Learn More than Technology

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Learn More than Technology

Steve Jones - SSC Editor

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February 7, 2019 at 9:05 pm

#382704

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Robert Sterbal SSChampion Points: 11046 More actions · Answer 1

I like the frame of this post because it allows for a more complete discussion of the topic then the investment sites I typically visit.

412-977-3526 call/text

skeleton567 SSCertifiable Points: 5670 More actions · Answer 2

Good morning Steve and all. I just work up to your writing, and will add a few thoughts. I heartily agree on most of your points, and will add a few items.

First, as I have commented before, at my advancing age I can attest to the importance of planning for and contributing to your retirement, especially if your employer will match anything you do. Over our working years together, my wife and I both maxed out the amount we could put into tax-protected savings. Now we are so thankful that we did that,even though it might have been hard to do back then.

Now here is a simple and least painful method to accomplish that. When I was first getting serious about retirement savings back in my 30's, I decided that any time I received a salary increase, I would increase my retirement savings contribution by the net amount of the increase. The first thing that happens is that you receive the maximum that an employer might contribute if your plan includes matching funds. That is like finding money. Second, the increased contributions are fairly painless since you don't get accustomed to living on the increase, so life goes on as all you do is adjust to the inflation factor.

I kept records of all this and found it was very comforting when our tax-free retirement growth became like a 'third income'. Now that we are retired, and have been for a number of years, that third income continues to work for us and 'send us a check'. Now, at 75 years, all I have taken from my tax-protected funds is what the feds require me to remove and pay tax on. The rest continues to grow tax-free until removed.

My final point is to be extremely careful WHO you trust with managing your funds any time they are not managed by an employers choice. We had both good and bad over the years. You need to learn about personal finances and select, with good professional advice, what is appropriate for your situation. The item in particular that was not a good experience for us was investing in annuities at a point in our effort that was too early for that type of savings. You need to focus early on growth and later on income.

Rick
Disaster Recovery = Backup ( Backup ( Your Backup ) )

primitivefuture2006 Old Hand Points: 389 More actions · Answer 3

skeleton567 - Friday, February 8, 2019 8:55 AM
Good morning Steve and all. I just work up to your writing, and will add a few thoughts. I heartily agree on most of your points, and will add a few items.
First, as I have commented before, at my advancing age I can attest to the importance of planning for and contributing to your retirement, especially if your employer will match anything you do. Over our working years together, my wife and I both maxed out the amount we could put into tax-protected savings. Now we are so thankful that we did that,even though it might have been hard to do back then.
Now here is a simple and least painful method to accomplish that. When I was first getting serious about retirement savings back in my 30's, I decided that any time I received a salary increase, I would increase my retirement savings contribution by the net amount of the increase. The first thing that happens is that you receive the maximum that an employer might contribute if your plan includes matching funds. That is like finding money. Second, the increased contributions are fairly painless since you don't get accustomed to living on the increase, so life goes on as all you do is adjust to the inflation factor.
I kept records of all this and found it was very comforting when our tax-free retirement growth became like a 'third income'. Now that we are retired, and have been for a number of years, that third income continues to work for us and 'send us a check'. Now, at 75 years, all I have taken from my tax-protected funds is what the feds require me to remove and pay tax on. The rest continues to grow tax-free until removed.
My final point is to be extremely careful WHO you trust with managing your funds any time they are not managed by an employers choice. We had both good and bad over the years. You need to learn about personal finances and select, with good professional advice, what is appropriate for your situation. The item in particular that was not a good experience for us was investing in annuities at a point in our effort that was too early for that type of savings. You need to focus early on growth and later on income.

How do you save for retirement? Are there services you use that compounds yearly your savings? Thanks!

Robert Sterbal SSChampion Points: 11046 More actions · Answer 4

primitivefuture2006 - Friday, February 8, 2019 9:21 AM
skeleton567 - Friday, February 8, 2019 8:55 AM
Good morning Steve and all. I just work up to your writing, and will add a few thoughts. I heartily agree on most of your points, and will add a few items.
First, as I have commented before, at my advancing age I can attest to the importance of planning for and contributing to your retirement, especially if your employer will match anything you do. Over our working years together, my wife and I both maxed out the amount we could put into tax-protected savings. Now we are so thankful that we did that,even though it might have been hard to do back then.
Now here is a simple and least painful method to accomplish that. When I was first getting serious about retirement savings back in my 30's, I decided that any time I received a salary increase, I would increase my retirement savings contribution by the net amount of the increase. The first thing that happens is that you receive the maximum that an employer might contribute if your plan includes matching funds. That is like finding money. Second, the increased contributions are fairly painless since you don't get accustomed to living on the increase, so life goes on as all you do is adjust to the inflation factor.
I kept records of all this and found it was very comforting when our tax-free retirement growth became like a 'third income'. Now that we are retired, and have been for a number of years, that third income continues to work for us and 'send us a check'. Now, at 75 years, all I have taken from my tax-protected funds is what the feds require me to remove and pay tax on. The rest continues to grow tax-free until removed.
My final point is to be extremely careful WHO you trust with managing your funds any time they are not managed by an employers choice. We had both good and bad over the years. You need to learn about personal finances and select, with good professional advice, what is appropriate for your situation. The item in particular that was not a good experience for us was investing in annuities at a point in our effort that was too early for that type of savings. You need to focus early on growth and later on income.
How do you save for retirement? Are there services you use that compounds yearly your savings? Thanks!

