, Nax5 agrees with me.
 
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Spaulding!No!

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my dad says we went thru this in the 70s and had black tv shows to all inclusive.
 



ekeg0002

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I like Jake's response. That is pretty much my strategy - but I would add to buy a reasonable house and pay it off as fast as you can. Interest rates are low, but cash flow has a lot of power as well. I have preached to my kids to start saving early from day 1. My son is only 18 and has already saved up 5-figures (hard worker) that he invested into an IRA. Bright Future!
Totally agree, there's an abstract psychological value you get too from paying off your house early.

Personal finance is a passion of mine and it irks me to no end that schools do NOT teach anything about it... especially in a country where most people live well beyond their means with no safety net. I am 100% self-taught as well and have taken some of the FIRE (financial independence/retire early) movement to heart. Mister Money Moustache blog is incredible if you don't know anything about it.

Like Spoofin I'm teaching my kids everything I can. My wife and I are on plan to retire comfortably at 55, but there is no reason my kids shouldn't be able to retire earlier than that, or at least have the flexibility to work part time at something they enjoy; versus being forced to work until 65 or 70...

As far as what I'm invested in I take a pretty hands-off approach as mentioned above. I'm not smart enough to predict the winners or losers, so I just throw as much money as possible at index funds with brute force and expect them to do what they've been doing in the long term for decades.
 

kg21

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Totally agree, there's an abstract psychological value you get too from paying off your house early.

Personal finance is a passion of mine and it irks me to no end that schools do NOT teach anything about it... especially in a country where most people live well beyond their means with no safety net. I am 100% self-taught as well and have taken some of the FIRE (financial independence/retire early) movement to heart. Mister Money Moustache blog is incredible if you don't know anything about it.

Like Spoofin I'm teaching my kids everything I can. My wife and I are on plan to retire comfortably at 55, but there is no reason my kids shouldn't be able to retire earlier than that, or at least have the flexibility to work part time at something they enjoy; versus being forced to work until 65 or 70...

As far as what I'm invested in I take a pretty hands-off approach as mentioned above. I'm not smart enough to predict the winners or losers, so I just throw as much money as possible at index funds with brute force and expect them to do what they've been doing in the long term for decades.
You ever listen to Dave Ramsey, and if so, what do you think? He is all about paying off the house first.
 

MplsGopher

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Totally agree, there's an abstract psychological value you get too from paying off your house early.

Personal finance is a passion of mine and it irks me to no end that schools do NOT teach anything about it... especially in a country where most people live well beyond their means with no safety net. I am 100% self-taught as well and have taken some of the FIRE (financial independence/retire early) movement to heart. Mister Money Moustache blog is incredible if you don't know anything about it.

Like Spoofin I'm teaching my kids everything I can. My wife and I are on plan to retire comfortably at 55, but there is no reason my kids shouldn't be able to retire earlier than that, or at least have the flexibility to work part time at something they enjoy; versus being forced to work until 65 or 70...

As far as what I'm invested in I take a pretty hands-off approach as mentioned above. I'm not smart enough to predict the winners or losers, so I just throw as much money as possible at index funds with brute force and expect them to do what they've been doing in the long term for decades.
My question is: WTF are you supposed to do when you're retired??

Watch TV all day? Post on internet message boards all day?

I guess if you're really rich, you can take 20 trips per year.
 

John Galt

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Put in the max every paycheck and forget about it. Make your selections, based on your age and only adjust infrequently. Look up 20 years later and you have something.
This is better than nothing, but it falls far short of what you should do. It makes you a captive to your companies 401k options, fees and forces you to wait until you are 59 to withdraw. The better approach is a mix of tax free, tax deferred, taxable, real estate, etc etc.
 

ekeg0002

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You ever listen to Dave Ramsey, and if so, what do you think? He is all about paying off the house first.
I haven't, I will check him out. I do think it depends on the interest rates. They've been so obscenely low over the past few years that if you have a fixed rate mortgage at 3%, you probably shouldn't be paying your house off first even if it feels good. Your dollars are better allocated somewhere else.
 

Nax5

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You ever listen to Dave Ramsey, and if so, what do you think? He is all about paying off the house first.
Ramsey is good for beginners. Kinda more for people who are in deep debt (student, credit card, etc) and need help creating a plan to get them to financial stability.

