How much do you Save for retirement?

[Anonymous]

I am 41, have about $ 650,000 saved for retirement plus another $ 200K for College, etc for the kids and own a house worth $ 1.1million on which I owe $ 750K. I am maxing out the 401 and saving an additional $ 12K a year. I make $ 240K a year. I also get some company stock and options that are appreciating slowly- the question is: how much is enough and HOW THE F do you know? I feel like I am doing everything I can to save, and all of the "advisors" say "do more!" - any thoughts?

You don't have enough. You need to sell your home immediately and move into a trailer. Also, your kids will need to go to the local community college so that you can save more.

 

[Anonymous]

If you are going to use after tax dollars, then you might as well set up a Roth IRA which will grow tax free. Why put it in a taxable investment and get taxed twice?

As he said, the Roth IRA has income limits. But you can add after tax dollars to your 401k. It grows tax deferred and protected from liability and lawsuits.

You can invest in tax smart etf's or index funds and very little action occurs during the year. So no dividend taxes and short term gains to pay each year. Only a long term cap gain tax when you ultimately sell it way down the road.

 

[thehairyfiddler]

OK, I'm pretty ignorant about this stuff. Is there someone I can talk to about adding after tax dollars to the 401K? Do you do this through an employer, or on your own? Other than the yellow pages, I have no idea where to start to find someone reputable with good advice. And the math works with your suggestions so I would like to learn how to do this. I'm only aware of Roth IRAs and they have income limits that prevent me from participating.

And buying land sooner than later sounds interesting. I would be willing to move almost anywhere so long as I have a few acres and no traffic. Wyoming or Tennessee would both be great. I see the benefit of being close to a major city for health care but don't want to be too close!

Put your retirement money into a 401K before taxes, not an IRA after tax. Compounding interest will far exceed after tax IRA, despite paying the tax upon maturity/withdrawal.

Anyone telling you differently is flat out wrong. The only way this could backfire...if way down the road, the IRS raises the tax percentage taken to 75%, upon maturity. Highy unlikely.

 

[Anonymous]

How would you know anything about it? You don't invest in the market remember? You dont' trust the market remember? Why would you advise someone to do something you yourself claim you don't do. Unless you are lying????? I guess that would be lie #100 I have caught you in

ILA....the truth detector catches Hairy yet again.

 

[Anonymous]

Put your retirement money into a 401K before taxes, not an IRA after tax. Compounding interest will far exceed after tax IRA, despite paying the tax upon maturity/withdrawal.

Anyone telling you differently is flat out wrong. The only way this could backfire...if way down the road, the IRS raises the tax percentage taken to 75%, upon maturity. Highy unlikely.

I don't think you can do an IRA and a 401k at the same time. But you can do a Roth IRA and a 401k at the same time.

I'm sure you would recommend a Roth over an unmatched pre-tax 401k up to the maximum first? Then put the remainder in your 401k. Roth's are by far the #1 retirement investment vehicle right now. Tax free growth and can always pull out your contributions with no penalties. Also, no required minimum distributions ever, and your beneficiaries don't ever have to take distributions ever, too. It can be passed on from generation to generation creating immense tax free wealth.

The only reason to do an after tax IRA is that you can roll it over into a Roth, especially in 2010 (no $100k income limits).

 

[Anonymous]

I don't think you can do an IRA and a 401k at the same time. But you can do a Roth IRA and a 401k at the same time.

I'm sure you would recommend a Roth over an unmatched pre-tax 401k up to the maximum first? Then put the remainder in your 401k. Roth's are by far the #1 retirement investment vehicle right now. Tax free growth and can always pull out your contributions with no penalties. Also, no required minimum distributions ever, and your beneficiaries don't ever have to take distributions ever, too. It can be passed on from generation to generation creating immense tax free wealth.

The only reason to do an after tax IRA is that you can roll it over into a Roth, especially in 2010 (no $100k income limits).

You can certainly fund a 401K, a Trad'l IRA, and a Roth IRA simultaneously but there are income parameters to consider with the Roth.....high income singles and folks that are married will have contribution opportunities phased out beyond certain income levels. IE: If you are married and filing a joint return, you will be phased out and unable to contribute to a Roth at $165,000+

 

[thehairyfiddler]

Welcome to the club in figuring out DingyHairyFiddler is a complete and utter fool when it comes to money. You are correct about the Roth, except for one thing. If you have a company match, you would be silly not to forgo that free money in favor of the Roth, even with its tax advantages. I would contribute up to match in a 401K then go with the Roth. Especially if your employer has really shitty mutual funds to choose from. A Roth will give you much more flexibility. You can even open a brokerage account and trade stocks in your Roth, although the trading fees are very high compared to Etrade and the others. It would be an account to buy and hold if you were going to do that. But, if you landed a good company, it grows tax free which may offset the fees. Anyway, the best financial advice I could give anyone is do exactly the opposite of what DingyHairyFiddler does.

