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(Forbes)   This just in: If you're relying solely on your 401k and SS for your retirement, you're screwed   (forbes.com) divider line 249
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4756 clicks; posted to Business » on 18 Jul 2013 at 9:45 AM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-07-18 01:25:19 PM

AngryDragon: Anyone who wants to take my retirement can EABOD.


Yea, right. And why shouldn't I be allowed to collect welfare just because I work?

Your argument is absurdly inane and reflects an absolute and complete lack of understanding of both the historical basis for and function of the Social Security system.
 
2013-07-18 01:27:06 PM

AngryDragon: skozlaw: AngryDragon: FARK YOU.

No, fark you. If you don't want to participate in society then go live in Somalia or something. This bullshiat where people like you pretend that the job you're able to go to and are healthy enough to work at just fell out of your own ass one day is completely retarded.

Your job, your health, your education, everything right down to the fact that you're able to go get a drink when you need it without having to worry it will leave you dying of the runs over the course of the next week comes down to the fact that you are participating in a society. If you're going to accept those benefits then you should accept some of the costs as well.

If you think you can go kill your own food with your bootstraps and catch rainwater in the boots, go farking do it and quit your goddamn whining.

I pay my taxes.  Happily.  I have no kids in school, yet I pay property taxes without complaining.  Federal taxes, state taxes , local taxes, sales taxes, capital gains taxes, use taxes, medicare taxes.  I have no problem paying any of those and "participating in society".  When it comes to retirement?  Hands off.  I have already contributed, probably more than my share.  Anyone who wants to take my retirement can EABOD.


Hmm, I think I see the problem. The people I know who talk like this are the ones who are trying to buy themselves a 30 year life of idle leisure starting at about age 45 or 50 or so. Well, good luck with all that. You know what they say about the best laid plans of mice and men.....
 
2013-07-18 01:28:20 PM

NostroZ: 401k + Social Security + part time job + cat food + living in part of town where I carry a gun = RETIREMENT!


Don't be silly. Cat food is way too expensive.
 
2013-07-18 01:30:34 PM

pdieten: Hmm, I think I see the problem. The people I know who talk like this are the ones who are trying to buy themselves a 30 year life of idle leisure starting at about age 45 or 50 or so. Well, good luck with all that. You know what they say about the best laid plans of mice and men.....


Incorrect.  My target retirement age is 65.  How does working for 30+ years have you retiring at 45?  Starting at 15?
 
2013-07-18 01:31:17 PM

Rapmaster2000: Hyjamon: Don't you take into account the performance of the fund vs. fees? Example: index fund avg return is 8% with 0.08% fees vs. managed fung avg return of 15% with 1% fees. isn't the managed fund the better option?

The problem with this is, the market average beats managed funds over the long-term.  That is even before you subtract fees.  Some people made out like bandits on Magellan in the 80s and that really set the stage for thinking that market beating results were repeatable.  Unfortunately (for investors, but fortunately for fund managers), this is not the case.  You're much better off in the indexed average.

Slow and low.  Don't try to beat the market, just try to match it.  I have a little fun in my IRA with individual stocks, but I don't expect to beat the market.  If anything, I keep an eye on not losing to it.


Thanks for the advice and link.  I am basically doing this now.  75% of my investments are in a 50% stock fund(FASMX), 70% stock fund( FASGX) and a target retirement date fund.  The other 25% are spread among 10 other funds where I am just picking some I think are worthy and watching how they do in the next year.  In essence, trying to learn to invest by having some skin in the game.  At the moment I like dividend funds since I feel like I am making gains when they pay out (I know one should value capital appreciation on its own vs. value gained from dividends) but it makes me feel better.  My 50% did the best in the past few years since it is heavy on bonds, but now with the market loosening up, I am trying to get more into stock-heavy plans.

I feel I am doing ok at 34 yrs old with ~90k in my 401k so far.  My 401k benefits at my job are pretty good, I contribute 6% and my employer contributes 10% (yes 6% and 10%, not a typo).  Also opened at Roth IRA this year to start socking extra into (mostly as a college fund for the noobie in my family).  I just need to get to $2,500 faster in the Roth so it can be invested in something to start growing.
 
2013-07-18 01:33:44 PM

Parkanzky: I honestly don't know how anyone that's firmly in the "middle class" can ever hope to retire.

I was working for a company that contributes a total of 0.9% to their employees' 401k's.  So if you make $40k/yr, they're going to contribute exactly $30/mo to your retirement account.



Mine put in %15 into 'Profit Sharing'

That adds up
 
2013-07-18 01:33:46 PM

impaler: AngryDragon: I'm not some 1%er.

Then stop crying about adding unearned income to SS contributions, because it will likely not affect you.

Unless you vote Republican, they would probably tie it to only the first $100k of unearned income instead waving the first $100k. Because that would "punish success," or something stupid like that.


You realize that a 100k return is only 8% on a 1.2M portfolio right?  And that 1.2M is the recommended retirement minimum for median income in the US.  You're not talking about the wealthy here.
 
2013-07-18 01:34:24 PM

Sergeant Grumbles: Millenials are screwed.
Student loans and high housing prices are going to leave them paying off debt and renting for most of their prime earning years, unable to build any savings.


millenial here!

college debt paid off, have a house, can currently make the mortgage but the hard to enter professional market with low-ball salaries is what's making life difficult.
 
