Retirement Q&A

[BigOrangeMojo]

44

I have 401k but I know it's not enough less than 100k

Pay depends on business but 80k or more

House is not paid for (went through a divorce five years ago and had to refinance to get her name off)

Two kids 16 and 12

House and truck are only debt right now. No credit card debt

I would say health wise I am on the better side of health for someone my age (workout six to seven days a week and eating properly 80% of the time) I have health insurance through work but its not the best

Employer does have 401k that's where it started from.

I wouldnt recommend buying a rental in your situation. If you are real handy and can put in enough sweat equity for a heavily discounted fixer upper, maybe. But that would be only situation Id consider it

You can contribute 23,500 to 401K in 2025. When you get to 50, you can contribute even more. If you have money leftover, you can contribute 7,000 per year (more after age of 50). If you can contribute 30K per year plus employer match for next 20-25 years, you should have more than enough to retire with a good standard of living...

I think contributing 30K on 80K+ will be difficult especially if you are paying child support/alimony.

If you get house paid off, get the debt paid off, and contribute 15K-20K for next 20 years, you should be in decent shape...

 

[Thunder Good-Oil]

When you have a 401(k) try to contribute at least up to the amount that employers will match. After that, an IRA is a good option. Then if those 2 get maxed out, contribute to the unmatched portion of 401(k)s.

1). Matched 401(k)
2). IRA
3). Unmatched 401(k)

 

[Orangesmokey]

The Full Retirement Age is a confusing concept.

You can begin taking Social Security at age 62. Don’t begin beyond age 70 as the monthly benefits no longer increase for waiting.

The biggest FRA rule affecting most people is that if you continue working after taking early SS the government will possibly take a large chunk of it. Working a few hours per week usually won’t affect the monthly SS benefit unless your hourly wage is substantial. After your FRA the work penalty no longer applies.

Social Security benefits ought to be tax free. Trump wants that to happen. The other party opposes the change in the legislation. However, tax free SS benefits would make it more difficult to balance the budget and reverse the growing National Debt level.

As far as working after taking early SS... isn't the total number of hours worked or the dollar amount made?

 

[Thunder Good-Oil]

44 is young enough to get some very good compound growth in investments.

 

[Thunder Good-Oil]

As far as working after taking early SS... isn't the total number of hours worked or the dollar amount made?

Dollars. The number of hours worked isn’t considered in any of the calculations - just income.

 

[BigOrangeMojo]

When you have a 401(k) try to contribute at least up to the amount that employers will match. After that, an IRA is a good option. Then if those 2 get maxed out, contribute to the unmatched portion of 401(k)s.

1). Matched 401(k)
2). IRA
3). Unmatched 401(k)

Might almost put HSA (3)

 

[Orangesmokey]

A lot of good information so far. Thanks for all the suggestions. Keep them coming.

 

[BigOrangeMojo]

Without knowing how much equity you have and size of truck debt you have, you are probably a smidge behind preferred spot. But with your income, saving 20% for next 20-25 years should get you to a pretty confortable retirement....

If you can save 22-25% or more, even better...

 

[Fatman Photos]

I retired at 62 but kept working part time until my wife decided to retire at 65. Wasn't really that much of a difference in my SS, a few hundred dollars a month. We both have 401K's so that is what we have to go along with our SS monthly. However we changed a little on what we were spending unnecessarily. Haven't had to touch our 401K so far or our savings account either. We are doing pretty much as good as we were when we were working. No big changes except a lot more free time to do as we want.

 

[95 Vol Alum]

When you have a 401(k) try to contribute at least up to the amount that employers will match. After that, an IRA is a good option. Then if those 2 get maxed out, contribute to the unmatched portion of 401(k)s.

1). Matched 401(k)
2). IRA
3). Unmatched 401(k)

Even doing this out of sequence (me), you still will be fine just by doing these to the highest limit one is able and/or allowed. I know you know that but for others asking questions.

Hard to go back and fix but don’t stress if you’ve done something at least.

