Greenspan talks about the deficit

[epicstruggle]

I've always worked on the assumption that I won't get SS. A substitute teacher I had in elementary school once told me that the way he got wealthy was to save 10 cents out of every dollar, period, no ifs ands, or buts. If he got a dollar of income, regardless of source, he would immediately take 10 cents and put it away where he couldn't touch it.

I haven't exactly followed his advice, but I still save about 30% of my yearly income. Of course, our wedding, honeymoon, and house purchases set me back, but most people would be surprised how little I buy given my household income. With the exception of electronic gadgets, I spend very little else. I still drive a Honda Civic.

It takes very little to become very rich over your lifetime. I wish I could remember the book that showed that saving a few dollars a month(week?) you could become a millionaire when you retire. There were some very simple things you could do to help you out on this.
-pay off high interest rate debt first.
-cut on frivolous(sp?) spending (music, movies,...)
-cut all but one low interest rate credit card.
-depending on your risk aversion put money in bonds, savings account, stock market, index fund,...
-take a portion of your salary directly to your investment portfolio.
There were other, but im sure you get the idea.

later,
epic
ps not a bad idea for the govermnent to follow some of the above suggestions

 

[kyleb]

It takes very little to become very rich over your lifetime. I wish I could remember the book that showed that saving a few dollars a month(week?) you could become a millionaire when you retire.

having a million dollars hardly makes you rich in this day and age. 100millon or so is getting there, but the rich people these days are billionaires. granted with a million well invested you can live off the intrest if you live a reasoably frugle life, but i couldn't let the misconception that a million dollars makes you rich go unchallanged.

 

[epicstruggle]

It takes very little to become very rich over your lifetime. I wish I could remember the book that showed that saving a few dollars a month(week?) you could become a millionaire when you retire.

having a million dollars hardly makes you rich in this day and age. 100millon or so is getting there, but the rich people these days are billionaires. granted with a million well invested you can live off the intrest if you live a reasoably frugle life, but i couldn't let the misconception that a million dollars makes you rich go unchallanged.

You must be nuts. a million dollars is alot of money and would classify you as rich. Your right that a million wont buy you a jet or a big boat. Exactly what do you plan to do with a 100 mill btw?? Depending on how old you are a million dollars is like a fortune. when most average americans make 30-40k.

later,
epic

 

[Natoma]

You have to take into account inflation epic.

 

[epicstruggle]

You have to take into account inflation epic.

you think?? 8) http://cgi.money.cnn.com/tools/millionaire/millionaire.html use this calculator to figure out how long it will take you to become a millionaire. It also gives you how much extra time it would take for you to earn the buying power of a million dollars today (takes inflation into account). Depending on how far down the road your looking at it might add from 3 months to 3 years.
later,
epic

 

[Joe DeFuria]

You have to take into account inflation epic.

This is true.

When "planning for retirement" you've got to make lots of assumptions, and you should really re-evaluate and tweak those assumptions every couple years.

When it comes to retirement nest-eggs, the biggest variables tend to be inflation, tax rates, and estimating your own salary increases (as they related to inflation). It's also simply difficult to even try to guess what kind of "lifestyle" you want to retire with...am I going to be happy mostly hanging out at home...working in the yard, hanging with grand-kids? Take a more active role in community activities? Am I going to want to be a serious "traveller?"

Looking 20 years out, it's basically a crap shoot...you make some gross assumptions, and try not to micromanage it....but at the same time you can't fool yourself and be completely in the dark about "how much will be enough." The important thing is to set a savings goal / target, so you have something you're shooting for.

 

[Natoma]

You have to take into account inflation epic.

you think?? 8) http://cgi.money.cnn.com/tools/millionaire/millionaire.html use this calculator to figure out how long it will take you to become a millionaire. It also gives you how much extra time it would take for you to earn the buying power of a million dollars today (takes inflation into account). Depending on how far down the road your looking at it might add from 3 months to 3 years.
later,
epic

Just saying. I didn't know if you had done so.

I'm 26 and my bf/domestic partner/soon to be husband woo hoo (sorry for the gay marriage plug. ) is 22. We'll be done paying off our school loans and credit card debt by February of next year, finally, freeing up $2700/mo. And of course, factoring in raises this year and other budgetary changes, we intend on saving about $3600/mo starting in 2005, and increasing from there for the next 35-40 years. This of course doesn't take into account his 401K plan.

I might look into a Roth IRA. From the research I've done on retirement accounts, those seem to be the best overall.

Basically, we decided to start early. My mom didn't really get started until about 5-10 years ago, and she's going to be 50 this year, so she has to work for a while yet. It's just a good thing that she's really healthy and can do so.

 

[Natoma]

Looking 20 years out, it's basically a crap shoot...you make some gross assumptions, and try not to micromanage it....but at the same time you can't fool yourself and be completely in the dark about "how much will be enough." The important thing is to set a savings goal / target, so you have something you're shooting for.

20 years? Pfft. We're going for 40.

