I am retired and have a question...

[Dr. Blackheart]

[GooooMarquette]

I'm 52, and paid as long as I get my work done...which means I can post on Scoop during the workday if I'm not in a meeting.

Regarding the saving/retirement thing...I had a financial plan like others here:

*lived frugally early on, eating at home and paying off student loans ASAP.
*stayed well within our means (including driving my '92 Accord for 17 years).
*dumped max contributions into 401(k)s and IRAs.
*paid off our house early (100% debt free by 50).

We started spending more around 45, traveling (from Singapore to Paris, Seoul to Rome) and getting newer cars (a 2015 VW GTI soon!).

We both could retire comfortably within the next year or two, but I plan to stay on longer because I actually like my job.  I may gradually cut back the hours as money becomes less of an issue.

[brandx]

I'm 52, and paid as long as I get my work done...which means I can post on Scoop during the workday if I'm not in a meeting.

Regarding the saving/retirement thing...I had a financial plan like others here:

*lived frugally early on, eating at home and paying off student loans ASAP.
*stayed well within our means (including driving my '92 Accord for 17 years).
*dumped max contributions into 401(k)s and IRAs.
*paid off our house early (100% debt free by 50).

We started spending more around 45, traveling (from Singapore to Paris, Seoul to Rome) and getting newer cars (a 2015 VW GTI soon!).

We both could retire comfortably within the next year or two, but I plan to stay on longer because I actually like my job.  I may gradually cut back the hours as money becomes less of an issue.

Life is good!!

[reinko]

Great stories everyone, gives me confidence. 

My wife and I are in mid 30's, each sock away 15% of our income in 403(b)s, just started a Roth (I know I know, a bit too late, but we are trying).  Currently rent, but live in high cost area (Boston), and have a down payment fund, but housing prices and PMI have scared us off thus far.  Daycare for the next few years is taking it's toll, but adjusting our spending to ensure we keep that retirement fund pumping.

Any other ideas, or "wish I would have dones" from folks?

[Coleman]

Great stories everyone, gives me confidence.  

My wife and I are in mid 30's, each sock away 15% of our income in 403(b)s, just started a Roth (I know I know, a bit too late, but we are trying).  Currently rent, but live in high cost area (Boston), and have a down payment fund, but housing prices and PMI have scared us off thus far.  Daycare for the next few years is taking it's toll, but adjusting our spending to ensure we keep that retirement fund pumping.

Any other ideas, or "wish I would have dones" from folks?

Thanks for making me a feel a little bit better. Was starting to feel a little inadequate next to all of these financial Einsteins.

I'm 29, still renting in Chicago, for the same reasons you listed, but will probably buy within the next year. I keep going back and forth between waiting until I have a 20% down payment, yet risking home prices and interest rates going up, or buying sooner and biting the bullet with PMI. Only have enough for about a 10% down payment right now.

I guess another alternative is my credit union is offering a 5/5 ARM, which only requires a 5% down payment and has no PMI, offers 3.25% introductory APR but can increase 2% every 5 years, with a 9.25% lifetime cap. I think that is on the table, since my first home will probably only be for 8-10 years, so I'd only have to deal with 1 increase. Any thoughts on this as a quicker way into home ownership from the wise Scoop sages?

Have some student loans that still need to be paid, nothing massive, but about 30% of my annual income still remaining. That's my only debt. Decent interest rate at 5%, so haven't been paying it off any quicker than the minimum payment, have just been socking away into the Roth IRA and 401k.

The Roth IRA is a great tool. I have just been pumping as much as I can into that. It gives some nice security as it is more liquid than a 401k because in an emergency you can pull out contributions at any time penalty free, and you can withdraw contributions and up to $10k of earnings towards a first home after 5 years of being open. I am coming up on my 5th year in about 18 months, at which point I could avoid PMI, but not sure I want to wait that long or empty a potential retirement fund.

[GooooMarquette]

Any other ideas, or "wish I would have dones" from folks?

Wish I had dumped every penny into Google in 2005....

Seriously, the only significant financial "mistake" I made in my early 30s was believing in the big name mutual fund managers, and putting too much money into high-fee funds.  Some did well, but on balance, they didn't beat the index funds.  I finally switched to mostly low-cost index funds about 15 years ago.  I have a small part of my portfolio in stocks (Apple, Intel, Cisco), but for secure long-term growth, it's hard to beat a few well-selected index funds.

