Saving for retirement

[Lao Tzu]

I'm curious as to everyone's opinions on this.

On a personal note, I have never had a real job (real meaning high paying) since I am still in college as a senior. And I do not intend to have kids anytime soon. So I may not have the same level of knowledge of this stuff as some of you.


But assume you have a household making 50k a year, which is about the median. Taxes will take out about 15k. If you are puting 10% into retirement that is 5k. Then you have a mortgage, lets assume 7k a year.

When you retire, your taxes go down due to less/no payroll taxes. Social security is not taxed. So lets assume tax rate drops from 30% of income to 20 or less, maybe 15%. Lets also assume the house is paid off. Lets also assume you get a reverse mortgage on your home. Also, once you retire you stop putting 10% of your income into a 401k.

So now you are 67 (in the year 2043ish, assuming we still retire by then which we probably wont) you are not saving 5k a year for retirement anymore, you are saving 7k on your home by paying off your mortgage, you are earning 5-7k a year via a reverse mortgage and your tax rate went from 30% to 15%.

Plus when you are retired you are no longer saving for your kids. your kids are probably independent by now, so you don't save for their college or pay for their stuff anymore.

So retire at 67 and you should get about 2k a month in SS payments, which I am assuming are not taxed. So that is 24k a year. Plus the reverse mortgage gives you another 6k and is not taxed so you are making 30k a year tax free. You still have other taxes, but no payroll or income taxes on that income.

So originally you were making 50k, spending 7k on a mortgage, paying about 8-10k in payroll/income taxes, and saving 5k a year for retirement, giving a total of about 29k in spending income. With a reverse mortgage and social security you are already at that same level, and that is w/o taking into consideration your income from investments your whole life. Plus at this age you have no kids to raise.

So am I missing something because retirement saving sounds relatively easy.

 

[chewyxrage]

Sign me up dude.

You are assuming social security though. That's huge. They are already up'ed the age you have to be to qualify. You're what, 22ish? You have 45 years before you can get soc. and who knows if it's even around by then.

 

[Lao Tzu]

Sign me up dude.

You are assuming social security though. That's huge. They are already up'ed the age you have to be to qualify. You're what, 22ish? You have 45 years before you can get soc. and who knows if it's even around by then.

27ish. Social security is solvent for far longer than most people realize. The whole 2042 thing is based on assumptions of slow economic growth and was largely invented to scare people into private accounts. Even if it does happen SS can still pay out 70-80% of benefits. However I'd be all in favor of raising Plunkeys taxes so that SS remains solvent until the 23rd century.

http://www.socsec.org/publications.asp?pubid=507

The problem is honestly that in the next 40 years there will be so many biotechnology revolutions that people aren't just going to retire at 67 and sit around all day watching TV anymore.

 

[mrplunkey]

Your chances of getting SS as you know it today are zero.

Also take property taxes, loans for your children, inflation, etc. etc.

And 10% isn't so easy to put back each year once you mix cars, kids, a wife, etc. etc. into the frey.

 

[chewyxrage]

27ish. Social security is solvent for far longer than most people realize. The whole 2042 thing is based on assumptions of slow economic growth and was largely invented to scare people into private accounts. Even if it does happen SS can still pay out 70-80% of benefits. However I'd be all in favor of raising Plunkeys taxes so that SS remains solvent until the 23rd century.

http://www.socsec.org/publications.asp?pubid=507

The problem is honestly that in the next 40 years there will be so many biotechnology revolutions that people aren't just going to retire at 67 and sit around all day watching TV anymore.

No doubt. People are working longer and longer these days.

My parents for example, baby boomers, mom is retired @56, she is going into real estate for a little hobby. My dad, engineer w/ MBA, he will work until he's
80, he'd be bored as shit without it.

Of course they have it all figured out to where they each make 4k/month apon retirement but neither is actually retiring.

 

[test boy ii]

The fundamental problem is that I believe most people are happier while working. A lot of people just start dieing when they retire. Boredom etc.

Concentrate on a good career. Retirement is a very long time from now.

 

[chewyxrage]

The fundamental problem is that I believe most people are happier while working. A lot of people just start dieing when they retire. Boredom etc.

