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Posted: 6/24/2012 7:14:45 PM EDT
I hear these are great to have––yet I don't know ANYONE who is retiring comfortably on theirs––do you?
I don't know anyone who even has a sizeable amount in one.
Maybe some of you do––share your stories with us and increase our faith!
Link Posted: 6/24/2012 7:26:29 PM EDT
[#1]
Do you know anyone who's retired comfortably without one?
Link Posted: 6/24/2012 7:29:42 PM EDT
[#2]
Quoted:
Do you know anyone who's retired comfortably without one?


This....

While maybe not specifically a 401K, it is hard to successfully retire without some sort of retirement income, whether that be pension, social security, investment income, or more likely a combination of all.
Link Posted: 6/24/2012 7:32:36 PM EDT
[#3]
I'm 47 and have 120K in my retirement IRA (transferred from previous 401k) and current 401k.  I contribute 10% per pay check to it.  My wife has 85K in her IRA transferred from her 401k when she worked.

If the money doubles every 8 years, plus additional contributions for my account, we should have 500K to a million available at around age 67.
Link Posted: 6/24/2012 7:35:30 PM EDT
[#4]
Quoted:
If the money doubles every 8 years, plus additional contributions for my account, we should have 500K to a million available at around age 67.


That's a pretty big IF.
Link Posted: 6/24/2012 7:37:13 PM EDT
[#5]
Quoted:
I'm 47 and have 120K in my retirement IRA (transferred from previous 401k) and current 401k.  I contribute 10% per pay check to it.  My wife has 85K in her IRA transferred from her 401k when she worked.

If the money doubles every 8 years, plus additional contributions for my account, we should have 500K to a million available at around age 67.


You are getting 9% on your 401K? Please tell me what you are investing in.

Link Posted: 6/24/2012 7:42:43 PM EDT
[#6]
Quoted:
Quoted:
If the money doubles every 8 years, plus additional contributions for my account, we should have 500K to a million available at around age 67.


That's a pretty big IF.



Actually no it isn't.  If you look at long term investments they normally double in 6 to 8 years.

Most people don't think in long term periods though.  They see the markets going up and down and buy high and sell low.  I buy good stuff and hold till it makes me money until I and my advisor find something that will make me more money.

I also balance my retirement stuff every 6 months to a year and diversify across lots of markets.

The numbers I used are very conservative actually.  If the markets actually do take off some I could push to a couple million.

Money + diversification + time = more money.
Link Posted: 6/24/2012 7:45:52 PM EDT
[#7]
Quoted:
Quoted:
I'm 47 and have 120K in my retirement IRA (transferred from previous 401k) and current 401k.  I contribute 10% per pay check to it.  My wife has 85K in her IRA transferred from her 401k when she worked.

If the money doubles every 8 years, plus additional contributions for my account, we should have 500K to a million available at around age 67.


You are getting 9% on your 401K? Please tell me what you are investing in.



Large caps, medium cap funds, small cap funds, international funds, bond funds, real estate funds.  Plus 10% contribution per month.  (11% with employer match)

This is as of right now including  the losses from last week:

Personal Rate of Return from 01/01/2012 to 06/22/2012 is 5.8%

Link Posted: 6/24/2012 7:46:06 PM EDT
[#8]
Quoted:
Quoted:
Quoted:
If the money doubles every 8 years, plus additional contributions for my account, we should have 500K to a million available at around age 67.


That's a pretty big IF.



Actually no it isn't.  If you look at long term investments they normally double in 6 to 8 years.

Most people don't think in long term periods though.  They see the markets going up and down and buy high and sell low.  I buy good stuff and hold till it makes me money until I and my advisor find something that will make me more money.

I also balance my retirement stuff every 6 months to a year and diversify across lots of markets.

The numbers I used are very conservative actually.  If the markets actually do take off some I could push to a couple million.

Money + diversification + time = more money.


You are getting 9% on your 401K? Please tell me what you are investing in.
Link Posted: 6/24/2012 7:48:43 PM EDT
[#9]
Quoted:
Quoted:
Quoted:
I'm 47 and have 120K in my retirement IRA (transferred from previous 401k) and current 401k.  I contribute 10% per pay check to it.  My wife has 85K in her IRA transferred from her 401k when she worked.

If the money doubles every 8 years, plus additional contributions for my account, we should have 500K to a million available at around age 67.


