Retirement thoughts/plans/dreams

[davids]

I don't know if this belongs here but:

My wife has had a lifetime bias towards frugality and saving. She managed to convert me to that program a few decades back. And it's worked really, really well for us. So now we find ourselves, if not exactly rich, then quite well-off.

And I have to confess: Transitioning from being a reflexive saver to a deliberative spender is not as straightforward as I thought it would be.

We just took some cash out of our investment account for a good-sized home project, replacing our patio. The amount was less than the increase in our portfolio's value over the last month. The whole project will go right to our cost basis and our ultimate resale value. And taking summilux's advice, we're not cheaping out on the quality of the work.

And goddamn does it feel weird. Like I am lighting cigars with $100 bills.

[SlowPokePete]

I’ve always said that no matter how much money someone has, nobody likes seeing large chunks of it go away.

SPP

[defspace]

I've got lots to add on this if anyone really wants to hear it.

There are no secrets.

Seconded. Let's hear it.

One book I found especially interesting is:
The Millionaire Next Door: The Surprising Secrets of America's Wealthy.

No matter your current age, go buy a copy and read it.

Great recommendation. A really eye-opening read.

[NYCfixie]

...The amount was less than the increase in our portfolio's value over the last month...

Not a great comparison. Assuming a 6% (yes, that is six percent and not .006 which is less than 1 percent) increase which is what we made in the last 30 days on our entire portfolio, that is not sustainable no matter what the bobble heads on cable TV say. But, you probably already know that.

Today, homes are stable investments in that they keep the present value of your money and move it into a time when you sell your home but you are not actually going to "make money" on your home. When you adjust for inflation and present value of money, homes are not a good investment. This also assumes that you own your home for more than 10 years, bought at a good price, and sell for a good price. "Homes are places you live and you want to own for personal and not financial reasons" is what at least two accountants have told us.

My wife loved owning a home. I did not. Once it was sold after 10 years and I did the calculations, it was as-if we paid rent for 10 years. Our money would have been better invested in the stock market even for those years 2005-2010.

And of course, take all of this with a grain of salt because there are too many factors involved (i.e. mortgage rate and length, personal tax bracket, local property taxes, real estate market/location) to make a generalized statement.

[mmoore]

I really have nothing to add to this that hasn't been said, this discussion and others on here sometimes are pure gold and really get in the feels some day.

I turned 30 a little over a week ago and my wife and I are doing some of the things you guys mention here.

We are Canadian and both have employer pensions that are mandatory so we are "investing" that way but the majority of our money has been going to pay forward our mortgage which in the next month or two will be our only debt when the finance on our car is done.
(Car was only financed because they offered 0% and we made out way better than that putting the money away than buying with cash)

We have been able to shave 10 years off our mortgage amortization in excess of the amount of time we have had to just pay it. That to me will make things way easier in the future, should they need to be and save us a shitton of interest that would have otherwise been given to the bank.



live simple and enjoy yourselfs.

[SteveP]

personally i love the pay extra to a mortgage to get rid of it sooner.
i get that there are 2 sides to the argument...
tax deduction, make more $$ in the market, etc

my side is i paid off my mortgage 18 years ago.
the "mortgage money" can be used elsewhere.

[dgaddis]

Funny, just heard a recommendation for the Millionaire Next Door on a podcast. I'll pick it up.

Dave Ramsey's Total Money Makeover is good too. I need to finish it actually....

One of my best friends, who's my age (33) has what I can only assume is a *very* well paying job. He's also very frugal. After college both he and his now-wife moved back home with their parents for a year until they got married, saved their money that year, then they bought a house. ~9yrs and two kids later, they had that house paid off. His wife was a teacher, but now with the house paid off she's a stay at home mom to their two little girls. They had a lot of good luck on their side starting out (no debt at all coming out college, ability to live at home for a year), but they've made the most of it.

[NYCfixie]

There is good debt:
- Education
- Home (assuming you can pay the mortgage and have reserves in case something goes wrong)

And there is bad debt:
- Credit cards (used to buy stuff you could not pay for using cash in hand)
- Cars
- Home (assuming you purchased a home you cannot afford and/or do not have reserves)


I got out of college in what today's dollars would be about $55,000 in loans. I worked through school, took out loans, and got any grants I could. I can't imagine what it would be to graduate today with $240,000 in loans from undergraduate studies (assuming a private school). But then again, very few students actually pay that much.

