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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 (51 weeks ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-07-18 03:45:06 PM

MyRandomName: 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.


Yes.  Nothing screws people more than deductions for mortgage interest, property taxes, retirement plan contributions, educational savings deductions, and muni bond deductions.

You're much better off renting your entire life, spending all of your earnings, and living like a king off of SS at 67.
 
2013-07-18 03:51:01 PM

InmanRoshi: pdieten: Even if you're getting free money from the government from income redistribution, being poor sucks so hard that it's worth working harder to avoid it.

The American worker has shown no problems working harder and being more productive.   They're just seeing any fruits of their labor in terms of living wages since the American public laughably and gullibly bought into "trickle down" economics sold to them by Wall Street

.


There was a boom in computational devices in the late 70s to early 80s. Labor capital is not responsible for productivity gains. If you took a graph arou d the time of the boom in manufacturing you would see the same divergence. Your graph is farking idiotic.

Productivity goes to many areas including costs of goods. It has never been 1 to 1 with labor. Look at the scales on the axis. Hate this farking graph.
 
2013-07-18 03:52:21 PM

Rapmaster2000: 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.


If you read that link, the basic problem is that you're not deferring additional earnings, you're losing tens of thousands of dollars in benefits.

www.zerohedge.com

Now here in SV, you'd have to be crazy to work less.  Rent on a functional apartment is approaching $2000/month, so being at $50K is poverty, and $70K is roommate/paycheck-to-paycheck time.

But if you're in the midwest, where $55K a year is totally survivable, and only serious professionals or really, really good union jobs can break $60K, yeah, you're way better off working at Walmart and abusing welfare.  And you'll teach your kids that abusing welfare is better than actually working.  And THAT's the problem.  The utter inability to break out of poverty, combined with a culture that teaches that living on the welfare is better than not working.  (And remember, that chart doesn't include SSI.  With SSI, we're off to the races.)

/And yes, I wish that the exchange rate between "Money I spend"/"Stuff I get" was better, but the above is the real problem, especially once we get even higher taxes and wealth taxes.
 
2013-07-18 03:55:57 PM

haywatchthis: beanie babies and collector plates is all i need


great, I can supply you all you will ever need in exchange for your eggs and some coffee.
 
2013-07-18 03:57:36 PM

meyerkev: 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.


growlersoftware.com
 
2013-07-18 03:59:34 PM

Rapmaster2000: To summarize all of what I'm trying to say and give you some advice - stop reading Zerohedge.


I second that advice.
 
2013-07-18 04:01:07 PM

Lawnchair: 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.


I ended up doing something similar inadvertently.

Freshman year, I got screwed.  Divorced Parents combined for about $100K (and we had to fill out another form that counts both parents), so I got boned.
Sophomore year, the FAFSA only counts one parent in the divorce.  And she got unemployed, and I hadn't started making money off the internships.  So we filled out the little "Change in income" form, and got a full 100% grants ride.
Junior year, Mom had a job again, but we got to use LAST year, so once again we got a mostly full ride (the mostly coming from my income from CS internships).
And then senior semester, I was only part-time and Mom was unemployed again, so once again, a mostly full ride.

I ended up escaping college with $15K in loans, where going in I had expected to end up with $50K.
 
2013-07-18 04:08:55 PM

robertus: 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.


I assume this is in a taxable account, and not an IRA.  It sounds like you don't want to take risk on that $1500 because you'll need it within a short-term time frame.  If so, sell your shares and put it in an FDIC insured bank account or bank CD.  No point taking market risk if you're going to need that money soon, say within five years or so.

If you're looking for a long-term investment, go with boring-ass index funds.

If you chart the performance of HILGX compared to the plain vanilla Vanguard Total Stock Market index fund (VTSMX) or ETF (VTI), you'll see there isn't a great deal of difference.  You've been paying a 0.98% expense ratio vs VTSMX's expense ratio of 0.17%, and VTI's expense ratio of 0.05%.  That's not much, but every little bit in your pocket helps.

I'm not a big fan of balanced funds because I prefer a bit more control over my portfolio's asset allocation, but the same argument holds for HEIIX, which has a portfolio of about 60% stocks, 35% bonds, and 5% cash, with an expense ratio of 1.08%.  Compare its performance to Vanguard Wellington (VWELX), which has a similar stock/bond ratio and an expense ratio of 0.25%.

