# Let's talk retirement.



## KuJoe (Jul 19, 2014)

So I received a letter in the mail from the company that manages my retirement accounts and it was basically a pamphlet trying to get me to increase the money into my 401k but something struck me as odd, one of the stats they quoted was that most people live in retirement for 30 years... does this seem off to you? I can retire without tax penalties when I'm 59 1/2 so that means that (based on that stat) most people live until their 90? Even if they said the average person will live 30 years in retirement (instead of using the word "most") it's still hard to believe even with the marvels of modern medicine.

Either way, it had me thinking about my retirement accounts and how many years I could live off of my current accounts as of today and I barely have 5 years of livable income. Luckily I have 30 years before I have to worry about that but it did get me thinking about how other people are planning for their retirement. I basically have my retirement accounts on cruise control, I deposit just enough money to get the company match and my company deposits a few thousand a year in stock and profit sharing but other than that I really don't do anything. I haven't changed my retirement account investments in 9 years and aside from my house in Florida (which will be paid off before I retire) I don't have any long term investments at all.

I know there's probably not a lot of professional financial planners on here but I was wondering what others on here are doing to plan for retirement in case somebody has some amazing ideas the rest of us haven't thought of.

Funny enough, I work for one of the biggest financial firms in the country yet these kinds of things are totally foreign to me aside. 

EDIT: Fixed some numbers, I was looking at the retirement age for Social Security, not 401k plans.


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## raindog308 (Jul 19, 2014)

There are various googleable retirement calculators where you can plug in numbers, etc.  It's mostly a guess.

Virtually all private employers in the US use defined-contribution rather than defined-benefit (pensions), which is unfortunate but a fact of life.

I've been putting 10% of my pay into a 401K since my mid-20s.  Like you, I keep it more or less on cruise control - leaning heavily towards growth (though not insane).  Index funds mostly with some in foreign.

Financial planners will say "you put in $X every year and you'll have $XX,XXX,XXX when you retire!" but that's all a guess.  Usually they take 10.5% as a compound growth rate and just assume that as an annual return, which is inaccurate - it's not like your mutual fund always pays 10.5% a year!  While it's true that's the historical average of the S&P over a long time, it doesn't mean that's what you're going to get.  Spending the first ten years of investing in a cheap period is a lot better than spending the first ten years buying into a peak.  But you can't control when you're born.

You could easily live into your 90s though I (like you) am skeptical it's truly "most people".  The mutual fund company of course wants to paint a picture that you'll need a lot of money hence you should invest a lot now.

The ultimate path would be that you have so much saved up you can just live off the interest in retirement.  That's unlikely to happen (god bless and congrats if you do).  More likely you'll live off a combination of social security, interest on your retirement accounts, and principle from your retirement accounts, hopefully in that order of priority.  You obviously don't want to run out of money, but the good news is that your expenses in retirement will probably be lower - house paid off, no kids to support, etc.  On the other hand, your medical may be higher, so once again it's kind of a guess.  

I always laugh when these retirement calculators say "what percentage of your income will you need when you're retired?  60%?"  Um, no, about 200% - I want to travel the world, don't you!?

We're just coming to the first generation that will be retiring in charge of their benefits, as opposed to the decades of "I retired with a pension".  I suspect a lot of people are going to mishandle their money.

Some random advice:


If you have extra cash, put it in a Roth IRA - not tax deductible now, but withdrawals are tax deductible.  So you put in some cash now, it grows tax free, and you can withdraw tax free.  Different than traditional IRA which is tax deductible now, grows tax free, but you're taxed on withdrawals.
You can still put money in a Roth IRA if you have a 401K at work.  Highly recommended, assuming you have extra money left every month.  Even $50 or $100 when you can adds up over many years.
Pay for your children's college with a state college fund.  They're often tax deductible.  Heck, if YOU go to college, do it - you can deposit money in December, withdraw in January, and claim the deduction.
And of course once you get to your 50s you need to start switching your money slowly to more conservative options.  I've been very shocked by the number of people I've worked with who'e retired and come back saying their portfolio was partially wiped out.  These are people in their early 60s who still want to invest in tech IPOs.  Fine, but don't do it with your nest egg.
You can get a social security statement from the gov't, which helps inform planning.  People say "you can't trust it'll still be around" but I think it'd be a pretty insane scenario for the government to decide to impact social security benefits - the politician who says "thanks for paying, we're stiffing you" would be suicidal.

