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And it's FRIDAY!

<--- Lookie what I got! Ish soo cool, it's hot!

Today’s Topic of Debate:


When do you feel you should start saving money for retirement? Are you saving money right now?


( 14 comments — Leave a comment )
Mar. 26th, 2004 06:35 am (UTC)
from the fuddy-duddy
I found out about investing and the rule of 72 and compounding when I was about 19 or 20. I wanted to start then, but with circumstances and getting our household established blah, blah, blah, all the usual excuses, I wasn't able to start until I was 27. Is that right? About 2 1/2 years now, anyway, since I've been eligible for my company's 401k program. If you work for a company with a 401k, you absolutely should take advantage of it, especially if it matches. At the same time, I also set up an IRA for doveshadows so she'll have something in her name.

Short answer, you should start saving/investing for retirement as soon as you're responsible for your own living expenses. Whether that's after high school or after college, once you're no longer dependent on your parents.

Side note but related on budgeting: You should also plan on using no more than 50% of your gross income on living expenses. Rent/mortgage, utilities, vehicle(s) w/ maintenance and food. Of the remaining 50%, you'll pay taxes, insurance, retirement and entertainment. Do you have 3 month's income socked away liquid for emergencies right now? I know I don't.

Mar. 26th, 2004 06:42 am (UTC)
You should start saving for retirment as soon as you get your first pay check.

I did not, I still don't. I try, but I'm terrible with money.

BTW, I really really want to have that 401K talk with you soon. Right now all I have is a savings account.

Mar. 26th, 2004 06:45 am (UTC)
::nods:: I will talk to you ASAP. ^_^
I can help you out with some information .. Maybe one night I can come over and help you out
(Deleted comment)
Mar. 26th, 2004 08:44 am (UTC)
Re: Our guy
True she could do that.. But it has been my experience with this company that when advisors call in they do not know all the restristions and guidelines on the plan and rules that might apply with that plan.
Mar. 26th, 2004 06:45 am (UTC)
You should start now.
Yes I am.

In all seriousness, You should start saving for retirement the very instant you can afford to lose even 10 bucks out of your paycheck. 10 bucks doesn't seem like a lot now, but 10 bucks a month invested over 44 years with compounded interest will add up to considerably more than the $5280 raw investment (52,000 at 8% interest).

The average person lives for 15 years beyond their retirement. So if you live on 50,000 per year today, you'll need to have at least 750,000 put back into IRAs and 401Ks. That does not count inflation over those 15 years (But since I didn't factor Social Security or Pension monies into that 750K figure, that might balance out.

That will not leave an inheritance for your children, though (Assuming you have any), unless you also have separate life-insurance (Which, by the way, is cheaper to get at a younger age - so if you don't have it now, get it). Whole life, not Term Life. If you buy a term life policy for 25,000 dollars today, it will cost you 8 bucks a month (Give or take), but it will always be worth exactly 25,000 dollars. If you buy a whole life policy for 25,000 dollars, and you die 40 years later, it's worth considerably more than face value. Do not use life insurance as an investment strategy, though. All things considered, life insurance has a reasonably low rate of return.

The younger you are when you start putting back for retirement, the more aggressive you can be. If you can start putting back at age 25, or even 30, you can take an aggressive strategy for 10 years or so. The risks are great, but the rewards are greater. If you wait until you are 35 to start investing, you cannot afford to lose as much, so you need to take a less risky investment strategy. This means you probably won't lose any money, but neither will you earn as great a return.

Of course, you, the Stephers, knows all this. But I'm throwing it out for your loyal readership. I don't work for a retirement planning service, so it looks less like preaching when I say it ;-).
Mar. 26th, 2004 03:40 pm (UTC)
Re: Topic: Life insurance
I have to disagree on using whole life versus term life insurance. The question becomes, what is the purpose of life insurance? Is it for burial expenses? Find out what the whole life cost would be, get a term policy for 1/5 as much, and put the difference into a burial fund you can't touch, or at least is very difficult to touch. Takes discipline, you betcha, but doesn't everything? Is the life insurance for household expenses or to replace your income in the event of kicking off? Again, figure out how much you'll need (your annual income divided by .06, approximately, you can expect a regular 6% return with minimal risk), then find out how much the whole life will be, get a term policy with guaranteed renewals (price goes up at each renewal, but you're guaranteed that ammount of insurance), and put the difference into a retirement fund or annuity that will be used in the case you kick it. Once you've got the ammount in your own account, you don't need life insurance anymore, so the high rates of old age don't make a difference.

btw, to replace a $45k annual income, you'll need a $3/4 mil policy. Priced that in whole life recently? It's more than health insurance is. Which is another issue all together, but I'll save it for another time.

Mar. 26th, 2004 07:07 am (UTC)
Okay, first off looooooo the girl!!! You're right, she's really cool!! ^_^

Now, as for the debate, I agree with the others: It's never to early to start saving for retirement! ~_~

Put it this way, the earlier you save the more you'll have later. Particulary(sp?) when some things seem to be changing with Social Security and what not these days. When we're old and gray things won't be how it was for our Grandparents who are mostly living off Social Security and retirement.

