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Saving Money, Retirement, and other scary stuff

Discussion in 'LGBT Later in Life' started by MisterTinkles, Apr 21, 2015.

  1. MisterTinkles

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    My grandma had to work until she couldn't work anymore. Then she worked from home, since she couldn't hold down a regular job anymore...until she couldn't use her hands anymore.

    I don't know how she bought a house. She pretty much had to work until she physically couldn't do it anymore. Which seems to be the route I'm on as well.

    I've worked all my life, and have nothing to show for it.

    I'm just now at a point in my life where I actually have a few dollars left over from my paycheck every other week.

    I've been living in apartments since I got out on my own, and I'm sick of it.

    I think at this point, I can either start trying to save for a retirement account, or I can attempt to find a way to get my own house or piece of land. I can't do both, so I'm having a hard time figuring out which one would be best.

    Saving money is good, but then again, there is a good chance I will never get the benefit of using it. Or, if I do, it won't be enough to last me.

    Trying to buy my own place might be costly, and may take what little I do have saved up at this time, but at least I will be using my money on something that will be mine.....hopefully, instead of wasting all my money on renting apartments, where the management doesn't give a f**k about anything. Not to mention the disgusting neighbors and area. At least with my own place, I could possibly find something away from other people.

    I don't know what would work best though. I've talked to a couple of investment advisors, but I have absolutely NO idea what they were talking about....it's all bankers talk to me.

    :bang:
     
  2. skiff

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    Hi,

    A house is always needing money for improvements or repairs. Are you handy?
     
  3. OGS

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    So, I actually am a private banker, so I will try to avoid "bankers talk.":lol:

    To start with I have to put out there the obligatory you really should try to do both (if you want to own a house that is). I don't know how strictly you budget but when my partner and I started to really rigidly budget--we literally tracked every penny for about six months and had weekly meetings (complete with refreshments) to discuss the budget--we were amazed how much money we were able to pull out of what we had previously thought was a pretty tight financial situation. If you are able to save for retirement through payroll deduction (401k or 403b) you may not even notice the difference but it can add up faster than you might think, especially if your employer has any sort of match.

    Second, I will go ahead and say that your situation is pretty normal. Americans don't save for retirement. The average retirement savings among Americans is a little over $101,000 but even that figure inflates the actual situation because the median retirement savings (half have more, half have less) is less than $32,000.

    But, if I take you at your word that you really do want to do both but really can only do one I vote for house. I think it's a concrete thing that one can do to prepare for the future and which can really make one feel like they are preparing. The one serious downside is that it ties you down--it really does limit your options going forward. So the way I would decide would be to look at your own life and decide the extent to which you have reached a place--both geographically and emotionally--where you want to stay. If you have buy a house. If you haven't start a retirement plan--under most circumstances you'll be able to pull out 10 or 20k penalty free to buy a first home if you choose to later.
     
  4. SWburbchgo

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    Great advice OGS. I am going through a similar type of situation regarding finances and your post was very helpful. Thanks again
     
  5. Yossarian

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    Americans don't save a whole lot in terms of money, because the Federal Reserve is constantly diluting its value by inflating the currency. Money I saved for retirement 30 years ago is worth 1/10th what it was in terms of what it could have bought at the time. You can only "save" by spending wisely on tangible stuff whose value increases with inflation, typically close-in land, precious metals, jewelstones etc. Most financial investments don't even keep up with inflation when they seem to be growing, unless you luck out with a win such as buying Apple before it took off, or Ford when it looked like the Big Three were going under. Opportunities like that come only rarely, and usually don't look like opportunities when they are.
     
  6. Foz

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    Saving up for a pension is something many people put off for too long, I started saving when I was 18 and my company matched your contributions, so I put my final pay check into my pension. They also gave me a lump sum as one of my ideas was adopted by the company, I'm going to carry on investing in a pension after my masters so I can enjoy retirement and not live from pay day to pay day.
     
  7. juliegt6

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    I've worked with people who didn't save enough for retirement. It's sad at sixty to be looking at the reality that really want to retire but you're looking down the reality that you never will. They may have had the same thought that they might never get to where they'd even be able to use it. That's horrible thinking. That's the same logic of doing stupid things because YOLO. Ask grandma what she'd do looking back (if she's still alive), I bet money she'd say she wished she saved more and planned better.