If you don't need that $1500 soon, you could just let it ride.  You might have to take a long-term capital gains haircut by selling, and paying higher expense ratios on holdings of $1500 going forward isn't going to kill you.  I'd put any new investment money into cheap-ass Vanguard funds, or the equivalent (Fidelity Spartan funds, etc.).

If you want to know more, check out the "Bogleheads" books on investing and retirement planning.  Bogleheads.org has a good financial wiki, and very helpful forums.  Also check out early-retirement.org
 
2013-07-18 04:09:08 PM

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


I don't know about you, but I'd prefer to own my retirement assets instead of rely on the promise of my company that the money will be there when I retire.
 
2013-07-18 04:10:37 PM

robertus: 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.



I had a little money in Hennessy Cornerstone Growth several years ago.  I wasn't impressed.  Looking at the funds you own, their performance against their benchmarks isn't favorable with the fees you're paying.  Now I have a GED in economics, mind you, but I think you'd be better in an index fund.  As far as actively managed funds go, I've been a big fan of Oakmark (OAKMX, OAKIX) for over 10 years
 
2013-07-18 04:11:42 PM

impaler: Rapmaster2000: To summarize all of what I'm trying to say and give you some advice - stop reading Zerohedge.

I second that advice.


I normally don't, but it was just the first version of that chart I found.  I'd seen the chart before and did a search for "The Welfare Cliff" and it was the first result.

/Having read a couple of the other articles, it actually reminds me of something I might have written during my teenage rebellion phase where I went: "My mother is an utter hippy so I should end up as this contrary libertarian conservative"
 
2013-07-18 04:12:25 PM

meyerkev: yeah, you're way better off working at Walmart and abusing welfare.  And you'll teach your kids that abusing welfare is better than actually working


If they're working, how are they abusing welfare?

Also, how does that $29,000 job compare to the $69,000 when the kid hits 18 (and 12 for the child care tax credit)?

As for the yellow "child care" component, I'm not sure all what that entails in that graph (it's shown as over $15,000).

The 'child care' tax credit is capped at $6000 for two children, and you only get it by putting kids in child care when you work, and the kids have to be 12 and younger. Not sure how that is going to stop someone from working when you can't get it without working.
 
2013-07-18 04:14:28 PM

meyerkev: Lawnchair: 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.

I ended up doing something similar inadvertently.

Freshman year, I got screwed.  Divorced Parents combined for about $100K (and we had to fill out another form that counts both parents), so I got boned.
Sophomore year, the FAFSA only counts one parent in the divorce.  And she got unemployed, and I hadn't started making money off the internships.  So we filled out the little "Change in income" form, and got a full 100% grants ride.
Junior year, Mom had a job again, but we got to use LAST year, so once again we got a mostly full ride (the mostly coming from my income from CS internships).
And then senior semester, I was only part-time and Mom was unemployed again, so once again, a mostly full ride.

I ended up escaping college with $15K in loans, where going in I had expected to end up with $50K.


Is this the same person who was angry at taxes a few replies up-thread?

"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 "

no comment.  I think you were arguing efficiency of taxes, but you may have just started a flame war.
 
2013-07-18 04:18:21 PM

meyerkev: Rapmaster2000: 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.

If you read that link, the basic problem is that you're not deferring additional earnings, you're losing tens of thousands of dollars in benefits.

[www.zerohedge.com image 600x449]

Now here in SV, you'd have to be crazy to work less.  Rent on a functional apartment is approaching $2000/month, so being at $50K is poverty, and $70K is roommate/paycheck-to-paycheck time.

But if you're in the midwest, where $55K a year is totally survivable, and only serious professionals or really, really good union jobs can break $60K, yeah, you're way better off working at Walmart and abusing welfare.  And you'll teach your kids that abusing welfare is better than actually working.  And THAT's the problem.  The utter inability to break out of poverty, combined with a culture that teaches that living on the welfare is better than not working.  (And remember, that chart doesn't include SSI.  With SSI, we're off to the races.)

/And yes, I wish that the exchange rate between "Money I spend"/"Stuff I get" was better, but the above is the real problem, especially once we get even higher taxes and wealth taxes.