2013-07-18 01:34:30 PM

InmanRoshi: AngryDragon: My complaint is that I earned that money, through my work, for decades. Long hours, missed weekends and vacations, sometimes multiple jobs, saving every penny busting my ass to make sure I wouldn't end up in the worst-case retirement scenario. Being poor does suck hard, I've been there. Now after working for 30 years someone is going to come along and say "you have enough, someone else needs it, sorry". I'm not some 1%er. I'm just a guy being responsible for myself. I have two words for anyone believing that what I sweated for is fair game for "redistribution"...

FARK YOU.
AngryDragon: My complaint is that I earned that money, through my work, for decades. Long hours, missed weekends and vacations, sometimes multiple jobs, saving every penny busting my ass to make sure I wouldn't end up in the worst-case retirement scenario. Being poor does suck hard, I've been there. Now after working for 30 years someone is going to come along and say "you have enough, someone else needs it, sorry". I'm not some 1%er. I'm just a guy being responsible for myself. I have two words for anyone believing that what I sweated for is fair game for "redistribution"...

FARK YOU.

I love it when someone thinks they're a special little snowflake because they got up and went to work in the morning like everyone else.  Newsflash:  You're going to take out much more from Medicare and SSN than you ever put into it.  Mostly due to advancements in lifespan and medicine, for which you can thank publicly funded research institutions and education.


Most of what you said here is wrong. When you look at the NPV of SS with any reasonable interest it is negative. You might take out significantly more in nominal dollars, but you will be taking out less in real dollars.

Life expectancy at age 65 has increased about 5 years since 1950, not a huge jump and this has caused adjustments to payouts (delayed or reduced) resulting in an even lower NPV for most people.
 
2013-07-18 01:38:02 PM

AngryDragon: You realize that a 100k return is only 8% on a 1.2M portfolio right?  And that 1.2M is the recommended retirement minimum for median income in the US.  You're not talking about the wealthy here.


You realize capital gains is taxed AFTER you sell? If you have a stock that doubles, you don't pay income tax on that until you sell the stock.

Also, your example is untouched by a tax that doesn't affect the first 100k, so what's your point?
 
2013-07-18 01:38:06 PM

AngryDragon: pdieten: Hmm, I think I see the problem. The people I know who talk like this are the ones who are trying to buy themselves a 30 year life of idle leisure starting at about age 45 or 50 or so. Well, good luck with all that. You know what they say about the best laid plans of mice and men.....

Incorrect.  My target retirement age is 65.  How does working for 30+ years have you retiring at 45?  Starting at 15?


It happens. Of course, people like that tend to look for something to do on a part-time basis after they retire from whatever they were doing for 15 hours a day to earn money before then.
 
2013-07-18 01:42:29 PM

Girion47: college debt paid off, have a house, can currently make the mortgage but the hard to enter professional market with low-ball salaries is what's making life difficult.


How did you manage the debt and the house with such low-ball salaries? Those are making every step difficult.
 
2013-07-18 01:44:22 PM

AngryDragon: Stone Meadow: mcreadyblue: There will never be a means test for SS.

Never?

[szwordsmithdotcom.files.wordpress.com image 640x612]

But even if I am wrong, the solution to SS's woes is obvious: remove the caps and unearned income exclusion.

As long as the benefit continues to scale up, I have no problem removing the income cap.  Unearned income is a different matter.  If I save on top of what they take from me in SS, why should I be penalized because I was responsible with my money?

The problem is that over 30 years the money the government takes from me in SS could make for a fairly stable retirement.  About $800K worth at historical returns.  If I save outside of that, you're telling me that I just have to start giving up almost a million dollars because I was responsible?

How about no.


Ahhh. Someone else who's run the numbers. Mine was close to $900k.

And on average you get back about $300k
 
2013-07-18 01:51:45 PM

CujoQuarrel: Ahhh. Someone else who's run the numbers. Mine was close to $900k.

And on average you get back about $300k


It's insurance, not investment.
Do you calculate the ROI on your health insurance? Car insurance? Homeowner's insurance?
I'll bet you could make a lot of more money if you pulled your money out of those worthless.... unless something bad were to happen... amirite?
 
2013-07-18 01:51:50 PM

fortheloveofgod: hej: So for the financial rubes here, if dumping money into a 401k isn't good enough, what is?

One way is by getting into a horrific car accident - a closed head injury is a plus - and then saving away the lawsuit winnings.


Now, Mr. Love, if you will just sign the durable power of attorney I have prepared...
 
2013-07-18 01:52:10 PM

Hyjamon: Rapmaster2000: Hyjamon: Don't you take into account the performance of the fund vs. fees? Example: index fund avg return is 8% with 0.08% fees vs. managed fung avg return of 15% with 1% fees. isn't the managed fund the better option?

The problem with this is, the market average beats managed funds over the long-term.  That is even before you subtract fees.  Some people made out like bandits on Magellan in the 80s and that really set the stage for thinking that market beating results were repeatable.  Unfortunately (for investors, but fortunately for fund managers), this is not the case.  You're much better off in the indexed average.

Slow and low.  Don't try to beat the market, just try to match it.  I have a little fun in my IRA with individual stocks, but I don't expect to beat the market.  If anything, I keep an eye on not losing to it.

Thanks for the advice and link.  I am basically doing this now.  75% of my investments are in a 50% stock fund(FASMX), 70% stock fund( FASGX) and a target retirement date fund.  The other 25% are spread among 10 other funds where I am just picking some I think are worthy and watching how they do in the next year.  In essence, trying to learn to invest by having some skin in the game.  At the moment I like dividend funds since I feel like I am making gains when they pay out (I know one should value capital appreciation on its own vs. value gained from dividends) but it makes me feel better.  My 50% did the best in the past few years since it is heavy on bonds, but now with the market loosening up, I am trying to get more into stock-heavy plans.