You are getting 9% on your 401K? Please tell me what you are investing in.



Large caps, medium cap funds, small cap funds, international funds, bond funds, real estate funds.  Plus 10% contribution per month.  (11% with employer match)


Sorry, I misunderstood. You are saying overall your money will double. OK.
Thank you.

Link Posted: 6/24/2012 7:49:30 PM EDT
[#10]
Quoted:
Quoted:
Quoted:
Quoted:
I'm 47 and have 120K in my retirement IRA (transferred from previous 401k) and current 401k.  I contribute 10% per pay check to it.  My wife has 85K in her IRA transferred from her 401k when she worked.

If the money doubles every 8 years, plus additional contributions for my account, we should have 500K to a million available at around age 67.


You are getting 9% on your 401K? Please tell me what you are investing in.



Large caps, medium cap funds, small cap funds, international funds, bond funds, real estate funds.  Plus 10% contribution per month.  (11% with employer match)


Sorry, I misunderstood. You are saying overall your money will double. OK.
Thank you.



It should double twice in 20 or so years not including additional contributions.
Link Posted: 6/24/2012 8:11:16 PM EDT
[#11]
Quoted:
Quoted:
Quoted:
If the money doubles every 8 years, plus additional contributions for my account, we should have 500K to a million available at around age 67.


That's a pretty big IF.



Actually no it isn't.  If you look at long term investments they normally double in 6 to 8 years.

Most people don't think in long term periods though.  They see the markets going up and down and buy high and sell low.  I buy good stuff and hold till it makes me money until I and my advisor find something that will make me more money.

I also balance my retirement stuff every 6 months to a year and diversify across lots of markets.

The numbers I used are very conservative actually.  If the markets actually do take off some I could push to a couple million.

Money + diversification + time = more money.


Ya, I'm aware of all the rosy scenarios painted by financial advisors.

I'm also aware that we really don't have free markets anymore. We have markets that hinge upon the whims of asshole politicians.

I'm not disagreeing with you so much, I'm invested as well...for the moment. I'm just skeptical of your assumptions.
Link Posted: 6/24/2012 8:38:04 PM EDT
[#12]
Quoted:
I hear these are great to have––yet I don't know ANYONE who is retiring comfortably on theirs––do you?
I don't know anyone who even has a sizeable amount in one.
Maybe some of you do––share your stories with us and increase our faith!


Yes.

I know of at least two people with 7 figures in there at retirement and a handful with high 6 figures.  Those accounts ought to afford them anywhere between a $25k to $50k per year retirement if they look to preserve their capital and more if they are willing to draw it down over life expectancy.  That's not living high on the hog but they won't have to show up to work each day to get it.

You don't need faith, you just need to take contributing to your 401k seriously.  Most people just put in a couple percent and call it a day.  That's not going to get it done.  If you are serious about retiring on your money without taking a "pay cut" at around the age of 65 then you're bare minimum needs to be 15% (401k, IRA, ect combined).  With 40 years of work and a 4% return after inflation, you'll run out of money at about 88 years old in that scenario.  That's why it's the BARE minimum.

Most people don't take it that serious which is why most people will never retire comfortably on their 401k.  

I frankly think people should build their retirement around an overall savings goal of 25% spread between 401k, IRA, and non-retirement accounts.  They key is to hit that goal FIRST and then plan your standard of living around the 75% that's left.  If you've got student debt or other hurdles to get over first that's fine but don't expand your lifestyle with a bigger house or a nice car until you've hit that 25% mark.






Link Posted: 6/24/2012 8:45:35 PM EDT
[#13]
Quoted:
Quoted:
Quoted:
Quoted:
Quoted:
I'm 47 and have 120K in my retirement IRA (transferred from previous 401k) and current 401k.  I contribute 10% per pay check to it.  My wife has 85K in her IRA transferred from her 401k when she worked.

If the money doubles every 8 years, plus additional contributions for my account, we should have 500K to a million available at around age 67.


You are getting 9% on your 401K? Please tell me what you are investing in.



Large caps, medium cap funds, small cap funds, international funds, bond funds, real estate funds.  Plus 10% contribution per month.  (11% with employer match)


Sorry, I misunderstood. You are saying overall your money will double. OK.
Thank you.



It should double twice in 20 or so years not including additional contributions.


