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Plan For Retirement


Ro-bear
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I am no financial expert.  I am an English teacher.  I have never earned more than 50K in salary.  But in four years, at the age of 59, I will retire a fairly wealthy man.  I still can't believe it myself.  Here is how it happened:

 

Last week I found out I had an account I didn't know about. Although my first degree was in business, I have no interest in it, nor any aptitude.  My wife handles the finances, except for my stock and 401K notifications, which she hands to me and I put away without looking at too closely.  My 401K from a job I left seventeen years ago had an account balance almost exactly matching one of my two other stock accounts, so I somehow conflated the two in my mind.  I had made no contributions nor made any changes in the account in all that time.  The stock I bought back when I was with the company has flourished in the years since.

 

So how did a clueless wonder like myself end up with such a fat retirement?  I bought stock in my late twenties and thirties.  That is the only smart thing I did (besides not selling any of it); everything else I did, like losing track of the account, failing to diversify or rebalance, was stupid.  I'm lucky I didn't lose it all, not that I would have noticed.  I never sell any of the stuff, because I bought it so I wouldn't eat dog food in retirement. I didn't think Social Security would be around still, because I was a Republican and I believed other Republicans.  So my wife and I have been living modestly for over twenty years with the reasonable expectation of a comfortable retirement. When we found out about this account, we nearly fainted.  We will be eating quality groceries in exotic locales.

 

I post this only partially to boast. The thing is, I have to tell someone.  I don't want to tell my friends and family, at least not yet.  What I want most of all is to give some advice to the younger members here.  Plan your retirement NOW, while you are young.  Buy as much stock as you can afford, and live within your means.  Don't carry a credit card balance.  Buy, don't rent.  You wouldn't believe how fast the years go by.

 

FYI, I am on top of things now.  I am halfway through the diversification/rebalancing process to reduce my risk and position myself to retire.

 

Don't count on Social Security to fund your retirement.  There is practically no such thing as a pension anymore.  It's up to you.  Max out your 401K contributions, especially if your company matches contributions.  If your company has a stock purchase program, go for it.  Don't leave money on the table.  Over time, that shit can grow like you wouldn't believe.

 

 

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Ro-bear, This is wonderful news!! You must be elated!! yellow.gif Congratulations on being able to retire comfortably.

 

And yes, the young ones should 'listen up'' because what you say about putting money away is sooo true. I'm still waiting to win the lottery.....

 

But good for you my friend!! And good to see you!! Best of everything to you!!

 

Hug

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Congratulations! Time to break out a terrific $9 bottle of wine! smile.png

 

It just goes to show that you only have to do a few things right to get ahead. Live well within your means, avoid debt, invest your money. Put aside money for a rainy day so you don't have to borrow with high-interest credit cards. After a certain point, more money and more stuff won't make you happier. Few of us need an expensive cell phone plan, a gym membership, cable TV or Starbucks every day. Nobody needs a $30,000 wedding, a summer spent backpacking in Thailand or a brand new car.

 

Besides helping you retire, living simply and having savings means you own yourself. If you have a sucky job, you can probably quit and find a new one. If you find a great deal, you can take advantage of it. If you have an emergency, you can take care of it. (A few years ago, I broke a tooth and knocked two others out of place in an accident. If I hadn't had savings, I wouldn't have been able to pay cash to get braces and a dental implant--insurance didn't cover either one. And if I'd had no savings and maxed-out credit, I'd have a missing tooth and bite problems.) 

 

I'll just add that women need to do this, too. Probably, most women here were raised with the idea that a man will take care of them, but the sad fact is, there seem to be many more marriageable women than men. Even if you marry someone great, he can get hurt, sick, or laid off from his job. If I'd waited for a man to come along, marry me and buy me a house, I'd still be renting--and priced out of the market. 

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Congratulations, Ro-Bear!  Hopefully the youngsters will heed your advice.  :-)

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What about the millions of 401(k) plans that were destroyed in the crash of 2008? 

