Retirement Funds

[dovy2]

i thought a good strategy would be to FIRST save up for a "simcha", down payment & rainy day funds BEFORE contributing to retirement accounts, assuming no employee match, as any monies would be locked up till retirement.

what i mean by simcha fund is enough money to cover every bris, bar mitzvah, vort, wedding, sheva berachos and support for my kids. obviously depending on family size and how much you spend, this fund goal can easily be $500k plus.

am i wrong? what's recommended?  i would love to max out retirement accounts (incl 529) and make significant contributions to my simcha fund, but its not realistic.

Depends where your saving the simcha money. If your keeping it under your mattress or in a standard bank account, you mind as well max out a Roth IRA each year, and take out the principle (penalty, tax free) when ever the simcha comes up

[Fish Tank]

Don't think anyone would advocate borrowing money to invest in 401k

You misunderstood. I said invest today in a 401k, and then if/when you need money for a simcha, take out a loan against your 401k.

[Fish Tank]

Bottom line don't retire its many times the worst decision to make

What?

A) Retirement isn't always voluntary.
B) Saving for retirement doesn't have anything to do with retiring
C) Many times it's the best decision, so what about those scenarios?

[ExGingi]

What?

A) Retirement isn't always voluntary.
B) Saving for retirement doesn't have anything to do with retiring
C) Many times it's the best decision, so what about those scenarios?

I would suggest that A and B (and possibly C) deserve to all be lumped together into "one should be saving X% of their income for future emergencies and opportunities".

The fact that the US tax code gives some favorable tax treatment to certain account structures, and to certain investment and savings vehicles, should be used strategically (as long as the time and effort involved in planning and implementing the strategy makes economic sense).

[gozalim]

I would suggest that A and B (and possibly C) deserve to all be lumped together into "one should be saving X% of their income for future emergencies and opportunities".

The fact that the US tax code gives some favorable tax treatment to certain account structures, and to certain investment and savings vehicles, should be used strategically (as long as the time and effort involved in planning and implementing the strategy makes economic sense).

welcome to the ExGingi school of finance

[ushdadude]

You misunderstood. I said invest today in a 401k, and then if/when you need money for a simcha, take out a loan against your 401k.

Borrowing for a simcha fits this bill?

Borrowing can be used to your advantage in a massive way, and it can also crush you if not used right.

You pointed out that it's risky to borrow money. You neglected to also point that it can have tremendous advantages. Therefore I posted that isn't the DR thread where in his world the word "borrow" is always followed by "very risky" and never by "biggest opportunity".

[CountValentine]

Bottom line don't retire its many times the worst decision to make

Everyone I know it is the best decision they ever made. One neighbor retired a couple years ago at the age of 53. My other neighbor just retired last week at the age of 51. Trying to get the neighbor across the street to retire and he is 55. Best advice I can give is retire as early as you can.

[Fish Tank]

Borrowing for a simcha fits this bill?

Please read through the thread - you aren't following the conversation.
Pulling things out of context doesn't do any good.

I'll summarize for you:
@Kobe Bryant posted that borrowing is risky. I responded that borrowing money is also a very powerful resource of funds if used correctly. I said that if you want to post that borrowing is risky , you also need to post that it has advantages, otherwise we can go to the DR thread where borrowing is always a risk and never an advantage.

Regarding your question - The premise of borrowing for a simcha was a reply to @Cat18 who was contemplating investing $500k in a Simcha fund, vs. investing in 401k. I proposed that he save the money in a 401k and then if/when needed, he can borrow against his 401k for the simcha, and then repay the loan using his future income that would otherwise fund the 401k.

[Fish Tank]

Everyone I know it is the best decision they ever made. One neighbor retired a couple years ago at the age of 53. My other neighbor just retired last week at the age of 51. Trying to get the neighbor across the street to retire and he is 55. Best advice I can give is retire as early as you can.

Cool. What was their strategy?

[CountValentine]

Cool. What was their strategy?

They are/were all blue collar workers with excellent pensions. Two bread earners and they saved. One of them did invest in condos. Two have four kids and the other has 2 kids.

[Sammy82]

Cool. What was their strategy?

Likely only 1 or 2 children and public school. At least that's a good start.

[CountValentine]

Likely only 1 or 2 children and public school. At least that's a good start.

Four kids here and Catholic school K-8 and then a mix (their choice) for high school. 3 went to college and one trade school. Retired at 62 and should have went sooner (thinking 59).

[ushdadude]

Please read through the thread - you aren't following the conversation.
Pulling things out of context doesn't do any good.

I'll summarize for you:
@Kobe Bryant posted that borrowing is risky. I responded that borrowing money is also a very powerful resource of funds if used correctly. I said that if you want to post that borrowing is risky , you also need to post that it has advantages, otherwise we can go to the DR thread where borrowing is always a risk and never an advantage.

Regarding your question - The premise of borrowing for a simcha was a reply to @Cat18 who was contemplating investing $500k in a Simcha fund, vs. investing in 401k. I proposed that he save the money in a 401k and then if/when needed, he can borrow against his 401k for the simcha, and then repay the loan using his future income that would otherwise fund the 401k.

Got it. there is actually some good info in your snarky responses.

[ushdadude]

They are/were all blue collar workers with excellent pensions. Two bread earners and they saved. One of them did invest in condos. Two have four kids and the other has 2 kids.

Key words.
being able to retire is like losing weight. the theory is easy but it's hard to implement.

[CountValentine]

being able to retire is like losing weight. the theory is easy but it's hard to implement.

The hardest part is for patents to get their kids to understand how important it is to save early. My youngest that got married last year, is expecting the end of this year and has already bought a house  There is no reason they can't retire in their early 50's.

[Fish Tank]

Got it. there is actually some good info in your snarky responses.

Apologize for being snarky. Was unintentional.

[Fish Tank]

The hardest part is for patents to get their kids to understand how important it is to save early. My youngest that got married last year, is expecting the end of this year and has already bought a house  There is no reason they can't retire in their early 50's.

.... If only they taught financial education in school as part of the curriculum.

[ushdadude]

The hardest part is for patents to get their kids to understand how important it is to save early. My youngest that got married last year, is expecting the end of this year and has already bought a house  There is no reason they can't retire in their early 50's.

Did you make your kids put their babysitting money into a roth IRA?

[CountValentine]

.... If only they taught financial education in school as part of the curriculum.

True but aren't parents the best teachers?

[Fish Tank]

True but aren't parents the best teachers?

No. You homeschool your kids?