 

[GVF]

44

I have 401k but I know it's not enough less than 100k

Pay depends on business but 80k or more

House is not paid for (went through a divorce five years ago and had to refinance to get her name off)

Two kids 16 and 12

House and truck are only debt right now. No credit card debt

I would say health wise I am on the better side of health for someone my age (workout six to seven days a week and eating properly 80% of the time) I have health insurance through work but its not the best

Employer does have 401k that's where it started from.

Keep it that way. Credit card debt is evil, and everyone but oyu wants you to have it. You can take that same money that would pay monthly payments and put away quite a bit. Took us a long time to get out from under it once we allowed ourselves to get burdened by it. No telling what we could have put away using those payments for something else.

I know interest rates are up, and selling and replacing is ot what it was, but still not a bad option to explore in order to see if there's an opportunity to reduce mortgage debt...if you have any kind of equity left after divorce. Mojo is pretty savvy. He and some others wills have some good "do's" advice. I'm one of the leading sources on what "not to do," One, is never ever buy rental property beyond a modest and short radius from your residence. Like 1:45 down the I85 from your house into inner ATL. Nightmare to manage and a disaster. Probably would have fared well and built a small stockpile if I had chosen locations better. Deals were great at the time. Locations were boneheaded. 3 houses coming up empty in three consecutive months and trying to manage that from afar was nuclear.

 

[95 Vol Alum]

There's apps for that too. lol.

I don’t need an app to index investment. I’m sure mojo and Thunder will debate the allocations but in my early 50’s and conservative, I use the following for my retirement investments:

75% stocks
25% bonds/fixed income

It was weighted more on stocks in my earlier years. The 100 minus my age rule is too conservative, imo.

 

[GVF]

When you have a 401(k) try to contribute at least up to the amount that employers will match. After that, an IRA is a good option. Then if those 2 get maxed out, contribute to the unmatched portion of 401(k)s.

1). Matched 401(k)
2). IRA
3). Unmatched 401(k)

My other advice for 401K's is they are not automatic. Do not contribute and just ignore your account. You have access to it to move your investment funds around. You can move from stock funds to bond funds when hte market calls for it. You can pile up on one company's stock if you like. Manage your 401K just like you would any other investment account. That is how I built mine to $30K in 18 months. 401K's by nature are designed to be in funds, not individual stocks ad are intended to provide moderately safe return over hte long haul. If you manage it well and actively, you can increase your 401K dramatically.

 

[Thunder Good-Oil]

Might almost put HSA (3)

Good point.

 

[GVF]

I don’t need an app to index investment. I’m sure mojo and Thunder will debate the allocations but in my early 50’s and conservative, I use the following for my retirement investments:

75% stocks
25% bonds/fixed income

It was weighted more on stocks in my earlier years. The 100 minus my age rule is too conservative, imo.

The one 401K i had that built so quickly for me was Timken Co. They split stocks every few years between $55-65. So every 2-3 years your stock shares doubled. Then they'd split again right on cue. It was common knowledge to move all your contribution to 100% Timken stock in your 401K. One hourly forklift driver in our plant had that same job his entire life and never made over $14/hr. He followed that advice off of what he could contribute from his meager paycheck, and retired a millionaire in his 401K account. That was also one of the jobs I got laid off after I got promoted cause they killed an entire shift. So, that accumulation ultimately suffered termination tax and paid mortgage payments

 

[95 Vol Alum]

My other advice for 401K's is they are not automatic. Do not contribute and just ignore your account. You have access to it to move your investment funds around. You can move from stock funds to bond funds when hte market calls for it. You can pile up on one company's stock if you like. Manage your 401K just like you would any other investment account. That is how I built mine to $30K in 18 months. 401K's by nature are designed to be in funds, not individual stocks ad are intended to provide moderately safe return over hte long haul. If you manage it well and actively, you can increase your 401K dramatically.

Interesting. I would advise almost the opposite. Let it be the market and only change quarterly to annually to rebalance back to your allocation basis.