A single mom is better off making $29,000 with $1,000,000 in benefits than making $29,000 with $57,000 in benefits.  They're both about as likely to occur.

FYI, you can save yourself the trouble and just grab the Tom Ridge Pennsylvania slides from The American Enterprise Institute:  http://www.aei.org/files/2012/07/11/-alexander-presentation_100635322 7 8.pdf

I love this one:

www.zerohedge.com


You need to adjust your bullshiat detector.  Especially when it's the kind of bullshiat you like to hear.

1.  That number above, 66,000,000, includes everyone - including children.
2.  A wealth producer means "someone who is employed in a private sector job".  It doesn't include people on retirement who are drawing a salary from savings and paying taxes.  Apparently, a dollar invested isn't "producing any wealth."  That sounds kinda liberal.
3.  Garbage in garbage out.

There is no "welfare crisis" in America.  That siren wail is 50 years old and it's been due to destroy America any day now since then.  Any.day.now.
 
2013-07-18 04:26:08 PM
I'm glad I invested in Glen Beck gold and Franklin mint plates. Screw all you poor people!
 
2013-07-18 04:26:25 PM

Hyjamon: 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.


California paid with IOUs a few years ago.

Also, City of Detroit just declared bankruptcy.

Unless the money is in your account, it's not really yours.
 
2013-07-18 04:28:50 PM

Rapmaster2000: A single mom is better off making $29,000 with $1,000,000 in benefits than making $29,000 with $57,000 in benefits.  They're both about as likely to occur.

FYI, you can save yourself the trouble and just grab the Tom Ridge Pennsylvania slides from The American Enterprise Institute:  http://www.aei.org/files/2012/07/11/-alexander-presentation_100635322 7 8.pdf


And back to that yellow "child care" line that is $15,000 big. Apparently it just stops at around $43,000. If it's referring to the child care tax credit, it doesn't end at $43,000, it just never goes below 20% after $43,000. Even then, it's at most 35% of what you pay for child care, so to get the max $6000, you need to spend over $17,000 in child care.
 
2013-07-18 04:33:02 PM

mcreadyblue: Hyjamon: 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.

California paid with IOUs a few years ago.

Also, City of Detroit just declared bankruptcy.

Unless the money is in your account, it's not really yours.


If its a true 401k you are indeed golden! 401k can survive your own bankruptcy.
 
2013-07-18 04:34:57 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?


Under ACA the ROI on I surance is 80% according to the bill. The ROI in his example is 30% nobody would buy insurance at that ROI.
 
2013-07-18 04:34:57 PM

impaler: Rapmaster2000: A single mom is better off making $29,000 with $1,000,000 in benefits than making $29,000 with $57,000 in benefits.  They're both about as likely to occur.

FYI, you can save yourself the trouble and just grab the Tom Ridge Pennsylvania slides from The American Enterprise Institute:  http://www.aei.org/files/2012/07/11/-alexander-presentation_100635322 7 8.pdf

And back to that yellow "child care" line that is $15,000 big. Apparently it just stops at around $43,000. If it's referring to the child care tax credit, it doesn't end at $43,000, it just never goes below 20% after $43,000. Even then, it's at most 35% of what you pay for child care, so to get the max $6000, you need to spend over $17,000 in child care.


These things are always what a hypothetical welfare genius gets by gaming the system to its level of maximum efficiency.   The idea being that the poor middle class is oppressed and could be living like kings if only they'd quit work.  But you and I soldier on because we're honorable and just and continue to slave away when we could be Kings of the Trailer Park.  Also, something about Shaneequas and Cadillacs.

It's an emotional appeal, so of course it succeeds.
 
2013-07-18 04:59:00 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.


You are on fark during work hours. Unless you goal is to make people laugh, you might want to refrain from using terms like "hard earned".

There are few things more hilarious than someone spending hours during the work day on an internet site complaining about taxes taking the fruits of their "hard work".
 
2013-07-18 05:01:27 PM

Mcavity: Johnsnownw: OMG, you mean I have to be responsible for my own finances!? I have to plan for my own retirement, and live life within my means?

/Seriously, people, it aint that complicated.

It kind of is. they really should have it as part of high school curriculum. Most people I know have not done all that well when it comes to retirement planning. and I work at a fortune 500.