Concentrate on a good career. Retirement is a very long time from now.

fuck that when I retire I'm going to play video games and mainline heroin all day.

 

[Lao Tzu]

Your chances of getting SS as you know it today are zero.

Also take property taxes, loans for your children, inflation, etc. etc.

And 10% isn't so easy to put back each year once you mix cars, kids, a wife, etc. etc. into the frey.

I don't agree with the SS thing, SS should be solvent for quite a while, even with minor changes it can last until the 22nd century.

I'm including property taxes, but the big taxes like payroll and income shouldn't apply to your major sources of income when retired like SS and a reverse mortgage. These values are all in constant inflation adjusted dollars. Loans for your kids isn't something I actually thought of, but would a kid need a loan more than 10-20k at most?

10% may be hard, but I don't intend to have a wife or kids for a long ass time.

 

[Lao Tzu]

The fundamental problem is that I believe most people are happier while working. A lot of people just start dieing when they retire. Boredom etc.

Concentrate on a good career. Retirement is a very long time from now.

Alot of people lead shit careers they hate because they spend everything they make. I will not end up like that if I plan ahead financially. If I invest wisely I should have enough economic leeway to find careers I actually enjoy.

 

[chazk]

it all looks good on paper. Now throw in actual expenses.
I'll lay out mine for you.
mortgage 1100$ a month 13,200 a year
property taxes 4,000$ a year
electric 150$ a month
water 55$ a month
auto insurance 150$ a month
cell phone 75$ a month
home phone 25$ a month
home owners insurance 3k a year or 250$ a month
student loan 125$ a month
car payment 300$ a month
so far basic expenses are $2563 a month or $30,758 a year

Now throw in food, clothes,gas,oil changes, medical or hell just buying a cd to listen to and your already up to around 40,000$ a year


To be honest it all looks good on paper your plan. But then reality will take over.Your gonna want to furnish your first house so expect to have a 15,000$ charge card debt to pay off the next 3-5 years. Right after you just got done putting down 75,000$ on a 300k home to get a decent intrest rate to avoid PMI to get a lower monthly rate.

In other wards at 50k a year your fucked

 

[chazk]

Also to add by the year 2043 29k a year will be below the poverty level.
becuase its not far from poverty now as we speak in the year 2007.

plus reverse a reverse mortgage usually does not pay more then the property taxes if even that.They are hoping you will die off long before the note is over so they can take the house.Your better off at age 67 to just sell the house by that time it will prob be worth 350k to 750k depending on the area .Then rent a smaller house .walking with the lump sum is better then the 6k a year 180k total at the end of 30 yrs.By the time your 97 if you live that long 29k a years retired income prob wont even cover the price of a decent coffin you can prob request your ashes be char-broiled at the local burgerking then scattered out in the parking lot for a discount price of 20k.

 

[Lao Tzu]

those numbers like 29k are constant dollars. Naturally they will be higher when adjusted for inflation, but I'm talking 2006 dollars.

Where do you live where property taxes & Homeowners insurance are so high? The midwest is damn cheap compared to that.

 

[chazk]

those numbers like 29k are constant dollars. Naturally they will be higher when adjusted for inflation, but I'm talking 2006 dollars.

Where do you live where property taxes & Homeowners insurance are so high? The midwest is damn cheap compared to that.

I live in sunny Floirda home of german tourist, mickeymouse and elder people that just cant die fast enough.

the 29k mark you mentioned Can not be adjusted to the degree to battle poverty. becuase the ssi syetem does not work that way nor do banks buying homes on a reverse mortgage.But property taxes still go up, so do home owners insurance and bills.
You better find away to make that 29k adjusted 120k in 2050 if you want to live if not good luck eating dog food for dinner.

 

[chewyxrage]

I live in sunny Floirda home of german tourist, mickeymouse and elder people that just cant die fast enough.

the 29k mark you mentioned Can not be adjusted to the degree to battle poverty. becuase the ssi syetem does not work that way nor do banks buying homes on a reverse mortgage.But property taxes still go up, so do home owners insurance and bills.
You better find away to make that 29k adjusted 120k in 2050 if you want to live if not good luck eating dog food for dinner.

it's called ramen noodles and tuna cmon, not dog food


I think you put out a bleaker picture than it will be.

in this case, inflation, blah blah, everything else you added, he will be making more than 50k, pretty sure he meant that relative to today.

