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HomeOff Topics › Roth IRAs and retirement a lie?
06-07-2018 07:31 PM  11 days agoPost 1
RM3

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Killeen, Texas - USA

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So been watching alot of videos and reading on the internet about retirement strategies...

And something simply isnt adding up. Many claim that if you maxed out contributions every year on a Roth IRA starting from age 18 ( yeah right ) by the time you retire at age 65 ( again likely BS ) you'll have 1.2 to 1.4 million dollars in "todays money"... even AFTER accounting for inflation of say 2%

Doing the Kentucky windage Math, 1.2 million today will likely only keep you comfortable for about 15 years if you still pay rent for a nice part in the US (low crime, nice weather, good doctors), still buy a car every now and then and dont have any significant health expenses.

The crappy part is that inflation based on current history if you include both cost of living and health expenses is more like 8% or more... rendering the value of the Roth IRA to more like $500k in "todays dollars".

Why are these so called retirement "experts" lying to us?

showing a preference will only get you into trouble, 90% of everything is crap...

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06-07-2018 08:17 PM  11 days agoPost 2
spaceman spiff

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Tucson

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If inflation averages 2 percent and an investment averages 7 to 9% (I am at only 13% this year because I made a huge mistake ) ....

Run the numbers for yourself.

https://www.bankrate.com/calculator...calculator.aspx

I can retire today at 57 years old. All it takes is 100$ a month and 40 or 50 years. Our highschool math teachers were not kidding.

I use a 401K and just a regular e-trade account. There are advantages in having a few different types of buckets.

In my case if I retire today I live off of checking account and e trade. let the 401K ride so there are no early withdraw penalties, Pay almost no taxes because I am sitting in cash and the taxes already have been payed. House is paid off, no debts, I pay some amount for health insurance, but only until full retirement age when Medicare that I have already paid for kicks in. if I could have invested all the money I dumped into the idotic Social Security system shoebox, wow, that would have been awesome.

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06-07-2018 08:57 PM  11 days agoPost 3
Chuck Bole

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Tulsa Ok. U.S.A.

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Retire?

Team Synergy Field Representative / Thunder Power

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06-07-2018 09:49 PM  11 days agoPost 4
RM3

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Killeen, Texas - USA

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Chuck Bole
Retire?
yeah what was I thinking... Im sure the rising cost of healthcare, the end of SS, and the inevitable rise in the cost of living will render most retirement plans null and void. Right now I think my best bet is work till I die.

showing a preference will only get you into trouble, 90% of everything is crap...

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06-07-2018 10:13 PM  11 days agoPost 5
spaceman spiff

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Tucson

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Two of my best friends retired at 55. They hit a million around 20 years ago and decided that was enough. It was enough even thru the great recession.

It is a shame they don't teach anything about Kentucky Windage or how to use a "y" shaped twig to find water in high schools or Universities.

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06-07-2018 10:20 PM  11 days agoPost 6
ticedoff8

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Morgan Hill, CA. USA

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There are too many holes in your statement.
Factors like:
How much is the contribution starting at 18?
How much does the 18 year old earn and what is the rate of pay increase over then next 40 years?
Did the 18yo actually start contributing when they were actually 40 and the invested the maximum "catch-up" rate to their Roth IRA or 401k?

With around 500k in a retirement savings and retiring at 65 (with the higher rate of SS), you may be close to 60k / year income.

What can you do with that?
It depends on how well prepared you are.

Believe 1/2 of what you see and none of what you hear.
Fake News will be the downfall of our Republic!

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06-07-2018 11:02 PM  10 days agoPost 7
spaceman spiff

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Tucson

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It depends on how well prepared you are.
Exactly. Start early is a big part, and there are many paths to being prepared. I invested time in school, and invested money for the future. That works for a lot of folks, just takes a little discipline. If I had a time machine I would go back to 1974 when I was a paperboy. instead of spending my money on candy movies and bowling, I would buy stocks. Berkshire Hathaway was going for 40$ a share, the same share is worth more than 200,000 last time I checked. Jusy 200$ invested in 1974 makes you a millionaire now even if you do nothing else.

My old boss made a ton of money, most of it did not come from the company he built. He invested in different ways, including buying properties, houses, stores, he especially liked the commercial properties,,, rents them out. He liked that because he wasn't even investing his own money. Borrow from the bank, then let the renter pay it off... the monetary system can go to heck and he still owns property, and a lot of it...

I had this conversation with a young guy at the pub a couple weeks ago. He likes the idea of investing, but like most young folks thinks he cant afford to. Never mind that he downed 40$ of tequila while we talked...

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06-08-2018 07:33 AM  10 days agoPost 8
spaceman spiff

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Tucson

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Many claim that if you maxed out contributions every year on a Roth IRA starting from age 18 ( yeah right ) by the time you retire at age 65 ( again likely BS ) you'll have 1.2 to 1.4 million dollars in "todays money"... even AFTER accounting for inflation of say 2%!
When the program started, Roths were limited to 2000$ contributions a year. Now you can put in 5500 or 6500$ per year. (under 50/older than 50 year old) , so a kid (starting now) potentially ends up just under 4.5 million at retirement assuming average 9% from a fund, and 2.9% inflation and he stays at the lower 5500 per year contribution rate.

Or he could just ignore it all, and get his measly 1400$ a month from Social security if it survives that long. Illuninati, wheels within wheels... its all stacked against the regular guy... rotten futmuckers are everywhere stepping on people's grass! So there is no reason to try for more than bare bones Social Security...

An important point to keep in mind about stock funds is you own shares not money. The value of those shares is based on property values, outstanding debts, and sales numbers.... If during some period of time you have an unusual jump in inflation, the value of a dollar will drop, but real value of the stock may still be going up. (it has been doing that more or less continuosly for more than 100 years) The debt burden of that company drops because they are paying it back with devalued green backs, the prices they charge go up, and the stock price likely goes up too.

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