So, like many boomers, I have a 401k that represents basically my entire retirement fund. Unlike many boomers, I am under the age of 50.
I'm sure there's plenty of other millennials, and possibly even younger generations, who have simple, relatively hands-off accounts from jobs where you just diverted a percentage of your paycheck. It's not flashy or trendy, and it's kinda old-school - like the employers we got them from.
With the market being about as stable as a cement mixer full of nitroglycerin, what are we to do?
I've thrown some pocket change into the Meme War on Wall Street, but if this triggers a collapse, there goes my 'retirement' (as though that could ever happen given current trends). What should I and people like me be looking out for?
Fuck it, stay in the market, if the damn thing blows up the USD is going down with it so you can't win anyway. (no, the UKP, EUR and JPY won't do better, and fuck the CNY)
Already missed the opportunities for bullion, so the main alternative is ammunition and canned food.
I've never understood why people are convinced gold will retain value in a SHTF scenario... Gold isn't a practical metal, it's value is based on scarcity, isn't it?
Food, water, medical supplies, and freedom seeds are what all my TrumpBux have gone to, so there's that.
Don't have the real estate for it right now, but I used to work on a farm, and the wife wants animals if we ever manage to move rural.
Bubba, you're ahead of the game. Now, go buy a farm off a couple disappointed in their kids and get to making a crop of farmhands with the missus. Chop chop!
I like your thinking.
If you're planning to be self-sufficient I don't even know what the purpose of your question is. If you have food, water, and the means to produce more, what sort of retirement fund do you need? If you have it it's icing, but the cake is definitely being self-sufficient so you don't need it for food and shelter.
What sort of retirement fund did you ancestors in the 1700's have? If they were landowners, it was their farm and their children.
You're right, of course. I guess I'm still somewhat caught in the mode of thought where everything will proceed normally and retirement is a logical end goal financed by discreet savings accumulated over your career.
This is obviously not the case.
It could be. You should consider the possibility that you're wrong and that the rotted out system will be able to survive beyond your lifetime. It's a fair assumption, since the system has been rotted out for a long time and has survived through many lifetimes.
FWIW pretty much all my wealth except my residence is long in stocks. Because I know I'm pessimistic by nature and there's a very real possibility that things aren't nearly as bad as I think they are. OTOH I want to have land, the ability to produce my own food, and the ability to provide for my own defense in case things are as bad as I think they are.
It's taking the ideas of diversification and hedging and extending them beyond simple investments and into life decisions.
I am not saying people don't think of gold in a SHTF scenario, but it also isnt a binary between "everything's fine" and SHTF. IMO gold is for a Venezuela or Zimbabwe scenario.
That makes sense. Somewhere before Mad Max or Waterworld.
As a just regular person without any insider financial or tax expertise, I've been going through the retirement thing for a year or so.
Several things have become clear to me: Your retirement funds will be seized/taxed/inflated to shit by the time you get there, if indeed you do ever get there. I cannot tell you how many of my 20something friends never made it to age 60. And after 60 they were dropping like flies, they never got a chance to use their retirement savings at all.
Having savings is a good thing of course but government has made it almost impossible to hang onto them over the long term. If you run into expensive medical problems (as I have) they are going to steal your savings that way. Having savings/assets disqualifies you for any kind medical financial help. I have Medicare parts A,B, and D and I'm still in a pickle as my medication costs - $18,000- a month.
Save as you like, but my advice is don't get too wound up about it. Spend the money now and have the time of your life. You never know how long that will be.
Even though I wrote an entire novel in this thread about my retirement and investments with almost no mention of generally fun stuff, I want to second this. I've been on the opposite side of some discussion with friends that feel the need to save away every dollar for their mystical retirement at the cost of not having fun now. They think I'm stupid because some book told them to max their retirement accounts out and I don't. On my side, I don't think of them at all when I've traveled somewhere fun, or driving my totally impractical car, playing a video game, or whatever fun thing I'm doing.
At this point I save a lot because I never succumbed to lifestyle inflation as I grew in my career, and I'd like to be done with corporate life by the time I'm 40. I see my coworkers who are still in cubicles well into their 50s or 60s, and something just seems off about that; and that's not where I want to be at that age.
And I do max out my retirement accounts, but that's because I also have a large taxable portfolio, and the retirement accounts let me rebalance my asset allocation without having to worry about the tax implications.
That's for sure. I've targeted age 50 myself. Not that I couldn't be out of it sooner, but I'm getting quite close to 40 as it is, and I'm in a good spot right now in that I have a super flexible corporate job that I enjoy doing.
The lifestyle inflation thing I something I think a lot of people get stuck in, particularly ones that inflate themselves into debt to inflate their lifestyle. I've probably done a little inflation with respect to fun things, but I've kept my housing costs way down to counter that. Having the cheap house in the slightly older part of the nice neighborhood has really been a good move for me.
