So, how much are you trying to save for retirement?

[aida2003]

Yeah but it's better to plan for the worse, save more then end up up the creek when you retire. I'd rather get used to stash as much cash as possible now than later.

I agree. Since we cannot predict future (some pessimists even predict that the USA will slowly go down and down long term ), it's still better to save and stay anti-consumer.

[ceejay74]

Currently I'm way behind. I only came to my senses last year, so my first goal is pay off credit card debt as fast as I can, and then I'll save and invest as aggressively as I can. Broken Arrow recommended a Wall Street Journal beginner's book so I've asked for that for my birthday. Other than that, can I ask whether you are all self-taught or if some of you pay a financial planning professional--be it a single person or a big company like Ameriprise? I'm still a year or more away from doing anything but my minimum match amount to my 401(k), but I want to be prepared because I'm going to save like the dickens once my credit card debt goes away! My current goal is simply "as much as I can and still live a comfortable existence," but I know I need a better plan than that. :-)

[jIM_Ohio]

Currently I'm way behind. I only came to my senses last year, so my first goal is pay off credit card debt as fast as I can, and then I'll save and invest as aggressively as I can. Broken Arrow recommended a Wall Street Journal beginner's book so I've asked for that for my birthday. Other than that, can I ask whether you are all self-taught or if some of you pay a financial planning professional--be it a single person or a big company like Ameriprise? I'm still a year or more away from doing anything but my minimum match amount to my 401(k), but I want to be prepared because I'm going to save like the dickens once my credit card debt goes away! My current goal is simply "as much as I can and still live a comfortable existence," but I know I need a better plan than that. :-)

Investing learned through the school of hard knocks. I've been on sites like this for years, and picked up the basics along the way.

Paul Merriman (CBS Marketwatch) had some good columns when I started investing in 1997.

Smart Money magazine was recomended when I bought a magazine from someone as a fund raiser. That helps too.

Motley fool, fundalarm, misc.financial-planning all help. The misc.financial-planning group is probably the best one- as the topics which are covered there show how broad a knowledge base is needed to solve a given "problem" and understand where that will put someone a few years later.

The learning never stops. The issue is know the basics on a lot of subjects, so when you read something which ties two topics, two basics, together, you have a good base to build on.

retirement saving and taxes are two independant issues. Withdraw rate is another issue. Debt payoff is another issue. Dollar cost averaging is another issue. Mortgage interest is another issue. Asset allocation is another issue. You need to learn about most of these topics one way or another so you can paint your own picture.

I think taxes are my weakest area- knowing how deductions work, and knowing when to itemize vs use standard deduction, for example.

I also think predicting the future is an area I need work on too.

[Broken Arrow]

ceejay: I'm self-taught, though I would say I'm still very new at all this.

I know we all emphasize being aggressive, but it isn't the ONLY way to invest. It really depends on your financial situation at the time and your actual risk tolerance. For example, I'm in my early 30's and I am just starting out, so I can afford to be very aggressive. Well, that and it's somewhat my personality anyway so.... The point is, there are also times when being conservative is called for, and there is nothing wrong with that.

If you're an active investor, you'll also want to know several different strategies to use to adapt to the ever-changing market climate. For example, when the market rebounds and is in a good bull run, you'll see me starting to take on a more conservative position.

If you really want to know the ABCs investing, then yes, I think the WSJ's booklet is a quick and fun read to get you up to speed. If you're looking for a book to actually show you how to invest, then I recommend the Bogleheads' Complete Guide to Investing. I haven't finished it yet, but so far, I like it a lot. Even if you don't end up investing in index funds through Vanguard, it's quite informative, and it will give you the necessary foundation to build on top of that. However, that book is definitely geared towards conservative investors that prefer index funds through Vanguard. If that's what you're looking for, your bible has arrived.

[Snave]

I'm with jIM OHIO on this one. I have learned by reading a lot. I am not the smartest person when it comes to investing and which funds to necessarily choose, etc... but I know the basics, the amounts I will need, the vehicles to get me there (401K's, roth's 529's, etc...) and when I am investing I do understand the loads, etc... I read SmartMoney and other magazines as well, so I do know about some funds and performance (probably enough to be a danger to myself). But, for some things I do use an expert. I do have my taxes done professionally and I do do have someone I work with for my invest choices. I guess that I know my limits and ask for help where appropriate.

