Sunday, February 02, 2014

Shy and Retiring

Once more into the "saving for retirement" type post.

... To be assured of having enough money to fund a comfortable retirement, you should save a total of 22 times the annual income you want to earn when you retire. That is higher than many previous estimates, but it offers near-certainty of hitting your target.

For instance, if you want $100,000 in annual income (not counting Social Security), then your magic number is $2.2 million in total retirement savings. You can hit that magic number if you are prudent and willing to save money like mad.

Think of yourself as the sponsor of a traditional “defined benefit” corporate pension plan that sets enough money aside to guarantee a steady monthly income to retired workers for the rest of their lives. Then recognize that the only beneficiary of that pension plan is you.

That is the framework proposed in a recent article in the Financial Analysts Journal by Stephen Sexauer, chief investment officer for U.S. multiasset management at AllianzALV.XE -0.92% Global Investors in New York, and Laurence Siegel, who heads the CFA Institute Research Foundation, a financial think tank in Charlottesville, Va. They call it “the personal pension plan.” ...

I think this is a tad on the optimistic side, but I've known folks who got started late and managed to put together a sizable portfolio and a monthly benefit from the Motion Picture Industry Pension Plan, so it can be done. And how exactly?

1) MPI Defined Benefit Plan

2) MPI Individual Account Plan

3) TAG 401(k) Plan

4) Roth IRA

5) Investment Accounts

I spent years doing things wrong. I pissed money away on the frivolities of youth; I got boned by "financial advisors"; I worked in low-paying, dead-end jobs. It wasn't until I was past forty that I was able to tuck consistent money away, and I finally got serious about it.

So here's my advice to anyone reading this:

1) Stash 10% of what you earn into a 401(k) or investment account. 2) Put the money into low-cost mutual funds that cover all or a large part of the equities markets. (Use an automatic deposit that comes out of your checking account, if that's convenient.) 3) Look at the investments' totals once every 36 months.

The more you can put cash in on a regular basis, and the less you actually think about the money and the funds those dollars are going into, the better off you'll be. After twenty years, you'll have a sizable stash, and you'll have done most or all of the whole thing on autopilot.

And yes, I'm holding more 401(k) enrollment meetings next week.

401(k) Enrollment Meetings

TUESDAY Feb 4th -- Cartoon Network - Main Conference Room - 2 p.m.

WEDNESDAY Feb 5th -- Warner Bros. Animation - Main Conf. Rm 107 - Bldg 34R - 2 p.m.

THURSDAY Feb 6th -- Sony Pictures Anim. - North - Rm 2050 -- 2 p.m.


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