 

I really don't have faith in anything, 401(k), Social Security, whatever. If it ever gets to where I can't support myself or find a job, I'll commit suicide. Being an atheist, I don't fear death. It's not a big deal. I've already lived 45 painless years on this earth, more than I deserve. I can't complain about anything. 

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I think that 401k plans that were hurt in 2008 are ok (for the most part) unless they were sold during the recession at their low value, The stock market has recuperated since then, It's been my experience that the ones who really lose are the ones who panic and sell out when there is a crash. But stocks in good companies will bee a good investment in the long term. I mean real long term. I'm no expert in investments. So let the buyer beware.  Rip

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The years after 2008 saw some huge returns--except for people who locked in their losses by selling at the bottom of the market. For people who kept their heads and had cash, it was a time to scoop up bargains.

 

Warren Buffett says that for the know-nothing investor, the best investment is a no-load index mutual fund. I agree with that advice. If you're young, if you don't need the cash within a few years, buy and hold and don't try to time the market. 

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Ro-bear and Sheerbliss are right, young-uns. Social Security was never intended to be a retirement fund, but merely starvation prevention. And for some, even that doesn't work. Start now. Don't say you can't afford it. If you can't afford it now, how will you pay your bills when you are retired and have no income? As a college professor, I saw what students put into the vending machines. Skip that. Even $20 a month is a start. Considering your lifespan, you will need at least $2 million in retirement. You CAN have that if you start now, add regularly, and let compound interest work for you.

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I am a person who has spent the last decade stuck at the mental age of 17 or so.

Last month I turned 29, and it is starting to dawn on me that I should be doing... well, something. The problem is, I have no idea how any of that stuff work (besides having a normal bank account, which contains my life savings of 2800$).

 

People say buy stocks, get mutual this or that, thingamagic... it's all chinese to me, and I have no idea how to even do any of that. "Don't leave it on the table", fine! But do WHAT instead?

 

Like, I have a vague idea of what stocks are, but how does one even know what to buy and what not to buy? How do you even buy that stuff? It's not like you can just go to a store and buy it. Do you have to call the headquarters of each company whom you want to buy stock from? You give them your credit card number? Or pay online in some form or another?

 

I'm sorry if my questions are extremely stupid, but this is stuff I've never been taught in any way. It seems to me like they should be teaching that stuff in school at least?

 

I graduated college at 21, make decent money, am married and could easily tone down the partying a bit to make sure I can spare a few 100 bucks every months towards something for the future. The problem is I don't know what to do or how to do it. It all just sounds like foreign gibberish to me.

 

Help.

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Congratulations! Enjoy!

I do buy when things crash if I can. Buy when cheap. However some stock like Enron will never ever recover, so it's tough.

Become financially aware. If you're completely oblivious like I once was try reading...

Rich Dad Poor Dad

Richest Man in Babylon

These are a couple of simple interesting books that started me thinking about money differently. Then try to find trustworthy advisors. It's tough but you have to do it.

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I urge caution against people thinking that investing when you're young guarantees you a rich and pleasant retirement of jet setting from beach to beach and sipping champagne for breakfast. The OP got lucky - pure and simple. I'm very happy for him, but this is like winning a lotto - because life has no guarantees!

 

I invested $15,000 that I couldn't afford (took out a loan) over 15 years ago. You know how much it's worth now? $20,000! Once you factor in the interest I paid on that loan, I didn't make a thing. I should have bought some gold and left it at that, or used it to go on a memorable honeymoon with my lovely wife.

 

That experience taught me that many people who worry too much about retirement when they're young, will find themselves 65 years old with no LIFE behind them because they worried to much about a very unpredictable future. There are so many things that can happen as you age to make your life pure misery (i.e. divorce, death of loved ones, cancer, economy, loss of job, depression...) that you are very, very lucky if you make it to 60, 65 with the ability to enjoy a long and protracted retirement with meaning

 

Retirement is an invented construct, to ensure that young people could get work. Many people (my dad included), get depressed and sick once they stop working altogether. My wife's grandmother started working at 75 (when her husband died) and continued to work until past the age of 100. I'm not saying every 65 year old should work 40 hours / week, but most of us need a purpose beyond simply being alive in order to have a happy and healthy life.

