Category Archives: retirement

No FI Number

No FI number. While I dream of financial independence, lately I realized I don’t want to define a number. I have a goal obsessive personality. When I set hard, measurable goals, I become hyper focused to deliver results.

Examples below:

          Graduate in 3 years from undergrad

          Finish master’s in 1 year following undergraduate studies

          Complete MBA following master’s.

          List goes on

 Overall, it’s helped my life. It’s a reason I have been able to pull myself out of poverty. There is a reason I succeed. BUT there is one downside. I miss out on smelling the roses and sometimes this leads to burnout. A goal obsessive personality, also comes with anxiety. My husband reminds me I need to slow down. There are times he frustrates me because I don’t know how to slow down in the grand scheme of things. But it really goes back to a theme.

I need to enjoy life. I say this every year. If I keep repeating and making it a goal, eventually I will get there, right?

I was just reviewing our budget for 2017. We really are not crazy spenders. It shows in our monthly budget. Yes, we eat out, more than we probably should, but it is an indulgent. I love food. My hubby likes it when I’m happy. Wink!

The truth is I’m trying to automate financial transactions so I become less obsessive over our financial operations. After spending so much time at work, my non-working time is limited. I want to focus more again on exercising and maintaining a healthy lifestyle. 

Are Baby Boomers Still Retiring?

Last week I read an article on WSJ about baby boomers ripping up their retirement plan.

Nearly two-thirds of Americans between the ages of 45 and 60 say they plan to delay retirement, according to a report to be released Friday by the Conference Board. That was a steep jump from just two years earlier, when the group found that 42% of respondents expected to put off retirement.

The increase was driven by the financial losses, layoffs and income stagnation sustained during the last few years of recession and recovery, said Gad Levanon, director of macroeconomic research at the organization and a co-author of the report, which is based on a 2012 survey of 15,000 individuals.

Pretty scary, no? It’s very depressing, especially when you have been told all your life, retirement is the dream! The ability to check out from the 9 to 5, and not have to worry about anything.

In my team, I am currently working with 4 colleagues who are 50+. Thus, in my mind they should be planning for retirement since it’s only ten years away. When I asked them what their plan for retirement is, every single one of them said they can’t retire in the next ten years. They are probably looking at retiring in 15-20 years maybe!!!

These are category managers and directors who make more than $150K a year minimum, saying they can’t retire. What did they do wrong?

Oftentimes, I find most people can’t retire because they have an extensive lifestyle: driving around in Land Rovers, living in 5,000 square feet when there’s only two people, supporting kids in adult years, not saving enough, or making poor investment choices. One of the category managers lost most of her nest egg when her company went bankrupt. She had heavily invested most of her retirement in company stock (warning!).

Should we feel sorry for the baby boomers that can’t retire? It’s hard for me to say since I see most of them living in riches. At least where I live at, which is a upper middle class suburban area.

I did have a chance to meet a older man the other day on my way to the parking garage who said he will be retiring in 622 days! He and his wife will split their time between their homes in Hawaii and Canada. He worked for 29 years at one company, and then worked the next ten years at our company. His joy over retirement gave me hope! I’m glad one baby boomer is retiring. I have met other baby boomers that retired: a couple of my university professors retired and then taught for fun, one of my mentors retired at 55, and is now a consultant when he wants to be.

I’m not sure if I’ll be able to retire young. I will bear the responsibility of taking care of my parents in their elder years since they have no retirement plan, which means I will have to work. Until LBJ signed the social security act, extending benefits past FDR’s timeline, kids took care of their parents. Now, we have become so individualistic, we expect our parents to take care of themselves and sometimes us too!

Our generation will see a different retirement landscape: no pension plans and no social security. If you ever want to retire, make sure you are preparing for it financially every year, or have kids that will take care of you when you are old. Don’t expect society to take care of your retirement needs.

I Realigned My 401K Portfolio With Some Vanguard

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My company added Vanguard funds to their 401k funds!!!!!!!!!! You have no idea how happy I was when I logged in and looked investment choices earlier this week. I actually found out by mistake. You think they would send a huge company announcement saying we added Vanguard, no peeps go sign up for them. But nooooo!!! They kept their mouths shut and I had to go find out by checking my investment options.

Remember my crappy investment choices? If not here’s quick reminder (see picture below). These funds have extremely high expenses and terrible yields. Look atAEYIX (American Century Equity Income). It has an average 1.69% yield and a 1.95% fee….so I’m basically making money to pay the fund managers, and then, coming out negative….Hmmmm does not sound right.
Retirement1

Now, my 401k looks like this as of 1/10/2013. I completely simplified my strategy. I’m investing in VMCPX, VIIX, VSCPX. And of course, since they are Vanguard funds, fees are extremely low, like less than .2%! Booyahh! I have my ROTH IRA invested in VHDYX.

