This is for all my fellow NPs or anyone who wants to chime in, not sure if this is right location for thread, please relocate if need be.
How is everyone saving for the future? I started my 401k 2 years ago after realizing the biggest financial mistake of my career. As an RN I never started a 401k because frankly I was young and dumb and didn't know too much about them. 8 years later I finally realized a 401k doesn't really change your paycheck by much because the money comes out before taxes. So now I put 10% of my pay a month into a 401k and my pay check may be 300$ lower each month which isn't bad. 3600$ a year I lose after taxes but 12000 goes into my 401k, it's a no brainier now!!
I also have a Roth IRA which by law only allows 5500$ I think each year. This allows me to put post tax money into retirement and any growth I make I can take out tax free after the age of 65 I think.
I started a money market account with a brokerage company as well last year which acts like a retirement account as far as growth but I can touch it at anytime if I need the funds with no penalty.
This is is my PSA to anyone who reads this, don't make the mistake I did, please start a 401k with your employer if you haven't started one already!!!
This is a great topic, so many people put their head in the sand and don't think about/plan for the future. Personally, I have been fortunate that my hubby has been on this from the very beginning. We both contribute the max that the law allows into our 401K's and other accounts that will provide steady monthly income in our golden years. We have investment properties that all turn over a profit. Although being a landlord isn't for everyone - if you can handle it, it can be a great investment with steady income - if you have the right tenants. We set up bi-monthly payments to pay off mortgage faster and ride our cars till the wheels fall off! Looking to retire at or before age 60.
My advise to anyone is at minimum take advantage of employee matching and start saving in your 401k - otherwise you are throwing away free money!
I am extremely fortunate in that my practice contributes 17% of my base pay to any investment plan I choose so that is a huge benefit!
Also, thanks to my husband, he has had a full military pension since he was 42 from the USAF. And...he will soon have another pension. I will add a small pension from a hospital I used to work at. We do not look to SS counting for much.
I highly recommend everyone look into their local community college, as they likely offer a personal finance course in their business department. I'm just finishing it and it is extraordinarily helpful. In addition, since I'm taking undergrad business classes in prep for my MBA next fall, I've learned a lot about the world of money I didn't know before (plus I watched Suze Orman religiously from 2002 up until her show went off the air, and all her advice coincides with what is recommended in personal finance). I'd be happy to help anyone out though! And remember, a mantra in business finance is "a dollar today is worth more than a dollar tomorrow" meaning it is better to have money to invest today because you'll lose any potential in earning interest.
Anyhow, in terms of basic savings for retirement:
If your employer offers a 401k with match, contribute up to the max that they'll contribute. Then, fully fund a Roth IRA up to its maximum if you're below the income threshold for it.
If they offer a Roth 401k, even better: while it comes out after tax, you aren't taxed on it when you take out money after 59 and a half, and typically people are in a higher tax bracket the older they get, not lower, meaning you'll end up saving in taxes in the long run.
In a Roth IRA, you'll be choosing what to invest in. Now, depending on how far away you are from retirement, your level of risk will change; however, your portfolio should ALWAYS be diversified. To this purpose, I suggest investing in no-load mutual funds (no-load means you don't pay to invest in them, and most mutual funds perform as well as the market whether they're no load or loaded mutual funds) and invest in mutual funds that try to match the index (ie: match the Dow in terms of percent increase) and mutual funds that are low to moderately aggressive in terms of investing, as you don't want your portfolio to decrease in value as this is for retirement, not a dream vacation that you can live without. ALSO invest in Bond Funds, as these are typically very low risk mutual funds based on bonds, and they can perform surprisingly well. You should look for bond funds based on government bonds such as federal bonds and state/municipal bonds. I checked out a California bond fund the other day and it was having returns of 16% which in this economy is amazing. Imagine if you had invested $10,000 in that last year? You'd have an extra $1,600 now; now imagine that over many, many years compounding. This is why the earlier you invest, the better. I'm happy to answer any questions anyone has :)
curious- does anyone's employer offer as 403b but not match it at all?
Mine doesn't match but they offer a fully funded pension instead.
-We also drive our vehicles until they die.
-Have a financial advisor managing funds from a small inheritance.
-Just learned a few days ago that since both my parents are now passed, my grandmother is including me & my siblings to inherit with my aunt & uncles.
-Hoping to have the house paid off within the next 5 yrs.
-Considering purchasing a neighboring house to rent briefly before tearing down to increase our lot size & property value (owner keeps changing her mind).
