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Retirement Fear
Old 07-30-2013, 08:39 AM   #1
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Retirement Fear

Hello,

I am 51 and just getting started saving for retirement with less than 25k in Roth/401k.

I don't have any credit card debt and recently short sold a house so I don't own a home and am going to need to rent for two more years before I can buy again but hopefully I can pay off a 15 year mortgage before I retire..but have a student loan

I have no children and am not married.

I earn a pretty good wage and am currently saving 12% but just met with a financial advisor and am planning to increase that to 20%.

Need some help or encouragement..
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Old 07-30-2013, 09:11 AM   #2
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Welcome. I didn't start saving until I was 35, I'm 54 now and retiring in 4 months. You sound like you know what you have to do, you can make it happen!
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Old 07-30-2013, 09:16 AM   #3
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Like my grand pappy used to say, "The best time to plant a tree was 30 years ago, the next best time is today."

Plant your wealth tree. Water it, fertilize it, and prune it when necessary. Guard it from those who would chop it down for their own fire wood, or take its fruit to satisfy their own greedy appetites. Watch it grow. 15 years will go by more rapidly than you like. Read and learn about ways to save money. For most of us a dollar saved is like earning about $1.35 (before taxes). Often it is easier to save a dollar, than earn a dollar.

But don't be to cheap. Take some time to enjoy life and smell the roses. The goal is to retire in your mid 60's I assume, not spend 15 years of your precious life in misery.

When you reach the mid 60's, look around you. You will find many people of the same age still working, in debt with barely a penny to their name, unable to retire, and wondering how they will live on nothing but social security. Sad, but true. Thankfully, you will have saved yourself from such a fate.
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Old 07-30-2013, 09:49 AM   #4
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White you are not in a great situation, it would not help to cry over spilled milk.

I'd recommend to start to keep track in writing about each cent that comes in and is spent.
This will help to achieve the 20% saving rate - or more.

Why a house in 2 years? Is that really wise? Do you need that much space?
You might want to move to some low cost part of the country later in life - or to some part where part time jobs for seniors are available.

Educate yourself about money management: What's the best overall Money Management book?
I'd highly recommend Ralph Warner's "you do not need a million to retire...".

Mr. Money Mustache gives lots of advice on reducing cost of living: Mr. Money Mustache

Take care of your health. Health related cost can kill all your savings.

A bit more of your story might help us to be more helpful.
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Old 07-30-2013, 11:12 AM   #5
Confused about dryer sheets
 
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A little more info.

The reason I want to buy a house is that I want to have a place that I can live in when I retire, hopefully that is paid for.

I have no credit card debt.

I finished school in 2000 with a degree in IT and have a $25k loan at 6.375%

I want to start making double payments on this loan:

Minimum Payment: $289, paid off in 9 years, 10 months
Interest Paid: $8,810

Double Payment: $578, paid off in 4 years, 2 months
Interest Paid: $3,567

I have 2 interest free loans
1). $800
2). $744

Thanks for your help..
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Old 07-30-2013, 01:17 PM   #6
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You can do it. Go for the 20% savings and cut costs as suggested by chris2008. You still have a lot of time compared to some of my friends who have a negative net worth and are nearly 60 years of age.
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Old 07-30-2013, 02:59 PM   #7
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Quote:
Originally Posted by drdexter33 View Post
A little more info.

The reason I want to buy a house is that I want to have a place that I can live in when I retire, hopefully that is paid for.

I have no credit card debt.