 

For many of us, saving while we're young is very difficult. My wife and I were dutiful Christians so I was the only one working and she raised our kids. We gave tens of thousands of dollars away, which we certainly couldn't afford!! While we don't regret these choices, it meant that if we wanted to have any fun with our kids we couldn't save a lot of money (any?!). We've gone traveling, we've helped build houses in 3rd world countries, we've gone camping, skiing and hiking and we've created fantastic memories along the way. I don't for one second wish I'd invested in the stock market rather than spend quality, precious time with my family!

 

I have done a few things right, we live in a house that'll be paid off in 3 years. My wife is getting a university degree at 40 (education is the best investment- $30,000 will get us over $1,000,000 in her income over 20 years) and we have no debt. We learned to live simply, which is the best advice I can give anyone. Happiness does not depend on luxurious living but rather on spending quality time doing things you love with the people you love and remembering that the best way to be happy is making others happy too.

 

Everything in moderation is the key IMHO. Just don't forget to LIVE life while you can! YMMV of course. I just wanted to add this perspective.

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Ro-bear and Sheerbliss are right, young-uns. Social Security was never intended to be a retirement fund, but merely starvation prevention. And for some, even that doesn't work. Start now. Don't say you can't afford it. If you can't afford it now, how will you pay your bills when you are retired and have no income? As a college professor, I saw what students put into the vending machines. Skip that. Even $20 a month is a start. Considering your lifespan, you will need at least $2 million in retirement. You CAN have that if you start now, add regularly, and let compound interest work for you.

 

$2,000,000?! I strongly disagree with alarmist statements such as this. My folks retired at 65 with $500,000 and my wife's folks have much less than that! The west has a strange idea about old folks where we expect them to pay their own way when they stop working. In many cultures, the parents are respected more as they age, not less. In my neighborhood many children support their parents and even have them living in their homes with them.

 

Where was the promise of compound interest on my $15,000 invested 15 years ago? It's only worth $20,000 now! :)

 

You do not NEED $2,000,000 to retire. These are figures that financial advisers push on people to get their money and their commissions. This is exactly the type of panic that makes the bankers so rich and the investment firms (that forced the world into global recession, don't forget) to take billions of our hard-earned dollars every year, only to take government handouts when they make bad investments with it!

 

A balanced approach to life is best. Pay off your house, live simply and invest in a wide range of investments including stocks and safer options. The best investment is an education and healthy, happy living. IMHO of course!

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I am a person who has spent the last decade stuck at the mental age of 17 or so.

Last month I turned 29, and it is starting to dawn on me that I should be doing... well, something. The problem is, I have no idea how any of that stuff work (besides having a normal bank account, which contains my life savings of 2800$).

 

People say buy stocks, get mutual this or that, thingamagic... it's all chinese to me, and I have no idea how to even do any of that. "Don't leave it on the table", fine! But do WHAT instead?

 

Like, I have a vague idea of what stocks are, but how does one even know what to buy and what not to buy? How do you even buy that stuff? It's not like you can just go to a store and buy it. Do you have to call the headquarters of each company whom you want to buy stock from? You give them your credit card number? Or pay online in some form or another?

 

I'm sorry if my questions are extremely stupid, but this is stuff I've never been taught in any way. It seems to me like they should be teaching that stuff in school at least?

 

I graduated college at 21, make decent money, am married and could easily tone down the partying a bit to make sure I can spare a few 100 bucks every months towards something for the future. The problem is I don't know what to do or how to do it. It all just sounds like foreign gibberish to me.

 

Help.

Excellent!

 

First things first: if you don't have an emergency fund, set one up. Call your bank or go online and have them put money into a savings account automatically every month until you have enough to live on for a few months. This money is for emergencies only: car repairs, not car maintenance. Medical expenses, not vacations. It will simply be a savings account, not an investment in mutual funds or stocks.