I learned about finances as earlier as I could. So, when I got out of school and got my first job I already knew about loan repayment, IRAs, pensions, and related financial instruments. Two of the best "early" financial decisions I made were:
- applied for any low interest credit card I could get and put my student loans on it. It lowered my overall interest rate and I paid off my loans in 7 rather than 10 years.
- started investing in DRIP plans as soon as I got my first paycheck. It is a great low cost way to begin an investing strategy.

[rec head]

I moved out at 18 and didn't ever really make money until my 30's. I learned how to live within my means because I didn't have much of a choice and I never had any debt. My wife and I have had 1 fight about money. After that I completely re-did how our finances work and we have both been really happy with it.

1) Both our paychecks go into the checking account.
2) All bills are paid and auto deductions are made into different savings accounts
3) Leaving a small cushion we split the money up and both have our own play money.

I'm a huge proponent of auto deduction savings. We decided what want to save for like rainy day, vacation and home improvement. Once that money is there we don't hesitate to spend it on what it is for except rainy day. We've been lucky on that.

Each having our own play money is the thing that really keeps us happy. That 1 fight we had was about a bike I wanted to buy. Now I can just save up and buy whatever bike I want and she just says cool. Same goes the other way. She wants some fancy grey camera lens I just think of the cool bird shots she can get.

It's weird loving my job and thinking about how I want to retire from it everyday.

[davids]

I moved out at 18 and didn't ever really make money until my 30's. I learned how to live within my means because I didn't have much of a choice and I never had any debt. My wife and I have had 1 fight about money. After that I completely re-did how our finances work and we have both been really happy with it.

1) Both our paychecks go into the checking account.
2) All bills are paid and auto deductions are made into different savings accounts
3) Leaving a small cushion we split the money up and both have our own play money.

I'm a huge proponent of auto deduction savings. We decided what want to save for like rainy day, vacation and home improvement. Once that money is there we don't hesitate to spend it on what it is for except rainy day. We've been lucky on that.

Each having our own play money is the thing that really keeps us happy. That 1 fight we had was about a bike I wanted to buy. Now I can just save up and buy whatever bike I want and she just says cool. Same goes the other way. She wants some fancy grey camera lens I just think of the cool bird shots she can get.

My wife & I have done this two ways, both with the overall idea that we pay our mutual obligations together.

Before we had a kid, we did it exactly your way - We figured out how much we needed to pay our mutual expenses each month - mortgage, groceries, insurance, etc. - and each kept the rest for ourselves.

When my wife took time away from full-time employment for our daughter, we changed it so that all our income went into the pot and all expenses - now including our play money - came out of our joint income. We made that change because we went from a situation where we were making very similar salaries to one where I was bringing home a much larger proportion of our overall income. The old system wasn't fair any more.

We never went back to the old distribution even after she went back to full-time work and our incomes were once again comparable.

It works for us for exactly the reasons you describe - I can't get resentful when she loads up on drawing supplies, and she can't get pissed off when I buy another bicycle. In fact, I think it helps us appreciate our spouse's interests more.

[SteveP]

i would add here, as somebody from the "enjoyed my gig but did it long enough" camp
and has enjoyed being retired for a couple of years now.
The clock keeps ticking and nobody knows for how long.

make the most of your time here... family and friends make the world go around.
make yourself participate in living. Get out and do whatever is on your bucket list.
time flies... faster the older you get.

[ron l edmiston]

--- i may look at this topic through a clouded lens.., but i do not count "inherited monies" as retirement income to plan for work's exit..
tammy has been a at home home-maker for 39 years.., many look down on as not earning income for the family or the trails end.. that is fine with us.., our choice and
we have done very well..
my father's farm's.., worked my ass off.., but still my father's and our farm managers work/expertise that made the roi..
let two of the farms be purchased by managers for their value when they started with dad.. monies tammy and i received went to building a new humane society
and underwriting children's home relative to unwed mothers.. both projects have endowment funds we provided to keep safely continuing into the future.. the third farm belongs to our daughter, son by marriage and granddaughter..
we have done very well with my working in corporate America, investments and gracious luck --- and are blessed for our net worth.., with no debts outside of month to month living expenses.., for our future sunrises/sunsets..
we no longer look at "what's mine what's hers..," we look at our retirement as "what can we do to assist.."
my next retirement dream are the "homeless & hunngry.."

by thinking good thoughts., i have come to realize that "no brinks or loomis armored truck will follow me to arlington.."

ronnie with a smile

[Too Tall]

First a nod to what Ronnie said. Neither myself or Mrs. Too Tall did or expected to inherit wealth. Also, both of us are hardwired to earn.
I retired 4 years ago and continued to work for myself at several jobs that were created, on the side as it were, while I had a day job. I plan to keep earning until I run out of passion for it.