I strongly recommend forums at the bogleheads.org - https://www.bogleheads.org/

412-977-3526 call/text

skeleton567 SSCertifiable Points: 5670 More actions · Answer 5

primitivefuture2006 - Friday, February 8, 2019 9:21 AM
How do you save for retirement? Are there services you use that compounds yearly your savings? Thanks!

Primitive, here are the two things I did.
First, if your employer has a plan, use it. They can make regular payroll deductions, which you never see so are regular and painless. Depending on where you are, in the US these are 401k plans which may include 'profit sharing' contributions by your employer. You don't pay any incoome tax on the amount you contribute or your employer contributes, until you retire, and possibly are in a lower tax bracket. Currently you can contribute up to 15% of your salary and have no tax deducted. Then that grows also tax free for the years before you retire.

Also consider that while the 401k contribution is limited to the 15% or your salary, there is no limit to the taxable investment deposits you can make to other non-retirement accounts.

Even if you do not have a 401k account available, there are IRA (Individual Retirement Account) that are also tax-deductible up to a point, and then regular brokerage accounts that are taxable. These also grow tax-free until you retire.

So how do you do this? A simple thing to do is use a 'bill-pay' system through your bank or credit union. Set up an automatic 'payment' every payday to send an EFT deposit to you investment account. The automatic part provides the discipline to help make this less painful. And the tax penalty for withdrawals helps avoid withdrawing and spending the funds now.

You may have years of fantastic growth, and years of painful losses, but over the years the odds are for good growth on average. You can't panic in the bad years, and can really enjoy the good ones. What you need is the advice and guidance of investment professionals working for you. In fact, the bad years are usually the BEST time to be making deposits, as there it then better future growth as things recover.

My wife and I have used Fidelity (www.fidelity.com) for many years after trying a number of different financial advisers, and they have done well for us ( at times you may need to get forceful to get them to listen to your needs and comfort level, but that would be the same for any others ).

I just checked my old records, and at the point of retiring, I had been depositing $662.90 per month into my savings, all automatic, so no pain.

Rick
Disaster Recovery = Backup ( Backup ( Your Backup ) )

primitivefuture2006 Old Hand Points: 389 More actions · Answer 6

skeleton567 - Friday, February 8, 2019 10:29 AM
primitivefuture2006 - Friday, February 8, 2019 9:21 AM
How do you save for retirement? Are there services you use that compounds yearly your savings? Thanks!
Primitive, here are the two things I did.
First, if your employer has a plan, use it. They can make regular payroll deductions, which you never see so are regular and painless. Depending on where you are, in the US these are 401k plans which may include 'profit sharing' contributions by your employer. You don't pay any incoome tax on the amount you contribute or your employer contributes, until you retire, and possibly are in a lower tax bracket. Currently you can contribute up to 15% of your salary and have no tax deducted. Then that grows also tax free for the years before you retire.
Also consider that while the 401k contribution is limited to the 15% or your salary, there is no limit to the taxable investment deposits you can make to other retirement accounts.
Even if you do not have a 401k account available, there are IRA (Individual Retirement Account) that are also tax-deductible up to a point, and then regular brokerage accounts that are taxable. These also grow tax-free until you retire.
So how do you do this? A simple thing to do is use a 'bill-pay' system through your bank or credit union. Set up an automatic 'payment' every payday to send an EFT deposit to you investment account. The automatic part provides the discipline to help make this less painful. And the tax penalty for withdrawals helps avoid withdrawing and spending the funds now.
You may have years of fantastic growth, and years of painful losses, but over the years the odds are for good growth on average. You can't panic in the bad years, and can really enjoy the good ones. What you need is the advice and guidance of investment professionals working for you. In fact, the bad years are usually the BEST time to be making deposits, as there it then better future growth as things recover.
My wife and I have used Fidelity (www.fidelity.com) for many years after trying a number of different financial advisers, and they have done well for us ( at times you may need to get forceful to get them to listen to your needs and comfort level, but that would be the same for any others ).

Is there a minimum deposit requirement for Fidelity? Also, do those saving compound yearly? How do you know a year is bad? Do you just make payments to Fidelity and trust them to handle the finances? Sorry for the newbie questions, I'm thinking of making accounts for my parents.

giordsl SSC Rookie Points: 25 More actions · Answer 7

giordsl

SSC Rookie

Points: 25

February 8, 2019 at 10:47 am

#2021527

Very well put Steve!

