How much do you have saved for retirement (2019 edition)

[NobodyHere]

Originally Posted by Edward64

Wish you all the best here. Definitely worthwhile goal, wish I had that mindset early on. I have started talking to my college age son about this goal.

I've read blogs and reddit posts about FIRE. I get folks retiring early when they are 55-60 but some of those posts about folks in 30-40's retiring don't apply to me.

1) Many say think about your retirement first before kids college. I'm of the mindset that I have an obligation to send my kids through college and not have them graduate with crushing debt. I will help out as much as I can (but if they want a graduate degree, its on them)

2) Even if you can retire at age 40, should you? You are missing out on an additional 10-20 years of making money, adding to the kitty, having a much easier retirement, and possibly leaving a larger legacy for your kids

3) I find myself relatively cash poor. The majority of my $ is in 401k/IRAs which I can't/won't touch before 59.5. Ideally I will also wait another 6-7 years for full retirement age to give an opportunity for the $ to near-double assuming historical averages. So even if I have saved up enough total $ to supposedly retire early, I don't actually have enough cash on hand to do early retirement (unless I go live in Asia, Mexico etc.)

Its to the point where I've seriously thought about stopping 401k contributions and just putting the $ into a eTrade account to grow available cash. But the tax benefits of 401k can't be beat.

4) Definitely worried about recessions and stock market crashes. We had 2 big recessions in the oughts. They stunted my savings contribution and also saving growth. I feel "behind" from where I need to be, its like a lost decade and feel the need to "catch-up". Having a recession/crash early into FIRE would not be good unless you really had reliable multiple sources of income

FWIW, this is what I read and motivated me before the recent FIRE craze. It really changed my perspective and would encourage you to read it if you haven't already.

Millionaire Next Door
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Keep in mind that most people in the FIRE community put a lot more emphasis on being "Financially Independent" than "Retiring Early". FIRE is simply a cooler acronym than FI.

1. I don't have kids and I don't plan on having any. If I do and they want to go to college, then they can do what I did and join the military.

2. That's kind of the trade off. One value you have to look at is time. You kind of have to weigh spending time working vs how much money you'll be living off of. I could work until 80 and pile a bunch of cash. But is it worth all that time being at a job? Conversely I could in theory FIRE now and live on near poverty wages for the rest of my life. It's up to the individual to find their happy balance.

3. I need to look closer at where to park my money as well. Right now I have a 401k (mostly when I saved earlier in my career before I came across FIRE). I do mutual funds right now based on the idea that the taxes are 0 for people withdrawing under $40,000 or so.

4. There's a lot of debate on how much money you can take out and survive money fluctuations. I think the minimum accepted withdrawal rate is about 4% as the Trinity Study gets thrown around a lot. If the market does tank than you can always get a side-hustle.

[NobodyHere]

Good year financially for me as well. Covid didn't affect my job and I stayed the course when it came to investing.

[molson]

Originally Posted by Edward64

Because you have a state pension, does that mean you don't get social security also? I assume you get pretty good subsidized health insurance also after you retire at age 60 (but before medicare).

We do get social security, and we have social security taxes withheld.

You can also take a lump sum of the pension when you leave employment, but, that would be dumb. But I don't know if that's something that differentiates situations where you don't get social security - I know some who are in that boat. Or if it's an opt-out thing.

There is some kind of subsidized health insurance for retirees, and your unused sick time at retirement is converted into payments for that. And everybody has lots of unused sick time. I'm not sure how good and affordable a program it is aside from that, but the retirees I know all use it. But they are also in Medicare. I don't know how those systems interact. Probably should figure that out.

Regular retirement age is 65, buy I hit my rule of 90 at 59. But you can keep working after that and increase your benefit. I figure I'd try to go a few more years, but, if I can stay employed by any state agency until 59, then, I'm not really worried about losing my job anymore, and I can walk away if my boss sucks or whatever.

Edit: My dream would be quitting my office job in my late 50s, and then spend some years working for the parks department, driving around emptying trash from campsites or something, still adding service time. But I think they have to clean the porta potites too, so, maybe not. But a lot of people do stuff like that. A city police chief left his job and became our office runner for a year to stretch out his service time. He made copies, ran documents to the courthouse, and gossiped all day. He loved it.

[Icy]

How do you guys calculate that in USA?

Does it include properties like houses, cars, business shares, art, cash in the bank, investments in stock markets? crypto? pensions plans that you contribute yearly? Government retirement (don't know if you have that in USA)?