Hillarious, Curly. Astoundingly funny. I suppose that you have your money in an IRA. How many times do I have to explain to you how compounding interest rates actually work, hmmm?

Just when I thought you were catching on...and now this.

Compounding before tax is taken will absolutely slaughter post taxation compounding. Even if the taxation rate laws spiral upward in 25 years. Stick to "shorting it" on your stock picks...but you better find a new financial advisor.

What a dumb mofo you are.

Do you need an example?

 

[thehairyfiddler]

I don't think you can do an IRA and a 401k at the same time. But you can do a Roth IRA and a 401k at the same time.

I'm sure you would recommend a Roth over an unmatched pre-tax 401k up to the maximum first? Then put the remainder in your 401k. Roth's are by far the #1 retirement investment vehicle right now. Tax free growth and can always pull out your contributions with no penalties. Also, no required minimum distributions ever, and your beneficiaries don't ever have to take distributions ever, too. It can be passed on from generation to generation creating immense tax free wealth.

The only reason to do an after tax IRA is that you can roll it over into a Roth, especially in 2010 (no $100k income limits).

If a fincial advisor has told you that Roth IRA's are the number one retirement investment vehicle, you need to find a new advisor. He's an idiot. Get out your calculator, and run it both ways at 6% or 5% or 4%. It doesn't matter what the return is. The 401K will slaughter the IRA, even if you have to pay a whopping 35% in 25 years.

 

[thehairyfiddler]

How would you know anything about it? You don't invest in the market remember? You dont' trust the market remember? Why would you advise someone to do something you yourself claim you don't do. Unless you are lying????? I guess that would be lie #100 I have caught you in

It's called having a business degree, Curly. And yeah, I fuck around with mutual funds with the little stuff............only because my employer matches 6%.

But my "big pile" is in safe stuff. Gambling in the market with one's real money can be disasterous. You'll find that out the hard way. Remember, you so called "rich Republicans" pay 450 billlion per year tax money to fund the national debt.

You can thank the GOP administrations for this massive run-up 3fold higher than the Dem administrations since 1946.

Who'd a thunk it, huh Curly?

 

[It's All Good!]

If a fincial advisor has told you that Roth IRA's are the number one retirement investment vehicle, you need to find a new advisor. He's an idiot. Get out your calculator, and run it both ways at 6% or 5% or 4%. It doesn't matter what the return is. The 401K will slaughter the IRA, even if you have to pay a whopping 35% in 25 years.

You are a little too confident there Hairy...take another look.


"Roth IRAs have many advantages over 401(k)s, including the ability to withdraw contributions (not earnings) any time without penalty. And in terms of estate planning, the Roth has an interesting benefit that allows your dependents to withdraw money from the account tax free."

"Which type of account you should emphasize — after you've gotten the maximum contribution from your company on your 401(k) — really depends on a number of assumptions no one knows the answers to. One of the top factors is what you expect your marginal tax rate to be in the future.

Here's why: If your tax rate in the future is about the same as it is now, the 401(k) has a slight advantage. If you invest $4,000 a year over 38 years at an 8% annual return, and your marginal tax rate remains at 25%, the money would be worth about $700,000 in a 401(k) and about $661,000 in a Roth. However, if your tax rate rises in the future, the answer changes. Assume the tax rate rises from 25% to 35%. Then, your 401(k) would be worth $626,021 — less than the $661,000 value of your Roth.

While there's no way to know for sure which will be better for you, the Roth or the 401(k), both are a huge help in building your retirement fund. Assuming taxes stay steady at 25%, a taxable retirement account would have only $524,000 in it, which is 25% less than the 401(k) and 20% less than the Roth."


http://www.usatoday.com/money/perfi/columnist/krantz/2005-11-25-retirement-accounts_x.htm

 

[thehairyfiddler]

You are a little too confident there Hairy...take another look.


"Roth IRAs have many advantages over 401(k)s, including the ability to withdraw contributions (not earnings) any time without penalty. And in terms of estate planning, the Roth has an interesting benefit that allows your dependents to withdraw money from the account tax free."

Of course you can withdraw the money without penalty. You've already paid taxes on it. It's your money. Conversely, you are making a killing on your 401K....because you haven't ponied up taxes. Smokescreen man, smokescreen.

"Which type of account you should emphasize — after you've gotten the maximum contribution from your company on your 401(k) — really depends on a number of assumptions no one knows the answers to. One of the top factors is what you expect your marginal tax rate to be in the future.

True statement there. However, unless the marginal tax rate hits an astounding 75 to 80 percent upon dispursal date, you win with the 401K. The lower the tax rate come maturity date, the bigger the windfall of 401K vs Roth IRA.

