Sunday, June 23, 2013

Retire Rich or At Least Early

I recently read an article from Afford Anything with the article titled Party Like You're a 72-Year Old Retiree.  I like to read a lot of personal finance type of blogs and this was one of my favorites.  I planned on writing about something similar, but instead I'm going to take some of the key points and write about them in a little more detail from my side.

I'm 31 am I ever going to be retired???

"My parents, in short, have the coolest retirement ever. And what’s crazy is that they didn’t start saving for retirement until their 40s. That flies in the face of conventional wisdom, which says that if you don’t start saving for retirement by age 25, you’re totally screwed"

The median income for households is right around 50K, so let's use that number for our talk.  If you take $400 every month(this assumes you have $0 saved so far) at a 6% rate(lower than historical data), at the age of 65 you will have 500K.  That's some pretty good coin, but it's so hard to think that far ahead and to be honest $400 a month sure does seem like a lot.  Also remember that we are relying solely on the stock market in this scenario and while I think the stock market is the Golden Ticket, people from the Great Depression, the .Com crash, and the recent crash of the housing market and bail outs, makes me a little nervous.  So is it possible absolutely, but 34 years of giving up $400 month to have a half of a million dollars at 65, doesn't really get me to excited, so I'm guessing it won't for you either.

Keys to Retiring Early

"Yet by the time they both turned 60, only 20 years after they began working, they were ready to retire. They probably could have done it sooner if they weren’t raising little ol’ me."  They have zero personal debt. They paid off their mortgage within 7 or 8 years. They’ve never taken out a car loan and they’ve never carried a credit card balance."

So seeing the big picture or little pieces of motivation that come along really help and the statement above did just that.  So a pretty broad example but a couple took 20 years of saving had no personal debt, paid off their mortgage extremely early, and never had a car loan or credit card balance to speak of.  I am taking steps to get rid of every one of these retirement killers.  I had a car loan and sold my car and thus got rid of the loan with it.  I have a mortgage, currently on a 7 year plan to pay it off(the other option is when I turn 60 or in 2033 it would be paid off, sounds terrible), and I can happily say I have paid off my credit card balance.  

Enjoy Today and Tomorrow

"Yes, you should still enjoy today. Don’t get so obsessed with retirement that you forget the present moment. Travel when you’re young AND when you’re old. The world will change a lot in the next few decades. You’ll get to watch it happen.
But don’t forget that packing your lunch to work, brewing your own coffee, driving an old car – that’s not really a sacrifice, is it? Not compared to what you’ll gain."

Enjoy today.  Travel, Explore, do what you enjoy the most.  Just remember that you should not do it with a credit card, cash advance, personal loan, or anything else that requires you owe someone especially the bank.  The last statement really hit home, especially with my Saving for Vacation with Grocery Money  I really don't mind packing my own lunch, brewing coffee at the house, and taking the bus or train.  It certainly can be tempting living in Chicago with all the great places to eat and drink, but like Afford Anything said it's not really a sacrifice is it?

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