I wouldn't base my plans on that.  Even if you do get two doubles in 20 years, there is just no way that is going to be post-inflation.  I don't think a 10% contribution is going to get it done if the 401k is your primary nest egg for retirement.  Have you considered cranking it up to 15% or better?

I'm not a market naysayer, I just a good rock solid plan requires a healthy dose of pessimism.  Even if I'm wrong, the worst thing that can happen is you have too much money at the finish line.  That's a good problem to have.

Link Posted: 6/24/2012 8:49:10 PM EDT
[#14]
Quoted:
Quoted:
Quoted:
Quoted:
Quoted:
Quoted:
I'm 47 and have 120K in my retirement IRA (transferred from previous 401k) and current 401k.  I contribute 10% per pay check to it.  My wife has 85K in her IRA transferred from her 401k when she worked.

If the money doubles every 8 years, plus additional contributions for my account, we should have 500K to a million available at around age 67.


You are getting 9% on your 401K? Please tell me what you are investing in.



Large caps, medium cap funds, small cap funds, international funds, bond funds, real estate funds.  Plus 10% contribution per month.  (11% with employer match)


Sorry, I misunderstood. You are saying overall your money will double. OK.
Thank you.



It should double twice in 20 or so years not including additional contributions.


I wouldn't base my plans on that.  Even if you do get two doubles in 20 years, there is just no way that is going to be post-inflation.  I don't think a 10% contribution is going to get it done if the 401k is your primary nest egg for retirement.  Have you considered cranking it up to 15% or better?

I'm not a market naysayer, I just a good rock solid plan requires a healthy dose of pessimism.  Even if I'm wrong, the worst thing that can happen is you have too much money at the finish line.  That's a good problem to have.



I was maxing it out a few years ago.  If I go too high a percentage I bump into the max contribution.

My 401k and retirement accounts are the smaller of my investments.
Link Posted: 6/25/2012 4:35:53 AM EDT
[#15]
Quoted:
Quoted:
Quoted:
Quoted:
Quoted:
Quoted:
Quoted:
I'm 47 and have 120K in my retirement IRA (transferred from previous 401k) and current 401k.  I contribute 10% per pay check to it.  My wife has 85K in her IRA transferred from her 401k when she worked.

If the money doubles every 8 years, plus additional contributions for my account, we should have 500K to a million available at around age 67.


You are getting 9% on your 401K? Please tell me what you are investing in.



Large caps, medium cap funds, small cap funds, international funds, bond funds, real estate funds.  Plus 10% contribution per month.  (11% with employer match)


Sorry, I misunderstood. You are saying overall your money will double. OK.
Thank you.



It should double twice in 20 or so years not including additional contributions.


I wouldn't base my plans on that.  Even if you do get two doubles in 20 years, there is just no way that is going to be post-inflation.  I don't think a 10% contribution is going to get it done if the 401k is your primary nest egg for retirement.  Have you considered cranking it up to 15% or better?

I'm not a market naysayer, I just a good rock solid plan requires a healthy dose of pessimism.  Even if I'm wrong, the worst thing that can happen is you have too much money at the finish line.  That's a good problem to have.



I was maxing it out a few years ago.  If I go too high a percentage I bump into the max contribution.

My 401k and retirement accounts are the smaller of my investments.


Roger that.  
Link Posted: 6/28/2012 4:24:30 PM EDT
[#16]
I would suggest you need to find new people to hang out with.  I'm not trying to be rude but it sounds like you are serious about retirement and everybody you know isn't.  You need to find what you consider to be "winners" in the areas of your life that you want to win at and start looking like those guys.  I'm only 30 and I know several people with high 6 figure 401k's, but I know more that don't have that much but have very diversified investments.  The reason I know so many is that I'm always on the lookout for old dudes that a winners.  Men who have lived well don't mind sharing how they did it.  Heck I got to talk with the guy who has the 99year lease on the royal gorge in Colorado.  Now that guy is a winner in every category I can think of and you'd never notice him on the street.
Link Posted: 6/30/2012 5:30:38 AM EDT
[#17]
I'd suggest you look at japans Nikkei, http://finance.yahoo.com/q/bc?s=%5EN225+Basic+Chart&t=my. I'd also suggest your financial advisor's fees are a drag on a investment horizon of 30yrs of about 30%. Hence, his rosy outlook for your* investments he's skimming his fees from . Unless he's a one time set up fee paid individual. Its difficult to expect a financial advisor, to look out for your best interest. Many of whom work for institutions pushing fee based and heavily commissioned "funds" or "products" on the "customer". Personally I call them "salesmen". As akin to Edward Jones investments, or the like.  JMO
Link Posted: 6/30/2012 7:35:22 AM EDT
[#18]
Many people start to contribute too late in life for it to build up much.  Before I married my wife I found out she wasn't contributing and I made her do it.  I would if I had the option.
Link Posted: 6/30/2012 2:35:38 PM EDT
[#19]
http://www.early-retirement.org/forums/

