Sunday, October 24, 2010

How much is needed for retirement?

My friend told me about which can track all of your financial accounts and help provide some guidance on how to get out of debt *cough, cough* or on how to save for retirement.  You punch in your age, your income, when you'd like to retire and how much you want to have each year.  The program assumed I'd live to 90 and told me I would need about $3.6M if I wanted to rock the equivalent of $80k per year.  Hmmm...$3.6M sounds like quite a bit so I re-ran the numbers.  I said I would get ~7% return and suddenly I only needed to save something like $2.5M.  Crikey.

I try to max out my 401k, but I'm not doing much beyond a little stock trading.  What do people do to save for retirement?  If I'm crazy, I might think I could count on a little from Social Security and possibly a small inheritance from my folks, but the latter would require me forcing my brother to sell our parents' house to split the profits.  I don't think he reads my blog anymore, but my plan is to just give him the house since he's more likely to put it to good use.  I think it would be nice to keep in the family, but who knows?  My parents are still young yet.

I guess I should start socking more away, but I need to put it somewhere I can't reach because otherwise I'll spend it.  I have an IRA so I should start contributing more, but I make too much to get a tax benefit.  I'm also worried about what to do with the money once it's in the account.  I can buy stock, but those could just as easily lose money.  I guess I should find a fairly conservative fund which will give me a solid 5% return.

In order to free up money to be saved, I need to stop spending money.  I'm hoping Mint's dire predictions will keep me in line because self-discipline hasn't worked at all to this point.


Jeremy said...

Mint is already saving me money since it pointed out a credit card offer with 0% APR on balance transfers for 21 months (3% transfer fee) and 0% APR on purchases for 12 months. Sweet. I applied and was accepted which should save me nearly $1k over the 21 month period.

I have to make sure I don't fill up the unused credit though. I've got to be more disciplined.

Y said...

I heard index fund is the best.

You really need to stop spending so much. Maybe don't look at stuff. If you don't look, them you aren't tempted to buy.

Jeremy said...

Yeah, I've got some index funds already.

I do need to stop spending money though what's really killing me is repaying my 401k loan which I took out to replace my roof.