Great Janitor: Inflation is 5%, so any program that doesn't match increase at 5% or more is losing value
AngryDragon: FARK YOU.
JolobinSmokin: I'll remember to tell this to my uncle who lost all his money in 2008 in the stock market.That job with a pension was a shackle, you did a good job taking the one with the 401k.
Aarontology: Almost makes the destruction of pensions look like a bad idea, doesn't it?
Great_Milenko: SlothB77: if we are screwed anyway, let's get rid of Social Security then.Things are bad. Let's make them worse!
FarkedOver: sigdiamond2000: It's one of the worst times to retire in recent history.What does this sentence even mean?It means get back to work!
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.
plcow: Sergeant Grumbles: CujoQuarrel: Ahhh. Someone else who's run the numbers. Mine was close to $900k.And on average you get back about $300kIt'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.
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.
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.
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.
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.
Sergeant Grumbles: CujoQuarrel: Ahhh. Someone else who's run the numbers. Mine was close to $900k.And on average you get back about $300kIt'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?
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.
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.
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.
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.
Hyjamon: Also, would like to hear what managed fund are out there for >0.15% fees
Hyjamon: NostroZ: Finally, your investments. Your family, make sure they are not dicks and will forget about you in your old age. If you know they will be dicks, connect them not throwing you in a dilapidated nursing home as a contingent in your will. As far as where to sock away your money, just make sure you're not paying high 4b1 fees or other 'management' fees above .5% on any fund. The rest, I'm sure other Farkers will help you with (diversification, local & foreign index funds, proper mix for your age, etc.)Chagrin: But watch that 3% match get eaten by the 401K manager's fees (Fidelity takes 1%) and expense ratios on their funds (2%).Seriously, the fees and default disbursement for my employer's 401K managed by Fidelity is that way.AngryDragon: Yeah, there should be a law against fleecing 401(k)s with management fees. I'm lucky. The funds I hold have a total expense ratio of 0.08% and the brokerage is still making money.Rapmaster2000: That depends on two things.1. 401k manager fee: The average is 0.78% (yes, that is too high in my opinion, but it's not 1%).2. 2% expense ratio is ridiculous. Choose better funds. I'm a big believer in Vanguard Indexes rather than hoping some fund manger his the jackpot and beats the market. 0.17% is the expense ratio of VFINX which my 401k offers.So the fees are significantly less than what you're proposing IF you do it right. The average stock fund expense is 1.44% - highway robbery.This is the conversation I want in on. There was a discussion similar to this a few months back that got me to look harder at my fund investments (Fidelity for sake of conversation). So I tried to find funds with low fees, but the only ones I could find (granted i have access to 500+ so hard to look at everyone of them) were index funds (i have a vangaurd index at something like .07-.08). All the other managed funds are around 0.7-0.85. Choose a few of those in different markets(large cap, discovery, low priced, real estate, utilities, yad ...
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.
meyerkev: Because I just graduated college and it's student loans yes, but housing prices no, since right when I buy a house is the same time when all the Baby Boomers die and drop millions of houses onto debt-saddled Millennials which sends the price screaming through the floor.
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.
mcreadyblue: pdieten:Housing prices seem to have gone up a tad bit in the last 15 years.And bacon.
Chagrin: E5bie: Great Janitor:Banks aren't great at investing, given that a CD is less than 3%. So you'll actually lose money compared to inflation. 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).If you put in 6%, and your employer puts in a match of 3%, then 9% is going into the 401K. That's a 50% boost.The returns would have to be pretty low for inflation to eat that up I thinkBut watch that 3% match get eaten by the 401K manager's fees (Fidelity takes 1%) and expense ratios on their funds (2%).Seriously, the fees and default disbursement for my employer's 401K managed by Fidelity is that way.
Great Janitor: Social Security has a negative rate of return. We're supposed to pay into it today so we can retire on it, but we get less money back than we pay in. We'd be better off with ANY other form of retirement planning. Hell, I'd be better off taking the money I pay into Social Security, taking it to the casino and playing roulette with it. At least that way I could possibly see some gain with it.
AngryDragon: sigdiamond2000: It's one of the worst times to retire in recent history.What does this sentence even mean?It means that after gutting the entire social structure, the boomers are whining again that they have to face the consequences now.
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?
Great Janitor: I've known people who knew how to super inflate their Universal Life Insurance policies and pull it off.
hej: So for the financial rubes here, if dumping money into a 401k isn't good enough, what is?
Saiga410: Hmmm, low inflation yields low returns..... ya dont say.Though I wonder why tuition increases factor into your ability to retire..... I know when I retire I will not be going back to school to be that one guy that always sits in the front row asking the most assinine questions in a 100 level class.
hej: No, I was implying that the advice was for the rubes (i.e. me), not coming from it.
RoyHobbs22: Too lazy to find the Nick Cage "you don't say?" picture but it is exactly what comes to mind. Was considering investing in beach property to partly enjoy and partly rent for vacations. Other ideas?
sigdiamond2000: It's one of the worst times to retire in recent history.What does this sentence even mean?
brainscab: 1/3 to rent1/3 to taxes1/3 to retirementwhere is food in this equation?
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