So what?  In 2008, the crash took us back to 1996 levels, or 12 years.  Over a 40 year investing time horizon, being set back 12 years means you are still way way ahead.  

All this ignoring the fact that the market was over sold in 2008 and corrected quickly and profits were still being paid as dividends while people waited for that correction.  In the time it took the DJIA to reach it's previous high after the 2008 crash, investors tracking the Dow received somewhere in the neighborhood of a 10%-15% total return on yields alone while riding out the disaster.  The only people who got fucked in stocks in 2008 where the people who panicked and sold.  The people who got richer were those who saw blood in the streets and started buying.

Even someone retiring in 2008 wouldn't have done that bad because it's not like you need your ENTIRE nest egg in cash the day you retire.  Most of your money remains working.  It also goes without saying that someone who is tightly dependent on their nest egg for retirement shouldn't have been heavily loaded into stocks that close to retirement in the first place.  None of this stuff is hindsight, these are things we all knew long before the crash.

I was 52. I got started late though. I retired from the Army at 39 and started working again at 40 years and 3 months.

From age 52 to 60 I have tripled the amount in the account to just over $320K.

I should end up with the following (stacked retirements) over the next 20 years or so, assuming I live to tell about it:

Army retirement    $414,000.00
TSP (401K)           $320,000.00
FERS retirement    $304,444.30
Social Security     $368,400.00  

I'll be 61 soon. I've been collecting Army retirement for almost 21 years.

This does not include interest in the TSP that will accumulate, say in an annuity.
The house will be paid off in June. We have Tricare.
The wife still works too. She just went over $200K in her TSP and will also get a FERS and SS check as well.

I have a high school education with a little over a year of college. Wife is RN. I fix medical equipment and can
retire any time now. I am waiting to finish off the mortgage though.

this is absolutely correct.

ar-jedi

ps
please elaborate on what aspect of life is risk-free.  you could slip on ice.  you could get divorced.  you could get fired.  you could contract GBS.  your house could be flattened by a hurricane or tornado.   you could get T-boned at an intersection.   your house could be consumed by forest fire.  

and what do you do to protect yourself against these and a myriad of other maladies that could cause you immense problems?  do you not go outside?  not get married?  not be in contact with others?  not own a house?  not drive a car?  no.  you accept risk and work out ways to balance out the risk for a net reward -- companionship, a roof over your head, ability to go places, etc etc etc. -- and your personal finances are no different.

Yeah, wife and I are both going to hit 100K at 30 she rolled her TSP over so she is a bit ahead of me. It should help with the future.

sir -- good job and keep on truckin' -- your plan is working!

ar-jedi

Only if you are a foolish lemming and sell after the crash.  Dollar cost averaging is a thing, perhaps you've heard of it?

I retired from the Marines in 2006 and started my 401(k) in September that year. I turn 51 next month and my 401 should break the $100k mark later this year. It has doubled in just the last year.

no dont buy a whole life policy, terrible idea

mine hit 2 million last week.

???  because some people are too dumb to contribute to a 401K, companies will enroll you when you first start working and if you dont choose an investment, they will choose one,  but the employee can still opt out,  i have never heard of a company making you contribute to a 401K -

and its a good idea because people wont sign up because they dont understand saving for retirement

Impossible, the gold bugs and naysayers in this thread say nobody gets "rich" with a 401k.  . Congrats!  I may get there some day.

I think I had to wait to contribute to my TSP plan when I started working. Vesting or something of that nature took out 6 months of contributions.

My advise is to contribute as much as you can stand. Most of the monies in your 401Ks will be your contributions. The longer it stays in the better.
Take it out when you need it. USAA said that they would take my TSP/401K and give me a 20 year annuity that would total out at almost $.5M after
20 years. I highly recommend getting a financial advisor. USAA provides them for free. Get a second opinion too.

