@SOSConcern I started contributing towards my 401k plan in 1994, prior to marriage, mortgages and kids. I can tell you I REALLY appreciate the concepts of compound interest and the time value of money!
^^This is why I am helping recent grads fund a Roth. I didnāt have retirement accounts in my 20s. You canāt make back that time and what it does for your money. Oldest D is teacher and is in a retirement plan, but still funding Roth. D2 is in grad school and almost 100% for PhD which means barely living wage for next 5-6 years. We are using proceeds from some of her investments and some help from us to fund Roth as much as possible. Big investment in her future.
I have a good friend who teaches finance and she says the problem with lots of experts you hear on podcasts and TV shows is that while their information is correct, most of the time she thinks āit dependsā is a better answer to almost every investment question.
Yes, we also funded Roths for our children. The earlier they start saving, the better off theyāll be.
My husband and I grew up in families where extravagances were almost non-existent. So when we started our professional lives, we made it a priority to save. We knew at 23 we would eventually start a family. We knew I wanted to stay at home while they were young. So we didnāt buy new cars or furniture for several years. We lived off less than one salary - living in Houston with a low cost of living helped tremendously.
Being frugal does become a habit. Even as our income increased we didnāt change our lifestyle much. It was good financial choices coupled with luck that allowed us to retire while our kids were in high school.
Now at our age (50s) we can learn a lot from our parents, their friends and even our friendsā parents. Weāve seen good and questionable decision-making. Possible down-sizing (and the timing of it) is something we talk about now, even though weāre probably years away from it.
Our goal: we donāt want to be a financial burden to our children as we age. My husband and I are already having discussions with and without our children concerning our future financial expectations. Of course there are no guarantees our planning will work out, but we are trying to be proactive.
@scmom12 When I open my quarterly statement and see what my 401k grew by I think back to the mentor I had at work that essentially forced me to open my account. You just motivated me to track him down and buy him a beerā¦
My first job at age 26 was as a business school professor and someone handed me material on the 403b, and the university matched my contribution. I said, āWait, you can contribute pre-tax money and get a match from the university? Whatās the max I can put in?ā Iāve got my kids doing Roths and ShawD is doing 401k or equivalent at her work. ShawSon and a partner have just started a new company (with a bunch of VC $$ in a seed round). I donāt know if they would offer retirement plans at this point, but would probably be thinking about stock options instead. They are hiring their first four employees.
@Time2Shine, I think as @ChoatieMom said, peopleās situations will be different. How much they have saved. Whether they want to retire or continue working. What kind of lifestyle they expect to lead. Some have significant real estate investment income. Some donāt. I think we are expecting a more expensive lifestyle than some ā houses probably on more than one coast in expensive states. We also have a more variable income than many. Never that low but in some years pretty high. So, Iām guessing we think the $X is higher than some. Because I later became self-employed, I set up a Defined Benefit Plan to go along with other tax-deferred savings and maxed it out. So, one of my issues is that I have a significant percentage of assets in tax-deferred savings plans an hence I need to gross up X for the tax I will pay on that part of my savings.
We have friends that have retired and moved to Manhattan. I donāt even want to try and figure out how much money that would require. Others have stopped working but still live in our old town in New Jersey. That also takes a lot of funds, especially when some of them still maintain beach houses on the Jersey shore or elsewhere. Meanwhile, we could remain in place comfortably where we are just outside of Charlotte - mainly because my wife insisted on āMaster downā (Master bedroom on the 1st floor) when we bought our house here 10 years ago (I canāt believe it has been 10 years!) We recently visited friends at a nearby 55+ community and while we were there ran into 2 former neighbors! A move to a place like that would free up 40% - 50% of the equity we have in our current way-too-big-for-us home. A move to a similar 55+ community in Florida (Ocala FL in this example) could free up even more equity and probably lower annual expenses. So, itās all about location and lifestyle.
We recently completed a roadtrip south where we visited many friends with many different lifestyles. Some are fulltime residents of Florida, others only there for the winter. Some in condos, townhomes, even palatial āestates.ā Definitely got us thinking. Maybe next winter we will rent for a month to get a better feel for actually living there.
āMaybe next winter we will rent for a month to get a better feel for actually living there.ā
I think that is a smart thing to do. My folks did that for several years in different parts of FL as well as visiting friends in AZ and decided it wasnāt right for them preferring to stay in snowy New England. It was a good undertaking to help them make a more informed decision.