[MU Fan in Connecticut]

I'm 29, still renting in Chicago, for the same reasons you listed, but will probably buy within the next year. I keep going back and forth between waiting until I have a 20% down payment, yet risking home prices and interest rates going up, or buying sooner and biting the bullet with PMI. Only have enough for about a 10% down payment right now. Have some student loans that still need to be paid, nothing massive, but about 30% of my annual income still remaining. That's my only debt. Decent interest rate at 5%, so haven't been paying it off any quicker than the minimum payment, have just been socking away into the Roth IRA and 401k.

PMI - I never had to pay in 14 years of having a mortgage.  I re-fied in 2013 and ended up having to pay PMI because "the drop in appraised home value prices".  In my case if the appraisal was like $4,000 higher I wouldn't have had to pay PMI.  Zillow average indicated the appraisal should have been little higher, but if I had another appraisal completed, there was no guarantee it was going to be any different.  Plus we would have lost the rate (as the rates went up slightly in the interim) if we waited on another appraisal.    

[g0lden3agle]

PMI - I never had to pay in 14 years of having a mortgage.  I re-fied in 2013 and ended up having to pay PMI because "the drop in appraised home value prices".  In my case if the appraisal was like $4,000 higher I wouldn't have had to pay PMI.  Zillow average indicated the appraisal should have been little higher, but if I had another appraisal completed, there was no guarantee it was going to be any different.  Plus we would have lost the rate (as the rates went up slightly in the interim) if we waited on another appraisal.    

Sorry if this is being too invasive, but I don't see how that makes sense.  Have you been in the same house for those 14 years, or was a move involved?  If you've been in the same house, shouldn't you have had enough principal paid off where the drop in the appraised value of the home didn't matter?  I thought PMI was only used when someone doesn't have 20% of the value of the home paid off.  I.E. I just bought a $200k home that I could only take out 160k and needed to pay 40k up front to avoid PMI.  If you had avoided PMI from the get-go how did the refinance bite you in the butt like that?

[ChicosBailBonds]

Any other ideas, or "wish I would have dones" from folks?

Wish I had gone to work for Mark Cuban when offered in 1998, but I was promoted in the MU Athletic Department and my wife was pregnant.......oh well.

[mu03eng]

We're DINKs in our mid-30s.  We sock about 20-25% of our annual income away into retirement funds (401(k)/403(b), other investments).  We only ever have one car on a loan at a time, plan is to get at least 10 years out of a car before trading in for a new or newish mid-range vehicle.  

We try to take small to medium vacations 3 or 4 times a year, like a long weekend or a week at most.  Typically those vacations are to visit friends or family, or trips like a weekend in Door County.  We just got back from a long ski weekend in Keystone/Copper and stayed with friends in Castle Rock near Denver.  It's not an official policy but generally take a big vacation every other year (2 weeks in Boston/Maine, 10 days in Ireland, Europe proper in the next year or two, etc).  Put investments into our house, like hopefully a new kitchen this year to keep it up to date and marketable should we ever want to move.

We definitely could be living a fatter lifestyle if we wanted and not saving as much as we do.....but on our current trajectory we could retire at 52 (wife is a PT and long careers in that field are tough) live until we're 95 and not have to worry about social security being around or accounting for the pension I have through my company (they killed it about 6 months after I was vested).

Had a profound conversation with my dad when I graduated from Marquette.  After he retired from the Air Force he went to work for a series of defense contractors and did very well for himself and the family.  He sat me down and said "You've become accustomed to a lifestyle living with us you simply can't afford right now.  Never have a lifestyle you can't afford because you won't have it for long and then you'll be really pissed."

As for the OP, I work for a Fortune 500 company and am really good at my job so can get stuff done pretty easily while taking breaks to go on Scoop and have fun/clear my brain.  Some days I'm never on, some days I'm on once an hour depending on meetings, work load, travel, etc.

[Chicago_inferiority_complexes]

Wish I had dumped every penny into Google in 2005....

Seriously, the only significant financial "mistake" I made in my early 30s was believing in the big name mutual fund managers, and putting too much money into high-fee funds.  Some did well, but on balance, they didn't beat the index funds.  I finally switched to mostly low-cost index funds about 15 years ago.  I have a small part of my portfolio in stocks (Apple, Intel, Cisco), but for secure long-term growth, it's hard to beat a few well-selected index funds.

Who are you with? I just opened a Vanguard account for my non-retirement savings. I'd like to just dump some cash into index funds and only review them every 3-6 months.

[muwarrior69]

Thanks for making me a feel a little bit better. Was starting to feel a little inadequate next to all of these financial Einsteins.

