| Retirement plan is moving to a warm place and a large box |
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Debbborra
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| Retirement plan is moving to a warm place and a large box |
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I'd love some advice. I have no savings and no retirement benefits. I am 46 years old.
As of a three weeks ago, I decided that I can afford to put away $40 a week. Right now it is in a savings account that I believe gets about 1% interest. (You guys probably know better than I what the standard rates are.)
What should I do with my $40 per week?
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Sat Jan 30, 2010 12:38 am |
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Raptor
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That depends on when you need that money in the future. If this is long term 10 or more years, you can open a mutual fund account for as little as $25 per month. Each mutual fund company varies. I recommend a index fund or a targeted retirement fund. The next few years will be the test, expect the market to go up and down, but don't worry, just remember that every time the market drops, you are buying shares cheaper. Maintain the discipline and when it's time to retire you'll be happy.
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Sat Jan 30, 2010 2:12 am |
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Debbborra
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I know this will sound foolish, but where do I go to buy into a targeted retirement fund? How does it work?
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Sat Jan 30, 2010 2:24 am |
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Raptor
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I use USAA, https://www.usaa.com .Their investments are open to everyone; don't need to be a member. However their minimum monthly investment is $50.00. I recommend them because they have low fund manager fees and do not take unnecessary risk. They offer a variety of mutual funds to include index and targeted retirement funds. Additionally if you are set on saving this money for retirement, then you can consider opening an IRA, you'll still be able to invest in the mutual funds; however you'll get a tax savings. The only drawback is if you pull your money out of a retirement account the government charges you a 10% penalty and the lump sum you pulled out is seen as income and added to that years earning and taxed. It can be a very hefty tax penalty if you ever need your money. USAA have financial advisors that can provide you with all the details you need.
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Sat Jan 30, 2010 4:56 am |
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Debbborra
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Thank you very much. Lots to think about here.
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Sat Jan 30, 2010 2:27 pm |
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cleverboy
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For many, retirement is the reward for a whole lifetime of work. After years of everyday effort, maybe you're dreaming of travelling, playing golf every day, or spending more time with your family. If this type of planning is already at the top of your list of financial goals, that's exactly where it should be.
PARTAGAS CIGARS | HOYO DE MONTERREY CIGARS | PUNCH CIGARS
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Sun Jan 31, 2010 2:45 pm |
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Debbborra
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Those things sound lovely. I'm hoping not to have to eat cat food.
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Sun Jan 31, 2010 4:14 pm |
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oldguy
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quote:
What should I do with my $40 per week?
I agree with the Target Fund idea - but I would modify it a little. Since you are starting about 10 years late, I would choose a Target year about 30 years away instead of only 20 yrs, that way you have a chance to get a higher return (but you have to accept a slightly higher risk).
I use the Vanguard Fund Company, they are one of the major no-load fund companies, good service.
Also, you may want to modify your $40/week plan if you can. That would have worked at age 26, you would have about $1,200,000 at age 65. But at age 46, you will have only about $125,000 - that is a pretty weak retirement. (That is why you often see the 'start early' advice.) If you were able to double the input to $80/wk, you would have $250,000. And then, if you could work until age 70, you would have about $450,000.
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Sun Jan 31, 2010 6:31 pm |
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Debbborra
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Thanks for your thoughts and advice. Yes, 30 years is probably what I need to look at. I wish I could put more money away, but sadly it's not an option. I'll look at Vanguard as well. Does anyone have any opinions on Franklin Templeton?
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Sun Jan 31, 2010 6:37 pm |
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oldguy
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Franklin Templeton sells loaded funds, kinda expensive. I would (and do) stick with the 3 major no-load fund companies - Fidelty, Vanguard, or T. Rowe Price.
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Sun Jan 31, 2010 7:49 pm |
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Debbborra
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Aha. Thanks!
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Sun Jan 31, 2010 7:53 pm |
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401kDave
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| Not so fast |
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You forgot Schwab who is very impartial to the funds they sell. They have about 3000 no load funds you can use and they have many choices that beat the week Vanguard index offerings. I've never used Fidelity but they might sway you to using Fidelity funds when there are better no load choices in the open market.
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Fri Apr 02, 2010 4:43 am |
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