    I recommend the retirement route over buying a house based on your scenario of one or the other. Houses aren't great investments outside of proper rentals. You have property taxes, upkeep, utilities, and that's not talking about what even a 10 year mortgage at ideal rates will cost you in interest. Then there's the time value of money. If you had a100k house, by the time it's appreciated to 150k, you could have invested somewhat conservatively the same amount and had more than 150k. Also, by the time it's worth 150k, you may have spent the 50k in taxes, interest and upkeep.

    Buying a house is not a bad thing but it's not the end all be all that previous generations sometimes viewed it as. I'm likely buying my first house next year but I have more in my Roth 401K and Roth IRA than what this house will cost and I'm 27. A house as primary residence is nothing but a place to live to me. I don't view it as a good investment. I want one so I can have my own space.

    If you want to get a hold of your finances and own them, you need to learn and take interest in them. While it may seem like banker talk now, learning the language and the system can make your life better.

    People don't get excited about things like IRS publications, but learning about things like health savings accounts, flex spending accounts, tax advantaged retirement accounts, tax credits, etc is important. However knowledge is power and since you worked hard to earn it, work hard to keep it and grow it as much as possible!

    People have crappy neighbors in houses too. You also won't have crappy management to deal with, you get to be the management! Meaning when stuff breaks, you're completely on the hook for fixing and expenses associated.

    That was kind of a random ordered response but I'm a little medicated for pain right now.
     
  8. MisterTinkles

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    Well, I have worked from paycheck to paycheck all of my life.

    Anytime I have gotten a raise at any job I've had, the prices double on just about everything, instantaneously....which nulls out the raise I got. For example, I got a 30 cent raise at the first of the year. And instantaneously, prices on food and toiletries went UP over a dollar!!! Toilet paper prices went up a dollar per pack, and food prices went up at least 50 cents, and brand named potato chips when from $3.00 a bag to $5.00 a bag!!!
    (just to give you reference)

    Anytime I've gotten a big tax refund or had an extra amount of pay for some reason, I've had to either spend it on moving to another apartment or fixing my vehicle. I have never been ABLE to save money until now.

    And yes, I do NOT have money to attempt to buy someplace to live AND save for retirement.

    As it is at this point, my social security is HALF of what I will need to just pay for a nursing home (when the time comes), so I am pretty much shit outta luck on that.

    What I REALLY want is a nice travel RV and a new truck to pull it. That way I can take my home anywhere I want. But both of those are just as expensive as buying a place to live thats permanent in one spot.

    I've looked into investing a small amount of money, but there is no such thing as "small investments" apparently. Every stock option I've looked into, or investment professional I've spoken with says I have to have $3,000 to $10,000 in order to invest in anything.
    Shit, if I had THAT kind of money, I wouldn't need to be scrounging for some type of plan to get by on......I'd already have a huge savings plan.

    So, as it is, I'm pretty much fucked. The most I can hope for is to find a big nice fridge box in a quiet alley somewhere.
     
  9. RainbowBright

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    It is not necessary to live paycheck to paycheck, almost ever. And especially not for someone who is physically capable of work and does not have huge medical bills. I came from a family that had absolutely nothing, and no knowledge about how to have anything, and I learned that it is often due to a simple lack of information. You have to be willing to do a lot of hard work, and read a lot, and keep a strict budget, but it is possible to get more than what you have right now. I went from being homeless with no support, to buying a house, to being a landlord, to now owning my second house in a luxury area of the nation. And I never had a really high-paying job during any of that. I am still in my early 30s.

    The thing is, you can't rely on what strangers, including financial advisors, tell you to do. If you don't know your own finances, people will rob you blind. Start reading as much as you can about smart investing, and saving for retirement. If you don't understand a lot of the information out there (and there are tons of great books and websites), then start by reading books in the yellow and black "For Dummies" series, which are really good at explaining things from the bottom up, for people who don't have financial degrees. It is the worst decision in the world to buy a house when you haven't studied real estate - so many people end up buying houses that are poor investments and then not being able to get out and sell them because the house ends up upside-down (worth less than they paid for it, and the bank wants their money for the mortgage), so they end up foreclosed on and evicted and bankrupt, or at the best forced to stay in a place they hate for 20 years. For other investments, people often don't do any research and then buy a truly terrible investment and either lose their money, or lose access to it and never make a profit - essentially they just gave a company a loan interest-free!