I will most probably defer my social security until I am 66 since my wife will still be working.

thats not what you do, in retirement you take about 4% a year from your investments, that way you dont deplete it and it can still grow when you are retired,  you also have social security,  on a $1M 401K  + SS your income should be around $70K/yr - not bad if you have your house paid off and no other debts

For us younger folks, the means tested SS will be long gone.  Going to need a bigger 401K.

I'm glad to see this thread has so much steam. Hopefully, those that don't contribute will wake up or at least look for alternatives. Seems to be some great info flowing around here.

that bullshit, you have to watch whats going on and manage your account, , what people dont realize is that when the market crashes it ALWAYS comes back,

And even if you don't have any debt, your utilities, food, tax, and healthcare will cost you $$$$$.  I used to think having a paid off house and car when I retire would make things pretty easy, but now I look at everything and think those are the smaller expenses.

2 million pennies



 

32. Then some cockgoblins decided to 9/11. After that I realized I could predict major financial disasters based on how good my retirement accounts were doing. Every ... Fucking ... Time!!!

This

Nice...but how old are you?

+1.  If I knew then what I know now.    I would be in a much better position than I am today.  

Don't get a late start you darn youngins!     And get off my lawn!

Here is a really great illustration of compounding interest.   I had to increase the size since I can not find a better example online.  I hope it works OK.

pennies and im 45



 

Well done!

Don't you just love bankrate's calculators?  They have one for everything.

This might be interesting for some of you - if not, just move along.

Right about 15 years ago, I had just exited my first marriage (I wasn't on arfcom yet, so no blaming "the curse").  It was all for the best, but in the time we had married I had wrecked my own financial situation in a wasted attempt to fix my ex-wife's.  Lesson learned.  At this point in time, I had bought a small 800 sq. ft. condo near my work.  My ex was fairly amicable about the split, all things considered, so to avoid any possible fighting and to make it as quickly as possible, I left her everything - I walked out with my clothes, a few things from the house and my car.

I also walked out with all the debt I'd incurred.  I was working a steady job, but owed so much that due to traveling for work and my company being slow on reimbursement I was at times having to take a cash advance on one credit card to pay the minimum balance on another.  In all, I owed closed to $30k in credit cards at one point around 2000-2001 (as a frame of reference, the job I took in 1997 paid $30k).  You might say times were tough.  I had been poorer (at one point in college, I had enough $$ to afford a box of saltines - 4 bags of crackers - and a 2 liter of coke to last me a week for groceries), but I had never owed as much.  My soon-to-be wife #2 was in all fairness cautious about starting to share things financially, even though she was spending many nights at my condo and eating my food regularly.


So what's the point of all this?


A solid financial plan. along with hard work and diligence can dig you out of the worst places.  We ended up buying a house together in 2000, and then moved to a larger one in 2004.  All the time, I was both paying down debt and saving what I could.  Throughout this entire time, I always put *something* into my 401k, following the mantra of "pay yourself first".  And I can say it has paid off.

About 4 years ago, I thought we were doing okay - however, our financial advisor had moved to another career and I'd been handling our finances solo for a while and wanted to know where we stood.  So I sat down one day and logged into all our accounts, reviewed all our statements, and put everything into Excel.  Now, I do this exercise every so often and I encourage others to do the same so you know where you really stand.  Having cash, liquid savings, durable savings and retirement matters, but so does understanding where your debt is, what kind it is, how much you're paying in interest vs. how much you're earning in interest, etc.  I'm not going to share all my numbers, but I will share a little graph that gives a relative understanding of how we've progressed the past 4 years.



The bottom line?  You can be risky and you can be safe, but hardly anyone retires well by doing nothing.  AND, its never too late to plan for the future and start investing in yourself.

I figure if the .gov "seizes" retirement funds, any other investments you own and the economy in general will be fucked as well, so it wouldn't make much difference at that point.

So, I save and invest and will continue to do so.  In my mid 20's now and will have plenty of time to deal with bumps in the road, just taking it a year at a time.

