NationStates Jolt Archive

What do you think the best method/methods are for saving money for retirement? Being a long way from retirement myself, it's something I should probably start thinking about now. I dont know if Social Security will exist when I retire or not,so I'm going to pretend it wont to be on the safe side. What do you guys feel are the best ways to turn your money into more money, so that you may live comfortably in your Golden Years?

Stock Market

401 K through the company you work for

CD's

Personal Savings account

Buying and selling Real Estate and putting the money away for retirement

other
these will be in a poll-give me a sec....

What do you think the best method/methods are for saving money for retirement? Being a long way from retirement myself, it's something I should probably start thinking about now. I dont know if Social Security will exist when I retire or not,so I'm going to pretend it wont to be on the safe side. What do you guys feel are the best ways to turn your money into more money, so that you may live comfortably in your Golden Years?

Stock Market

401 K through the company you work for

CD's

Personal Savings account

Buying and selling Real Estate and putting the money away for retirement

other
these will be in a poll-give me a sec....


I would suggest buying and renting out property. That way you have other people paying for multiple assets for you and even if property prices drop you still make tons.

Ho s are always a good idea.

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Ho s are always a good idea.

Please check out Pimpbot 5000 for a good example of the proper pimp.


you didnt finish your nations name.......it should be Jaythewiseass ;)

annuities

you should be able to get one that'll at least double inflation, which means that your money will REALLY grow over time (not just nominally).

Always pick up money off the ground. If my experience is any indication, you can get an average of $20-$50 a year this way. It also seems to make you more frugal, and less apt to spend money. After all, the best way to save money is to spend as little as possible.

annuities

you should be able to get one that'll at least double inflation, which means that your money will REALLY grow over time (not just nominally).


I made this thread so that I can compile information that may be useful to anyone thinking about the future.....so would you explain a little in detail how an annuity works, how does it mature, what are the typical interst rates and penalites, taxable options....stuff like that. I read some on investments and the verbage is sometimes confusing. Would you break your suggestion down for me please? :)

And the rest of you please do the same! No over my head Economist lingo ;)

It does depend on your age now, how soon you want to retire, and how much you are willing to risk living off the soup kitchens when you are in your 70s.

I am going to assume that you do not want to risk the soup kitchens, and that you are planning to retire at least 25 years from now. Under these circumstances you would want low risk funds that pay reasonable returns due to your assets being tied up. (i.e. you can not go and just get the money). Exactly what funds etc, will depend on where you are, but often private pension plans run by insurance companies pan out pretty well as you get the actuarial advantage of the poor guys that die before retiring.

EDIT: If you want figures, go talk to financial advisers, not an Internet forum.

re: Annuities

go here... this should help:

http://www.annuitiesinstitute.com/annuities_101.htm

I would suggest buying and renting out property. That way you have other people paying for multiple assets for you and even if property prices drop you still make tons.
My father used to do that. I'm not sure if he still does or not.
Judging by the amount of money he managed to work up, I think it worked fairly well for him.

It depends on your individual situation. If you are in a job that is long term and not subject to frequent changes of employer, and if your company offers a good 401k fund, then 401k is the way to go (specially if your company matches some or all of your contributions). If you work for a solid company that offers an Employee Stock Purchase Plan, get in on that too (notice I said too, not instead of). If you are going from job to job alot or you are in the government contracts system (where the company you work for changes every few years), or if your company doesnt offer a 401k program, or if they offer it through a company that isnt very good and doesnt offer good funds, then look into a Roth IRA or a traditional IRA.

You definitely do not want to use the stock market for retirement. If you would like to play the stock market do it with money that is not earmarked for retirement. However, having some stock oriented mutual funds in your retirement portfolio (through a 401k or IRA) is a great idea. If you arent planning on retiring any time soon, 80% stocks and 20% bonds is a good mix for long range growth (youll want to shift towards bonds as you get older and can no longer afford the same amount of risk).

I was hoping youd make suggestions AB. I have spoken with a financial advisor and it seemed he was more interested in the fee's I would be paying him instead of how to help me make sound financial decisions. Anyway...I'm just asking suggestions and ideas from people here on NS because there are a lot of intelligent people. I dont really rely on internet forums for solid, foolproof facts .....just like to hear opinions on the matter :)

My father used to do that. I'm not sure if he still does or not.
Judging by the amount of money he managed to work up, I think it worked fairly well for him.

I have always maintained "never sell property", but thats just if you are thinking long term. After a few years you can even retire if you do it properly, with the monthly income you can make on the renting out of the property eventually it will be more then your current salary and will only grow exponentially.

you didnt finish your nations name.......it should be Jaythewiseass ;)

hmmm yes :cool:

A single premium deferred annuity, or SPDA, is an annuity you purchase with a single payment. You get a guaranteed interest rate for a specified period of time, and the taxes on the interest you earn are deferred until you make a withdrawal. Single Premium Deferred Annuities are ideal for anyone who wants to let their money grow risk-free while deferring income taxes, with the goal of creating income later in life.
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so... you put in, say, $5,000 now

it is 2005

let's say you retire in 2050

that $5,000 will grow at a set interest rate, compounding annually, until you decide to withdraw the whole thing in 2050.

i have not my financial calculator with me, but if you put in (easier number to figure with) $10,000 now and your annuity pays 10% per year (a bit high, but used as an example), 1 year from now you'll have $11,000

two years from now it will be worth $12,100

three years from now it will be worth $13,310

and etc.

this should give you some idea of how your money will grow with an annuity

it is guaranteed, too, which is comforting. Bear in mind that inflation averages somewhere around 2.5% per year, so MAKE SURE your annuity interest rate is well above that so that you'll see real returns on your investment.

