Making Millions

But even living deaths eventually end, John.* Two months to go.* Creaky rambling Victorian for sale.* Brand new RV on order.* Sh*t-eating grin, heart of gold, a couple of dogs, and the road ahead.* Coming soon to a town near you.

Trailer Trash Tozz

Quote:

Originally Posted by MRGALT2U "A government job with a *good pension". It's a living death. Come on folks. *Just shoot yourself in the head. *You will be happier in the long run.

[Eagle43]

Yeah John, living deaths do end. Then, all you gotta do is outlive the bastards.

CaChing! The sound of another pension check falling into my bank account. Oops, there's another one!

[maddythebeagle]

You dont have to work 30 years, either. You can save on the "side" and just get a smaller pension check and a smaller "life force" sucked from you.

[tryan]

Quote:

I am quite interested in real estate, but I think buying right now would be a big mistake, especially in my area.

You hit the nail on the head .... keep the day job and save like hell. At some point in the next 5-7 years the real estate opportunity of the life time will present itself. And only those who prepared will be in the game... cash will be king.

[geeman]

Quote:

Originally Posted by tryan You hit the nail on the head .... keep the day job and save like hell. At some point in the next 5-7 years the real estate opportunity of the life time will present itself. And only those who prepared will be in the game... cash will be king.

I hope you're right!!!

[justin]

Quote:

Originally Posted by tozz Brand new RV on order.

My parents have been looking at RV's similar to this one with the Benz engine on a Sprinter chassis. What's the approximate price range and lead time for delivery for this model, if you don't mind me asking? I didn't see pricing on their website.

Loaded, they are listing for $85K.* Most (and I) seem to be squeezing out $20K discounts.* *However, with fuel prices edging up, and 20mpg looking better than 6-10mpg, discounts might be harder and harder to get.* I had to wait two months for my H model.* J models are quite rare so the price/wait might be higher/longer.* Can't wait for the trailer park.* I'll wink at the camera to all my ER pals when the Cops video crew arrives.

[Alan]

Geeman said:
But, looking ahead I don’t see any way of accumulating a decent amount of money (over a million or its equivalent in years to come) without owning a business or being a high level executive. In my case I make 45K and when all is said and done, I am pulling in maybe 33k a year.

Don't knock the day job on the head just yet. Be prepared to take a little time to gain experience and invest in yourself. I just ran a simple scenario for starting at $45K, putting away 10% pre-tax into a 401(k) plus a 3% match if your company supports matching. With an average raise each year of 5% and an average return of 10% return on investments you'll make that million over 25 years.

But life will have many twists and turns, hopefully most of them in your favor. If you can make it with your company, then you will probably do well working for other companies, and will way exceed an average of 5% / year in the long run.

I changed my job after 2 years, fully into computing. Within my new company I changed positions every 2 years, and after 6 years changed companies again, then again after 7 years. I have now been with my current company 18 years. I am not a corporate executive, but am now a line manager with a few other professionals working for me.

I expect to retire in 4 years at 55 with a pension of $45K/year, plus deferred pensions from my former companies of $15K/year at age 62. I have just short of a $million in investments today, and can quite easily live on $50K/year net, so expect to have a very comfortable retirement. (I also have a wife of 30 years - married at college - and 2 grown up kids).

This is just to show that it can be done in the traditional "slow" way of doing things. I didn't start investing in funds until 13 years ago, and started with $75K of savings with a 70/30 mix of funds and slowly migrated to a 35/50/15 mix. (Stocks/bonds/cash).

[geeman]

Quote:

Originally Posted by Alan This is just to show that it can be done in the traditional "slow" way of doing things. I didn't start investing in funds until 13 years ago, and started with $75K of savings with a 70/30 mix of funds and slowly migrated to a 35/50/15 mix. (Stocks/bonds/cash).

^--- This is quite inpressive, just the thing I needed to hear.

I think I'm a bit impatient... My friends and I just graduated from college and they all ran out and bought cars and trucks (25K), and I'm still driving my 1992 Honda Accord with 200k miles. I guess I just want to go out and do the same, without any $ worries. They are all in debt, and I 'm not.

