Why retire later? Take a retire-break now and start working again when you’re 60-65. 
… if money isn’t an obstruction.
Bad idea for most people. I semi-retired at 35, though I was totally unprepared to do so. After law school I moved to this small town in beautiful Northern Cal, worked for someone else for a few years, then quit in order to run my own law practice, which meant sneaking out at noon on a regular basis to go for bike rides, go hiking on the beach and in the forest, smoke a lot of dope, and go traveling for months at a time. Eventually I woke up and realized I was an idiot – you can’t retire at age 35 with less than $100K in savings. So I’m paying the price now: working hard and saving fast so I can retire comfortably before I’m too old. It’s all worked out just fine, but I do regret goofing off for so long when I should have been working. Oh well, live and learn.
Thanks so much for that MT. I was beginning to think I was the only one who made that mistake. The way it looks now I’ll never have any money and the only retirement I’ll be able to afford is a deep six holiday. “Oh well” sums it up pretty well.
Thanks so much for that MT. I was beginning to think I was the only one who made that mistake. The way it looks now I’ll never have any money and the only retirement I’ll be able to afford is a deep six holiday. “Oh well” sums it up pretty well.[/quote]
I should elaborate. There are sound reasons for playing around in ones 20s/30s instead of working hard. If you don’t know what career you might be interested in it might help to take time off. Also, it’s easier to travel intensely and do wild sports and adventures when you’re young.
But on the other hand, the compounding value of interest on ones savings is a huge reason for saving money early. If one puts away $100K by age 30 or 35, puts it in a hands-off retirement account, and invests wisely it will grow to a remarkable sum by retirement age, especially if one continues contributing to it. If one starts saving at age 40 or 45 it will take a lot more. Additionally, if one earns a good degree and begins a career, then takes a number of years goofing off, it will be hard to explain that lapse in the resume. I know, because I’ve had to explain such gaps in my resume to lots of potential employers.
All’s working out fine for me despite a number of years off, and I’m hugely grateful for all my experiences in Asia (less so for the years getting stoned and hanging out back home), but I realize now the advantages of graduating from uni and starting off ones career with hard work and diligence. And Bob, don’t worry, I’m sure it will work out fine for you too; it just means buckling down now and working and saving.
100K will hardly make a good downpayment on a decent house down here. How you gonna live on whats left?
I didn’t suggest buying a house with the $100K. I said:
That’s definitely true. Check out the chart at the following link, which shows the power of compounding interest:
medill.northwestern.edu/jour … works.html
As the chart shows, if one invests $2,000/year at 5% interest starting 20 years before retirement (age 45/age 65) one ends up with $69K. If one starts ten years earlier (age 35/age 65), one has roughly double the amount, or $139K. At 10% for 20 years one has just $126K, but over 30 years one ends up with three times that amount, or $361K.
The above chart refers to just monthly payments, but if you jump start the process with a large lump sum, as I mentioned, the effect is even greater. If one set aside $100K in a retirement account at age 30 or 35, invested it wisely and made modest additional contributions, as I suggested, one should have well over $1 million by age 65.
Here’s another chart that shows what I’m talking about, in case you still don’t get it.
And if all that compounding interest gets eaten up by inflation?
You know, I remember when an excellant wage in Taiwan in 1966 was 30 USD a month. Look at it now, 40 years later! How does that modify that chart?
[quote=“Shin-Gua”]And if all that compounding interest gets eaten up by inflation?
You know, I remember when an excellant wage in Taiwan in 1966 was 30 USD a month. Look at it now, 40 years later! How does that modify that chart?[/quote]
I know inflation in the US is like 3% or something. So just make sure your investments make you more than that.
My retirement plan’s a little different. I just plan on trying to live as balanced as I can until I’m 105. I don’t ever plan on working too much or too little (though I’m pretty good at working too little. 6 hours a day feels like too much).
I think too many people focus on numbers when planning on retirement and forget to invest in health, good friends, hobbies (and things of that nature). Then again, there are a lot of people who focus too much on hobbies and forget about the numbers.
Just don’t forget to enjoy yourself now (cause that’s all there really is, right?)
And I remember when the finance rate for house financing was eighteen (yes, 18) percent annually. 
Holy sh*t!
Holy sh*t! [/quote]
and it wasn’t THAT long ago either(early 80s). In NZ it peaked around 20% and when I bring it up these days many people around my age or younger quite simply don’t believe me.
Thats why 90% financing and the like always has some sort of risk, irrespective of the capital gains.
[quote=“Shin-Gua”]And if all that compounding interest gets eaten up by inflation?
You know, I remember when an excellant wage in Taiwan in 1966 was 30 USD a month. Look at it now, 40 years later! How does that modify that chart?[/quote]
And what if your investments fail and you lose everything?
And what if you lose a lawsuit and they take your retirement money?
And what if your spouse is evil and steals everything without your knowledge?
And what if you get hit by a truck and never make it to retirement age?
Look, Shin-Gua, I don’t care what you do, but most people would like to have some money saved up for the day they retire. Most people have enough common sense to know the government won’t take care of their needs and it’s not wise to rely on others. Therefore, unless one is willing to take a gamble and risk having nothing at retirement age, at some point one needs to start putting away money in safe investments for retirement.
The earlier one starts doing that the more one benefits from gains made upon earlier gains, which are based on earlier gains on ones investments. In other words, the money is building up in the retirement account without effort by the hopeful retiree – it is pure profit on investment rather than dollars put into the account that were earned by ones hard labor. And, as the chart shows, those investment gains increase geometrically, making it all the wiser to start ones retirement savings at an early date. That’s all I’m saying and it’s hardly revolutionary advice. It’s one of the most basic pieces of advice any competent financial advisor will give.
[quote=“miltownkid”]My retirement plan’s a little different. I just plan on trying to live as balanced as I can until I’m 105. I don’t ever plan on working too much or too little (though I’m pretty good at working too little. 6 hours a day feels like too much).
I think too many people focus on numbers when planning on retirement and forget to invest in health, good friends, hobbies (and things of that nature). Then again, there are a lot of people who focus too much on hobbies and forget about the numbers.
Just don’t forget to enjoy yourself now (cause that’s all there really is, right?)[/quote]
Absolutely. One should definitely enjoy life every day – ones health, friends, family, even just the little ordinary things – because nothing is permanent and all of that will be gone one day. BUT, I was glad to see in another thread you mentioned that you’ve started contributing to a tax-free/deferred retirement account. Good move. Just because one is enjoying life today, doesn’t mean one can’t also plan for the future.
Acting on some sort of reasonable plan will allow you to enjoy things even more now because you will be more relaxed about the future.
That or having a paradigm shift in your thinking.
That is what I need. Somehow I have fallen into the rut of accepting too many limitations in life and in my situation that is a really bad thing.