I feel I am doing ok at 34 yrs old with ~90k in my 401k so far.  My 401k benefits at my job are pretty good, I contribute 6% and my employer contributes 10% (yes 6% and 10%, not a typo).  Also opened at Roth IRA this year to start socking extra into (mostly as a college fund for the noobie in my family).  I just need to get to $2,500 faster in the Roth so it can be invested in something ...


Sounds good.  I think you can probably be a little higher risk than that at your age.  I wouldn't worry about throttling back into bonds until you're 45.  That said, I am an pretty high risk investor so I understand most people aren't comfortable with that.

BTW, 10% is an incredible employer contribution.  I would just verify that those are actual contributions and not a matching % up to 10%.  I only get 4.5% matching.

You may want to look into 529 Plans for the kid, or Coverdell plans if you qualify.  I see you're in GA as am I.  For the Georgia 529, you don't pay any taxes on 529 plan earnings for both in-state AND out-of-state tuition.  There are also tax deductions available.  I think that might be a better option.
 
2013-07-18 01:55:36 PM

InmanRoshi: AngryDragon: My complaint is that I earned that money, through my work, for decades. Long hours, missed weekends and vacations, sometimes multiple jobs, saving every penny busting my ass to make sure I wouldn't end up in the worst-case retirement scenario. Being poor does suck hard, I've been there. Now after working for 30 years someone is going to come along and say "you have enough, someone else needs it, sorry". I'm not some 1%er. I'm just a guy being responsible for myself. I have two words for anyone believing that what I sweated for is fair game for "redistribution"...

FARK YOU.
AngryDragon: My complaint is that I earned that money, through my work, for decades. Long hours, missed weekends and vacations, sometimes multiple jobs, saving every penny busting my ass to make sure I wouldn't end up in the worst-case retirement scenario. Being poor does suck hard, I've been there. Now after working for 30 years someone is going to come along and say "you have enough, someone else needs it, sorry". I'm not some 1%er. I'm just a guy being responsible for myself. I have two words for anyone believing that what I sweated for is fair game for "redistribution"...

FARK YOU.

I love it when someone thinks they're a special little snowflake because they got up and went to work in the morning like everyone else.  Newsflash:  You're going to take out much more from Medicare and SSN than you ever put into it.  Mostly due to advancements in lifespan and medicine, for which you can thank publicly funded research institutions and education.


I am with AngryDragon on this one.  If you think you are entitled to what I create with my own hands, and I think I am entitled to what I create with my own hands, then we are at odds, and it will come out in favor of whoever is smarter, works harder, and has better negotiating power as between me and the federal government.  I can guarantee you that I will come out on top of that discussion without breaking any rules of the game or laws.

I look at a cost benefit analysis of what I pay vs what I receive when it comes to taxes. Right now, I pay WAY more in taxes than the benefit I receive.  And that is based on my value assessment, and I couldn't care less about yours.  Obviously the lower class receive way more than they pay, so they will feel differently.  Now, since I am in that situation, I have a number of options available in order to level the playing field.  Those are what I spend about 1-2 hours on a day.  It sucks for you, because instead of continuing my research and business investments in energy (my area of expertise) I have to spend those hours reducing my tax burden.  It's always a balance of my time, weighing spending time on contibuting to society vs reducing tax burden.  The way I see it, society is suffering because of it.  And so am I.  It's a lose/lose situation and one that will have the US looking like India in the next 100 years.
 
2013-07-18 02:02:11 PM

plcow: Those are what I spend about 1-2 hours on a day.  It sucks for you, because instead of continuing my research and business investments in energy (my area of expertise) I have to spend those hours reducing my tax burden.  It's always a balance of my time, weighing spending time on contibuting to society vs reducing tax burden.  The way I see it, society is suffering because of it


Protip:
1) Society isn't suffering because of your anal obsession with reduced tax burden, you are.

2) Stop spending 2 hours a day figuring how to screw the tax man, and spend it being more profitable. You will come out with more money. Sure you may tick up a couple points in the "effective tax rate" category, but your income increase will go up more.
 
2013-07-18 02:04:43 PM

plcow: It's always a balance of my time, weighing spending time on contibuting to society vs reducing tax burden. The way I see it, society is suffering because of it. And so am I. It's a lose/lose situation and one that will have the US looking like India in the next 100 years.


I think if we're going to me making comparisons like this, it would help to note that India is NOT a high tax state (lower than US) and that much of its problems arise from its high-degree of local government control leading to rent-seeking behaviors and low public servant pay leading to a heavy reliance on bribery.

The situations really aren't comparable.

BTW, I'm a bit confused as to what you guys are arguing about.  Are you upset about paying taxes on SS distributions or 401k distributions?
 
2013-07-18 02:16:07 PM

plcow: If you think you are entitled to what I create with my own hands, and I think I am entitled to what I create with my own hands, then we are at odds, and it will come out in favor of whoever is smarter, works harder, and has better negotiating power as between me and the federal government.  I can guarantee you that I will come out on top of that discussion without breaking any rules of the game or laws.


images.wikia.com

This country already has a disproportionally regressive tax system (when you add up payroll tax, sales tax, income tax, etc - not just income tax only).  If you think dollar-based instead of percentage-based, yes, you do pay out more than you take in.  But by the same token, people of "lower class" see that they are paying out to society at a higher percentage than what those better off are paying, and generally have to work harder to have basic needs.
 
2013-07-18 02:19:03 PM

Rapmaster2000: plcow: It's always a balance of my time, weighing spending time on contibuting to society vs reducing tax burden. The way I see it, society is suffering because of it. And so am I. It's a lose/lose situation and one that will have the US looking like India in the next 100 years.

