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Retirement Planning Advice

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exbellicus
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Retirement Planning Advice  Reply with quote  

Hello finance experts! Looking to get some tips on planning for retirement. I've been researching on the web and am a bit overwhelmed by all the different options out there.

Age: 23
Married
Housing: Renting An Apartment
My Income: 54000 before taxes/deductions
Future Expected Income: 70000 by 2017, 82000 by 2022
Pay: Bi-Weekly
Wife's Income: 12K (student)
Wife's Expected Income as of 2014: $30-$40k
Monthly Expenses:
Rent: $770
TV/Internet: $100
Utilities: $100
Food/Hobbies/Etc: Not tracking yet
Auto Insurance: $80
Debts: 0
Children: 0, Planning to have two starting in the next 5 years.
Expected major purchases in the next 5 years: 2 Vehicles, 1 House

I have mandatory enrollment in a TMRS account for my retirement. www.tmrs.org/ I currently have $600 in this account from my current job. I am starting a new job in 2 weeks and I they also match up to 200% of my 7% max contributions.
Here is data from the city I'll be working for.



In addition to this account, should I be investing in another account specifically for retirement or will this be sufficient? [/img]
Post Sun Oct 14, 2012 2:21 am
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coaster
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I think it's great that you're thinking about this now already; and even better that you have the resources to do something with it. But on the other hand, at your age you really don't need to get too wrapped up in it. Your main focus now should be on getting your life, your career, and your family all going in positive directions, and that's already a lot.

I see only two things you really need to do right now: put in as much money into your employer's plan that gets the match. Rule #1 is: never turn down free money.

The second thing is any excess funds you want to put away over and above that should be put into investments that concentrate on *growth* and not on income. One way to let the professionals adjust this automatically over time is to invest in what's called "target" funds. They adjust the investment mix over time to be best for your current age and time remaining to retirement. Assuming you retire at age 65, a "target 2050" or "target 2055" fund would be appropriate. You can invest in such a fund in a taxable account if your contributions to your employer's plan are too much for you to put any excess in an IRA.

~Tim~
Post Sun Oct 14, 2012 5:22 am
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exbellicus
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Thanks Tim.

Another question. Lets say theoretically my wife and I could save 20k/yr for 5 years and put 100k cash down on a house. Would that be more advisable than buying a house in about a year and not pay 40k in apartment rent over the 5yrs?
Post Sun Oct 14, 2012 6:46 pm
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nbrown01
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Hello you're doing a great job for your age. I would always look for safe aggressive streams of income at your age that way once your at the retirement age of 65 for some by some studies are showing it to rise to 75-85 then by that issue you are more than secure as the others of your peers once you hit that age. Next I would work on monitoring and checking my credit scores every quarter along with signing up with a credit monitoring service normally 6-12 months before I decide to make my home purchase on getting approved with a mortgage. Also have at least 6-12 months reserve for your down-payment of 5-10 percent. I would also take advantage of Roth IRA being they're tax structure that you're not charged taxes on your money once you become retirement age. By the way you're in a great part of the country that the cost of living adjust is great based on your income to purchase a nice size home compared to other states like California Example a $100k home square foot of the average homes are 400-600 square feet compared to Texas is double or more.
Take care and great job.
Post Sun Oct 14, 2012 6:54 pm
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coaster
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quote:
Originally posted by exbellicus
Another question. Lets say theoretically my wife and I could save 20k/yr for 5 years and put 100k cash down on a house. Would that be more advisable than buying a house in about a year and not pay 40k in apartment rent over the 5yrs?

I'd recommend buying.

~Tim~
Post Mon Oct 15, 2012 5:54 am
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oldguy
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quote:
In addition to this account, should I be investing in another account specifically for retirement or will this be sufficient?


I would build a family wealth fund for a couple reasons, and account that grows at about 11%/yr, grows tax deferred, and is immediately available.. (1) It gives you a fallback EF. The qualified accounts are locked away until age 59 1/2. The traditional small savings account (3 to 6 months) is OK to fix the washing machine, get new tires - but it won't cover 6 or 9 months without work, layoff or accident. (2) lt is there for investments in rentals, homes, cars, kids' college, whatever life throws you over the next 30 yrs. (3) If the govt retirement programs are changed, cancelled, etc over the next 35 yrs, alternate plans can't hurt. Do you also get SS?

quote:
Another question. Lets say theoretically my wife and I could save 20k/yr for 5 years and put 100k cash down on a house. Would that be more advisable than buying a house in about a year and not pay 40k in apartment rent over the 5yrs?


The main reason to rent is 'mobility', during your startup years you usually move often. Eg, your new job now, DW's new job in a couple yrs. Usually you need 5 years in a house to cover the realtor costs. both coming & going. So a good sense of a 5-yr minimum horizon is the trigger.

What I tell people - it's good to save $100k for a DP, that insulates you against foreclosures - but then DON'T use it for a DP, retain the use of that capital and get an almost 100% mortgage. (US mortages are the cheapest capital in the world, no where else can you get sub-4% fixed rate capital, locked for 30 years. And, in every 30 yr era of history, you will earn more than 4% - historically about 11%/yr). Eg, your $100k invested at 11%/yr = $2,200,000 in 30 yrs. All you need is discipline to not touch it - lol, no lamburgini.
Post Sun Oct 28, 2012 5:24 pm
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Anton Martin
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Buy A House  Reply with quote  

quote:
Originally posted by exbellicus
Thanks Tim.

Another question. Lets say theoretically my wife and I could save 20k/yr for 5 years and put 100k cash down on a house. Would that be more advisable than buying a house in about a year and not pay 40k in apartment rent over the 5yrs?


Why you should pay rent?, when you can buy your own house, that rent money you can utilize in buying your own house. Go ahead and own your house.
Post Fri Nov 23, 2012 10:05 am
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noah herman
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Re: Retirement Planning Advice  Reply with quote  

Hi,
You asked very interesting question. let me talk with some my friends on that, I will catch you back on it.

Thanks Smile
Post Tue Mar 19, 2013 12:01 pm
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