UmmiSays Posted February 11, 2012 Share Posted February 11, 2012 Hi to All! So I am really trying to figure out how to save properly for retirement. I have heard people say that they lost alot of their retirement savings when the market crashed. Is there someway to save money without it being connected to the market? Can someone reccomend a book or website that wil teach me about retirement? I am really clueless on this and would like to become knowledgeable. Thanks in advanced! Quote Link to comment Share on other sites More sharing options...
Pegasus Posted February 11, 2012 Share Posted February 11, 2012 Maybe someone else can chime in and recommend a favorite book/website. I'd recommend reading a variety because you'll find lots of different advice/opinions. Yes, you can save money for retirement and not invest in the stock market. However, it is generally thought that investing in stocks (actually, it is typically mutual funds) is necessary for most people to have hope of having enough in retirement. So, there IS risk of your balance dropping when you have mutual fund investments. However, there is also risk of your returns not keeping up with inflation if you do NOT have mutual fund investments. Three typically recommended low-cost companies to invest with include Vanguard, T. Rowe-Price, and Fidelity. Beware financial companies that want to charge you commission or have high fees. For folks who don't have the time or interest to pick and choose, target retirements funds are great. They automatically adjust the balance of investments based on your age. Choose one that uses only index funds and the costs are usually low. Pegasus Quote Link to comment Share on other sites More sharing options...
UmmiSays Posted February 11, 2012 Author Share Posted February 11, 2012 Yes, you can save money for retirement and not invest in the stock market. However, it is generally thought that investing in stocks (actually, it is typically mutual funds) is necessary for most people to have hope of having enough in retirement. So, there IS risk of your balance dropping when you have mutual fund investments. However, there is also risk of your returns not keeping up with inflation if you do NOT have mutual fund investments. Pegasus Thanks for responding. This part of your post is a scary thought. It's like you MAY be d*mned if you do and you MAY be d*mned if you don't. I wish it was a better way to do this. Quote Link to comment Share on other sites More sharing options...
Pegasus Posted February 11, 2012 Share Posted February 11, 2012 I'm disappointed that you didn't get any more responses as this is a very important topic and I commend you for wanting to become more informed. The two financial books that made the biggest impression on me are the following. I hesitated to suggest them right away because they are not "retirement" books but rather general financial books. The Wealthy Barber by David Chilton - this one is great for people just beginning to learn about financial matters because it is written in story form and gently eases the reader into the topic. He offers basic financial advice and nothing "out there." Your Money or Your Life by Vicki Robin and Joe Dominguez - This one can revolutionize the entire way the reader thinks about money. It's a great book and I highly recommend it. However, his investment advice is commonly criticized for not being aggressive enough for the typical person. Just keep that in mind. After these two, I'd recommend browsing whatever books your library has and consider the financial magazines as well. Also, there are financial forums that can be very informative, just as this board is for homeschoolers! Pegasus Quote Link to comment Share on other sites More sharing options...
K&Rs Mom Posted February 11, 2012 Share Posted February 11, 2012 Thanks for responding. This part of your post is a scary thought. It's like you MAY be d*mned if you do and you MAY be d*mned if you don't. I wish it was a better way to do this. That's exactly the conclusion we've come to. :glare: Right now we're paying off the house faster (no other debt), hopefully to be fully paid before we're 45. Without a mortgage payment we'll be able to put more in savings of some sort, and hopefully by that time it will be more clear what sort is worthwhile. Since the whole idea of compound interest & needing an early start has pretty much fallen apart, no one seems to know what the new answer is. Quote Link to comment Share on other sites More sharing options...
FaithManor Posted February 11, 2012 Share Posted February 11, 2012 Dh's 401K and my IRA tanked when the market sank after the housing bubble fiasco. So, if we had to retire now, we would be hurting. However, we have a while so we hope it will recover. That said, we've decided that our best retirement plan is getting out of debt and having a little plot of land for gardening. Dh likes to raise food. He also is putting up a few solar panels, and we've converted to heating with wood which costs sooooo much less (we do have propane back-up). Without a mortgage or other debt, reduced utility costs, and some food production, if we had to retire on what is currently available, we'd make it. The debt, once we began to eliminate it, felt like an albatross...the thing that was hanging on our backs that dictated how much we had to earn or have coming in each month. It is going to be a massive relief to get rid of it. Down to 20 months! Diversity seems to be the rule of thumb...not having all of your nest eggs in one basket. Our friends, who are very well set for retirement, have both traditional accounts such as 401k's and IRA's, own farm land which continues to appreciate in Michigan despite the loss of equity in almost all other real estate, liquid savings, silver and gold...both certificates of investment as well as physical assets...coins, etc., no debt, and though still in their early 40's, have actually put in things like a wheelchair ramp and other simple modifications to make their house more amenable for their elder years...it's already been handy as their own parents age. They seem to take a wide view of retirement and look at the range of issues retirees face. They also have a garden, some chickens, etc. I think they are ready for the future. Faith Quote Link to comment Share on other sites More sharing options...