I think if we're going to me making comparisons like this, it would help to note that India is NOT a high tax state (lower than US) and that much of its problems arise from its high-degree of local government control leading to rent-seeking behaviors and low public servant pay leading to a heavy reliance on bribery.

The situations really aren't comparable.

BTW, I'm a bit confused as to what you guys are arguing about.  Are you upset about paying taxes on SS distributions or 401k distributions?


My rant started with this comment:

"So unless you want to start seeing "Lucky Ducky" comics, you might be better off appreciating the fact that you have enough income that you can have some of it redistributed away."

I took offense to the idea that someone else had the right to "redistribute" my hard earned cash.
 
2013-07-18 02:20:15 PM

HeadLever: InmanRoshi: Newsflash: You're going to take out much more from Medicare and SSN than you ever put into it.

Not necessarily.  As a general statistical average, yes.  However, there are always exceptions to this.


Medicare yes. I'd bet most people take out more than they put in eventually.

For SS get your statement as to how much you've put in each year. Get a list of the how much that money would have earned if it had been invested (here's a historic table  http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histret.h t ml

Interpolate the rest till your retirement age using some reasonable return and about 12% of your income..

Last time I checked an average male got about $290k back from SS and a female $310k from SS

Even with the disaster that was 2008 I'm going to put in about 3x what I can expect to get out.
 
2013-07-18 02:22:16 PM
An article written by a baby boomer lamenting the current retirement challenges. How adorable.
 
2013-07-18 02:23:41 PM

Sergeant Grumbles: Girion47: college debt paid off, have a house, can currently make the mortgage but the hard to enter professional market with low-ball salaries is what's making life difficult.

How did you manage the debt and the house with such low-ball salaries? Those are making every step difficult.


Focused on paying down debt hardcore while jumping companies when the opportunity presented itself.

My definition of lowball meant, low for the field I'm in and years experience that I have, it's not low for the average income nationwide.
 
2013-07-18 02:23:49 PM

AngryDragon: Rapmaster2000: plcow: It's always a balance of my time, weighing spending time on contibuting to society vs reducing tax burden. The way I see it, society is suffering because of it. And so am I. It's a lose/lose situation and one that will have the US looking like India in the next 100 years.

I think if we're going to me making comparisons like this, it would help to note that India is NOT a high tax state (lower than US) and that much of its problems arise from its high-degree of local government control leading to rent-seeking behaviors and low public servant pay leading to a heavy reliance on bribery.

The situations really aren't comparable.

BTW, I'm a bit confused as to what you guys are arguing about.  Are you upset about paying taxes on SS distributions or 401k distributions?

My rant started with this comment:

"So unless you want to start seeing "Lucky Ducky" comics, you might be better off appreciating the fact that you have enough income that you can have some of it redistributed away."

I took offense to the idea that someone else had the right to "redistribute" my hard earned cash.


OK, but that's rather vague.  401k distributions are taxed by definition as they are tax-deferred.

Note:  someone has the right to redistribute your hard-earned cash because Americans have voted for it - from income taxes all the way down to property, gas, and ad-valorem taxes.  If you don't like it, you've got to change the system or leave.  I'm not trying to be flippant here.  Those are your two options.
 
2013-07-18 02:24:26 PM

Rapmaster2000: Sounds good. I think you can probably be a little higher risk than that at your age. I wouldn't worry about throttling back into bonds until you're 45. That said, I am an pretty high risk investor so I understand most people aren't comfortable with that.

BTW, 10% is an incredible employer contribution. I would just verify that those are actual contributions and not a matching % up to 10%. I only get 4.5% matching.

You may want to look into 529 Plans for the kid, or Coverdell plans if you qualify. I see you're in GA as am I. For the Georgia 529, you don't pay any taxes on 529 plan earnings for both in-state AND out-of-state tuition. There are also tax deductions available. I think that might be a better option.


Yea, it is a 10% contribution.  Even if I lower my contribution say to 3%, employer still contributes 10% (state employee).

We looked at 529's and we are hedging our bets against the possibility of our child getting scholarships. HOPE, or possibly not choosing college.  That is why we went with the Roth.  Also, the Roth seemed to have more flexibility if we needed to pull from it for some unforeseen issue.  Also, how portable are 529's?  If we moved to a different state for example.

Glad to hear I can be more aggressive.  once the market turned down in 2008, I started looking more into the stock market and I know being so young I will see some more boom and bust cycles before I reach retirement.  I will probably change a good bit of investments next year.  I made a few "round-a-bouts" in the past months with my initial foray into changing investments, I am on a watch list with fidelity for a few funds.  Never knew that about funds, but that I what I am trying to do, learn.
 
2013-07-18 02:29:51 PM
Rapmaster2000:
Note:  someone has the right to redistribute your hard-earned cash because Americans have voted for it - from income taxes all the way down to property, gas, and ad-valorem taxes.  If you don't like it, you've got to change the system or leave.  I'm not trying to be flippant here.  Those are your two options.

I'm OK with how my taxes are allocated now and I'm OK with the fact that I'll get about a third of what I ever put into Social Security.  I've reconciled myself to that fact.  What I took issue with is that the other poster suggested that even more should be taken.  If they appear to start voting for that, then I will definitely make myself heard.
 
2013-07-18 02:30:12 PM

Fish in a Barrel: mcreadyblue: Please post the funds with less than 0.1% fees.

FUSVX


Thx...I see Apple is their number 1 investment.
 