 

[mrplunkey]

it all looks good on paper. Now throw in actual expenses.
I'll lay out mine for you.
mortgage 1100$ a month 13,200 a year
property taxes 4,000$ a year
electric 150$ a month
water 55$ a month
auto insurance 150$ a month
cell phone 75$ a month
home phone 25$ a month
home owners insurance 3k a year or 250$ a month
student loan 125$ a month
car payment 300$ a month
so far basic expenses are $2563 a month or $30,758 a year

Now throw in food, clothes,gas,oil changes, medical or hell just buying a cd to listen to and your already up to around 40,000$ a year


To be honest it all looks good on paper your plan. But then reality will take over.Your gonna want to furnish your first house so expect to have a 15,000$ charge card debt to pay off the next 3-5 years. Right after you just got done putting down 75,000$ on a 300k home to get a decent intrest rate to avoid PMI to get a lower monthly rate.

In other wards at 50k a year your fucked

This isn't a slam Lao Tzu -- I promise. Just remember that your still in your theoretical phase of life. There is a huge delta between a "paper plan" and "reality". In your first two years out of college, you're going to experience the biggest reality shift in your life. Retirement is hard for 99.9% of all Americans -- even the rich ones.

Different people handle it different ways too. Some get angry and jaded. Others reject the reality that's hitting them in the face and try to do things "thier way". Most people, virtually all the successful ones, see the differences and can laugh about the fact that they "didn't know what they don't know".

P.S. Kudos to you for trying to plan though. That alone puts you ahead of 95% of today's college students.

 

[gonelifting]

Yeah, just add "unforeseen" to that first list.... $250,000 lol jk But not really.



To oversimplify it, I would just project what kind of income I want at retirement and shoot for that goal. THEN, I'd try and beat inflation with the money put away for the goal I've made. (Stock market will give you the best chance at that)

If you can do that, then it's all you need. Easier said than done, but that's all it is.

 

[patsfan1379]

it all looks good on paper. Now throw in actual expenses.
I'll lay out mine for you.
mortgage 1100$ a month 13,200 a year
property taxes 4,000$ a year
electric 150$ a month
water 55$ a month
auto insurance 150$ a month
cell phone 75$ a month
home phone 25$ a month
home owners insurance 3k a year or 250$ a month
student loan 125$ a month
car payment 300$ a month
so far basic expenses are $2563 a month or $30,758 a year

Now throw in food, clothes,gas,oil changes, medical or hell just buying a cd to listen to and your already up to around 40,000$ a year


To be honest it all looks good on paper your plan. But then reality will take over.Your gonna want to furnish your first house so expect to have a 15,000$ charge card debt to pay off the next 3-5 years. Right after you just got done putting down 75,000$ on a 300k home to get a decent intrest rate to avoid PMI to get a lower monthly rate.

In other wards at 50k a year your fucked

then your water heater busts, or you need to fix a roof, or you need to pay condo fees, or your car taxes come, or you owe on income taxes... you need a shovel, you need an oil change....

it never ends.

 

[Lao Tzu]

Allah will protect me from the evils of homeowner perils.

Yeah, I am inexperienced and I admit it. But it just seems so damn sweet on paper. Just put 10-15% of income into investments and pay off your house and you should be ok when you retire.

 

[gonelifting]

Allah will protect me from the evils of homeowner perils.

Yeah, I am inexperienced and I admit it. But it just seems so damn sweet on paper. Just put 10-15% of income into investments and pay off your house and you should be ok when you retire.

If you can do this, you'll be in good shape IMO. There are tons of other variables, but this is great. Not everyone can do this for life from day one, job one.

I read in Money magazine or somewhere... When a baby is born, if you oput roughly (I forget the exact dollar amount) $13,000 in an account for him in the stock market. Let it grow with themarket, pay taxes on the money because it is in a taxable account, pay all fees from the account, bla bllah... when the baby retires at 65 (yeah I know lol) he will have exactly 1 Million dollars.


If it were in a tax free account it would grow much faster, but you can't really get that with a newborn.

