Retirement thread

[Bobber]

Lot of good advice posted. In my case have always maxed out my 401 K, used debt to acquire homes and investment real estate(duplex and several farms), but have always focused on debt reduction as fast as possible. I remember that looked like a really great policy after the dot com bust in the late 90's.

The stock market has been good for me. Have rode it up and down, but long term it has been a very good game to be in. My wife and I have set aside money in Iowa 529 plans for our kids schooling since they were born. By the time they go to ISU, those balances will approach 6 digit totals with nearly half of it being stock market gains. Have the age based system in place so the money has shifted into bonds automatically so the value is protected in a stock market down term.

While I probably could retire early, I don't see myself ever doing so. My wife is 5 years younger than me and want her to be able to collect social security when I do. I like working and have a job I enjoy. Will work full time to 70 health permitting and will find something to do after I retire too!

 

[DurangoCy]

Not to turn this in to a Ramsey love fest, but i agree with the last couple of folks. I like listening to him and loosely follow his baby steps. I'll continue to use credit cards (for everything I can - 200k miles right now) and know about how much I can spend each month, then plan accordingly. I got to the point where I was just tired of paying money for college 10 years later, even though my rate was about 2.35%, so I just paid it off a couple years ago.

I'm on Ramsey Steps 4,5,6 (no kids college), but am saving closer to 40% of my income instead of piling money on the house. I refied to a 15 year mortgage last year and think I'll try to get it done in 10, but won't start for another year or two. Right now I'd rather increase my liquid assets and I'm going to need upgrade my vehicle in the next year or so. I also started tracking my net worth via spreadsheet in 2011 (wish I'd started right out of college) and it has really helped motivate me. My house has been appreciating like crazy the last year or two, so my YOY increase in NW is approaching 6 figures, which is mind-blowing to think about, because I still have the mindset that I'll never be well off most of the time.

Also, I can't tell you how much driving a POS car and doing some of the simple work on it will save you in the long run. I live close enough to work that if i mess up I can ride my bike for a week or two if necessary. For whatever reason this is a common theme at my workplace, so I'd almost be embarrassed to drive a brand new car.

 

[BCClone]

Not to turn this in to a Ramsey love fest, but i agree with the last couple of folks. I like listening to him and loosely follow his baby steps. I'll continue to use credit cards (for everything I can - 200k miles right now) and know about how much I can spend each month, then plan accordingly. I got to the point where I was just tired of paying money for college 10 years later, even though my rate was about 2.35%, so I just paid it off a couple years ago.

I'm on Ramsey Steps 4,5,6 (no kids college), but am saving closer to 40% of my income instead of piling money on the house. I refied to a 15 year mortgage last year and think I'll try to get it done in 10, but won't start for another year or two. Right now I'd rather increase my liquid assets and I'm going to need upgrade my vehicle in the next year or so. I also started tracking my net worth via spreadsheet in 2011 (wish I'd started right out of college) and it has really helped motivate me. My house has been appreciating like crazy the last year or two, so my YOY increase in NW is approaching 6 figures, which is mind-blowing to think about, because I still have the mindset that I'll never be well off most of the time.

Also, I can't tell you how much driving a POS car and doing some of the simple work on it will save you in the long run. I live close enough to work that if i mess up I can ride my bike for a week or two if necessary. For whatever reason this is a common theme at my workplace, so I'd almost be embarrassed to drive a brand new car.

A suggestion I have, put your house in for what you paid for it and leave it alone. If you don't plan to rent a house sometime and just sell yours, it's not a trueness gain. It will make you feel nice but it's not something that will help you long term. I do this with investments that I don't plan to sell, real estate to clarify, and it gives me a better grasp of how the year went.

 

[throwittoblythe]

I know everyone has a different approach when it comes to home buying, but I have also followed Ramsey's rule of not buying anything that has a mortgage of greater than 25% of take home pay. The exception being that we used a 30 yr mortgage rather than a 15. This approach has worked well for us. We bought a home that was in good shape but needed updating. So, we're putting some money into updating it. Of course, the bank was willing to give us a loan for way more, but using this rule has been a good piece of advice.

 

[DurangoCy]

A suggestion I have, put your house in for what you paid for it and leave it alone. If you don't plan to rent a house sometime and just sell yours, it's not a trueness gain. It will make you feel nice but it's not something that will help you long term. I do this with investments that I don't plan to sell, real estate to clarify, and it gives me a better grasp of how the year went.

It will help long term/count towards my net worth, so I'm absolutely counting it. I understand what you're saying with your ill-liquid assest, but that's your call.

 

[Stormin]

Concerning retirement.

Number One is to be born to parents of wealth. Then you likely won't have student loans to pay off. And you are likely to receive a decent inheritance as well.