    You can't just read one book and assume that book is totally right. You'll need to do a lot of reading, and as you learn you can start comparing what each book says to find the truth that lies somewhere in the middle.

    From today onward, the things that you can do to make sure you can have both a house and retirement someday (instant gratification is not real - this will take years of work to get to both, but it is definitely possible), are:

    1. Start tracking your budget (using Excel or a software program like Quicken on a computer helps a ton to keep long-term records that you can analyze and compare over time) - be honest with yourself as to what you're actually spending, and what you're actually making. Don't forget to consider expenses that may not show up every month, but that you still have to save for, like taxes, car insurance, repairs, or house insurance and property taxes if you want to start budgeting for that.

    2. Start looking at what your choices are. What is the cheapest and most reliable transportation? (consider the whole picture - if it's a car, how much does it cost, how frequent and expensive are repairs, how much is the insurance, etc? Often a more expensive car will actually cost you LESS in the long run) Can you use public transportation and still keep your job? Can you go in with others on a carpool or carshare situation? Do you have cheaper options for clothes? Can you see TV on Hulu, which costs $8/mo, vs. cable, which costs often $80+/mo? Can you get a prepaid phone, rather than pay for a cell contract?

    Don't get a pet, especially not one larger than a gerbil. They prevent you from renting in most places, they cost a ton in pet rental fees, and most cats and dogs actually cost between $2,000-7,000/yr in food, toys, treats, shots, vet bills, and medical emergencies. It is WAY more than one would think when you add up each year, and the older they get, the more they cost because you have to add arthritis medication, tumor surgeries, or other sorts of medical intervention.

    Everything that is optional, consider cutting out of your life entirely. Don't try to keep up with the Joneses - the Jones family is broke, spending far past what they have on credit card for fancy cars and hairdos and clothes and vacations, and half of what they own is about to be REPOed any minute! They are miserable and fighting all the time about money, even though their FB picture makes them look like the perfect family. Don't believe the hype! Less is more.

    For the most part, a brand-new car, or a brand-new house, are NEVER worth the money. Used options with a thorough inspection are far cheaper, and more reliable.

    3. Don't buy anything you can't pay for in cash. Poverty should be a catalyst for major creativity - find a way around everything you need. If you can't afford a car in cash, then you can't afford it. Take the bus. Or buy a scooter instead, which if it goes below a certain speed limit as some are designed to do, don't even require a license or insurance to ride, and only cost about $600. You can even buy them online at good prices, with great reviews. Have credit cards, because you need them for great credit (and having great credit can save you a ton of money!), but only use them for basic recurring expenses like for utilities. Research prices of staples that you buy regularly, and find a way to get the best equivalent you can for the most money - often this will be online like something on Amazon, and in bulk.

    4. Get creative with your income. Scrooge McDuck used too say, "Work smarter, not harder!" and that was totally true. Find ways to make the most money for the least time and effort. Do what needs to be done to get a better job - but research it first, don't just pay some random online degree program, or jump into a field that you aren't really good at. If you're as high as you can get in your job, look for other ways to make (LEGAL!) side income. Are you good at crafts? Try selling them at fairs on the weekends. Can you take a second part-time job? (Only do this if the pay is worth the time... best with something you would like to do for free, like maybe teach an instrument to someone, or tutor kids, or help out at a vets office, or paint houses, or walk dogs, etc.) Sell things on Fiverr. Try Etsy. Sell all your old junk on Craigslist or Ebay. If you're handy, consider picking things up that people give away for free on these sites, or leave out on trash day, and refurbish them and sell them for good money. If you need to chill out, try starting a Meetup where you help people to do yoga or meditate and charge a small fee per class from each member. If you're good at something, people will pay for it. And you'll like it so much that the money will just be an extra benefit. Look into things like mTurk (usually poor pay, but you never know), Odesk, and ELance. Learn how to write articles or cards for extra cash, which you can usually do from home with reputable companies, and build up your reputation over time to get lots more work. Try being a photographer if you're good at that for weddings where people don't have much money, or try selling paintings. Research to learn how to get a tax ID and do things legally.

