When do you think you will retire?

[Blieb]

Unsure. But we save a lot in the ole Tax Deferred and Roth accounts.
I hope it works out!

I have it all organized as a simple index portfolio according to the Boglehead philosophy.

 

[Dr. Detroit]

I'm still trying to figure out if I want a Roth 401k. My employer offers one but so far I've stuck with the traditional 401k. It kind of comes down to which I think is more likely: Congress taxing Roths in the future or Congress jacking up marginal rates in the future. By going with the traditional 401k I can see the tax savings right now but I also see this big pile of debt that will eventually need to get paid off either through higher taxes in the future or through inflation. Another head scratcher.

3 thoughts:

If I keep my citizenship -

I'm assuming I will be in a much lower tax bracket when I retire and draw down my 401K.

If I shred my Passport -

I'll take my lump some with the promise to pay on April 15th and be a tax cheat in a foreign country.

Moving to a low state income tax state to take my withdrawals -

 

[Red Squirrel]

Probably around like 75. Companies are getting cheaper and cheaper and phasing out retirement packages, and the government is always talking about pushing the retirement age. I'm 26, so by the time I get to the point of retirement I'm sure they'll have pushed that stuff pretty much out, so I'll have to do my own saving.

Idealy I want to retire much younger and just make money through the internet by offering services or something. Basically something that I build, they come, and I sit back and only do basic maintenance on it while I sit on the beach at my retirement cottage.

 

[Exterous]

Out of curiosity, what can the average Joe do other than to diversify? It's been shown time and time again that timing the market or buying individual stocks, on average, nets a worse gain than a dollar cost average of various mutual funds (diversified). Again, I researched my ass off and still got hammered. I even read the book that told me to not become emotionally attached (don't fall in love with a stock) and yet, I did what the book said 90% of the people will do...I fell in love and "hoped" my way to a $59,000 loss.

Maybe I'm wrong in the next 10 years...maybe not. Again, I was the biggest proponent of 401k's and self retirement (wanted to get rid of SS in my younger years) but living through the decade of the 2000's has taught me that the average Joe (which I'm one of) has little chance of success in the markets and the big boys of the markets know it, especially in today's "high speed trading" world.

Well, the first thing the 'average joe' could do is not rely on their house to constitute 90% of their wealth - as the middle class does now. So the 'average joe' is not even close to diversifying. I will admit there is a very big issue in that most people do not have very good 401k options so I am willing to bet that the 'average joes' that are actually above average and saving a good chunk for retirement in their 401ks are not actually well diversified. That would mean they would need to look outside their 401k. That usually (and should) means taking the time and effort to setup a Roth IRA and even taxable accounts. But according to the EBRI 60% of workers and 55% of retirees have less than $25,000 in total savings and investments so we are a very far cry from the average joe saving/investing enough

As for averaging the stock picking results I would be really interested to know more of a profile breakdown on who is stock picking. IMO the issue is that everyone is lumped together. All of the different strategies - all of the different personalities. You have the day traders with the drip investors. You have the hot head knee jerkers with the buy and holders.

If you have any recommendations on studies/books that break down the groups and use hard numbers I would be very very interested to read more on it. There is a way to do it. People/institutions have done it - its just a matter of digging through the bullshit to find it. It may or may not be as important in an up economy but when its stagnant or going down being able to generate even meager returns will put you ahead of an index fund.

 

[AreaCode707]

I will probably retire after 70,200 hours of work. That is, at approximately age 35. I'll probably still work part time, hopefully on our own property producing balsamico.

To compare, if you work 40 hrs/wk for 4 years (25-65) you would work 83,200 hrs.

 

[Jadow]

no idea when I will retire, however I hope to retire in my mid-late 50's.

 

[IronWing]

Nvm.

