Retirement funding problem...

[topsites]

How does one, as an older guy who didn't think about this until he was in his mid-30's, sock away 5 thousand / year without locking it up until age 69.5 AND without paying HUGE taxes?

I can tolerate locking it up to a point, but what if I want to retire at age 62 w/out taking a huge loss?

I'm learning about the SEP process, and also the solo 401k sounds interesting, any other ideas?

[Allure]

Roth IRA. great retirement investment & i believe you can withdraw without penalty at 59 1/2. Same for my 401k but that's through my other job. i don't know about solo 401k's

with a roth ira you invest after tax dollars, then, when you withdraw the money you pay no tax.

right now i believe the maximum yearly contribution is still $4000 unless you are over 50 then it's higher.

[Mow Right]

Roth IRA. great retirement investment & i believe you can withdraw without penalty at 59 1/2. Same for my 401k but that's through my other job. i don't know about solo 401k's

with a roth ira you invest after tax dollars, then, when you withdraw the money you pay no tax.

right now i believe the maximum yearly contribution is still $4000 unless you are over 50 then it's higher.

I am young still, but I would like to start putting money into some type of retirement fund next year or the year after, where would I go to start it?.... My goal is to retire by the time I'm 50, although I don't plan to achieve this with the lawncare business...

[BeautifulBlooms]

Roth IRA,

The Vanguard Group www.vanguard.com (singlehandedly the best no load or low load funds around)

Best way to go and max out your contributions every year/ Put away as much as you possibly can withint the governments rules.

Just be sure to research where you put your money when you start, and always remember that it is for retirement, if the market fluctuates up and down don't worry it will bounce back. Get used to funds they offer and most of all feel comfortable with where your money is invested.

[topsites]

Because of one additional issue I'm still leaning towards 401k ...

IF I need the money, I hear say I can borrow from my 401k and pay this loan back later (with interest lol), and so long I pay it back then it is not viewed as a payout...

Is this possible with Ira's, to withdraw money as a loan without penalty?
Because that's the only thing that makes me nervous, I HATE the thought of having money completely tied up.

With a loan, at least when I pay it back (to myself), it is to my greatest benefit.
That's if I even need it...

[LindblomRJ]

Go talk to a finincial planner. Roth IRA seems to one the better plans around.

[hdtvluvr]

If you are young, you should seriously consider stock mutual funds. The stock market has outpaced interest rates over the long haul. IMO, an International fund should also be included in a retirement account mix.

The stock market has ups and downs. If you can't sleep because the market is down and you've lost thousands (on paper), the stock mutual funds may not be right for you.

Bond funds and CD's are stable and you usually don't lose money (unless they are junk bonds). However, if you look at the bond funds and other investment types against inflation rates you will lose future buying power because the return is at or barely above the inflation rate. This means your money isn't working hard for you.

It is all a matter of personal comfort levels. Vanguard is a good group. Fidelity, T. Rowe Price and others are also good. Regardless of which group you choose, stick with adding money routinely. (Called Dollar Cost Averaging)

Mow Right, if you are going to start investing next year, now would be the time to start learning about your investment options. Contact one of the groups above and get some info about what they offer. Choose some funds, pretend you've invested $10,000 and watch them weekly. See if you are comfortable with the ups and downs.

Disclaimer: I'm not a professional investor or accountant.

[turf dog]

I use the SEP plan. But as you said you are locking up that money until you retire. When I looked at diffrent plans a few years ago I went with the SEP because it was easy and cheaper to use. Where if I remember correctly the personal 401k was a little pricey to administrate.

[Uranus]

I read through this thread earlier today and it got me wondering how much does it take to retire and live happily. Then I got a flire from my bookkeeper and the same question came up because the flier was about writing off expences and retirement funds. So what does it take to retire. I know it differs from location to location and by person by person, but has anyone ever heard of a number that one should have or be close to to be able to retire?

[nysuz]

What do you require from life. 3 meals and a cot, less money is needed for that. I want to go to Europe and travel the US, that requires good funds. I could retire today, but I want to do more than just live, so I am thinking $2million invested for us. Plus health care could end up costing 20K by the time my husband and I retire. If you live cheaply, you can get away with much less.
We got into Roth IRA's and I was only 29 and invested very aggressively. I have plenty of time for things to grow tax free.

[hdtvluvr]

I've read that one needs 80% of pre-retirement income to retire in the manner they are accustomed. This assumes that the house is paid off, kids out of college, etc..

Therefore, assuming no Social Security and pre-retirement income was $50,000, one would need $40,000 per year. If you assume you could get 5% on your money, you would need a lump sum of $800,000 to get the $40,000 the first year.

This would just get you the $40,000 and the lump sum would not grow so that you could increase your annual withdrawals in order to keep up with inflation. It's also likely that some years the interest rate won't be as high as 5% so you will have less money unless you dip into the original lump sum. If you dip into the lump sum, you will have less money working for you in future years.

About all one can do is estimate, have a goal and hope they can save enough each year. The sooner a person starts the better off they will be since time and compounding will be on their side.

