posted
Alright, I'm confused. I just received my annual statement. It has this nice little newsletter assuring me that I will one day get something out of the money I am putting in. It says they have plenty of money until 2037, plenty of time for me to retire.
Ummmmmm......
I was born in 1980. That would make me.....57? 5 years before I can even take early retirement. So they are confirming my worst fears?
Posts: 3134 | Registered: Mar 2005
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posted
I get them as well. I was born in 1981 and it says that by the time I am eligible for Retirement benefits I may only receive 50% of what I should due to the lack of funds.
If you haven't already, start contributing to a 401(k). It is the best thing you could do for your retirement. In 2008 I made $1800 for doing absolutely nothing except contributing 5% of my check each pay period. The funds I invested in actually gained money, so between my companies match and the gain the market, I made almost $2,000 for the year. Not a bad return.
Posts: 1937 | Registered: Nov 2006
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posted
Well, even when 2037 comes around, it doesn't mean payments stop, it just means that payments will be larger than income, which either means increased taxes, or decreased payments.
I think that also assumes that the trust fund is actually repaid by the government, who has borrowed from it heavily.
Fixes for the system vary depending on who you ask. Some Republicans say investment accounts: Let people each take their share and put it into the stock market or other personally chosen investments. I actually don't have a problem with a modified version of this. I don't think it should be ALL your portion, only a fraction, and I think it should be regulated so you can't be 50 and have all your money in stocks that can go poof in an instant. Higher yields only come out of playing the stock market if you have a long, long period of time to offset lows with highs to get a decent average return over the lifetime of the investment. Mandating that people can only have so much of their money in more risky assets would decrease a lot of the risk for older citizens.
In general though, experts suggest raising the retirement age, and a slight decrease in benefits. The system as is was never meant to do what people are using it for, or intending to use it for.
Posts: 21898 | Registered: Nov 2004
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quote:Originally posted by Geraine: I get them as well. I was born in 1981 and it says that by the time I am eligible for Retirement benefits I may only receive 50% of what I should due to the lack of funds.
If you haven't already, start contributing to a 401(k). It is the best thing you could do for your retirement. In 2008 I made $1800 for doing absolutely nothing except contributing 5% of my check each pay period. The funds I invested in actually gained money, so between my companies match and the gain the market, I made almost $2,000 for the year. Not a bad return.
I'm a teacher. So unless we have someone messing with our pension, I feel fairly secure. Though we do put in a good chunk into a 403b as well, but its not matched by any one. I actually enjoyed the stock market crash this past year. My mutual funds were funded very cheaply. Just have to remember to sell everything the next time I hear the words, "the market has reached a new all time high".
Posts: 3134 | Registered: Mar 2005
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posted
Heh. I don't have any money to put into a retirement fund, and likely won't until I'm 30, which means missing out on some of the most profitable years of my life I know.
Last year, right after Ford came back from the brink and their stock was going for like a dollar a share, I was a hair's breadth away from putting all my money into Ford stock. I figured I'd take the extra, put it into a retirement fund, and take my original investment back out.
It trades for about $11 today. I kick myself on a near daily basis.
Posts: 21898 | Registered: Nov 2004
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posted
I would wait until after the Congressional probe of the Prius brakes. You might find their stock has a bit more time to spend on the downward trend before it rebounds. If the probe finds some sort of scandal, or for that matter, if sales of the Prius are interrupted as a result, they could take another hit.
Posts: 21898 | Registered: Nov 2004
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posted
401k can be a really advantageous way to save money, but I agree with some advice I read recently from a financial planner that said you should save a significant amount of money outside your 401k before you really start committing money to it. He noted that people often don't have a safety cushion outside of their 401k, and when they really could use some of the money they have saved, often can't access it, or have to take huge penalties for doing so. Save for retirement after you've saved for emergencies and bad fortune.
Posts: 4287 | Registered: Mar 2005
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posted
I've read that as well. You should generally try and save up a cushion to cover your monthly expenses for six months to a year, and then apply all extra money for your 401K. For parents, I've also read it's better to max out 401K matched contributions, and in general, put as much money into your 401K as possible before ever turning to college related funds. This is mostly because considerable funding is often available for college for kids, not so much for retirement funds.
Posts: 21898 | Registered: Nov 2004
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quote:Originally posted by Lyrhawn: I've read that as well. You should generally try and save up a cushion to cover your monthly expenses for six months to a year, and then apply all extra money for your 401K. For parents, I've also read it's better to max out 401K matched contributions, and in general, put as much money into your 401K as possible before ever turning to college related funds. This is mostly because considerable funding is often available for college for kids, not so much for retirement funds.
Not to mention you can take money out for their college. I opened a ROTH IRA to put my daughter's college savings in. No penalty to take it out for her education, and if she doesn't go its tax free retirement income later.
The college savings accounts have penalties if they don't go.
Posts: 3134 | Registered: Mar 2005
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quote:Originally posted by Lyrhawn: Heh. I don't have any money to put into a retirement fund, and likely won't until I'm 30, which means missing out on some of the most profitable years of my life I know.
I'm in my 20s and putting money into a high-interest checking account, which is the best interest I can get right now, about 3% and I'm getting 300 per year for it, roughly.
Those magical compound interest things where you make a million bucks by putting away a lot of money before you are 30 work a lot better if interest doesn't suck. Posts: 1757 | Registered: Oct 2004
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posted
Yeah, even if you want zero risk, you can get a CD that'll get you at least a fraction more. A high interest savings account is good if you need short-term access to the money, but definitely isn't anywhere near the best return you can get, even with the twists and turns of the economy. I've got a good chunk of money in an index fund that's earned over 4% a year since the start of the stock market decline, and that's with big downturns at the beginning (its an emerging markets index fund).
Investing your money in stock market index funds now (rather than when you feel it is for sure on an up-swing) will, with virtual certainty (if the last hundred years of record is any evidence) result in much higher rates of return in the long run. Even with the most conservative index funds (S&P 500).
edit: and even if you were only earning the same interest, it would still be much better for your retirement if you put the money in a Roth IRA, due to the tax advantages (when you withdraw at a higher rate than you're earning now, presumably).
edit yet again: I'm assuming you're maxing out any employer matching, since that's free money.
Posts: 15770 | Registered: Dec 2001
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posted
I'm not counting on getting a penny from social security, and I was also born in 1980. I'm planning on taking care of the retirement issue on my own. Heck, I don't expect I'll ever fully retire anyway; I'll just change careers.
Posts: 1813 | Registered: Apr 2001
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