2013-07-18 02:33:00 PM
Hyjamon:

We looked at 529's and we are hedging our bets against the possibility of our child getting scholarships. HOPE, or possibly not choosing college.  That is why we went with the Roth.  Also, the Roth seemed to have more flexibility if we needed to pull from it for some unforeseen issue.

I like this thinking.

Also, how portable are 529's?  If we moved to a different state for example.
.

Not really sure.  I haven't reproduced yet, but the plan is that I will be investigating these things in a year or so.
 
2013-07-18 02:33:36 PM

AngryDragon: Rapmaster2000: plcow: It's always a balance of my time, weighing spending time on contibuting to society vs reducing tax burden. The way I see it, society is suffering because of it. And so am I. It's a lose/lose situation and one that will have the US looking like India in the next 100 years.

I think if we're going to me making comparisons like this, it would help to note that India is NOT a high tax state (lower than US) and that much of its problems arise from its high-degree of local government control leading to rent-seeking behaviors and low public servant pay leading to a heavy reliance on bribery.

The situations really aren't comparable.

BTW, I'm a bit confused as to what you guys are arguing about.  Are you upset about paying taxes on SS distributions or 401k distributions?

My rant started with this comment:

"So unless you want to start seeing "Lucky Ducky" comics, you might be better off appreciating the fact that you have enough income that you can have some of it redistributed away."

I took offense to the idea that someone else had the right to "redistribute" my hard earned cash.


Yeah, and you kind of missed the point. I interpreted your complaint as that you didn't want to pay Social Security tax on income and then have means testing that would prevent you from collecting it. Nobody is entitled to get their Social Security money back. You're paying an insurance premium when you pay social security tax. Insurance works by collecting from many and paying out to few, otherwise the business model doesn't work. Income redistribution happens when you get back less than you pay in, because the long-lived poor collect more than they paid in. Means testing SS, which we don't currently do, would increase the amount of redistribution. But nobody is going to take your personal retirement savings away, if that's what you're talking about now. That belongs to you.
 
2013-07-18 02:34:37 PM

Aarontology: Almost makes the destruction of pensions look like a bad idea, doesn't it?


Not when liberals are pushing pension payouts to 90% of salary or more, after 30 years and underfunded by using unreasonable growth projections. CALPers is all one needs to look at to understand why pensions don't work.
 
2013-07-18 02:36:32 PM

The Banana Thug: Great Janitor: A 3% matching 401k still doesn't work due to inflation, which is why I've always turned down 401k options (also, if you need your money from a 401k before retirement you get hit with double taxes and double penalties).

Jesus Christ.  Someone's giving you really bad investment advice.

If you need money from your 401k, you can actually do a loan instead of a withdrawal for up to $50K or 50% of your 401k total, whichever's lower, and it gets repaid through your paycheck deduction.  No penalty, but some double taxes (some say for the interest portion only, not the principal portion).


If you quite or lose your job you must immediately repay your 401k loan or it becomes a taxable event like a withdrawal.
 
2013-07-18 02:37:16 PM
beanie babies and collector plates is all i need
 
2013-07-18 02:40:59 PM

Hyjamon: Rapmaster2000: Sounds good. I think you can probably be a little higher risk than that at your age. I wouldn't worry about throttling back into bonds until you're 45. That said, I am an pretty high risk investor so I understand most people aren't comfortable with that.

BTW, 10% is an incredible employer contribution. I would just verify that those are actual contributions and not a matching % up to 10%. I only get 4.5% matching.

You may want to look into 529 Plans for the kid, or Coverdell plans if you qualify. I see you're in GA as am I. For the Georgia 529, you don't pay any taxes on 529 plan earnings for both in-state AND out-of-state tuition. There are also tax deductions available. I think that might be a better option.

Yea, it is a 10% contribution.  Even if I lower my contribution say to 3%, employer still contributes 10% (state employee).

We looked at 529's and we are hedging our bets against the possibility of our child getting scholarships. HOPE, or possibly not choosing college.  That is why we went with the Roth.  Also, the Roth seemed to have more flexibility if we needed to pull from it for some unforeseen issue.  Also, how portable are 529's?  If we moved to a different state for example.

Glad to hear I can be more aggressive.  once the market turned down in 2008, I started looking more into the stock market and I know being so young I will see some more boom and bust cycles before I reach retirement.  I will probably change a good bit of investments next year.  I made a few "round-a-bouts" in the past months with my initial foray into changing investments, I am on a watch list with fidelity for a few funds.  Never knew that about funds, but that I what I am trying to do, learn.


I hope you know the State can take their contributions back and give you an IOU redeemable at a future date.
 
2013-07-18 02:44:53 PM
Good thing we eliminated those pension plans everyone used to have!
 
2013-07-18 02:48:36 PM

pdieten: Yeah, and you kind of missed the point. I interpreted your complaint as that you didn't want to pay Social Security tax on income and then have means testing that would prevent you from collecting it. Nobody is entitled to get their Social Security money back. You're paying an insurance premium when you pay social security tax. Insurance works by collecting from many and paying out to few, otherwise the business model doesn't work. Income redistribution happens when you get back less than you pay in, because the long-lived poor collect more than they paid in. Means testing SS, which we don't currently do, would increase the amount of redistribution. But nobody is going to take your personal retirement savings away, if that's what you're talking about now. That belongs to you.


No, I got your point quite well.  After paying into social security for 30+ years AND saving privately for retirement, you are telling me that if I save enough that my benefit should be reduced or forfeit..  I would already have to live to 115 to get out of SS what I contributed (plus interest).  It's not my fault that the government has screwed up the SS Trust.   At what point does fairness to an individual's labor get coopted by the general public?  It's ludicrous.  SS is supposed to be insurance, that's correct.  But EVERYONE is supposed to collect on it in some form or another.  That was the deal.  Retirement, survivor benefits, disability, available to every citizen.