There are many people who retire off their tax advantaged accounts.  Are you willing to sacrifice to achieve financial independence is the real question?
Link Posted: 7/1/2012 6:26:50 PM EDT
[#20]
I have been maxing mine out on small and mid cap growth mutuals (columbia acorn and Aston Tamro) for the past several years.

 I have stayed true to it, even in the face of plunging markets in 09 and other dismal periods.  I am putting in 21K per year the company is putting in about 7500 and its growing like a weed.



Link Posted: 7/2/2012 6:07:13 AM EDT
[#21]
Quoted:
Many people start to contribute too late in life for it to build up much.  


This. If you start thinking about retirement at 40, there's no way you're going to retire comfortably without some sort of extra income. The earlier you start, the easier it is to retire off your 401k without worrying about additional income during retirement.

A lot of people are also too lazy to spend a couple hours every few months to check and make sure they're on track with their retirement investments. They'll just dump a little money from each check into whatever fund their 401k's financial adviser suggests without ever actually knowing what they're investing in. Even worse, they never break down and do the math to see how much they need to be contributing. Most people just pick a number that sounds like an acceptable amount of income to sacrifice and are happy putting $50 a month into a 401k.
Link Posted: 7/2/2012 6:52:10 AM EDT
[#22]
I am learning––read a few books this month (richest man in babylon and millionaire next door), and am putting 15% of my income into my 401 K's split between a roth and traditional.

I am asking people  and NO ONE  has yet provided me with anyone who uses or could use JUST their 401K's––that's why I am asking here––I will check out the above link later today.  I know several people who are using a combination of Pensions and social security; just social security; precious metals; investments (other than stock market––we are talking home sales and business part ownership income); but NO 401k's or stock market trading except for one cousin, and like many, he lost big a few years ago––he's the next one I talk to when I see him again.

As far as sacrifice, what's the definition of that?  I drive old cars with no payments; put money into my funds; save beyond that, put money into funds for my children and relatives' and friends children, buy PM's (physical), and work in a great job––I work at Federal cartridge, I want to move up, not retire early. As much as I can on 50K/yr.  Yeah, I sacrifice by my definition.  I'm not interested in working a second job or overtime as I am putting that time into my children and family, which should be the greatest investment yet.  

So since VERY FEW people I know personally, or that I have found YET, do not or cannot retire "comfily" on their 401k's––makes me wonder if there isn't a better choice?
Link Posted: 7/2/2012 6:54:18 AM EDT
[#23]
Quoted:
Quoted:
Many people start to contribute too late in life for it to build up much.  


This. If you start thinking about retirement at 40, there's no way you're going to retire comfortably without some sort of extra income. The earlier you start, the easier it is to retire off your 401k without worrying about additional income during retirement.

A lot of people are also too lazy to spend a couple hours every few months to check and make sure they're on track with their retirement investments. They'll just dump a little money from each check into whatever fund their 401k's financial adviser suggests without ever actually knowing what they're investing in. Even worse, they never break down and do the math to see how much they need to be contributing. Most people just pick a number that sounds like an acceptable amount of income to sacrifice and are happy putting $50 a month into a 401k.


I'm wondering if this isn't the crux of the issue.  I didn't get serious until I was 40 and simply do not have the income to hit it hard enough.
Link Posted: 7/2/2012 7:10:19 AM EDT
[#24]
Quoted:
I'm 47 and have 120K in my retirement IRA (transferred from previous 401k) and current 401k.  I contribute 10% per pay check to it.  My wife has 85K in her IRA transferred from her 401k when she worked.

If the money doubles every 8 years, plus additional contributions for my account, we should have 500K to a million available at around age 67.


If the money doubles?


Are you currently up? Or even? Please refer us to your investment vehicles?

Ahh... I see. You are counting your own contribution in your calculations.