As for "Am I saving money now?" HA!!! I'm lucky to have money period what with two little ones to take care of and feed and not much of an income coming in to boot. =( Hopefully though when things get better I'll be able to set more aside, not only for retirement but for college(sp?) funds as well. [sigh]

Mar. 26th, 2004 11:09 am (UTC)
I learned what not to do from my parents!
Heh..I only wish my parents knew what we know about this.. My Dad died leaving my mom with a 10K life insurance policy curtesy of the armed forces...which he had designated his Brother as his beneficiary during WW2 lol!! Yes..I made that road trip home so he could sign it over to her..lol My Dad had no, financial planning, other insurance, or anything else. He left her with zip and worse, 3 months before he died we became cosigners on a loan for him that I am still paying to this day (6 yrs later) She is the same.. has a tiny policy, her pension from work and social security. She lives month to month with help from us at times.. her condo which she refuses to give up, is about the same as her Soc. Security... whoever said 50% was right on..lol Unexpected medical expenses ruin people. Unexpected life circumstances ruin people. Part of my job was as a 401k administrator...I had this conversation many times with the 20somethings I hired. I love when they tell me they have their money in savings, and have outstanding credit card debts.. after I ask them what % of return they get on their savings ..and how much interest their credit cards are...we finally see that even a 50% match on the first 6% of contributions are just awesome! Husbands mother is the same, EXCEPT, she only has a couple months left..and has NO LIFE INSURANCE or assets or money.. That is the inheritance we are used to..lol the kind when they die, you end up paying more..lol My advice for young families is to get ahold of the "Rich Dad, Poor Dad" books.. that guy is awesome.. Im not the sharpest nail in the drawer, but I refuse to die old and poor. ten years ago..we started paying ourselves first, and made it a priority. Every month an amount goes into investments which will be used for the 4 college educations.(please god let one of them get a scholarship)..I doubt there will be much for retirement..lol but im low maintenance, and would be happy in a cracker shack as long as there is sun. We were young and dumb.. we used to pay our taxes on credit cards! 6 years ago, I went to the philosophy of, If I can't pay for it by cash, I don't need it. I keep 2 credit cards for emergencies and traveling...and pay them off. And yes, we paid for a financial consultant who told me I would end up working till i was in my 70's... I hate to break it to him, but it seems our standards have changed.. we no longer think the first born will be heading to Stanford or Princeton. And we had 2 more kids..so our formulas are worthless but the principle is there. And I doubt I have it in me to work for anyone else, anymore...so whatever I do, it will be self-employed. So the question is... is it wrong to take your kids college education funds if you think they are going to blow it...after all, it is money you worked for..and why do you just give a large chunk of change to someone to squander? I would rather invest it and give him a piece of land when im done with it...worth more.. and let him figure out how he goes to school, if he wants it bad enough...I will not however, leave my childeren with any additional debts..and will have done the prefunded funeral arrangements..lol
Mar. 26th, 2004 01:47 pm (UTC)
Re: I learned what not to do from my parents!
I am getting Bar B Qued--- I mean I am allow myself to be ashes and not Burried.. Plus .. Kiddoes will have some Liquid assets to manage when I die.. I hope..Long as I have this job or a better one. I have a life insurence plan that is 100K I might increase it when I retired to 2.5 Million that cover some cost and stuff
Mar. 26th, 2004 04:05 pm (UTC)
Re: I learned what not to do from my parents!
Oh yes... BBQ is a given..lol My Dad used to read the advertisements in the Sunday paper..He sits in a lovely urn.. it doesnt conflict with the necessity of having a wake..a real irish wake.. and a simple memorial service to remind the bratellas to be nice to one another..lol was teasing my son he better have a closet that will hold all the urns..or a nice garden..either way..we wont know..lol I have Life on the hubby..::evil grin:: I need something better on me than term that comes with work.. would not care to repeat the cycle of fiscal irresponsibility...as well as others..
Mar. 26th, 2004 01:21 pm (UTC)
I'd like to be saving not at 22. But... alas, I have no money to save :(

btw: cool little read head graphic girl. Did you make it somewhere on line... hum, I need one :)
Mar. 26th, 2004 01:44 pm (UTC)
Thanks! ^_^

the The red head is my avatar on Go Gaia I asked someone to custom make the graphics on her. I am having another made with my other Avatar blowing kisses ::grins::
Mar. 28th, 2004 08:48 pm (UTC)
I should have started saving when I was working at Microsoft. I am very humbled and embarrassed to say that I've not saved a cent. :(

I'm determined in another month, if I'm still at Manpower, to get into their 401K plan. :\ I just need to know that the job is stable.
Mar. 29th, 2004 06:23 pm (UTC)
Well, I'm always saving money... whether for recreation or for retirement. It just makes good sense. I find, if you make it a habit to save your money, you will have some trouble spending it, which means you'll have more money to save. On the downside, you begin to feel guilty when you buy things deemed unnecessary. Sadly, I need help spending money on myself.
( 14 comments — Leave a comment )