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comment by rinx
rinx  ·  1796 days ago  ·  link  ·    ·  parent  ·  post: Don’t Be So Sure the Economy Will Return to Normal

    I find it unlikely that I will ever properly retire unless I receive a large windfall.

That is really sad and very scary! There are lots of options for retirement planning outside of your company, if you are in the US IRAs can be a very good option.





pleb  ·  1796 days ago  ·  link  ·  

Yes I understand but I can't start properly squirreling away money for another couple years. Current savings are going towards bringing my fiance to the states and then saving towards a house down payment. Once I'm past that we can start saving up again but by then I'm worried that it doesn't matter the amount I save since it obviously won't be equatable to my current income and I know compound interest won't pull it up enough.

I'll likely end up needing to work part time when I'm older to support myself. Maybe that will change in the future. We'll see. I'm in a kind of transition period at the moment so there is a possibility circumstances will change.

rinx  ·  1795 days ago  ·  link  ·  

Yeah switching jobs might be your best bet. It's pretty common for companies to offer help saving for retirement. Either way, I understand it's difficult to save when there's so much ahead of you. I didn't mention it to judge you, just trying to share some extra resources.

One thing about the house, the nice thing about a Roth IRA is that you can take out the money you've put in any time. On top of that, for a first time homebuyer you can take out an additional 10k. So your money will grow tax free and help you along with savings. Ideally you would be able to keep it in for retirement, but if you can't there's lots of good options.

pleb  ·  1795 days ago  ·  link  ·  

I actually have a good portion of the downpayment in bonds at the moment. I'm just going to end up having to liquidate them when we go to purchase a house. Once all the expenditures are out of the way we'll probably start putting money into a Roth IRA and some diversified bonds similar to what I have now. I just doubt that the IRA and bonds will equate to enough savings for either me or my future wife to fully retire in our old age. I appreciate the suggestions though.

user-inactivated  ·  1796 days ago  ·  link  ·  

Give us some deets finance guru.

rinx  ·  1796 days ago  ·  link  ·  

Heh, sorry can't help myself from chiming in when I see posts like that.

From this blog post:

    John* starts putting $100 a month in his Roth at age 25 until he’s 65. When he retires he’ll have $1,100,000. (assuming compound interest around 8%)

It's incredibly important to save while your young, even a small amount helps. If your company sucks, doesn't match 401ks or other reasons, Roth IRAs are a typical vehicle for this. The limit is $5,500 as long as you make under 6 figures.

Why Roth's are bananas great: The money in your Roth grows tax free. On top of that, you can take out the principle (the money you put in) if you hit a life emergency and need the cash. That's why there is an income limit, its basically a really awesome savings vehicle designed for middle class Americans.

b_b  ·  1796 days ago  ·  link  ·  

WTF? By my calculation, John will have about $350,000, depending on the compounding formula. Unless they're making that $100 contribution inflation adjusted or something. Or he's starting with $30,000 in his pocket.

rinx  ·  1796 days ago  ·  link  ·  

Yep! Inflation adjusted. However $100 a month for your entire retirement is pretty small. Here's another look with a little more put into investing:

http://www.getrichslowly.org/blog/2008/04/02/the-extraordinary-power-of-compound-interest/

And again, this is doing it all yourself, in a Roth, no company match. Gets a lot easier if your company helps.

b_b  ·  1796 days ago  ·  link  ·  

That makes a lot more sense. $100 real dollars per year. I agree that's way too little to be something to rely on, but it's a good start if it's all you can afford at the time.