Not having student loan payments on your earned college degree allows you to have the extra money to pay for all things quicker and to invest for retirement. Certainty of an inheritance also helps with retirement goals as well.

Marry wisely. Marry someone who you can build a relationship that will last your lifetime. Divorce will pretty much screw you in most cases. Marrying someone who just happens to have wealthy parents is a bonus. Sizeable spouse inheritance is a good thing.

Have good behavior and do not break the law with DWI convictions. Those will cost you big time. Don't smoke. That will cost you a quarter million in smoking costs plus additional costs for health and life insurance.

There are 3 ways to make money. Earn it. Inherit it. Marry it.

Easiest is to inherit it. Split decision on whether it is easiest to marry it or just earn it.

Don't know why so many children choose to be born to poor parents. Being born wealthy is a good thing.

 

[CtownCyclone]

Concerning retirement.

Number One is to be born to parents of wealth. Then you likely won't have student loans to pay off. And you are likely to receive a decent inheritance as well.

Not having student loan payments on your earned college degree allows you to have the extra money to pay for all things quicker and to invest for retirement. Certainty of an inheritance also helps with retirement goals as well.

Marry wisely. Marry someone who you can build a relationship that will last your lifetime. Divorce will pretty much screw you in most cases. Marrying someone who just happens to have wealthy parents is a bonus. Sizeable spouse inheritance is a good thing.

Have good behavior and do not break the law with DWI convictions. Those will cost you big time. Don't smoke. That will cost you a quarter million in smoking costs plus additional costs for health and life insurance.

There are 3 ways to make money. Earn it. Inherit it. Marry it.

Easiest is to inherit it. Split decision on whether it is easiest to marry it or just earn it.

Don't know why so many children choose to be born to poor parents. Being born wealthy is a good thing.

 

[Tailg8er]

Concerning retirement.

Number One is to be born to parents of wealth. Then you likely won't have student loans to pay off. And you are likely to receive a decent inheritance as well.

Not having student loan payments on your earned college degree allows you to have the extra money to pay for all things quicker and to invest for retirement. Certainty of an inheritance also helps with retirement goals as well.

Marry wisely. Marry someone who you can build a relationship that will last your lifetime. Divorce will pretty much screw you in most cases. Marrying someone who just happens to have wealthy parents is a bonus. Sizeable spouse inheritance is a good thing.

Have good behavior and do not break the law with DWI convictions. Those will cost you big time. Don't smoke. That will cost you a quarter million in smoking costs plus additional costs for health and life insurance.

There are 3 ways to make money. Earn it. Inherit it. Marry it.

Easiest is to inherit it. Split decision on whether it is easiest to marry it or just earn it.

Don't know why so many children choose to be born to poor parents. Being born wealthy is a good thing.

Very helpful post, thanks for contributing......

 

[CprE84]

I know everyone has a different approach when it comes to home buying, but I have also followed Ramsey's rule of not buying anything that has a mortgage of greater than 25% of take home pay. The exception being that we used a 30 yr mortgage rather than a 15. This approach has worked well for us. We bought a home that was in good shape but needed updating. So, we're putting some money into updating it. Of course, the bank was willing to give us a loan for way more, but using this rule has been a good piece of advice.

Personally, I would advise doing 15 year loans or less. You can alway pre-pay the 30 year, but if you're planning on doing that, the 15 year makes more sense because the rates are lower. Given that you are not stretching on how much you can afford, the 15 year should be manageable and you build equity so much faster during those early years with a 15 vs 30 yr.

However, this is similar to the debate about whether it is better to pay off debt aggressively or build up investments. If you have been putting the extra money into the stock market for the past several years, you are probably doing better w/ the 30 yr, as your returns should be much better than the interest on that loan.

 

[Stormin]

i actually just had a talk with my wife about her parents needing to work more so she can inherit more money. a modest house split between three siblings isn't going to allow me to retire. gosh they're selfish.

You won't get anything. Rest Home will likely take it all. ACA repeal will eliminate Medicaid for Nursing Home when they run out of funds. 3 siblings might want to decide who gets what shift in caring for the parents.

 

[Bobber]

Concerning retirement.

Number One is to be born to parents of wealth. Then you likely won't have student loans to pay off. And you are likely to receive a decent inheritance as well.

Not having student loan payments on your earned college degree allows you to have the extra money to pay for all things quicker and to invest for retirement. Certainty of an inheritance also helps with retirement goals as well.

Marry wisely. Marry someone who you can build a relationship that will last your lifetime. Divorce will pretty much screw you in most cases. Marrying someone who just happens to have wealthy parents is a bonus. Sizeable spouse inheritance is a good thing.

Have good behavior and do not break the law with DWI convictions. Those will cost you big time. Don't smoke. That will cost you a quarter million in smoking costs plus additional costs for health and life insurance.

There are 3 ways to make money. Earn it. Inherit it. Marry it.