[Allure]

I read through this thread earlier today and it got me wondering how much does it take to retire and live happily. Then I got a flire from my bookkeeper and the same question came up because the flier was about writing off expences and retirement funds. So what does it take to retire. I know it differs from location to location and by person by person, but has anyone ever heard of a number that one should have or be close to to be able to retire?
there is no easy answer for you. You have to consider the type of life you want to lead when you retire as well as /housing expenses/taxes/kids needs (if any)/medical (that's the big one). the list goes on.

you can start with a calculator like this one to get a basic view of where you stand now & whether you are on track with your savings.

[Uranus]

I'm 30 right now, I have no retirement, and I'm going to go next week to start probably a roth IRA. I was thinking about 1 million in a retirement would be enough for me. My wife has a good/very good job and has been saving the max each year for the past 9 years. Between me and her I know we will be fine. Who knows where social security will be when I retire. I was just looking for a balpark figure of what a good amount to live would be. I know its all depends on a million different things. Just looking for a ballpark number

[Allure]

I'm 30 right now, I have no retirement, and I'm going to go next week to start probably a roth IRA. I was thinking about 1 million in a retirement would be enough for me. My wife has a good/very good job and has been saving the max each year for the past 9 years. Between me and her I know we will be fine. Who knows where social security will be when I retire. I was just looking for a balpark figure of what a good amount to live would be. I know its all depends on a million different things. Just looking for a ballpark number
Williams - you are way ahead of the game since you started saving at 21. :clapping: Many people wait until their 30's or 40's to think about saving for retirement

My wife & I started in our early 20's & now at 38 & 39 we are well on our way. You don't have to make a ton of money as long as you save regularly & make sound investments. The big question is what will health care cost.

[Uranus]

Williams - you are way ahead of the game since you started saving at 21. :clapping: Many people wait until their 30's or 40's to think about saving for retirement

My wife & I started in our early 20's & now at 38 & 39 we are well on our way. You don't have to make a ton of money as long as you save regularly & make sound investments. The big question is what will health care cost.

Reread the first 8 words of my last post. My wife started not me. In this day and age, marital status changes like the weather. I need my own!

[Allure]

Sorry! & i know what you mean. I am planning for just such a change in the weather myself.
Sometimes i read to fast. I pend to much time on here as it is.:dizzy:

[Roger]

A good financial planner will be the first good investment. The taxing rules sometimes get complex, and a skilled planner will know the best way to get the right balance of return and risk. Just making an investment for high rates of return may not be the best plan for you. It sounds right, but your risk may be much higher than appropriate (or comfortable) for you.

Yes, a planner will cost you some money. But, if the right decisions are made the cost will be returned many times over in returns.

Oh yes, take some advice from others on the Forum regarding getting a professional to do the job for you, at least work with you. We hear the merits of hiring a professional to do lawn care. Isn't planning for retirement far, far more important than if the lawn looks good?

[PTP]

When people are planning for retirement, they often think of stocks, bonds, mutual funds, ira's, etc, but one thing that is often missing from the equation is real estate. It takes some work but the returns can be extraordinary.

The returns that you can receive will vary on the type of investing that you do. A very conservative investor can reasonably see a 25% return (these numbers can very greatly in either direction) per year. A more agressive investor can see 1,000% or even much more per year.

I don't want to hijack this thread so I will start another thread on this topic.

[jc1]

A "Simple IRA" will allow you to put away up to 10k a year pretax. Talk to a financial planner to cost is minimal to get set up. If you have your wife as an employee you can offer The simple to her and she can put away upto 10k also aslong as her salary is higher then 10k, then the business can match her contribution up to 3%. All pre tax savings for retirement

[Mow Right]

Oh yes, take some advice from others on the Forum regarding getting a professional to do the job for you, at least work with you. We hear the merits of hiring a professional to do lawn care. Isn't planning for retirement far, far more important than if the lawn looks good?

I suppose so, considering I don't even care what my lawn looks like, and I would like to get a jump start on retirement...

How much does a financial planner cost? Or somebody maybe that could do the stuff for me to get an LLC and set up some type of retirement.

Do they charge by the hour? Would a 401k cost like $1000 to setup or what?

Thanks

- Josh

[Allure]

When people are planning for retirement, they often think of stocks, bonds, mutual funds, ira's, etc, but one thing that is often missing from the equation is real estate. It takes some work but the returns can be extraordinary.

The returns that you can receive will vary on the type of investing that you do. A very conservative investor can reasonably see a 25% return (these numbers can very greatly in either direction) per year. A more agressive investor can see 1,000% or even much more per year.

I don't want to hijack this thread so I will start another thread on this topic.

Is this the new math i keep hearing about. While those #'s are possible to achieve they are unrealistic goals to expect to average from year to year. The stock market's historical average is somewhere around 10%.

[MSS Mow]

A good financial planner will be the first good investment. The taxing rules sometimes get complex, and a skilled planner will know the best way to get the right balance of return and risk. Just making an investment for high rates of return may not be the best plan for you. It sounds right, but your risk may be much higher than appropriate (or comfortable) for you.