Thanks so much Frag :)

okay -- the first example is an annuity with which you would make a payment (call it the principal amount of the annuity) and then you'd sit back and watch it grow, grow, grow until you retire and then WHAM you'd take it all out.

then there's this type of annuity:
----------------------------
A split annuity is a very tax efficient and intelligent investment vehicle combining two different types of annuities - a single premium deferred annuity and a single premium immediate annuity. One annuity repays you a set sum of money each and every month over a specified period of time. The other annuity is left in place to grow on a fixed interest basis, with the goal being that by the time funds in your immediate annuity are depleted, the single premium deferred annuity will be restored to your original starting principal. This allows you to then restart the process with new prevailing interest rates.
--------------------------------

This way, you keep the "nest egg" part of the annuity but you also get some "spending money" between now and the time you retire (and receive the balance of your annuity).

No one method is the best. CDs are too conservative, the stock market is too risky, and bonds may mature long after one is dead. Instead, a variety of investment options is best. It's all better than stuffing one's retirement money under a mattress.

*takes notes*

I appreciate that info. So far, I've been very fortunate with my financial obligations. I have 3 cars, all paid for, so no car payment. I paid off 10k in credit card debt last year so now I just have a small balance on one card. Shredded the others after paying them off. I have about 50k in equity on my house(yay!) SO my debt to income ration is very low.

My brother says Real Estate is where its at, but thats easy for him to say because he's got the Midas touch and has tons of money. Takes money to make money like they say. So I dunno about that. I will look into some annuity options and find out what my options are tax wise. Like do I only pay taxes on the interest earned each year -stuff like that.*shakes fist at taxes*

damn ask a threads....bump

I would suggest buying and renting out property. That way you have other people paying for multiple assets for you and even if property prices drop you still make tons.

Absofarkinglutely.

Property rarely depreciates. And it lasts forever. Plus even if your crappy poor, you still got a shelter or many shelters over your head is alot better than none.

The only unlikely event is probably earthquake or major disaster.

And rent, people always need a place to stay.

So that's one thing Frang and I agree on. Yeah, Annuities are definitely the way to go for personal control of your retirement.

Don't try and 'save money' in the stock market. The stock market is a game of risk and when people start thinking otherwise it gets riskier.

Don't try and 'save money' in the stock market. The stock market is a game of risk and when people start thinking otherwise it gets riskier.


That's true. 80% of investors loose money in stocks. Mostly because they are idiots however.

"Jesus Saves" - banner ad on a local bank near my house.

It made me laugh so hard I nearly rear-ended someone.

I'd rather have my money grow my whole life than have to worry about living off of savings. I understand that you tactics listed show that, but the question takes a conservative approach. I don't like having my $$ sit around and I wouldn't want my money to become relatively devalued or "isolated" with time.

What should someone do? Personally, conservative retirees should consider bonds, currency, and commodity markets. Pick something you're interested in and watch it on a standard basis. That way, you know whats going on (in finances and throughout the world) and you don't get bored with life as you get older. Also, couples sort of get interested in something together and because they actually have a stake in what they're watching, so its viewed more carefully and closely.

In Germany: none.
First you're tricked and /or forced into saving money, then you're unemployed and get no support until all your saved money is used up. According to the law.
:mad:

*takes notes*

I appreciate that info. So far, I've been very fortunate with my financial obligations. I have 3 cars, all paid for, so no car payment. I paid off 10k in credit card debt last year so now I just have a small balance on one card. Shredded the others after paying them off. I have about 50k in equity on my house(yay!) SO my debt to income ration is very low.

My brother says Real Estate is where its at, but thats easy for him to say because he's got the Midas touch and has tons of money. Takes money to make money like they say. So I dunno about that. I will look into some annuity options and find out what my options are tax wise. Like do I only pay taxes on the interest earned each year -stuff like that.*shakes fist at taxes*

Your brother is correct. Real Estate is where its at. Follow his advice if he is as good as you say. You can buy property all day long with no money down. My wife and I buy 1 property a year for rentals. Its suprising as years go by and you realise that your making a ton of money in equity every year and its compounding. Its an amazing machine if you do it right.

Your brother is correct. Real Estate is where its at. Follow his advice if he is as good as you say. You can buy property all day long with no money down. My wife and I buy 1 property a year for rentals. Its suprising as years go by and you realise that your making a ton of money in equity every year and its compounding. Its an amazing machine if you do it right.

You can't do that where I live. If you try it you will end up with a negative income stream from the properties.

*mutters something under his breath about the dot.com boom and the reasons behind it*

You can't do that where I live. If you try it you will end up with a negative income stream from the properties.

*mutters something under his breath about the dot.com boom and the reasons behind it*


Well I agree this doesnt work in every part of the country (The equity rise). But you can do rentals anywhere you are for cashflow. Just a different method and approach.

Well I agree this doesnt work in every part of the country (The equity rise). But you can do rentals anywhere you are for cashflow. Just a different method and approach.

The thing is, right now, you can't do rentals for cash flow either. I happen to know quite a bit about this, because a couple of people I know have tried this. At the moment there is a significant gap between what the rental market will generate in monthly rent, and the actual value of property. Added to this, there are a lot of rentals on the market looking for tenants. People end up buying then having to accept a negative cash flow from the property, because the rents no-where near cover costs. Of course, they hope that the property will increase in value offsetting this, but that can't go on forever at rates that make it a realistic investment.

What makes it worse is the methods of creative financing that people are using to aquire these properties.

I've already seen one collapse in house prices around here - about 15 years ago. I expect to see another soon.

*puts fingers in ears*