But as I said, I’m only wanting the broad market risk in my retirement investments and not my bad, chasing things risk.

 

[Thunder Good-Oil]

Don’t have a significant percentage of your wealth in your employer’s stock. If the company goes under you can lose your job AND your investments. Enron employees that loaded up their retirement accounts with Enron shares were annihilated. Unfortunately the company leaders encouraged their employees to pile into Enron shares.

The most important concept in investing is diversification.

Compound growth is another. As is discipline. Don’t cash out the retirement accounts early for an expensive car or boat or vacations.

 

[scvol98]

Got my eye on some property close by. There is actually a bank there currently. Found a good deal on a ski mask.

 

[Orangesmokey]

Keep it that way. Credit card debt is evil, and everyone but oyu wants you to have it. You can take that same money that would pay monthly payments and put away quite a bit. Took us a long time to get out from under it once we allowed ourselves to get burdened by it. No telling what we could have put away using those payments for something else.

I know interest rates are up, and selling and replacing is ot what it was, but still not a bad option to explore in order to see if there's an opportunity to reduce mortgage debt...if you have any kind of equity left after divorce. Mojo is pretty savvy. He and some others wills have some good "do's" advice. I'm one of the leading sources on what "not to do," One, is never ever buy rental property beyond a modest and short radius from your residence. Like 1:45 down the I85 from your house into inner ATL. Nightmare to manage and a disaster. Probably would have fared well and built a small stockpile if I had chosen locations better. Deals were great at the time. Locations were boneheaded. 3 houses coming up empty in three consecutive months and trying to manage that from afar was nuclear.

There was credit card debt at the time of divorce and was paid off by both of us. Once it was paid for I left the cards at home in the safe. The only reason I kept them was in case of an emergency but I didn't have to use them. They ended up being closed by the credit card company due to lack of use.

Rental property is on my list as investment but its not high on the list as I can do a few things around to fix it up but not enough to justify purchasing one that needs a ton of work

 

[GVF]

Interesting. I would advise almost the opposite. Let it be the market and only change quarterly to annually to rebalance back to your allocation basis.

But as I said, I’m only wanting the broad market risk in my retirement investments and not my bad, chasing things risk.

I didn't go full risky at Freudenberg. I left 50% in the investment funds. and turned around and put hte rest back on Timken like I did 100% when I was there. Got it to $18K in about 16 months, but not the $30K I did in 18 months at timken.

Best money manager I ever met was a young (about 15 years younger than me then) colleague I worked with at Freudenberg. He ran one of the other business units. Single then, but married now and still religiously lives by the same code.

Every month on payday, he would put 50% of his check away. Would not touch it. Lived on the other 50%. If he couldn't pay cash for something he didn't own it. In the fall, if it was brown it was down and he filled his freezer. Granted, he was slick so his living expenses were negligeable at times. We had several engineers in the plant that were Guard or reserves and would regularly deploy. So, he would sublet his apartment to his "girlfriends" and would live in these guys houses while they were deployed rent free and just pay the bills just to care for the place and keep it up. Extra money would come from findng great deals on cars, drive for a few months and sell for profit.

 

[Thunder Good-Oil]

The one 401K i had that built so quickly for me was Timken Co. They split stocks every few years between $55-65. So every 2-3 years your stock shares doubled. Then they'd split again right on cue. It was common knowledge to move all your contribution to 100% Timken stock in your 401K. One hourly forklift driver in our plant had that same job his entire life and never made over $14/hr. He followed that advice off of what he could contribute from his meager paycheck, and retired a millionaire in his 401K account. That was also one of the jobs I got laid off after I got promoted cause they killed an entire shift. So, that accumulation ultimately suffered termination tax and paid mortgage payments

Stock splits don’t mean a whole lot. The math is exactly the same without them.

Splits dilute shares. But traders can sometimes take advantage of the short term volatility. Also, options contracts trade with underlying round lots of multiples of 100 shares. So stocks that go up a lot in value become more expensive to trade options on.

