Retirement Ponderings
- Thread starter BigFrank
- Start date
clevelandisthecity
Bitter AF but not offensive
This.
This seems to be the only realistic "retire" early plan. Unless you have a very high income and never do anything, or have a big inheritance, retiring before 60 seems almost impossible.
Our house will be paid off in the next 8 years, and my state pension kicks in at 55. I'll have to wait 3 months, then I can get some little part time job and be doing pretty well. My wife is about 5-10 years behind me as far as retirement goes. So my plan was to retire together and I can just have a small job to cover the difference until we hit social security age.
MordorMongo
Have you seen my watch?
I feel so bad for those in my company who only have 401ks. We did away with real pensions about 15 years ago, thankfully I was here just long enough to be grandfathered in. But when I see what some of my employees are contributing it’s clear they have zero realistic plan to retire. My kid officially started college today. The day he graduates will be very closely aligned to my last day of work. Can’t fucking wait dot gif.
capnmike
Assistant Coach
what’s this now?
GhostOfGaspar
Husband of Dime-Piece
My glorious wife and I got serious about saving a few years back. For a long time we had our savings stored at the Credit Union i'd been using since like 1998, which did next to literally nothing for us. So starting in like 2019, we cleared all our debt first except the mortgage which we refinanced in '21 to a low rate and 15-year, started blasting at our 401ks at much as we could and moved our savings to a HYSA. We also max contributed to an ibond, which I still don't know much about except that the rates are based on inflation? Not sure, but the dime-piece handles that. Started maxing out Roth IRAs last year and have been steadily increasing 401k contributions as we can. Including company matches, we contribute 18% and 19%.
I'm really hoping that with a simple lifestyle, I'll be able to retire at 59.5, but who the fuck knows. Nonetheless, it does feel nice to feel like we're taking some of the right steps. Not having children and not having expensive tastes or hobbies really helps.
I'm really hoping that with a simple lifestyle, I'll be able to retire at 59.5, but who the fuck knows. Nonetheless, it does feel nice to feel like we're taking some of the right steps. Not having children and not having expensive tastes or hobbies really helps.
Yeah not understanding this. 401k/403b and accounts like it can be great. It's only when you don't fund them that they suck. If you are just doing some 3% with 3% match, you won't have a lot of money to retire. Another mistake is selecting the "safest" option which is very bond heavy. It's a lot better to select the more aggressive options when you are far out from retirement which are mostly in stocks. I'm not really a fan of international tracking funds and bonds. If you have money just sitting around and you can buy a 5-6% bond then that's fine. Self directing the money and having it in small, medium, and large cap ETFs or mutual funds is a better mover in my opinion. Or an even easier move is just shoving money into an S&P and Total Market tracking ETF or mutual fund.
This is not investment advice, just someone who plays a financial advisor on the internet.
Lots of people don’t know any of the above. Hence the pathetically low median balances across all age ranges. Mandatory automatic enrollment should have been started decades ago, as most other countries did, but hopefully it makes a difference eventually.
I’m 46 and should be retiring in the next 7-10 years depending on how the stock market performs. I will not be embarking on a second career or any part time work, I’ll be done. Not too shabby for a community college dropout living in a place with a high cost of living.
This is the way. Low fees. Set it and forget it.
First ten years of my working career was 1999-2009 so dot com bust, 9/11, and financial crisis. I put a little money away but it was worth less after a decade than if I would have just put in under a mattress. Despised work and going backwards financially didn't help at all. Kept quitting jobs and taking travel sabbaticals and spending all of my money. I was pretty much broke at 30. Finally decided that wasn't sustainable and committed to working for a decade straight. Found some early retirement blogs and that led me down a rabbit hole of saving and frugality. It was the light at the end of the tunnel that I needed. Maxed out every account I could with low cost S&P funds. Market turned around and seeing the snowballing effect was motivating and I've been working 17 years straight now.
Never made six figures but I'm hoping to be done with full-time work by 50 (market dependent of course). May do something part-time or per diem for a few years after that but only things I enjoy. No kids has definitely been a big part of the equation. My partner is also nearly a decade my junior so they will work a few years longer than I providing a health insurance option and a stable income to fall back on should (or when I should say) the market drops.
Much of my focus now is preparing for life after work.
boogercrack
🦧 Rowdy Chowder
Every year I do my own taxes and have done a backdoor roth ira conversion on my own I feel like I'm going to go to IRS jail.
capnmike
Assistant Coach
I've probably mentioned this in here already, but...I should probably sell the rest of some company stock I have from my last employer, just so I don't go through the what-ifs each time I log in (I know, terrible reason to sell).
The company went public in 2001, and I participated in the ESPP and maybe got tiny grants of stock on anniversaries or whatever until I left in 2010. I finished grad school in 2009, and 6 months after I graduated, I sold enough to pay off my grad school loans. You may remember, 2009/10 was a pretty low point (tech bubble). Grad school was cheaper then, but it wasn't an insignificant amount.
Today, the stock is worth 11x what it was then. So....11x grad school loans could be chilling in that account right now. Heck, the all-time high was 13x.