 

[Engineer]

Well, the first thing the 'average joe' could do is not rely on their house to constitute 90% of their wealth - as the middle class does now. So the 'average joe' is not even close to diversifying. I will admit there is a very big issue in that most people do not have very good 401k options so I am willing to bet that the 'average joes' that are actually above average and saving a good chunk for retirement in their 401ks are not actually well diversified. That would mean they would need to look outside their 401k. That usually (and should) means taking the time and effort to setup a Roth IRA and even taxable accounts. But according to the EBRI 60% of workers and 55% of retirees have less than $25,000 in total savings and investments so we are a very far cry from the average joe saving/investing enough

As for averaging the stock picking results I would be really interested to know more of a profile breakdown on who is stock picking. IMO the issue is that everyone is lumped together. All of the different strategies - all of the different personalities. You have the day traders with the drip investors. You have the hot head knee jerkers with the buy and holders.

If you have any recommendations on studies/books that break down the groups and use hard numbers I would be very very interested to read more on it. There is a way to do it. People/institutions have done it - its just a matter of digging through the bullshit to find it. It may or may not be as important in an up economy but when its stagnant or going down being able to generate even meager returns will put you ahead of an index fund.

Because many live a debt lifestyle and have been in a pay slump for over a decade (middle class). I doubt that many are looking at saving more than they already are. "You" may be able to beat the market but "every" average Joe cannot. If everyone "beat" the market, it would just be "average" now wouldn't it? And I agree that too many put their wealth into their homes. I'm not sure if that's changing now or not with the crash of housing. I suspect not as they are also putting less and less into retirement accounts and even getting more loans on their 401ks (see the yahoo article asking if there is now going to be a 401k bubble because of all of the loans that are not being repaid).

Good luck in your "adventure" and post updates throughout the years.

 

[HendrixFan]

If you have any recommendations on studies/books that break down the groups and use hard numbers I would be very very interested to read more on it. There is a way to do it. People/institutions have done it - its just a matter of digging through the bullshit to find it. It may or may not be as important in an up economy but when its stagnant or going down being able to generate even meager returns will put you ahead of an index fund.

http://www.amazon.com/Unconventional.../dp/0743228383

The guy who wrote this runs Yale's endowment and has one of the best records of beating the market long term. He started the book trying to figure out what to recommend for personal investment, but after running the numbers (which are included in the book) he found that as a personal investor you probably won't beat the market.

The numbers show that investing in index funds with low expense ratios allow you to ride the market, which long term trends upward. The advantages he has as an institutional investor are not available to personal investors, so their strategy differs.

It is a good read, but it points to the fact that the general trend of the market is where we collectively go. For everyone that beats the market, someone has to trail the market equally. It is all zero sum. As investment banks come in and take their share, through HFT and the like, that leaves less for the rest of us. Add in their fees and it is hard to win on your own. When the market does poorly for a long period, only luck can salvage that.

My annualized rate of return is 4.3%. I'm sure that beats "inflation", but only because things like energy costs aren't included. That should be what I earn off of CDs and the like. The 70 year trend of securities before the housing collapse was a little over 10% annualized. That is quite a long period of stagnancy, especially considering we are likely to continue at that poor rate (or worse) for another 5-10 years.

 

[vi edit]

Too many assumptions to say for sure. I'm 34 and my wife is 32. Already have about 250k in retirement accts and about half that again in home equity.

Ideally I'll have the house paid off by the time I'm 50. My daughter will have two years of college left at that point. My son will be out of college when I'm 56. We also plow away about $250 a month in a 529 plan via Vanguard for some of those costs.

So assuming no major health issues, divorce, major career/lifestyle changes 50-55 looks good for me. My wife will probably remain on working half to 3/4 time to pick up benefits and still bank close to $75k a year even at half time to pay taxes, utilities, and fun money. We'll just let retirement accts plump up/sit until we can start to draw without penalty.

In addition to 401ks/Roths we also have a small pension from our employer that will add up to around $1600 a month for us. At the very least it will cover health insurance. Then add in whatever trickle of funds are available in social security.