Companies that have stock splits are typically going to be in good financial standing. Companies that have REVERSE stock splits are in deep trouble.

 

[GVF]

There was credit card debt at the time of divorce and was paid off by both of us. Once it was paid for I left the cards at home in the safe. The only reason I kept them was in case of an emergency but I didn't have to use them. They ended up being closed by the credit card company due to lack of use.

Rental property is on my list as investment but its not high on the list as I can do a few things around to fix it up but not enough to justify purchasing one that needs a ton of work

We probably had maybe 6 cards near capacity. So there was a time we shelled out $500 a month paying credit card minimums. Ludricous to live that way. Down to one card half full, and a very small amount on a second.

"But, you need debt, and mortgages, and car payments to have a credit score"
-If you save and pay for it (house not included) you don't need credit or debt.

My brother has been rennovating the old farm house now for about 15-16 years. Debt free. Saves up for next project, and goes and gets materials. He's always been a successful money manager. I was late in life learning my lessons. I have great advice. I just didn't exercise hte discipline to follow it at a young age like my brother. Added a year on before retirement to pay off new lawn mower and UTV. Will be debt free when he walks away. No credit card debt. Would not use them. They are the root of all financial problems and feed the I want it now mantra.

 

[GVF]

Stock splits don’t mean a whole lot. The math is exactly the same without them.

Splits dilute shares. But traders can sometimes take advantage of the short term volatility. Also, options contracts trade with underlying round lots of multiples of 100 shares. So stocks that go up a lot in value become more expensive to trade options on.

Companies that have stock splits are typically going to be in good financial standing. Companies that have REVERSE stock splits are in deep trouble.

Except their stocks vaue never failed to return to that $55. So every 18-24 months on average, you'd double your shares, and 18 months from there you'd double your value right before the next split. That forklift driver ammassed his million dollar 401K 100% of company stock and splits over his employment.

I get the theory, but long term, you can gain from splits when the stock price of the company continually returns to it's norm. I can have 5 shares now at $55. In three years I'll have roughly $165 value. Next month it splits and I have 10 shares at $15-20. I'm still even or maybe $25 up. In 2-3 years it's back up to $55, and now I have 10 shares at $55 and $550 value excluding insterest factor. My effective value is over 3 times the value of the 5 shares over hte same period. To your point about fiancial standing, Timken was very strong back then. Most empoyees that invested heavy 401K in company stock fared quite well. Not an 401K management model for any company you work for. But, Timken and Freudenberg both were strong and well managed at the top. You need to know the health and trends of who you work for if you do that.

 

[Thunder Good-Oil]

Except their stocks vaue never failed to return to that $55. So every 18-24 months on average, you'd double your shares, and 18 months from there you'd double your value right before the next split. That forklift driver ammassed his million dollar 401K 100% of company stock and splits over his employment.

I get the theory, but long term, you can gain from splits when the stock price of the company continually returns to it's norm. I can have 5 shares now at $55. In three years I'll have roughly $165 value. Next month it splits and I have 10 shares at $15-20. I'm still even or maybe $25 up. In 2-3 years it's back up to $55, and now I have 10 shares at $55 and $550 value excluding insterest factor. My effective value is over 3 times the value of the 5 shares over hte same period. To your point about fiancial standing, Timken was very strong back then. Most empoyees that invested heavy 401K in company stock fared quite well. Not an 401K management model for any company you work for. But, Timken and Freudenberg both were strong and well managed at the top. You need to know the health and trends of who you work for if you do that.

Stock splits don’t matter. It’s just math. Market caps matter. Revenue and profits have the most effect on growing market caps.

 

[BigOrangeMojo]

Im with @95 Vol Alum on index investing within a 401K. Many of the non indexed funds in 401ks are absolute sh*t. If you see T Rowe, Fidelity, Schwab, Vanguard, you probably have a decent funds but there are some absolute sh*t funds in 401k plans....

HR departments are usually the one choosing the 401k administrator and HR people, by and large, are really crappy with $$$...