Yeah... The money should grow, but at 5.8% inflation is kicking your ass.
Link Posted: 7/2/2012 7:25:10 AM EDT
[#25]
Quoted:
As far as sacrifice, what's the definition of that?  I drive old cars with no payments; put money into my funds; save beyond that, put money into funds for my children and relatives' and friends children, buy PM's (physical), and work in a great job––I work at Federal cartridge, I want to move up, not retire early. As much as I can on 50K/yr.  Yeah, I sacrifice by my definition.  I'm not interested in working a second job or overtime as I am putting that time into my children and family, which should be the greatest investment yet.  


"Sacrifice" is all relative to what you can afford to do and what your goals are. You shouldn't be investing without a goal. You need to set a goal and stick to it. Calculate how much money you'll need annually upon retirement. Then adjust it for inflation. Ideally, you should have 20 times that amount when you retire. You can withdraw 3-5% of your portfolio every year to use as income, and still deplete the principal slowly enough to last the rest of your life.

If you're doing as much as you can handle, the that's great. There's nothing wrong with putting family first and not wanting to work a second job. You could walk out of your house and get hit by a bus tomorrow and that retirement account with a million dollars won't mean much.

Quoted:
So since VERY FEW people I know personally, or that I have found YET, do not or cannot retire "comfily" on their 401k's––makes me wonder if there isn't a better choice?


There's not a better choice. 401Ks and IRAs have huge advantages over anything else simply because of their tax benefits. And stocks have consistently shown to provide the best long term returns of any investment, which means that a stock heavy 401K will do far better than any other investment over the long term. Use other investment vehicles to help dampen the volatility of stocks, but you should be primarily look for returns in your stock investments. Bonds, MMs, CDs, etc will give you a bit less volatility, but the returns won't be as significant.

Quoted:
I'm wondering if this isn't the crux of the issue.  I didn't get serious until I was 40 and simply do not have the income to hit it hard enough.


There's still time. Set your goal now and focus on trying to reach that number.

Let's say you want to keep your $50k income at retirement. Say you're 40 now and retire at 65. Assuming inflation stays around it's historical norm, you'll need about $105k annually to keep the same amount of real income when you retire in 25 years. If you had $2.1 million in your IRA at age 65, then you could retire and withdraw 5% of your money every year to generate $105k of income. Assuming you can maintain a 5% return during retirement, your returns will offset the withdrawals and you won't deplete your principle during retirement.

If you're putting 15% into your 401k, that's $7500 per year. Does Federal match any or all of that? Let's say they match up to 5% of your salary, that makes your annual contribution a total of $10k. You invest into stocks and bonds, and let's go with a conservative long term return of 7%. Stocks, on average are about 9%, but you don't want to be overly optimistic and fail to meet your goals. Not including what money is already in there, your contributions should turn into about $700k upon retirement with a 7% return. If you already have $50k in your 401K, you should be able to hit $1 million by retirement.

From there, you can determine if those figures will be adequate for retirement. If it won't, you'll need to start playing with the numbers to see what gets you where you need to be. Do you need to contribute more (or can you afford to). Will your employers match more if you contribute more? Can you withdraw more from your 401K during retirement? What kind of life expectancy do you see in your family and how long do you think your retirement will last? Are you planning to leave any money to your kids or will you spend all of it? Does your wife have a retirement plan or is this money going to cover both of you? What kind of expenses do you foresee upon retirement? Will you still have a house payment, for example?
Link Posted: 7/2/2012 11:41:50 AM EDT
[#26]
Quoted:
I am learning––read a few books this month (richest man in babylon and millionaire next door), and am putting 15% of my income into my 401 K's split between a roth and traditional.

I am asking people  and NO ONE  has yet provided me with anyone who uses or could use JUST their 401K's––that's why I am asking here––I will check out the above link later today.  I know several people who are using a combination of Pensions and social security; just social security; precious metals; investments (other than stock market––we are talking home sales and business part ownership income); but NO 401k's or stock market trading except for one cousin, and like many, he lost big a few years ago––he's the next one I talk to when I see him again.


They keyword there is "combination".  Your 401k can be part of a combination which includes pensions, social security, and other investments like real estate or side business.  Saving for retirement via a 401k isn't an all or nothing deal.  If you don't quite reach your goal and can't 100% replace your working income you'll still end up with a big pile to replace SOME of it.