I'm 29, still renting in Chicago, for the same reasons you listed, but will probably buy within the next year. I keep going back and forth between waiting until I have a 20% down payment, yet risking home prices and interest rates going up, or buying sooner and biting the bullet with PMI. Only have enough for about a 10% down payment right now.

I guess another alternative is my credit union is offering a 5/5 ARM, which only requires a 5% down payment and has no PMI, offers 3.25% introductory APR but can increase 2% every 5 years, with a 9.25% lifetime cap. I think that is on the table, since my first home will probably only be for 8-10 years, so I'd only have to deal with 1 increase. Any thoughts on this as a quicker way into home ownership from the wise Scoop sages?

Have some student loans that still need to be paid, nothing massive, but about 30% of my annual income still remaining. That's my only debt. Decent interest rate at 5%, so haven't been paying it off any quicker than the minimum payment, have just been socking away into the Roth IRA and 401k.

The Roth IRA is a great tool. I have just been pumping as much as I can into that. It gives some nice security as it is more liquid than a 401k because in an emergency you can pull out contributions at any time penalty free, and you can withdraw contributions and up to $10k of earnings towards a first home after 5 years of being open. I am coming up on my 5th year in about 18 months, at which point I could avoid PMI, but not sure I want to wait that long or empty a potential retirement fund.

You shouldn't feel inadequate. My wife and I saved her salary for 3 years so we could put a 1/3 down payment on a house. Things are a lot different today than when we started saving for retirement. My wife and I both have income from our company pensions which we did not contribute one penny ( not too many of those today). Supplemental savings which companies matched didn't start until the late 70s. My wife and I started those in the early 80s. You have to remember the Dow index back then was around 1000 (correct me if I'm wrong) and look at  where it is now. Our 401k is worth 5x what we put into it (conservative investments). Yes, Roth IRAs are great; we have about 20% of our income from Roths. What looks very small today can be a lot bigger tomorrow. I am no Einstein. In the early spring of 2008 my wife and I both lost our jobs so we just decided to retire. The silver lining on loosing our jobs was that we moved our 401ks out of the stock market before it crashed. Were not all geniuses, sometimes it's just good luck!

The biggest difference however is that the cost of a home, car, taxes and daily living expenses took a lower percentage of our income than it does today. Our incomes went a lot further than incomes today which is sad. In this respect your generation does have it harder.

[mu03eng]

Thanks for making me a feel a little bit better. Was starting to feel a little inadequate next to all of these financial Einsteins.

I'm 29, still renting in Chicago, for the same reasons you listed, but will probably buy within the next year. I keep going back and forth between waiting until I have a 20% down payment, yet risking home prices and interest rates going up, or buying sooner and biting the bullet with PMI. Only have enough for about a 10% down payment right now.

I guess another alternative is my credit union is offering a 5/5 ARM, which only requires a 5% down payment and has no PMI, offers 3.25% introductory APR but can increase 2% every 5 years, with a 9.25% lifetime cap. I think that is on the table, since my first home will probably only be for 8-10 years, so I'd only have to deal with 1 increase. Any thoughts on this as a quicker way into home ownership from the wise Scoop sages?

Have some student loans that still need to be paid, nothing massive, but about 30% of my annual income still remaining. That's my only debt. Decent interest rate at 5%, so haven't been paying it off any quicker than the minimum payment, have just been socking away into the Roth IRA and 401k.

The Roth IRA is a great tool. I have just been pumping as much as I can into that. It gives some nice security as it is more liquid than a 401k because in an emergency you can pull out contributions at any time penalty free, and you can withdraw contributions and up to $10k of earnings towards a first home after 5 years of being open. I am coming up on my 5th year in about 18 months, at which point I could avoid PMI, but not sure I want to wait that long or empty a potential retirement fund.

My personal opinion, jump now, you will save more by a lower interest rate than you will lose on PMI.  Hell, if house values go up, you pay extra a month to pay down principal, or remodel the house enough to improve the valuation and you can make PMI go away pretty quick.  Bought our house just off the floor in 2009, only put 10% down and got rid of the PMI a year ago.  Interest rates are going up in the next year and baring some sort of disaster they will never, ever be this low again.  Better to lock in now, especially if it's a house you will be in 10+ years.

[Blackhat]

I work in the medical field.  During therapy, I put my laptop on my patient's back as I ride em like a horse.

[mu03eng]

I work in the medical field.  During therapy, I put my laptop on my patient's back as I ride em like a horse.

