Investing, Stock Market and Retirement Planning Thread
Investing, Stock Market and Retirement Planning Thread
So I've decided to become a grown up and take this whole 401K thing seriously. Better late than never I guess.
Let us assume I know nothing about 401Ks....cause I don't...
My company matches up to 3% of my salary. Does that mean if I make $100 a year they will match everything I put into it up to a total of $3 in a year?
I read somewhere that something is happening with the global economy in October. A re-evaluation or something (yes I know I should be paying more attention, cut me some slack. I'm trying now...). Should I wait until after this to start putting money in? Does it matter? Should I put all I can in before then?
What could this re-evaluation mean to the housing market? Will prices shoot up for a while before calming down? Will prices fall? No change?
Thanks for any help.
Let us assume I know nothing about 401Ks....cause I don't...
My company matches up to 3% of my salary. Does that mean if I make $100 a year they will match everything I put into it up to a total of $3 in a year?
I read somewhere that something is happening with the global economy in October. A re-evaluation or something (yes I know I should be paying more attention, cut me some slack. I'm trying now...). Should I wait until after this to start putting money in? Does it matter? Should I put all I can in before then?
What could this re-evaluation mean to the housing market? Will prices shoot up for a while before calming down? Will prices fall? No change?
Thanks for any help.
Investing, Stock Market and Retirement Planning Thread
As far as I understand (at least that's how it works with many other employers), if you put X% of your salary into the retirement fund, and X<3, then your company will also contribute the same X%.So I've decided to become a grown up and take this whole 401K thing seriously. Better late than never I guess.
Let us assume I know nothing about 401Ks....cause I don't...
My company matches up to 3% of my salary. Does that mean if I make $100 a year they will match everything I put into it up to a total of $3 in a year?
If X >=3, then the company will contribute 3%.
Here is my advice - I would pay no attention to any of this. If enough people knew the prices will go up (or down) for sure in October, nobody would patiently wait at trade assets at their current too low (or too high) prices in July. If the shift in prices were to happen for sure in October, the prices should go up (or down) today.I read somewhere that something is happening with the global economy in October. A re-evaluation or something (yes I know I should be paying more attention, cut me some slack. I'm trying now...). Should I wait until after this to start putting money in? Does it matter? Should I put all I can in before then?
What could this re-evaluation mean to the housing market? Will prices shoot up for a while before calming down? Will prices fall? No change?
Thanks for any help.
So, I would just set up regular payroll deduction every Y weeks you are getting paid, and ride with it... [Just to be sure - there is a limit one can contribute into a retirement account annually using PRE-tax dollars. You should investigate what it is for you, as it is dependent on age: https://401k.fidelity.com/public/conten ... tionLimits .]
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Investing, Stock Market and Retirement Planning Thread
As expected, Thomas pretty much said everything that needed to be said. Your retirement is decades away, so there is no sense in trying to time the market. Just get started now.
Also, if you do not contribute the 3% and get the employer match,it is rather unwise. That is walking away from free money
Also, if you do not contribute the 3% and get the employer match,it is rather unwise. That is walking away from free money
Investing, Stock Market and Retirement Planning Thread
Once you know the available investing options, please post them.
Investing, Stock Market and Retirement Planning Thread
As expected, Thomas pretty much said everything that needed to be said. Your retirement is decades away, so there is no sense in trying to time the market. Just get started now.
Also, if you do not contribute the 3% and get the employer match,it is rather unwise. That is walking away from free money
Also, the best way to describe the market to young people. It's like someone walking up a hill with a yo-yo. The market is the yo-yo. It is going to go up and down, up and down, but the end game will constantly be appreciating, even at the lows. It's whenever you get closer to retirement age that you have to worry.
Also, and correct me if I'm wrong, the average American our age (30-40) should have around $2M in assets to comfortably retire in 30 some years.
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Investing, Stock Market and Retirement Planning Thread
$2M in assets at age 30-40 to retire in 30 years? or $2M at time of retirement??
