Financial Goal Question

[Supersetoy]

I know I should probably contact a financial advisor about this...but my goal is to retire by the age of 40. It's going to be tough to accomplish, but I feel like it is attainable.

I just recently turned 23, and every month I have an extra $1500-$1800 to do whatever I want with (this is after bills and putting away 15% to my 401K). I plan on marrying my current girlfriend within the next year and a half, and that number will more than likely raise to $2000-$2500.

What should I do to accomplish my goal? Any comments/ideas are welcome.

[Pocket Trips]

if you want I can hook you up with a very good CFP.. just PM me

[samjjones]

If you want to retire at 40, stay single. Otherwise, with wife and kids/s, it becomes very, very difficult.

[wh1t3bread]

[ QUOTE ]
I plan on marrying my current girlfriend within the next year and a half, and that number will more than likely raise to $2000-$2500.


[/ QUOTE ]

This thinking is flawed.

Anyway. Open up a Roth-IRA in addition to your 401k. Other than that I don't really know what to do. 17 years is not really a lot of time to make the 3-4 million that you will need to retire on. So some high risk / high reward investments are what you are going to need. I would contact a financial advisor.

[jakethebake]

[ QUOTE ]
[ QUOTE ]
I plan on marrying my current girlfriend within the next year and a half, and that number will more than likely raise to $2000-$2500.


[/ QUOTE ]

This thinking is flawed.

[/ QUOTE ]

HaHaHa...Seriously flawed.

[Patrick del Poker Grande]

[ QUOTE ]
I plan on marrying my current girlfriend within the next year and a half, and that number will more than likely plummet to -$64863218673446.

[/ QUOTE ]
FYP

[tbach24]

How do you guys know he's not marrying Oprah?

[Pocket Trips]

[ QUOTE ]
How do you guys know he's not marrying Oprah?

[/ QUOTE ]

Because oprah's a man-hating bull dyke?

[wh1t3bread]

[ QUOTE ]
[ QUOTE ]
How do you guys know he's not marrying Oprah?

[/ QUOTE ]

Because oprah's a man-hating bull dyke?

[/ QUOTE ]

Because any increase in personal income would soon be a decrease do to the amount of food purchased and consumed?

[Supersetoy]

I'm glad my thread could take this turn. I'd marry Oprah for the money.

[Patrick del Poker Grande]

[ QUOTE ]
I'm glad my thread could take this turn. I'd marry Oprah for the money.

[/ QUOTE ]
... and you were allowed a little something better on the side.

[Supersetoy]

The money alone would allow me that type of freedom.

[teamdonkey]

[ QUOTE ]
Open up a Roth-IRA in addition to your 401k.

[/ QUOTE ]

Yes

[ QUOTE ]
So some high risk / high reward investments are what you are going to need.

[/ QUOTE ]

Yes, in addition to the 401K and Roth IRA

Do you rent your place, or own it? If you rent, and you know you're going to be in that area for at least a few years, buying something quickly. Having a down payment is nice but doesn't offset the lost equity from waiting until you can accumulate one.

[Pocket Trips]

[ QUOTE ]
I'm glad my thread could take this turn. I'd marry Oprah for the money.

[/ QUOTE ]

This raises an interesting question? how intoxicated would you have to to screw Oprah? Could you do it if you were not gauranteed access to her $$$$?

[jakethebake]

So we're all in agreement then? Dump the fiance, marry Oprah and screw around on the side is the correct financial plan?

[jakethebake]

[ QUOTE ]
This raises an interesting question? how intoxicated would you have to to screw Oprah? Could you do it if you were not gauranteed access to her $$$$?

[/ QUOTE ]

Why would you?

[Pocket Trips]

[ QUOTE ]
[ QUOTE ]
This raises an interesting question? how intoxicated would you have to to screw Oprah? Could you do it if you were not gauranteed access to her $$$$?

[/ QUOTE ]

Why would you?

[/ QUOTE ]

what I mean is would you have to be certain that you get her $$$ or would you just close yur eyes and go for it hoping for the best?

[Patrick del Poker Grande]

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
This raises an interesting question? how intoxicated would you have to to screw Oprah? Could you do it if you were not gauranteed access to her $$$$?

[/ QUOTE ]

Why would you?