If that is the case then I shouldn't be forced to play.  I will happily give up my SS benefit for life, surrendering everything that I've paid in so far, if I can just opt out.  I can easily provide for myself by adding my SS deduction to my investments.  Again, I have no problem with removing the income cap to help make the system healthier.  But if I contribute, I better damn well get a benefit back when the time comes.  Otherwise it really IS a Ponzi scheme.
 
2013-07-18 02:48:48 PM
1/3 to rent
1/3 to taxes
1/3 to retirement


Where are these taxes you speak of? Not for me, thanks.
 
2013-07-18 03:03:16 PM

mcreadyblue: Hyjamon: Rapmaster2000: Sounds good. I think you can probably be a little higher risk than that at your age. I wouldn't worry about throttling back into bonds until you're 45. That said, I am an pretty high risk investor so I understand most people aren't comfortable with that.

BTW, 10% is an incredible employer contribution. I would just verify that those are actual contributions and not a matching % up to 10%. I only get 4.5% matching.

You may want to look into 529 Plans for the kid, or Coverdell plans if you qualify. I see you're in GA as am I. For the Georgia 529, you don't pay any taxes on 529 plan earnings for both in-state AND out-of-state tuition. There are also tax deductions available. I think that might be a better option.

Yea, it is a 10% contribution.  Even if I lower my contribution say to 3%, employer still contributes 10% (state employee).

We looked at 529's and we are hedging our bets against the possibility of our child getting scholarships. HOPE, or possibly not choosing college.  That is why we went with the Roth.  Also, the Roth seemed to have more flexibility if we needed to pull from it for some unforeseen issue.  Also, how portable are 529's?  If we moved to a different state for example.

Glad to hear I can be more aggressive.  once the market turned down in 2008, I started looking more into the stock market and I know being so young I will see some more boom and bust cycles before I reach retirement.  I will probably change a good bit of investments next year.  I made a few "round-a-bouts" in the past months with my initial foray into changing investments, I am on a watch list with fidelity for a few funds.  Never knew that about funds, but that I what I am trying to do, learn.

I hope you know the State can take their contributions back and give you an IOU redeemable at a future date.


Something about this sounds fishy to me.  I don't know how they would do that or how that could hold up in court, sounds like breach of contract.  Please enlighten me (note this is not a pension, but a 401k) on how they can ask for the money they paid me back.  I can see if they erroneously over-paid me and ask for the overage back, but I find it hard for them to take what was correctly paid to me back.

Also, with none of us getting pay raises for 5+ years, if they were to pull a stunt like that, the brain drain from GA would be incredible.
 
2013-07-18 03:07:08 PM

AngryDragon: pdieten: Yeah, and you kind of missed the point. I interpreted your complaint as that you didn't want to pay Social Security tax on income and then have means testing that would prevent you from collecting it. Nobody is entitled to get their Social Security money back. You're paying an insurance premium when you pay social security tax. Insurance works by collecting from many and paying out to few, otherwise the business model doesn't work. Income redistribution happens when you get back less than you pay in, because the long-lived poor collect more than they paid in. Means testing SS, which we don't currently do, would increase the amount of redistribution. But nobody is going to take your personal retirement savings away, if that's what you're talking about now. That belongs to you.

No, I got your point quite well.  After paying into social security for 30+ years AND saving privately for retirement, you are telling me that if I save enough that my benefit should be reduced or forfeit..  I would already have to live to 115 to get out of SS what I contributed (plus interest).  It's not my fault that the government has screwed up the SS Trust.   At what point does fairness to an individual's labor get coopted by the general public?  It's ludicrous.  SS is supposed to be insurance, that's correct.  But EVERYONE is supposed to collect on it in some form or another.  That was the deal.  Retirement, survivor benefits, disability, available to every citizen.

If that is the case then I shouldn't be forced to play.  I will happily give up my SS benefit for life, surrendering everything that I've paid in so far, if I can just opt out.  I can easily provide for myself by adding my SS deduction to my investments.  Again, I have no problem with removing the income cap to help make the system healthier.  But if I contribute, I better damn well get a benefit back when the time comes.  Otherwise it really IS a Ponzi scheme.


I think you don't understand how Social Security works. Second time: You are entitled to NOTHING from Social Security. That is not your money. It does not belong to you in any way. If you die before the age you can start to collect, neither you nor your estate gets any of it. And you don't get to opt out of the system for the exact same reason that you're not allowed to just "opt out" of Obamacare. The model doesn't work if everyone doesn't participate. Have you thought about what happens if you lose your savings? Could happen very easily, and then you would pass the means test and collect Social Security. What if you had opted out? Then what?

How it works is: As the law stands today, if you contribute during your working lifetime, you get money when you reach the age of distribution. That is the beginning and end of your "entitlement" as of today. It could be changed. You may or may not get a benefit depending on how the law is written at the time you try to collect.

Incidentally, a Ponzi scheme is illegal because at some point the new income will end and there won't be any money to pay back investors. The US government cannot by definition run a Ponzi scheme because we assume it will continue to exist in perpetuity and always be able to collect new income to pay out. The trust fund has absolutely nothing to do with anything. That's just where they stick the excess collected funds that they don't have to pay out immediately. If there is no trust fund, then the distributions are made from current collected funds. Maybe it's less than what the statement had said 20 years prior. Oh well.
 
