31 and would like to retire in 25 years with at least 1 million..... How?

[DevrinB]

I'm a 31 year old process operator at a local chemical plant and I would like to retire at the age of 55 or 56 with a minimum of 1 million dollars of liquid assets. I currently have 36k in my 401k and 12k in savings. It is possible for me to reach my goals or perhaps do better?

 

[martyb]

I'd be shooting higher than 1 million in 25 years. A million won't be what it is today in 25 years. Of course, it isn't today what it was 25 years ago, either! The good news is you have PLENTY of time to grow your nest egg. You just have to have the discipline to do what it takes. Max your 401k, max Roth IRAs...live below your means, stay out of high-interest debt as much a possible. Don't forget to enjoy life along the way, but keep your eye on the prize...

 

[Westernskies]

LBYM

Invest every cent you can...Get as much $$ into a company sponsored 401K and/or an individual Roth IRA as soon as you can to take advantage of compounding; time is still on your side in this equation.


Rinse and Repeat every year.


Your fellow swamp dweller Uncle Mick would probably add "pssst... Wellesley."

Lots of financial calculators online that should show you what you need to do on the $$ side, but LBYM is the most important, IMO.








And definitely pay off the Mortgage early....

 

[Arnie]

I'm a 31 year old process operator at a local chemical plant and I would like to retire at the age of 55 or 56 with a minimum of 1 million dollars of liquid assets. I currently have 36k in my 401k and 12k in savings. It is possible for me to reach my goals or perhaps do better?

Welcome. Might depend on how much of a head start you have already, marital status, kids, etc. But at this stage, keep control of your budget, LBYM, be smart about debt, be diligent about saving, keep investing expenses low ... and let time be your friend.

 

[Amethyst]

Something many of us have done is to put pay raises (if we get 'em) in the bank, instead of raising our living standard in step with the raise. Even if it is not a big raise, the constant savings can mount up over time. So there is an idea for you.

Also, people on this forum pay close attention to spending habits. If you have any little habits, like buying coffee every day, you might put that few bucks a day in the bank instead. Again, it mounts up over time.

Good luck!

Amethyst

I'm a 31 year old process operator at a local chemical plant and I would like to retire at the age of 55 or 56 with a minimum of 1 million dollars of liquid assets. I currently have 36k in my 401k and 12k in savings. It is possible for me to reach my goals or perhaps do better?

 

[DevrinB]

Thanks everyone for this very useful information. I'm actually aiming for about 5 million but I at least would like to have 1 million. A few people mentioned the Roth IRA so it looks like I'm gonna have to start one. Thanks again

 

[travelover]

Welcome DevrinB.

Start by reading a few books off this list. You can buy many of them used on line. I like the Bogleheads Guide to Investing as a starter.

Investment Books

 

[DevrinB]

Ok thanks travel

 

[Ginamalou]

Something many of us have done is to put pay raises (if we get 'em) in the bank, instead of raising our living standard in step with the raise. Even if it is not a big raise, the constant savings can mount up over time. So there is an idea for you.

Also, people on this forum pay close attention to spending habits. If you have any little habits, like buying coffee every day, you might put that few bucks a day in the bank instead. Again, it mounts up over time.

Good luck!

Amethyst

More power to you.But there must be other ways.Typical American on a typical day usually eat out!But ..........let's hope it averages.

 

[Ginamalou]

Welcome. Might depend on how much of a head start you have already, marital status, kids, etc. But at this stage, keep control of your budget, LBYM, be smart about debt, be diligent about saving, keep investing expenses low ... and let time be your friend.

I'm like you,only,I 'm already here.You're still on your way. It's dreadful,but I'm positive.I have a husband who have 401k.At this time I already got and spending my 401k we are paying our mortgage .Children out the house my son on his own ,however,my daughter we helped only few bucks. I will try to be frugal.That's why I say I may ,if I have a way not to go back to work.if not,then I'l go and find a job to supplement his our income.One thing people back then do not earn two income,I wish it will be the same.Then people will not hordes.Nor do we need to fill our house with stuff we don't really need.

 

[robbridg]

More power to you.But there must be other ways.Typical American on a typical day usually eat out!But ..........let's hope it averages.

I think you'll find most of the successful people on this forum are not typical.

 

[DevrinB]

Yea I'm starting to realize that you guys aren't typical. That's a good thing though. Being typical is what got so many people in so much debt

 

[Walt34]

Something many of us have done is to put pay raises (if we get 'em) in the bank, instead of raising our living standard in step with the raise.

I remember having a similar conversation with a lady friend at work, who was also torn between spending pay raises and increasing savings. What I did was split the difference, allowing myself to spend half of each raise and saving the other half. Inflation was still romping along pretty good at the time so not increasing spending at all was not, I thought, being realistic. She thought that was a good middle ground.

 

[DevrinB]

I have a few co workers that have told me to do that also... Every year we would get a 3% cost of living raise and they suggested I put it in my 401k.

 

[aida2003]

I have a few co workers that have told me to do that also... Every year we would get a 3% cost of living raise and they suggested I put it in my 401k.

It's wonderful that you've got such savvy coworkers. At my place, everyone avoids talking about their finances and what they do to achieve comfortable retirement in the future. It's their business and they have a right not to discuss it, so I'm happy I've discovered this forum.
PS. There are also ladies who obviously don't shop at Target or Kohl's, so I imagine what they do with their $$...

 

[DevrinB]

Yeah my co workers help me out alot. Especially the older ones. Those guys have been here 30 years and have a few millions saved. I always pick their brains for info.