But yes, you'll have trouble finding people who retire on 401k's alone because most people simply don't take it seriously enough for their entire 40 year working life.  Who do you know that actually contributes 15%+ of their gross to their 401k starting at the age of 25 years old and sticks with it?  You literally need 40 years at 15% if you want an honest shot at replacing your working income and maintaining your standard of living through the age of 88.


As far as sacrifice, what's the definition of that?  I drive old cars with no payments; put money into my funds; save beyond that, put money into funds for my children and relatives' and friends children, buy PM's (physical), and work in a great job––I work at Federal cartridge, I want to move up, not retire early. As much as I can on 50K/yr.  Yeah, I sacrifice by my definition.  I'm not interested in working a second job or overtime as I am putting that time into my children and family, which should be the greatest investment yet.  


The definition is whatever it takes to get the job done.  In reality, it's not really a sacrifice because it should be part of everyone's budget to begin with.  Your base standard of living from which both sacrifice and luxury should be measured should be in post-tax and post-savings dollars.  Pay the man, pay yourself, and then what's left determines what you have to live on.

So since VERY FEW people I know personally, or that I have found YET, do not or cannot retire "comfily" on their 401k's––makes me wonder if there isn't a better choice?


Like I mention before, the problem isn't the system, the problem is the people you know personally and most other people for that matter.  The 401k math works out just fine in theory and in practice but you have to take it seriously and make serious contributions.  

Keep in mind that the whole concept of retirement is based on the notion of saving up enough money over a working career to pay your way through a retirement.  That means you have to create and save enough value in EXCESS of what you consume in 40 years to sustain your consumption for another 20 years at retirement.  We are fundamentally talking about paying for 60 years worth of consumption with only 40 years of work.  You simply can't make that math work without putting some serious dough away.

There is no shortcut or better way.  It simply takes brute force and that's it.  If there was a shortcut to riches, everybody would be doing it.


I'm wondering if this isn't the crux of the issue.  I didn't get serious until I was 40 and simply do not have the income to hit it hard enough.


Yes, that is the crux of the issue but you do have choices:

1)  Presuming your retirement savings are negligible at 40, you'll need to do 35% instead of 15% had you started at 20.  My assumptions presume a 4% return AFTER the effect of inflation.  You might to better but it's hazardous to plan on it.  I think the reason so many people dramatically underfund their 401k plans is because they buy into that notion that they can "count on" 7%-10% returns consistently with no contingency for inflation or bear markets that intersect their retirement plans.

2)  Lower your expectations.  If you live on $50k now, prepare your retirement to live on $22k at the age of 65 plus whatever benefits still exist on the taxpayer dime.  Once again, assuming you have negligible savings at 40 and you'll make 4% AFTER inflation between now and 65 on your 15% contributions.

3)  Retire later or work side jobs to fill in the gaps at retirement.  

4)  Figure out a way to make more money now or later.  If you get raises between now and retirement, resist the urge to increase your standard of living and bank the difference instead.  That would go LONG way to catching you up.  Bank any bonuses or "found" money as well.

I think that's about it.   It's simply a matter of mathematical fact at this point.  The bright side is that doing SOMETHING will always be better than nothing.  Having half of your retirement income taken care of with investments is better than none.  It certainly would lower your hurdle you need to get over each month from other sources (working retirement or .gov benefits) to stay afloat.

Link Posted: 7/3/2012 7:07:19 PM EDT
[#27]
Quoted:
Quoted:
I am learning––read a few books this month (richest man in babylon and millionaire next door), and am putting 15% of my income into my 401 K's split between a roth and traditional.

I am asking people  and NO ONE  has yet provided me with anyone who uses or could use JUST their 401K's––that's why I am asking here––I will check out the above link later today.  I know several people who are using a combination of Pensions and social security; just social security; precious metals; investments (other than stock market––we are talking home sales and business part ownership income); but NO 401k's or stock market trading except for one cousin, and like many, he lost big a few years ago––he's the next one I talk to when I see him again.


They keyword there is "combination".  Your 401k can be part of a combination which includes pensions, social security, and other investments like real estate or side business.  Saving for retirement via a 401k isn't an all or nothing deal.  If you don't quite reach your goal and can't 100% replace your working income you'll still end up with a big pile to replace SOME of it.

