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?
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.