 

While you're getting your emergency fund together, take time to learn about investments so you can start an IRA (if your employer doesn't provide a 401(k) or 403(B)). Here's a page that has a good description of mutual funds. Still, I'll repeat Warren Buffett's advice: a no-load index mutual fund is the best investment for the know-nothing investor. A mutual fund is where a group of people pool their money to buy a variety of stocks (shares in companies). No-load means there's no sales commission. Index means that the fund invests in a wide variety of stocks to match some index like the S&P 500--in other words, there's no significant stock-picking involved. It keeps the fund's costs (and therefore your costs) low. Buffett's exact words:

 

"Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees. Those following this path are sure to beat the net results (after fees and expenses) delivered by the great majority of investment professionals."

 

I recommend Vanguard as an investment firm--it's a well-regarded firm with low fees and a variety of funds appropriate for different investors.

 

To buy individual stocks, OTOH, you should know how to read financial statements and how to value a business, or have a strictly numerical system you always follow. You can't panic when things get crazy. In other words, know-nothing investors have no business picking individual stocks.

 

 

 

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For someone (in the USA) who wants to save their current wealth to be spent in the future when you are over 60 years old, a good place to start is to make a deposit into a Roth IRA account.  This kind of account allows for tax advantages when you will withdraw the money with an appreciate value may years from now.  The IRS will allow you to deposit as much as $5500 in the year 2015 which you can withdraw in the future tax free.  For high income people (over $100,000 yearly), the favorable tax treatment is ratcheted back on a schedule.

 

If you decide you want to open a Roth IRA account, where and how would you do this?  I am not giving anyone advice, but can describe what I've done. It would take me about 20 minutes to take the following steps:  Go to the website of Vanguard Mutual Funds, open an account, set up a bank transfer shifting $1000 from my savings account to my new Vanguard account, setting up a scheduled monthly transfer into the Vanguard account, and picking a sensible wealth balance portfolio.  What, in actuality, does this process look like?  It is just walking through a website designed to be user-friendly clicking toggle buttons, and inputting your account number.  You'll be done in 20 minutes, and you'll wonder why you hadn't done this earlier.

 

What is a sensible wealth balance portfolio?  For me, I pick Vanguard Target Retirement 2050 Fund (VFIFX).  This is a balance between US Stocks, US Bonds, International Stocks, and International Bonds.  All segments of this portfolio tracks indexes.  This fund is designed to provide a good balance between risk and reward, at every stage of a person's career;  and is designed for people expecting to begin making withdraws in 2050.  If you make a deposit into VFIFX, your deposit will be rebalanced every month.  Because it is a "fund of index funds" it has management fees which cannot be beat (0.18% fees each year to manage the account.)  If you forget that you own this account, it will be rebalanced for a typical American's risk-reward preference throughout your life.  It will never become unbalanced in its asset mix.  I am not a shill for Vanguard, but I do think that its business model is based on good theory.

 

https://personal.vanguard.com/us/funds/snapshot?FundId=0699&FundIntExt=INT

 

Vanguard is a good place to deposit.  Another popular and cheap place to deposit your wealth is Fidelity.  Of course, if your employer offers you a 401(k) with employer matching contributions, talk to your HR person about making a deposit in that account (instead of an IRA).  If there is an "employer match" that is free money that your employer is ready to give you if you would only make retirement contributions.  Before making an employer plan deposit, ask about fees.  If you are an employee of the federal government, make a deposit into the Thrift Savings Plan before a Vanguard IRA.  TSP has even cheaper fees than Vanguard.  Again, I am not a financial advisor, I am not giving you advice.  Every investment has risks of losing all of your money, talk to an accountant for special advice for your own unique situation.  yada yada yada, don't sue me if you lose everything.  etc. etc. etc.

 

Now to my theory -- I want to invest in myself and my community.  I don't want to spend everything I have in consumption.  I don't care to "beat the market" and attempting to do this tends to fail.  In today's world, "investing in my community" is mediated in large part through market deposits.  "Being taken care of" by the community is mediated through stock market withdrawals.  I also donate to my local United Way, and I also plan for the future by good diet and exercise.  You can invest in your future by developing your ability to communicate and persuade, and by developing other people around you who are loyal to you.  Retirement accounts are just one component of social integration, participation and insurance.

