I am 31 and have about $32k in my retirement accounts. Is this well below average?

Some of you may think you have enough money to retire at 55 and get by until you get social security and medicare. But, you may just be one medical disaster and unfavorable insurance company decision away from bad times.

I just turned 30...$95k between 401k, Roth and cash savings. I just started making decent money in 2008 ($100k base) but also started an MBA degree at a top 5 program, which eats about 25k a year (evening program).

Sadly I've calculated my entire net outflows...$102k each year since 20008. That does include school and ALL expenses. Pretty crazy that I've still managed to save what I have. I actually saved more per year when I made less (about $65k), but I anticipate my base income bumping to +$150k per year once I graduate in June so I'm not too concerned. Moral of the story, you don't need much if your expenses are low. The more you make the more you tend to consume. As you get older, you anticipate lifetime earnings, not just annual, so you consume accordingly. This is a well researched fact of human behavior.

I am a banker and have studied money extensively. My advice: spend it now and don't worry about borrowing if you can borrow below 8%: fiat paper will be worth shit in about 10 yrs. Anything you borrow now will be paid back on a heavily depreciated basis. Just make sure to get fixed rate loans now (which are at historic lows) so that you won't get f***ed in the ass by inflation, which is gonna spike (the Fed has said it WANTS to increase inflation b/c its below its randomly selected target).

Flagpole: In general, your very basic principals of living below your means is an acceptable philosophy. However, your investment advice is shit. I simply offer this explanation. I was talking to a Nobel Prize winning Econ professor (we have many). I said, do you really believe in the principals of an efficient market. He said, "of course". I asked, and isn't it true that most of the math in economics is based on the principals of physics? Again he agreed, of course it is. So I asked, would the laws of physics apply whether man is on earth or admonished from its face? For a third time, he agreed. And I said, well is that true about economics. By gut reaction, he replied yes, but then paused. So I said, before you say yes, think, would our economics work in Soviet Russia. He said, well of course not, they were not a free market economy. And I replied, exactly. The markets are driven by humans, who exhibit animal like behavior. In other words, they adapt. Unfortunately, the markets, by human behavior, have been proven inefficient because our behaviors have changed. The math behind economics is flawed because it does not anticipate changes in behavior as it actually occurs. Think of it like this: Economic models anticipate change within a define set of rules. The problem: the rules have been broken and the game changed. It is the vampire of Wall Street who will insist at every opportunity to ignore the burning house and to keep buying furniture to put back in the burning house. In other words, you'll simply be throwing good money after bad. To all the dipshits who keep insisting that commodities are the way to go, I laugh. The best way to go is consumption. Calculate a cost of capital based on your happiness derived from the beta of risk that the government will only f*** you harder in the future (trust me, that beta risk is well over 1.0)

Aside from consumption and your happiness, the best investment in the next 2-3 decades will be any investment that lowers your tax liability. In much the same way that you could easily calculate the housing bubble by looking at the ratio of housing price to wages or wage growth, you can look at the ratio of national debt/expenditures to GDP. It will be impossible for the government to maintain itself w/o raising taxes. So anything that you can invest in that will lower this liability will buy you an immediate 35%+ return (or higher since pretty much everyone with a brain anticipates future increases).

Again, I am a banker (for now)...I see how the rules are made, b/c, well, I have a hand in making them. The house wins a majority of the time, and you the consumer/middle class are not the house.

i'm in the boat. a medical catastrophe and i'm really in a bind. it's awful. worse, BCBS is full of unethical a-holes who deny every medical expense only to cover it when I fight.

the result: a cash flow emergency every month and money trickling in from BCBS whenever they deem it ok - even though they say they pay within 30 days.

to anyone else dealing with this - you're not alone.

if anyone has advice on fighting bcbs of mass or if reporting to BBB makes any sense, I'd appreciate the advice.

you have substantially more than the average america, and substantially less than you ought to

'This is true. I'm married but I rent. At this point in my life, home ownership doesn't interest me at all. That may change, of course. But my "American Dream" doesn't include home ownership. :)'

It will in 20 years when your rent has trebled. If you can, buy now while the prices are lower

MMind you its good that Flagpole has solved everyone's retirement problems. Just put £1k a month away and you are sorted - because eveyone has that sort of spare money hanging around every month. As well lets just hope the banks don't go bust again - because the gov't are not going to bail them out twice

try this

http://cgi.money.cnn.com/tools/networth_ageincome/index.html

not sure if this is pure BS or the most insightful thing Ive read on these boards in a long long time

agree a lot on this... the US $ and all world $ are all at play now. the rules have changed since your Dad and Grand Dad where head of house - and dont blame the urrent prez this has been goign sine Bush too.