[/ QUOTE ]

what I mean is would you have to be certain that you get her $$$ or would you just close yur eyes and go for it hoping for the best?

[/ QUOTE ]
I'd require a hefty down payment.

[player24]

If you invest the money properly for your remaining life expectancy (use 60 years to be safe) ou will need about $250,000 of financial assets for each $10,000 of retirement income. (i.e. Based on historical data, using an "optimal" asset allocation - you can withdraw about 4% of your portfolio assets each year and be fairly sure that you will not consume all of your assets before you die.)

So, if you can life on $40,000 per year (just scraping by?), you can retire with an investment portfolio of $1 million.

Good luck.
for more advice check: www.retireearlyhomepage.com (http://www.retireearlyhomepage.com)

[Mansavage]

I think that the idea of opening a Roth IRA can be a bad idea if you want to have access to the money before you turn 60.

Using the extra money you have each month you should begin investing in property. If you look at the average American millionaire you will notice that many of them built wealth through real estate. If you are halfway decent at property management you can actually create positive monthly cash-flow situations, as well as get rich off the equity.

[meep_42]

Is that 4% growth rate above inflation? For most retirees it isn't that much of a concern, but if you're going to live 40 years past retirement, it becomes much more of one.

-d

[player24]

[ QUOTE ]
Is that 4% growth rate above inflation? For most retirees it isn't that much of a concern, but if you're going to live 40 years past retirement, it becomes much more of one.

The 4% "safe withdrawal rate" is a real rate. You can withdraw 4% each year, plus an additional amount to adjust for a rising cost of living (inflation). The idea is to maintain your current standard of living for your entire retirement, and make sure your portfolio is not depleted before you die.

-d

[/ QUOTE ]

[Supersetoy]

[ QUOTE ]

Do you rent your place, or own it? If you rent, and you know you're going to be in that area for at least a few years, buying something quickly. Having a down payment is nice but doesn't offset the lost equity from waiting until you can accumulate one.

[/ QUOTE ]

I own a 230K "condo" (3 bed/2 bath) and pay $1700/month (including cable/homeowner dues etc.). Once I propose to my girlfriend/oprah, I hope to have her pay close to half of that (or at least cover some other bills).

I plan to upgrade to a "house" in the next 3 years. I have only been paying a mortgage since March.

[Supersetoy]

[ QUOTE ]
Is that 4% growth rate above inflation? For most retirees it isn't that much of a concern, but if you're going to live 40 years past retirement, it becomes much more of one.

-d

[/ QUOTE ]

This is the part I'm afraid of, I plan on living at least until 70, so I'm looking for a way to live without working for the last 30 years of my life.

[Pocket Trips]

[ QUOTE ]
I own a 230K "condo" (3 bed/2 bath) and pay $1700/month (including cable/homeowner dues etc.). Once I propose to my girlfriend/oprah, I hope to have her pay close to half of that

[/ QUOTE ] ROFLMAO

[Supersetoy]

I understand what is so hilarious...but seriously, do none of your women help out with the bills? I've already talked to my girlfriend about our financial situation and it looks pretty good to me. *shrugs*

[jakethebake]

[ QUOTE ]
I understand what is so hilarious...but seriously, do none of your women help out with the bills? I've already talked to my girlfriend about our financial situation and it looks pretty good to me. *shrugs*

[/ QUOTE ]

Aaaah, young grasshopper. Sooo much to learn.

[swede123]

We're a jaded bunch of sons of bitches here. Seriously though, if your girlfriend isn't some materialistic shopping whore with all her credit cards maxed out and if she has a job bringing a similar income to what you are, I really don't see any huge red flags, for now. Obviously this will change greatly if/when you guys decide on kids. Not only will you lose her extra income but you'll end up spending a small fortune on baby related crap.

I think the advise about finding a financial advisor seems like a good one.

Swede

[turnipmonster]

don't listen to these people, I'm married now and we still split mortgage payment, dinners etc. it depends on your woman, that's all there is to it.

--turnipmonster

[Stuey]

Two ways to try this imo.

1. Get a good paying job and live at a lower level in relation to your wage. Save like crazy and invest in safe stuff hoping your money will retain its value. Retire and live very cheaply like RV vacations no season tickets to sporting events ect. Just get by but do no "work". This is self-weighting and I don't like it myself but it is safe and boring and will work.