Here's why: If your tax rate in the future is about the same as it is now, the 401(k) has a slight advantage. If you invest $4,000 a year over 38 years at an 8% annual return, and your marginal tax rate remains at 25%, the money would be worth about $700,000 in a 401(k) and about $661,000 in a Roth. However, if your tax rate rises in the future, the answer changes. Assume the tax rate rises from 25% to 35%. Then, your 401(k) would be worth $626,021 — less than the $661,000 value of your Roth.

I don't know what kind of calculator you used, but if if one plowed in 4K per annum at 8% for 38 years, the pile would sit at $1,026,265.99. But you're still missing the point here. By taking 4K from after tax money, your disposable cash for living and further investing is greatly reduced. Contrast that with what happens with a 401K. If you make 100K, and defer tax through a 401K, then your disposable income goes up about 3K to 4K. You take your "extra" 3K to 4K in 401K, and then you invest the extra disposable income also at 8% over 38 years. In this scenario, not only do you have the 1,026,265, but an additional 600 to 700 thousand by investing the difference. It's true, you'll have to pay tax on your "outside investment", but come on man do the math. You're miles ahead. It's the same principle as to why people should never buy universal life insurance, but should instead buy term insurance and invest the difference. When you buy whole life, the insurance company invests your money, but they pocket the proceeds.

While there's no way to know for sure which will be better for you, the Roth or the 401(k), both are a huge help in building your retirement fund. Assuming taxes stay steady at 25%, a taxable retirement account would have only $524,000 in it, which is 25% less than the 401(k) and 20% less than the Roth."

Again, your numbers are askewed, review what I said above. 401K is far and away the better vehicle than the Roth.


http://www.usatoday.com/money/perfi/columnist/krantz/2005-11-25-retirement-accounts_x.htm

xx

 

[Anonymous]

You are a little too confident there Hairy...take another look.


"Roth IRAs have many advantages over 401(k)s, including the ability to withdraw contributions (not earnings) any time without penalty. And in terms of estate planning, the Roth has an interesting benefit that allows your dependents to withdraw money from the account tax free."

"Which type of account you should emphasize — after you've gotten the maximum contribution from your company on your 401(k) — really depends on a number of assumptions no one knows the answers to. One of the top factors is what you expect your marginal tax rate to be in the future.

Here's why: If your tax rate in the future is about the same as it is now, the 401(k) has a slight advantage. If you invest $4,000 a year over 38 years at an 8% annual return, and your marginal tax rate remains at 25%, the money would be worth about $700,000 in a 401(k) and about $661,000 in a Roth. However, if your tax rate rises in the future, the answer changes. Assume the tax rate rises from 25% to 35%. Then, your 401(k) would be worth $626,021 — less than the $661,000 value of your Roth.

While there's no way to know for sure which will be better for you, the Roth or the 401(k), both are a huge help in building your retirement fund. Assuming taxes stay steady at 25%, a taxable retirement account would have only $524,000 in it, which is 25% less than the 401(k) and 20% less than the Roth."


http://www.usatoday.com/money/perfi/columnist/krantz/2005-11-25-retirement-accounts_x.htm

WHo are you people that even qualify for a Roth IRA?
Dont misunderstand me but 165k was a while back for some of us.

 

[Anonymous]

WHo are you people that even qualify for a Roth IRA?
Dont misunderstand me but 165k was a while back for some of us.

Lick deez nuts Mr. "some of us". Most pharma reps make below $116,500, big shot.

 

[Anonymous]

The brokers will all tell you to ride the market with "well diversified" mutual funds. I'm not an investment guru, but all my money is collecting a measly 5% in CD's and will double it's value in 14.5 years (rule of 72). Sounds crappy, I know. But how can anyone want to gamble with their retirement savings, when our administration wants to bomb Iran. Do you ever think about what that will do to our gas prices? You've seen what a clusterfuck Iraq has been, wait until you see what happens when our lying president goes "Bizzarro world" on Iran...and then Syria. Also, the value of the dollar continues to plummet, due to the expansion of our money supply by our Federal Reserve. The dollar right now is at a record 15 year low. Do not believe a word of what the Wallstreeters tell you. Just last week, our "banking leaders took a trip over to China to discuss "issues". Not a peep out of them, as to what was "agreed upon" regarding this meeting. Why no report?

Now, combine that with a national debt pinging 9 trillion with a trade deficit also in unchartered waters.

If anything, throw a chunk into gold...as gold usually performs well when the dollar value goes down the shitter.

Keep feeding the "kitty" every year as well. It will add up slowly, but surely.