[ceejay74]

BA: I think I misspoke (or wrote, I guess). When I said "aggressively" what I meant in my head was "putting as large a portion of my income as possible toward it."

I think I'm middle-of-the-road riskwise. I don't mind taking some risks because I come from a healthy and hardworking stock and so does my man, so we will probably be working well past retirement at least part-time. (My dad could retire comfortably right now, but he's still working and just now adjusted his workweek to less than 40 hours. He's 76 years old.) On the other hand, I think about what if something happens and we can't work? I'd like to know we have some solid, conservative investments, even if it means living more modestly than if we'd doubled down on aggressive investments. :-)

So at least I know my risk tolerance. Now I just need to figure out the combination of investments that matches my personality!

[Scanner]

1 million will be plenty.

It's just that Americans are greedy Smurfs.

You didn't get into the discussion here but I don't plan to retire and hop cruise boat after cruise boat in my retirement. That's the Baby Boomer definition of retirement:

1. Buy a Buick advertised by Tiger Woods
2. Go to the local hospital and get DEXA's, yoga, and other health care
3. Go cruise on Princess Cruise Lines

The marketing gurus will have to totally figure out Generation X as different.

I don't particularly have a lavish travel bug (my wife can go without me if she wants to travel the world, thus cutting it in half for our family) and after age 55, when I have my $1,000,000, hopefully, I'll be working 15-25 hours/week in something until I am age 75.

I also plan to be totally stocks/equites until 75, maybe 80, just diversified across commodities, real estate and stocks.

That is. . .I never plan to sit there and collect an annuity/ponzi scheme/SSI.

[Scanner]

BTW, speaking as a doctor who deals with a lot of work-related disability:

To all the males:

Don't retire and live a life of leisure.

You'll will die/.health will decline within 1-3 years along with driving your wife crazy.

I have seen it time and time again.

You don't have to work/work. . .but I would somehow be industrious - charity, church, work, business.

One fellow I know loves baseball and he is a hot dog vendor at the local baseball park handing out pendants/stuffed toys (you know. . .trinkets. . .not hot dogs but he walks the stairs all over the stadium). The Atlantic City Surf. Probably makes $4000-8000/baseball season.

He's the guy who talked me into silver last year, now up 27% for me.

Females:

Have fun. Live the life of leisure. You'll be no worse for the wear.

[Snave]

I am someone that does want to travel, have the nice car, etc... and I hope (and hope is not a strategy) that we will have more than enough to retire comfortably do those things. Even if we never do, it will be nice to know that financially we could. That's why we are saving so much now. We are saving about 30% now and if things continue to go as planned, we will significantly pass the target to be at 100% of our current salary (and that would exclude any ss or pensions). In fact, it will be more like 165% of our current salary. Throw in ss and my pension and we will be closer to 200%. If I'm right, great for me. If I'm wrong, still great for me. I can be off 50% and still be at 100% of my income. If you are wondering why I would need that much money, I don't. But, what am I suppossed to do, go blow the 30% savings now. If I don't need it, why not save it.

[zetta]

I like the calculator at How Much to Retire?

My goal is $4.3 million at age 60.

[aida2003]

BTW, speaking as a doctor who deals with a lot of work-related disability:

To all the males:

Don't retire and live a life of leisure.

You'll will die/.health will decline within 1-3 years along with driving your wife crazy.

I have seen it time and time again.

You don't have to work/work. . .but I would somehow be industrious - charity, church, work, business.

I think I should pass this advice to my DH . He says after he retires he'll devote his time to playing chess, gardening, and reading. Unless I work myself at that time (FT or PT), I think it'll drive me nuts to see him at home 24-7.

[Broken Arrow]

I think I should pass this advice to my DH . He says after he retires he'll devote his time to playing chess, gardening, and reading. Unless I work myself at that time (FT or PT), I think it'll drive me nuts to see him at home 24-7.

But honey, I'll even let you pick which chess color you want this time! Honey?

[disneysteve]

This thread has gotten me thinking a lot about our retirement planning and in the past week, I've gone over and over the numbers and used various online calculators trying to see where things stand and I still don't know if I'm setting the right goal.

I'm aiming to have 100% of preretirement income in retirement, but 100% of what, exactly? It wouldn't be 100% of what I actually earn, because that isn't what we currently live on. We invest 18% of my gross for long-term savings including retirement and college. We won't be doing that in retirement, so does "100%" really mean 82%? We also won't have our mortgage (principal and interest) or home equity loan. Those payments take another 9% of gross. So does "100%" really mean 73%? And some planners still say 80 or 85% of income is adequate in retirement. So would that mean 80% of that 73%, or just 58% of current income?