[MU Fan in Connecticut]

Sorry if this is being too invasive, but I don't see how that makes sense.  Have you been in the same house for those 14 years, or was a move involved?  If you've been in the same house, shouldn't you have had enough principal paid off where the drop in the appraised value of the home didn't matter?  I thought PMI was only used when someone doesn't have 20% of the value of the home paid off.  I.E. I just bought a $200k home that I could only take out 160k and needed to pay 40k up front to avoid PMI.  If you had avoided PMI from the get-go how did the refinance bite you in the butt like that?

I originally bought from my mom, way below market rate than built an addition (because the original home was basically a 1.5 bedroom house).
After 9/11 a lot of New Yorkers got out of the City and moved to Connecticut and drove up "the value" of home prices like crazy and my town was a big landing spot because of the excellent school system.
House appraised value dropped $85-$90k from mid-2000s.

FWIW, despite paying the PMI, my mortgage is still less per month than it was before the re-fi and that includes getting rid of 3 years of payments as we took a shorter term. 

[Badgerhater]

FWIW, despite paying the PMI, my mortgage is still less per month than it was before the re-fi and that includes getting rid of 3 years of payments as we took a shorter term.  

When doing a refi, always try to pull off a shorter term, even if it means having 25 years left on a 30 and doing a refi into a 20.  If one can get it into a 15, then they will find -- depending on the rate -- that the payments start with paying more principal then interest each month.  Which is fantastic because I hate paying interest more than I hate the Badgers.

[Benny B]

PMI - I never had to pay in 14 years of having a mortgage.  I re-fied in 2013 and ended up having to pay PMI because "the drop in appraised home value prices".  In my case if the appraisal was like $4,000 higher I wouldn't have had to pay PMI.  Zillow average indicated the appraisal should have been little higher, but if I had another appraisal completed, there was no guarantee it was going to be any different.  Plus we would have lost the rate (as the rates went up slightly in the interim) if we waited on another appraisal.    

PMI isn't necessarily bad... 2010 was an opportune time for my wife and I to buy a house, defaults were high, prices were low, inventory was plentiful, etc., but lending was tight, and my wife was pregnant with our 2nd child.  So between a 20% down payment and issues regarding my wife taking a 10-12 week maternity leave, going the conventional route was too much of a burden... so we FHA'd the loan, got a better interest rate than what we were quoted for a conventional, but we're paying PMI.  When I did the calc, over the life of the loan, PMI only added about 20 bps to the overall rate we were paying net of the Chase 1% refund we get every year on PI pmts, so we still have an effective rate sub 4.5%, not to mention that we bought the house for $40-50k less than what we should have paid for it (and still about a $100k below a stabilized market value).  Had we waited a year or two for incomes to stabilize and post the 20% down, the house we have would likely have not been on the market, and we would have paid at least $75k-100k more for a similar house nearby.

In short, PMI was a necessary evil to take advantage of getting the home we wanted in a very favorable marketplace, and in the end, we still came out ahead.  If you can avoid PMI, excellent... but look at the context of the situation/market before you dismiss it.

[Coleman]

PMI isn't necessarily bad... 2010 was an opportune time for my wife and I to buy a house, defaults were high, prices were low, inventory was plentiful, etc., but lending was tight, and my wife was pregnant with our 2nd child.  So between a 20% down payment and issues regarding my wife taking a 10-12 week maternity leave, going the conventional route was too much of a burden... so we FHA'd the loan, got a better interest rate than what we were quoted for a conventional, but we're paying PMI.  When I did the calc, over the life of the loan, PMI only added about 20 bps to the overall rate we were paying net of the Chase 1% refund we get every year on PI pmts, so we still have an effective rate sub 4.5%, not to mention that we bought the house for $40-50k less than what we should have paid for it (and still about a $100k below a stabilized market value).  Had we waited a year or two for incomes to stabilize and post the 20% down, the house we have would likely have not been on the market, and we would have paid at least $75k-100k more for a similar house nearby.

In short, PMI was a necessary evil to take advantage of getting the home we wanted in a very favorable marketplace, and in the end, we still came out ahead.  If you can avoid PMI, excellent... but look at the context of the situation/market before you dismiss it.

What are the requirements for an FHA loan?

[GooooMarquette]

Who are you with? I just opened a Vanguard account for my non-retirement savings. I'd like to just dump some cash into index funds and only review them every 3-6 months.

My work retirement plan is managed by Fidelity, so most of my money is in their index funds, but Vanguard's are just as good IMHO.