HighPlainsDBA SSCrazy Points: 2611 More actions · Answer 8

Great topic Steve and excellent advice. I particularly like the suggestion that you define success on your own terms. Comparing your life to someone else's is only marginally informative. You have to ask some fundamental questions of yourself and answer honestly. What makes me happy? What doesn't make me happy? What will money do for me? What will it cost me? For me, I wish I hadn't worked so hard in my 20's or at least not where I was at anyway. I had no one giving me good advice. I never worked harder to achieve so little. I was in the IBM world and left it for the crazy and dawning Windows world and for some inexplicable reason the less I try the more successful I've become since then. More accurately, I work a lot less then I did then and make a lot more but I've picked the jobs that were interesting to me and not just the ones that paid more. It also helps that what you like to do pays well of course. After a certain point, the money has diminishing returns on your happiness (for most people I believe).

skeleton567 SSCertifiable Points: 5670 More actions · Answer 9

primitivefuture2006 - Friday, February 8, 2019 10:36 AM
Is there a minimum deposit requirement for Fidelity? Also, do those saving compound yearly? How do you know a year is bad? Do you just make payments to Fidelity and trust them to handle the finances? Sorry for the newbie questions, I'm thinking of making accounts for my parents.

Primitive, so that I don't mislead you, you should check out the Fidelity website for the details, based on the type of account you want - IRA, regular investment, and don't forget 529 plans if you have children that will need education funds. You would also need to consider you parents ages for the type of account that is appropriate.

My wife and I also had five 529 plans for grandchildren to help with their college expenses, and they are now using those funds which have been growing tax free for years.

The guys at Fidelity can help you with all of these, and a great part is that they can help you with it all in the same place. As I worked at various employers I was able to 'roll over' several different plans over the years to a single IRA at Fidelity which helped keep things simple. They will manage the funds for you - admittedly at a fee - so you don't have to manage market timing and different individual investments. They allocate your funds to various investment types based on your age, comfort level, etc.

Rick
Disaster Recovery = Backup ( Backup ( Your Backup ) )

johnk 43251 SSC Enthusiast Points: 170 More actions · Answer 10

Steven,
Good topic. While working in IT for over 30 years, I have always wanted to make my community. Right now, I work for a social service agency serving homeless youth, marginalized and poor. I am using my database administration and development skills for the greater good. Next month, I am starting certificate program to become an advocate for immigrants and refugees in the U.S. My wife and I do have investments, but nothing fancy. Yesterday, I was interviewed by a graduate intern. I gave him the advice to realize that life and business is based upon relationships and not transactions.

Everyone have a great weekend.
John

Steve Jones - SSC Editor SSC Guru Points: 734434 More actions · Answer 11

skeleton567 - Friday, February 8, 2019 8:55 AM
I kept records of all this and found it was very comforting when our tax-free retirement growth became like a 'third income'. Now that we are retired, and have been for a number of years, that third income continues to work for us and 'send us a check'. Now, at 75 years, all I have taken from my tax-protected funds is what the feds require me to remove and pay tax on. The rest continues to grow tax-free until removed.

Congrats to you and glad you're enjoying retirement

Steve Jones - SSC Editor SSC Guru Points: 734434 More actions · Answer 12

giordsl - Friday, February 8, 2019 10:47 AM
Very well put Steve!

Thanks

Steve Jones - SSC Editor SSC Guru Points: 734434 More actions · Answer 13

HighPlainsDBA - Friday, February 8, 2019 10:53 AM
Great topic Steve and excellent advice. I particularly like the suggestion that you define success on your own terms. Comparing your life to someone else's is only marginally informative. You have to ask some fundamental questions of yourself and answer honestly. What makes me happy? What doesn't make me happy? What will money do for me? What will it cost me? For me, I wish I hadn't worked so hard in my 20's or at least not where I was at anyway. I had no one giving me good advice. I never worked harder to achieve so little. I was in the IBM world and left it for the crazy and dawning Windows world and for some inexplicable reason the less I try the more successful I've become since then. More accurately, I work a lot less then I did then and make a lot more but I've picked the jobs that were interesting to me and not just the ones that paid more. It also helps that what you like to do pays well of course. After a certain point, the money has diminishing returns on your happiness (for most people I believe).

Good for you, and I learned this as well. I value time more than money now, and would trade some money for more time if I could. Hard to do at times, but I certainly don't mind paying people to do some things to take them off my plate. Like an oil change. I feel guilty at times, but I know the time saved is valuable to me.

Steve Jones - SSC Editor SSC Guru Points: 734434 More actions · Answer 14

johnk 43251 - Friday, February 8, 2019 11:32 AM
Steven,
Good topic. While working in IT for over 30 years, I have always wanted to make my community. Right now, I work for a social service agency serving homeless youth, marginalized and poor. I am using my database administration and development skills for the greater good. Next month, I am starting certificate program to become an advocate for immigrants and refugees in the U.S. My wife and I do have investments, but nothing fancy. Yesterday, I was interviewed by a graduate intern. I gave him the advice to realize that life and business is based upon relationships and not transactions.
Everyone have a great weekend.
John

Excellent thoughts and that's a great way to use your talents to help others. Best of luck in the future.