[Alan]

Quote:

Originally Posted by geeman I think I'm a bit impatient...* My friends and I just graduated from college and they all ran out and bought cars and trucks (25K), and I'm still driving my 1992 Honda Accord with 200k miles.* I guess I just want to go out and do the same, without any $ worries.* They are all in debt, and I 'm not.

Another thing I have managed is to never have a car note.* Bought my first car when I graduated at age 22 for $200 even though my friends were buying cars with loans now that they had real jobs.* 9 months later moved up to a 3 yr old model. 3 yrs later got myself a new "boy-racer-rover".* All good things come to those that wait.* Just remember that as well as a retirement goal, use a similar approach to other short-term goals.

[wildcat]

Quote:

I think I'm a bit impatient... My friends and I just graduated from college and they all ran out and bought cars and trucks (25K), and I'm still driving my 1992 Honda Accord with 200k miles. I guess I just want to go out and do the same, without any $ worries

Geeman no offense but I hate to hear that. Sounds like you want money for the wrong reasons, i.e. buy whatever you choose because you can afford it. To me money is not material possessions. To me money is freedom and worth more than a friggin brand new car that will be worth zilch sooner or later. You are just starting your FIRE quest so I don't recommend that frame of mind.

[maddythebeagle]

A little rust is a badge of honor in my book. Why are you concerned with what your friends are doing. Most people are in debt up to their eyeballs....

[retire@40]

Quote:

Originally Posted by wildcat To me money is freedom and worth more than a friggin brand new car that will be worth zilch sooner or later.

Every dollar gives you four cents of financial independence.

[MRGALT2U]

Quote:

Originally Posted by maddythebeagle A little rust is a badge of honor in my book. Why are you concerned with what your friends are doing. Most people are in debt up to their eyeballs....

Hello Maddy...........I struggle with this one. Our vehicles are both 8 years old but look sharp. Driving a rust bucket (unless I was OldRancher
or unclemick) ..............I just can't do it; yet. We had a 1990 Jeep
which was in real good shape accept the body kept rusting through.
I sold it and now I kind of miss it as I had so little invested and it was
doing the job. I'm rambling. The point is that having set the
pace for the "non-Jones" for decades, it is damn hard to switch that off,
even for me.

JG

[dandan14]

Quote:

Originally Posted by Andre1969 My grandmother's cousin keeps trying to tell me to get into the government. Only problem there is, my grandma's cousin retired way back in 1980, as a GS-13, and she's under that old system where you didn't pay social security, and you'd get a good retirement. Nowadays, I don't know if it would really benefit me much to go into the gov't. And my Mom, who's been gov't like forever, occasionally mentions that she wishes she'd gone contractor, so she could make more money. I guess the grass is always greener on the other side of the fence. Well, and over the septic tank!

Interesting you should bring this up. I had lunch with a friend of mine in DC this weekend. He went to work for the fed. govt about the time I went to work in the corp. world.
He is now a GS-13 (you can find govt. pay scales here: http://www.opm.gov/oca/05tables/index.asp) and makes pretty decent money. The real kicker is that the federal govt. is one of the few places you can get an old style pension. So if you put in 30 years (or less for a lower percentage) you get 75% of your highest salary (top 3 years averaged) for the rest of your life. It's hard to beat that! I would guess my Personal Pension Acct. would only last 2-3 years at that draw rate.
I was thinking it may be interesting to put together a quick spreadsheet showing the value of the pension in today's dollars. Anyone want to run that spreadsheet and post it?

[maddythebeagle]

I think folks have been throwing around x25 the annual pension for a cola pension. I think that is reasonable.

My state pension will also be the average of the highest 3 wage years. That is something else that I am considering to boost before I take off. I dont know if I want to just take on a bunch of overtime (within reason) right before I leave the last few years.

[azanon]

Quote:

The real kicker is that the federal govt. is one of the few places you can get an old style pension.* So if you put in 30 years (or less for a lower percentage) you get 75% of your highest salary (top 3 years averaged) for the rest of your life.* It's hard to beat that!

I wish!* *I think maybe you're thinking of active duty military.* *Last i checked (many years ago), they offered 50% of original pay at 20 years, and 75% of original pay at 30 years or something similar.

