Lets Talk Retirement Savings

[crinkles]

How much are you socking away?
What are you investing in?

My work pays 9% and I contribute an additional 6% of my gross pay. These things get taxed at 15%, and earnings in my retirement savings also at 15%. The lump sum / annuity you get after 65 is tax free though.

I am 28; and invest in 80% shares and 20% bonds. I like to keep it simple, no foreign shares, no property, exotic assets (race horses), etc.

 

[Shannow]

crinkles,
the problem with super (as we've seen today) is that they can change the rules at no notice...how many rules changes in the last decade ?

How can you plan when they keep messing with the system ?

And there's ultimately going to be so much super money invested that they will almost literally end up betting on flies crawling up a wall.

BTW, 65 is the old number. We can't retire until 67 now.

 

[crinkles]

well yeah I only just started adding the extra 6%. My gut tells me to save it in a bank vault somewhere else even though i don't get the tax benefit.

 

[Shannow]

I've been doing the 6% salary sacrifice because they give a tax break on it.

I still don't trust the baby boomers as far as I can spit them to give us some stable rules base to make long term decisions.

If they can retrospectively change the retirement age for everybody but them...

 

[Shannow]

BTW, did you see the interview where they justified the retirement age changes, that historically, people had 12 years of retirement, now that people are living longer, they should work longer to maintain the status quo.

 

[crinkles]

All they need to do is simplify it really.

And keep it simple.

As for working longer, yes, that sucks. but, I think the living expectancy will drop a little with the "obesity epidemic".

All in all I think it is a good system.

Other than not being able to contribute insane amounts ($25k cap per year), the shifting goalposts are mostly for good, no?

 

[Burt]

How's Australia's economy and budget deficit doing? Pretty good I expect with all the natural resource development going on. That should be a comfort that your currency will hold its value or appreciate.

 

[crinkles]

We have 5 - 10% debt as proportion of GDP; usually we carry a surplus but not in last few years.

New tax on resource mining - additional 40%

Australian dollar is now worth 92 US cents... usually around 60c - 70c...

 

[PandaBear]

I'm contributing up to the max of my 401k employer match, about 6% of my salary myself and 3% from employer matching. Invested in money market before the crash and now I'm investing in Vanguard Developed International (or something that sounds like it).

The rest of my money is invested in the wild stock market in tech stocks that I'm familiar with. So far I'm lucky and most of the stocks I picked went up a lot this last year.

The rest of my money is invested with my parents in real estate (house flipping), and my mortgage is through them for a rate between the lowest 30 years fixed and highest CD. Everyone is happy.

 

[eljefino]

Wife & I alternatively (every other year) throw a lump sum into our IRAs where they grow tax free. I do S&P 500 index, she does hippy dippy funds. Our way of diversifying.

It REALLY REALLY hurts with two little kids, a falling down house, and her working half time, but the market looks poised for growth. We also have a pile of non-retirement-committed cash sitting on the sidelines looking for an outlet, which could be as simple as propping up our ever-collapsing house.

I had a 401k at the turn of the milennium; wanted to throw money at Asia so I put it in a world fund. Since Asia just had a meltdown and was underperforming the fund manager put 41% of assets in the USA. I guess we ARE part of the world...

I have a gut feeling 401ks and IRAs will be liberalized in how you can spend them (ie not retired) as the next form of economic stimulus...

 

[ZZman]

It is scary when stats show that most people have less than 10,000 in a retirement acccount. You are wise to be thinking ahead at your age.

My employer used to put in 5% and we could do 5% and they would match 1 to 1 on that. We could then do an additional 10% and they would match that 1 to 2. I would usually put in 5-7 % over the years.

We now have a defined benefit plan where I have to put in 10%. I then have a 2.5% multiplier times my years of service to get my monthly benefit. at 30 years I get 75% of my pay based on the avg highest 3 years out of the last 5 I worked.

 

[Shannow]

Serious, you are moving towards defined benefit schemes ?

The baby boomers cut that rug out down here decades ago (while keeping it themselves).

 

[oilmaven]

Crinkles...glad to hear you're at least doing SOMETHING about retirement but it's hard to know whether our plans will pan out or if the money will actually be there in the end.