Finally, buy LEBs.  They're cheaper than real VPSes and you can invest the savings


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## rds100 (Jul 20, 2014)

While some people might live to 90 years old, i doubt many in the IT indurstry will. Unless you take a good care of yourself, with regular excercising, etc., but most ITs don't.


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## Schultz (Jul 20, 2014)

Given the technological advancement within the next, lets say 50 years - it's most possible humans will live past 150, and hell even 200.


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## KuJoe (Jul 20, 2014)

Boxode said:


> Given the technological advancement within the next, lets say 50 years - it's most possible humans will live past 150, and hell even 200.


But we're talking about now, not 50 years from now. As time passes the length of the average life span will increase, but that's not what we're talking about in this thread.


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## wlanboy (Jul 20, 2014)

First of all: Very important topic.

Roth IRA (Individual Retirement Arrangement) is a great way to save money for the later years.

In Europe you have a national old-age pension (which will break in some years) and often a company based pension too.

First one is a hot topic in the EU because all politicans currently say that the pension is save.

But we all know that the demographic change in the EU will cause the end of the "contract of the generations".

The national pension is something that worked for decades.

Every employee has to give away about 15% of his/her wage and gets a pension if he/she stops working after 63 years.

All pay into one single fund - billions over billions of €.

For my dad (lucky year of birth) this national old-age pension is working well. He gets about $2000 every month.

And he gets some additional $1000 out of his company pension.

Something I will never get.

But the worst thing is: A lot of the money is gone out of the funds because of the banking crisis.

Why did they put so much money into the banks of the EU?

Why could Greece and Irland not fail?

Right because all old-age funds invested their money into government bonds of EU countries.

Savest place for money - for decades.

Back to topic:

I have to pay into the national old-age pension, so 15% of my money is taken away to fund current old-age pensions.

I won't see that money but maybe I will get some bucks a month (social welfare level) back when I go into retirement when I am beyond 60.

My current company does not have any pension plans. So I have to skip that.

I do have a private pension too. It is tax saved and goverment is putting some extra money into it too as a kind of sponsorship.

And I do have a life insurance. First to cover the cost for my familiy if I pass away and for a tax free cash out when I retiere.

Hopefully enough.

Buying a house as a money saver when I am old is currently out of scope.

I am not living in a big city, but the free money floating around killed house prices.

A small and old row house with a half tennis court as garden currently costs about $800000.

Double that price if you want to buy it in any city which has more than 10 roads.


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## MannDude (Jul 20, 2014)

I don't have any retirement options at my place of employment because I am a contract worker. For now, i'm just trying to save what I can and stash some silver here and there. I'm hoping to be able to find some land to purchase where I can build a very small cabin, live cheaply and within my means and live my life while avoiding debt. I'm hoping/praying that living reasonably and responsibly and without encountering any debt will allow me to one day retire at a respectful age.


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## Schultz (Jul 20, 2014)

Ehh still; didn't mean to derail the thread 

I too find it odd they assume you'll live till 90 if you retire at 60. My mum says she'll be happy if she lives till 70 (lol) - she's already quite old and doesn't seem to understand the advances in the tech & medicine fields in the last even 10 years.

On-topic though; perhaps you should setup some investments within the property sector to raise your net-value for when you do retire; that way if things turn bad, you could always sell off any existing investment property you have


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## KuJoe (Jul 20, 2014)

MannDude said:


> I'm hoping/praying that living reasonably and responsibly and without encountering any debt will allow me to one day retire at a respectful age.


I think this is crucial. Right now my student loans outweigh all of my retirement accounts as well as my mortgage (not combined, but individually which is still depressing).

Luckily most of my student loans are government loans so the ones that aren't paid off in 10 years are forgiven as long as I pay them on time for the full 10 years.

The private ones want more than my mortgage payment per month so I'm just ignoring them until the courts get involved since they can only legally garnish a percentage of my wages which is significantly less than what they want per month. Additionally, 2 of my private loans were sold to debt collectors who only want one third of the original loan which is pretty awesome. Sure, my credit is ruined for 7 years but I already have a house and a car so I don't need to take out any more loans for the foreseeable future.


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## Coastercraze (Jul 20, 2014)

Yeah, school loans suck. Thankfully, next year I won't have to take any new ones out as my employer will start picking up the tab.

Retirement wise, I don't have much yet as I'm focusing on paying off those pesky school loans and my car, but I would like to do something like a Roth IRA and some stock investments here and there.