2. Get a good paying job save up a chunk of cash 50-100K. Look for high-risk investments that have high payoffs. Find an edge push it and hope. If you hit it you are on your way just repeat risking less on each pick but picking more investments. If you miss and go bust return to work/save till you got a chunk of cash again. This is non-self weighting. Unlike example 1 this is NOT going to work every time for everyone.

Best option would be to assume a non-self weighting attitude, get a job you love, live below your means, and never risk enough on your high risk investments that you will be mentally upset with losing the money.

I know several very rich people who could have retired at 30. They are still working, some are over 70, and one is 94. The ninety four year old owns a building I rent. He came to inspect the roof as I had complained it was leaking. He climbed on top of the roof, 2 story building, to try and fix it himself. Cheap sob, great guy, and smart enough to own not rent. /images/graemlins/crazy.gif

[bholdr]

real estate.

positive cashflow rental properties, a half-dozen homes combined with intelligent long-term investing (iras, etc)should be able to provide a modest retirment by 40 or so, if you can get there.

that's my plan anyway, but i'm thinking 60- gotta get some living in along the way.

[gvibes]

For a looooooooooooooong retirement, I think a 4% withdrawl rate is good number (that's return over inflation).

How much do you want to live on? 50k a year (today's dollars) sounds like a nice round number for a modest retirement. You would need $1.25M (once again, in today's dollars) to retire on.

Let's assume a 6% real rate of return on your investments up until retirement. That's a little opitimistic, I think, but whatever. To hit the 1.25M number, you would need to deposit roughly $3500 a month (also in today's dollars - ie the amount you deposit monthly will need to increase to keep up with inflation), assuming you start with nothing. That's quite a bit of scratch.

EDIT: my math sucks, so I could be badly wrong here, but that sounds about right.

[OtisTheMarsupial]

[ QUOTE ]
[ QUOTE ]
I own a 230K "condo" (3 bed/2 bath) and pay $1700/month (including cable/homeowner dues etc.). Once I propose to my girlfriend/oprah, I hope to have her pay close to half of that

[/ QUOTE ] ROFLMAO

[/ QUOTE ]
So, you're going to propose like this:
"I love you and want to spend the rest of my lilfe with you. Now will you please just move in and start paying half my bills?"

[James Boston]

....if this guy wants to retire at 40, at least not without severe penalties. You have to be 59, or have had the money in it for five years (if you invested at age 57,58,etc...) to get it out penalty and tax free.

[ddubois]

[ QUOTE ]
I'm married now and we still split

[/ QUOTE ]
I find this strange to even read. My wife and I don't 'split' anything. There is no 'my' money or 'her' money - there is a single SchwabOne account (plus some IRAs) that has the money in it. I guess I need to thank my lucky stars that we are both frugal and don't have any of the issues that seem to affect the plebes.

[turnipmonster]

not sure what to say, people are different I guess. we each have our own accounts and a joint account that we both contribute to, and besides all that I have a separate poker bankroll.

my friend's parents (who have been married 40 years) said they were much happier after opening separate bank accounts as well as a joint account (and this is after they had been married and had kids). my parents always had one account though. different strokes for different folks.

--turnipmonster

[Chris Daddy Cool]

[ QUOTE ]
....if this guy wants to retire at 40, at least not without severe penalties. You have to be 59, or have had the money in it for five years (if you invested at age 57,58,etc...) to get it out penalty and tax free.

[/ QUOTE ]

you can take money out without penalties after just 5 years as long as it goes towards the purchase of your own home. but otherwise you'll have to wait some more years to reep the full benefit or pay the penalties.

[Talk2BigSteve]

Buy as much stock in Party Poker as you can get!!! Let The people here at 2+2 pay for your retirement.

Living, Learning, and Laughing.
Big Steve /images/graemlins/cool.gif

[FMThe2nd]

I direct you to
the retire early home page (http://www.retireearlyhomepage.com/).

Check out the "4% withdrawal" study link on that page. I believe that study says you need to accumulate enough so that you can live off of 4% of the amount. So, if you can live on $40,000 per year, you will need to accumulate $1 million. I believe the 4% withdrawal amount assumes that you have 80% in a stock index and 20% in bonds.

