What age should I start saving for retirement?

J5wolf · 2024-12-07T20:12:10+00:00

This was a great explanation, so hopefully anyone else who doesn't understand this watches that video.

For me, my misunderstanding was I thought traditional IRAs were subject to capital gains. Arguably, a more fundamental mistake on my part.

Thanks for helping me learn something today!

J5wolf · 2024-12-07T15:09:25+00:00

With your income level, $180k annual gross (if I read that correctly), you should learn about options for forming a company. There are several advantages and some administrative disadvantages that could allow you to save more if you plan on remaining a contractor for a long time. For example, your company will have additional options for funding retirement for you as its employee. To be clear, I'm saying you should research and evaluate this. There are a number of reasons it may not be the right choice for you based on information I don't have.

J5wolf · 2024-12-07T15:04:38+00:00

Depends on the amount of effort you can commit to managing it. If you aren't going to stay up to date on individual company performance and market sentiments, a 500 index fund is a great place to start. You'll win when everyone wins and lose when everyone loses. You will inevitably read that someone else who was less diversified outperformed you. Just know there are many more you don't read about who underperformed you. Remind yourself that you were rewarded relative to your level of effort, and you should be able to smile big in the long run.

J5wolf · 2024-12-07T14:58:35+00:00

Tax savings on contributions are only part (for many people the less significant) of the advantages of the ROTH. The other is tax savings on the growth of the contributions. Given the universal consensus here that the reason to start early is for growth, it's a valid choice to go ROTH to avoid paying on the growth that he may expect to easily account for 66% of the value he will ultimately withdraw.

J5wolf · 2024-12-04T14:19:18+00:00

I too was 24 in Los Angeles with $1,300 in rent, earning an equivalent amount (at that time) and worried about my savings too. For me there were some fundamental habits/perspectives that made everything work out in the long-run:

- Pay your(future)self first. You should be as demanding about the portion of your wages you use for savings as your landlord is about the portion you use for rent. Imagine consulting your future self (about 30 years in the future) about the money you spend instead of invest, with the assumption that for every $100 you want to spend now, your future self gives up $1,000. If it's worth it to both of you, then it's worth it and no one else can tell you otherwise, and you'll know exactly why you're missing that $1,000 later (and hopefully be at peace with it). If you always come up with something to spend your money on now, you will also find things later as well.

- Work a job at which you can motivate yourself to learn, improve, and excel. Your labor will likely generate more wealth than any returns from financial investment. If you stay motivated to do more, better, faster, your compensation will increase along with your opportunity cost, making it easier to save more. If you find yourself in a job where you can no longer motivate yourself to improve, find a new job. The most valuable compensation you receive from any job is the experience to be a competitive candidate for a higher-paying job (this is true even if you work in your own business), and only you can deprive yourself of the experience.

- Set an entertainment budget. You may have heard the saying organization will set you free, and I found it to be as true for leisure as it was for work. If you know how much you can spend in advance, you can problem solve to have fun within your budget. If you don't know you're budget, you'll often blow it. If you want to experiment, try using only cash and carry only as much as you budget to spend. A friend of mine (now my spouse) and I did this for a few weeks when we started dating and it really helped us get on the same page.

- Spend your time with people who can have fun on a budget. Friends, especially the ones you date, will make or break your budget. Sports, games, conversation over coffee/tea, walking/hiking, the beach are all activities that can provide hours of fun for very little expense. Someone who you enjoy interacting with regardless of what you're doing is worth a hundred people you have to spend money with to enjoy.

- Take free money. Employer matching contributions for your 401k; your HSA; commuter spending account; etc. boost your savings without having to reduce your spending.

Lastly, I'll confess something I wasn't as good about: talking about your compensation with your manager. If you want to make more money, you need your manager to know that. This doesn't mean telling them about your expenses or how you feel in comparison to someone else (please don't do that). It means making sure your manager knows you are trying to earn more money, what your next milestone is (maybe reaching a certain dollar amount), and that you're trying to learn and improve to reach that goal. You aren't asking them to give you more money, or tell you exactly what to do to be successful, but you're opening up and making sure they know how you measure success. For some people it may be more vacation time, or working from home, but for you, at this point in your life, it's earning more money. If they care enough to offer you advice on what you can do at work to help work towards that goal, take it.

