Retirement savings ....

[Savoir Faire-Demogague in NJ]

The Ric-E trust is a high fee trust. Three hundred to start but a 2% annual fee and high expense funds.

Depends on the advisor, funds, etc., and their management style and funds available.
All money is gifted to the trust tax free and grows tax free. Unlike a 529 plan where the money must be used for education, a RIC-E Trust is for retirement.

Having relatives like grandparents put money into it, you can have your 2 month old get a 23 year head start on retirement savings.

[Wisconsin Beth]

Mar 16, 2011 12:46:59 GMT -5 phil5185 said:

On the good side she is paying the same mortgage amount for a house worth over a million now as someone with a 400K mortgage.

Hmmm - you have an interesting view of "good side".

But it is a common phenomena - winners of lottery, of judgments, and heirs - any lump sum - seem to squander it in less than 7 yrs. Handled differently, $300k is a life-changing opportunity - if placed at 11%/yr, it would grow to a million in only 12 yrs. No need to start a business or any other extraordinary effort, just keep your hands off of it for 12 yrs.

Funny you should mention it Phil. I was wondering what your advice for someone getting 200K would be and here it is, more or less. ;D

[phil5185]

I was wondering what your advice for someone getting 200K would be and here it is, more or less.

The common thread of lottery winners seems to be the fragmenting of the lump sum to pay off a house, their mom's house, their car, their mom's car, their credit cards, their HELOC, yada. All things that seem to be sensible based on their life experiences. And then they invest the last remaining $10,000 "for their future". LOL.

[DVM gone riding]

The J: That sounds about right, I figured adjusted for inflation I needed 2-3 mil, not counting RE (which unlike cawiu I have) with the current plan and the numbers I said that will put me at 2.5mil at age 65. It might be much better and it could be worse of course but it was the best I could guess at.

With the income and savings Caiwu is talking about if they kept it up I am thinking they would be closer to 4 mil or more, but then I am sure his wife would find a way to spend it

[Wisconsin Beth]

Yeah, I was daydreaming about winning the lottery and thinking along the lines of "low 6 figure payout changes things but not "quit your job immediately and live off the interest" life changing, if that makes sense.

[The J]

Mar 16, 2011 15:26:44 GMT -5 DVM gone riding said:

The J: That sounds about right, I figured adjusted for inflation I needed 2-3 mil, not counting RE (which unlike cawiu I have) with the current plan and the numbers I said that will put me at 2.5mil at age 65. It might be much better and it could be worse of course but it was the best I could guess at.

With the income and savings Caiwu is talking about if they kept it up I am thinking they would be closer to 4 mil or more, but then I am sure his wife would find a way to spend it

But you've also got to remember that he's running off of a higher income and what will be an increasing standard of living. So while an inflation adjusted $50k/year may be sufficient for you, that doesn't mean it's going to be sufficient for him. I know it wouldn't be sufficient for me.

[Deleted]

Mar 16, 2011 13:14:39 GMT -5 phil5185 said:

they got to buy their dream home at 23 for her and 28 for him instead of waiting till they were 44 and 53 like my parents.

Come on, for them that is HUGE! They are the youngest home owners in their block/neighborhood

I don't see that as a 'good' at all. The excesses (mcmansions & leased beemers) of the last 20 yrs have caused the financial failure of jillions of families. Do you really not see the economic futility of kids blowing a $300k windfall on a DP of a $750k house?

I am just yanking your chain Phil and I agree with you

Some people have different priorities that is all... hers was to have a nice Mega mansion for close to 3/4 of a million dollars.

[Deleted]

Mar 16, 2011 15:26:44 GMT -5 DVM gone riding said:

With the income and savings Caiwu is talking about if they kept it up I am thinking they would be closer to 4 mil or more, but then I am sure his wife would find a way to spend it

I really gave my wife a bad reputation around here... but really she has improved

My main reason for forking so much into 401K is that we want to reduce our tax liability but the others are the following:

a) with kids and god's knows what else we might need to decrease it in the future. So might as well put as much away now.

b) While I am all for letting your kids pay their own way for college I will admit that deep down I want to pay for my kids college education if I can. So if god willing when my kids goes off to college I am set for retirement (let's say 43-46) I could without any worries contribute less to retirement for a bit to pay for college.