Yes, but is it because their retirement plan consisted of not thinking about it until they were middle age? Or possibly doing things or purchasing things they wanted, rather than needed?

Also, I thought everyone had to take econ classes in College...
 
2013-07-18 05:05:13 PM

groppet: This is why you should marry younger than you. You retire while they still work.


I thought that was why we have the Social Security system. I retire, you younger people work. And pay me.

/ I didn't earn it, I don't need it, but if they miss one payment, I'll raise hell!
 
2013-07-18 05:06:10 PM

Parthenogenetic: <long, well-thought-out and easily understood response> If you don't need that $1500 soon, you could just let it ride.  You might have to take a long-term capital gains haircut by selling, and paying higher expense ratios on holdings of $1500 going forward isn't going to kill you.  I'd put any new investment money into cheap-ass Vanguard funds, or the equivalent (Fidelity Spartan funds, etc.).

 
Groovy, thanks for the advice. Sounds like the play is let it ride. This was basically however much farkaround money I had a decade ago. Had a twinge of responsibility, did a little research (morningstar, yahoo finance, honest-to-god paper prospectus forms), and wound up throwing it in an AFBA 5-Star account. Barring catastrophe, I won't need to tap into it short term.

When the time's right to start investing new money, I'll do other research and look around. Won't be for a couple of years most likely.


 
2013-07-18 05:08:42 PM

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

I don't know about you, but I'd prefer to own my retirement assets instead of rely on the promise of my company that the money will be there when I retire.


On the one hand, I completely agree with the premise. On the other hand, an awful lot of people are, shall we say, not in a good position to be in charge of managing their own retirement assets. Let's just say that the switch from pensions to 401k plans has had winners and losers.
 
2013-07-18 05:14:20 PM

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

I don't know about you, but I'd prefer to own my retirement assets instead of rely on the promise of my company that the money will be there when I retire.

On the one hand, I completely agree with the premise. On the other hand, an awful lot of people are, shall we say, not in a good position to be in charge of managing their own retirement assets. Let's just say that the switch from pensions to 401k plans has had winners and losers.


What do you mean I shouldn't put my whole investment portfolio into TULIP, the returns are going to be amazing.
 
2013-07-18 05:19:07 PM
"A 3% matching 401k still doesn't work due to inflation, which is why I've always turned down 401k options "

I see people are migrating over from the Politics tab to the Business tab.  Please go back and stay away from those of us who know how math and money works.
 
2013-07-18 06:21:15 PM

pdieten: 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?


I know exactly what it is.  Its "retirement insurance" which was brought upon a bunch of people who werent demanding it, paid for on the backs of a generation which had not yet existed.

If it were offered side-by-side any other financial product at a bank, not a single soul would sign up for it.  it costs the same as what any reputable financial adviser would suggest if you wanted a comfortable retirement.
 
2013-07-18 06:28:55 PM
No prob, I have enough cash to have retirement houses all over the country.

http://www.boxdepot.us
 
2013-07-18 06:31:37 PM
My plan is to take, take, take from the system to punish the hell out of this twisted society.
Beyond that, my retirement plan is a bottle of bourbon and a cheap Walmart shotgun.
 
2013-07-18 06:43:09 PM

robertus: Parthenogenetic: <long, well-thought-out and easily understood response> If you don't need that $1500 soon, you could just let it ride.  You might have to take a long-term capital gains haircut by selling, and paying higher expense ratios on holdings of $1500 going forward isn't going to kill you.  I'd put any new investment money into cheap-ass Vanguard funds, or the equivalent (Fidelity Spartan funds, etc.).
 
Groovy, thanks for the advice. Sounds like the play is let it ride. This was basically however much farkaround money I had a decade ago. Had a twinge of responsibility, did a little research (morningstar, yahoo finance, honest-to-god paper prospectus forms), and wound up throwing it in an AFBA 5-Star account. Barring catastrophe, I won't need to tap into it short term.

When the time's right to start investing new money, I'll do other research and look around. Won't be for a couple of years most likely.


You're welcome.

Warning: I am not a financial services professional.  I am self-educated about personal finance, and a random anonymous guy on the Internet.  Do not trust me, or anyone else, to give you sound financial advice without doing your own due diligence.

Don't waste time researching stocks.  Spend that time and energy educating yourself about the principles of personal finance.