*sigh*
The company went public in 2001, and I participated in the ESPP and maybe got tiny grants of stock on anniversaries or whatever until I left in 2010. I finished grad school in 2009, and 6 months after I graduated, I sold enough to pay off my grad school loans. You may remember, 2009/10 was a pretty low point (tech bubble). Grad school was cheaper then, but it wasn't an insignificant amount.
Today, the stock is worth 11x what it was then. So....11x grad school loans could be chilling in that account right now. Heck, the all-time high was 13x.
*sigh*
MordorMongo
Have you seen my watch?
I sold a noninsignificant amount of bitcoin in 2017 for no real good reason (like didn’t need the money per se) because as I told my wife “no way that shit goes any higher than 10k”.
I get reminded of that about as much as you would think I should be.
GhostOfGaspar
Husband of Dime-Piece
I've spent a ton of time thinking about how long I can handle working. I have an objectively great job that many people would kill for and while it doesn't pay a ton, I do ok and my wife does a little better. So we're in a good position.
But we're also stuck in this spot where there is not much else we can do right now. We are in the process of bumping up our 401k contributions. We just both increased by 2%. We can only make changes quarterly, so we're starting the bump at 2% then evaluate how it affects our day-to-day for 3 months, then hopefully bump up again until either it starts to put us in a strain or we max out our contributions. We currently live neither extravagantly nor miserly, and while we want to save as much as possible to retire as early as possible, neither of us are interested in reducing our lifestyle at all for several years to cut maybe one or two years off our working careers.
But we're in the position now where it's kind of like, "Fuck man, this is boring." We have spent the last few years actively doing things and setting ourselves up. Once we figure out what the breaking point is for our 401k contributions, we will either just stick there until something changes and we can increase what we're putting in, or if we can max them out, opening a brokerage fund to invest what we can. I realize this is first-world problem complaining, but man- I just want to be as super-proactive as I can be. I have big dreams for the future and for retirement, I just want to get to that magic number that will let us hit "eject" as soon as we can (within reason).
My old man advice I give my employees that ask is they should take half of any raise they receive and use that to increase their 401k contribution until they’re maxed out.
GhostOfGaspar
Husband of Dime-Piece
Yeah, this is part of it for sure. Generally I anticipate the typical 3% cost-of-living annual raise. That'll be 2% added to the contribution for sure. I have a little bit of room still to go because I don't make much. I'm currently putting in 17% plus my company matches 4% (so in effect I'm at 21%), but I still have some ways to go to get to 23k (or is the max 23.5k? either way...). I've even considered picking up a weekend side hustle of beer tending at Angry Chair, which I could probably get in pretty easily. I could do like 2 days a week and bring home probably an extra 15k a year that could go right into a brokerage or something. . . I'm just not good at the passive point of this journey. the last few years it's been "pay of debts", "re-finance", "open this account and auto-pay to max it", "build the emergency fund", "re-build the emergency fund (Thanks fucking Hurricanes!)".
Like I'm almost tempted to start paying the mortgage down faster even though the math doesn't make sense to do it, just to give me an active goal to work towards.
If you read or listen to any early retirement blogs/podcasts, where you're at is literally referred to as "the boring middle". So if you're feeling that way, then you are probably doing most everything right. It sucks and feels like you're going nowhere sometimes but it's part of the process while waiting for compounding interest to start working. Enjoy the time there and don't wish it away. Do other things to improve yourself for when retirement finally comes - learn now hobbies, get healthy, build relationships - those are the things that need to be done during this time.
Don't underestimate the power of a small side hustle. Let's say you're making $80k and putting $15k towards 401k and health insurance. Leaves you with $65k. Assume about 23% of that goes to federal income tax and FICA leaving you with $50k. You said you were maxing your Roth IRA so that leaves you with $43k take home give or take. Guessing around $1k/month of that goes towards mortgage and taxes so down to ~$30k to spend on everything else. If you can make $15k on a small side hustle, you've effectively increased your disposable income by 50%.
I took on a small side hustle making $5-10k a few years ago and it's been amazing how just that much has pretty much eliminated my constant analysis of every purchase or decision. Carrying that side hustle into retirement also drastically reduces the amount of savings you'll need too so it's also a good time to work on that if it's something you might continue doing down the road.
It's not "optimal" to pay down a 2-5% mortgage, but I think it is a good thing to have done by the time you retire. IDK when you started your fund, but if you are already have 20% net going into retire and an emergency fund (3-6 months expenses), you are basically playing with house money. Anything you do will be icing on the cake.
I do think having a paid off house, where no matter what happens you will have a place to live, provides more value than what you lose missing out on an extra 5-10% in the market.
The only other things I would think about before putting money towards a mortgage is maybe checking on any home maintenance you may have been putting off. Is the roof good, how old is the AC, is our foundation solid? Any high cost items that may just randomly pop up. Maybe also assess your vehicle situation as you get closer to retirement. Taking care of incidentals now while you are still working would set you up.
boogercrack
🦧 Rowdy Chowder
I will say that if you're looking to eject early, depending on how early, you've got to consider what you're going to ride on until you can withdraw the 401k without penalty.