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The problem with contract work (and I've done some) is that it is inherently unstable. Contractors are the first out when times get lean. I was called from one contract job that seemed relatively stable and told not to show up the next day. The agency fired me over the phone and I got my things in a grocery store parking lot.
I'm not saying it can't work for some, but for younger people looking for stability, especially during these uncertain times, it just doesn't seem very wise.
For sure, when I was doing contract work down in Antarctica, it wasn't so much that they were going to lay us off, it was looking for that next gig so to speak, if you didn't want to work in Antarctica, year after year after year.
Another story, this was from a Network Admin, who has been working IT in Antarctica for 20 or more years now, he's in his late 50s now. He does 8-9 month contracts at Palmer Station, which is the best station out of the three (South Pole, McMurdo and Palmer) and makes pretty good money and has a storage unit back in Washington State and in the 3-4 months (mid-June to early October) he is off, he travels a lot, he did the entire Appalachian Trail over two summers, spent 3 summers kayaking and camping the entire width of the US.
I guess the point I'm getting at, contract work in Antarctica is a little different than say back here in the states, in that it is very stable and you can basically keep going down year after year after year for years and decades even and continue to "bank the money" and maximize your 401k or 403b. The hardest part is getting your foot in the door.
It's not uncommon to know people in the United States Antarctic Program that have been to 50-70 different countries and have 100k-300k in their savings, not including their retirement, because you can't really spend any money in Antarctica, only on alcohol, everything else is paid for!
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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The problem is that the maximum 401K will not result enough to live on in 35 years, when a new cars is $110,000 and a starter condo is $2.5 million. Put away as much as you can in any retirement accounts or make other investments, along the way. When we retire in 2 years we have pensions, Social Security, 401Ks, 457Bs, and 2 credit union passbook savings accounts. If not for the equity in our home being now at $600k we would find it hard to live on those accounts. We will sell and buy for cash in a less expensive area as our taxes are now over $10,000 on this house and we will do great without any mortgage and more reasonable property taxes.
Im mid 30's but planning to retire around 65, possibly earlier a little earlier for something and less income im more interested in doing as a career. Currently putting away the max tax amount into my 401k. Anything else that you wish you did before retirement?
I'm taking the question as: Anything else besides putting the max away into 401K that I wish I had done for income streams in retirement ? If that is the crux of the questions, I would recommend add the following:
I would continue to contrib to 401K. Keep the funds invested in several good performing mutual funds offered through your plan and just let them go (in the bad years you'll just be buying more so your growth will be exponential in the good years).
Additionally, I would save enough money for a down payment on a house. However, instead of a single family house, buy a Duplex and live in one side. While you live in it, continue saving enough money for a second down payment. Once you have enough for another down-payment, move out of the duplex, rent the unit you were living in, and buy a second duplex that you move into. By moving into the duplex, you can purchase with low down payments and traditional financing. This will enable you to more quickly build a portfolio of real estate properties. After 10 years (or when you feel the time is right) sell a couple and use the funds to pay off the mortgages on a couple. Now, you will have several mortgage free duplexes to provide a secondary income stream in retirement. Or to sell prior to retirement for more investible funds.
It's all about building income streams over time to supplement your 401K income, in my opinion.
I've bought and sold many properties over the years and it has paid off in a very good way. Just take it slow and learn along the way and be dedicated to it ... understanding the rough patches will be worth it in the end.
There's more that goes into it. This is just a surface level introduction. One last recommendation: If you get more than just one duplex, consider hiring a property manager to manage them. The fee will be worth it in the long run while you're busy working your regular job.
The problem is that the maximum 401K will not result enough to live on in 35 years, when a new cars is $110,000 and a starter condo is $2.5 million.
Max + a modest employer match is going to be in the ball park of $3M in today’s dollars at a 7% real return. With a 4% SWR providing $120K/yr from that plus SS, I think they’ll be fine. LOL
Well, we were supposed to retire this year, then Pandemic hit and things are on-hold until after Covid. I'm 48 and don't want to work beyond 50 if I can help it. We're just waiting for the global 'gate' to re-open again for safe travels and then we're out!
