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Retirement with 401k

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Natty Bumpo

You'll get all kinds of horror stories about all the money people lost; usually because they got cold feet and sold everything at the market bottom. The market goes up and the market goes down. All I can tell you is you'll be broke in your retirement years if you sit around and wait for the right time to get in. You will never save enough money to be comfortable. You have to invest. 401[(k) or an IRA is a must if you even hope to have a chance.

The best plan is simple. Start young. Put something in every month and don't take it out until you are retired. Stay away from the quick and dirty plans. At your age, just put in even $50 every month in something like an S&P 500 account. In 35 years you'll be a millionaire. The most important thing you can invest is time. Start early and keep at it. In the long run, and its the only way to look at it, you'll be way ahead. Most of the people complaining did nothing until their 50's then tried to do it all at once. Recipe for disaster.

Solid Gold advice right there. Best post of the thread by far.

I know a number of people my age who sold out everything they had in the market right at the recent market bottom in '09. Worst possible move imaginable. They had some horrible financial advice, or none at all. :down:

Mr. Market has doubled since then..............

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Dogwood

You'll get all kinds of horror stories about all the money people lost; usually because they got cold feet and sold everything at the market bottom. The market goes up and the market goes down. All I can tell you is you'll be broke in your retirement years if you sit around and wait for the right time to get in. You will never save enough money to be comfortable. You have to invest. 401[(k) or an IRA is a must if you even hope to have a chance.

The best plan is simple. Start young. Put something in every month and don't take it out until you are retired. Stay away from the quick and dirty plans. At your age, just put in even $50 every month in something like an S&P 500 account. In 35 years you'll be a millionaire. The most important thing you can invest is time. Start early and keep at it. In the long run, and its the only way to look at it, you'll be way ahead. Most of the people complaining did nothing until their 50's then tried to do it all at once. Recipe for disaster.

Solid Gold advice right there. Best post of the thread by far.

I know a number of people my age who sold out everything they had in the market right at the recent market bottom in '09. Worst possible move imaginable. They had some horrible financial advice, or none at all. :down:

Mr. Market has doubled since then..............

+1 on NB's comments.

I'll take it one step further and recommend reading any of John Bogle's books on common sense index investing; short, easy and fun to read, plain English.  Then start your 401K with all index funds through Vanguard.  You'll then have a solid understanding of how to simply and consistently invest for retirement and follow your own advice and not worry about finding someone trustworthy to do it for you.  Furthermore this approach will empower you to tune out all the financial noise (read bullsh*t), relatively kick back, max out your contributions every year, and ride the sine waves over time to wealth.  

If you need advice consult a FEE ONLY Certified Financial Planner (there's a website to find a listing of those in your area).  They'll give honest investment advice including wills, trusts, taxes etc. to get all your ducks in a row paddling in the same direction.

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trust me
I'm not connected with Vanguard in any way but their index funds are consistently the cheapest to own.  If you are a stock picker, then go it on your own, but the rest of us need to stay with index funds.

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Chris Raymond

I'm going to be very blunt here but if you're in your 20's, 30's or 40's and haven't started saving for your retirement, you've really missed the boat if you're a normal wage earner.  As Sneem and others have said, time is your best friend.  When I was running HR departments, 401k administration came under my hat and even with all the advocacy that I put out there, we still had some that refused to set money aside for whatever reason...even when we offered a company match.  The amount didn't have to be much as long as there was some time left to retirement.  The common excuse was "I just can't afford it"...well people can't afford not to save and often the issue isn't one of not having enough to set some aside, it's one of priorities and budgeting.  Retirement before toys, cars and lux homes should be the mantra.  

Personally, now after 20+ years of aggressively saving (predominately through employer based 401k and Roths to a lesser extent), my wife and I have a tidy little nest egg that wouldn't normally have been possible otherwise and we have at least 15+ years to build upon the base that's there.  We have good salaries but nothing great (we've stayed living close to grouse woods and water instead of hopping around for better salaries) too much to make big money.   And as far as market drops go...bring them on as it allows greater opportunity on the rebounds for increased growth.  I can worry about them more finitely once I'm within a shorter window to retirement.  

Then when retirement does come, I'm going to find a place in a gun, fly or bait shop that is looking for a part-timer to fill in holes that would keep some gas and spending money in my pocket and me mentally or socially engaged.  I have a couple of other ideas that I'm perculating right now as well for my retirement years but don't every see myself not working or otherwise engaged in some manner or another.  The point that I'm making here is that I don't see retirement being a full-on extraction from the workforce but something where part-time engagement can be maintained.  This is of interest to me for a couple of different reasons and suspect that many others will drift in this direction as well in comparison to previous generations.

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Larry Brown

My wife is 20 years younger than I am.  I tell people I married my IRA.  As long as I can keep her working . . . but being married to a retired guy (although I still do some outdoor writing) is a bad example.  