What figure are all of you using in doing your retirement planning and setting your savings goals?

[jIM_Ohio]

This thread has gotten me thinking a lot about our retirement planning and in the past week, I've gone over and over the numbers and used various online calculators trying to see where things stand and I still don't know if I'm setting the right goal.

I'm aiming to have 100% of preretirement income in retirement, but 100% of what, exactly? It wouldn't be 100% of what I actually earn, because that isn't what we currently live on. We invest 18% of my gross for long-term savings including retirement and college. We won't be doing that in retirement, so does "100%" really mean 82%? We also won't have our mortgage (principal and interest) or home equity loan. Those payments take another 9% of gross. So does "100%" really mean 73%? And some planners still say 80 or 85% of income is adequate in retirement. So would that mean 80% of that 73%, or just 58% of current income?

What figure are all of you using in doing your retirement planning and setting your savings goals?

There are two issues here
1) A person's desire to retire
2) Financial independance

Meaning I want to retire now, but do not have the financial assets to do it. Some people might have the money, but need something to do with their time, so they keep working.

I will concentrate on #2, but this implies a person wants to retire at the earliest possible time.

I would keep the mortgage factored into all calculations (for expenses) because it's possible financial independance comes first (where you have enough money for all current expenses, with a mortgage which needs to be paid off). Some people use "paying off mortgage" as the baseline for the earliest possible date they retire, and based on my anecdotal research, paying off mortgage first is NOT a requirement. If you have the financial assets to withdraw 4% and sustain the mortgage payment within the 4%, then retire.

The key is to have 4% withdraw rate cover the expected expenses. A 60-40 portfolio can sustain itself for 40-60 years, so the risk of running out of money is really low. Another board I go to has something called firecalc, and that calculator helps with probabilities a given asset allocation, with a given withdraw rate, will work.

I would concentrate on withdraw rate as the factor which drives financial independance. 3% or less withdraw rates are usually close to 100% success rates (60-40 portfolio), with money left. 4% withdraw rates last for 40-60 years most of the time (may not leave much money left).

[Snowgirl]

This thread has gotten me thinking a lot about our retirement planning and in the past week, I've gone over and over the numbers and used various online calculators trying to see where things stand and I still don't know if I'm setting the right goal.

I'm aiming to have 100% of preretirement income in retirement, but 100% of what, exactly? It wouldn't be 100% of what I actually earn, because that isn't what we currently live on. We invest 18% of my gross for long-term savings including retirement and college. We won't be doing that in retirement, so does "100%" really mean 82%? We also won't have our mortgage (principal and interest) or home equity loan. Those payments take another 9% of gross. So does "100%" really mean 73%? And some planners still say 80 or 85% of income is adequate in retirement. So would that mean 80% of that 73%, or just 58% of current income?

What figure are all of you using in doing your retirement planning and setting your savings goals?

My target income for retirement is about 80% of my current salary, with inflation. I find the 70% recommended by many planners too little, since I don't expect my expenses or lifestyle to lower significantly at retirement. Right now I save 18% of income on retirement, so 80% makes for a nice reasonable figure. Since my salary will increase over the years (I hope!), those numbers might not be valid in 5 years, but I expect I will be able to save more with a bigger salary, and that any kids related expense will be gone by retirement, so it evens out in my head. Keep in mind I'm still young (30), so I approximate a few things!

If I want to retire in 25 years at 55 (aggressive goal!), and project to live until 90 with an income of 50k$ actual $, this will be 82k$ in the first year at 2% inflation. The capital will decrease gradually until my death, and income rise with inflation. In the 80-90 years range, I will probably need a bit less, so money could keep longer. In essence, I target to save 1.6 millions for myself, same for my boyfriend. Astounding! But with our current balance, a 18% contribution, and with 8% return until retirement, we should be OK! Time will only tell, and working in retirement is a very good possibility.

RRSP Calculator

I love this calculator, because it factors in inflation, automatically increases your saving with inflation if you want, and can change the rate of return after retirement. It's Canadian, for savings in tax deferred account, but dollars are dollars and our maths are the same! I also found a nice spreadsheet on Wisebread if anyone is interested, the results are similar, but you can keep the information on your computer, and you can adjust for other things if you want.