How much is enough??

[seafox]

.........Why?

[exfishnz]

Originally Posted by GMac

maybe just because he writes smart

As opposed to me just being a smartass?

[waterworldly]

401k's are gimmicks weighed down by confusing rules and expensive administrative fees. The only time it is to your advantage is when your employer offers matching funds, which seems to be less and less frequent. It was a gift to the money services industry, which promptly lost lots of people's money over the last few years on bad calls. Although the premise sounds good on paper, in the end, if your post retirement income is even slightly close to your working income, it is better to just take your tax lumps while working and have full control over your money. The minimum age rule for withdraws is too high for me as well.

[Therapy]

Originally Posted by seafox

.........Why?

good question.

Me.

My children get hungry.

[Therapy]

Originally Posted by waterworldly

401k's are gimmicks weighed down by confusing rules and expensive administrative fees. The only time it is to your advantage is when your employer offers matching funds, which seems to be less and less frequent. It was a gift to the money services industry, which promptly lost lots of people's money over the last few years on bad calls. Although the premise sounds good on paper, in the end, if your post retirement income is even slightly close to your working income, it is better to just take your tax lumps while working and have full control over your money. The minimum age rule for withdraws is too high for me as well.

AGREED!!!!

More of a "good idea" that does not work. Like Welfare.

[LifeArtist]

It's interesting to look at "recent" posts and come across a massive topic like this one. I've read the first 12 and last 3 pages. I hope to read the rest, but still would like to add my 2 cents at this point.

I haven't seen if people have adjusted their expected rates of return on investment since the recent economic downturn, but my retirement account lost 9.6% in the past six months. The US stock market may have a longterm average return of 10%, but there have been long bear markets. I read in the Wall Steet Journal that if you were in the US stock market from 1969-1982 that your portfolio would have averaged something like 5-6% annual growth, 2% LESS than the rate of inflation during that time. But the period 1982-2000 showed average annual returns of 18%!

In another article, they looked at what a "safe" withdrawal rate from a retirement nest egg might be. I believe they said that if you withdrew 3.6% of the total, there was 0% risk of depleting the nest egg. I don't remember the investment mix, but I believe it was a pretty standard conservative mix of equities/bonds/cash. If your investments did better, you could take out more than the 3.6%.

Sooo, that would mean that a $1 million USD nest egg would guarantee an income of $36,000 (possibly more) and would theoretically last forever.

[LifeArtist]

Originally Posted by waterworldly

401k's are gimmicks weighed down by confusing rules and expensive administrative fees. The only time it is to your advantage is when your employer offers matching funds, which seems to be less and less frequent. It was a gift to the money services industry, which promptly lost lots of people's money over the last few years on bad calls. Although the premise sounds good on paper, in the end, if your post retirement income is even slightly close to your working income, it is better to just take your tax lumps while working and have full control over your money. The minimum age rule for withdraws is too high for me as well.

That may be true in some instances, but doesn't have to be the case. I have a SEP IRA, which is essentially like a 401k. I invest in the Vanguard Retirement 2025 Fund, which is a mix of index funds with NO load (sales commission) and very low fees. As I said, I did lose 9.6% in the past 6 months, but so did most everyone else.

Obviously, if you are going to need the money before the minimum withdrawal age, don't put it in a 401k. But I hope to be living beyond 59 1/2 and it would be nice to have some money growing for me until then. The tax deferral is real.

[ssullivan]

Originally Posted by LifeArtist

As I said, I did lose 9.6% in the past 6 months, but so did most everyone else.

Financially, I'm not in great shape yet, but I can safely say to the above, "Not me!!"

[Hud3]

My 401k is the reason that I was able to retire early. I enjoyed some matching by the Company, but I always put the maximum allowable amount into it each year. The power of compounding earnings on a tax-deferred basis is amazing.

The rules for IRAs and 401ks are different. The minimum age for withdrawing from a 401k can be as low as age 55, which was the case with my Company. It depends on how you Company set up it's 401k.

The minimum age for withdrawing from an IRA without penalty is 59-1/2, but there are eight exceptions to that rule. The early withdrawal penalty does not apply to distributions that:

1. Occur because of the IRA owner's disability.
2. Occur because of the IRA owner's death.
3. Are a series of "substantially equal periodic payments" made over the life expectancy of the IRA owner.
4. Are used to pay for unreimbursed medical expenses that exceed 7 1/2% of adjusted gross income (AGI).
5. Are used to pay medical insurance premiums after the IRA owner has received unemployment compensation for more than 12 weeks.
6. Are used to pay the costs of a first-time home purchase (subject to a lifetime limit of $10,000).
7. Are used to pay for the qualified expenses of higher education for the IRA owner and/or eligible family members.
8. Are used to pay back taxes because of an Internal Revenue Service levy placed against the IRA.

[Iriemon]

Very interesting to review the posts on this thread from the early to mid 2007 timeframe, after the events of the last few years. I wonder how many continued to get the 20% or 30% or even 12% returns some were estimating on their real estate and stock investments? I wonder how many who were hoping to leave in a few years got derailed from their plan?

Back in mid-2007 I figured with just "modest" returns from stock investments and selling my house I would be able to retire to cruising in comfort by now.

After 4 years of a terrifying ride in the stock market roller coaster and watching my home equity evaporate, I am still working and expect to be for a while, and have more modest and longer term plans for retiring to cruising. Fortunately, and unlike so many I am not underwater on my home mortgage. My stock portfolio is still behind what it was in 2007, but thankfully a lot better shape than it was a couple years ago!

I figured for my wants and desires I need a minimum of about $600k. That buys a modest boat (~$75k) and leaves a kitty that should sustain about $2k a month living expenses. That's kind of my personal minimum.

$750k buys a little better boat (~125k) and provides about $30k to live on. That is my goal. Anything above that is gravy.

The last kid is off to college in a little less than 5 years. If the housing market doesn't get any worse and the stock market doesn't tank again, I should be about at my minimum by then. If we get even half of the historic return on the S&P 500 (ie 5%) I'll be pretty close to my goal. Anything above that and I'll be sitting pretty.

Maybe I'll look this thread up again in another 4 years or so and see how things turned out. : )

[CNC-Charters]

A couple of observations
1. No one has mentioned yacht payments so I assume everyone owners their yachts free and clear (I Wish I was in that position)
2. No one has mentioned a budget for boat insurance
3. No one has mentioned health insurance.
Just an observation, love the thread though

[rtbates]

Originally Posted by 44'cruisingcat

Depends on how old you are.

And even more importantly how long you PLAN to live?... I say plan in all jest..most folks live longer than their retirement funds. And last, but certainly not least, how do you plan to live? The high life or the frugal life?

The fact that I'm needing to explain any of this is rather funny.....