    5. If you do at some point own property, consider renting out a room in your house, or becoming a full-fledged landlord. Do a TON of research, because there are a million legal and financial pitfalls here, but if you know what you're doing there is great money to be made.

    6. Start growing your own food. This one is not easy, but pays a ton back to you in health and eventually a lot of saved money. Start small, buying a few seeds and growing some sprouts in a windowsill. Read up on organic container gardening. Don't get trendy stuff - you can buy things mad cheap if you look. And eventually, even in an apartment if you have any outdoor space at all, you can compost nearly all of your garbage and paper recycling really easily, and have organic soil for free!

    7. Save for retirement NOW. Anybody can do it. Take $1, or $50, or $100, or $200 - whatever you have right now, and put it in an interest-bearing account that you will never access. Read up on Roth IRAs and other retirement savings accounts. Most will not have a minimum to open. If you do not have a 401k option at work (if you do, match the max as often as you can), then one of these other types of retirement accounts is your best bet. The earlier you start, the more time that money will have to grow. 401ks are often riskier anyway, because they involve investments that can tank suddenly, as just happened in the recent economic crash. That's ok if you have long enough to wait it out, but it's better to have at least some of your money in very secure investments that my not make as much money, but are stable. Diversify, diversify, diversify. The sooner you start the better - don't worry about if it's enough, but just start. Then next time you have a little extra, add it. Over time, you'll have more and more to contribute. It's ok to start with just $20 at a time, and work your way up. If you don't have enough for an official account, get a separate free bank account with no minimum and start saving up in there until you DO have enough. Consider CDs or other accounts that have interest, even if it is low - some interest is better than no interest, while you are saving up. Or if you're really good at something, invest the money instead into materials for a new side business, and put the profit you make that year into the retirement account. Just be sure to spend wisely and have a business plan.

    8. Real estate is great, but do your homework. I took 2 full years of daily research before each of the two houses I bought, and man that really paid off! While everybody else I know couldn't get a house at all, or bought one that lost them money, my first house DOUBLED in value in just 6 years of owning it. I then sold it at a high point, and waited until a low point to buy the next one, which is already gaining rapidly in value. In the meantime, I am renting out a room in the house to somebody with impeccable credit and references (and manners, fortunately), for a large amount of money because I bought in a very in-demand area. When I started, I had absolutely nothing, and very little to put down. But I took advantage of the right time in the market, a structurally sound but cosmetically ugly house I could fix up myself in a good neighborhood, and watching that market for 2 years helped me know when I was getting a great bargain and which house to pick.

    9. Do take out student loans, but only at the best rates, and ONLY when you have done the research and are SURE you will make that money back quickly post-degree.

    10. Live well. What it comes down to, is that most of the "first world" populations don't do well financially because they are attached to status, and don't want to be bothered to do the hard work to learn about finances. It takes years to stick to a budget and really see results. What makes it easy is when you re-order your priorities. Focus on fulfilling your spirit, taking care of your body, and having true fun - and you won't really need a whole lot of money. Don't buy the $1,000 hair weaves, or go clubbing every weekend and buy all the alcohol. Instead, have a heart to heart with a true friend while going for a hike, or visiting a museum on their free day. Spend time meditating and deep breathing every day, and all the expensive coffee drinks and need for fancy clothes and fattening food and expensive status symbols won't mean much anymore. Eat simple, fresh, nutritional food, and spend some time outdoors instead of at an expensive gym, and your body will feel good, and also have way less medical bills in the long run. Find what matters to you, rather than focusing on a bunch of stuff that people tell you you should want, that doesn't actually make you happy at all.

    11. Find a non-profit debt consolidator with an excellent reputation (not crooks!) to help you consolidate debt payments if you have a lot of debt.

