I graduated from college in 2008 with $10K in cash and $17K in student loans, a net worth of -$7K. I worked in the back office for 2 years while living with my parents in Queens and paying down my debt. I moved to Manhattan this July and got a job in the front office. During this time, I made some investments that paid off, now I have $105K in my ROTH IRA / ROTH 401K, $40K in my brokerage account, $10K cash, and all student loans paid off. I have maxed out my ROTH 401K / ROTH IRA for the past 2 years, and now I have to decide if I want to do this again for 2011. Am I saving too much for retirement? I am asking because I fear that if I want to buy property in NYC, or even start a business, I would not have enough liquid assets to do so, since much of my net worth is in my retirement accounts.
Wow ur discipline is impressive. I recently graduated college with a networth of 200k. But bought a 100k car. And cant stop spending money (spending the money isnt even making me happy). To top it all off i need a job for next year and money for a potential business venture. I have the blues just thinking about it.
I think you are doing awesome saving for retirement. I work in wealth managment right now and see many people that are not even close to being in your situation. One thing to note is that with your Roth IRA, the money that you have contributed to it (your basis) can be taken out any time you wish without taxes or penalties, so you can use that to buy a property if you wish. Another good thing about that is when you take money out of the Roth IRA, it comes out basis first. disclaimer: Not investment advice here. Just stating some facts.
AndyPettitteIsGreat Wrote: ------------------------------------------------------- > I graduated from college in 2008 with $10K in cash > and $17K in student loans, a net worth of -$7K. > > I worked in the back office for 2 years while > living with my parents in Queens and paying down > my debt. I moved to Manhattan this July and got a > job in the front office. > > During this time, I made some investments that > paid off, now I have $105K in my ROTH IRA / ROTH > 401K, $40K in my brokerage account, $10K cash, and > all student loans paid off. I have maxed out my > ROTH 401K / ROTH IRA for the past 2 years, and now > I have to decide if I want to do this again for > 2011. Am I saving too much for retirement? > > I am asking because I fear that if I want to buy > property in NYC, or even start a business, I would > not have enough liquid assets to do so, since much > of my net worth is in my retirement accounts. My net worth is zero, always has been, probably will be until I hit >30. So, I respect what you’re saving. I would encourage you to keep saving and cross the bridge with the real estate when you get there. Real estate agents and mortgage underwriters will always find a way to make the deal work with your assets. If you’re really concerned, you could always just shift some of your saving efforts into the brokerage account which obviously would count towards relatively liquid assets.
CFAcountry Wrote: ------------------------------------------------------- > I think you are doing awesome saving for > retirement. I work in wealth managment right now > and see many people that are not even close to > being in your situation. One thing to note is that > with your Roth IRA, the money that you have > contributed to it (your basis) can be taken out > any time you wish without taxes or penalties, so > you can use that to buy a property if you wish. > Another good thing about that is when you take > money out of the Roth IRA, it comes out basis > first. > > disclaimer: Not investment advice here. Just > stating some facts. I thought I’m not allowed to withdraw from the ROTH IRA until I am 59. Otherwise I pay a 10% penalty on whatever I withdraw…
What are you asking, exactly? Currently you have $150k in retirement accounts and $50k outside of retirement accounts. Are you asking if you should keep a 3:1 ratio between your retirement or non-retirement accounts? Or something else?
AndyPettitteIsGreat Wrote: ------------------------------------------------------- > CFAcountry Wrote: > -------------------------------------------------- > ----- > > I think you are doing awesome saving for > > retirement. I work in wealth managment right > now > > and see many people that are not even close to > > being in your situation. One thing to note is > that > > with your Roth IRA, the money that you have > > contributed to it (your basis) can be taken out > > any time you wish without taxes or penalties, > so > > you can use that to buy a property if you wish. > > Another good thing about that is when you take > > money out of the Roth IRA, it comes out basis > > first. > > > > disclaimer: Not investment advice here. Just > > stating some facts. > > I thought I’m not allowed to withdraw from the > ROTH IRA until I am 59. Otherwise I pay a 10% > penalty on whatever I withdraw… Since it is a Roth IRA and you have already paid the taxes on the money you put in, you can withdraw the BASIS without any taxes or penalties. The earnings are different. If you take out any of the earnings beyond what you put into the Roth, then you have to pay ordinary income tax on that amount plus a 10% penalty. But your basis you can access at any time. Say, for instance, i put 5000 into a Roth IRA today. I can take out that 5000 next week if i wanted without any taxes or penalties. Now lets say i put in 5000 today, and within a week it grows to 6000. I can then take out the 5000 without penalty or taxes, but unless im 59.5 yrs old, if i take out the last 1000 i will have to pay ordinary income tax plus a 10% penalty only on the 1000.