Anyway, it just shows how TIME can do wonders for your money. It is a matter of the amount of money as well, but TIME can grow your money very well, if you start early enough. Start a retirement plan at 22-25, you're way ahead of the game. Good luck

 

[SC4EVA]

Always a lot of what-ifs in these discussions - Its all never guaranteed

 

[mrplunkey]

Allah will protect me from the evils of homeowner perils.

Yeah, I am inexperienced and I admit it. But it just seems so damn sweet on paper. Just put 10-15% of income into investments and pay off your house and you should be ok when you retire.

Over the next 10 years, you are going to be blown-away by how many things look sweet on paper and then fail miserably in practice. I'd say that describes a good 85% of all ideas -- maybe even 95%.

The good news is you can have a great time learning what works and doesn't work.

 

[Raptorex]

Then you have a mortgage, lets assume 7k a year.

LMFAO, you planning on living in a shack bro...or Idaho, East/West Coast, triple that figure for the cheap neighborhoods.

 

[Raptorex]

BINGO!

it all looks good on paper. Now throw in actual expenses.
I'll lay out mine for you.
mortgage 1100$ a month 13,200 a year
property taxes 4,000$ a year
electric 150$ a month
water 55$ a month
auto insurance 150$ a month
cell phone 75$ a month
home phone 25$ a month
home owners insurance 3k a year or 250$ a month
student loan 125$ a month
car payment 300$ a month
so far basic expenses are $2563 a month or $30,758 a year

Now throw in food, clothes,gas,oil changes, medical or hell just buying a cd to listen to and your already up to around 40,000$ a year


To be honest it all looks good on paper your plan. But then reality will take over.Your gonna want to furnish your first house so expect to have a 15,000$ charge card debt to pay off the next 3-5 years. Right after you just got done putting down 75,000$ on a 300k home to get a decent intrest rate to avoid PMI to get a lower monthly rate.

In other wards at 50k a year your fucked

 

[Lao Tzu]

LMFAO, you planning on living in a shack bro...or Idaho, East/West Coast, triple that figure for the cheap neighborhoods.

In the midwest a 7k a year mortgage is relatively common. My older brother is building his own 3000 sq ft home for about 130k.

 

[test boy ii]

In the midwest a 7k a year mortgage is relatively common. My older brother is building his own 3000 sq ft home for about 130k.

Bor I'm glad you clarified that cause otherwise I figured he was buying it for me.


Dam the luck.

 

[jnevin]

Who pays $7K/ yr for a mortgage?

I wish...

 

[jnevin]

If you can do this, you'll be in good shape IMO. There are tons of other variables, but this is great. Not everyone can do this for life from day one, job one.

I read in Money magazine or somewhere... When a baby is born, if you oput roughly (I forget the exact dollar amount) $13,000 in an account for him in the stock market. Let it grow with themarket, pay taxes on the money because it is in a taxable account, pay all fees from the account, bla bllah... when the baby retires at 65 (yeah I know lol) he will have exactly 1 Million dollars.


If it were in a tax free account it would grow much faster, but you can't really get that with a newborn.

Anyway, it just shows how TIME can do wonders for your money. It is a matter of the amount of money as well, but TIME can grow your money very well, if you start early enough. Start a retirement plan at 22-25, you're way ahead of the game. Good luck

That's pretty close. $30K earning 10% over 30 years will be close to $1.1M.

I lost everything when I got divorced and am starting over at 30 with a new job.

<<< nervous.... this guy

 

[gonelifting]

That's pretty close. $30K earning 10% over 30 years will be close to $1.1M.

I lost everything when I got divorced and am starting over at 30 with a new job.

<<< nervous.... this guy

My example uses earnings and taxes paid from the account. $13,000 wasn't too far off the mark. Maybe $13,200 or something, but not much more.

 

[Wulfgar]

Lao, u seem to smart of a bro to settle for a 50K a year 9-5 job
be an entreprenuer and do what you love. The $$ just flows in more than u can imagine when you are of service to others doing what you love.

 

[Lao Tzu]

Lao, u seem to smart of a bro to settle for a 50K a year 9-5 job
be an entreprenuer and do what you love. The $$ just flows in more than u can imagine when you are of service to others doing what you love.