I guess part of your savings go towards potential health issues when you get older, that is fully state covered in Spain until you die for example, so no need to save at all for that. Same with your kids university, that is also "free" in Spain as it's health (with free i mean that it's paid from everybody's taxes, of course somebody is paying for it).

Also when you retire, you get state pension if you have contributed with taxes for at least 15 years. The amount depends on how much did you contribute over your working years but there is a minimum enough to survive (barely) if at least you have already paid your mortgage (that you should).

For example my mother, who is 70, has her mortgage already paid, so her expenses are just food, etc, electricity and gas. She worked for 30 years, low contribution, so she gets like the minimum salary from the state, that covers these expenses and can live without any luxury but with no troubles either. Health is fully covered by state.

If you are happy with just surviving like that, you don't need any savings in Spain as the government has you covered. I'm not happy just surviving nor I trust government a lot working with my money towards my retirement, so I'm also saving on my own despite what I'm forced to contribute from my salary.

[Edward64]

Originally Posted by Icy

How do you guys calculate that in USA?

Does it include properties like houses, cars, business shares, art, cash in the bank, investments in stock markets? crypto? pensions plans that you contribute yearly? Government retirement (don't know if you have that in USA)?

To me ... "savings for retirement" = Net Worth. And net worth = Assets - Liabilities

However, IMO there is no need to go to the nth degree. So how I calculate come up with Assets:

House = Yes
Cars = No, unless they are collectibles
Business shares (e.g. partnership) = Probably not, hard to come up with a $ and no guarantee you could sell it for that much
Art = No, unless they truly can be sold for a significant sum
Investments in stock markets = Yes
Crypto = Unsure, no experience
Pension Plans like 401k, IRAs = yes
Pension Plans like Social Security = No, it's in the future and you don't have it in hand
Government Retirement = Unsure, no experience but think like Social Security

Additional ...

Bank checking, savings = I kinda just estimate an average; most of my $ is in investments, 401k, IRAs
Jewelry = maybe if they can be sold for a significant sum. Things that you just pawn, probably not
Life Insurance = No, it's in the future and don't have it in hand

[bob]

Depends on the state / job. My wife is a teacher in GA. No social security taken out and no social security paid later. But teachers contributed 6 percent of their salary to the pension fund.

[sovereignstar v2]

How do most of you manage your retirement funds and savings? I have a brokerage account and Roth IRA with Vanguard (pretty modest sums) and a traditional IRA through my current employer (again pretty modest sum). My brokerage account is a pretty basic combination of domestic/international stock and domestic/international bonds. I have both of my IRA's invested in targeted retirement funds. In the very near future a very sizeable amount of money is going to be moving from a trust in my mother's name into an inherited IRA I recently set up. This thing is roughly 4x my current portfolio and I'm debating how I want to allocate funds.

I know this is largely about preferences and I don't think that anyone here is a financial/advisor planner. I'm just looking for general comments on what you guys do. I'm leaning towards using another targeted fund and just relying on the expertise of Vanguard to manage the correct asset mix and risk for my age. Does anyone think there are reasons not to use a targeted fund and do more of what I'm doing with my current brokerage fund? Are the fees that much more substantial with the targeted funds?

[Swaggs]

Originally Posted by sovereignstar v2

How do most of you manage your retirement funds and savings? I have a brokerage account and Roth IRA with Vanguard (pretty modest sums) and a traditional IRA through my current employer (again pretty modest sum). My brokerage account is a pretty basic combination of domestic/international stock and domestic/international bonds. I have both of my IRA's invested in targeted retirement funds. In the very near future a very sizeable amount of money is going to be moving from a trust in my mother's name into an inherited IRA I recently set up. This thing is roughly 4x my current portfolio and I'm debating how I want to allocate funds.

I know this is largely about preferences and I don't think that anyone here is a financial/advisor planner. I'm just looking for general comments on what you guys do. I'm leaning towards using another targeted fund and just relying on the expertise of Vanguard to manage the correct asset mix and risk for my age. Does anyone think there are reasons not to use a targeted fund and do more of what I'm doing with my current brokerage fund? Are the fees that much more substantial with the targeted funds?

I'm not financial planner, but some thoughts:

If you are getting a lump sum from a traditional IRA, it will almost certainly be tax deferred for you which sort of changes the present- and future-day values. If it was a Roth, you have more flexibility as it will be tax-free to move around and use (there are some exceptions to that if there have been more recent contributions).

