J Money over at Budgets Are Sexy urges that you ignore all financial advisors and business marketing regarding how much you need to retire that don’t factor in spending. After all, each of us is unique with different needs and wants. To derive the magic number you need to retire, you should calculate it based on your spending. “At the end of the day it all comes down to your expenses. And without knowing that no one can tell you how much you’ll need to hang up the job when it’s time.” (budgetsaresexy.com)
From an interview with the Bill Fold, Alan Lastufka describes how he started out with $30,000 in debt at 25. After selling his share of the business, he was able to retire at 32. At the low point Alan stopped paying his student loans. His life turned around when he learned to manage his personal finance that set him on course toward early retirement. After selling his company in 2014, he paid off his mortgage in full. Without any debts he keeps his living expenses low, about $25,000 per year. Now that the dividend payouts from his investment portfolio total over $36,00 per year, Andy is able to retire at 32. (thebillfold.com)
Rob shares his story on madFIentist about how he and his wife with 13 kids will be able to retire in 13 years. Rob is trying to achieve financial independence on a single income while raising all those kids. Rob is 49 and his wife is 46 with 13 kids ages 2 to 24. They have always been frugal and pay of all debts except the mortgage. Food is their biggest monthly expense, and they mainly shop at Aldi to minimize the expenses. Beside his main job, Rob also mows lawn during the summer to fill up their IRAs. Overall, he has been able to save 35% on a single income. Good luck to Rob and his family on their way toward financial independence. (madfientist.com)
The early-retirement movement is getting popular as more people are exposed to the concept of reaching financial independence as soon as possible. Thomas Smale wrote on Entrepreneur, “those in the early-retirement movement do share one common trait: They typically adopt a contrarian mindset that produces a fascinating lifestyle, spending, and retirement planning insights.” Here are 5 lessons from people who retired at 40:
- They understand the math of financial independence
- They spend less, but are just as happy
- They invest early and over decades, not years
- They avoid high investment fees
- They buy cash-flowing assets
David Danon, a former Vanguard tax lawyer, says in whistle-blower claim that Vanguard could owe billions of dollars in taxes on uncollected revenue. The lawsuit is just crazy as millions of shareholders could end up paying somewhat higher fees if Mr. Danon wins in court against Vanguard. Since Vanguard’s funds are owned by its shareholders, Vanguard’s overall fees are the lowest in the industry. While not taking in more profits are good for investors, Vanguard runs into a peculiar tax challenge. The New York Times shows Mr. Danon’s reason: “Because the Vanguard Group was set up as a C corporation, and not a partnership, it has potential tax liabilities, even if it does not actually earn a profit. And because it is owned by its mutual funds, for tax purposes, it is required to account for the profits that it could have earned if it had charged the higher fees that the marketplace would have borne.” While Mr. Danon is waiting for a big pay day to collect up to 30% Vanguard’s penalty, a New York judge dismissed Mr. Danon’s suit in November. For now there’s no reason for Vanguard shareholders to transfer their money to another company. (nytimes.com)
After analyzing all 50 states and the District of Columbia, Kiplinger has an answer for which state is the worst for retirement when it comes to Taxes. Vermont gets the unenviable prize as the worst state for retirement with high property tax, 6% sales tax, high income tax rate and estate tax. Also, most forms of retirement income are taxed. (kiplinger.com)
More than 50% of those ages 18 to 34 have less than $1,000 in savings and 62% of all Americans have less than $1,000 saved. No doubt the Millennial generation is falling behind. However, with a long investing horizon, they can get their saving into shape. USA Today points out 7 ways Millennials can get a jump-start on retirement planning:
- Pay yourself first
- Put your money to work
- Get every penny of your 401(k) match
- Consider a Roth IRA
- Keep investments simple
- Think beyond savings
- Be wary of advice from peers or parents
According to an interview for PBS television’s Frontline, over 900 people in any given 1,000 person retirement plan will retire in poverty or run out of money before death. The average 65-year-old retiree can expect to have two more decades ahead in retirement. Daily Finance show you 5 retirement planning mistakes and how to fix them.
- Mistake: Focusing solely on your rate of return. Solution: Create a diversified portfolio.
- Mistake: Forgetting about taxes. Solution: Have a tax plan for investments and assets.
- Mistake: Thinking the start of retirement marks the end of planning. Solution: Review finances and goals every year.
- Mistake: Saving too little. Solution: Start now and automatically increase contributions with every raise and bonus.
- Mistake: Saving too late. Solution: Stay in the workforce or look for guaranteed income streams.
Retirement planning is one of the most important financial goals you’ll undertake. Don’t make the mistake of not taking retirement planning seriously enough. (dailyfinance.com)
A survey from Bankrate.com found out that over one-third of American’s don’t have a penny saved for retirement, including more than a quarter of those ages 50 to 64. As you already know the best way to stay on track for a comfortable retirement is to start saving early. But If you’re late on the retirement saving, fear not. USA Today has an article to help you back on track. Here’s 5 simple ways to catch up on your retirement savings:
- Focus on debt
- Max out tax-deferred accounts
- Reduce advisory fees
- Work longer
- Don’t fall for shortcuts.
The Globe and Mail just did an interview with Mr. Money Moustache detailing his approach on how to retire at age 30. Here’s an excerpt: “But even better, choose your career and employer (and gradually build up your own business) in such a way that you can live somewhere beautiful that is affordable. With good Internet access, you can pull in a six-figure salary while living in some seaside haven in Nova Scotia where the houses might cost 80 per cent less. Or you can do what I did and choose any other country in the world, figure out the immigration rules and expand your life to include this great new location. Living in Colorado where it is always sunny and I can ride my mountain bike on red rock trails in the middle of January, we also come to Canada and spend every summer there with family and friends. This was well worth the hassle of getting a degree in a portable field, deciphering a few government forms and going to some job interviews.”
Peter Adeney, the man behind Mr. Money Mustache, actually earns around $400,000 a year on his blog. His blog Mr. Money Mustache is currently one of the top blogs on the list of Top Personal Finance Blogs. Now that he’s retired with more money his family ever needs, Mr. Money Mustache plans to donate to money to worthy charity.