    12. Fix your credit. Get your credit reports (you can get all 3 for free), and find out what went wrong and how you can fix it. It takes 7 years for each bad credit mark to leave your report. So start fixing it now, and have patience that if you were late on a lot of bills, it may take 7 full years to get to perfect credit. But it is so worth it! I have a credit score above 800, which is perfect. When you have perfect credit, you get cheaper apartment rent, cheaper mortgage payments, better deals on things like phone contracts, cheaper car insurance, etc. etc. Savings are right and left. You also qualify for great credit cards that give you a lot of money back per dollar spent, and since you pay your credit card bill off in full every single month and never carry anything over, it is a lot of savings in your pocket without any negative side. That can lead to free vacations, and all sorts of other perks that make all this hard work worth it in the long run.

    13. Make a game of finances. People find money stressful, and that's why a lot of people don't face it. But it can be fun. Check out your utility bills this month, and make a game of trying to get a lower bill each month. If you live with someone, challenge them to see who can save the most on food bills while still having all 3 meals in a month, or who can find the cheapest GroupOn coupon for local entertainment, etc. Challenge yourself to make more money each money than the last month on a hobby, like painting furniture, or singing on street corners (again, you'll need a tax ID - you can get that for free online very easily - and to be sure what you're doing is legal). See who of your friends can make the most from giving lessons to people with what you're good at, or who can make the most doing focus groups for marketing research if you live in a big city. Treat yourself to free or very cheap fun things when you reach goals - like taking a whole day off to roll around in your bed and pretend you're swimming, or spend a day with your romantic interest, or playing Twister or finger painting, or maybe building a fort and bombing each other with checkers. Or talking your dog to the beach. Whatever.


    This is a lot of stuff, but to get started with any of these ideas, you don't need much knowledge at all. Just determination to have a better life. It is very doable, even for people who come from nothing. I have friends who have done it in much tougher countries with much harder circumstances, so it is definitely possible for someone who is not very sick, who lives in a place like the US or UK, etc., and who has at least an 8th grade education.

    Hopefully something in this list gives someone an idea to start with.
     
    #9 RainbowBright, Apr 23, 2015
    Last edited: Apr 23, 2015
  10. CalgaryMac

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    I retired in October 2014 at age 62. I worked in health care for 30 years and had had enough. My partner is 7 years younger and still working mostly because if he were to retire now, we would need to draw down from the principal of our investments.

    I am Canadian so some of my observations might not fit for you if you are in America:

    I changed jobs about 15 years ago and had the choice to either transfer my pension funds to a new pension or take it out and invest in a locked - in pension account (LIRA). I chose to lock it in and the fund doubled in value in 15 years. Although I take money out of it each month, it continues to grow faster than I take it out.

    We rely on financial advisors and an accountant to place us in the best possible position to save on taxes. We can use the fees associated with the financial advice and the accountant fees as a tax deduction. While initially, we were concerned with the costs of this, they know what to do better than we do and we have been earning about 11% per year on our investments, even with the market not being the best. They are worth it.

    We have taken advantage of any government programs to save money and save taxes. We try to max out as much as we can and have usually set up a savings plan for retirement so that came off the top each month. We chose an amount that was realistic and then adjusted our spending to afford the saving rather than save whatever isn't spent.

    I take a minimal retirement amount each month and if I need more I get lump sums out of the account. That way I don't have extra money sitting in savings accounts that don't have the best returns.

    We try to save money by buying food more frequently and in smaller amounts ( less risk of spoilage because it sits in the fridge), use the library a lot (ours provides free access to online newspapers including the one in our home town), don't eat out often, bought a Nespresso machine so we can make our own lattes at a fraction of the cost of coffee shops, buy clothes only that are on sale or clearance (an online - can get pants shortened etc. with no extra cost).We try to use our cells for a phone and texts and we use the computer for data (way cheaper).

    Retirement creates savings - don't need work clothes, buy far less gas (1 fill-up per month rather than 4 when I was working), eat out less, drink less coffee, etc.. My partner likes to check to see if we need something or want something before spending happens. Not having the extra dollars in my pocket as I did when I was working also has changed my attitude towards shopping - usually I don't need it.

    Anyway, while I love being retired I am still learning how to stretch dollars. My dad dies a year after he retired so we have decided not to focus only on savings but also to enjoy what savings that we have.

    Do what you can - it's all good and in the right direction.