Even CNBC has to admit that 2022 was a disaster for those putting away for retirement on average. Of course inflation made it even worse than the numbers indicate as the money you had left lost a portion of its buying power. https://www.cnbc.com/2023/02/23/401...ount-balances-sank-in-2022-fidelity-says.html We tend to forget that the main reason for Social Security in the first place was that the depression and the banking system had left most of the elderly with no resources. While we like to talk about averages, we in fact live in a world of individuals. Old story, 29 men in a bar with average retirement savings of $500. Elton Musk walks in, now 30 men in bar with average savings for retirement of about $6 billion. One view of the retirement in the present "good times per Biden" was as follows. Average Retirement Savings in the U.S.: $65,000 | The Motley Fool So far the tools used to increase your retirement income has been to encourage the investment in and growth of your IRA's which in fact may well increase the banking profits and the stock market, but do not insure that there will be any money in them when you retire. Given the present nursing home cost, $500 or so a day, any stay of over 4 months would assure the average person will leave no estate for his children even if he spends nothing on retirement. I am 85, still have a little in savings and the best retirement decisions I ever made was to buy a house in 1980, never sell it and never borrow money on it, heat with wood and have wood on the lot, drive used cars and have no car payments and have no credit cards. Retirement has been quite good, not a lot of money, but what we need. The best tool in retirement as near as I can see is to be debt free and have a simple life style.
@duane "...the money you had left lost a portion of its buying power." This is the key and, sadly, I do not think we have seen anything yet... I think we'll see prices continue to rise much more sharply until inflation is brought down. They simply ran the printing presses too long and there is too much paper - I mean - money floating around. Things are getting better - a bit. CDs are now paying ~4% or close to it. Don't misunderstand, that's not great, not even good, but it does mean that money is drying up a bit given the last couple of years they paid nothing. Now, if we can simply keep the government from printing more or going farther into debt... Doubtful. There are a lot of things in the near future that will or could affect us financially. I think the biggest one is the Presidential election of 2024. I also think we are now back into a long-term Cold War - again - and we'll have to budget as such...making the Defense Industry laugh all the way to the bank. This will not end with the Ukraine War, not a chance. This Cold War will last until, at least, Putin's death, or someone nips it in the bud by assassinating him now, that's the optimum solution. China also will be a driving factor on many financial fronts and not just the military. It is now obvious to all that our nation has become too reliant on China for way too many necessary goods such as medicines. In the long-term these new industries are a good thing for the nation and our people, but they take time to stand up. Until then there is always the possibility of a trade war or even sanctions or boycotts against us in retaliation, using these necessary goods against. Anyway, financial outlook is pretty hazy but if I was going to pick the most important factor to improve or degrade the outlook it will be the election of 2024. Biden or his masters (China?), seem determine to drive us to our knees and so far, is doing a damn good job of it.
I saw mine drop, big time, it's diversified as well. Account manager just says "Don't panic, it will rebound". I'm not holding my breath. Unlike my father, I'll probably have to work until I die.
Yes, I'm in that category as well. I've been trying to figure out a profitable business model for about 2 decades. Haven't come up with one yet.
I'll probably end up digging an underground house on government land, and live there. Apparently the EPA is stealing people's houses anyway. Don't see the point in owning one if the gov't is gonna steal it anyway: EPA CLEANUP EXTORTION FEES: THE PLAN TO LIEN & SEIZE HOMES & PROPERTY – The Phaser
I gave up saving for retirement. Any money that I have "invested" into the stock market has provided negative gains. I figured I can lose my money just as good as the stock market can.
I only have what my employer will match up to in my 401k. Reason being, tax loss harvesting. I can not offset losses in my 401k towards my income or capital gains. In your 401k let's say you have 10k in one of the funds but due to losses you actually paid 15k. If you sell that fund ... you have locked in the loss of 5k and it is never used as a cost basis for the next purchase you by. Meaning, if you buy that same fund again with that 10k ... your cost basis for that purchase is 10k. If that fund goes up to 15k, and you retire and cash out .. you owe taxes on 5k worth of gain as your cost basis for that fund was 10k. Now had this been in a regular brokerage account and this all happened in a single year, as long as you wait at least 30 days between the sale and the purchase, you can deduct the loss against your profit. Can't do that in your tax leveraged account. You just lock in those losses and pay more taxes in the end. Again, I'm not a CPA/CFP nor your advisor, but you can get screwed in your 401K if you are not careful.