Here are some basic tenets. Some of these are personal, I don't recommend it for everyone:

Always pay yourself first - Google it. Force yourself to stash %15 or more of every nickle you earn.
Have multiple income streams - Side jobs, part time employment...whatever. This is gravy. All of my sidework was and is used to pay for sundries, cars, small luxury items, eating out etc. The idea is that your main income is saved or used to pay for things which have gained value over time.
Own real property - A smart real estate purchase will almost always be a smart real estate purchase.
Financial Managers - No thank you.
Wealth management with some one you have a fiduciary relationship - google it I do not trust people carte blance esp. with things that put bread on the table. This was a big deal for me.

This is how I operate and how we got to where we are. DavidS is rich (LOL) we have enough and we are fine with that.

With a little luck I'll get hit by a car and never get to spend it ;) Kidding.

[NYCfixie]

The market giveth and the market taketh.

Up 6% in last 30 days.
Down 2% in last 2 days.

Stay long and it does not matter.

....Assuming a 6% (yes, that is six percent and not .006 which is less than 1 percent) increase which is what we made in the last 30 days on our entire portfolio, that is not sustainable no matter what the bobble heads on cable TV say. But, you probably already know that.....

[defspace]

The market giveth and the market taketh.

Up 6% in last 30 days.
Down 2% in last 2 days.

Stay long and it does not matter.

I thought this was a fun little article. What if You Only Invested at Market Peaks?

[NYCfixie]

This is a very, very, very conservative financial view I have heard from a few different people assuming you will retire and never work again:

- Do not count on social security. Except for the boomers and maybe the next generation, who knows how long it will be around.
- Pay off your house before you retire.
- Most people spend as much, if not more, in retirement because you travel more and eat out more (even when you consider what you save on business clothes and commuting costs that you no longer need)
- When you transfer your investments to a safer choice as you near retirement, you can hope for 5% dividend income a year at best (some years more, some years less, so save in the good years to cover the bad years)
- Do not spend your capital (assume it will be needed for rainy days, medical emergencies, grand-kids, leaving money to others, etc)
- You have no idea how long you and your significant other are going to live so plan for the worst (that you may live to 100 and beyond)

Based on this, a person would need $1,000,000 in capital/investments to produce $50,000 of income per year before taxes (remember you still need to pay taxes on those IRA and 401k plans that have been growing interest free for all these years)

So, when you look at it this way....when can you retire?

[rec head]

Have multiple income streams - Side jobs, part time employment...whatever. This is gravy. All of my sidework was and is used to pay for sundries, cars, small luxury items, eating out etc. The idea is that your main income is saved or used to pay for things which have gained value over time.

Man, I can't disagree more. For me personally I finally got to the place where I only need one job and I only do one job. I know plenty of people that are always hustlin'. I respect it but that ain't me.

[ides1056]

Great thread.

All my plans are predicated on social stability.

We own land enough to provide food, fuel, and water to meet our needs, because I don't trust corporations or governments to provide this. We've invested in our community, as well as the market, with variable returns. My legs are still good enough to ride where I want to. When I can't do this I will walk.

[NYCfixie]

Man, I can't disagree more. For me personally I finally got to the place where I only need one job and I only do one job. I know plenty of people that are always hustlin'. I respect it but that ain't me.

Could not agree more. When I'm done, I'm done.

[Too Tall]

Man, I can't disagree more. For me personally I finally got to the place where I only need one job and I only do one job. I know plenty of people that are always hustlin'. I respect it but that ain't me.

I'm a massage therapist for the past 30 years. It was a side gig during the years I had a day job and now it's part of me working because I love it. See this from my perspective. This is something I totally dig and it pays the bills....for instance.

"Done is done" really? We might be wired differently. I really enjoy earning, just not all consuming.