āBeing frugal does become a habit. Even as our income increased we didnāt change our lifestyle much.ā
I think this is key. People who increase their standard of living as income increases are often the ones who are hurt most when life hits bumps. Especially those who budget based on two incomes. Iām not naive enough to think that everyone can make ends meet on just one income, but helps to try if possible. Iām working on my children to be frugal - with one itās easy, the other not so much although the amount her Roth earned last year impressed the value of investing on her.
My goal for retirement is to downsize homes. I would like to do it soon so that we can get a good feel for what we need to live on.
I think those of us on this thread skew older than the average CC parents.
We are actively looking to downsize but at one level, I donāt see the space requirements as that different. We need a MBR (hopeful 1st floor), a guest room and probably two (if we want to have both kids at the same time) and a home office. Our current house has a full sized LR, full sized DR (we entertain a lot) and a 500 sf room that would probably be called a great room as well as 5 BRs, one quite large. Plus we have a separate 1000 sf art studio building.
Downsizing probably implies ditching one one BR and the LR. Not a huge space saving. I did see a house with fold-down beds that retained visitor sleeping without requiring full rooms.
@scmom12, Iād say our spending has increased steadily over the years but has remained significantly less than our peer group. That has enabled significant saving.
My sonās GF is an immigrant who is beyond frugal ā he has to talk her out of trying to eat food that should have been thrown out a while ago. She works in bus dev for one of the major tech companies, so she isnāt going broke. I think she will be frugal for her whole life. My son in contrast is not frugal item-by-item. Instead, he wants a very simple life ā no things. Why have two pairs of shoes when you can have one? He focuses intensely on academic and career success. If success dictate acquiring any things, he will get them (though hopefully they will appear by GF or parents doing the purchasing). He has been taking the suits and shirts that I wore 20+ years ago ā very high quality because I was working on Wall Street ā for some reason I never threw out.
The other one said to ShawWife: Iām cooking dinner on Valentineās Day for BF. Why spend more money going out on Valentineās Day when the same food is more expensive. BF is taking me out for a fancy dinner the following week instead." ShawWife said, āHave you been talking to your father?ā as she was really channeling me. She said no, but Iām sure my approach has seeped in over time.
Both have inherited my affection for Costco. ShawSonās GF had it before they met.
Most restauranteurs will tell you that Valentineās Day is the very worst day to go out to dinner if you want a good meal. Sounds like your daughter and her boyfriend are smart!
Maybe they donāt have the attention span at this point to set it up, but having a 401k plan is absurdly cheap, for a small company maybe $1000-$1500 per year total. They donāt have to offer a match, and can outsource virtually everything.
Thereās really no excuse for any company to not have one these days, and it would be a serious negative if I was considering employment at a company without one.
Some people say that alternating two (or more) pairs of shoes will have them last longer than an equal number of pairs worn sequentially. Thereās a logic to it. I know it works with running shoes, according to my wife, who keeps accurate mileage records for each pair of shoes when sheās training for a marathon.
Itās also better for your feet to not wear the same shoes constantly. It gives the shoes a chance to breathe and different shoes fit differently as well.
As far as hiring employees for a start-up, I just hope they are hired as real employees not the scam of contractual workers which many start-ups try to pull off.
And leather dress shoes last far longer if allowed to 'breathe" a day or so in between wearings. Let the moisture evaporate.
Coats last longer, too, if you have a couple. 
Mr.'s employer switched to a new 401(k) plan. Just discovered that we have to do some tricks to max out the match! The current match is spread over the entire year worth of paychecks. So if one reaches his contribution max over the first part of the year, he is losing out on the second half of the match.
@BunsenBurner, I lost money for years by not realizing I was contributing too much too early in the year. Now I pay closer attention.
My former employer allowed us to make a one time withholding adjustment for each December paycheck to allow for that sort of thing. Is that something that is common? It came in handy as compensation could vary from year to year depending on the size of bonus payouts.
My DHs former employer matched at each paycheck. As the company became more unstable, we put everything into the 401k. Match and hit the IRS maximum asap during the year. The last year he was employed we had socked away our $50 something by April.
āOur current plan, though quite distant, includes relocating to a state with advantageous tax laws, which should also help.ā - That can work, especially if it is somewhere you want to be. Butā¦ if there are expensive trips home to visit family, it can eat into the savings.
I started my 401k at age 23, thanks to 2 near-retirees that coached the new-hires about need to save early. (At the time, the thought was there would be less SS down the road. In reality, SS is still ok ā¦ but the generous annuity pension switched over to cash accumulations plan. So it is good we saved early and continuously.)