Don't make the mistake of thinking they'd hesitate to seize the instruments outright if they thought it'd help them in the near term at some point.   They'll almost certainly go after cash, if the wheels are still on when it comes to that, and there isn't anything effectively stopping them from requiring new contributions to reside in whatever they order them to.

They're going to do anything they think will benefit them and that they think they can get away with.   Their calculations for both of those factors aren't likely to be very accurate.

If someone has a retirement account that they'll be able to use soon, or enough income and other assets that the risk of gov't shenannigans are worth the tax benefits, then great.    

But everyone else?  Might as well be pissing money down a hole.





That's an outstanding example.    It's also not particularly relevant for anyone struggling with the truly horrific levels of unemployment and debt in the age ranges near the start of that chart.   If anything, it's even more reason why that age group should be burning things down and finding new lamp post decorations.  

Our higher education system in particular has ended up being a massive multi-generation project that does littler more than financially ruin millions of young adults.

The majority of those under a certain age don't have a snowball's chance in hell of retiring.   Most of them have still not figured that out.

My bad, I was talking about a 401K that rolled into an IRA. As somebody who retired 10 years ago on a lot less than some of you guys have, I'm making it work. It depends on ones life style. If I need a large chunk of money for something, I don't want to take it out of the IRA is what I've been trying to preach. After tax money keeps one in a lower tax bracket in those instances and why save all your life and then end up giving any of it to the IRS......

As an active duty  enlisted solider I had hardly a penny to my name when I retired from the .mil at age 43. I did have a home with about 45K is equity and maybe 20K in savings. My savings in first 3 or 4 years after retirement were slim due to a kids in school, a mortgage payment and bad habits.

401K didn't hit 100k until maybe 8 years ago (47 yo) when I started saving in earnest and began using a very good investment advisor. In those 8 years I maxed every IRA, 403b and 401K opportunity that I had but that was only approx. 25% of what I was saving/ investing each year.  I became a bit concerned following the 2007-08 fiasco in that while I had a diversified portfolio I had very little in the way of tangible assets. So I used post tax monies that I had been saving to pay off our main home and also buy with cash a property at the beach, for vacation and to use as a rental.

Job wise what allowed me to save as much as I have was a defining moment. I literally was in a meeting in DC that I attended in 2007 when working as contractor action officer at CENTCOM. This was a senior meeting and I spoke up, against the tide of opinion in the room. I made my case for a certain set of activities that weren't popular with majority. Following that meeting I was approached by a SES from an agency in DC and offered a job.

From that day on I began to make money that was significantly better than before, e.g. in 2012 my total compensation package was triple what it was in 2006...and I wasn't making bad money in 2006.

Essentially, I could retire now regardless of the fact that I still can't touch IRA monies, without penalties, for about 4+ years.  I  did "retire"  for the last year or so and found that I'm bored out of my mind. So I'm back to consulting.

So the bottom line is that I fucked up royally and I hope some of the younger guys here learn by my mistakes.  What saved my ass, in terms of investments, was some skill but mostly factors beyond my control; luck and timing. If I had to do it over I would have taken the advice of my first Team Sgt and banked 15% of every penny that I made from my early 20's onward. I didn't and though it worked out for me, I was a real dumb ass and I had put my family at risk.


Edit: while this was a simple question by the OP and not an financial discussion thread there is one piece of data that'd like to share.  When you read all the retirement calculators, expert advice, etc...you'll  hear "you need 80% of your current income to live comfortably in retirement" or words to that effect.

What they never mention is the factor that your saving's rate creates. That's to say if your take-home pay is 200K per year the retirement calculators will derive that you'll need about $160K in retirement to maintain your lifestyle.  So will a T Rowe, Fidelity, etc..advisor.  