2013-07-18 03:07:25 PM

mcreadyblue: Hyjamon: Rapmaster2000: Sounds good. I think you can probably be a little higher risk than that at your age. I wouldn't worry about throttling back into bonds until you're 45. That said, I am an pretty high risk investor so I understand most people aren't comfortable with that.

BTW, 10% is an incredible employer contribution. I would just verify that those are actual contributions and not a matching % up to 10%. I only get 4.5% matching.

You may want to look into 529 Plans for the kid, or Coverdell plans if you qualify. I see you're in GA as am I. For the Georgia 529, you don't pay any taxes on 529 plan earnings for both in-state AND out-of-state tuition. There are also tax deductions available. I think that might be a better option.

Yea, it is a 10% contribution.  Even if I lower my contribution say to 3%, employer still contributes 10% (state employee).

We looked at 529's and we are hedging our bets against the possibility of our child getting scholarships. HOPE, or possibly not choosing college.  That is why we went with the Roth.  Also, the Roth seemed to have more flexibility if we needed to pull from it for some unforeseen issue.  Also, how portable are 529's?  If we moved to a different state for example.

Glad to hear I can be more aggressive.  once the market turned down in 2008, I started looking more into the stock market and I know being so young I will see some more boom and bust cycles before I reach retirement.  I will probably change a good bit of investments next year.  I made a few "round-a-bouts" in the past months with my initial foray into changing investments, I am on a watch list with fidelity for a few funds.  Never knew that about funds, but that I what I am trying to do, learn.

I hope you know the State can take their contributions back and give you an IOU redeemable at a future date.


Quick google search gave me this: Wiki - Under Federal Law an employer can take back all or part of the matching money they put into an employees account if the worker fails to stay on the job for a certain number of years.

This sounds like taking it back before a vesting period of time is met.  My plan has no vesting period.
 
2013-07-18 03:09:45 PM
Some of the Farkers in this thread seem to have a head for this sort of thing, so I'll ask:

About 10 years ago, I stashed a very small amount of money (that I wouldn't miss) in mutual funds that eventually became HILGX and HEIIX (Hennessey Cornerstone Large Growth and Equity & Income Institutional Class, respectively). Now, it works out to be about $1,500 total between the two funds, give or take. Not a real significant amount, but there's a comma in there, so it's worth taking a look at. Are these funds any good? Should I be thinking about consolidating that money into one or the other, or letting it ride? Is this such a pithy amount that it doesn't make much of a difference?

I don't have disposable income to throw into them (been reinvesting the dividends, but that's the only activity). We're squirreling money away into an emergency fund and to pay off the mortgage in the next few years, and don't want to put that money at risk (i.e., this isn't farkaround money like the initial investment).

/Meeting the company match on the Vanguard 401k.
 
2013-07-18 03:12:30 PM

Rapmaster2000: Are you upset about paying taxes on SS distributions or 401k distributions?


Honestly, everything.

We're losing a third of our incomes (or more.  A lot more if you count the pre-paycheck payroll taxes).   Then we get farked to the tune of 9-10% of what's left through sales tax. Any actual property we manage to acquire gets us farked by property taxes. Any money that we hang onto to avoid the last 2 gets us farked by capital gains taxes which run at just a little less than a third or so.

And since the Democrats are basically stealing every idea from Europe whether it's good or bad (and not all of them are bad), and theRepublicans are eating their own young so they can't fight it effectively:

* Once we get single-payer, we'll be getting farked to the tune of another 15-20% in direct taxes since the poors won't becontributing a dime.
* At some point, we'll get a wealth tax, meaning that whatever we earn and manage to hide away, we can't keep.

So right now, we're keeping little more than  half of every dollar we make (and the moderately rich people are probably closer to a third (Of course, the super-super rich people are at about two-thirds and this is a problem)).  And once the state pensions blow up, along with SS and Medi*, we'll be at 70% income taxes for everyone.

I wouldn't mind this (yes, I'd still biatch, but biatching is what we do) if I could actually see benefits from all this.  But I can't.  Broken, undersized infrastructure that hasn't been upgraded since the 1960's and a combination of environmentalism, NIMBYISM, and corruption preventing any upgrades, crushing deficits because of promises made by my grandparents on my behalf, and historically low military spending as a percentage of GDP are combining to screw everyone.

If most of this stuff was "For all, by all", I could go with it.  Give every major city a New-York-style (ie: non-bus) mass transit system so I don't CARE about downtown traffic, coupled with a fantastic Detroit-style suburban road network and reasonably high-speed rail to pickup the suburban commuters (Hint: If rush-hour traffic is faster than the mass transit, you have failed.  Looking at you, Caltrain vs. 101),  I'm game.  Run FANTASTIC High-speed rail on the 3-4 regions that have sufficient density and close-enough cities to justify the massive expenditure?  Let's talk.  Throw Google Fiber into every corner of the country?  I'm there.  Back off on the crazy zoning laws in the major cities so we can get some affordable housing and I'm not blowing $2500/month on a 1BR to get working plumbing and good enough electrical systems to drive a microwave and a tv at the same time? (Note: I can't afford that, so I don't have those things)  Done.

But it's not.  It's massive inefficient (since the bureaucrats have to take their cut) wealth transfers designed to create a permanent welfare class combined with crony capitalism to make the rich guys richer.

You want the middle class to come back?  Make it pay to work again.
 
2013-07-18 03:26:35 PM

Parkanzky: I honestly don't know how anyone that's firmly in the "middle class" can ever hope to retire.


Maybe if the government let us keep what we earned, rather than contribute into a program which gains no interest, cant be withdrawn early, barely keeps up with inflation and offers no array of growth options, you might have a better shot at retiring.