I'm getting the distinct sense that I'm at a fork in the road that is my career that I will either need to publicly embrace "woke" or not be able to work for Woke Capital anymore. And that's if my refusal to embrace WuFlu restrictions don't end it first. 40 is probably optimistic; I'd say making it to 2022 is a 50/50 proposition.
I go back and forth between wishing I had gone into IT like most of my friends so I could make bank working from home, and being glad I work for a small company where my boss's dad teaches her son to reload ammo for fun and profit and I get to make jokes about Covid in front of whoever I want.
I wonder the same thing sometimes, but from the other side. The town I grew up in was one of those small towns that people tended to not leave.
I left the town I grew up in 15 years ago, and I regard the one I'm in now as a pit stop. A long pit stop, to be sure, but we're looking ahead as far as we can see now.
Next step is a house. Gotta fight to get the credit where we need it, and then somehow manage a job and house at the same time in a place we want to be and then execute.
I'm mildly terrified.
I'd never call myself a boomer and I shun any connection to being a millenial, but I do have a 401k. It's probably my biggest asset at this point. It's mostly hands off but I do manage the funds in it myself. This whole mess might be a TLDR, but it will be interesting to write and if no one reads it I don't care anyway.
I might be a little different in that I don't think of my retirement as I get to 65 and suddenly some trumpets sound and I am now retired and living off my retirement accounts. I also don't think of any of my upcoming gloom and doom predictions to be all or nothing either--meaning that I can only prepare for one of either brilliant right wing capitalist economy or entire dairy farm of manure hits the fan. So I just try to think about both with the mindset of not trying to hinder myself in the best scenario and not being set up to starve to death in the worst. With that all in mind here's how I handle some of the different future planning, investments, and mindset on things. Maybe it will be useful to others or someone can tell me I'm nuts.
401k account -- I only contribute enough to this to get the full company matches I'm offered. I resist suggestions I should do more or push it to the max because this account is not my entire retirement plan. I'd rather use those funds elsewhere. I move allocations around from time to time, but in general it's a boring stock and bond fund account.
Roth IRA -- I put tiny amounts into this every year. It's not a huge account compared to my 401k and has really become where I piddle with stock and ETFs. Right now I have a lot of commodities ETFs in here. That's not a rule though, I make stock bets or whatever here. It's not necessarily a retirement account as I take in and out at times because it's a roth and not company sponsored.
Cash in USD held in the bank -- I've built this up as a good case scenario (i.e job loss, not civil war) emergency fund. I don't really add to it anymore. I'm happy with the amount where it is.
Real estate -- this is where the bulk of my free savings money has gone for the last 5 years. (remember I don't contribute much to the above accounts) Plan at the moment is to build up some rental properties over time. I'm just starting to realize this, but by the end of the year I should have one rented and instead of me taking income from it the profits will just be saved for the next one. First house is in low cost deep red semi-rural suburbs in a very red state. I also have my own house equity I throw in this category.
Precious metals and crypto -- this is my newest endeavor. I thought about trying to move other assets I already have here but think instead I'm going to start really small and build it up. This is simple, I'm going to start buying silver coins and bitcoin in tiny amounts over time really with income money that in the past would have been earmarked to go into the cash bank accounts above.
Ok so I've basically spit out a ton of my financial thoughts, but it's not personally identifiable so I don't care. It might sound rich but bear in mind that 2020 is the first year I have ever booked over a six figure income, and we are talking barely over. It's just the result of about 15 years of trying to be smart and patient. I don't live at all like a pauper like some will tell you to do. I have had multiple new cars, I travel, I buy things. I just try to never repeat mistakes, keep away from consumer debt (credit cards, bad car loans, etc), and I hate monthly expenses. I was smart in my 20s to not try to overdo it and it's paid off. I also didn't mention like stockpiling food or guns and ammo, etc above. I don't really see that as an investment. I do have some of those things in decent amounts but from a how I do my finances perspective those things are just in the "random stuff I buy" category.
Thoughts on things I might or might not change because of the world situation:
Where I live -- I've considered moving to the country, and I might in 5 years or so. I've been tied to the metro suburbs I'm in now due to my job, but that may be more flexible with not working in the office and for me was getting more flexible before China Virus. So I wouldn't be shocked if I'm in a small town a couple hours away from the city by 2025. If things go well I might be one that retires early to South America or something. Who knows.
My job -- I can't see good reason to quit a good job that I like. Yeah, it's big corporate, but it's one of the more resilient industries in existence. Sure, I could get run off for a diversity hire or it become unbearably leftist, but right now it hasn't and if it does then I've got the entire plan of stuff above still and can move on. I'm not going to move out and become a farmer. I'm just not a farmer type. If we're talking mega-depression government collapse scenario I see myself as a skilled tradesman anyway. I'd grow some vegetables and trade my mechanical skills for whatever else I need. It's part of the reason in this such scenario my huge collection of tools is extremely high on my list of value, because they are my survival. Maybe I'm crazy and should start herding cattle, but the way I see it skilled trade has been around for almost the entirety of mankind.