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## MartinD (Jul 20, 2014)

I'm relatively lucky in that our retirement is already taken care of as its basically property. As or when the time comes, the property is sold off the pension funds are there.


Also have a few investments to ensure a very good quality of life in later years.


Would much rather take control of my own future than put it in the hands of someone else.


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## MannDude (Jul 20, 2014)

MartinD said:


> As or when the time comes, the property is sold off the pension funds are there.


That is, assuming someone is able and willing to buy the propert(y/ies) when your hair is graying and you're ready to cash in. Look at the USA, you can drive through entire suburbs and see tons of empty, for sale houses. Up and down the street, houses for sale that people just aren't buying.


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## KuJoe (Jul 20, 2014)

MannDude said:


> Look at the USA, you can drive through entire suburbs and see tons of empty, for sale houses. Up and down the street, houses for sale that people just aren't buying.


That depends on the location. In Florida, you can buy nice houses all day long for dirt cheap (<$100k) while here in Colorado, a decent house won't be on the market for more than a week. It's at the point that it's cheaper and easier to build a house brand new than it is to find an already built one that'll be on the market by the time you call the seller.

And renting a house here is near impossible, the last rental I was interested in turned into a bidding war just for applications (about 30 people showed up to see the house and the agent only brought 20 applications, I wasn't able to get an application because I didn't have enough cash on me, but I offered the guy $300 more than he was asking per month and somebody with an application offered him more than what I offered ).


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## MartinD (Jul 20, 2014)

MannDude said:


> That is, assuming someone is able and willing to buy the propert(y/ies) when your hair is graying and you're ready to cash in. Look at the USA, you can drive through entire suburbs and see tons of empty, for sale houses. Up and down the street, houses for sale that people just aren't buying.


It's in the centre of London, it won't be a problem


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## VPSCorey (Jul 20, 2014)

KuJoe I got a nice place in Colorado Springs I'll sell ya 

You take my advice at your own risk!

Dont know about everyone else but even during the great recession I managed to eek out gains, usually above 20% if I play my cards right.  You cant day trade 401k funds anymore (Those were 36% years  ), but if you keep track of trends and moods you can usually get ahead of the curve.

Right now avoid any Asia specific funds, they've been on the decline for awhile  and are not worth the risk anymore IMO.  PIMCO is dead to me as well if you have that.  REIT's seem to do okay.

Small Caps - great gains, but if the market starts going south dump these ASAP.  Small cap's usually have the worst performance during any downturn because they just do not have the resources.  Mid and Large cap funds tend to do better and still eek out gains.  Right now most of these funds are YOY and YTD 20% or better.  I have one that's 27% up for the year.

Index funds can do okay as well.  Keep in mind the further out they are the more riskier they are.

Also DO NOT listen to anyone who says "You're young keep your money in the market".  It was a complete SCAM during the recession and I list over 80,000 in value of my 401K (been saving since I was 21).  I only barely managed a 1% gain that year by saying enough is enough dumping it all to cash and jumping back in when the down was around 6500.  If I had listened to the retirement planners in 2007 that were saying to the old folks cash out to safe funds now I could of made a killing.

Having a 401k is like having common stock of any company. You're the last to get traded on and I absolutely hate that.  If there was ever a market  panic and you wanted your money out it's not cashing out for 24 hours and by then the damage could be one.  In reality it's rigged so the stock traders, banks, and rich can cash out most of their money while you lose most of yours.  Why I still invest, because it's still easy enough to see issues coming that would cause a panic.  If Yellowstone blew up, we'll were all fsck'd anyways.


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## raindog308 (Jul 20, 2014)

FRCorey said:


> If Yellowstone blew up, we'll were all fsck'd anyways.


I'm skeptical a national park will blow up.

On a more serious note, it's extraordinarily difficult to beat the S&P return on any kind of long-term basis.  Even Warren Buffett can't do it.


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## VPSCorey (Jul 20, 2014)

raindog308 said:


> I'm skeptical a national park will blow up.
> 
> On a more serious note, it's extraordinarily difficult to beat the S&P return on any kind of long-term basis.  Even Warren Buffett can't do it.



You know Yellowstone is a super volcano right?


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## texteditor (Jul 20, 2014)

raindog308 said:


> I'm skeptical a national park will blow up.


Oh it's definitely gonna pop someday, just a matter of when


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## raindog308 (Jul 20, 2014)

FRCorey said:


> You know Yellowstone is a super volcano right?


