or Connect
Styleforum › Forums › Culture › Business, Careers & Education › Personal savings rate?
New Posts  All Forums:Forum Nav:

Personal savings rate? - Page 3

post #31 of 59
Quote:
Originally Posted by otc View Post

I mean lets face it, someone who is literally saving 50% of their income (and doesn't have a very low income) either has some sort of plan for it or is kind of dumb. The point of earning the money is to spend it on *something*. That could be saving for an early retirement (which requires a lot since you have both less time to earn interest and more time to spend it), saving to send the kids to college, saving to buy a life-size 737 flight simulator, whatever.
Saving that much just because "saving is good" is just going to end up meaning that instead of wasting your money on little bits of dumb shit, you will waste money one one big piece of dumb shit. Either way, you are still spending your money on dumb shit that gives you enjoyment but if you are sacrificing enjoyment in order to save heavily with no goal, you are just going to have a big pile of savings burning a hole in your pocket end up with a house on an island somewhere that it turns out you only end up using for one weekend a year (when you could spent the previous years spending a week on a different island every year with the same money).

well, yes and no.

Many young people don't realize how much even a basic life in retirement costs, and therefore don't plan properly. This is partly why many baby boomers are working late in their 60s and even 70s to try to make up for shortfalls earlier in their career. I don't intend to be one of those people, so I save more now.

That said, between my early 20s and now, I've gradually come around to the "you can't take it with you, enjoy it while you are young" mentality, so I've become a bit less frugal.
post #32 of 59
Quote:
Originally Posted by norcaltransplant View Post

I don't plan on spending it on dumbshit stuff, rather, on future healthcare costs. I assume that Medicare and/or Social Security will be no longer solvent when I am ready to retire. The minimum distribution age will likely increase to 67.5 or even 70 before I die which means my working career will have to be extended until I can save a decent sized nest egg. I consider $2-2.5+ million, inflation adjusted for today's dollars, with a 3% spend down rate will be sufficient to live a middle class lifestyle without sweating our respective families.

Good post re: future health care costs.

Still, the current fiscal environment is incredibly poor for saving. Fund any employer match to the max, build up emergency fund, max Roth. If you can be responsible, take advantage of interest rates. This is a great time to borrow and spend.
post #33 of 59

I put away $200 a month in my savings account. Plus there is about $5000+ that goes into my RRSP each year. Nothing spectacular, but I guess that is better than most people in my age group. Don't get me wrong, the RRSP nice, it lowers my income tax now, but I will have to pay for it down the road. I also try and set aside some money, so I can purchase small quantities of silver.

 

One thing is for sure, if I start making good money, within the next few months, I will try and put more money into my savings account. I just wish I did it sooner.


Edited by ettebe - 4/20/12 at 11:20pm
post #34 of 59
Quote:
Originally Posted by brimley View Post


Good post re: future health care costs.

Still, the current fiscal environment is incredibly poor for saving. Fund any employer match to the max, build up emergency fund, max Roth. If you can be responsible, take advantage of interest rates. This is a great time to borrow and spend.

You can't even use a Roth after a married couple's AGI exceeds 175k or so. Additionally, IRAs have to be funded with post tax dollars. It's really fucked.

A couple of thoughts in general:

1) Enjoy today but prepare for tomorrow. So have some fun now but don't sell your future with frivolous debt today.

2) Don't think "savings" is just $$$ in an account. Right now is a great time to buy a house as both property prices and interest rates are super low. I doubt we'll ever see appreciation like the last 10 years but a 25 year time period will probably mark today as a great time to buy a house. Paying that house off can be seen as "savings."

3) Someone mentioned a 4% spend rate. That's the gold standard. So if you want 120k income today, you need $3 million of income producing assets. Don't underestimate how big of a nut you'll need.

4) Consider getting some form of deferred compensation built into your employment contract. If you can defer taxes on income until you're in a lower tax bracket due to retirement that's a double win. Think how nicely padded your retirement accounts would be if you had 10%, 15%, or more of your base income fund a deferred account.
post #35 of 59
Quote:
Originally Posted by Piobaire View Post

You can't even use a Roth after a married couple's AGI exceeds 175k or so. Additionally, IRAs have to be funded with post tax dollars. It's really fucked.
A couple of thoughts in general:
1) Enjoy today but prepare for tomorrow. So have some fun now but don't sell your future with frivolous debt today.
2) Don't think "savings" is just $$$ in an account. Right now is a great time to buy a house as both property prices and interest rates are super low. I doubt we'll ever see appreciation like the last 10 years but a 25 year time period will probably mark today as a great time to buy a house. Paying that house off can be seen as "savings."
3) Someone mentioned a 4% spend rate. That's the gold standard. So if you want 120k income today, you need $3 million of income producing assets. Don't underestimate how big of a nut you'll need.
4) Consider getting some form of deferred compensation built into your employment contract. If you can defer taxes on income until you're in a lower tax bracket due to retirement that's a double win. Think how nicely padded your retirement accounts would be if you had 10%, 15%, or more of your base income fund a deferred account.