Investing, Stock Market and Retirement Planning Thread
At the time of retirement.$2M in assets at age 30-40 to retire in 30 years? or $2M at time of retirement??
Investing, Stock Market and Retirement Planning Thread
I think the retirement target is very much income-specific. The roughest "4% rule" says that in order to have a very high certainty of outliving your money, you should be able to afford withdrawal of 4% of your retirement account during the first year, and increase that dollar value every year by the level of inflation achieved that year. So, with $2M retirement asset, your first withdrawal will be 4% of $2M, or $80,000. But, since you will be withdrawing it in, say, 30 years, the real value of the $80K needs to be discounted back utilizing the expected level of inflation over those 30 years. With 3% inflation, your first withdrawal becomes $80K/(1.03)^30 = $32,959 of TODAY'S dollars. With 2.5% inflation it would be $80K/(1.025)^30 = $38,139. Granted, you should also factor in your non-retirement savings after 30 years, as well as the (rather uncertain) social security, plus the fact that at the time of your retirement, the house will be most likely paid off, but $30+K, while definitely decent, may not be fully comfortable for everyone.At the time of retirement.$2M in assets at age 30-40 to retire in 30 years? or $2M at time of retirement??
Investing, Stock Market and Retirement Planning Thread
Railroad stock and frozen concentrated orange juice.Once you know the available investing options, please post them.
Investing, Stock Market and Retirement Planning Thread
Soybean Futures.
Investing, Stock Market and Retirement Planning Thread
There's also the variable percentage withdrawal method:I think the retirement target is very much income-specific. The roughest "4% rule" says that in order to have a very high certainty of outliving your money, you should be able to afford withdrawal of 4% of your retirement account during the first year, and increase that dollar value every year by the level of inflation achieved that year. So, with $2M retirement asset, your first withdrawal will be 4% of $2M, or $80,000. But, since you will be withdrawing it in, say, 30 years, the real value of the $80K needs to be discounted back utilizing the expected level of inflation over those 30 years. With 3% inflation, your first withdrawal becomes $80K/(1.03)^30 = $32,959 of TODAY'S dollars. With 2.5% inflation it would be $80K/(1.025)^30 = $38,139. Granted, you should also factor in your non-retirement savings after 30 years, as well as the (rather uncertain) social security, plus the fact that at the time of your retirement, the house will be most likely paid off, but $30+K, while definitely decent, may not be fully comfortable for everyone.At the time of retirement.$2M in assets at age 30-40 to retire in 30 years? or $2M at time of retirement??
http://www.bogleheads.org/wiki/Variable ... withdrawal
Investing, Stock Market and Retirement Planning Thread
@columbiaOnce you know the available investing options, please post them.
Not sure if this is what you are looking for. It's the best I could do to get it into the thread.
Investing, Stock Market and Retirement Planning Thread
Just to clarify, I think you meant to say "In order to have a very high certainty of your money outliving you", is that correct?I think the retirement target is very much income-specific. The roughest "4% rule" says that in order to have a very high certainty of outliving your money, you should be able to afford withdrawal of 4% of your retirement account during the first year, and increase that dollar value every year by the level of inflation achieved that year. So, with $2M retirement asset, your first withdrawal will be 4% of $2M, or $80,000. But, since you will be withdrawing it in, say, 30 years, the real value of the $80K needs to be discounted back utilizing the expected level of inflation over those 30 years. With 3% inflation, your first withdrawal becomes $80K/(1.03)^30 = $32,959 of TODAY'S dollars. With 2.5% inflation it would be $80K/(1.025)^30 = $38,139. Granted, you should also factor in your non-retirement savings after 30 years, as well as the (rather uncertain) social security, plus the fact that at the time of your retirement, the house will be most likely paid off, but $30+K, while definitely decent, may not be fully comfortable for everyone.At the time of retirement.$2M in assets at age 30-40 to retire in 30 years? or $2M at time of retirement??
Also, the $2M example is in 2015 dollars, not in 20xx dollars, correct?