We are long time travelers, and over the years, we realize our love for travel hasn't diminished one bit. We know we want to spend our retirement doing slow travel (3-6 months or more in one place) to places that we've been to (but didn't have a chance to spend much time in) or new places. Learn some new languages.
Then when our bodies can no longer do that, we'll just check ourselves into assisted living and die with no regrets.
1 thing I should have done earlier is marry someone that had similar financial and economical values that I had. But when you are young, those things don't seem to be that big of a deal. Long story short, we are no longer together as of 17 years ago.
Knowing what I know now, I would not have taken a 2nd, part time job when my kids were smaller. I felt like I needed to catch up, so I worked more than what I needed. But at the time, it seemed like the right thing to do. I have to think that a lot of others have work related regrets.
1 thing I felt I did right was get involved in residential real estate. Be forewarned that it's not for the faint of heart. Prior to 2007, I looked like a financial genius on paper. But in 2008 was a scary time. Values dropped. Many who knee jerked lost money.
Debt is a tool. Use it wisely. If not, it will become a road block to your ultimate goal.
The key to my financial security since I retired at age 62 was having a job with a vested pension in addition to my 401K. I contributed to my 401K for 27 years and when I retired converted it to an IRA. I retired with 27 tears of service vested in my pension. From the day I started working my main requirement was a vested pension, and in the long run it paid off. My pension is as about as much as our joint social security and my IRA RMD combined. There's not many jobs with a vested pension these days but they are still out there. The second thing that was important was a very good health insurance and pharmacy plan in addition to Medicare. With a major illness you can pile up hundreds of thousands of dollars in hospital bills in a few weeks, plus many thousands in pharmacy and medical expenses for the rest of your life. The other thing I did before retiring was pay off all our debt including our mortgage, and cut up all my credit cards and replaced them with a debit card. Psychologically I always spent less with a debit card than with a credit card, because I was not spending future earnings, I was spending money that was already in the bank. It gave me more of an incentive to spend wisely. Charles Dickens gave the formula for financial security as simply spending less than you make. Retirement is no time to take financial risks or overspend.
Quote:
Originally Posted by DannyHobkins
Im mid 30's but planning to retire around 65, possibly earlier a little earlier for something and less income im more interested in doing as a career. Currently putting away the max tax amount into my 401k. Anything else that you wish you did before retirement?
Max + a modest employer match is going to be in the ball park of $3M in today’s dollars at a 7% real return. With a 4% SWR providing $120K/yr from that plus SS, I think they’ll be fine. LOL
Careful. Your 4% safe withdrawal rate will be supplanted by the IRS' minimum required withdrawal, which in your late 70s and 80s will be substantially more than $120k annually.
The problem is that the maximum 401K will not result enough to live on in 35 years, when a new cars is $110,000 and a starter condo is $2.5 million. Put away as much as you can in any retirement accounts or make other investments, along the way. When we retire in 2 years we have pensions, Social Security, 401Ks, 457Bs, and 2 credit union passbook savings accounts. If not for the equity in our home being now at $600k we would find it hard to live on those accounts. We will sell and buy for cash in a less expensive area as our taxes are now over $10,000 on this house and we will do great without any mortgage and more reasonable property taxes.
Maybe a condo being that expensive will be the case in major cities, but there's no way that is going to happen here in flyover country.
Save and invest. When you are young, don't worry about bonds just go with equities and get the growth. You don't have to have all of your savings for 401K either. You can save for a wedding. You can save for a home. Just be diligent about not letting that get spent of smaller things. Your savings rate ultimately is more important to your success than your income. Plus, you can get nice things, but you need to find when and how to get them on sale. Ultimately, if you buy quality, you will have nice things of whatever you need, and will reach a point where there's little that you want.
For myself, the one thing I wanted from money was the ability to walk away from a bad situation no problem. Once in the position where I no longer HAD to have that next paycheck....could literally walk out the door and not worry about a thing...working got better. It's not that work is bad, but there's lots of bad jobs. When you find one that let's you live happy, stick to it. Don't be in a hurry to grab a job someone else has just given up.
Be kind and considerate, even if it makes you the sucker once in awhile. It's a lot better to look back and say...I won it on points. I didn't cheat anyone to do it. I helped a few people along the way.
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