I finished school in 2000 with a degree in IT and have a $25k loan at 6.375%

I want to start making double payments on this loan:

Minimum Payment: $289, paid off in 9 years, 10 months
Interest Paid: $8,810

Double Payment: $578, paid off in 4 years, 2 months
Interest Paid: $3,567

I have 2 interest free loans
1). $800
2). $744
This is what I would do in your shoes (I'm not a planner, I'm not a pro, just my opinion):

- I would definitely pay down the 6+% loan quickly. That's a "guaranteed return".
- I would build up an emergency savings of 3-ish months worth of expenses if you don't already have it.
- I would figure out a way to increase my savings rate even over 20%. With no family to support, you don't need a big place, you don't need a fancy car. I would really trim expenses without being miserable. When you start late, you have to save more to try to make up ground (my parents had to).
- Work with your planner (if you feel you must have one) to determine what AA is best for you. You may have to take a little bit more risk depending on your timeline.
- Really think about what kind of place you need to live in retirement. You may be tempted to buy a bigger, nicer house than you need. Thing is, that single expense will dictate more about when you're able to retire than anything else. Really look at getting good value and what you need there so you can pay it off while still maintaining a high savings rate!

As others have said, you recognized your situation earlier than a lot of people. And you'll be better off for it. Good luck!
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Old 07-30-2013, 04:43 PM   #8
Confused about dryer sheets
 
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Do you recommend using a financial advisor?
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Old 07-30-2013, 05:49 PM   #9
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Originally Posted by drdexter33 View Post
Do you recommend using a financial advisor?
Your financial situation seems relatively straightforward.

The fee a financial would take on your capital can have a VERY SIGNIFICANT impact on your savings (1% doesn't look like much, but it does add up in a mind-boggling way, the power of compounding running against you). And well, given where you are in life, you don't want to waste money...

If you have some basic math skills, read a good book on Passive Investing, and you will probably figure out that you can do without a financial advisor, and be in a better shape by doing so. It's really quite simple... Surprisingly simple!

Now if you really feel safer in seeking professional advice, then make sure to hire an advisor requesting a fixed fee, nor a % of your savings. Ask many questions to understand WHAT he's doing and WHY. And double-check the answers by asking questions on this forum. After a couple of years, you'll probably figure out you don't need the guy any more...

Good luck. You're certainly starting a tad late, but hey, with a bit of common sense, you'll make it.
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Old 07-30-2013, 07:11 PM   #10
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Quote:
Originally Posted by drdexter33 View Post
Do you recommend using a financial advisor?
I don't, but I have been reading/studying/learning about personal finance since I graduate college and started working 14 years ago. I can't speak for your comfort level with investing, saving, etc. All I can say is that paying someone to manage your money for you starts you at a disadvantage, and rarely do those people make a marked difference compared to an informed/educated investor. Fees take a big dent out of any portfolio, whether it's via fund expenses, trading commissions, or paying an adviser.

It just really depends on what your personal comfort level is and how much time you're willing to invest in learning. If you DO use a planner/adviser, I would recommend using a fee-only adviser, rather than one who gets paid by trading or on commission.
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Old 07-30-2013, 08:10 PM   #11
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I may be the only one on this entire forum to give this advice - but I ended up with a financial advisor, and am paying way more fees than I should, and for me, it was the smart decision. Here's why. 25 years ago we got a $20K inheritance out of the blue. Our first real start on building up some assets. Our kids were young, and with 15 or 20 years to invest, what a great college fund. So i stashed it in a money fund until I could pick the right no load mutual fund(s). And it sat there for 12 years, earning money fund rates. And I never could settle on the perfect fund or pull the trigger and put the money to work. Finally in 1999 I went to a broker, laid out all my money, and started investing it more or less rationally. This was about 6 months ahead of some market correction or other. Value went south right away. I paid broker fees for every transaction. Still, for me, the best decision I ever made.

For most people here, that would be a bad strategy, but for me, sitting with the broker once a year forces me to make decisions about my investments. And having the money in the market earns me more than I spend on the broker.

I wish I could do the low cost, do it myself, option. I know I should. But for me, it just didn't work - so I've made my peace with paying someone so I can make sure it gets done.
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Old 07-31-2013, 07:45 AM   #12
Confused about dryer sheets
 
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If you have some basic math skills, read a good book on Passive Investing, and you will probably figure out that you can do without a financial advisor, and be in a better shape by doing so
Any book recommendations?

Thanks..
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