Check out those forums (fora?) and the Boglehead books in my original post.

For a basic primer, this is a good choice:

ecx.images-amazon.com

http://www.amazon.com/The-Elements-Investing-Lessons-Investor/dp/111 84 84878

Read this, then move up from there.

It sounds like you've gotten a grasp on the first, and hardest step of investing: not spending everything you earn so that you have something to invest.  Most people can't do that.
 
2013-07-18 10:06:01 PM

Parthenogenetic: robertus: Parthenogenetic: <long, well-thought-out and easily understood response> If you don't need that $1500 soon, you could just let it ride.  You might have to take a long-term capital gains haircut by selling, and paying higher expense ratios on holdings of $1500 going forward isn't going to kill you.  I'd put any new investment money into cheap-ass Vanguard funds, or the equivalent (Fidelity Spartan funds, etc.).

Groovy, thanks for the advice. Sounds like the play is let it ride. This was basically however much farkaround money I had a decade ago. Had a twinge of responsibility, did a little research (morningstar, yahoo finance, honest-to-god paper prospectus forms), and wound up throwing it in an AFBA 5-Star account. Barring catastrophe, I won't need to tap into it short term.

When the time's right to start investing new money, I'll do other research and look around. Won't be for a couple of years most likely.

You're welcome.

Warning: I am not a financial services professional.  I am self-educated about personal finance, and a random anonymous guy on the Internet.  Do not trust me, or anyone else, to give you sound financial advice without doing your own due diligence.


Well, I mean, obviously, yes.

I have a couple of years of self-imposed hard times before I can start throwing pocket money into long-term investments - have to meet our short-term goals (pay down mortgage) before stashing stuff away for 20-30 years from now. You know, besides the 401(k). Figure to use that time doing the due (particularly once we get closer to our short-term goal).

In the meantime, we can pretty much let that already-invested money sit. It may not be min/maxed as tightly as it could be, but it's also not like these are egregiously bad funds that are costing more than they're bringing in (like the 401k at my previous employer). I knew that before I asked, but it's nice to get a little validation from total strangers on the internet.

/Already cut out the really frivolous expenses.
//Wife gets her Masters in the spring. Then, it's game on.
 
2013-07-18 10:23:42 PM

plcow: 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.


The trigger event is getting to your 65th birthday.  Not everyone lives that long.  At it's heart, it is nothing more than welfare for old people.  Back when it started barely anybody lived long enough to collect, and those who did make it didn't stick around very long to collect much.

We did this because it would be a disgusting mark of shame on our country if our elderly couldn't afford food or housing.  Nobody wants to see this on America's streets:

www.visualphotos.com

They just needed to candy coat it by having everyone get some payments out of it, so we can all feel "invested" in the system and keep it going.
 
2013-07-18 11:30:35 PM

robertus: Parthenogenetic: robertus: Parthenogenetic: <long, well-thought-out and easily understood response> If you don't need that $1500 soon, you could just let it ride.  You might have to take a long-term capital gains haircut by selling, and paying higher expense ratios on holdings of $1500 going forward isn't going to kill you.  I'd put any new investment money into cheap-ass Vanguard funds, or the equivalent (Fidelity Spartan funds, etc.).

Groovy, thanks for the advice. Sounds like the play is let it ride. This was basically however much farkaround money I had a decade ago. Had a twinge of responsibility, did a little research (morningstar, yahoo finance, honest-to-god paper prospectus forms), and wound up throwing it in an AFBA 5-Star account. Barring catastrophe, I won't need to tap into it short term.

When the time's right to start investing new money, I'll do other research and look around. Won't be for a couple of years most likely.

You're welcome.

Warning: I am not a financial services professional.  I am self-educated about personal finance, and a random anonymous guy on the Internet.  Do not trust me, or anyone else, to give you sound financial advice without doing your own due diligence.

Well, I mean, obviously, yes.

I have a couple of years of self-imposed hard times before I can start throwing pocket money into long-term investments - have to meet our short-term goals (pay down mortgage) before stashing stuff away for 20-30 years from now. You know, besides the 401(k). Figure to use that time doing the due (particularly once we get closer to our short-term goal).

In the meantime, we can pretty much let that already-invested money sit. It may not be min/maxed as tightly as it could be, but it's also not like these are egregiously bad funds that are costing more than they're bringing in (like the 401k at my previous employer). I knew that before I asked, but it's nice to get a little validation from total strangers on the internet.

