Investing for Retirement

[GeddyWrox]

Wait...is that a real thing?? Not consuming ENOUGH?

[Arthur Dent]

Wait...is that a real thing?? Not consuming ENOUGH?

If you are saving $25k+/yr in a retirement accounts, you should really be thinking about what you are hoping to achieve by it. Do you really want more and more retirement income through austerity while you're still young?

[Joe Shlabotnik]

Wait...is that a real thing?? Not consuming ENOUGH?

If you are saving $25k+/yr in a retirement accounts, you should really be thinking about what you are hoping to achieve by it. Do you really want more and more retirement income through austerity while you're still young?

Uhhhh - is this a trick question?

Of course you should save for maximum retirement. Most people don't have the discipline but its the right thing to do. You don't eat your crops all summer and fall. You store it away for the winter.

[Popeye_Card]

Wait...is that a real thing?? Not consuming ENOUGH?

If you are saving $25k+/yr in a retirement accounts, you should really be thinking about what you are hoping to achieve by it. Do you really want more and more retirement income through austerity while you're still young?

What I’m thinking about when I save $25k+/yr. for retirement:

* I have a lot of uncertainty for what the world/economy is going to be like in 20-30 years.
* I make the assumption that social security won’t help me. Maybe it will still be around, but I don’t trust the GOP to not raid it or significantly alter it. Ditto for Medicare.
* To make this politically unbiased, I don’t trust Democrats either (or Republicans for that matter) to not eff up how 401k’s are taxed by the time I’m ready to retire.
* I don’t know how inflation will be between now and then. Given my accounts should also benefit from that, but it is a concern.
* I’m fortunate enough to work for a company that still provides a pension plan in addition to 401k, but even with today’s watered down plan it won’t go very far. I’m concerned that they’ll trim it down again before I’m ready to retire.
* I’m concerned about my consumption rate when I’m retired. We’re going to have to live off of our retirement bank for 40, perhaps 50 years. Chances are I’ll be retired for as long or longer than I worked. You need a pretty big bank saved up to last that long.

I’m not even looking to retire early, as of now. I’ll probably work until at least 65. I have thoughts of doing consulting work for a few years perhaps after that. But with medical advances I need to plan until we’re at least 100.

Overall, what concerns me most is that I’m getting close to the midway point of my working career, and my retirement accounts as of now would only cover a few years of my current salary. Chances are I’ll spend less in retirement than I do mid-career, but it still worries me.

I also really, really like Porsches.

[Radbird]

What I’m thinking about when I save $25k+/yr. for retirement:

* I have a lot of uncertainty for what the world/economy is going to be like in 20-30 years.
* I make the assumption that social security won’t help me. Maybe it will still be around, but I don’t trust the GOP to not raid it or significantly alter it. Ditto for Medicare.
* To make this politically unbiased, I don’t trust Democrats either (or Republicans for that matter) to not eff up how 401k’s are taxed by the time I’m ready to retire.
* I don’t know how inflation will be between now and then. Given my accounts should also benefit from that, but it is a concern.
* I’m fortunate enough to work for a company that still provides a pension plan in addition to 401k, but even with today’s watered down plan it won’t go very far. I’m concerned that they’ll trim it down again before I’m ready to retire.
* I’m concerned about my consumption rate when I’m retired. We’re going to have to live off of our retirement bank for 40, perhaps 50 years. Chances are I’ll be retired for as long or longer than I worked. You need a pretty big bank saved up to last that long.

I’m not even looking to retire early, as of now. I’ll probably work until at least 65. I have thoughts of doing consulting work for a few years perhaps after that. But with medical advances I need to plan until we’re at least 100.

Overall, what concerns me most is that I’m getting close to the midway point of my working career, and my retirement accounts as of now would only cover a few years of my current salary. Chances are I’ll spend less in retirement than I do mid-career, but it still worries me.

I also really, really like Porsches.

I have very similar situation to yours, Popeye - except I'm almost at the end of the road. I just turned 65 and plan to work until 66 (full SS age for us). We've planned and saved well and should be ready, but given what's going on in our country nothing is a sure bet anymore. One reason I'm still working is to further pad the retirement funds. Our recent downsizing will help immensely, but may do some consulting as you mention - take jobs for 10-12 weeks at a time to supplement income and minimize withdrawals. Would still allow time for retirement life - hobbies, volunteering, travel, etc.

[Michael]

For me being a super saver is all about flexibility. 10 to 15 years I want the opportunity to downshift my career or stop working completely. In the personal finance world I sit somewhere between a Boglehead where you have a traditional retirement at age 65 with a healthy retirement savings via a 3 fund portfolio and the FIRE (Financial Independence/Retire Early) crowd at Mr Money Mustache where you save like 500k-1m at the age of 35 and retire with a modest income off your principal.

Personally, I don't want to consume more. I already have all the stuff I want. I guess I'd kinda like a 1m-1.5m house in Chicago, but I would never prioritize that over my other life goals. Plus I think the actual upkeep of a house would be a hassle.

Needless to say, I feel super fortunate to be in the position where I can have these types of life goals.

edit - The max contribution limit for a 401k went up to 18.5k in 2018

[TimeForGuinness]

Focusing on retirement is good, if you make it...don't push off having fun now that might not happen later. It's good to be prepared, but don't let it be your focus.

Treat yo'self now and in the future.

[Arthur Dent]

Wait...is that a real thing?? Not consuming ENOUGH?

If you are saving $25k+/yr in a retirement accounts, you should really be thinking about what you are hoping to achieve by it. Do you really want more and more retirement income through austerity while you're still young?

Uhhhh - is this a trick question?

Of course you should save for maximum retirement. Most people don't have the discipline but its the right thing to do. You don't eat your crops all summer and fall. You store it away for the winter.

Sort of what I thought. Saving is conceived of as personal virtue more than a practical necessity.

There's no reason to put away the maximum for winter if it's more than you need. Life is lived in the now, and you are also taking big risks assuming that it is only when you are in your 60s and older that you want consumption. That behavior is not virtue -- it's compulsive hoarding.

If you are so lucky as to have the choice, pick a retirement savings rate that matches reasonably conservative assumptions, and find something more worthwhile to do with the remainder.

Someday never comes.

Edit: If what you want is early retirement, relying on 401k (rolled over to IRA) withdrawals is going to stick you with a big tax rate. You should consider putting money in a straightforwardly taxable account.

[Michael]

IMO as human beings we've made the choice to consume more at the expense of free time. I think it's crazy we demand larger homes and junk we don't need over a 25-30 hour work week.

Not me. I'm saving to make my life my own. I don't need a 5-10k watch.


edit -

Edit: If what you want is early retirement, relying on 401k (rolled over to IRA) withdrawals is going to stick you with a big tax rate. You should consider putting money in a straightforwardly taxable account.

Solid advice. I'm adding to taxable as well, but running the numbers I think I'm still too young to shift things significantly.

[Arthur Dent]

IMO as human beings we've made the choice to consume more at the expense of free time. I think it's crazy we demand larger homes and junk we don't need over a 25-30 hour work week.

Is there somebody offering 25-30 hour work week jobs with good hourly wages?