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Tuesday, June 24, 2008

Retirement and Financial Independence

In the May 2008 issue of Money Magazine, 3 blogs were listed as the "best money blogs." JD over GetRichSlowly.org was listed as the "Most Inspiring." While MyMoneyBlog.com was named by the magazine as the most voyeuristic. The other, was named most sensible. While, I enjoy reading the third blog, this article is more about the recent articles published by the other other two. Both of them had recent articles, regarding retirement.


This may seem strange coming from a fellow who’s not yet forty, but I’ve been thinking a lot about retirement lately. Now that I’ve repaid my debt, now that I’ve begun to save money, I’m curious how much a person actually needs in order to retire. How do you know when you have enough?
- JD Roth, GetRichSlowly.org
Since, I am someone who will be 40 in about 3-weeks, this paragraph caught my eye. I have been concerned for some time, especially the past 2-years about my retirement savings. My 401-K is very small, and wouldn't even get me through 1-year. Yet I am to retire in about 25-years? How am I going to do that?

Now, due to the sell of my place of employment, I will be moving from my 401-k to a simple IRA (with a 3% matching contribution). As a result, I will need to find a place to roll my 401-k into. Not sure, at this time, where I will place this retirement investment. I do know, though, that there is no way in hell, that I will leave the funds invested in my soon to be previous employers account, even though that will be an option for me.

I have considered rolling it over with ShareBuilder.com and I have also considered working with one of my Credit Unions to roll it over with one of them. Still, I am not sure. I guess, when I get the paperwork, I will talk to each of these groups and make a decision at that time.

In fact, that ties into what MyMoneyBlog.com was discussing in his post "How Do I Start Investing For Retirement." He has some great advice, for those just starting out, with retirement investing, but the article really doesn't focus (or even mention) rolling a current plan over. Not that it would matter much anyway, as my problem isn't the how, but where.


Like JD, I don't just want to be able to retire, rather, I want to be financial independent. What is financially independent, is what JD asked. Well, I have the same question. Originally, I thought $1 million dollars would be enough, but with rise gas and oil prizes maybe I should raise that goal to $2 million (and then some).
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go ahead share your thoughts with me now.

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Posted by Kevin Surbaugh at 6/24/2008 07:46:00 AM
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6 comments:

  1. Kev, I would go with Vanguard or T Rowe Price IRA, or 401K rollover, you can do it all online. Vanguard also has the target retirement funds which you can pick based on the date you want to retire/ withdraw.

    Of course, don't take advice from me, I'm broke!

    HS
    ReplyDelete
  2. ??
    You should increase your income. You won't be able to save much until you earn much more. I thought remembering you saying that your hectic work schedule prevented you from seeking a 2nd job. This is something that you should negotiate with your new boss: fixed hours.
    You can look at millionaire mommy next door: http://millionairemommynextdoor.blogspot.com/2008/06/i-want-more-money.html form some inspiration
    ReplyDelete
  3. anonymous -

    The new employer will not be paying me salary. I will return to hourly. However, if I continue working my 55 hours, I will make more then I am currently.

    If you remember (or maybe you missed it) I received about a 19% increase in pay, back in May. That figures to be several thousand dollars over the year. Now the new owner is telling me whatever my new hourly rate will be, I will have bigger checks every other week. So I am looking forward to that.
    ReplyDelete
  4. thanks HS, I will look into those options as well.
    ReplyDelete
  5. I second HS on TRowe Price. However, I would go for a Roth IRA, as it will draw tax free. DR also recommends a Roth.

    Mzmuny
    ReplyDelete
  6. You need about 25-33 times your annual expenses in an accessible account. If you want to retire be financially independent early or do not plan to sell your house, you can't count in IRA/401k's or home equity.

    Your expense level is up to you. If you use $40000 a year, you need more than a million. If you use $80000 a year, you need more than two million. The good news is that if you only use $10000 a year, you only need $250000. Also, if you start putting your time into it, you will find that there are lots of ways of reducing expenses by doing things yourself, buying quality stuff, reducing waste, and recycling stuff.
    ReplyDelete

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