/Already cut out the really frivolous expenses.
//Wife gets her Masters in the spring. Then, it's game on.


Paying down your mortgage instead of investing is not wise in this market. If you recently bought or refinanced, your rate your rate is lower than the rate of return you would get in an index fund.

If you spent that last two years over paying your mortgage, you forwent the ~12% annual return of the SP500 to avoid paying the
 
2013-07-18 11:31:54 PM
It is not hard.  Follow the Jack Bogle way, invest in low cost index funds and let it ride.  All you have to do is adjust the asset allocation between the 3 or 4 funds you hold every year or so.  So long as you are investing enough and start early, you will be good to go.
 
2013-07-18 11:45:59 PM

max_pooper: Paying down your mortgage instead of investing is not wise in this market. If you recently bought or refinanced, your rate your rate is lower than the rate of return you would get in an index fund.


I dig what you're saying, but that's not us. We're in a situation where we want to move in the next 4-5 years, and I'm working off an 80/20 loan. The interest rate on the 80 isn't bad, but the rate on the 20 stinks on ice (~9%) and we're underwater (conveniently, by about the amount on the 20). So the plan is to pay off the 20 ASAP and see where that leaves us. If it were just the 80, we'd be golden.

Right now, with the wife doing freelance (finishing her degree) and me being the only set income, we're basically dead in the water. We're getting by, but not by so much that we'd want to put money out of arm's reach. Once she's finished up in the spring, we can set about it in earnest.
 
2013-07-18 11:49:58 PM
Reality check before I spend money on one of those Advisor people.

I'm a laborer who sometimes rakes in 80K a year.  My girlfriend of 15 years is a professor who routinely rakes in 90K a year.  Each of us has over 100K in retirement and have equal equity in a mostly-paid-for $600K estate.  We share a 7-year old child and we're not married.  So she's a single mother with a live-in (deadbeat, if need be) boyfriend.  What's the best way to milk this system?  Can she quit work and still make 90k?  Would it behoove us to sell out, shelter our cash and move into gov't housing?
 
2013-07-18 11:57:19 PM

emonk: Reality check before I spend money on one of those Advisor people.

I'm a laborer who sometimes rakes in 80K a year.  My girlfriend of 15 years is a professor who routinely rakes in 90K a year.  Each of us has over 100K in retirement and have equal equity in a mostly-paid-for $600K estate.  We share a 7-year old child and we're not married.  So she's a single mother with a live-in (deadbeat, if need be) boyfriend.  What's the best way to milk this system?  Can she quit work and still make 90k?  Would it behoove us to sell out, shelter our cash and move into gov't housing?


Yes.

You can have all this and Cadillacs when you go on welfare. Frankly, you are a fool for not having done so already.
 
2013-07-19 12:03:59 AM

Republican Catchphrase Cargo Cult: emonk: Reality check before I spend money on one of those Advisor people.

I'm a laborer who sometimes rakes in 80K a year.  My girlfriend of 15 years is a professor who routinely rakes in 90K a year.  Each of us has over 100K in retirement and have equal equity in a mostly-paid-for $600K estate.  We share a 7-year old child and we're not married.  So she's a single mother with a live-in (deadbeat, if need be) boyfriend.  What's the best way to milk this system?  Can she quit work and still make 90k?  Would it behoove us to sell out, shelter our cash and move into gov't housing?

Yes.

You can have all this and Cadillacs when you go on welfare. Frankly, you are a fool for not having done so already.


Might be tough convincing her that an Escalade is better than her Infiniti or my Cayenne ...
 
2013-07-19 12:46:07 AM

emonk: I'm a laborer who sometimes rakes in 80K a year. My girlfriend of 15 years is a professor who routinely rakes in 90K a year. Each of us has over 100K in retirement and have equal equity in a mostly-paid-for $600K estate. We share a 7-year old child and we're not married. So she's a single mother with a live-in (deadbeat, if need be) boyfriend. What's the best way to milk this system? Can she quit work and still make 90k? Would it behoove us to sell out, shelter our cash and move into gov't housing?