Yes, a planner will cost you some money. But, if the right decisions are made the cost will be returned many times over in returns.

Oh yes, take some advice from others on the Forum regarding getting a professional to do the job for you, at least work with you. We hear the merits of hiring a professional to do lawn care. Isn't planning for retirement far, far more important than if the lawn looks good?

Now that's advice worth taking to the bank.

[PTP]

Is this the new math i keep hearing about. While those #'s are possible to achieve they are unrealistic goals to expect to average from year to year. The stock market's historical average is somewhere around 10%.
I was not talking about the stock market. I was talking about real estate.

[Mow Right]

I was not talking about the stock market. I was talking about real estate.

I've still never heard of somebody getting 25% return without aggressively investing, is it possible? Absolutely, but still doubtful....

So are you talking about buying apartment complexes or what? because that, in it self, sounds like a different can of worms...

[PTP]

I've still never heard of somebody getting 25% return without aggressively investing, is it possible? Absolutely, but still doubtful....

So are you talking about buying apartment complexes or what? because that, in it self, sounds like a different can of worms...
I don't know what you mean by "agressively investing".

When I invest, I do my homework, put some effort into it, and get good returns. A lot of people, when they think of investing, think of handing their money over to some "professional" that will do the work for them buy placing it in a particular fund or something. I don't do that.

25% can be done on the low end. It is not unheard of or even unusual. It is common - at least in my world it is. In the world of IRA's, 401K's, mutual funds, and CD's, it is not so common.

Here is an example. You buy a house for 35K. It needs to be fixed up which will cost 15K. Now the house is worth 75K. You just made 25K. Also, instead of selling the house, you can lease or rent it out and make even more profit.

I just did something similar - except I did not fix up the house. I flipped to another investor for a quick 10K profit.

This is only one example. There are lots of ways to make money in this.

[MarcSmith]

no matter what you, many funds have the optin to do automatic deposits form your bank account... just set it up to take the money out a few hundred at a time through the entire year, so you get used to running on less money rather than trying to shell out 4 grand all at once.

[Roger]

Some thoughts to consider about retirement: (especially for those wishing to retire at an early age)

http://www.foxnews.com/story/0,2933,235562,00.html

[Mow Right]

Here is an example. You buy a house for 35K. It needs to be fixed up which will cost 15K. Now the house is worth 75K. You just made 25K. Also, instead of selling the house, you can lease or rent it out and make even more profit.

I just did something similar - except I did not fix up the house. I flipped to another investor for a quick 10K profit.

This is only one example. There are lots of ways to make money in this.

I need to take some real estate classes...

[topsites]

Yes, I do have an accountant, he got me started on this lol.

I read through this thread earlier today and it got me wondering how much does it take to retire and live happily. Then I got a flire from my bookkeeper and the same question came up because the flier was about writing off expences and retirement funds. So what does it take to retire. I know it differs from location to location and by person by person, but has anyone ever heard of a number that one should have or be close to to be able to retire?

You need to provide yourself with enough income to pay the bills...
Likely you'll follow your current budget to a point.

So, check your Social Security Benefits first...
I usually get one letter a year (or maybe it's every so many years) that tells me how much SS will pay me when I retire.
This is at least 50% of the factor that determines WHEN I will be able to retire.
As early as 62 or as late as 69, the longer I wait, the better my pay (and the shorter the time left).

On top of that, I add other income (perhaps you rent out a room, or you get some kind of permanent check for whatever reason).
This has little to do with when, usually...

Then, you need savings, and to be quite blunt, the interest on the savings should be all that is needed, since you can never be quite sure how long it must last.
This takes the rest of the cake when reaching the decision of WHEN.

To say the least, it pays to learn to live frugally.
In my case, I am thinking a k a month should be enough, but I'm working towards more as it would be nice to get out of the house some time.

And obviously, more is better and there is no such thing as too much :laugh:

[Roger]

Today's Wall St Journal has an entire segment of the paper devoted to retirement planning. There is one primary article that includes much information about planning, items to consider, withdrawals, tax consequences, misconceptions, etc.

Here is the online link:

http://users1.wsj.com/lmda/do/checkLogin?mg=wsj-users1&url=http%3A%2F%2Fonline.wsj.com%2Farticle%2FSB116544325824442699.html%3Fmod%3Dtodays_us_nonsub_journ alreports

However, it requires a paid subscription to read online. If you receive a daily paper edition, you will find it. If not, perhaps you can contact a friend who gets the paper edition and have them save it for you. The topic is covered in much detail across several articles.

Topsites, your idea of 1K per month will cover your basic health care costs, not much beyond.

[ant]

topsite: did you look into the solo 401k?

[causalitist]

you might want to consider putting half in a roth ira, and half in a regular "cash" investment account. the cash one you will get taxed only whenever you sell something .. but you can take it out whenever. its really a trade off, the roth has huge tax benifits but those age restrictions .. i personally have both a tax sheltered roth and just a regular account, i put about 25% in the regular ... i use ETF's and buy in $1000 or bigger lumps, thats the most tax efficient way to invest. my expenses are just $7 for each purchase and 0.10% per year ... super cheap.