OrganicAnn Posted February 11, 2012 Share Posted February 11, 2012 A lot depends on your risk tolerances. There are more risky stocks and less risky. Another investment is Bonds - these are US Govt Bonds, Municipal Bonds or Corporate Bonds. These have their own risks and returns. Then there is a saving accounts and CDs which the principal is guaranteed, but your return is very low. Most people have a mix of investments. You only lose money on the stock market crash if you sell your stock when it is low (or the company bankrupts). Most people will diversify their investments - investing in several areas - large cap funds ie stock in big companies, medium cap funds - stock in medium companies, small capt funds, international stock fund, bonds, us t-bills along with a certain amount kept in savings. The first thing of course you have to figure out is How much money do you need to save for retirement. That is a difficult question. You can estimate how much you need for your expenses. Look at your current expenses - everything including car, xmas presents etc, subtract anything like mortgage payments that will be gone by retirement, adjust for kids having left home and assume some percentage of increased costs per year. Then using averages figure out how long you and your DH will be retired (ie 65 to say 85 if that is the average life span). You'll get a fairly good estimate of what you'll need except for one big glaring factor - healthcare. That is the one factor you will not be able to estimate. They can be significant if it involves assisted living or other long-term care. Also medicine can be extremely expensive and usually the last few years of life people have more medicine prescribed than any other period. There is no standard amount to save for retirement. If you are not saving 5% per year, then you probably need to step up your saving rate. If you feel you need more help, there are 'financial advisors' that will look over all your information and perpare a plan for you - usually costs $100 to $400. Then you'll know if you have right amount saved and the right investments. Quote Link to comment Share on other sites More sharing options...
kalanamak Posted February 11, 2012 Share Posted February 11, 2012 I like Eric Tyson for no-nonsense beginning info. You can always go more in depth, but his "for Dummies" books cover the bases. There is a Personal Finance for Seniors for Dummies by him that opens with planning. It also covers what to do with budget and money during retirement, so you can get a picture of the horizon we are all moving towards. I sympathize with your concern: I've used about 3 calculators and my results come up so varied, I don't know who to trust. Given the insecurity in the economy, I've moved into a smaller house and am selling my newer cars for older ones, and I'm doing more overtime than I'd like, but I'd rather not lose sleep over risking falling short. Both hubby and I come from long-lived families. Quote Link to comment Share on other sites More sharing options...
QueenCat Posted February 12, 2012 Share Posted February 12, 2012 Dh's 401K and my IRA tanked when the market sank after the housing bubble fiasco. So, if we had to retire now, we would be hurting. However, we have a while so we hope it will recover. Ours tanked too but it has fully recovered, and is now higher than it was two years ago (in addition to the contributions made during that time period). Quote Link to comment Share on other sites More sharing options...
black_midori Posted February 12, 2012 Share Posted February 12, 2012 The whole retirement situation is SO up in the air right now that it is very hard to decide what is best to do. All of the "traditional" retirement options are in such flux right now that there is no hard and fast way of doing things anymore. Up until several years ago, I'd have said that the best retirement plan includes: - paying off all debt except your house as soon as possible, even to the extent of putting not putting much any sort of traditional retirement option until this is done. (I still think this is true!! It goes hand in hand with this, of course, to not continue to go into debt.) - saving 3-6 months worth of expenses in easily-accessible money. (I still think this is true, also - although maybe saving 6-8 months, or more, might be better - unemployment is coming more often and lasting longer, as is underemployment.) - paying off your house in conjunction with starting to fully fund more traditional retirement options (I don't know about this, now. I'm up in the air - my dh really believes that we should no longer be working on this, and I have gone along with that for now. We still plan to set aside a fair amount of money AS IF to pay off the house, but with the current economic flux & potential political and civil unrest, it seems safer to not actually pay off the house yet. After all - if we pay down, say, 50k of the house & THEN have financial issues, we still have to pay our monthly amount due. We won't have to pay it for as long, of course, but if we had that 50k sitting in savings instead then we would be better off (at that point). If, on the other hand, we find in 5-10 years of saving or so that we are financially stable & the economy has settled down some, we can always at that point take all of the saved money and apply it to our mortgage. Therefore, for now we are going to go into a "holding pattern" on the mortgage thing & see what happens in the next few years.) - begin investing in traditional retirement plans - in particular, fully fund the IRA and, if available, an HSA account. Use a beginning strategy of investing in a wide variety of areas & several layers of risk - reduce level of risk as retirement age approaches. (This is a total unknown to me, now. Are there even any "non-risky" areas of investment left? What level of risk vs return is now acceptable? Previously, I would have said to invest as wisely as you could & be willing to be in it for the long-haul, period. Now - I just don't know that I'm willing to accept most of the risks out there! We're sticking with CDs now, with a guaranteed return... but of course that return is very VERY low. AAAAaaaahhh!! I do still plan to fully fund the HSA when possible, even if I don't move it from the "savings" to "investments".) - Purchase land for the future. (Another one I am totally shying away from for now. In fact, we are actually planning on SELLING land that dh's parents have had for a long time - I'm not positive that this is the right plan, but dh thinks maybe & his brother is realllllllly pushing, so... there it is. The estate taxes are changing, the value of land continues to plummet, and the potential capital gains tax is likely to sharply increase; none of these are good in terms of real estate investment!) Right now my strategy is "hold on tight & hang on for the ride!!!" :D Quote Link to comment Share on other sites More sharing options...