You mean like a pension? But pensions are evil and ruined/are still ruining America.
post #36 of 59
Quote:
Originally Posted by NorCal View Post

You mean like a pension? But pensions are evil and ruined/are still ruining America.

Son, I am disappoint. This is the best troll you could come up with?

And no, there is a clear difference between an individual having a deferred compensation plan, and a pension plan of the type you are referring to. It is not my goal or responsibility to educate you to the difference though.
post #37 of 59
Quote:
Originally Posted by NorCal View Post

You mean like a pension? But pensions are evil and ruined/are still ruining America.

Deferred income is a different thing.

On that same vein though, I was listening to a lawyer, who is much closer to retirement than I am, talk about a defined benefit (read pension) plan that his firm started offering. I don't recall the specific details but essentially it was a plan that payed a defined minuscule interest rate on top of whatever you put in. There was no input into your plan from people further down the line like a traditional pension but the structure made it taxed like a pension. It essentially gave a way for older, high income workers to defer income until retirement--the interest rate you earned was worthless but was far outweighed by the decreased tax burden.
post #38 of 59
Quote:
Originally Posted by Piobaire View Post

Son, I am disappoint. This is the best troll you could come up with?
And no, there is a clear difference between an individual having a deferred compensation plan, and a pension plan of the type you are referring to. It is not my goal or responsibility to educate you to the difference though.

Yes, you are disappoint.
Potato, potato says I.
post #39 of 59
Quote:
Originally Posted by NorCal View Post

Quote:
Originally Posted by Piobaire View Post

Son, I am disappoint. This is the best troll you could come up with?
And no, there is a clear difference between an individual having a deferred compensation plan, and a pension plan of the type you are referring to. It is not my goal or responsibility to educate you to the difference though.

Yes, you are disappoint.
Potato, potato says I.

Apple and orange says I. Well, me and the rest of the world. wink.gif
post #40 of 59
Quote:
Originally Posted by Piobaire View Post

Apple and orange says I. Well, me and the rest of the world. wink.gif

The rest of the world is overrated.
post #41 of 59
Also, luckily everybody can still contribute to a traditional IRA...

You lose the same-year tax benefits above the income limit, but you still benefit a ton from not paying taxes on the interim gains (or at least you do if you have a little bit of churn or hold some tax disadvantaged assets like REITs).

I do wish that the income limit on the traditional IRA was a little higher. IIRC, once you hit the income limit to stop contributing to a Roth, you are already at the point where the tax benefits on the Traditional IRA start to roll off.
post #42 of 59
Quote:
Originally Posted by otc View Post

Also, luckily everybody can still contribute to a traditional IRA...

You lose the same-year tax benefits above the income limit, but you still benefit a ton from not paying taxes on the interim gains (or at least you do if you have a little bit of churn or hold some tax disadvantaged assets like REITs).

I do wish that the income limit on the traditional IRA was a little higher. IIRC, once you hit the income limit to stop contributing to a Roth, you are already at the point where the tax benefits on the Traditional IRA start to roll off.

This is why when people making around 200-350k get accused of being "rich" and having all these tax loopholes I laugh. A guy making 100k has more tax dodges than a guy making 250k.
post #43 of 59
At the end of the day, the 250k guy is still better off than the 100k guy...and its not like not paying taxes on your 5k IRA contribution and deducting a couple hundred bucks worth of student loan interest is actually that big of a shift in the long run.

The real tax loopholes don't start until you are making far more than 250k (and it doesn't hurt to have an employer who is willing to play ball as far as wacky compensation schemes go)
post #44 of 59
Quote:
Originally Posted by otc View Post

At the end of the day, the 250k guy is still better off than the 100k guy...and its not like not paying taxes on your 5k IRA contribution and deducting a couple hundred bucks worth of student loan interest is actually that big of a shift in the long run.

The real tax loopholes don't start until you are making far more than 250k (and it doesn't hurt to have an employer who is willing to play ball as far as wacky compensation schemes go)

But "better off" doesn't mean he has more tax advantaged things to play with. The real tax plays come around 500k or so when you get the attention of people dedicated to wealth management, etc. and have cash flow high enough you can take a long term view on things.
post #45 of 59

What sort of % interest can you get on personal savings in the USA?

 

Over here in the UK, savings rates were poor for several years, however they're now starting to slowly increase despite the base rate remaining low.

 

3% is now easily available on an ISA (Individual Savings Account - a tax free limited savings account), rising to about 4.5% for a 5 year bond.

New Posts  All Forums:Forum Nav:
  Return Home
  Back to Forum: Business, Careers & Education
Styleforum › Forums › Culture › Business, Careers & Education › Personal savings rate?