My medium term (next 20-30 years) goal is to be a research scientist. After that, not sure. But entrepreneurship has always interested me.

 

[chazk]

If a investment asset manger is trying to tell you that you will make 10% every year for the next 30yrs in some mutual fund .
they are just trying to get you to set up a roth IRA with them so they can charge you the 50$ to 500$ a year management fee reguardless if you lose money or make money.

To prove it go right now and find me a finiacial planners mutual fund group and show me its earnings from 2000 to 2005 over 5 years . Its almost enough to prob make you luagh ,pull the money out , just buy realestate ,trade stocks ,cash out your IRA and just manage your own assets .
When you advisor is managing 5,000 accounts who do you think is is gonna sell bunk stock to and get it out of his own portfolio . He is gonna dump it on you.Most the time is a fucking crock of shit and just makes the companies rich by using your funds to manipulate the markets .Then the company ceos cash out while your left holding the empty pot but its ok their are still 50 other stocks in your mutual group "that might cover up for the loss".

 

[mrplunkey]

My medium term (next 20-30 years) goal is to be a research scientist. After that, not sure. But entrepreneurship has always interested me.

Have you played the grant game yet? Applying for a grant is the ultimate sell-job. There are lies, damn lies, and grant applications

 

[Lao Tzu]

Have you played the grant game yet? Applying for a grant is the ultimate sell-job. There are lies, damn lies, and grant applications

I wasn't planning on leading a research team, I don't want to end up doing all that grant writing shite.

 

[Raptorex]

I wasn't planning on leading a research team, I don't want to end up doing all that grant writing shite.

Don't get your PhD because you will have no choice otherwise, whether its an R01 or anything else, its all salesmanship.

 

[cindylou]

In the midwest a 7k a year mortgage is relatively common. My older brother is building his own 3000 sq ft home for about 130k.

where is this? I live in the midwest and 130 wont get you 900 sq ft!!

I want to know where this is!!!

 

[manny78]

I'm curious as to everyone's opinions on this.

On a personal note, I have never had a real job (real meaning high paying) since I am still in college as a senior. And I do not intend to have kids anytime soon. So I may not have the same level of knowledge of this stuff as some of you.


But assume you have a household making 50k a year, which is about the median. Taxes will take out about 15k. If you are puting 10% into retirement that is 5k. Then you have a mortgage, lets assume 7k a year.

When you retire, your taxes go down due to less/no payroll taxes. Social security is not taxed. So lets assume tax rate drops from 30% of income to 20 or less, maybe 15%. Lets also assume the house is paid off. Lets also assume you get a reverse mortgage on your home. Also, once you retire you stop putting 10% of your income into a 401k.

So now you are 67 (in the year 2043ish, assuming we still retire by then which we probably wont) you are not saving 5k a year for retirement anymore, you are saving 7k on your home by paying off your mortgage, you are earning 5-7k a year via a reverse mortgage and your tax rate went from 30% to 15%.

Plus when you are retired you are no longer saving for your kids. your kids are probably independent by now, so you don't save for their college or pay for their stuff anymore.

So retire at 67 and you should get about 2k a month in SS payments, which I am assuming are not taxed. So that is 24k a year. Plus the reverse mortgage gives you another 6k and is not taxed so you are making 30k a year tax free. You still have other taxes, but no payroll or income taxes on that income.

So originally you were making 50k, spending 7k on a mortgage, paying about 8-10k in payroll/income taxes, and saving 5k a year for retirement, giving a total of about 29k in spending income. With a reverse mortgage and social security you are already at that same level, and that is w/o taking into consideration your income from investments your whole life. Plus at this age you have no kids to raise.

So am I missing something because retirement saving sounds relatively easy.

Too many "probably" in your example.

You'll also probably get fooled into marriage and divorce and get assraped in the process. You'll also probably be stuck with high maintenance kids and higher taxes....

 

[Lao Tzu]

where is this? I live in the midwest and 130 wont get you 900 sq ft!!

I want to know where this is!!!

Indiana. 130k will get you about a 1500-2000 sq ft home in Indiana.

If you want really cheap housing go to Houston.