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I urge caution against people thinking that investing when you're young guarantees you a rich and pleasant retirement of jet setting from beach to beach and sipping champagne for breakfast. The OP got lucky - pure and simple. I'm very happy for him, but this is like winning a lotto - because life has no guarantees!

 

I invested $15,000 that I couldn't afford (took out a loan) over 15 years ago. You know how much it's worth now? $20,000! Once you factor in the interest I paid on that loan, I didn't make a thing. I should have bought some gold and left it at that, or used it to go on a memorable honeymoon with my lovely wife.

 

That experience taught me that many people who worry too much about retirement when they're young, will find themselves 65 years old with no LIFE behind them because they worried to much about a very unpredictable future. There are so many things that can happen as you age to make your life pure misery (i.e. divorce, death of loved ones, cancer, economy, loss of job, depression...) that you are very, very lucky if you make it to 60, 65 with the ability to enjoy a long and protracted retirement with meaning

 

Retirement is an invented construct, to ensure that young people could get work. Many people (my dad included), get depressed and sick once they stop working altogether. My wife's grandmother started working at 75 (when her husband died) and continued to work until past the age of 100. I'm not saying every 65 year old should work 40 hours / week, but most of us need a purpose beyond simply being alive in order to have a happy and healthy life.

 

For many of us, saving while we're young is very difficult. My wife and I were dutiful Christians so I was the only one working and she raised our kids. We gave tens of thousands of dollars away, which we certainly couldn't afford!! While we don't regret these choices, it meant that if we wanted to have any fun with our kids we couldn't save a lot of money (any?!). We've gone traveling, we've helped build houses in 3rd world countries, we've gone camping, skiing and hiking and we've created fantastic memories along the way. I don't for one second wish I'd invested in the stock market rather than spend quality, precious time with my family!

 

I have done a few things right, we live in a house that'll be paid off in 3 years. My wife is getting a university degree at 40 (education is the best investment- $30,000 will get us over $1,000,000 in her income over 20 years) and we have no debt. We learned to live simply, which is the best advice I can give anyone. Happiness does not depend on luxurious living but rather on spending quality time doing things you love with the people you love and remembering that the best way to be happy is making others happy too.

 

Everything in moderation is the key IMHO. Just don't forget to LIVE life while you can! YMMV of course. I just wanted to add this perspective.

Respectfully, the OP bought stock that appreciated in value, lived within his means and saved his money. That wasn't luck.

 

Your statement about borrowing money you couldn't afford to make an investment doesn't make sense. If you couldn't afford the loan, you shouldn't have taken it out. Full stop. If you think you should have taken out a loan to buy gold...you might want to stay away from salesmen. In retrospect, it was a good buy, but 15 years ago, who knew? As for blowing it on a trip, 15 thousand dollars is a really expensive honeymoon, especially for someone who says, "we gave tens of thousands of dollars away, which we certainly couldn't afford!!"

 

Education might help you make more money. Not every degree is going to make someone $50,000 a year over and above what they'd make without it. My engineering degree certainly didn't.

 

All things considered, I would gently suggest that people avoid things they can't afford. Given that most people in the US live into their 70s, they will need money to retire on. Memories of vacations will be cold comfort when they can't afford "elective" surgery, lawn care or a dinner out.

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To Burny:

You are right — there are no guarantees. But as a general rule, long-term investments do increase with compound interest and dividends over time. The data confirms this. Yes, an individual investment may fail, but many succeed. The key is to spread out in various types of instruments.

 

We connected with a certified financial planner 35 years ago, starting small, setting aside what we could afford. It has paid off. And we have never worried about it, have had a full and enjoyable life, and are busy and happy in retirement. Most important, we do not worry now about paying our bills.

 

I see that you are in Canada where medical care and the social safety network is quite different from that in the US. Here, medical costs can be ruinous. A recent news article reports that some people are having to resort to crowd funding to pay their medical bills (http://www.slate.com/articles/business/moneybox/2015/01/crowdfunding_medical_bills_it_may_make_you_feel_good_but_it_s_a_distraction.html). Others are having to resort to emergency rooms because their doctors no longer accept the low payments from the government systems (http://www.fresnobee.com/2015/01/18/4337282/valley-hospital-emergency-departments.html?sp=/99/406/).