Playing the same game up here in Canukland . Just did personal taxes , I'm broke again !! And need to pull enough RIFF out that its not got me in a tax bracket !! I need to find a corner store i can buster from . Kidding , lots of planning needed to keep my coin , mine ! Sloth
I would have liked Fidelity to tell me that when they were first explaining a 401k to me at my first job. They made it sound like I would magically accrue 10% interest on my money, and I would magically retire with a million dollars. The part they leave out is you only make 10% interest if you invest in the correct stock and the market always goes up. After 10 years invested in Fidelity's mutual fund, I realize I didn't make 10%, so I took it out during the 2008 crash. Then, of course, there was a 10 year bull market that I missed out on, because I didn't trust the stock market anymore. The other part that they don't tell you is that once you put your money into a 401k, it's locked into the 401k and you can't take it out until you're 65. Also, the forget to mention that they can do a "bail in", and simply take your money if sh*t hits the fan. But with all that said, I still do waste some money by putting it into a Roth 401k on occasion. I don't know why, but I do.
Looking to turn 25% of my 401k into a physical precious metals ira. I have just started the process. Will let you guys know how it goes.
While the markets are down and before the Trump tax cuts expire, it may be a good time to convert regular tax deferred IRAs and 401ks into Roths. You recharacterize the savings and pay a ton of taxes on it now, but when the markets recover that surge back up in value and future earnings will be tax free. If you are between 62 and 65 you will need to be careful doing this so the seemingly higher income does not drive your Medicare premiums higher when you turn 65. It can also be good strategy with taxes to delay taking Social Security until later to reduce taxes. Done right, you can cut your total tax bill from age 65 to 95 50-70% and have for yourself or heirs 25-40% more money at 95 all other things being equal. Talk to a good financial planner that knows not just investment strategy but also taxes and Medicare stuff.
Well, if your plan allows it, you can take a loan of up to 50 percent of the value of your 401k. No penalty and you pay yourself back over up to 5 years. Some special reasons you could take longer than 5 years. Again, it depends on the plan design. And i think you can start taking a distribution as soon as 59.5 years old. Again, I'm not a financial advisor and more importantly not your financial advisor, ya need to do what is best for you.
How does the payback work, VT? Do you pay back the number of shares, or the dollar value? In other words, is it a good play when the market is at bottom or top?
typically you take out a dollar amount loan, it's spread across all your investments, they sell say 50 percent of each fund. And then with each paycheck you repurchase the shares. You are also paying interest on the loan but you are paying it to yourself. Not all 401ks have this provision though. loans avoid the 10 percent early withdraw penalty and taxes, so if you are going to remain at your current company for a while, then a loan isn't a bad idea. reminder ... I am not a financial advisor.
Cool, understand the "not an advisor part", I was licensed MANY years ago. I, also, am not an advisor. Let's continue this...let's say I want to pull $100,000 out for a loan to myself. To make things easy, let's say I have one fund, and its share price is $10. They sell 10,000 shares and hand me the proceeds. Now, let's say that the price of the fund goes up to $15. If I have to pay back 10,000 shares, that will cost me $150,000. Or, do I have to pay back only $100,000? In either scenario, would I keep making market gains since it is just a loan against the investment? hmmmmm
You'd be paying back the dollar amount of the loan. IIRC, that money from your paycheck to payback the loan (principal and interest) is POST-TAX dollars. so let's say 50k (Max 401k loan size) for 5 years at a 5 percent interest rate and you get paid every two weeks. Payment Every Two Weeks $433.84 Total of 130 Payments $56,399.39 Total Interest $6,399.39 They sell shares typically on a equal percentage from each fund. And your payment goes to repurchase them. You are buying back x dollars worth of them. NOT we sold 100 shares of each fund so you need to repurchase 100 shares no matter the prices. Now if you leave the company, that loan is going to be considered a distribution so you are going to get hit with an early distribution (10 %) penalty and income taxes unless you can repay the loan in full in 60 days (IIRC) .
Now if one were able to predict that you were going to sell at the top of the market and it was going to crash immediately after you got the loan proceeds. you'd be buying the shares at a lower dollar cost and would benefit if the share price were to appreciate while you were paying back the loan. (i.e. sold 1000 shares at the top and bought back 1750 shares during the loan duration) But i typically do the opposite, sell low buy high.
If you borrow money from your 401(k) account, some plans have a provision that prohibits you from making additional contributions until the loan balance is repaid. So you'd really want to review your plan documents carefully.