 

[Andre1969]

I'd agree with others, that you definitely want to shoot for higher than $1M, simply because of inflation and such.

That being said, over the course of 25 years, I'd say $1M should be pretty attainable. Just looking at my own records, when I was 31, ten years ago, I had about $75K combined (investments, 401k, IRA, savings bonds, checking acct). Now, ten years later, I'm hovering around the $660K mark.

Now, I did get lucky in some instances. Some of that came from selling a condo, where I probably cleared around $75K. And most recently, when the market crashed, I maxed out my HELOC and did a lot of investing while stock and mutual fund prices were low.

And I've done other LBYM methods, such as buying mainly used cars, not eating out alot, having roommates, etc.

 

[JmfromTx]

Hi Devrin. I'm new here too. The way we did it was to live on my salary and save my wife's. We put it on autopilot in the mid nineties with Vanguard. Check goes in the bank, Vanguard takes it out once a month and distributes it to our IRAs and other mutual funds according to my instructions. I'm an I&C tech and next Friday is my last day at the plant so if I can do it you can do it better with an earlier start. If I had known what I know now at your age I could easily have twice the money I have invested. (Or be broke because I thought I could outsmart the market)

 

[DevrinB]

Man that sounds like a really good plan but the only problem is that my wife has no income so I gotta do it alone. It's cool though. I figure since I started early I could still save a lot.

 

[Joshua]

From what I have read and seen, it does make it harder when only one half of a couple works, but it still should not be impossible if they are both willing to work as a team to make things happen. My wife was ill for many years and could not hold a job, so we have had to make it on one income. She is trying to start making a small contribution with freelance writing, but that kind of thing takes a while to get off of the ground. So (unlike some) I do not automatically condemn someone as not being serious about finances if he/she does not tell a spouse to pony up or get out.

Different circumstances just require different strategies. There are some expenses that can be cut a lot with only one person working (transportation, childcare, etc.)

I am actually cheating a little bit to make my plans work - I am in the Army, so if I stick around until retirement, I get a (whisper) pension that will help keep us afloat no matter what my personal savings and investments look like around retirement time. *shrug* Not a universal solution, but it works for me. Besides, I like the uniforms. I never have to figure out what to wear to work.

 

[kombat]

I don't mean to pry, but it's relevant to the discussion: Why doesn't your wife work? Is it because you have children, is it for medical reasons, is she in school, unable to find a job, just plain doesn't want to ... ?

If the plan is for her to become employed and contribute to the household, then it's really just a temporary speed bump. But if she's never going to enter the workforce, then that could seriously impede your progress.

Your goal is certainly achievable, but there are several big mistakes young people make that can easily derail them. Avoid making these mistakes, and you should be fine:

1. Have kids
2. Buy a bigger house than you need
3. Get divorced
4. Make a habit of buying/leasing new cars
5. Get sick/have a major accident without insurance

Dodge those bullets and it should be a cakewalk.

 

[NoEZmoney]

I'm no expert but there's some simple tools to commit to memory. One of my earliest revelations about doubling my money was the "Rule of 72's" If you want to know what the yield and term needs to be to "double your money" take factors from 72. Say you want your investment principle to "double" in 12 years? Then it needs to yield 6%, the reverse is also true. Double in 8 yrs? 9%. Now you'll want to keep adding to your investment so as to take advantage of compounding.

This is just a simple tool. Take a look at free online financial calculators like www.timevalue.com under the investment tab, they've even got a calculator to show what it takes to reach $1 milllion. Personally I like Vanguard Targeted Retirement Funds myself. They reduce risk automatically and shift your portfolio to more secure products as you near retirement ( as is conventional wisdom ) so you won't risk everything when you need it most. Good no-load & low expenses too.

My2Cents

 

[Aiming_4_55]

While I will say having kids increases our expenses, I'm not sure all kids are considered in the list of "big mistakes". IMHO

One can say, stay single or if you're married, go get a divorce early into the marriage before kids and/or obtaining any wealth.... just saying

Your goal is certainly achievable, but there are several big mistakes young people make that can easily derail them. Avoid making these mistakes, and you should be fine:

1. Have kids
2. Buy a bigger house than you need
3. Get divorced
4. Make a habit of buying/leasing new cars
5. Get sick/have a major accident without insurance

Dodge those bullets and it should be a cakewalk.

 

[Bestwifeever]

.... Take a look at free online financial calculators like www.timevalue.com under the investment tab, they've even got a calculator to show what it takes to reach $1 milllion. ...

I didn't see an investment tab on that website (maybe they redesigned the site?)--but I found about 50 free online calculators under the Products tab and then the TCalc link, including the one you mention: Millionaire Calculator: How can I save a million dollars?

 

[Maynard]

I didn't read through the posts, so apologies if I repeat something already said. Disclaimer: I'm not an investment advisor and I don't play one on TV.

I give this advice repeatedly and it's worked for me; invest in China, invest in anything China needs, investment in any company that has what China needs. In your lifetime, they'll be the number one growth engine for the world economy. They've already passed Japan to become the number two economy. We're the only larger one.

There are over a billion consumers in China who want to bypass the 20th century altogether and come straight into the 21st. At a point in the not too distant future, the Chinese economy will be able to decouple from the rest of the planet and sustain itself on domestic demand.

Their economy is relatively (I said relatively) quiet right now, and that makes it a good time to get in before it ramps up again. Yes, I took my own advice.

Good luck.