WOW! This person really got it right the past 18 months. Congrats to you!!! I did not invest in CDs or Gold the past 18 months, nor is it my long term strategy, but I did see this recession coming last February and went to 80% cash for most of 2008. I jumped back in on 11/20 (DOW 7500), made a quick 12% in two days, got back out for Dec/Jan and just got back in for the long haul last week at 7500 again. I plan on riding it out from here as I'm just 31, have 185K in retirement savings, and am completely debt free except for my mortgage. I plan to have it paid off in 4-5 years. I have been preaching for years the following, and perhaps it will take this recession/mini depression to make people finally listen to me. Live well below your means, pay cash, and SAVE! If you follow this formula, it doesn't really matter whether you follow this posters strategy of CD's/Gold, or mine of a well diversified portfolio of funds/stocks/bonds, you will win. Pick up a copy of Dave Ramsey's book, the total money makeover. I hate to read, and could not put it down. You'll get a lot out of it, and it will change your financial life forever. Good luck.

 

[Anonymous]

Lick deez nuts Mr. "some of us". Most pharma reps make below $116,500, big shot.

Yep,
Thats one of the reasons I got out of pharma. And I have a wife that chips in 60k.
Broke 250k last year.
Lick dees nuts bagel boy.

 

[Anonymous]

I am 41, have about $ 650,000 saved for retirement plus another $ 200K for College, etc for the kids and own a house worth $ 1.1million on which I owe $ 750K. I am maxing out the 401 and saving an additional $ 12K a year. I make $ 240K a year. I also get some company stock and options that are appreciating slowly- the question is: how much is enough and HOW THE F do you know? I feel like I am doing everything I can to save, and all of the "advisors" say "do more!" - any thoughts?

Congrats. You are a milionaire at age 41.

Your advisors should do a plan for you considering all the expenses you want/expect based on the standard of living you want at retirement.

They will come up with an amount. Be wary: they will use all sorts of assumptions in the calculations that will increase the amount you need at retirement b/c they get paid on a % of your account.

If you invest that $650k until you retire, you will have at least $3 million so relax- you are all set for the good life.

 

[Anonymous]

Why the FUCK does everyone assume that everything posted here is a lie? I can't believe the level of negativity that comes out when you remain "anonymous". I have to think that this board is made up of a buch of useless POS people that hate themslves, their jobs, lives, etc. and are trying their BEST to make everyone around them miserable.

The math DOES work here a-holes- especially if you're LUCKY enough to make the kind of money that guy makes. With that said- I'm sure that none of you POS's will EVER make that kind of money- better off to kill yourself now and leave something to your families- oh wait - who would marry someone with the attitudes you all have. just do yourselves and everyone else a favor- shut the FUCK up.

I agree. Everyone assumes the guy is lying. There are many people who make that kind of money and have that amount in savings. Isn't that why people get into medical sales?

There are way too many negative people on this site.

 

[Anonymous]

Our dual income is $255,000 per year. We started late saving for retirement. I've been told there is a general rule of thumb to save $1 million for every $100,000 you earn. With what we have saved to date, maxing out every year now to retirement (in 12 years) and catch up contributions, we'll only have about $900,000 in the 401K. We'll be paying kids college bills for another 6 years. So what other ways are best to improve our odds of reaching 2 million in 12 years? Some options are ruled out because of our income level.

don't pay for the entirety of your children's college. Make them contribute. THey will value their degree more, not choose an unncecessarily expensive college, strive for higher grades since it's THEIR money they are spending.

My friends Dad paid nothing for their kids college. The result: one went to West Point, the other a Ph.D in chemistry, and the other a medical device rep.

My parents couldn't afford to pay (6 kids). The result: I got a full academic scholarship. Now 5 out of the 6 now have Masters degrees.

 

[Anonymous]

My goal is to die destitute and live my last year completely on the gobblement's dime to fuck them out of all the money they stole from me during my lifetime.

 

[Anonymous]

WOW.... I am the original poster of this message and I can't believe the level of BS that gets put up here.. WHY would I lie it correct. Maybe I should also have mentioned I have been in Med devices for 20 years now (almost 44- almost 3 years since I posted this) and am a Director. When I posted this I was with Medtronic. I now work for a start-up and haven't made less than 225K in 10 years.

I asked the original questions because- like many of us- I wonder what is really enough to save for someone in my financial state. Everything you ready says- SAVE MORE!! I think i have it pretty squared away now. I work with an advisor and today my savings is pushing $ 850K even after the downturn we all wnet through.

My House has fallen in value- but I still have equity- and am not planning to sell it for many years. I also don't have any other payments- so yes my "all in " housepayment is almost $ 6000 a month with taxes and insurance and I make it every month - no sweat.

I can't decide to laugh at some of the BS comments people make on this site or just write it off as a place for very unhappy people to vent....

I'll check back in another 3 years and see what crap's been slung at the wall then.

Later!