UmmiSays Posted February 12, 2012 Author Share Posted February 12, 2012 Oh WOW! I thought I had killed my own thread yesterday!:001_smile: Thank you all for responding! I really appreciate the advice and insight. I will be heavily researching your recomendations. Retirement is such a scary thought to me. Seriously, when I sit and think too hard and too long about it, I feel a panic attack coming. I'm 32 and I'm not even a homeowner yet and now I have to think about retirement!!! Quote Link to comment Share on other sites More sharing options...
Shellers Posted February 12, 2012 Share Posted February 12, 2012 Ours tanked too but it has fully recovered, and is now higher than it was two years ago (in addition to the contributions made during that time period). The same thing happened to us too. We lost big time but are now doing better than before. :) Quote Link to comment Share on other sites More sharing options...
ErinE Posted February 12, 2012 Share Posted February 12, 2012 The whole retirement situation is SO up in the air right now that it is very hard to decide what is best to do. All of the "traditional" retirement options are in such flux right now that there is no hard and fast way of doing things anymore. Up until several years ago, I'd have said that the best retirement plan includes: - paying off all debt except your house as soon as possible, even to the extent of putting not putting much any sort of traditional retirement option until this is done. (I still think this is true!! It goes hand in hand with this, of course, to not continue to go into debt.) - saving 3-6 months worth of expenses in easily-accessible money. (I still think this is true, also - although maybe saving 6-8 months, or more, might be better - unemployment is coming more often and lasting longer, as is underemployment.) - paying off your house in conjunction with starting to fully fund more traditional retirement options (I don't know about this, now. I'm up in the air - my dh really believes that we should no longer be working on this, and I have gone along with that for now. We still plan to set aside a fair amount of money AS IF to pay off the house, but with the current economic flux & potential political and civil unrest, it seems safer to not actually pay off the house yet. After all - if we pay down, say, 50k of the house & THEN have financial issues, we still have to pay our monthly amount due. We won't have to pay it for as long, of course, but if we had that 50k sitting in savings instead then we would be better off (at that point). If, on the other hand, we find in 5-10 years of saving or so that we are financially stable & the economy has settled down some, we can always at that point take all of the saved money and apply it to our mortgage. Therefore, for now we are going to go into a "holding pattern" on the mortgage thing & see what happens in the next few years.) Just to chime in: please do not pay off housing debt in lieu of some retirement savings. I am not a financial advisor and I am not giving you financial advice. However, compounded interest and time are your friend. See this scenario. The sooner you start setting aside money for retirement, the more time you have for it to grow. Many companies have target date retirement funds which have different asset classes, moving an investor from stocks to bonds as the time for retirement draws near. For my own sake, my dh and I have set aside some funds every year since we graduated from college, no matter how little we could manage. Even while paying off student and auto loans, through unemployment and underemployment, juggling the mortgage on two homes, we found someway to contribute to retirement. We only invest in low fee, index funds. Other than rebalancing the accounts annually, we ignore them. It is unlikely we will receive any social security when we retire so we do not intend to rely on it. For us, we always put retirement savings first, maxing out any employer-sponsered plans or self-employed accounts. Then, we build up our emergency savings. Then we set aside a percentage for college. Then and only then, have we started paying down our housing debt. Quote Link to comment Share on other sites More sharing options...
black_midori Posted February 12, 2012 Share Posted February 12, 2012 Just to chime in: please do not pay off housing debt in lieu of some retirement savings. I am not a financial advisor and I am not giving you financial advice. However, compounded interest and time are your friend. See this scenario. The sooner you start setting aside money for retirement, the more time you have for it to grow. Many companies have target date retirement funds which have different asset classes, moving an investor from stocks to bonds as the time for retirement draws near. - paying off your house in conjunction with starting to fully fund more traditional retirement options (I don't know about this, now. I'm up in the air - ...) I agree with paying off the house AND paying into retirement - I had mentioned that in a separate line. :) However, I think if someone is paying on high-interest-rate debt it makes better financial sense to pay all of that off first - it doesn't matter if you are compounding interest income at 4% if you are compounding debt at 15+% and can't get out from under it! Quote Link to comment Share on other sites More sharing options...
kalanamak Posted February 12, 2012 Share Posted February 12, 2012 it doesn't matter if you are compounding interest income at 4% if you are compounding debt at 15+% and can't get out from under it! :iagree::iagree: Crunch your numbers! Quote Link to comment Share on other sites More sharing options...
ErinE Posted February 12, 2012 Share Posted February 12, 2012 I agree with paying off the house AND paying into retirement - I had mentioned that in a separate line. :) However, I think if someone is paying on high-interest-rate debt it makes better financial sense to pay all of that off first - it doesn't matter if you are compounding interest income at 4% if you are compounding debt at 15+% and can't get out from under it! Not disagreeing. It was paying off the housing debt first that I was disagreeing with. High interest rate debt should absolutely be paid off first. Quote Link to comment Share on other sites More sharing options...
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