Best decision I ever made, when I was young and made a number of bad ones, was to stay in the Army Reserve until I'd put in 20 years.  Actually stayed for 30.  Retired Reservists don't draw their pension until they hit 60, but they also get Tricare insurance coverage, which covers pretty much everything Medicare doesn't cover.  My long-time hunting partner retired from the National Guard after 20 years.  E-5 or E-6, so his pension isn't all that much.  But just the Tricare made it worthwhile for him.

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Bullwinkle
glad I didn't read all this before I retired..

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shoot-straight

i am a st govt employee, and will (hopefully) a pension when i retire. not planning on it though. i have 14 more years to go till i have my 30 in for full retirement. i will be 52. of course i will not be able to fully retire then, but i will make sure that at least the house is paid off by then. i have been putting money away each pay for years. my wife puts in over 15% of her salary (and gets a great match) as well. i think we will be all set. particularly if we downsize our house later on.

HOWEVER, i will never make huge sacrifices now for later. if my life experiences have taught me anything its that you need to enjoy life now. you never know what lies ahead. i have seen many people wait too long to retire. yes they have plenty of money, but cant do what they wanted to do because of some health issue or similar.

we have no kids BTW.

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JDThorstad
Just looking through the paperwork at the office, need to make a decision by tomorrow otherwise I will be waiting another year.  We use MassMutual and I see that my company doesn't kick in anything.  Wish I had more time to look into this but I've been on the road...

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PaFlyfisher
This topic interests me because it's been on my mind lately.  I turned 30 in June and I haven't set anything up yet.  Company just sent an email for 401k enrollment and I admit, I don't know very much about it.  I never made it to the meeting last year but as I understood it there were two or three options ranging from low risk/slow growth to high risk/high reward.  I've had several people tell me about how much money they lost in their 401k's and others about how lucky they are that they cashed out before it could take the hit.  Makes me feel like burying mason jars and buying land.

If you don't take advantage of a tax deferred option like a 401K you are nuts.

If you think you can only hoard cash or buy land, you are more nuts.

It is amazing how quickly these accounts can grow.

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Kenai
Just looking through the paperwork at the office, need to make a decision by tomorrow otherwise I will be waiting another year.  We use MassMutual and I see that my company doesn't kick in anything.  Wish I had more time to look into this but I've been on the road...

If you're company isn't matching anything, make sure you're maxing out a Roth IRA (using after tax dollars up to $5500/yr) before you contribute to the 401k.  

my 2 cents

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River19
Just looking through the paperwork at the office, need to make a decision by tomorrow otherwise I will be waiting another year.  We use MassMutual and I see that my company doesn't kick in anything.  Wish I had more time to look into this but I've been on the road...

If you're company isn't matching anything, make sure you're maxing out a Roth IRA (using after tax dollars up to $5500/yr) before you contribute to the 401k.  

my 2 cents

This makes excellent sense to me......there is a big difference between tax deferred and tax exempt......just like "tax avoidance is prudent, tax evasion is illegal"  :D

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Brad Eden
Crap, I keep hoping this Topic disappears below the scroll and off page 1....  This is a very depressing read for a Grouse Bum. Oo.gif

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Larry Brown
HOWEVER, i will never make huge sacrifices now for later. if my life experiences have taught me anything its that you need to enjoy life now. you never know what lies ahead. i have seen many people wait too long to retire. yes they have plenty of money, but cant do what they wanted to do because of some health issue or similar.

I made a choice based on the same philosophy:  started drawing Social Security at 62.  I ran the numbers and discovered that I'd be well into my 70's before it cost me anything.  At which point I asked myself:  Can I enjoy that money more now than I can 10 years from now?  You never know what's coming down the road.

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Steelheadfred
To be safe, you really need closer to 15 to 20 x income.  This assures no consuption of principle and no worries of outliving income.

Life expectancy, while unknown, is definately a major risk factor in financial success.

LOOK AROUND, HOW MANY PEOPLE DO YOU KNOW WHO ARE 70, 80, AND OR EVEN 90??

You will be surprised how may you know.  It especially challenging when the Fed is fighting against you while artificially keeping the fixed income market deflated.

fuess,

Does this include real estate investments or is this hard cash in retirement accounts and does it assume you will have the same debt at 60 as you do at say 40 and 50?

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MTRookie76
I am a bit of a pessimist in regard to this topic. It is my belief that the idea of retirement will be a thing of the past for my generation. We have a whole bunch of headwinds that previous generations didn't. Inflation does not equal economic growth and that is the only so called growth we are going to see for a very long time. Not to mention the older generations have robbed the US Treasury blind leaving us as the bag holders. Having said all that I still save and plan for retirement aggressively with the hopes of being the exception and not the rule.

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