live within your means not way above it and you will live a good life. the constant stress making end's meet is the single most bigget factor in people's unhappiness.

but dont kill yourself squirilling away every acorn. enjoy life. take vactions. do things. enjoy the time you have now. realize that material things like a new car every 2 years or a big fancy house etc dont make you happy. but at the same time taking an adventure or too with the poeple you love will cost money. spend wisely and acordingly.

dont assume that youll have good heath and time later in life to enjoy all you put away. dont assume govt wont tax the hell out of all the money you did manage to squirel away to help pay for the sins of your poor fellow americans that saved squat.

and more importantly - teach your kids the same values. all the money in the world will amount to zilch if your kids never grow up and turn into 30 year old dependants living in your basement.

all that being said - 1k a month is great for now. by the time you hit stride in your 40s you'll be socking away $ with ease. seek a for fee advisor in 5 years time to help plan out a good strategy to beat taxes and inflation. expect rules and taxes on short term investments and long term retirement accounts to change drastically.

Forget social security, our generation is at the bottom of that pyramid scheme.

You seem to be doing well, but could be better. Maybe I missed it, but are you married/single/kids/no kids? I have about double saved what you do and I'm a year older. However, I just had my second kid and my wife is going to stay at home at least until they are in school. I see the next 5 years as me barely breaking even after putting 6% in my 401K. Knowing my kids are at home with a great role model is worth it for me. I am also banking on making double what I am 5 years from now which is reasonable given I've doubled the previous 5 years.

Remember what is right for your retirement might be half of what the next guy needs and double what someone else needs. Figure out what you need. My goal is to retire by 60. I don't need a boat or a mansion, but I love me some travel and free time.

younginvestor wrote:

aslkdfmsdsadf wrote:

TRUTH - most Americans are obese redneck evangelicals driving pickup trucks who struggle just to put food on the table. so if you even know what a stock is and have anything in savings other than under your mattress, you're way ahead of the average "American."

i am a redneck and drive a pickup. whats wrong with that?

read the millionare next door. a survey done said the most commonly driven car in america by people who were millionares is a Ford f-150

not goinmg to bail out twice ? they already have twice. is everyone here that young to not know of the S&L crises of the 80's? bet your ass that there will be a 3rd too.

afterall once you been bent over once and taken it, you'll be their bitch forever. hasnt anyone seen Shawshank Redemption ?

I think you are ok

You have turned the corner and have a saving mentality. I would figure out what you should have at this age and tried to catch up.

I started my 401k at 28 and i was probably in the same position at 31... I maxed out everything.. and now at 38 i have $175k in the retirement account and $67K in cash that we are holding for a rainy day.

I think for most, it won't natter how many dollars you have even if it's in the millions. The value of the dollar will mostly be wiped away as the government debases the dollar into the abyss. Most people are blind to the idea that no country can print and borrow money on an exponential scale and get away with it. So people are going to pay for their lack of vision and lose most of everything.

As for me, I have over $250K, but two months ago it was only $150K. Where did the extra $100K come from you might ask...? Gold and silver mining shares. Especially undervalued Jr. miners. I pretty much get valued assets for pennies on the dollar since the general public is very out of the gold/silver/mining market. It's a very uncrowded trade. Bottom line, I don't look at the dollar figures in my account. It's inconsequential to me. It's all about owning quality tangible assets, or in my case companies that have huge deposits of economic "real" money that can't get debased into nothing.

Every month, I convert the paper money I get paid (after taxes and expenses) for real assets. Once that paper money can't buy me much, I quit my job. I expect to quit my job within 5 years.

anybody ? wrote:

not sure if this is pure BS or the most insightful thing Ive read on these boards in a long long time

I wish it were BS. I've spent A LOT of time and money to come to these conclusions, most of which I knew intuitively, but could not believe in b/c the public message is so vastly different. It took first hand experience to actually believe it. I get the sense there are a lot of people who have similar gut instincts but just can't believe in themselves because they feel their opinion is insignificant b/c they don't have the education/experience to back up their instinct. But let me just say this. Humans are animals. We were built with the same survival instincts as any other mammal. When your being is telling you that your survival is at risk (economic or other) then believe in it.

People with power or certification (btw, I've met plenty of dumb CFA's, CPA's, MBA's PhD's ect.) go through great lengths to make people feel insignificant and dumb so that the minions will feel dependent upon them.