c) I am not planning on cutting back in retirement as in living on less, etc. I want to keep the same standard of living and based on some calculations, that will costs some $$$.

d) I may not say it often but I kinda like the haitian culture where you spend money on your kids while you are alive. I might do it differently than my parents or mother in law... but I would not mind taking my kids/grandkids on a few trips while I am alive and see them enjoy the money while I am alive insted of when I am 6 feet under.

e) and don't worry we are making sure to enjoy life while alive now... and taking trips, going out, spending a bit of money. I don't intend to push back all our dreams of seeing the world/travelling/road trips/ etc till we are old and can barely move.

[Wisconsin Beth]

cawiau, DH and I have "surprise" kids between the age of 37-40. They should be hitting college when we're around 54/55 or so. I'm hoping that we'll be able to just cashflow some/all of their tuition.

I put 20% into my deferred comp plan at work. DH was putting 16% into his 401K w/ a 4% match (for 20% total.) He recently shifted to putting 11% in w/ 4% match and the other 5% is going into his IRA. While we may fiddle around with WHERE those percents go, we have no plans to stop putting that percent of our income into retirement accounts, even with the kids here now. Somehow it works with the dcp payment on top of the regular bills. It's that whole "you don't miss what you don't have" thing I guess.

[Deleted]

Mar 17, 2011 10:36:31 GMT -5 Wisconsin Beth said:

It's that whole "you don't miss what you don't have" thing I guess.

Thanks and yes that is the mentality we are slowly getting into.
We just work with our net income since our contributions to 401K is already out of the equation and there is nothing we can do about it.

Once we move in June and start paying less in rent, I intend to also increase my wife 401K contributions from 20% to 25% and live it there till we both max 401K contributions.

I feel 25% is sufficient, so we can just do it and forget about it. Once we more than max it at that percentage we will look into where to allocate the difference

[crystal1588]

I feel 25% is sufficient, so we can just do it and forget about it.

I'm always amazed at how quickly you are increasing retirement savings. That's outstanding.

We save 15% into our 401(k)s and another 10% of our savings into liquid for short term goals. I know you said you and your wife have a long term (short term?) goal of having children, are you being sure to put some money away for short term goals?

We are actually TTC now, and so we want to make sure our savings is balanced. I believe that because we started early we are in good shape and we also have to focus on our near future as well. We started retirement savings at 21 (we are 23 and 24 now) and have around 30k in retirement between our IRAs and 401(k)s. Our liquid savings goal is to have 15k by the time baby arrives (hopefully within the next year, but who knows!).

[Deleted]

Mar 17, 2011 12:43:36 GMT -5 @crystal1588 said:

I feel 25% is sufficient, so we can just do it and forget about it.

I'm always amazed at how quickly you are increasing retirement savings. That's outstanding.

We save 15% into our 401(k)s and another 10% of our savings into liquid for short term goals. I know you said you and your wife have a long term (short term?) goal of having children, are you being sure to put some money away for short term goals?

We are actually TTC now, and so we want to make sure our savings is balanced. I believe that because we started early we are in good shape and we also have to focus on our near future as well. We started retirement savings at 21 (we are 23 and 24 now) and have around 30k in retirement between our IRAs and 401(k)s. Our liquid savings goal is to have 15k by the time baby arrives (hopefully within the next year, but who knows!).

It's called the creeping up method and I have too with my wife ;D

My goal was always 25% to 401K from the get go since I knew that was the limit for both companies we work for, but with my wife, 25% from the get go would have shock her. So started with 10%, a few months down we increased it to 15, than 20%.

I only changed mine to 25% about 2 weeks ago and plan to change hers this June. Small changes do not surprise her and she barely notices it (she have yet to notice that her 401K contributions went from 10 to 20% since her check is direct deposited and she does not look at the stub).

We talked about it and yes 2-3 years is about the timeline for a kid. It gives us enough time to pay down the credit card and my car loan which is $800/month that would be going to savings instead of bills.

I wish I started as young as you (a bit envious) but with school/grad schol and a little time in the unemployment line set us back a bit but we are slowly making ground. We have about 5K in savings now and hope to get it to 10K once we are done with debt.

Congrats on your savings so far, and stay on track

Karma!