But regular federal employees who retire at 30 years get only 30% of their "high 3" (highest yearly salaries when they worked), not 75%, for their pension.* The other "two legs" are Social security and the TSP.

Azanon
GS-12 Federal employee

[Andre1969]

The federal government used to be really lucrative, under the old system where you didn't pay social security, but paid instead into their own fund. However, any employees hired after sometime in 1984, IIRC, are on a different system that, from my understanding, isn't really any better than your typical non-gov't job where you have a 401k and pay SS,but don't get a pension. My Mom plans on retiring from the gov't when she hits her 39th anniversary. She has enough leave saved up so they count that towards it, actually giving her 40 years. I think she said she'll be making around $60K per year. I don't know what she makes now, but she's only a GS-12. I don't know what step she is, but I think the range is around $61-82K. I'm guessing she's toward the upper end of it.

But then my grandmother's cousin retired back in 1980 from a GS-13 job. I don't know how much she brings in, but it's not much. Barely keeps her afloat. I'm guessing that she probably rose through the ranks really quickly, and while she had some really good earning years, she just didn't have enough years total to get a really lucrative retirement package?

[azanon]

Even under the old Federal system (CSCR), you'd only get 56.25% of your high-3 if you had exactly 30 years of tenure to calculate.* *(1.5xfirst 5 years, 1.75x for years 6-10, and 2x times remaining years worked).* *And yes sick leave does get tacked onto that so it could add up to a year or two more if you had that much.

40 years tenure, under the old system, then should have been approximately 76.25% of her high-3.

Source:
http://www.opm.gov/asd/pdf/ri83-001.pdf

[Nords]

Quote:

Originally Posted by maddythebeagle My state pension will also be the average of the highest 3 wage years. That is something else that I am considering to boost before I take off. I dont know if I want to just take on a bunch of overtime (within reason) right before I leave the last few years.

Ah, the overtime/burnout trap.

The military claims that their "high-3" retirement is 95% of the old "final pay" system. Unless you have a dramatically different pay scale, trying to turn your A into an A+ may be a dangerous exercise in diminishing returns. It's probably easier to spend your time jiggering your ER budget or working a couple more (normal) years.

Quote:

Originally Posted by Andre1969 The federal government used to be really lucrative, under the old system where you didn't pay social security, but paid instead into their own fund.* However, any employees hired after sometime in 1984, IIRC, are on a different system that, from my understanding, isn't really any better than your typical non-gov't job where you have a 401k and pay SS,but don't get a pension.* My Mom plans on retiring from the gov't when she hits her 39th anniversary.* She has enough leave saved up so they count that towards it, actually giving her 40 years.* I think she said she'll be making around $60K per year.* I don't know what she makes now, but she's only a GS-12.* I don't know what step she is, but I think the range is around $61-82K.* I'm guessing she's toward the upper end of it. But then my grandmother's cousin retired back in 1980 from a GS-13 job.* I don't know how much she brings in, but it's not much.* Barely keeps her afloat.* I'm guessing that she probably rose through the ranks really quickly, and while she had some really good earning years, she just didn't have enough years total to get a really lucrative retirement package?

Let's not turn the federal retirement system into the Emerald City. Its biggest advantages, even today, are affordable healthcare and COLA pensions. That's it, end of story, nothing better, pay no attention to the man behind the curtain.

Sure, we all know GS-12/13/14s who are living the life of luxury-- or who at least appear to be doing so. But when I think of the GS system, I think of a woman I knew at my last command. She started working in the IT department during the Vietnam War's Tet Offensive-- back when computers were mainframes with batch punchcards used for "automated data processing". She's had a few promotions since then, and she got a really nice 30-year pin a few years back, but as she enjoys her 38th year she's still a GS-8 and I think she's actually still using the same desk she started with.

She has a rich life and a loving family outside of work and she wouldn't have chosen to do it any other way. She's not gonna be rich in her retirement. But she won't be laying awake at night on a fixed pension wondering if she should spend the rest of her SS check on cat food or on medication, but not both.

If I had to sum up the federal retirement system in one word it would be "security". That also comes at a price...