 

Health care is a big issue here in the US. Some time ago, the World Health Organization ranked health systems around the world and the US came in 37th. (http://www.businessinsider.com/best-healthcare-systems-in-the-world-2012-6)

 

We also know from personal experience what it costs to care for the elderly, and have seen what is available in government-paid nursing homes. We do not want to end up there.

 

As to the $2 million estimate, consider that a young person today will work for perhaps 40 years before retiring and can probably expect to live at least 20 years in retirement. While we can’t predict inflation, consider that $1 in 1965 equals $7.52 today (http://www.bls.gov/data/inflation_calculator.htm). So if we pick the same inflation as an example, the $500,000 your parents had when they retired would need to be $3.75 million to have the same value 40 years from now.

 

Your advice to live simply is right on. I don’t think it’s an issue of panic at all. I think it’s a matter of carefully planning for the future.

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Memories of vacations will be cold comfort when they can't afford "elective" surgery, lawn care or a dinner out.

 

My father died at 42. My uncles, aunts, grandparents died in their 50s. I have two relatives that made it to official retirement age. Several of my relatives died during surgeries that were supposed to save them. There is no guarantee of reaching retirement age. I am saving for retirement. I encourage everyone to do so too. But I don't want to live my life regretting that I never did the things I always wanted to do. I'm not saying do things you can't afford. But I don't want to deprive myself of luxuries I strongly desire so I can save as much as possible for a retirement that may never come. I know someone who saved their whole life, hardly doing anything fun, built up a huge retirement savings, then died and left it to their kid. Their kid spent their parents' life savings in a manner of a few months.

 

If you really want to do something, you should find a way to do it. I greatly wanted to see the world so I did what I could to make that a reality for me. I've climbed the pyramids in Teotihuacan. I've walked on the great wall of China. I've stood at the base of Cristo Redentor on top of Corcovado. No one can take these things away from me. In my old age, I will feel comforted knowing I did what I wanted to do. 

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By all means, if you're funding your retirement, your children's education and have an emergency fund and no consumer debt, travel if you like. But unless you know you're not going to live long enough to retire, saying you're not guaranteed to live that long is technically true, but sounds like it's being used as a justification to live beyond your means. By that logic, there's no point in seeing a dentist or changing your oil. They're unpleasant chores that cost money and that you might not live long enough to get any benefit from.

 

Did the person you knew who built up a large retirement savings really never have any fun--they didn't have any hobbies, friends or interests they enjoyed? I say this because people might look at my life and say, "She never has any fun." Not true. I simply pick inexpensive fun.

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There is a difference in living beyond your means and being as frugal as possible. I don't feel like I've ever lived beyond my means. I won scholarships that enabled me to travel though my college study abroad programs. And then I was criticized by others who thought I should have spent that time doing internships at companies instead so I could have saved up money. If you want to be as frugal as possible then you could say by that logic you shouldn't have kids because they are expensive. You make room in your life for the expensive things you want. I always find a way to make my goals affordable.

 

I'm not saying to live an extravagant lifestyle without any care of your money because you might not live long enough to get benefit from worrying about oil changes and such. I'm saying I want to enjoy my life by doing the things I find enjoyable instead of saving as much as possible so that I can have lots of money in my old age. Whether my old age comes or not, I still think like this. I guess I'm just saying my goal in life is not to accumulate as much money as I possibly can if it means not getting to do things that I find make my life more worthwhile to me. I don't see how you can claim my logic is faulty and leads to failing to maintain your health and oil changes. I would rather pay to maintain my things so I have extra money to travel and do what I want to do. I don't want to waste money on big repairs when they can be avoided by maintenance. I don't want to lose my teeth and have big dental bills if I can help it. I don't consider those things to put off because I might not live to see the negative consequences. Like I said, I do save for retirement.

