Retirement

Predicting the Future: Will People In Their Twenties Today Collect Social Security In Retirement? And How Should That Answer Change Our Plans?

One common question I get from people fresh into the workforce and setting up their new 401(k)s is this: how much retirement income should I count on from Social Security? It’s not an easy question to answer because we don’t know what the political future of the United States holds. We do know one thing: …

How Much Money Do You Need For Retirement? Here’s How I’m Figuring My Number

Many people have no idea how much they should be saving for retirement and thus quite often they do whatever their retirement counselor suggests without actually knowing if what they’re doing is right. I wanted to understand the full process better, so I spent some time figuring out what I would need for retirement and …

Categories: Retirement

Are Inflation Rates Accelerating? How Should I Plan For It?

My wife’s grandfather likes to regularly comment on how fast the price of everything seems to be increasing lately. He’s loudly adamant that the rate of inflation is actually speeding up and that prices are doubling faster and faster and faster. He strongly encourages me to estimate high for inflation when I do my financial …

Categories: Retirement

Retirement Savings or Debt Repayment?

A few days ago, on my post about SmartMoney’s “7 Money Mistakes”, LTruslow left the following comment: I have always had a problem with those who believe that you should not invest before paying off all debts and establishing an emergency fund. For many, they would never begin saving for retirement. While an emergency fund …

The Future: Where Will Tax Brackets Go In 30 Years?

I try very hard to avoid political discussions on The Simple Dollar because it often winds up in partisan bickering, but I feel that a discussion about the future of taxes and their impact on your personal finance decisions today is vital. First of all, why is it important to think about future tax rates? …

Categories: Retirement, Taxes

The New Roth 401(k) Versus The Traditional 401(k): Which Is The Better Route?

Recently, a number of readers have asked me about the new Roth 401(k). Is it really a good deal, they ask? In a nutshell, it’s a very good deal for almost anyone eligible for it, but let’s walk through the scenario carefully. What Is A Roth 401(k)? A Roth 401(k) is not all that different …

Categories: Investing, Retirement

Financial Planning For A Life Of Volunteerism And Social Work

One of the most amazing people I’ve ever met has chosen a path of volunteerism and social work for her life. She’s taken the gifts and talents God has given her and chosen to forsake several much more lucrative opportunities to participate in a social work program fraught with challenges that I wouldn’t face for …

Categories: Frugality, Money, Retirement

Cashing Out 401(k) To Pay Off Credit Card Debt?

A reader writes in with an interesting scenario: I’m 28 years old and I have two 401(k) accounts, both with about $30,000 in them. At the same time, I have about $25,000 in credit card debt because I made some very stupid moves a few years ago. I’m paying this debt down, but it’s at …

What Does It Mean To Put Away 10% Of Your Salary For Retirement?

A reader wrote in with the following question: I have read in many places that you should maximize your 401(k) contributions. To me it seems there are MANY definitions of maximizing this and I was wondering what you mean when you say you should be saving at least 10% of your income for retirement. Right …

Categories: Retirement

Ultra-Frugal? Still Need A 401(k) Or A Roth IRA?

An ultra-frugal reader writes in with an interesting question – why even bother with a 401(k)? My husband and I have been living on about half our income for many years. If our expenses and savings rate stay about the same, we’ll have enough savings to live off the interest in about 7-10 years (depending …

A Closer Look At Money Magazine’s Retirement Benchmarks

In my recent review of the April 2007 issue of Money Magazine, several people were quite interested in my comments on the early retirement article that appeared in the magazine. In brief, here’s the part that was interesting: Assuming you want to retire at age 60 and plan to have no pension and no job …

Categories: Money, Retirement

Five Minute Finances #5: Get Started on Setting Up Your 401(k)

Five Minute Finances is a series of tips on how you can save significant money or reorganize your financial life in just five minutes. These tips appear Monday, Wednesday, and Friday on The Simple Dollar. If you haven’t started up a 401(k) plan (if you’re an employee) yet, what are you waiting for? Let’s say …

Categories: Money, Retirement

Inflation: What Is It And Why Should I Care?

Inflation is one of those topics that crops up time and time again on the news, and it’s one of those topics that makes my wife’s eyes immediately glaze over. It’s not long before the channel has been turned or the newspaper page has been flipped. Yet inflation (and avoiding it) is one of those …

Borrowing Against A Retirement Plan To Make A 20% Down Payment

My wife and I are currently contemplating an interesting question: should we borrow against our retirement plans in order to make a 20% down payment and avoid PMI or an adjustable rate mortgage? We’ve arrived at an answer to this question, but it’s not an answer that works for everyone, so let’s work through the …

Categories: Housing, Retirement

The Treasury Note Retirement Plan

A few weeks ago, I wrote an overview of what treasury notes, bonds, and bills are and how they work. In the discussion, I dropped this little tidbit which turned out to be alluring to a few of my readers: I know of at least one person with several million dollars sitting in treasury notes; …

Categories: Investing, Retirement

What Do I Need To Retire? A Simple Way To Calculate Your Number

Quite often, I’ve been asked by my relatives how I have such confidence in my esitmation of what I’ll need to retire. I told them that I have developed a very specific process for developing an estimate of the amount of money I’ll need to retire. Please note that I am not including any pension …

Categories: Retirement

Review: The Number

This week, The Simple Dollar takes a look at Lee Eisenberg’s The Number, a frank, well-written, and entertaining book that addresses the one number that so many of us obsess over: the amount of money we each need to live the rest of our lives the way we want to. For the last few months, …

When Your Investment Income Covers Your Living Expenses

About a month and a half ago, I read Your Money or Your Life and found it to be a relevatory experience (check out my review of the book). One particularly interesting part was a discussion of a concept that the authors referred to as the “crossover point.” Since then, I’ve seen reference to this …

Another Approach To Retirement Planning: Balancing A Retirement Target Fund Myself

Regular readers of The Simple Dollar are aware that I’m going through the process of starting my Roth IRA. For those unaware, so far I’ve decided to start a Roth IRA this year, found a company (Vanguard) that I’m comfortable with as a manager, developed a detailed plan for making it happen this year, and …

Categories: Investing, Retirement