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My investment strategy just got easier. Now I can just sit and relax :) Now, I do realize I am heavily…like 100% invested in stocks. But since I won’t touch this until 40 years from now, I’m being a little aggressive.

Have you looked at your company’s investment choices lately???Have you rebalanced your portfolio?

GASP…I Decreased My 401K Contribution

So before you jump on me about decreasing my 401K contribution read ahead! I initially started contributing 10% of my paycheck to my 401K; I received a full 7% match. Around September or October when my husband started working full time, I decided to increase my 401K contribution to 15%, making the a total contribution of 22%. Pretty great, right?

I got extremely caught up in everybody’s advice of maxing your 401K and contributing to your retirement, and how we won’t have enough money to retire if we don’t max out our contributions or how maybe we want to retire early in the future and we should invest as much as possible right now. And realized I might be living too much in the future by contributing so much… The realization came when my husband and I casually talked about our future plans and investments. I say casually, but it was intense. Deciding where the money goes is still a hot challenge for us as we navigate the choppy waters of personal finance.

He mentioned even though it’s great we are saving for retirement, he, also, wants us to save for a house and a small business fund. We won’t get to touch the money we put in our retirement accounts until 40 years from now.

I’m not quoting his exact words, but you get the jest. I may not always tell him, but I’m glad I have a partner who balances my crazy aggressive strategies.

I, also, read Ninja’s recent retirement post and their decision to invest about 15% of their income towards retirement. It kinda made me feel not so alone, you know?

I just put in $3,000 to our ROTH IRA A. Although right now it’s less than $3,000. This does not mean we are never going to increase our 401K contributions. Any raises will go to the 401k. Also, if our income goes up, I will have to re look at how much we are contributing to my 401k to avoid getting heavily taxed.

What will we do with the extra $100-$200? We will put it into our short term savings. There’s so much we want to do: travel, house, live, help family, fund a business. Sometimes it’s best to follow the tune of your own drum, not other’s.

Until the end of 2012, my 401K contribution will remain at 10% + 7% company match = 17%.

How do you prioritize your retirement? 

My Retirement Portfolio – Oct 25, 2012

Disclaimer: I’m 22 and honestly, have no idea what the heck I’m doing while I’m investing. Most of the time I’m throwing darts at an invisible target.

I opened up my 401K in July when I was eligible to start contributing. I’m immediately 100% vested, and my company has a match. Here are the funds available from my company:

As you can see, fees are pretty high. I actually had no idea they were high until I read Joe’s post My Overdue Portfolio. When I first invested in mutual funds at age 18, I didn’t even consider expense fees. Yup, crazy me! Here is my first plunge into my 401K.

After reading Joe’s post I realized I was investing in American Century Equity Income and paying an extreme fee: 1.95%. I also noticed I was paying an expense fee of .95% of Colombia Acorn International A-Z. Since I already had mid growth and large value funds, I decided to eliminate those funds.

As you can see, I still have funds with high expenses. I’m looking at the American Funds EuroPacific fund with a .84% expense fee. I know 401Ks have higher fees than other mutual funds, but I wonder how many people ignore those fees? I sure heck did. I’m still thinking of eliminating a couple of my funds with high expense fees like AEPGX. I’m thinking I can find a similar fund with better returns in Vanguard for my ROTH IRA.

I, also, took the plunge yesterday and invested in my ROTH IRA with Vanguard. I invested $3,000 in VGHCX. It’s a mutual fund concentrated on healthcare companies. Look at how low that expense fee is .35%, and that’s not a super low fee compared to other Vanguard funds.

My husband does not have a 401K, so I can’t show his portfolio. I will open his ROTH IRA later this year.

Have you looked at your portfolio lately? How do you feel about investing?

Retiring or Living Abroad: My Dream

So, I have to say I am definitely the most adventurous in our family. We were having dinner with my in-laws last night to celebrate my husband’s 23rd birthday, and I mentioned an opportunity to teach kindergarten English in Japan for a couple of years. Although I do not want to be a teacher, I did express my excitement about working in a new, different country. My sister-in-law (future teacher) completely shut down the idea. My husband is on the edge. He loves his American lifestyle and is quite stuck to his habits. When I mention living abroad, he says maybe if it’s Australia. It’s going to take some convincing to make him move in the future, but I will succeed! My parents despite moving from one country to another, do not want to make such a move again in their lives.

My dream has always been to live abroad. I want to experience new cultures, and love seeing House Hunters International. I would love to move every five years or so to a different country. But I definitely want to retire/settle down somewhere tropical like New Zealand or Australia or Costa Rica!!! I don’t know what the future holds, but I definitely hope it’s somewhere else on this earth.

If you want to retire abroad, there’s ten places in the world that provide beautiful scenery, cheaper cost of living, lower tax burdens, and good healthcare.

