Preparation for retirement ... ideas anybody?

[aa06a47]

This thread is inspired from the thread 401k.

OK, those of us in a chapter 13 are somewhat limited on being able to save any money in the next 5 year period. Some trustees allow small contributions to 401k's, some don't. But in either case, all disposible income goes to the trustee. You'll come out of your chapter 13 free of all unsecured debt, but in 36 months or 60 months, you will still come out of bk flat broke...so to speak.

OK, depending on how old a person is, the effects of not contributing to a retirement savings will vary alot in how your going to be able to live post retirement. I would argue the younger you are, the more it will affect you. It is that 10 or 20k you save and keep in there 30 years that will make you a millionaire, not the 10K you put in there the last year before you retire.

OK...so your savings isn't what it should be......what can a person do to prepare for retirement when they have not saved like they should have. Ideas on how to stretch your retirement dollars.

1) Make sure all unsecured debt is gone. BK is a way to do this, though shouldn't be used as a retirement strategy. If you find yourself stretched while working, you sure will be stretched retired.

(Note: While I never really thought about it, if I could have been able to keep up with the minimum payments, I would have NEVER been able to retire)

2) Try your best to have your house payed off. While I do believe in the American Dream of home ownership, I see these young kids buying houses for 200-300K and then moving in a could years and getting more house. Wow, they are on a cycle where they will never pay there house off.

[lrprn]

Here's a timely article (June 25, 06) on this exact topic, "Age 50...and Little Saved" - http://money.cnn.com/2006/06/22/pf/r...ymag/index.htm . I'm in my early fifties now, so I'm going to be using every one of these suggestions when our 13 plan is over in five years .

Most scary statistic in this article - "The Employee Benefits Research Institute reports that more than half of workers 45 to 54 have saved less than $50,000 for retirement. A recent Fidelity study found that the average boomer is on track to replace just 60% of his or her current income in retirement, even with help from Social Security and pensions."

[Rob-NC]

Just came out ofmy chapter 13, and yep...pretty much flat broke :blink

I finally can start looking a little more into the 401K and getting ready for another 30 years of work. 401K contributions are (at least I believe) not taxed until you start to withdraw them from your retirement account.

Sooo if you have your contribution taken out pretax from your paycheck, you will drop your taxable income and actually stand to make a few dollars MORE each payday.

Its hard for me to miss say 50 dollars a paycheck (contributing to a 401) if I never knew I even had it.

[aa06a47]

Great link lrprn, it does bring things into perspective.

[aa06a47]

Just came out ofmy chapter 13, and yep...pretty much flat broke :blink

I finally can start looking a little more into the 401K and getting ready for another 30 years of work. 401K contributions are (at least I believe) not taxed until you start to withdraw them from your retirement account.

Sooo if you have your contribution taken out pretax from your paycheck, you will drop your taxable income and actually stand to make a few dollars MORE each payday.

Its hard for me to miss say 50 dollars a paycheck (contributing to a 401) if I never knew I even had it.

Thanks Rob-NC.....

I can explain before tax deductions. I will use even numbers here and generic for my state (I have both state and federal taxes.

Income
5000/month salary
36% for state and local taxes: =1800.00
Take home pay = 3200

OK, with 10% taken out for a 401K
5000/month salary
500/month 401k (10% of 5000)
4500 Taxable Income
36% for state and local taxes = 1620
Take home pay = 2880

...so, the 500 savings in a 401k actually only meant a 320 difference in income. (3200-2880).

[anonymuse]

I can't even fathom the idea of retirement and I'm late 30s. I don't have kids yet, but want them dearly--so there's 18+ years of support plus college. After BK, I still have my student loan bills (15 years left on them). Hard to retire without having the house paid for (20 years left on the mortgage). I was vested at my old job, but not sure what that will end up giving me. Not contributing anything to 401K at the moment and no matching funds available (small company but absolutely wonderful to work for.)

Will be interesting to see how my life plays out! Now, where are those smart, witty, sensitive, and financially saavy guys? ;)

[Jenny]

To maximize retirement savings, you need to invest early in life. The older you get, the more money you need to contribute in order to reach your goal. It's a very simple concept.

[jane taylor]

Some brilliant mathematicians around here, for sure!

Oops! Took a double dose of the "Smart Aleck" Pills this A.M., or maybe it's the heat frying my brain

[bkbiker]

again, Great link lrprn

[debtisbad]

I had plenty of money in my 401k in the mid 90's. Several brokers made sure it did not last long. They were also the cream of the crop *wrong* Anyway, they had me invested in lots of different companies (all well known) and I lost a bundle. I also was invested in my husbands company -- Lucent Tech. Bad move. So its not always cracked up to be what it looks like. Sure you can start to save, but you never know what is going to happen around the corner. Oh, and husband had a heart attack (caused, we think, when he lost his job). Thousands of $$ even with insurance. Many USA retirees can no longer afford to live here. Many are relocating to Mexico and other foreign lands. Check out Chapala.com to see the largest American retiree outside of the US in north America. Sadly, the COL there is rising with the influx of retirees who are from NJ to Washington state. Very interesting site. I think over time, more retirees will be forced to relo out of the country. My mom told me about a guy down in FL who went to India to have medical issues taken care of. Could not afford to do it here. Folks, its getting more $$ here and harder to save. I am just not spending anymore. I am going to school to further my career, but clothes, dinners out, concerts, vacations--those are kind of history at this stage. Thing is, I do not even mind, I have so many friends so caught up in materialism that I am finding it sickening these days. If I see another soccer mom in a 50k BMW talking about her last ski vacation, I'm gonna puke!!!!