While many of us appear to be short term traders on the website, we have to keep an eye out for the future as well. This thread is to provide insights, feedback and tips for retirement accounts. Feel free to ask any questions or throw in any comments below.
One of the most interesting and accessible videos I have come across is this Frontline special on Retirement Accounts below. It shows how you can easily save hundreds of thousands of dollars in your retirement account. It is so simple but so many Americans are hemorrhaging money for no reason. It is one of the main takeaways for the entire thread. In a future post, I will give a great tool to easily make sure you are investing efficiently in your retirement account(s).
I am currently a big proponent of investing my 401K. Thankfully, the company I work for, and Merrill Lynch (who hold my 401K) allow me to invest in essentially whatever I want. I know a lot of accounts are more limited and only allow you to invest in specific funds, etc. As a 29 year old who started this full time job at 27, I calculated 30 years out what my 401K savings would be with company additions as well as my own and it would be at $600K roughly. If I average 10% a year, that would be roughly $2M. That's just the 401K. I try to tell that to all the younger people I know (my age or younger) so that they understand you can retire young if you just save, especially if you learn the market and can just average a respectable 10% a year. Obviously it's not THAT simple, but you get the idea. If I see myself on that path, I could even plan to retire much earlier, knowing that I have "proven" I can maintain a specific return rate on average over time, and if not, I've already built a real comfortable nest egg. If I can invest my wife's 401K as well, that number obviously grows dramatically. Now obviously there's an issue with not being able to acquire Social Security or withdraw from the 401K before taxes, but if you include the fact we could create another retirement account outside of our 401K's, or simply invest our savings and make the same 10%, we could live off that until we're old enough to withdraw from the 401K at no penalty.
I think that is so key. If someone took 1-2 months out of their lives to educated themselves on finance and the stock market, the impact on their lifetime earnings would be quite large I'd imagine.
Retirement seems so far off and the amounts seem arbitrary. Fidelity recommends some milestones related to your age that can make the process more tangible and easier to rank whether you are ahead of the curve or need to increase your savings: By 30, aim to have the equivalent of a year's salary saved. By 40, aim to have three times your salary saved up. By 50, aim to have six times your salary saved up. By 50, aim to have eight times your salary saved up. By 60, aim to have ten times your salary saved up. Source: https://www.cnbc.com/2016/02/11/whats-the-magic-number-for-your-retirement-savings.html