The creator of that page retired when he was 38 and had a $400,000 net worth.

One cool thing about being a poker player is that you should be able to retire much sooner than a non-poker player. If you can live off of $40,000 per year and can make $20K per year playing poker, then theoretically you can retire when you accumulate $500,000.

Early retirement can be achieved, but you will need to make a plan as soon as possible and have the discipline to stick to it. Good luck.

[Reef]

[ QUOTE ]
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How do you guys know he's not marrying Oprah?

[/ QUOTE ]

Because oprah's a man-hating bull dyke?

[/ QUOTE ]

thx - I lol'ed

[James Boston]

[ QUOTE ]
you can take money out without penalties after just 5 years as long as it goes towards the purchase of your own home.

[/ QUOTE ]

I didn't think that needed mentioning since the OP was looking to retire at 40 and would just need a source of income. And isn't it only for a first time home purchase?

[david050173]

[ QUOTE ]
[ QUOTE ]
you can take money out without penalties after just 5 years as long as it goes towards the purchase of your own home.

[/ QUOTE ]

I didn't think that needed mentioning since the OP was looking to retire at 40 and would just need a source of income. And isn't it only for a first time home purchase?

[/ QUOTE ]

ROTH IRA contributations can be withdrawn at any time penalty free. In addition you can suck out 10k for your first house and for some educational expenses. I think you can also do a an equal distributaion withdrawl (you set up a plan where you withdrawl the same amount for the next x years). Also consider you can't contribue a lot to a roth ira, you will have tons of savings outside of it to use to pay for your years until you turn 59.5. The only retirement plans that you can put enough away to retire before 40 would be the SEPs and thier equilavent since you can do 40K a year. A 401k and roth combines is less than half of that.

[James Boston]

[ QUOTE ]
ROTH IRA contributations can be withdrawn at any time penalty free.

[/ QUOTE ]

But not tax free, right? I used "penalty," which was the wrong word. But since the advantage of a Roth is the tax-free retirement income, paying the taxes defeats the point having your retirement in a Roth if you want to get it out early.

[swede123]

Correct.

Swede

[Dex]

[ QUOTE ]
[ QUOTE ]
ROTH IRA contributations can be withdrawn at any time penalty free.

[/ QUOTE ]

But not tax free, right? I used "penalty," which was the wrong word. But since the advantage of a Roth is the tax-free retirement income, paying the taxes defeats the point having your retirement in a Roth if you want to get it out early.

[/ QUOTE ]

Income that a Roth IRA generates is tax free.

You've already paid taxes on the money you've contributed to the Roth. You can pull that money back out without getting taxed.

[James Boston]

[ QUOTE ]
You can pull that money back out without getting taxed.

[/ QUOTE ]

Correct, but you owe taxes on the gains. Bottom line, you can't get ALL the money out of a ROTH before you're old enough without paying some taxes. If you wait, you pay none.

[Supersetoy]

[ QUOTE ]

that's my plan anyway, but i'm thinking 60- gotta get some living in along the way.

[/ QUOTE ]

This has been a toss up for me for the past few years...get the nice car/plasma tv/(enter other expensive toys here) and retire later or retire early and live cheap for the rest of my life. It's something I'm still struggling with right now, and more than likely something I will struggle with up until the point I "feel" like I can retire.

And to a previous poster, yes I plan on having children. I know this is going to be a HUGE blow to my finances. I don't know how this will change things, but I know it will change everything.

My parents share one checking account. My mom makes 100K a year, and my dad makes 50K. I have seen issues between them and money (my dad spending mainly). I plan on having a joint account and also our own separate accounts. My girlfriend and I have split bills/tabs pretty well since we've been dating. I would say I pay 65% of the time, but that's just because I make 7K more than she does (not including poker). I expect nothing less regarding bill payment once we move in together (she's currently splitting rent/bills with a roomate).

As far as retirement income goes, I honestly believe I can live off of 25K a year if everything else is already taken care of (car payment, house payment, college tuition). And, although it has been short term, I've averaged roughly 10K a year playing poker (past 3 years). I don't expect that to keep up as I'm sure the "fad" will die out in the next 5-7 years.

Thanks for all the advice. I still haven't had time to really research that retire early web site.