The fact of the matter is that if your take-home is notionally $200K and your saving $120K your lifestyle is based on a take home of $80K not $200K.  My point is that a healthy savings rate not only builds wealth it also helps to truncate your lifestyle expenses. Seems simple but plenty of friends that I've discussed this topic with seem to have missed that point. Their advisor is essentially using the "fear" of lack of cash flow to drive their savings rate. On one level it's not necessarily a bad thing. On another level it may be an invest advisor trying to up his percentage numbers. Just something to think about as investing, like most things should viewed through the lens of fact vice emotion.

Why do you not like a whole life policy?  Once you have maxed out contributions to your 401k and Roth, what would be a better investment?  Sure, you lose about 3% off of the top to pay for the policy itself, but what other investments exist with tax free earnings?  Plus, it is guaranteed to pay out to your beneficiaries eventually.

Because the return is HORRIBLE. It can take 8-12 years just to -break even-, and 30-40 years before you see any real gain.

The only reason for one I can think of is if you have already had one for a long time.

Here is an article with a LOT of reasons not to get one, and 4 reasons for one (one of which is if you've already had one for a long time...)

http://whitecoatinvestor.com/8-reasons-to-avoid-whole-life-insurance-and-4-reasons-to-consider-it/

and here is the key graphic from the article:

This is why a Roth IRA or 401k is so beautiful.

No, they'll just means test for social security. If you have a 401k over a certain paltry balance, they index down to maybe nothing your ss payment. Ss is not a constitutional amendment - a simple law change is all that is required. And like high earners, it's a small pool of people who will be affected for the benefit of a large pool.

Got about 50k so far between the employer 401k and Roth IRA, about to turn 26 this month.

Don't know that I'd bother with the 401k if my employer didn't have a token matching contributions plan.

is there some other method of saving ~17,000 year in a tax-advantage container?

ar-jedi

The best time to start saving was 20 years ago. The second best time is now.

TIAA-CREF keeps pestering me to open an supplemental IRA, which doesn't make a lick of sense since my employer doesn't match those contributions. Once I max out my employer match, maybe I'll do it.

But no, no one is pressuring me to contribute more to my 403b, or if they are, I'm not getting the message. I usually delete CREF's emails and their letters immediately go into the shredder, since they're 99% solicitations for other services I don't need/want/already have. If I need to see a statement, I just log in to the website.

My 401K and IRA are doing well but  think the 457B I just started on will surpass them both within a few years



Also only a few years left before my state pension will be my main income.

yes, and so far it seems that Gator96 hasn't been back to note that by waiting 8 years to start a 401k, you are basically taking a 7% pay cut for the rest of your life.

ar-jedi

They will confiscate it all within 10 years and create a national retirement plan.

As someone in the financial services industry, that article is wrong and misleading. Life insurance as an asset class has a place and can be a great tool.  I am 28 and have a universal life policy (not just a small one either) and I over fund it because of returns and tax considerations.

Don't write off life insurance if you are already maxing your Roths.

wait, wut?  how exactly then does the government make use of my thousands of shares of Spacely's Sprockets and Coswell's Cogs?


i think you have missed a point here, and suffer from a bit of external locus of control thinking.

your own "economy" is FAR more important than the country's. it is also very much disconnected -- it is certainly possible to personally make a lot of money when the economy is "bad" (hella money made in the bond market when the Fed was ratcheting down interest rates), and personally lose a lot of money when the economy is "good" (hella money lost by folks over-leveraging themselves into real estate -- an asset allocation boo-boo on a large scale).

for this reason, one should work on the things that are in your immediate control -- your job, your mortgage, your expenses, your long term investments, and so on. you can't control the economy, that's for sure. but you can ask for a raise; you can refinance your mortgage; you can reign in your expenses; you can pay attention to your long term investments, and so on.

http://en.wikipedia.org/wiki/Locus_of_control


you opine above about unemployment, the failure of our educational system, and so on, right down to hanging folks from lightstands, closing with "the majority ..." -- but these are external factors outside of your control.  you can not control them.  to wit, i really would like it to be 75'F tomorrow, not 15'F.  but that ain't happening, no matter what i do.  

