10 commandments of retirement planning

It's never too soon to begin thinking about how you'll fund your life once you leave the workforce. These guidelines can help you get your finances ready.

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Jan 26, 2013 2:48PM
Again there is no investment that will guarantee you 7% return on your investment over 40 years or even 1 year.    More realistic is about 3% net.   Also, how many people work steadily over that period of time to put away the 5 grand?  Not many.   Medical problems come up and there went your savings.    The housing market goes into the toilet and there went your investment in your home.   The best advice is to make all the money you can and try to spend as little as you can.  
Jan 26, 2013 2:41PM
Please show me any investment that guarantees a net 7% return over 40 years or even over one year.  There is no investment that guarantees that.   This article is silly.   Any investment is subject to fees and U.S. and state income taxes.  Even if you put your money into a tax deferred account, you still owe the taxes once you take out the investment.   A net return of 3% is reality.   That would cut it down to about 300 thou ac**** you could invest that 5 grand every year which is itself is not very realistic.
Jan 23, 2013 10:00PM
Funny how so many comments tend to disappear from these sites, even if they are not inflammatory or controversial.  A little selective censorship, huh?  Can't have anything but "feel-good" comments or comments saying what a great article it was.
Jan 23, 2013 1:42PM
The comments sections beneath articles like this are funny, frustrating and sad all at the same time.  You can always count on several people disparaging the advice in these articles as "stupid" or "BS", then revealing their financial situation is in shambles.  Of course, the reason for their situation is always someone else's fault.  
Jan 23, 2013 1:31PM
Nice, but on what planet is there a 7% return that does not involve substantial risks to your principal.  Surely no 7% CD's out there.  More like 1% for 5-10 years at the moment.  And you can do well in the market if you can stomach the big drops that show up pretty regularly every so many years. The concept is on the money, but I think the math is delusional.  Perhaps the authors would be willing to go back and change 7% TO 3.5%. Then it takes longer than you are likely to live to get to $1MM. 
Jan 23, 2013 1:02PM
Jan 23, 2013 12:52PM

It's not that complicated if you are fortunate enough (or deservingly) to exist with the means to set aside savings.  It's simply a matter of planning and common sense.  I am very aware, that there are a lot of people with different cercumstances out there, so apologies - this is not meant to offend:


1. Go to College, and/or please instill this value into your kids!  I am not implying that college graduates are better people, just better prepared.  The statistics are out there, those who get a college degree, on average make more money over the course of their life. (and p.s. an art degree does not provide a career path to a future financial windfall)

2. Do not rely or plan to rely on SS or a pension for you retirement.  You should assume you are on your own when it comes to your retirement finances (and medical insurance).  Everyone knows that nothing is certain when it comes to government assistance.  If those assistance programs happen to be there when the time comes - great, an added bonus to your income.

3.  Do not live beyond your means, and MINIMIZE DEBT.  I admit, this is easier in a dual income household, but holds true regardless.  Everyone wants new shiny toys, but as someone intelligently mentioned below, a 2 year old car is exactly that - a car that is 2 years older than a new one, but with someone else having taken the major hit in depreciation.  Try to keep your mortgage/rent below 25% of your take-home pay.  The mortgage crisis is a perfect example of people owning homes greater than what they could afford.  Not all, but many people lost their homes because theysimply bought too much home, and then complained that it was the bank's fault for lending them so much.  My wife and I are still in our first condo, which we would like nothing more than to move out of, and we bought in 2006 (bleh), but chose to only borrow 1/2 of what banks were willing to lend us for a home.  So when my wife lost her job in 2008 and our home was worth 60% of what we paid for it, we were still able to squeak by on my income alone until she found work.  Just because a bank will lend it, does not mean you will always be able to afford it.  Let your kids take out student loans to pay for college!  Everyone would love to give their kids a great head start financially, but if it comes down to choosing between your retirement and paying for your children's schooling - remember that you get (1) chance to retire, and your kids can always pay off their loans.  I am 33 and still paying of mine, but at least I have the time ahead of me to do it.

4. Save NOW!  Compounded interest is not imaginary.  Regardless of averaging 7%, 5% or 3% interest, the more you invest now, the more you will have later.  I recommend trying to save 8% annually when starting out, and as your income hopefully increases, try work up to 10%.  It is very hard to make up for lost time, and you don't want to be starting your retirement planning at 50.

5. Plan for the worst.  Though I do not disagree with road.rep's statement that your spending may decrease with age (noting that in their scenario, the parent's have a nice pension - which most people will not, and also keep in mind that major medical issues can put a halt to that financial comfort very quickly), why not plan to need 80%???  The worst that can happen is your have too much money when you retire!?!?  I would be just fine having that problem, and if you did not help pay for your children's education, you will at least be able to leave them something when you are gone. 

Jan 23, 2013 12:19PM

If I have a chance to get rid of all my debt I will. I own a condo and If I could sell it and pay off my student loans im home free! I dont mind renting an apartment to save up for another house. I dont carry credit card debt and my auto loan is pretty small. Id rather open a business with low start up costs and work for myself.


