Jane Galt has a great post about financial planning, especially for younger workers but really for everybody. Naturally, I gravitated towards this section:
My 401(k) savings are not quite that high, but since I started contributing right out of college, I’ve built up a reasonable nest egg for my age, substantially more than the American average of $50,000 according to the Bureau of Labor Statistics. (And I have at least 20 more years of work/contributing ahead of me). For younger workers, I cannot understate how important this book was to getting my financial house in order: “Get a Financial Life” by Beth Kobliner. I know it’s hard to think about retirement and rainy day funds when you’re young, healthy, and carefree but the decisions made when young mark a critical direction for the future.Retirement savings should 15-20% of your income.
Yes, I said 20%.
"20%!!!!!" I hear you screech. "I can't afford it!" Well, then you'd better start developing a taste for cat food. Home equity is going to be a bad way to save for retirement in a country with a stagnating population, as the US will have when I get around to retiring. And Social Security benefits may be slashed, means tested, or otherwise legislated out of your pockets. If you're putting 3% of your salary into your 401(k) every year and hoping that will cover you you're in big trouble.
4 comments:
When I was running my business, I told my freelancers if they opened a SEP-IRA or Roth, I'd match dollar-for-dollar every buck they put in.
1 out of 11 took me up on it.
So...now I'm 45 and due to savings, investments, and selling my successful business, I am retired. But guess who the government will come looking for to pay for their retirement when those clueless 10 out of 11 hit 65 and have $1.93 in the bank to "retire" on?
Which is why my money and I will be out of the US before that happens.
--Toren
Toren,
My only fear for my retirement future is that the government will take a look at my fat 401(k) account and say: "Hey, that Lindholm guys got a lot of cash."
-Eric
That is EXACTLY what I think will happen, which I why I plan to be "unavailable" for looting.
--Toren
I've been thinking about the demographics situation lately and, while all this investment seems like a good idea initially, is that really so for the post-Boomers?
Think of this, 401k, IRA, and other investment vehicles for retirement have been around almost since Boomers have entered the work force. This drives up current demand for stocks, bonds, etc.
Now what happens when the Boomers start needing that money back to retire on? Supply suddenly starts outstripping demand, potentially in a big way.
Are we setting ourselves up for a big market crash in the future?
StargazerA5
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