272
votes
Why do people save so much?
When people over 60 reflect back on their life, they generally do not say:
I wish I took out more student loans.
I wish I bought more expensive cars.
I wish I bought fancier clothes.
I wish I didn't ...
- 47.1k
217
votes
Why do people save so much?
Why do they need so much money as old people?
The future is unexpected.
My country has universal healthcare, so medical expenses are not a worry.
Will it have UHC in 50 years? Probably... but ...
- 50.6k
186
votes
What happens to people without any retirement savings?
I'm afraid you have missed a few of the outcomes commonly faced by millions of Americans, so I would like to take a moment to discuss a wider range of outcomes that are common in the United States ...
- 11.7k
110
votes
Why do people save so much?
The reason some people save so much so young is that they understand the growth potential of COMPOUND INTEREST.
Every dollar that I put away for my daughter at 2 years old can be worth $1,000 when she ...
- 32.7k
78
votes
Accepted
Is a higher salary worth not having a 401(k)?
From a long-term planning point of view, is the bump in salary worth not having a 401(k)?
In this case, absolutely. At $30k/year, the 4% company match comes to about $1,200 per year. To get that ...
- 130k
69
votes
Accepted
Would compound interest work better if all my accounts were combined into one?
No. The compounding is a multiplier, and multiplication is distributive over addition. So
1.1 * (x + y) = (1.1 * x) + (1.1 * y).
That is assuming that the accounts are large enough that no ...
- 7,556
67
votes
Accepted
Aging parents with no investments
Do they want your help?
Many times parents have difficulty taking advice from those whose nose and butt they wiped. Your accomplishments and investments are independent of the fact.
What are their ...
- 76.1k
65
votes
401(K) Very high negative rate of return
There is not one right answer to this but in my opinion, this is not the time to move to safer options for someone in your position. You are very young and this is a retirement account, you want to ...
- 2,113
62
votes
Best way to invest $300,000 inheritance for a couple intending to retire in 10 years
Lots of people will post lots of advice about what to invest in, or which research blog to read, but definitely the best advice is:
Talk to a financial planner
As newbie investors there are lots of ...
- 33.1k
60
votes
Why do people save so much?
For myself, I saved because having accumulated a nice pile of money - enough to live modestly on the income (what I call being "independently poor") is both security and freedom.
Take security. What ...
- 11.2k
57
votes
Accepted
How risky is real estate?
Where is the risk? The short answer is...
Property damage from weather, termites, tenants, whatever.
How about tenants who stop paying the rent and you need to go through legal channels to evict ...
- 75.7k
51
votes
Why should a person approaching retirement age make their portfolio less risky?
What occurred in 2000 and 2008 is "why this is true". If one were to have retired in 2007, with a major portion of their retirement invested in stocks, their portfolio value dropped significantly, ...
- 1,184
50
votes
What is the median retirement savings in the United States today?
I find this very hard to believe
Believe it. The bottom quarter of American households have negative net worth, and the bottom three quarters have no more than a tiny amount saved up.
https://en....
- 4,790
50
votes
Why do people save so much?
I'll be living in my own house that is already paid off at that
point, so no rent or mortgage payments.
This very much depends on where you live. In the major cities of the costal USA many folks ...
- 12.5k
49
votes
50% portfolio in single stock, JPM - appropriate for 80 year old?
This seems to me irregular both in terms of risk, lack of diversification
Me too.
Is this a suitable allocation of assets?
Putting 50% in one stock is acceptable, I think, if that one stock is a ...
- 50.6k
46
votes
Aging parents with no investments
Probably they shouldn't be investing. It's too late for that. And if they aren't investing it's pretty simple: Sell the big property before they urgently need the money because that takes time, then ...
- 824
46
votes
Can a small family retire early with 1.2M + a part time job?
Can a small family retire early with 1.2M + a part time job?
With the right sacrifices, almost certainly. Can you retire early in the scenario you described? No.
You're spending more per year than ...
- 69.1k
44
votes
Accepted
Should I Use an Investment Professional?
People ... are nearly twice as likely to ... feel confident
Great, confidence is amazing. That and $5 will buy you a cup of coffee.
44% [who hired a pro] have $100K or more [vs.] 9% of DIYers
...
- 32.7k
43
votes
Do I need term life insurance at age 57?
The answer to your question will depend on your own preferences and circumstances, but I would argue that generally at your stage of life you do not need nor want term life insurance.
Life insurance ...
- 15.1k
41
votes
Why do people save so much?
My country has universal healthcare, so medical expenses are not a worry.
People in their 20s (and 30s) thinking about the future may choose not to gamble that the government in 50 years will look ...
- 6,788
39
votes
Accepted
If I switch jobs to a lower tax bracket right before I retire, do I save on 401k taxes?
Your tax bracket is determined by your total taxable income in a given year, where money drawn from a traditional-style deferred-tax 401k or IRA is taxable income. (Money drawn from a Roth account was ...
- 42.9k
38
votes
My ignorance keeps me awake at night (specifics below)
Some comments:
Some disastrous taxation event that I don't know about.
These are rare. Usually disastrous taxation events are well publicized in advance and require a lot of legislative work. Seeing ...
- 165k
36
votes
Accepted
What happens to people without any retirement savings?
Well, if you worked in the United States you have social security, and medicare and medicaid in most cases as well. So you have a small amount of income to spend every month to cover your most basic ...
- 1,472
35
votes
Accepted
what happens if you don't start collecting social security until you're 75?
You'd need to talk with an attorney familiar with Social Security, or an appropriately qualified SSA representative to be sure - but all signs point to the idea that unfortunately Social Security does ...
- 11.7k
35
votes
How much should you save for retirement in a country that automatically takes care of retirement savings?
You give hints, but don't quite answer the key question -
At the time you retire, what fraction of your income will be replaced by the benefits you list? If that amount is your 'happy' number, you ...
34
votes
Can a small family retire early with 1.2M + a part time job?
$90K expenses. Less $12,000 Income. That’s $78,000.
You are asking if $78,000 can be returned from an investment of $1.2M.
As a rule of thumb, we talk about a 4% safe withdrawal rate. But even then, ...
34
votes
What is so good about IRAs?
For the reasons you cite may prefer the Roth IRA where you pay tax on the money contributed now, but future withdrawals are tax free.
However there is a benefit to pretax plans such as traditional ...
- 76.1k
33
votes
Accepted
How safe is the 4% rule if U.S. returns trend towards World returns?
Not safe at all. A 4% withdrawal rate would require the US stock market in the 21st century to produce returns similar to those of the 20th century, i.e. in the vicinity of 7% in real (inflation-...
- 1,530
32
votes
Is a higher salary worth not having a 401(k)?
4% of 30k ($1,200) is dwarfed by an $18,000 base pay increase. At 48k maxing out IRA will take ~11.5% of gross income, so at current position (30k salary) 401k contributions would likely be limited to ...
- 69.1k
32
votes
How much should you save for retirement in a country that automatically takes care of retirement savings?
Making the assumption that social programs will have the same conditions in 30-40 years (or even 5 years) as they do now is a very dangerous assumption to make.
For example, how do you think the ...
- 35.7k
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