Tuesday, February 28, 2012

living to 100 needs an extra $3.5 million

Just read this article in yahoo Finance that says living to 100 needs about $3.5 million.

The average American who lives to the ripe old age of 100 will spend $3.5 million in his or her lifetime, according to an analysis of data from the Bureau of Labor Statistics. A good chunk of that bill, more than $1.5 million, will have been racked by your 50th birthday. The next 30 or so years -- the average 50-year-old today can expect to live until 81 -- will run another $1.4 million. And the lucky few who make it to 100 will need an additional $630,000. Experts say these high costs of living often come as a shock to retirees, many of whom expect to dramatically cut back on their living expenses as they get older and stick to a fixed budget. "A lot of time people actually end up spending more money in retirement than they may have spent when they were working," says Heidi Schmidt, a wealth manager in Dallas with USAA.
So $1.5million at age 50, 1.4 million for the next 30 years, and another $630k for next 20 years if you are so lucky as to live to 100.

We're currently spending on average $4000 a month which means $48k/year.  If we continue living at this rate, we will spend $720k for the next 15 years until we are 50.

How much should we save for retirement?  We will probably not have a house cost ($1500/month savings), our food bill should be lower ($100-200/month lower), and our utilities should be lower ($100/month). So just with those savings, our current $4000 expense could be nearly halved.  Around $2k/month or $24k/year.  If we live out a modest lifestyle for the remainder of our lives and hopefully relatively little medical expenses cuz we are taking care of ourselves, the next 30 years would cost about another $720k.

So if I have a minimum retirement amount it would be around $720k, although I'm hoping to have enough investments set up that I won't have to worry about retirement.  In any case, if it does  run out sooner,  I have family to fall back on.   God will provide, even in retirement.

How much are you saving for retirement? What is your goal?

Friday, February 24, 2012

Regrets. Values. and Life.

What are your values? Last night after bible study, I asked a friend, what were your regrets in your 20's? Since we are nearing mid-late 30s, this was a very relevant question plus there were younger people that can learn from our mistakes.

I thought about what I could have done differently, probably be more patient with investing, probably chosen a different major (more related to business/finance), probably been smarter about dating/marriage, probably bought a house sooner, but even as I went through all those choices I could have done... I knew I wouldn't have done them any sooner or different because I just didn't have the foreknowledge.

I did most of those things thinking I was doing the right thing AT THE TIME. How do you plan for something? I learned a lot through the mistakes and I think those mistakes are probably the best teacher I will ever have.

I could have stayed in teaching, but I took a path that paid a lot more. I could have started my graduate school earlier, instead of struggling now with a wife, two kids (a third one coming), house payments, a job, etc. But hindsight is definitely 20/20.

What will I tell the next generation? Probably figure out what your values are. Do you want to have financial security? Do you want to pursue a particular field? Do you want freedom to travel? Do you want a family? Whatever you decide on a macro-level, you can then adjust your life to fit it, whether it is through large scale job change, or small scale volunteering, networking, part-time gigs, whatever. I don't know the secret to anything, I do know that if you don't try, you won't change.

Your career, your life is not a comparison to the world. You will fail and succeed in life, whether you try or not. You will look dumb or stupid compared to some people and you will look like a hotshot compared to others. But you do not live your life comparing yourself to what some other person in their mid to late 30s. No. You compare yourself 5, 10, 15 years ago to your present. You see what you have accomplished, you see what areas you have grown in... but you also see those areas you want to improve and are still weak. Those are the areas you should work on. This requires failing. This requires trying over and over and practicing over and over again. For this is the only way to grow.

If you stick only to the tried and true, you won't grow. The tried and true works for you because you know this system and you will grow complacent in this system. Same with your fitness workouts. You need muscle confusion. Same with your life. You need body confusion, spirit confusion... in order to grow in your life.

Probably my dumbest career move was quit a nice paying engineering gig to spend two years in China.  My dad said it was dumb, I couldn't find any work after I got back to the states.  I loafed around for another 3-4 years before landing my current job.  But in terms of personal growth, it was the most I had grown in a long time.  I traveled the world, I spoke another language, I met interesting people, I found out who I was and who I wasn't, started figuring out what I valued and what I don't value.
So. What do you value? Let that be your guide to more intense growth.

Tuesday, February 7, 2012

Net Worth (Jan 2012)

It's been a great start to 2012.  Everything seems to be up.  We'll see what happens when the elections are nearer.

Credit cards are at an extremely high (at least for us) due to tuition costs and various other expenses in January.  Property values have gone down actually due to a couple foreclosures in our neighborhood.  We even considered purchasing one, but owning a rental didn't make any sense... at least at the moment.

In any case, I started a Car fund in mint.  We reached our goal for $15k savings which is good for us.  My TSP is around $71k which is a new high for us as well, breaking the 70k mark.  Alrighty, making up for last year's losses... My two gambles of the year, buying call options for NFLX and CSTR... both of which has soared because of good earnings numbers, unfortunately I sold them right before they soared.  So I'm kinda sore right now.

In any case, leaving money on the table seems to be my recurring habit of the new year.