4 ms·

Mid 30s my self, I have cash in the bank of more than a year's worth of my current salary BUT, zero saved for retirement. I do not own a home, but expect to co

Mid 30s my self, I have cash in the bank of more than a year's worth of my current salary BUT, zero saved for retirement. I do not own a home, but expect to convert most of that liquid savings if the opportunity does arise. I do not make enough to qualify for owing a home in the area I live. I also don't anticipate growth in the markets long term over the period of my life to retirement; I fully expect the unfinished recession will need to show a bug ugly period again with an ACTUAL market correction and I foolishly hope we'll finally stop chasing bubbles after that because it will be politically untenable to not FULLY socialize retirement and (at least basic) health-care costs.

close04 8y ago
> I have cash in the bank of more than a year's worth of my current salary BUT, zero saved for retirement Just out of curiosity, what's the difference between money in the bank and money for retirement? Should the retirement money go into a dedicated (investment? pension?) fund? Can't they be your savings that you manage by yourself? I'm asking since I was raised with a different background with pension in Europe being a very different concept from the US.
- blang 8y ago
  I imagine they mean not in a retirement account that has restrictions (penalties for drawing money out early) but also has tax benefits
  - mjevans 8y ago
    Precisely that, as far as I am aware* (and I am not a financial adviser) the tax code in the US does not understand a mostly or easily liquid account that will only be touched for major life "investments" (such as a house) or during 'crisis' such as medical or employment hardships.
    - rryyan 8y ago
      IRAs do have exceptions to the early-withdrawal penalty for just the sort of reasons you note: https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-tax-on-early-distributions https://www.irs.gov/retirement-plans/plan-participant-employ...
      - mjevans 8y ago
        With limitations on the contributions at once and also on the withdrawal (first time home buyers (semi-ok), 10K USD limit - you call that a down-payment?)... Yeah this is just some silliness and I don't understand why there are so many different types of vehicles. It seems like there should be a given list of things that are OK for any tax exempt or deferred use, and I don't see why artificially limiting the case of that use is a good thing for society. The exception should be based around one of two concepts. Either "investing" pre-tax, and being taxed when pulling from the pool, or post-tax and being allowed to spend for allowed uses without any tax. Any profits should be forced to go back in to the same type of pool. Given the fact that taxes are assessed at some point, transferring (at current taxes) from the not-yet-taxed pool type to the already-taxed type should be allowed.
- bluGill 8y ago
  Risk/rewards. Banks implies low risk investments that also have low reward. You need some of this as emergency backup - if a big bill comes in. (Big bill could be unexpected like a job loss where you have to buy food from savings, or could expected like where you are putting a little extra away for a vacation) Investment/retirement implies long time, you can afford to take a large risk because the reward is worth it long term. Stocks historically average 10% any 20 year time, but in that 20 years there are some years where they drop 20%. It works out in the long run, but you better not have near term savings in there because you can't know for sure that your money will be there.
jarsin 8y ago
If the market does crash the way you think it will you can make a killing betting that it will crash. I almost bought a bunch of puts during the last recession but did not pull the trigger cause i did not know enough then.
- mjevans 8y ago
  Only if I predict the timing exactly right. I don't trust my self to do that.
  - jarsin 8y ago
    I admit if you want to get mega rich you need timing and a big risky bet, but during the last recession there was a decent period of time when the writing was on the wall and there was plenty of time to get into profitable short positions. I very clearly remember oil being very high even after lehman collapsed etc. If i remember correctly you had 6 months before the crash.
    - vagab0nd 8y ago
      Would you consider the writing to be on the wall today?
      - jarsin 8y ago
        No not even close to like it was back then. Literally every major media story was in total panic (not just the financial websites). Layoffs at almost every company were already taking place. Massive banks were on the brink of failure and still there were plenty of short opportunities in the market. I quickly looked at the oil chart and looks like oil was still above $100 when lehman failed. It dropped way down to like 20's.

close04 8y ago

> I have cash in the bank of more than a year's worth of my current salary BUT, zero saved for retirement Just out of curiosity, what's the difference between money in the bank and money for retirement? Should the retirement money go into a dedicated (investment? pension?) fund? Can't they be your savings that you manage by yourself? I'm asking since I was raised with a different background with pension in Europe being a very different concept from the US.

blang 8y ago
I imagine they mean not in a retirement account that has restrictions (penalties for drawing money out early) but also has tax benefits
- mjevans 8y ago
  Precisely that, as far as I am aware* (and I am not a financial adviser) the tax code in the US does not understand a mostly or easily liquid account that will only be touched for major life "investments" (such as a house) or during 'crisis' such as medical or employment hardships.
  - rryyan 8y ago
    IRAs do have exceptions to the early-withdrawal penalty for just the sort of reasons you note: https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-tax-on-early-distributions https://www.irs.gov/retirement-plans/plan-participant-employ...
    - mjevans 8y ago
      With limitations on the contributions at once and also on the withdrawal (first time home buyers (semi-ok), 10K USD limit - you call that a down-payment?)... Yeah this is just some silliness and I don't understand why there are so many different types of vehicles. It seems like there should be a given list of things that are OK for any tax exempt or deferred use, and I don't see why artificially limiting the case of that use is a good thing for society. The exception should be based around one of two concepts. Either "investing" pre-tax, and being taxed when pulling from the pool, or post-tax and being allowed to spend for allowed uses without any tax. Any profits should be forced to go back in to the same type of pool. Given the fact that taxes are assessed at some point, transferring (at current taxes) from the not-yet-taxed pool type to the already-taxed type should be allowed.
bluGill 8y ago
Risk/rewards. Banks implies low risk investments that also have low reward. You need some of this as emergency backup - if a big bill comes in. (Big bill could be unexpected like a job loss where you have to buy food from savings, or could expected like where you are putting a little extra away for a vacation) Investment/retirement implies long time, you can afford to take a large risk because the reward is worth it long term. Stocks historically average 10% any 20 year time, but in that 20 years there are some years where they drop 20%. It works out in the long run, but you better not have near term savings in there because you can't know for sure that your money will be there.

jarsin 8y ago

If the market does crash the way you think it will you can make a killing betting that it will crash. I almost bought a bunch of puts during the last recession but did not pull the trigger cause i did not know enough then.

mjevans 8y ago
Only if I predict the timing exactly right. I don't trust my self to do that.
- jarsin 8y ago
  I admit if you want to get mega rich you need timing and a big risky bet, but during the last recession there was a decent period of time when the writing was on the wall and there was plenty of time to get into profitable short positions. I very clearly remember oil being very high even after lehman collapsed etc. If i remember correctly you had 6 months before the crash.
  - vagab0nd 8y ago
    Would you consider the writing to be on the wall today?
    - jarsin 8y ago
      No not even close to like it was back then. Literally every major media story was in total panic (not just the financial websites). Layoffs at almost every company were already taking place. Massive banks were on the brink of failure and still there were plenty of short opportunities in the market. I quickly looked at the oil chart and looks like oil was still above $100 when lehman failed. It dropped way down to like 20's.