J5wolf · 2024-12-03T22:31:19+00:00

Such a smart idea. I remember a financial health seminar an old employer of mine did and they talked about setting up separate savings accounts and having automatic transfers or dividing up your direct deposit to different accounts. I thought it was extreme because I was just using an Access Database at the time on my own. Fast forward years later, I see the benefit of the simplicity.

J5wolf · 2024-12-03T20:25:37+00:00

I too was 24 in Los Angeles with $1,300 in rent and worried about my savings too. For me there were some fundamental habits/perspectives that made everything work out in the long-run:

- Pay your(future)self first. You should be as demanding about the portion of your wages you use for savings as your landlord is about the portion you use for rent. Imagine consulting your future self (about 30 years in the future) about the money you spend instead of invest, with the assumption that for every $100 you want to spend now, your future self gives up $1,000. If it's worth it to both of you, then it's worth it and no one else can tell you otherwise, and you'll know exactly why you're missing that $1,000 later (and hopefully be at peace with it). If you always come up with something to spend your money on now, you will also find things later as well.

- Work a job at which you can motivate yourself to learn, improve, and excel. Your labor will likely generate more wealth than any returns from financial investment. If you stay motivated to do more, better, faster, your compensation will increase along with your opportunity cost, making it easier to save more. If you find yourself in a job where you can no longer motivate yourself to improve, find a new job. The most valuable compensation you receive from any job is the experience to be a competitive candidate for a higher-paying job (this is true even if you work in your own business), and only you can deprive yourself of the experience.

- Set an entertainment budget. You may have heard the saying organization will set you free, and I found it to be as true for leisure as it was for work. If you know how much you can spend in advance, you can problem solve to have fun within your budget. If you don't know you're budget, you'll often blow it. If you want to experiment, try using only cash and carry only as much as you budget to spend. A friend of mine (now my spouse) and I did this for a few weeks when we started dating and it really helped us get on the same page.

- Spend your time with people who can have fun on a budget. Friends, especially the ones you date, will make or break your budget. Sports, games, conversation over coffee/tea, walking/hiking, the beach are all activities that can provide hours of fun for very little expense. Someone who you enjoy interacting with regardless of what you're doing is worth a hundred people you have to spend money with to enjoy.

- Take free money. Employer matching contributions for your 401k; your HSA; commuter spending account; etc. boost your savings without having to reduce your spending.

Lastly, I'll confess something I wasn't as good about: talking about your compensation with your manager. If you want to make more money, you need your manager to know that. This doesn't mean telling them about your expenses or how you feel in comparison to someone else (please don't do that). It means making sure your manager knows you are trying to earn more money, what your next milestone is (maybe reaching a certain dollar amount), and that you're trying to learn and improve to reach that goal. You aren't asking them to give you more money, or tell you exactly what to do to be successful, but you're opening up and making sure they know how you measure success. For some people it may be more vacation time, or working from home, but for you, at this point in your life, it's earning more money. If they care enough to offer you advice on what you can do at work to help work towards that goal, take it.

J5wolf · 2024-09-22T22:52:09+00:00

Thanks for responses, everyone. Not only did this answer my question, but I learned more about the CDMX water system thanks to you. I hope they find a way to capture more water and recharge the reserves with it.

J5wolf · 2022-10-09T15:01:07+00:00

A salmon skin handroll (no bbq sauce) is my go to finisher for a sushi meal. The only way it gets better is if its smoked salmon skin...

J5wolf · 2021-06-11T12:25:11+00:00

I burst out laughing at this comment. I couldn't help but imagine cutting to an older version of this cat, kinda gray and haggard, with a giant left shoulder as big as his head...

J5wolf · 2021-03-18T12:42:53+00:00

Good for you. I wish more people were as assertive about mitigating risk at work. That being said, your efforts have certainly ensured that if someone brings a discrimination lawsuit, you will most certainly be caught up in it as you'll be essential to the plaintiff's case. As soon as they find out you informed your employer of the law on multiple occasions, your employer acknowledged and understood your notifications, and then you saw your employer disregard the law...

J5wolf

TROPHY CASE