Easiest is to inherit it. Split decision on whether it is easiest to marry it or just earn it.

Don't know why so many children choose to be born to poor parents. Being born wealthy is a good thing.

Yeah, one of the wealthiest guys I know is an old classmate who got kicked out of high school, got a neighbor girl pregnant, married her and then worked at a factory for a number of years, and then started his own tile contracting business specializing in work along natural gas pipe lines. Eventually he did get a divorce. He is a multi millionaire now with several businesses. Forgot to mention his family had nothing.

He knows how to work hard and think well and didn't need a degree to do well. He could have easily pulled the "I am a victim of the rich card" multiple times in his life, but never did and is now a self made man.

 

[dmclone]

http://www.fa-mag.com/news/most-millionaires-self-made--study-says-14565.html

"Sixty-seven percent of high-net-worth Americans are self-made millionaires, according to the survey. Only 8 percent inherited their wealth. One third of the millionaires surveyed were women and half of them made their own fortunes."

 

[dmclone]

http://nypost.com/2011/11/08/the-real-1-percent/

"Roughly 80 percent of millionaires in America are the first generation of their family to be rich. They didn’t inherit their wealth; they earned it. How? According to a recent survey of the top 1 percent of American earners, slightly less than 14 percent were involved in banking or finance."

 

[CprE84]

Concerning retirement.

Number One is to be born to parents of wealth. Then you likely won't have student loans to pay off. And you are likely to receive a decent inheritance as well.

Not having student loan payments on your earned college degree allows you to have the extra money to pay for all things quicker and to invest for retirement. Certainty of an inheritance also helps with retirement goals as well.

Marry wisely. Marry someone who you can build a relationship that will last your lifetime. Divorce will pretty much screw you in most cases. Marrying someone who just happens to have wealthy parents is a bonus. Sizeable spouse inheritance is a good thing.

Have good behavior and do not break the law with DWI convictions. Those will cost you big time. Don't smoke. That will cost you a quarter million in smoking costs plus additional costs for health and life insurance.

There are 3 ways to make money. Earn it. Inherit it. Marry it.

Easiest is to inherit it. Split decision on whether it is easiest to marry it or just earn it.

Don't know why so many children choose to be born to poor parents. Being born wealthy is a good thing.

I know you're joking but, it is my firm believe that one kind of money that you should NEVER wish for is an inheritance, because if there was someone who loved you enough to give you sufficient money to make a difference, you really don't want them to be gone...

And you certainly should never plan for an inheritance, because what someone else chooses to do with their money is their choice and they may not give it to you in the end, and that's their absolute right. I have seen family conflicts related to inheritance and my view is that the person who earned the money should be able to do whatever they want with it and no one else should have an argument about it - if they want to give it all to charity or to their best friend's nephew, or whatever, that is their prerogative.



I do agree with you on avoiding legal problems, divorce, and smoking...

 

[Stormin]

Sounds like we should not eliminate the Federal Estate Tax. $5.45 million exemption is more than enough. Plus the government needs the revenue.

 

[Stormin]

I know you're joking but, it is my firm believe that one kind of money that you should NEVER wish for is an inheritance, because if there was someone who loved you enough to give you sufficient money to make a difference, you really don't want them to be gone...

And you certainly should never plan for an inheritance, because what someone else chooses to do with their money is their choice and they may not give it to you in the end, and that's their absolute right. I have seen family conflicts related to inheritance and my view is that the person who earned the money should be able to do whatever they want with it and no one else should have an argument about it - if they want to give it all to charity or to their best friend's nephew, or whatever, that is their prerogative.



I do agree with you on avoiding legal problems, divorce, and smoking...

Just curious. But does a deceased person really "give away" anything? Because you can't take it with you. That is not an option.

Definitely would prefer to have my parents alive versus inheritance.

 

[CloneGuy8]

How much of your portfolio should be in real estate (excluding your primary residence)? Down the road I would like to buy an investment property or two, but would hire a property management company as I have no desire to deal with tenants.

 

[Blandboy]

Probably should get out of journalism if I ever want to retire though.

No need to get out of journalism; just need to practice it in the right arena. I retired three years ago at 59 after a 37 year career in Marketing Communications at John Deere. You can actually make pretty good money working for a Fortune 500 company.

 

[throwittoblythe]

An interesting perspective that I heard when considering paying off a car or investing the extra money is to consider the situation where the car is already paid off. Would you borrow money against your car (or house) to invest it?

This is right out of the Dave Ramsey playbook. It's his go-to for 3rd and short.

 

[dmclone]

How much of your portfolio should be in real estate (excluding your primary residence)? Down the road I would like to buy an investment property or two, but would hire a property management company as I have no desire to deal with tenants.

I've never owned an investment property in my life.

With that in mind, why not just invest in REIT's instead?