Now that you mention it, I did know that.  My bad.


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## Mid (Jul 21, 2014)

Boxode said:


> Given the technological advancement within the next, lets say 50 years - it's most possible humans will live past 150, and hell even 200.


http://en.wikipedia.org/wiki/List_of_countries_by_life_expectancy

I am not from US, but It's unlikely its going to be 150 or 200 years even after several years I guess.

What is the % of persons having sugar (diabetes) in your country (USA)? I think it is around 8% (correct if wrong). And google says "obesity cuts 14 years from your life expectancy". And also cigarettes play role to some extent I guess.


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## raindog308 (Jul 21, 2014)

Mid said:


> What is the % of persons having sugar (diabetes) in your country (USA)? I think it is around 8% (correct if wrong). And google says "obesity cuts 14 years from your life expectancy". And also cigarettes play role to some extent I guess.


True, but the US actually has one of the lower smoking rates in the first world.  Nearly twice as many people smoke in Japan than in the US, for example.


I agree that exceeding 90-100 routinely is a way off. The last 100 years has mostly been about eliminating a lot of the easy killers, reducing infant mortality, etc. The next step is to improve people's lifestyles. But even if we were all marathon-running macrobiotic diners, there are still fundamental limits.  Of the three causes of death, you can perhaps surmount disease and reduce trauma, but aging itself is the cause of many different things and we don't even have a solution for one of them.

Various scientists have said that immortality is an "engineering problem" rather than a "science problem".  Even if that is not over-optimistic, there are plenty of engineering problems that have taken a looooong time to solve.  Fusion energy would be a good example.

I'll go out on a limb and say the vast majority of people reading this post will die before they're 100.


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## Aldryic C'boas (Jul 21, 2014)

_"To live to be 30 is to have failed at life" - Sebastian Trump_


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## raidz (Jul 21, 2014)

Only advice I can give is not to count on social security as a good retirement plan.


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## MannDude (Jul 21, 2014)

raidz said:


> Only advice I can give is not to count on social security as a good retirement plan.


Guess I'll just buy more silver and stash it in hollow tree trunks and drywall.


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## ChrisM (Jul 21, 2014)

MannDude said:


> Guess I'll just buy more silver and stash it in hollow tree trunks and drywall.


Sooo @MannDude you going on vacation anytime soon?


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## devonblzx (Jul 21, 2014)

Mid said:


> http://en.wikipedia.org/wiki/List_of_countries_by_life_expectancy
> 
> I am not from US, but It's unlikely its going to be 150 or 200 years even after several years I guess.
> 
> What is the % of persons having sugar (diabetes) in your country (USA)? I think it is around 8% (correct if wrong). And google says "obesity cuts 14 years from your life expectancy". And also cigarettes play role to some extent I guess.


Just remember that most seniors live past the life expectancy.  Life expectancy is slightly skewed by those who die at a young age from disease, accidents, etc.  So if you do live to be a senior, the life expectancy is slightly higher than what would be listed there.

I'm sure life insurance companies would have some accurate numbers for you.


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## MannDude (Jul 22, 2014)

Chris Miller said:


> Sooo @MannDude you going on vacation anytime soon?


Unfortunately, no. I don't have enough to make it worth the trip from Michigan anyhow.


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## Kephael (Jul 23, 2014)

raindog308 said:


> True, but the US actually has one of the lower smoking rates in the first world.  Nearly twice as many people smoke in Japan than in the US, for example.
> 
> 
> I agree that exceeding 90-100 routinely is a way off. The last 100 years has mostly been about eliminating a lot of the easy killers, reducing infant mortality, etc. The next step is to improve people's lifestyles. But even if we were all marathon-running macrobiotic diners, there are still fundamental limits.  Of the three causes of death, you can perhaps surmount disease and reduce trauma, but aging itself is the cause of many different things and we don't even have a solution for one of them.
> ...


But Ray Kurzweil.


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## concerto49 (Jul 23, 2014)

They're pushing the retirement age back here. Almost 70. Sigh.


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## raindog308 (Jul 23, 2014)

Kephael said:


> But Ray Kurzweil.


http://en.wikipedia.org/wiki/Predictions_made_by_Ray_Kurzweil#Future_predictions

You were saying?   :lol:


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## trewq (Jul 23, 2014)

concerto49 said:


> They're pushing the retirement age back here. Almost 70. Sigh.


I for one am not excited about working for another 50 years.


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