The simplest plan to start (and I think a very good one) would just be to dump most into the Vanguard Total Stock Market Index Fund, and smaller portions in the Total Bond Market Index Fund and Total International Stock Market Index Fund.  You can also throw a bit into one or two of their sector funds if you like - their Health Care Fund has been doing very well, for example.

[jficke13]

If you are on TD Ameritrade they have no transaction fee funds, at least one of which just tracks the S&P 500 (SVSPX I think). You can't sell for 6 months after purchase or you owe a transaction cost, but 0 transaction fees and something like a .05% management fee is pretty solid on keeping your costs low.

[nyg]

Wish I had dumped every penny into Google in 2005....

Seriously, the only significant financial "mistake" I made in my early 30s was believing in the big name mutual fund managers, and putting too much money into high-fee funds.  Some did well, but on balance, they didn't beat the index funds.  I finally switched to mostly low-cost index funds about 15 years ago.  I have a small part of my portfolio in stocks (Apple, Intel, Cisco), but for secure long-term growth, it's hard to beat a few well-selected index funds.

Shortly after 9/11, my Mom passed and I obtained a small amount of funds.  Never did the stock market thing, since both wife and I were going to get federal pensions, which under the Civil Service were excellent.  My brother worked on Wall Street and I told him I wanted to invest these funds in Nextel, since everyone had one and thought it was the wave of the future.  So, I took 10K of it and invested in Nextel.  Then the Blackberry came along and Nextel with its "walkie-talkie" aspect was thing of the past.  Lost 7K on that deal when I sold it last year after Sprint took over and T-Mobile deal to buy Sprint went south.  BUT, at the same time as Nextel investment, my brother mentioned that he and his best friend were to invest in a computer company and said it was a gamble, but recommended that I get in.  So, I took 20K and bought shares of this computer company and held onto to it. Heck, it was only a few bucks a share at the time and it was inheritance money and I took a chance. That company was Apple and the rest is history.  Those are the only stocks I have ever purchased, so sometimes the gamble pays off, sometimes it doesn't.  

[Coleman]

Shortly after 9/11, my Mom passed and I obtained a small amount of funds.  Never did the stock market thing, since both wife and I were going to get federal pensions, which under the Civil Service were excellent.  My brother worked on Wall Street and I told him I wanted to invest these funds in Nextel, since everyone had one and thought it was the wave of the future.  So, I took 10K of it and invested in Nextel.  Then the Blackberry came along and Nextel with its "walkie-talkie" aspect was thing of the past.  Lost 7K on that deal when I sold it last year after Sprint took over and T-Mobile deal to buy Sprint went south.  BUT, at the same time as Nextel investment, my brother mentioned that he and his best friend were to invest in a computer company and said it was a gamble, but recommended that I get in.  So, I took 20K and bought shares of this computer company and held onto to it. Heck, it was only a few bucks a share at the time and it was inheritance money and I took a chance. That company was Apple and the rest is history.  Those are the only stocks I have ever purchased, so sometimes the gamble pays off, sometimes it doesn't.  

Glad it worked out for you, but I would have taken that 30k and dumped it into an SP500 index fund. Return on that would also have been excellent.

[Stronghold]

I can do my work blind folded. So postin' ain't no big thang.

Saves money on loupes then, aye?

[JWags85]

Shortly after 9/11, my Mom passed and I obtained a small amount of funds.  Never did the stock market thing, since both wife and I were going to get federal pensions, which under the Civil Service were excellent.  My brother worked on Wall Street and I told him I wanted to invest these funds in Nextel, since everyone had one and thought it was the wave of the future.  So, I took 10K of it and invested in Nextel.  Then the Blackberry came along and Nextel with its "walkie-talkie" aspect was thing of the past.  Lost 7K on that deal when I sold it last year after Sprint took over and T-Mobile deal to buy Sprint went south.  BUT, at the same time as Nextel investment, my brother mentioned that he and his best friend were to invest in a computer company and said it was a gamble, but recommended that I get in.  So, I took 20K and bought shares of this computer company and held onto to it. Heck, it was only a few bucks a share at the time and it was inheritance money and I took a chance. That company was Apple and the rest is history.  Those are the only stocks I have ever purchased, so sometimes the gamble pays off, sometimes it doesn't.  

Hold on, so you bought $20K worth of AAPL shares at around $2 and have held it since then?  Through both stock splits?  If so, what building are you putting your name on at MU?  Oy vey