I don't know where you got your figure regarding Australia's debt level (unless this 5-10% vs. GDP reflects recent INCREASES to the debt load. I am not an economist but recently read an article regarding the world's top 20 debtor nations. The statistic they used was based on the countries gross external debt as a percentage of GDP as of 2009. The US ranks 20th (believe it or not) with a gross external debt (at the time of the article) at 93% of GDP ($13.77 trillion vs. a GDP of $14.26 trillion). Understand that the gross external debt figure is the TOTAL ACCUMULATED debt (think credit card balance) acquired over time.

Australia ranked 18th with a debt level of 124.3% ($1.025 trillion vs. GDP of $824.3 billion).

This is still not bad considering the top 2 debtors being the United Kingdom (459% debt vs. GDP) and Ireland (no. 1 by a long shot...1,312% or a $2.32 trillion debt vs. a GDP of 176.9 billion).

Almost all of the 20 are European nations and the US (with a couple of Asian countries including Singapore).

China, Brazil and India have debt levels well under 10% of GDP (NO debt isn't a good thing either as it indicates lack of foreign investment and a stagnant economy). Servicing (paying interest) on these levels of debt is problematic (think Greece, Portugal, Spain and Ireland) and in some cases unsustainable and can threaten their economies.

 

[Shannow]

Not to bicker, but if every nation owes debt, who do they owe it to ?

 

[Mr Nice]

Wife and I are both put 30% of our gross pay towards retirement.
Been doing that for the last decade.

 

[yeti]

shannow -- canada and the u.s. are moving AWAY from DB to DC pensions.since we all are in a global economy,the co.'s have to stay competitive by keeping costs as low as possible. as well,most people that have pensions are already on a DC (defined contribution)plan. that was a huge issue with the big 3 late in '08.the DB plans are going the way of the dinosaur.
some people are confused/wrong --if one HAS to contribute to his plan, then it's a DC plan. that's what the C means -- contribution.
crinkles -- "...keep it simple, no foreign shares,...".going into foreign markets, developed or emerging,is a wise thing to do.one misses out on many opportunities by restricting himself to his domestic market.spreading around risk is another issue.but, one needs to do his own DD. to each his own.
have a good day.

 

[Pablo]

25% to tax differed savings. Finally employer matching will return in July. That had royally [censored] me off.

XX% to other retirement savings.

$XXX,XXX in CASH now (yes cash in MM accounts)
$XX,XXX in 3X bear and 3X bull funds at any given moment.
$XXX,XXX in other mutual funds, PFO, etc

$XX,XXX in bank savings accounts from businesses.

Will still have us retiring poor, I suppose. Either we will have a [censored] shack on some plowable land, or screw it and sell everything and be itinerant.

 

[Burt]

"I don't know where you got your figure regarding Australia's debt level (unless this 5-10% vs. GDP reflects recent INCREASES to the debt load.

China, Brazil and India have debt levels well under 10% of GDP (NO debt isn't a good thing either as it indicates lack of foreign investment and a stagnant economy)."

Oilmaven, I believe that Crinkles was referring to the annual deficit as a % of GDP, not total debt. Also there is no connection between public debt and foreign investment. Two diferent things.

 

[McKittrick]

What scares me most is that if a large percentage of people have less than $10,000 saved for retirement. Where will the government get the money to give them retirement $.

The voters will speak, and all of us who have been careful and saved will get taxed more to pay for those who did not save.

That is what scares me most.

As for myself, I got out of stocks about 2 years ago, and now have most in money market, since I do not think the financial crisis is really over yet. Will get back in sometime in the future with the 401k money.

 

[Schmoe]

Working for the federal gov, we got what they call the L funds. You pick out a decade you plan on retiring, say 2020 or 2030, and this fund diversifies annually. So, if your just starting out in your career, it's a little more risky, but as you get close to you target date, it starts moving your money into securities. I've learned that chasing the market is a no win situation. I'm dumping in 10% of my salary and have been close to 20 years now. Took a 40K hit last year when the market sank, but now it's crawling back.