But yes, you'll have trouble finding people who retire on 401k's alone because most people simply don't take it seriously enough for their entire 40 year working life.  Who do you know that actually contributes 15%+ of their gross to their 401k starting at the age of 25 years old and sticks with it?  You literally need 40 years at 15% if you want an honest shot at replacing your working income and maintaining your standard of living through the age of 88.


As far as sacrifice, what's the definition of that?  I drive old cars with no payments; put money into my funds; save beyond that, put money into funds for my children and relatives' and friends children, buy PM's (physical), and work in a great job––I work at Federal cartridge, I want to move up, not retire early. As much as I can on 50K/yr.  Yeah, I sacrifice by my definition.  I'm not interested in working a second job or overtime as I am putting that time into my children and family, which should be the greatest investment yet.  


The definition is whatever it takes to get the job done.  In reality, it's not really a sacrifice because it should be part of everyone's budget to begin with.  Your base standard of living from which both sacrifice and luxury should be measured should be in post-tax and post-savings dollars.  Pay the man, pay yourself, and then what's left determines what you have to live on.

So since VERY FEW people I know personally, or that I have found YET, do not or cannot retire "comfily" on their 401k's––makes me wonder if there isn't a better choice?


Like I mention before, the problem isn't the system, the problem is the people you know personally and most other people for that matter.  The 401k math works out just fine in theory and in practice but you have to take it seriously and make serious contributions.  

Keep in mind that the whole concept of retirement is based on the notion of saving up enough money over a working career to pay your way through a retirement.  That means you have to create and save enough value in EXCESS of what you consume in 40 years to sustain your consumption for another 20 years at retirement.  We are fundamentally talking about paying for 60 years worth of consumption with only 40 years of work.  You simply can't make that math work without putting some serious dough away.

There is no shortcut or better way.  It simply takes brute force and that's it.  If there was a shortcut to riches, everybody would be doing it.


I'm wondering if this isn't the crux of the issue.  I didn't get serious until I was 40 and simply do not have the income to hit it hard enough.


Yes, that is the crux of the issue but you do have choices:

1)  Presuming your retirement savings are negligible at 40, you'll need to do 35% instead of 15% had you started at 20.  My assumptions presume a 4% return AFTER the effect of inflation.  You might to better but it's hazardous to plan on it.  I think the reason so many people dramatically underfund their 401k plans is because they buy into that notion that they can "count on" 7%-10% returns consistently with no contingency for inflation or bear markets that intersect their retirement plans.

2)  Lower your expectations.  If you live on $50k now, prepare your retirement to live on $22k at the age of 65 plus whatever benefits still exist on the taxpayer dime.  Once again, assuming you have negligible savings at 40 and you'll make 4% AFTER inflation between now and 65 on your 15% contributions.

3)  Retire later or work side jobs to fill in the gaps at retirement.  

4)  Figure out a way to make more money now or later.  If you get raises between now and retirement, resist the urge to increase your standard of living and bank the difference instead.  That would go LONG way to catching you up.  Bank any bonuses or "found" money as well.

I think that's about it.   It's simply a matter of mathematical fact at this point.  The bright side is that doing SOMETHING will always be better than nothing.  Having half of your retirement income taken care of with investments is better than none.  It certainly would lower your hurdle you need to get over each month from other sources (working retirement or .gov benefits) to stay afloat.

Well said I know so many with their head in the sand. Good Luck!

Link Posted: 7/5/2012 7:09:38 PM EDT
[#28]
Each time when I switched jobs (twice) I put my 401k into a self directed rollover and have done extremely well. Purchased a number of high dividend blue chips and sit back collecting almost as much as my salary each year. I just keep reinvesting the dividends into other high dividend stocks.
Link Posted: 7/5/2012 7:50:21 PM EDT
[#29]
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If the money doubles every 8 years, plus additional contributions for my account, we should have 500K to a million available at around age 67.


That's a pretty big IF.



Actually no it isn't.  If you look at long term investments they normally double in 6 to 8 years.

Most people don't think in long term periods though.  They see the markets going up and down and buy high and sell low.  I buy good stuff and hold till it makes me money until I and my advisor find something that will make me more money.

I also balance my retirement stuff every 6 months to a year and diversify across lots of markets.

The numbers I used are very conservative actually.  If the markets actually do take off some I could push to a couple million.

Money + diversification + time = more money.


You are getting 9% on your 401K? Please tell me what you are investing in.


Personal Rate of Return from 01/01/2012 to 07/02/2012 is 7.7%
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