Again...ideally...somewhere in that early 50's range our current home is going to get sold and then we'll take those funds and apply to a new home in some place that is much more retirement desirable than the midwest. A lot of that depends on kids...if they see a state school they like in California, Arizona, Colorado, Oregon...we may go ahead and just buy the home to get in state rates and then slowly make the transition to the retirement home.

It's easy to say "I'm out at 50" right now...but I know things change when you are really there. There's dozens of people in my office right now in that situation. Their PTO accruels are so high they work about half the year as it is. They are scrambling to take days off because they keep hitting their accruel limits. They are making a very high income after years of increases/adjustments/promotions and they are also in the bonus round for 401k matching. At that point our employer is kicking in a $7,000 a year bonus contribution in addition to the standard 5% match. It's a pile of free money each year. So basically you are working somewhere between 3/4 and half time...and making a pile of money doing it. Why retire?

 

[Exterous]

The converse is that certain high profile fund managers (Mr Swensen) do advocate a wide range of index funds.

The guy who wrote this runs Yale's endowment and has one of the best records of beating the market long term. He started the book trying to figure out what to recommend for personal investment, but after running the numbers (which are included in the book) he found that as a personal investor you probably won't beat the market.

 

[Exterous]

Because many live a debt lifestyle and have been in a pay slump for over a decade (middle class). I doubt that many are looking at saving more than they already are. "You" may be able to beat the market but "every" average Joe cannot. If everyone "beat" the market, it would just be "average" now wouldn't it? And I agree that too many put their wealth into their homes. I'm not sure if that's changing now or not with the crash of housing. I suspect not as they are also putting less and less into retirement accounts and even getting more loans on their 401ks (see the yahoo article asking if there is now going to be a 401k bubble because of all of the loans that are not being repaid).

Good luck in your "adventure" and post updates throughout the years.

Well, it in part depends on where they are playing. In a global market it would be possible for the 'average joe' to beat the market because the 'average jose' playing from a different country loses out. There are also more than just people playing (institutions/businesses) so the average person could still win at their expense.

I do get your point though which is why I side stepped the question with my initial response. I would like to see what an influx of americans responsibly investing large amount of money would do to the market but it may very well be that they don't have enough money for the market to change that much (Not so much the value but how investors operate)

I hadn't thought about posting updates but I guess if people are interested I will

So basically you are working somewhere between 3/4 and half time...and making a pile of money doing it. Why retire?

Completely agree. I know its just a rough estimate and if I were in their situation I would stay on as well. I imagine the freedom to be able to retire whenever they want lifts a big weight from their shoulders as well

 

[olds]

http://www.amazon.com/Unconventional.../dp/0743228383

...

Anandtech is hosing up that link for me, hangs on redirect.
http://www.amazon.com/Unconventional.../dp/0743228383
Nope, hoses this one too.

 

[Icepick]

Probably never. My wife fu**ed things up for me financially and I don't see how I'll ever be able to grow a nestegg now. I'm keeping myself healthy so that I can work until I'm 80 or so.

 

[manimal]

never! I plan on having multiple revenue streams even after I die! I do plan on ramping down my involvement as I age however.

 

[BurnItDwn]

Probably when I'm somewhere around 70-75.

I've been investing into my work retirement program since 2001.
I've been buying small quantities of stock since 1998.
I probably will be financially able to retire at 60 or 65, but things never go according to plan so I'm taking a realistic guess.

 

[olds]

From retirement, I am just one lottery ticket away.

 

[BoberFett]

Retire? I'll be dead long before I retire. If some idiot doesn't kill me while I'm on my motorcycle, I'll probably get shot in the back by a pissed off husband/boyfriend. Either way, saving for retirement isn't on my priority list.

 

[Exterous]

I'll probably get shot in the back by a pissed off husband

Minneapolis allows gay marriage?