All I know is he loves to say "That's just STUPID" a lot lol.
 

ekeg0002

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My question is: WTF are you supposed to do when you're retired??

Watch TV all day? Post on internet message boards all day?

I guess if you're really rich, you can take 20 trips per year.
Depends on the individual, but my goals are really about being able to do what I want.
I love to golf, I love to play pickleball and tennis, my wife and I enjoy travelling.

Obviously people need to keep those things ("lifestyle") in mind as well. If you retire with just enough to pay for food and housing and nothing else, you probably retired too early.

I intend to spend time volunteering, and by then may have grandchildren to keep me busy too. For me I don't think finding things to fill my day will be a problem!
 

MplsGopher

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This is better than nothing, but it falls far short of what you should do. It makes you a captive to your companies 401k options, fees and forces you to wait until you are 59 to withdraw. The better approach is a mix of tax free, tax deferred, taxable, real estate, etc etc.
What retirement investments exist that aren't subject to an early withdrawal penalty?

Regular investments are taxed with capital gains.
 

MplsGopher

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Depends on the individual, but my goals are really about being able to do what I want.
I love to golf, I love to play pickleball and tennis, my wife and I enjoy travelling.

Obviously people need to keep those things ("lifestyle") in mind as well. If you retire with just enough to pay for food and housing and nothing else, you probably retired too early.

I intend to spend time volunteering, and by then may have grandchildren to keep me busy too. For me I don't think finding things to fill my day will be a problem!
That sounds nice to me. Hope it works out for you that way!
 

ekeg0002

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Ramsey is good for beginners. Kinda more for people who are in deep debt (student, credit card, etc) and need help creating a plan to get them to financial stability.

All I know is he loves to say "That's just STUPID" a lot lol.
That's great, it is sad that so many people are financially illiterate, because it is not taught at all.

You don't have to be great at math to understand it, but you do need some simple explanations and those things don't really exist. My daughter's high school offers like 2 classes as electives about personal finance and investing. They also offer Firefighting and a million other things.
 

ekeg0002

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What retirement investments exist that aren't subject to an early withdrawal penalty?

Regular investments are taxed with capital gains.
You can also withdraw at 55 without penalty following certain guidelines- has to be the 401k of the employer you are with at retirement (but you can roll over any previous of course) and you have to leave that job at 55 or later. I'm sure there are other "loopholes" but I'm not an expert.

 

Blizzard

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Does anyone else have a traditional defined benefit pension plan?
 

Nax5

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My daughter's high school offers like 2 classes as electives about personal finance and investing. They also offer Firefighting and a million other things.
Man, that all sounds awesome. I wish my school would have had all of those. Firefighting especially! Sounds a lot more interesting than some of the electives I had to choose from.
 



Ogee Oglethorpe

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That's great, it is sad that so many people are financially illiterate, because it is not taught at all.

You don't have to be great at math to understand it, but you do need some simple explanations and those things don't really exist. My daughter's high school offers like 2 classes as electives about personal finance and investing. They also offer Firefighting and a million other things.
I had absolutely ZERO concept of the time-value of money until I had what was kind of an afterthought Engineering Economics class in one of my last years in college. What an absolute eye-opener, I had no clue up to that point. It's not taught at all, which is a great disservice to all of us; yet another massive failure by our secondary educational system right now. More concerned with the overall indoctrination than preparing our students for life in the real world. Our colleges and universities need to do better, do a lot better.
 

ekeg0002

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I had absolutely ZERO concept of the time-value of money until I had what was kind of an afterthought Engineering Economics class in one of my last years in college. What an absolute eye-opener, I had no clue up to that point. It's not taught at all, which is a great disservice to all of us; yet another massive failure by our secondary educational system right now. More concerned with the overall indoctrination than preparing our students for life in the real world. Our colleges and universities need to do better, do a lot better.
I think a tiny bit of personal finance was covered in my daughter's Home Ec class in middle school, but just super surface and more about budgeting and saving. Nothing about debts, interest rates, investing.

Absolutely no personal finance in any required courses in high school. I think high school is LATE to start learning all these concepts.
 




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