  1. Ecuador
  2. Panama
  3. Philippines
  4. Belize
  5. Southwest France
  6. Bali
  7. Costa Rica (No taxes on foreign retirement income)
  8. Italy
  9. Mexico (Campeche)
  10. Argentina

I, also, saw New Zealand in another list. Honestly, I can’t wait until retirement to live abroad. I mean by that time I retire, I’ll be too old to enjoy water sports or look good in a swim suit. So, I have to make sure we bust our ass and get abroad at some point in our careers.

Do you want to retire or live abroad?

Retirement Contributions Here I Come!

Personal finance is a journey. It’s a way of life. Each road has many different choices. On this journey, it’s just you on the road. Each turn you make brings new experiences.

You can either choose to spend it on a nice juice box:

Or a lean, mean piggy!

 Well, he doesn’t look that mean or big…

Last week, I set my retirement contributions at 10% of my annual pay. My company will be matching 7%. 10 + 7 equals 17%! Yesterday, I received all the funds’ prospectus (AKA financial information). Looks like I have some bed time reading for the next week or so.

I decided not to max out my 401K because we need to build our savings, pay for tuition, and we are still primarily depending on my income for living expenses. I still haven’t opened up a ROTH IRA. One step at a time peeps :)

It’s a little crazy to think I won’t be touching this money until about 3 decades from now. Hmm…talk about postponing pleasure. At least, I am not getting taxed now on the income. It will grow for years and years to become a fat little piggy.

Where in turn I can use to buy lots of crispy bacon! A girl’s gotta dream!!!

Have you started contributing to your 401K? How much do you have?

Saving For Retirement

Financial Choices

Saving, Debt, and Personal Goals for July-December 2012

By the way thanks so much for reading my post yesterday: The Exciting and Not So Exciting Parts of Growing Up! :)

Saving For Retirement

I was born in 1990, back when people still relied on pensions for their retirement. Remember those days? I don’t. So I digged up an old picture of a protest. Check it out. Fair pensions for all!

By the time I retire, there will be no social security and I will have to depend on my own portfolio if I ever want to retire.Young adults face some major challenges on our way to financial independence. High student debt and a weak job market is making it hard to increase our piggy banks. I have a friend who has 40K+ in student loans and doesn’t even have any job prospects.

Retirement is at least thirty to forty years away but thanks to the personal finance blog world, I know that if I start early, I will have more! Time is on my side here. And putting money away prevents from having lifestyle inflation. I think its, also, awesome that I am part of a DINKS couple! One of the many advantages of being married is combined retirement funds.

So, I am going to be aggressive on my retirement goal. I plan to max out my 401K. Yes, I am going to be putting $17,000 away. I, also, plan to max out my ROTH IRA ($5,000). I hope to use my bonus to fund my ROTH IRA at the end of the year. This won’t leave much left for my check, especially after taxes and my SPP contribution. It’s going to hurt this coming year, but that means any raises in the future can be all mine. I will not have to worry about increasing retirement contributions! This is a pretty aggressive move. I am not sure if I will regret it or not, but I think I need to do it. I can do this because we currently have no debts (school or cars). Some of the advantages of this plan are:

  • Paying less taxes now
  • Taking advantage of compound interest
  • Meeting retirement goals

Some of the disadvantages of this plan are:

  • Not being able to save as much for a house down payment :/
  • Not being able to buy more clothes or shoes (…maybe this is good)
  • Not being able to break away from the student broke life. It might improve a little bit.

Hopefully, I can become a millionaire sooner too! Because according to Northwestern Mutual, I am going to need more than $1 million to retire some day.

So what do you think? Do you max out your 401K? How old where you when you started? If you haven’t, do you want to?

SavvyFinancialLatina

Why I love the ROTH IRA!!!

I am 21, and recently started learning about personal finance and retirement. I come from a community where you work till you die. There is no knowledge of retirement funding, and I want to help change this trend.

I love the ROTH IRA because it allows you to save for retirement tax-free! The money you put in the account grows and grows until you start pulling it out when you retire at a minimum age of 59.5 years. You can contribute a maximum of $5,000 if you are under 50 and $6,000 if you are over 50. You can also withdraw your after tax money at any time, no penalty. If you are a purchasing your FIRST HOME you can withdraw any contributions and up to a lifetime maximum of $10,000 in earnings.

It’s a pretty great vehicle, if you ask me.  After doing a lot of research, I realize that it is way better for me to start investing now instead of later. I am going to open one as soon as I get my first job, which will hopefully be soon.

Have you opened up a ROTH IRA? Where did you open it? How much do you contribute to it every year? If not, when are you planning to open a ROTH IRA?
SavvyFinancialLatina

 

I am writing this blog as part of Good Financial Cents’ Roth IRA Movement. Jeff Rose, CEO and found of Alliance Wealth Management LLC, is the creator and wants to make young adults aware of the ROTH IRA. Click on the picture above to be redirected to his blog entry.