You're going to need more kids to get the big bucks and some Section 8 housing, so you might be in for some fun.
And are either of you minorities? If you're black or hispanic, you can get your welfare check payable in flat screen TVs, and your EBT or SNAP card is eligible to buy alcohol and cigarettes. It does, however, emit a high pitch squeal when scanned that is detectable only by white people, so they may come and judge you.
 
2013-07-19 09:28:34 AM

Bonzo_1116: plcow: 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.

The trigger event is getting to your 65th birthday.  Not everyone lives that long.  At it's heart, it is nothing more than welfare for old people.  Back when it started barely anybody lived long enough to collect, and those who did make it didn't stick around very long to collect much.

We did this because it would be a disgusting mark of shame on our country if our elderly couldn't afford food or housing.  Nobody wants to see this on America's streets:

[www.visualphotos.com image 700x487]

They just needed to candy coat it by having everyone get some payments out of it, so we can all feel "invested" in the system and keep it going.


Best explanation of it I have seen or heard of.  And point well taken.  I feel much better contributing to a system with that goal than I do a system with a stated objective of helping me retire.  I don't need nor want help from the government with that.
 
2013-07-19 09:32:26 AM

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

I don't understand the question. A 401(k) is just a way to the masses to invest money tax free. So are IRAs. So are pensions. The difference is that your employer might contribute to your 401(k), which is part of your total salary package. If it's offered then take it.

In a pension system the employer is fully responsible for investing the money and making sure you get it at retirement. The difference between the two is who's on the hook if insufficient money was invested while the employee was working for the employer. In a 401(k), it's the employee's problem. In a pension it's the employer's problem. That's why there are no pensions anymore. Pensions that still exist have managers who worry over where they're going to find investments that make enough return to pay everyone who is supposed to be receiving benefits.

An IRA isn't in effect much different from a 401(k) but your employer probably won't contribute to it. It's something you can do if you've maxed out your 401(k) contributions and want (and can afford) to save even more. Or, you can open one after you leave your job and the old employer makes your 401(k) money available for rollover. That's what I did.

The question is, what investments are *in* the fund? Basically what this article is fussing about is the fact that there's no easy way to get a high return anymore unless you are investing in business that are big in Brazil and India. But then, when was it ever easy? People talk about the early '80s and the 5% rate on their savings accounts as if that was a good thing, but loan interest rates and inflation were also terrifyingly high at the time. People biatch about inflation, but if you found a newspaper from Clinton's second term (which is now some 15 years ago) and looked at the sale flyers in it and compared prices, you might be surprised at how close they are to today's prices. Returns nowadays ...


GAS prices have tripled+ in the last 10 years.....
 
2013-07-19 09:40:53 AM

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

This, Wall Street talked us into losing any sense of value for work. We had to put our money all in the hands of the Olympian "risk-takers" right? Well, what is more risky than devoting your entire life to working for a wage without any guarantee that your lifetime of labor will result in anything but an impoverished old-age?

Pensions are shackles.  You don't dare leave the company until you're vested in the pension so you have to accept crap raises and poor treatment and can't take advantage of a lucrative opportunity at another company.  However, if you get laid off before you're vested, you have nothing!  Also, if the company goes bust a year or two before you want to retire, or even worse, a year or two after, you could lose a big part or even all of your retirement!

With a 401k, you own your retirement money.  You can invest it however conservatively or aggressively you feel suits you.  If you leave your company, that money is still yours and since your company has nothing to do with it once it's in your account, it's not at risk if your employer pulls an Enron.  Also, assuming your company provides a reasonable match, you'll end up with more money in the long-run that you would with a pension.


Yah, this is the bullshiat theory MY ex crap company tried to sell us when they screwed us by doing away with our defined pension and replacing it with an 'enhanced' 401k.  So what that basically said was, 'so the experts who manage pension funds for a living can't make it work anymore, so HERE you broom pushers and button pushers, we're sure YOU'LL make out like fat rats trying to do it!'  You know damned well that if the company was trying to change it, it was benefitting the company, not you.  (btw we had a defined benefit pension AND a decent 401k with decent match beforehand.  They simply did away with the pension and added just a fraction more to the 401k match.  Thanks a $^$&& lot.)
 