Investing, Stock Market and Retirement Planning Thread
If I remember correctly, the $2M is in 20XX dollars. Today, I think the amount is around $1.2MM if you want to retire and like you said, live comfortably and ensure the money outlives you.
Again, this all depends on your lifestyle as well.
Again, this all depends on your lifestyle as well.
Investing, Stock Market and Retirement Planning Thread
Stupid me. I wrote that exactly the opposite way. "In order to have a very high certainty of your money outliving you" is exactly what I meant.Just to clarify, I think you meant to say "In order to have a very high certainty of your money outliving you", is that correct?I think the retirement target is very much income-specific. The roughest "4% rule" says that in order to have a very high certainty of outliving your money, you should be able to afford withdrawal of 4% of your retirement account during the first year, and increase that dollar value every year by the level of inflation achieved that year. So, with $2M retirement asset, your first withdrawal will be 4% of $2M, or $80,000. But, since you will be withdrawing it in, say, 30 years, the real value of the $80K needs to be discounted back utilizing the expected level of inflation over those 30 years. With 3% inflation, your first withdrawal becomes $80K/(1.03)^30 = $32,959 of TODAY'S dollars. With 2.5% inflation it would be $80K/(1.025)^30 = $38,139. Granted, you should also factor in your non-retirement savings after 30 years, as well as the (rather uncertain) social security, plus the fact that at the time of your retirement, the house will be most likely paid off, but $30+K, while definitely decent, may not be fully comfortable for everyone.At the time of retirement.$2M in assets at age 30-40 to retire in 30 years? or $2M at time of retirement??
Also, the $2M example is in 2015 dollars, not in 20xx dollars, correct?
And the example was: If your future "target" retirement amount is $2,000,000 in 2045 (30 years from now), you should be able to withdraw reasonably safely $80,000 in 2045, and the same amount increased by inflation in every year after that. But, given that your withdrawals are going to be affected by 30 years worth of inflation, the purchasing power of $80,000 in 2045 is somewhere between $33K-$38K in today's (i.e. 2015) dollars.
Just to give a rough idea what it takes to achieve the $2,000,000 target in 2045. If you have no money saved now:
If you are able to achieve 9% appreciation of your retirement account every year, then you have to contribute $14,673 every year for the next 30 years (the first contribution is expected to happen 1 year from today). If you are going to achieve only 7% appreciation, the contributions will have to be $21,173.
Investing, Stock Market and Retirement Planning Thread
Very cool article. And one of the reasons I invest pretty much exclusively in index ETFs and mutual retirement funds, and I spend my time and effort at endeavors that has nothing to do with predictive investment analysis...
Investing, Stock Market and Retirement Planning Thread
A belated thanks to NAN and Tomas for answering my question yesterday.
Investing, Stock Market and Retirement Planning Thread
@columbia didn't even bother to respond to me...that Tarnstrom...A belated thanks to NAN and Tomas for answering my question yesterday.
Investing, Stock Market and Retirement Planning Thread
lol@columbia didn't even bother to respond to me...that Tarnstrom...A belated thanks to NAN and Tomas for answering my question yesterday.
I was just curious as to what you might choosing. Figured that out?
Investing, Stock Market and Retirement Planning Thread
I don't even know what the hell I'm looking at...
Investing, Stock Market and Retirement Planning Thread
In that case, you should probably pick "FID FREEDOM 2050" or whatever year you plan to retire.
Investing, Stock Market and Retirement Planning Thread
What does @ExPatriatePen say about it?
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Investing, Stock Market and Retirement Planning Thread
Assuming you're serious in asking that question and not trolling... You'd be surprised to learn that I agree with Columbia about using index funds and index related ETF's.What does @ExPatriatePen say about it?
I'm not a fan of target date (where you pick a fund based on the year you intend to retire) funds.
I have my reasons. If you're interested in why, I'll share them... otherwise... Good luck to all.
Investing, Stock Market and Retirement Planning Thread
I was serious. I figured getting the opposite side of the spectrum's opinion would be good. Thanks!
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