Why might I say this? Well I grew up a hillbilly and didn't know much about this stuff. I thought being a hillbilly was a bad thing. But then as I cleared the social/academic/professional hurdles, I realized that those at the top really aren't much smarter than those at the bottom. The only really smart people I know are ones that can physically do something not many others can do. e.g., Surgeons, mechanics, musicians, certain types of engineers, and surprisingly, nice people. I think nice people display a certain type of intelligence based upon the concept of heuristics. For those not familiar with the term, heuristics are basically short cuts or rules of thumb. Flagpole's advice is riddled with them. Heuristics allow the less capable to be super achievers by relying on instinct to fill in the experience and education gaps. Nice people seem to be phenomenal at practicing heuristics which I believe improves their survival drastically, and therefore reinforces their happiness.

Senior Software Engineer wrote:

Every month, I convert the paper money I get paid (after taxes and expenses) for real assets. Once that paper money can't buy me much, I quit my job. I expect to quit my job within 5 years.

So what real assets are you buying, and how "real" are they?

Are you talking gold and silver mining shares? actual bars of gold? guns and canned food and remote real estate?

el tigrecito wannabe wrote:

So what real assets are you buying, and how "real" are they?

Are you talking gold and silver mining shares? actual bars of gold? guns and canned food and remote real estate?

Mining shares for sure...I won't talk about the rest.

"Inflated P. Nis" was getting it right until he laughed about commodities and talked about just spend away using debt. His assumption that he will keep his overpaying job indefinitely will be proven way off the mark. The parasitic industries such as banking/finance will be in complete shambles as America is forced to start producing again and shed the fluff jobs that don't add value. So it would be wise to squirrel away real value since bankers really are worthless outside of their worthless industry.

As for me, I could develop software for a Chinese company if I need to. It would take over 20 years to move the programming standards away from English, so not knowing Chinese would not be that problematic.

As an investment professional...all you people shouting 'this time is different! should read some history. Every time there is a crisis, people shout 'this time is different! This time things really are crap!"

Anyone here born around 1965? Grow up in the 1970s? Now that was a crap time and it sure seemed the US would never reemerge.

Then the 1980s came and the biggest economic boom in many years.

So, P Nis, you have to say why this time is different and we really are in sort of an 'end times.'

Seems to me, you are just another doomsayer in the long list of doomsayers who got it wrong.

Me, I'm buying all the shares I can. The best time to buy is when spirits are this low. I'll sell my shares in 20 years to doomsayers.

aahck wrote:

As an investment professional...all you people shouting 'this time is different! should read some history. Every time there is a crisis, people shout 'this time is different! This time things really are crap!"

Me, I'm buying all the shares I can. The best time to buy is when spirits are this low. I'll sell my shares in 20 years to doomsayers.

You might want to study the history of money. No fiat currency has ever stood up to the test of time. Why do you think the founding fathers specified gold and silver to be used as money? Ever hear of the Continental? We have been on a fiat currency since 1971. Those boom years you talk about was one huge credit money printing splurge and now it's time to pay for it. Like all Ponzi schemes, it works until it doesn't.

Hope those are gold mining shares you are buying...

Lots of things can happen. Social Security can go belly-up. The dollar can collapse. WWIII. Hyperinflation. Jesus comes back. The government seizes all retirement funds (or just ends tax sheltering for Roths). All we can do is be wise with what we know right now. For 3000+ years (we're talking Proverbs and Ecclesiastes, at a minimum), financial wisdom has meant living on less than you make, saving/investing in diversified fashion, and staying out of debt. I know plenty of folks who are "retired" on pretty much nothing but Social Security and Medicare, with either a paid-for house or a small apartment. They are not going on cruises, but they are also eating Alpo. I have to believe that if, in addition to whatever system our government/society comes up with, I have zero debt, a paid-off home, and whatever the compound value of saving 10%+ of my income for a working career is on that date, that I'll be better than "fine."

"and whatever the compound value of saving 10%+ of my income for a working career is on that date, that I'll be better than fine."

That last line sounds like you expect the government to preserve your savings. During a currency crisis or outright default, most savers lose everything because they hold currency, bonds, and or the wrong stocks. They are debasing the dollar and you are losing value as I write this, although it still is not perceptible to you at this time.

I am not losing value however since I own the right things:

http://finviz.com/futures_charts.ashx?t=GC&p=w1

And no, it's not a bubble. The general public is not even there. Only 0.8% of funds are invested in this sector. It used to average 20% for over a 100 years. Think of the dollar as opposite of that chart... I expect that chart to rise increasingly faster over the next 1-2 years.