2013-07-19 11:41:16 AM

CujoQuarrel: 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.


ecx.images-amazon.com
$29.49 for a case of 24 on Amazon

All natural beef, extra vitamins & minerals added (what value!) In addition, it is already in an easy to swallow pate for those old teeth.
A can a day, plus bread to spread it on (lunch/dinner), maybe some a cup of tea and a hard boiled egg (breakfast)... comes to about $2 a day.

When one gets sick of the beef pate, there's 20 other flavors to choose from... Cat food is not dog food... there's a lot more variety and flavor to it (those damn carnivorous pampered pets).
www.naturalvalue.com
 
2013-07-19 12:05:39 PM

dinwv: Yah, this is the bullshiat theory MY ex crap company tried to sell us when they screwed us by doing away with our defined pension and replacing it with an 'enhanced' 401k. So what that basically said was, 'so the experts who manage pension funds for a living can't make it work anymore, so HERE you broom pushers and button pushers, we're sure YOU'LL make out like fat rats trying to do it!' You know damned well that if the company was trying to change it, it was benefitting the company, not you. (btw we had a defined benefit pension AND a decent 401k with decent match beforehand. They simply did away with the pension and added just a fraction more to the 401k match. Thanks a $^$&& lot.)


Your company may have screwed you, but I'm more happy with my 401k's than I would be under a pension system.  I have had three employment stints during my real "career."

The first was for a couple years.  If I had a pension, I'm sure I would have forfeited it leaving for job #2.  Instead, I have the money from my 401k and it's grown a lot over the past several years.

The 2nd, I had for five years.  That company had really terrible benefits, so I doubt I'd have been vested at all in a pension at year five, but even if I had it would have been for a tiny amount.  Instead, I managed to put a pretty significant amount of money together in the 401k, which I still have.

Now, I've been at job #3 for 15 months.  I make a lot more money here than I did at job #2, their 401k match is phenomenal and the market has been great, so my 401k here is huge considering how long I've been contributing.  I'm fully-vested and could take that money with me if some lunatic offered me a 25% raise tomorrow to go somewhere else.  If we had a pension here, I'd leave again with nothing.

But different people prefer different things and it's probably also somewhat industry specific.  It's common in my field (and geographical area) to move around a lot early in your career.  Lots of people would be getting no employer benefit for their retirement for the early part of their careers (when it matters most).

It's not as common as it used to be for somebody to get a job, put in their 30 or 35 years with the same company and leave with their gold watch and pension checks.
 
2013-07-19 01:28:46 PM
My retirement plan is a bottle of loudmouth and a shotgun shell.
 
2013-07-19 07:14:30 PM
I've always thought that Sarah Palin got one thing right.  She predicted "death panels" as a result of Obamacare.  Only she got that part wrong.  Death panels will eventually happen as a result of the retirement crisis.  Those with the means to retire will retire in comfort.  Everyone else will be offered a government program of squalid life in poverty in subsidized housing or...death.

Honestly, I am for the death panels and since I will have no money to retire, well, just turn me into Friskies.
 
2013-07-19 07:47:17 PM

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


Being born into a family with money and political influence so you can get a job in senior mangement in a multinational company.

Or being born into a family with money and political influence and going into politics until you die screaming in impotent rage at how the clouds keep moving across the sky.
 
2013-07-19 09:22:00 PM

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

Being born into a family with money and political influence so you can get a job in senior mangement in a multinational company.

Or being born into a family with money and political influence and going into politics until you die screaming in impotent rage at how the clouds keep moving across the sky.


And some actually serious ways:

Or hitting it REALLY REALLY lucky as a founder of a software startup (Not an employee.  Being an employee is a sucker's bet.  .25% of a $1 Billion dollar exit after 5 years is $2.5 million.  You'll keep $1.5 Million after taxes if you're lucky (or $300K/year) and the founders will have $150 Million.  And there are very, very few billion dollar exits.  It's the equivalent of playing the lottery, except tickets cost $40-100K/year in reduced salary and bennies and the big prize is $300K/year).

Or arbitrage.  Find a job that scales with COL, spend your career in NYC making $100K for breathing (and more for actually being useful) in some morally questionable business, and then retire to your little cottage on the North Carolina coast with a multi-million dollar nest egg.

/Though the new rich people seem to be people who founded successful companies.  The software startup guys tend to be doing better than the owner of "Bob's Auto Mart", but Bob's usually doing alright.
 
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