401(K)'s are great but not a gaurantee..we see what happened to people's money when the housing crash came tumbling down taking the economy with it. I have learned that if i cannot put 50% down on a home, I probably shouldnt  have it. Housing costs take up most of ones income here in NYC. But this is where the jobs tend to be in my field (accounting/finance).


Savings are great but with inflation you may not get much for your money years from now. Even though you should still save for a rainy day or year.


Kids- The biggest expense next to housing. With daycare and schooling alone you will go broke. New clothes they grow out of and feeding them as teens you will be penny pinching or bargain shopping just to keep up. This is not to say you shouldnt have them but they definitely should be planned!


My advice. Live WELL below your means but not to the point of misery. Save up as much as you can and if you have a skill, capitalize off of it as supplemental income. If you enjoy it enough, grow your own business (responsibly that is) while keeping your main source of income until you are successful enough to sustain a living without another job!


Lastly be HAPPY with whatever you do. I learned making lots of money being miserable at my job is not what I want. Id rather make decent money loving what I do! Retirement should be planned but its not gauranteed. Neither is life. Be responsible but remember tomorrow isnt promised but most likely will come.

Jan 23, 2013 11:58AM

My solution to retirement is "TO DIE BEFORE MY MONEY RUNS OUT" !!! :~))

PS have a sense of humor!

Jan 23, 2013 11:42AM
Going from secetarial single mom at around $30,000/yr to a Grants Administrator at $75,000/yr in about 35 years; I have to say the golden rule has been save 10%, give 10% and live on the remaining without the use of credit cards.  You know you have to make certain payments monthly/yearly such as car/house, health insuance and car insurance so put money aside for that.  In addition, if you have additional expenses such as weddings; special occassions coming up at a certain time, yes again, put money aside for that.  Buy used items when ever you can and EAT at home and TAKE LUNCH to work.  I probably will not retire with all the frills and travel the world (don't want to anyway); but I will have enough to be independent and self-sufficient with NO GOVERNMENT HAND-OUTS.  You don't need all that STUFF cluttering up your life and neither do your children.  It's time to "get-back" to WORKING" for a living and stop all this free-loading on the taxpayers!!
Jan 23, 2013 11:41AM

 Uncle Sam wants your retirement! Retirement is of an ancient civilization that lasted about fifty years, welcome to the New, new world order!

Jan 23, 2013 11:36AM
Jan 23, 2013 11:35AM
The more important one."Do not put cash in any saving or bank" (put it under your bed or waste it).Soon the Obama's will appropriate every bank .That's the Socialist-Communist Government  do it all the time when they need more to spend..........
Jan 23, 2013 11:26AM

Divorce, Job Loss, Medical, Student Loans, Disability by act of God, Family disaster.  I know most financial advisors preach this garbage listed in the article. I've been in this business for 30 years and maybe this article applies to 10% of the population, if that. The industry of Financial Investing and advising is a racket and the only way they make money is for you to play their game of in and out, in and out of financial products, or you're in products with high annual fees they benefit from. They need to put food on the table so their motivation is opposite of yours....


And another thing. Financial advisors continue to tell young people to take high risk. The truth is, the younger people with much more time should take less risk and they will come out far, far ahead versus the roller coaster and loosing big like the lost decade of 2000 to 2010.


Jan 23, 2013 10:55AM
And if I've worked since I turned 16 and am 60 now working for $10.00 / hour, what are your suggestions?  By the way, Wal-Mart got rid of their door greeters !
Jan 23, 2013 10:44AM

I have what I think is a pretty good job.  My debt is not out of hand.  I still live paycheck to paycheck. Some months I have to decide weather to buy gas or food.  How can I save for retirement?

I have resigned myself to working as long as I can get out of bed. 

Jan 23, 2013 10:42AM
Commandment #1 :  
 Thou shall not trust ANY investment firm or  financial advisor to look out for your welfare over theirs! 

Commandment #2: 
 Thou shall NOT trust the government with any of your savings,because they will figure a way to steal it, with false promises and inflation.

Commandment #3:
 Thou shall NOT listen to all the noise about "retiring" at any specific age. Every person is different,and it is an individuals decision to be made,based on ones lifestyle and needs.

Commandment #4:  
 Buy some physical gold. In 5 years you will thank me. In 10 years,you will thank God.
Commandment #5:
  Always remember what you read,see and hear is not always the whole truth,which use to be called lying,but is now politically acceptable as news.
Jan 23, 2013 10:31AM
Jan 23, 2013 9:33AM
i use a basic percentage rule: save 10% of salary each year no matter the salary; only use credit to buy homes or used auto; never carry credit card debt; 15% home mortgage; take care of your health along the way.  i practice medicine for a living and see more people in poor health than in poor finances.  retirement can be managed alot of ways but not if you have poor health.
Jan 23, 2013 7:26AM
Please provide directions to the planet where I can average a 7% rate of return. What a crock of BS.
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