 

The people I was talking about just did free fun things and saved every penny. They lived in a cold house and bundled up to stay warm. They didn't go out to eat. I'm sure they had fun, but they didn't enjoy any luxury type fun. Wouldn't it have been better to do a few of the things they wanted to do but felt it was too expensive? Was it better to die with a huge amount of money for their kid to blow through? Maybe to them, that's what they wanted. I would rather enjoy a bit more luxuries. If you really don't have any desire for expensive fun, then more power to you.

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@Lucy, I guess I'm not sure why you're arguing. Nobody here said to save every possible penny for retirement, nor anything even close to that.

 

As for luxuries, travel doesn't float my boat, but I'm sure I'd love a house full of antiques, lush gardens and a staff to take care of them. But I'd rather have a modest home I can care for myself and emergency savings and a comfortable retirement. I don't need a luxurious place to be happy. In fact, something called hedonic adaptation takes place when you upgrade your life: you soon get used to it and want the next level of stuff. (The stoics knew this and recommended adapting yourself to some hardship every now and then.) I live in a two-bedroom bungalow, furnished mostly with buys from estate sales, with a dog I got from a shelter. We have a happy little home. :)

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I urge caution against people thinking that investing when you're young guarantees you a rich and pleasant retirement of jet setting from beach to beach and sipping champagne for breakfast. The OP got lucky - pure and simple. I'm very happy for him, but this is like winning a lotto - because life has no guarantees!

 

I invested $15,000 that I couldn't afford (took out a loan) over 15 years ago. You know how much it's worth now? $20,000! Once you factor in the interest I paid on that loan, I didn't make a thing. I should have bought some gold and left it at that, or used it to go on a memorable honeymoon with my lovely wife.

 

That experience taught me that many people who worry too much about retirement when they're young, will find themselves 65 years old with no LIFE behind them because they worried to much about a very unpredictable future. There are so many things that can happen as you age to make your life pure misery (i.e. divorce, death of loved ones, cancer, economy, loss of job, depression...) that you are very, very lucky if you make it to 60, 65 with the ability to enjoy a long and protracted retirement with meaning

 

Retirement is an invented construct, to ensure that young people could get work. Many people (my dad included), get depressed and sick once they stop working altogether. My wife's grandmother started working at 75 (when her husband died) and continued to work until past the age of 100. I'm not saying every 65 year old should work 40 hours / week, but most of us need a purpose beyond simply being alive in order to have a happy and healthy life.

 

For many of us, saving while we're young is very difficult. My wife and I were dutiful Christians so I was the only one working and she raised our kids. We gave tens of thousands of dollars away, which we certainly couldn't afford!! While we don't regret these choices, it meant that if we wanted to have any fun with our kids we couldn't save a lot of money (any?!). We've gone traveling, we've helped build houses in 3rd world countries, we've gone camping, skiing and hiking and we've created fantastic memories along the way. I don't for one second wish I'd invested in the stock market rather than spend quality, precious time with my family!

 

I have done a few things right, we live in a house that'll be paid off in 3 years. My wife is getting a university degree at 40 (education is the best investment- $30,000 will get us over $1,000,000 in her income over 20 years) and we have no debt. We learned to live simply, which is the best advice I can give anyone. Happiness does not depend on luxurious living but rather on spending quality time doing things you love with the people you love and remembering that the best way to be happy is making others happy too.

 

Everything in moderation is the key IMHO. Just don't forget to LIVE life while you can! YMMV of course. I just wanted to add this perspective.

 

Ditto to all of the above. Well done, sir!

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@Sheerbliss, I will explain why I became argumentative. I didn't like being told that I was trying to justify living beyond my means. I don't see how one can determine if I'm living beyond my means or not without knowing what my means are. I also didn't like that you said you thought my logic can also mean being careless with maintenance. I don't see how I was implying that. That is all. Please don't worry about it. I'm sorry if I took offense at something that wasn't meant to be offensive.

 

The reason I talked about extreme cheap living is because I do know many people in real life that took saving money to the extreme and made themselves miserable. They denied themselves luxuries that would have made their lives better just to keep saving up money. I was referring to that attitude in life based on my observations of people I know, not necessarily anything anybody here has said about their own life.

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