ergo, i can either complain aloud to anyone within earshot about the temperature outside or i can expend that same effort working on finding new, creative, less expensive, and more efficient ways to add heat to my house or perhaps just better preserve the heat that is already contained in the house.  i hope you see the analogy to long term investing.

ar-jedi

hmmmm ... i wonder how this math works out.

ar-jedi

It's not hard really. Look at the NYS retirement system. Huge collection of assets including stocks, bonds, annuities, etc. They pay out from the interest and investment gains. This would essentially be the same. The government takes the stocks, bonds, etc. and creates a national retirement system and decides what you get paid. The seizure can take the form of a 100 percent tax. Since most people wouldn't have the cash on hand to pay the tax, the assets themselves could be signed over.

Or in the alternative they use the seized private assets to pay off the national debt. There is roughly what $17 to $18 Trillion is 401Ks? What's our national debt? Hmmmmm. Once the debt is eliminated (temporarily, you know they ill run it up again), they use the money that was going to debt service o fund a national retirement plan at a "fair standard of living." That will be how they will get around an eminent domain argument, you will be "compensated" for your loss in the form of a government guaranteed retirement payout. Thy will argue it is the only way to get out from under our crushing national debt, therefore it's a public good.

Look around, the people who will get fucked ate the middle and upper middle class. The people who will make out like bandits will be the poor. The people ho won't be phased at all are the wealthy who have their money out of the government's reach in foreign tax havens that the government cannot (and honestly doesn't want) to touch.

my wife works in an academic setting, albeit not a teacher.  nevertheless she has access to a 403b plan, which she contributes to.

her 403b plan is set up such that she has two options:
1) use T.RowePrice as the custodian, and within that account you have access to around 3 dozen index and sector funds.
2) use 1 of about 7 "union approved" local custodians, and with the help of these local firms you can invest in a variety of instruments.

(you can already guess which option i was 106% a fan of, but stay with me for a moment here)

when she started she rec'd a notice of a "403b orientation session", which we both attended one afternoon.   to say that i was dumbstuck about what was going on in that session was an understatement.  the folks from the teacher's union were parading/promoting their approved local custodians via a set of tables.  and at these tables, "financial planners" (their actual credentials were a little suspect) were hawking all kinds of stupidity.  there seemed to be two common themes: 5% front end loaded funds, and both fixed and variable annuities.  the front end loads, of course, are paying these people, and of course there is probably an "approval fee" (stepped percentage) which the union gets.  

but i asked several of these folks, "why would one purchase an annuity (a tax advantaged instrument) INSIDE a 403b account (a tax advantaged container)? -- it's like having two raincoats on.  you would have thought i was asking about life on Mars.  blank looks.  lots of nonsense words.  it finally dawned on me that this was the very best way to milk educators out of their retirement money.  it was an even better plan than taking 5% of their contributions off the top via a front end load!

again, i was awestruck by this.  i went home and googled.  holy smokes, their is an entire website devoted to this stupidity:
http://www.403bwise.com/participants/getwise_reading.html

which lead to articles such as,
http://www.forbes.com/forbes/2005/0425/100.html


unbelievable.

even more so is the entertainment factor of going to a random school colleague's wedding with my wife, and discussing the teacher retirement plans at the dinner table.  i am in awe, just in awe, of what comes out of folks' mouths.  "i have a local guy, he is taking care of my 403b for me, he has me in some annuities and he says everything is going great!"

at that point i want to stab myself in the head.

ar-jedi

the moment that happens, the seized assets will become worthless.


it won't work.  this is covered on page one of this thread:
http://www.ar15.com/forums/t_1_5/1578081_How_Old_Where_You_when_Your_401K_Hit__100_000.html&page=1#i44957099

ar-jedi

I don't want to read 8 pages, so apologize if already answered, but how do you get 8% out of a 401k? Mine is pretty restricted from anything that would earn remotely near that.

So you have no access to any mutual funds that have equities in them?  

No S&P 500 index fund?

What are the choices within your account?