If you have any bad debt (like student loans, if you have a large PMI on a mortgage, or credit card balances with a high interest rate), you could consider trying to retire it even though the trade off in paying taxes may not make it the best move - I just prefer to be debt-free and have that flexibility (aside from low interest mortgage and car loans). Otherwise, assuming you are not planning to retire in the next 10 years or so, I'd go with rolling it into your existing IRA and think about shaving a few years off your expected retirement date.

[sovereignstar v2]

Originally Posted by Swaggs

I'm not financial planner, but some thoughts:

If you are getting a lump sum from a traditional IRA, it will almost certainly be tax deferred for you which sort of changes the present- and future-day values. If it was a Roth, you have more flexibility as it will be tax-free to move around and use (there are some exceptions to that if there have been more recent contributions).

If you have any bad debt (like student loans, if you have a large PMI on a mortgage, or credit card balances with a high interest rate), you could consider trying to retire it even though the trade off in paying taxes may not make it the best move - I just prefer to be debt-free and have that flexibility (aside from low interest mortgage and car loans). Otherwise, assuming you are not planning to retire in the next 10 years or so, I'd go with rolling it into your existing IRA and think about shaving a few years off your expected retirement date.

So as a non-spousal heir I was required to open a new 'inherited IRA' and cannot roll it over into an existing IRA or make new contributions to it. Some recent law made it a requirement to empty inherited IRA's within a decade, however I've been informed the original trust pre-dated this requirement. I am only required to make an annual RMD.

I'm debt-free and have a low interest mortgage, however I am going to be looking to level up from my townhome very soon. The current housing market sort of scares me, but shared walls is crimping my style so it's possible I may try to take advantage of some of the new money. I think I can avoid paying tax on it if I can replace it within 60 days.

[sabotai]

To answer your general question on what I'm doing with my retirement and brokerage accounts (because I have absolutely zero knowledge on what to do with an "inherited IRA", I literally just found out about their existence from you right now)...

Brokerage Account: Just about all of it is in the Vanguard STAR Fund. But I am thinking of taking my money out of that and spreading it out to various other funds.

Roth IRA: Until the beginning of this year, I had it all in a Target Retirement Fund. But then I noticed two things. 1) The STAR fund is 40% bonds and 60% stocks with the target retirement fund is 90%+ in stocks and yet both perform similarly (though the last several months that target fund has done better), which led to me noticing 2) the target retirement fund (a managed fund) is mostly made up of other managed funds. Seemed like Vanguard was double dipping a bit there (which is also why I'm thinking of getting out of their STAR fund for my brokerage account).

I think I was in their Target Retirement Fund 2045, which certainly hasn't done poorly. Ave. return over the last year right now is 30%, but their various index funds of stocks are well above that for the last year. So I figured I'd just split the money amongst several index funds and keep ~10% in bonds and safer funds for now, essentially creating my own "target retirement fund" of mostly index funds.

So right now, My Roth IRA investments look like this:
Total Bond Market Fund (~10%)
STAR Fund (~5%)
Total Stock Market Index-Fund (~20%)
Mid-Cap Growth Index Fund (~20%)
Small Cap Growth Index Fund (~20%)
Small Cap Value Index Fund (~20%)
Utilities ETF (~5%)

And so far this year, my biggest returns have come from the Total Stock Market Index Fund and the Mid Cap Growth Fund. The two Small Cap funds are fairly volatile.

Was it worth it? Hard to tell (but probably not on purely financial terms). If I did this on Jan 1st, I'd be able to just compare YTD percentages straight up, but I didn't split up my investments until the end of February. I have gotten an ~11% return so far since then, and I know the target fund is at 14% YTD right now (which I know I got a piece of since their chart shows a steady increase starting from last October to now, so I got some of that return in the first two months), and the Small Cap Growth Index Fund (riskiest fund I'm in) hasn't really done much overall since I bought into it (I missed its last big spike). So I'm probably around what I would have if I had just left it all in the target retirement fund.

But I am paying more attention to my investments, which probably counts for something, and in the long run, I do think the index funds will outperform that target fund, which is also why I'm thinking of just ditching the STAR fund and the Total Bond fund for now and going 100% into index funds. No matter what happens, it looks like I'm 50/50 for even if I'll ever be able to retire at all, so might as well push all in on the index funds and see what happens I guess. (not that the difference between the two is going to that big)

But don't take my advise on anything. I'm just winging it so far.