Me and the wife have been putting in 15-20% each in 401k and roth401k since we finished undergrad.
I just finished NP school (10 years later) and I'm now in negotiation on my contract. I am attempting to have an option to put my production bonus towards the employer (match)/ contribution. Max for employee is 18,000, and remaining match max is 35,500 for 2016. (Max $53,500).
I'm 31 now, hoping to retire by 41... in addition, a couple of investment apartment complexes are in the next couple of years.
I highly recommend .... I'm happy to answer any questions anyone has :)
While I agree that people should educate themselves ... I don't thinking taking one course at a community college qualifies you to give financial advice. I see that you are a fan of Suze Orman and yet you contradict her advice (She always strongly recommended against bond funds) ... and you give lots of advice that would be inappropriate for many of our readers. ( Example: many of us will be making less in retirement than we are making now -- putting us in lower tax brackets later. And my investment income will not be taxed as "ordinary income" in retirement, but rather as capital gains, which are taxed at a lower rate.)
Readers, I encourage you to seek advice from professional, certified financial planners -- and not make specific financial decisions based on what a stranger says on the internet. Seek good counsel from qualified professionals tailored to fit your specific situation.
I was planning on doing 20 years in the service so I could retire and live off the currently ~5k/month pension High3 plan. Who knows if that or SS will be around in a few years anyway. Seems like congress is always tossing around the idea of cutting military spending.
Anyway, I'm getting out of the military now, and I don't have a 401k or TSP or anything. I just saved as much cash as I could. Maybe I should have done those. But I know they are both capped and you can't add more than a few thousand a year. I remember looking into those "retirement" accounts and just shaking my head. They are on average very low returns or tied to the stock market in one way or another (which went no where for almost a 13 years).
I educated myself about the stock market, and am waiting for the market to bottom out again where I can put a big trade. There are clear patterns in stocks. Wish I knew what I do now and had the money in 2008/09. Also, don't buy bonds. You should never buy something at all time highs. Bonds and the stock market are at all time highs.
But as others pointed out, get out of debt first. Then if anything, buy some crude oil!
Anyway, I'm getting out of the military now, and I don't have a 401k or TSP or anything. I just saved as much cash as I could. Maybe I should have done those. But I know they are both capped and you can't add more than a few thousand a year.
I don't know when you looked into 401K options -- but maybe you should take another look, particularly if your employer will be matching some of your contributions. Depending on your age, the amount you can contribute each year is not just a few thousand per year. For younger workers, it is around $16,000 per year. For people over 50, it is somewhere around $22,000 per year. That's definitely more than a few thousand per year.
Also, if your employer matches a portion of your contributions ... that's an enormous immediate rate of return on your investment. You're not going to get that big of a return on your money anywhere else that is remotely safe and reasonable. (Where are you going to beat an immediately 50% return?) As for long term returns ... look again. Many civilian employers offer a wide range of possible investments within their 401K's or 403B's. If you work for a typical civilian employer, you should be able to find something in there that would look good to you after getting the immediate 50% return with the match.
Remember to pay an extra month of your mortgage bill extra per year (or divided up per month) as a principle payment. Pays off a 30 year mortgage in 24 years. Saves lots.
Always contribute the max to match with your employer.
If they offer a Roth 401k, even better: while it comes out after tax, you aren't taxed on it when you take out money after 59 and a half, and typically people are in a higher tax bracket the older they get, not lower, meaning you'll end up saving in taxes in the long run.
The combined amount contributed to all designated Roth accounts and traditional, pre-tax accounts in any one year for any individual is $18,000 in 2015 and 2016, plus an additional $6,000 in 2015 and 2016 if you are age 50 or older at the end of the year.
KCMnurse, BSN, MSN, RN
1 Article; 283 Posts
This is a great topic, so many people put their head in the sand and don't think about/plan for the future. Personally, I have been fortunate that my hubby has been on this from the very beginning. We both contribute the max that the law allows into our 401K's and other accounts that will provide steady monthly income in our golden years. We have investment properties that all turn over a profit. Although being a landlord isn't for everyone - if you can handle it, it can be a great investment with steady income - if you have the right tenants. We set up bi-monthly payments to pay off mortgage faster and ride our cars till the wheels fall off! Looking to retire at or before age 60.
My advise to anyone is at minimum take advantage of employee matching and start saving in your 401k - otherwise you are throwing away free money!