Government hindrance -- I don't worry about this more than I can control. Say the government confiscates my 401k. Ok, that sucks. I've got two choices at that point, take arms and join the revolution or let it be and fall back to all of the other things I've set up. If it happens I will decide then based on what I know then. No different than if they take everything from me or show up to take me to the windowless train car. At which point I just accept I did the best I could and hope I can make my death an unfair trade with them on that day.
This is probably some of the best advice I've seen, thanks.
I mostly joke about being a boomer because my parents are older than most of my contemporaries, so I grew up culturally a lot more old-school than most, and in my field I'm older than most of the middle management and almost all of the line workers, so I constantly joke to the college students and high school grads that I'm a boomer and they make no sense.
Totally get that, I shun the Millennial thing because I'm on the extreme old side of what most call Millennial (some say it's not Millennial) and had parents that wanted me to get a job, not make a safe space for me. Those articles and such about "how Millennials are" they are pretty much the opposite of me.
One additional thing which mother Russia here didn't mention: it is legal and well-supported to hold your 401k in physical precious metals. You need a 401k provider who let's you do self-directed management, and a trustee to store the metals, and through them you buy bars and rounds on the market, to be stored by the trustee until your 401k matures. A good trustee will have your metals in a segregated vault box, and let you visually inspect it. I won't recommend a specific one, because I haven't chosen one yet.
I do stand to gain if you go for what I'm describing, and this isn't financial advice, just interesting info.
Yes, with a Roth you can always withdraw up to the entire amount you ever put in the account. It's a rather easy tax form (Form 8606, part III) you have to fill out and file with your taxes every year you take any money out. That amount goes back as far as you have the account, so if you have put in $1000 a year for the last 10 years for a total of $10k and never taken any out, you can withdraw $10k from your account with no penalty.
I've even been known to put money in the Roth, buy a stock, sell for a profit, and take the initial deposit + the profit out in the same year. Totally ok as long as you deduct it from your total. Example:
If you never let that contributions # get to zero then it's just your money you already paid tax on. Your deposits are subject to the limits ($6k or whatever). You can't put in too much and do this, or at least if you can I haven't read the tax guide on it. I don't ever contribute more than the limit.
Disclaimer: Please don't take my word as official tax advice or anything. I'm not a CPA or any sort of professional. I'm a guy who reads and familiarizes himself with the tax code because I like to do all my tax stuff myself. I encourage you to read yourself and/or consult a paid professional who will actually be on the hook for their advice. I follow every tax law to the letter and try avoid gray areas whether I agree with the laws or not, and these statements are based on the most black-and-white interpretations of the law I can come up with.
I used to contribute up to the limit, I go back and forth on it at times. Either way, Roth IRA is one of my favorite types of accounts because you can do so much with it.
I remember just because I did this specific tax form last night, but it specifically says in the instructions you can count all contributions back to 1998. I think that was first year they existed. So it really is as long as (sum of total contributions ever) - (sum of total withdrawals ever) > 0 then you don't owe a penalty.
I started by cheating off the software back when I was a self-contractor and a broke college student. Since I was a self-contractor I had to file some extra forms that wasn't covered under the "free" software and the software I needed was $75 I didn't want to spend. The software wouldn't charge you until you filed it, so I'd let it fill everything out and then copy to my own forms manually while at the same time trying to understand why it was putting numbers where. There are detailed instructions for every single form on IRS.gov, and once you get used to reading them they aren't that hard to follow.
I don't have any advice.
I expect I will never be allowed to retire. I expect retirement age to be pulled higher and higher. I expect more and more pension funds to "discover" they are bust as I get there. Same for governments. They're all in debt with current tax payers paying for the previous services not current or future ones. I don't expect the EU's bank guarantee will actually work through the next crisis--and that is only for 100k. I expect more governments will directly siphon funds from people's accounts like they did in Cyprus. As far as I am concerned if your money isn't in physical assets it is as good as gone. If it is in physical assets I expect they'll be seized or destroyed. I expect Big Brother to try harder and harder to eliminate cash so they can spy on every transaction and so the payment processors can insert themselves and scrape a little money off the top.
For starters, DON'T INVEST YOUR MONEY IN STOCKS THAT COST $300 EACH FOR A COMPANY THAT ONLY LOSES MONEY.
With that out of the way, 401K is an extremely risky device. Stock market could just crash. You could get cancelled. You may decide to take out your money at the same time as everyone else only to find the bank won't let you "for your own good."
Invest in REAL ESTATE and in YOUR BRAIN.
Wonder if this'll get downvoted to oblivion. Let's see.
Yeah, no wasn't planning on jumping on the GME train.
I have outright ignored my 401k since I started my career because I straight up do not understand what it is or how to interact with it. No one told me shit and just assumed I knew what to do with it. As you said, retirement is a myth, so I never worried enough to look into. Still not sure if that's a mistake or not, but I think investing in land and a home should probably take priority first.
That's probably the attitude I should take, watching it would only give me anxiety.
I just remember our shipping guy telling me about the 20k that disappeared from his 401k during 2008 when shit went sideways.