[sovereignstar v2]

Thanks for sharing, sabotai

[Ksyrup]

I still haven't done anything to actively manage (or have someone actively manage) my 3 401Ks. They are all in target retirement age funds and all have made about 11% this year.

EDIT - just checked and they are all right around 11.75% for the year.

[Edward64]

Originally Posted by Ksyrup

I still haven't done anything to actively manage (or have someone actively manage) my 3 401Ks. They are all in target retirement age funds and all have made about 11% this year.

EDIT - just checked and they are all right around 11.75% for the year.

Unless you are near retirement age, put it in the S&P 500 index fund (about 20+% YTD).

I suspect your target retirement age funds have a nice dose of bonds which IMO, unless you are really risk adverse or nearing retirement, you probably don't need to have.

[sovereignstar v2]

I checked Vanguard's targeted funds in regards to bonds:

Vanguard's VTIVX (Vanguard Target Retirement 2045 Fund Investor Shares) consists of 11% bonds, 53.5% domestic stock, and 35.5% international stock.

2040--18.6% bonds
2035--26.6%
2030--~34%
2025--~42%

[Ksyrup]

I think I've probably got the target 2035 fund IIRC. I'll check into it.

[sovereignstar v2]

I just rebalanced my brokerage account and will probably do the same allocation for my incoming new inherited IRA funds.

90% stock
---
VTSAX (total stock market index)--70%
VTIAX (total international stock index)--30%

10% bonds
---
VBTLX (total bond market index)--70%
VTABX (total international bond index)--30%

[PilotMan]

I've found my targets funds to be a bit too conservative, but I still have a portion in them for balance. I think that the 90/10 split works well, for that fund, if it were me, I'd probably park that money in funds with a slow an expense ration as possible. If you're looking for specific funds, I'd look at the Kiplinger 25 and their model portfolios. I've read Kiplinger for as long as I can remember, and they offer solid advice on money management.

[AgustusM]

The Number

I bought this book 10 years ago when our vote would have been - where is the negative net worth button? Today I clicked living large

I have read 100s of economics books in past 15 years - none did as much to get this part of our life in order as this one. Highly recommended

[sovereignstar v2]

Got the moola today and had to make several six figure transactions to set up the right portfolio mix. Not for the faint-hearted and thankfully I'm good a spreadsheets.

[PilotMan]

Originally Posted by AgustusM

The Number

I bought this book 10 years ago when our vote would have been - where is the negative net worth button? Today I clicked living large

I have read 100s of economics books in past 15 years - none did as much to get this part of our life in order as this one. Highly recommended

Thanks for the recommendation. I read through the sample and it's nice to know that I'm in the ballpark of where my head needs to be financially. I learned a long time ago that my parents taught me dick about finance and I screwed myself royally in my mid 20's. It took a ton of discipline to make it through my 30s as we went on food stamps twice and supported 5 people on my very average salary. I read a lot of books in that time and that's when I vowed that my kids would not be so financially illiterate as me. I talk openly about general budget strategies, I show them my bank accounts, how I manage the family finances, and best strategies and importance of planning for retirement early. And that has paid off as they have learned and are putting those things into practice with their own budgets.

[Lathum]

We got this letter today from Athene regarding an annuity surrender request for a rather high 5 figure amount. Says surrender request was processed and payment would be sent separately. Thing is we never requested anything. I can only speculate it is from my wifes prior employer and a policy that matured or something like that. Need to call them later.

[Toddzilla]

Originally Posted by AgustusM

The Number

I bought this book 10 years ago when our vote would have been - where is the negative net worth button? Today I clicked living large

I have read 100s of economics books in past 15 years - none did as much to get this part of our life in order as this one. Highly recommended

Putting away $200,000 a year is no small feat

[Ksyrup]

I decided a while ago that as great as it would be to retire early, I just cannot wrap my head around restricting my spending to the degree required to save enough money to make that happen. If I was single, or even a DINK, sure. But raising 2 kids and wanting to live fairly comfortably during that 25 year period, I decided to bank on catching up in the next 10 years as the kids move out, expenses dwindle, higher income continues at the current rate, and the percentage of income I can squirrel away greatly increases.

That's basically what my parents did, with less income, and they've been retired for over 5 years and have yet to touch their investments.

[PilotMan]

With Tesla popping the last week, my 401k has moved into a new box. Can't count on it staying there once investors start to take some profits, but it's good for the long run. Well, at least I hope it is. In fact, just yesterday, my Tesla gains were nearly double the total I have invested in it. That's a very crazy thing to watch.