 

[Stvn]

As someone said earlier in this thread, the key is to make social security funds completely separate from the general fund. That would in many ways stabilize social security for a very long time. Unfortunately it would also throw us even further into deficits.

Then again, that might not be such a bad thing. Might cause significant reductions in unnecessary defense outlays that eat up large portions of the defense budget. As someone else said, discretionary spending of the non-defense kind doesn't exactly make up a whole lot of our yearly budget.

 

[Sazar]

here's something else to think about... since bush has taken over... the SS which once had a SURPLUS around $500 billion or so compiled @ the time to offset the coming larger demands were used to balance out the budget to make the deficits seem smaller than they were when bush's tax cuts went into play...

I see no mention of that in greenspan's report and I have yet to hear bush say he used the SS surplus to adjust his fiscal figures to make it seem more balanced...

otoh ss does need a major re-working but the working man has a very good argument about the billions wasted in pork-barrel projects and more billions thrown @ fat retirement plans and the like for government workers... its not fair for the working man to have to take the hit while the capitol hill fatcats enjoy a life of luxury and excess...

 

[RussSchultz]

SS revenues have always gone into the general fund.

Always.

Why aren't you lambasting Clinton for lying that there was a surplus, when there really wasn't (if you subtract out the SS revenue)?

 

[Sxotty]

Russ is right

SS represents an increasing long term liability that is not sustainable unless it is changed.

Are you sure about that? SS has actually generated money and helped balance the budget since it was created. It won't be for quite a while until outlays exceed expenditures. If it was actually a separate fund, and not one raided to balance the budget, it would have no problem handling the spike that is/was the baby boomers. Our working population can't continue to decline forever, then it will work as designed.


....


Have always gone into general fund

But that doesn't make it right, we should never have put SS into general fund we should have invested it and then it would be a gigantic fund now, basically the politicians used it as a secret tax, they said oh it is for SS so you will get it back, but in reality they were spending it as quickly as they could so we all feel that our taxes are low when they are really high...

 

[Joe DeFuria]

...basically the politicians used it as a secret tax, they said oh it is for SS so you will get it back, but in reality they were spending it as quickly as they could so we all feel that our taxes are low when they are really high...

I hope you're just not finding this out now.

I said something earlier today (maybe in this thread?) I really wish that payroll tax withholding would go away. That people would have to write a check every month to government: One check for each tax:

Federal Income
Medicare
Social Security
State Income
etc...

People would start to understand just how much comes out of their pocket...

 

[kyleb]

It takes very little to become very rich over your lifetime. I wish I could remember the book that showed that saving a few dollars a month(week?) you could become a millionaire when you retire.

having a million dollars hardly makes you rich in this day and age. 100millon or so is getting there, but the rich people these days are billionaires. granted with a million well invested you can live off the intrest if you live a reasoably frugle life, but i couldn't let the misconception that a million dollars makes you rich go unchallanged.

You must be nuts. a million dollars is alot of money and would classify you as rich. Your right that a million wont buy you a jet or a big boat. Exactly what do you plan to do with a 100 mill btw?? Depending on how old you are a million dollars is like a fortune. when most average americans make 30-40k.

later,
epic

well i don't plan to do anything with 100mil as i will never have it anyway.

however, i can't say that i am supprised that you don't seem to understand the distrabution of wealth in the modren world. a million dollars does not make you rich in this country by any means, simply middle to upper middle class depending on what part of the country you live in.

these people are rich.

 

[DemoCoder]

1 million in actual assets doesn't mean you can retire for life, but I'd say it's upper class, but not "rich". Assume 1 million in account earning 5% APR interest. That's $50k, after inflation and taxes, it's more like $30k. You can live on $30k, especially if you own your house already (assume $2million in assets, but $1mill is non-liquid in real estate)

If you start depleting principle, you can live better, but I've heard it said that to retire by age 30, with a house, 2 cars, and 2 kids in college, and a white-collar family income, you need US $5 million.

I'd said that people with more than $5 million are "rich". Below that, they're merely upper class.

My household income is <$250k (depending on wife working or not), but to buy a tiny house in Silicon Valley (much smaller than Joe's behemoth, only 2200 sq ft, 4 bedrooms, 3.5 bath, no yard whatsoever), you need about $800k. My wife is not working right now, and after paying mortgage, my disposable income is on par with someone making $70k per year, the only difference is, I'm saving probably $20k per year.

TurboTax claims I'm in top 5% of US households based on income, but if you look at my tax return, all my income is from salary. Turbotax claims that the average person in my bracket derives gains $70,000 per year in investments.

That's why I cringe when Democrats start talking about the "top 5%". I'm supposedly in the top 5%, and I'm not rich. I have to work, or I lose my house. I drive a Honda Civic. My house is smaller than houses bought by people making $40k per year in Texas. I'm "already soaked" by taxes. Even though I have zero exemptions on my W-4, and a wife as a dependent, I still owe $5000 in income tax this year, and another $9600 in property taxes.

I consider myself upper middle class, not country-club Hamptons, don't have to work, trust fund, rich.