Do You Think of Retirement?

My grandparents were extremely frugal, planning to travel after he retired. Grandpa died at 62 when she was 16. Mom (& Dad) saved, but insisted we experience some life now. But don't start spending on all the luxuries now. You can enjoy for less.

1. 401K -Take employer match funds on day 1. Free money is a great investment, and if tax deferred you won't notice how little less you would have spent. If Roth non-deferred still worth the sacrifice now. 

Every time you get a raise, increase contributions by 1-2% until maxed out. Use low cost stock & bond funds/ETFs as your base investments.

2. You make 16-24% by paying off credit cards every month. Never carry a balance.

3. Save 6-12 months of expenses or $10,000, whichever is higher, for emergencies. May take you 3-5 years. Emergency funds will cover medical emergencies, auto accidents, or unemployment/job hunting. Things happen to everyone. Read "How much 8 different emergencies may cost you" below. 

4. Have insurance policies - auto, homeowners/renters, medical, Long Term Care, and consider an umbrella liability policy.

5. Aggressively pay down student debt, and save towards a mortgage down payment. It is a balance. Savings give you options.

6. Delay Social Security till 70-1/2. You earn 8% more income per year for your senior years, and may live much longer than you expect. Think will blessed if healthy enough to keep working well into my 70s.

Finance is for long term & can be complicated, but these basics will get you started towards paying for your retirement.

how much 8 different emergencies may cost you

https://www.marketwatch.com/story/this-is-how-much-8-different-emergencies-may-cost-you-and-you-probably-cant-afford-them-2019-02-20

Transitions at Work

Today 3 people retired and 5 people were laid off. Sorry to see everyone leave. Wish we all had work. Instead the few left will pick up more work.

The retirees are in good shape. They saved money, paid off debt, planned for collecting social security, and have interests to keep them busy. Very happy everyone was ready for the opportunity.

My laid off coworkers are in pretty good shape, with savings and little debt. A lesson aerospace workers learn early in our careers. Was told a joke when I starting out, “There are two types of aerospace workers - those who have been laid off, and those who will.”

Anytime you are not working, life gets hard fast. Unemployment does not cover rent, bills and food. Your savings has to cover what spending you can’t cut while you are job hunting. Everyone needs a minimum of 6 months savings to cover bills. I prefer over a year of savings on hand for emergencies.

How do you start building your emergency fund?

Put ~10% on your first or current job into your 401K. At least put enough to get the employers matching funds.

Then put money aside for emergencies, vacations, car repairs and hard times. Start with ~10% after taxes. Automatically deposit this to your savings account. You won’t see it, so you are less likely to spend it. Live on the 90% or less after taxes deposited to your checking.

When extra spending is necessary, you can transfer funds to your checking account to cover it. Most people may need to do this once or twice a year.

Secrets to financial independence:

1) Spend less than you make. Credit card debt not paid off every month ruins more people’s finances than any other mistake.

2) Every time you get overtime, a bonus, or a tax return: Put 10% in checking to spend on a treat. And put 90% in savings.

3) Every raise increase the percentage saved in the 401K and savings. 10% becomes 12%, then 14% and more. You aren’t use to spending the raise, so you don’t miss it.

Properly invested savings earn compounded interest and grow faster than you believe possible. When medical expenses occur, you can pay off the credit card. 6 months of job hunting becomes manageable. Eventually you can afford the down payment on a condo or house.

Good habits make you rich. Poor habits stress and shorten your life.

Turning 60

As a teenager decided to live to 100, and when that seemed too common - raised it quickly to 120. So am I now middle aged? Mom’s statement comes to mind, “It is not the Age, it’s the Mileage.”

The writer in me wants to reflect and deliver something profound. Not coming to me despite a long weekend. However here are my best decisions.

1. Live within My Means

Income has not stayed consistent in my manufacturing / entrepreneurial career.  Chose an affordable house instead of stretching. Have an emergency fund, and can pay off mortgage in 12 years versus 30. Low debt and savings make life easier.

2. Contribute to 401K

Took the match when I started, and raised my donation rate 2% with each raise.  After 6 years have 4 times the average retirement savings of my age group.

3. Keep Learning

Since graduating college have studied computers, CAD, project management, writing, and real estate. Read experts on other topics to keep my mind sharp. Talking with teenagers to seniors keep me engaged.

4. Time for Fun and Enjoyment

Love weekly volleyball games, going to small groups, reading, running or hiking. Watching good basketball & football games, and parties are welcome.

Don’t believe that you can have it all. Don’t believe wealth or skill comes without effort. Don’t believe “This Time is Different.” Don’t believe there is a balance to life. Life is always unexpected challenges. Adapt and change is required. Good attitudes and faith will get you through change.

BTW also have an Aging System you can use -- Denial J