The fact that so many people *Need* social security is because they are forced into it and cant afford anything else.  Classic example of being thankful for something you have no choice but to be a part of.
 
2013-07-18 03:28:20 PM
meyerkev:

But it's not.  It's massive inefficient (since the bureaucrats have to take their cut) wealth transfers designed to create a permanent welfare class combined with crony capitalism to make the rich guys richer.

This is where the all-too-frequent paranoia comes into these arguments.  Government is not buying votes with a permanent underclass.  It's paranoid and obnoxious to presuppose that there is this whole class of takers below you preferring to live in poverty due to stupidity and sloth, and a maniacal class of puppet-masters orchestrating it all from above.

You want the middle class to come back? Make it pay to work again.

You can go ahead and defer additional earnings because of higher tax rates if you'd like.   I won't.

You're committing the Randian fallacy of assuming that whatever work you perform is so far outside of the common man that your foregoing it will lead to it not being done at all.  Fortunately for society, one out of five people can do pretty much any job with the right amount of training.  To make a specific example, Jamie Dimon is not a precious snowflake.

To summarize all of what I'm trying to say and give you some advice - stop reading Zerohedge.  That is, unless you want to keep throwing money into gold while waiting for the imminent hyper-mega-flation which is happening any day now.  Any.day.now.
 
2013-07-18 03:34:56 PM

o5iiawah: Parkanzky: I honestly don't know how anyone that's firmly in the "middle class" can ever hope to retire.

Maybe if the government let us keep what we earned, rather than contribute into a program which gains no interest, cant be withdrawn early, barely keeps up with inflation and offers no array of growth options, you might have a better shot at retiring.

The fact that so many people *Need* social security is because they are forced into it and cant afford anything else.  Classic example of being thankful for something you have no choice but to be a part of.


Oh yay. Another one who doesn't understand the difference between Social Security and a retirement fund. That's just awesome. Would it really be too much to ask to go out and learn what Social Security is *for* before you go spouting your ignorance all over the Internet?
 
2013-07-18 03:38:14 PM

Lawnchair: Mad Scientist: If you're relying on SS for your retirement, you're going to be a very poor moran.

nocturnal001: Most people seem to only rely on SS, 401k is gravy for a lot of them.

A little of A, a little of B.  There are  millions of seniors with nothing but SS income (and another 8.5 million or so non-seniors with nothing but SSDI disability).  It doesn't come recommended if you can avoid it. That said they aren't, 99% of the time, starving and homeless.  They end up in crappy ultra-low-cost small towns (there are plenty of towns where such retirees are the typical resident), eating tuna sandwiches, watching Matlock, going to church, and waiting to die.  It's amazing how little many grannies have to spend.

Suck, suck, suck? Sure. OMG worst thing ever? Not really.


FTFY
 
2013-07-18 03:39:02 PM
To everyone whining about taxes, suck it up.

I like being in a country that has taxes, as the places without them tend to be shiatholes. Granted there are a few exceptions, but they have other sources of government revenue.

If it were up to me, I'd let you never pay taxes again, and pay back, with interest, every cent you've paid in. The caveat would be that you no longer has access to anything taxes pay for. Would anyone take that deal?
 
2013-07-18 03:39:56 PM

Stone Meadow: mcreadyblue: Social Security, currently can pay 70% of promised obligations forever.

It's not in that bad of shape.

When they means test SS everyone eligible will get 100% forever.


Screw those who save. The ant and the grasshopper is only a story afterall.
 
2013-07-18 03:44:26 PM

Sergeant Grumbles: CujoQuarrel: Ahhh. Someone else who's run the numbers. Mine was close to $900k.

And on average you get back about $300k

It's insurance, not investment.
Do you calculate the ROI on your health insurance? Car insurance? Homeowner's insurance?
I'll bet you could make a lot of more money if you pulled your money out of those worthless.... unless something bad were to happen... amirite?


First of all, you don't collect insurance unless the trigger event happens.  With SS you do. So no, it's not insurance.  And yes I do calculate ROI on insurance, everybody does.  And when I run an assessment of SS the answer is quite simple.  To the extent that it is "insurance" I would rather be self insured.
 
2013-07-18 03:44:38 PM

Hyjamon: We looked at 529's and we are hedging our bets against the possibility of our child getting scholarships. HOPE, or possibly not choosing college.  That is why we went with the Roth.  Also, the Roth seemed to have more flexibility if we needed to pull from it for some unforeseen issue.  Also, how portable are 529's?  If we moved to a different state for example.


There's a notable downside to 529s compared to what you're doing with IRA/401k/403b/etc.  Besides the possibility that the kid just isn't college material.

That is, when the offspring go to college, you will fill out the FAFSA.  You list parental assets on it.  Those assets include any 529 savings (which is perfectly reasonable... the whole point of them was saving for college).  However, and this is key, FAFSA assets don't include your retirement savings in qualified retirement-tagged accounts (IRAs, 401ks, etc).  They also don't include the equity/value of your primary residence.

This is what some really, really clever cookies with some inherited wealth do.  Maximize retirement savings like mad any chance you get.  Max 401k + IRA = ~$21,000 per year for each spouse.  Pay off the house in there, too.

If you're lucky, when the kid turns 18, you can have a racked up a near-million-dollar retirement account, have a nice paid-off house...  and according to the FAFSA you're utterly penniless.  Even better, take a few years off work when the kid turns 17.  As far as the FAFSA is concerned,  you're penniless and in poverty.    This means... need-based aid.

BTW - This also ties to another major reason to consider IRAs/401ks over taxable accounts.  That is, if you're sued or have to file bankruptcy, your retirement accounts are protected by the courts more often than not.
 
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