AndyPettitteIsGreat Wrote: ------------------------------------------------------- > CFAcountry Wrote: > -------------------------------------------------- > I thought I’m not allowed to withdraw from the > ROTH IRA until I am 59. Otherwise I pay a 10% > penalty on whatever I withdraw… i’m pretty sure you can still use the balance as collateral to secure a loan/mtge get a place with a pool/hot tub
Do 2 things immediately 1) Get married 2) Have a child
AndyPettitteIsGreat Wrote: ------------------------------------------------------- > During this time, I made some investments that > paid off, now I have $105K in my ROTH IRA / ROTH > 401K, $40K in my brokerage account, $10K cash, and > all student loans paid off. I have maxed out my > ROTH 401K / ROTH IRA for the past 2 years, and now > I have to decide if I want to do this again for > 2011. Am I saving too much for retirement? Andy- You’re doing great. I saved similarly aggressively between my graduation and now. I’ve got over 80K socked away for retirement, and I’m in great shape given how long that’s got to compound. I never had the benefit of living with my family and working simultaneously, so well done for making the most of it. My suggestion would be to subtly shift your focus to taxable savings. The tax advantages for most people in their first few years of work are less (since their income is usually not killer) and if you really want to buy property in NYC or start a business, you’ll need more than $40K. Figure out what you want to buy for your first apartment, calculate 20% of that, and then add 3-6 months of living expenses on that (because you’ll still need an oh sh%* fund). That’s how I set my cash/taxable investment goal since the next big thing I’d have to tackle is buying an apartment or home. Definitely do at least enough to get the company match at work, or even pick a nice round number like $5,000 or $8,000 of your money and do that. But is it mission critical to get the whole $15,500 in your 401(k) in 2011? Not judging by what you’ve said. At any rate, congrats on the saving. Socking away income in a city like NYC and having the discipline to put it somewhere other than your checking account is always to be commended. Well done. -SSF Note: Not investment advice, this is commentary and opinion, I am not holding myself out to be a financial planner, etc.
not that awesome considering you were living at home with mommy and daddy and working. More commendable is someone who has done this on their own.
wake2000 Wrote: ------------------------------------------------------- > not that awesome considering you were living at > home with mommy and daddy and working. More > commendable is someone who has done this on their > own. What is even more commendable are the others on this board that recognize a young person doing well for theirself and are willing to give him some useful information.
just not buying into the whole argument that he is so disciplined. The guy had no down payments or monthly rent in New York to deal with. Although your advice on tax basis is golden I must say.
^ Yea, rent is by far the largest expenditure. You live with parents, naturally you save. duh I would NEVER live with parents after graduation. I need my space, my life, my place to entertain the ladies, my god. I would PAY an additional fee to get away from living at home. Had a LOT more ladies as company having my own place… Oh man, that alone was worth the rent. I know one guy graduated in 2006, started work, lived at home for 2 years, maxed out all his 401k in stocks. Last I heard, he totally HATED giving up what would have been an awesome 2 years of his life.
Give me a break, 2 years with your parents isn’t a big deal. Especially if you live in the NYC – chances are you’ll be bunking up with your friends on the weekends anyway.
You can also use any of the money as a down payment on the down payment of your first house.
arbitageur Wrote: ------------------------------------------------------- > Wow ur discipline is impressive. I recently > graduated college with a networth of 200k. But > bought a 100k car. And cant stop spending money > (spending the money isnt even making me happy). Shia?
What $100k car was this? Please don’t say Dodge Viper.
comp_sci_kid Wrote: ------------------------------------------------------- > Do 2 things immediately > > 1) Get married > 2) Have a child Really? The guy can’t be older than 25 w/ a graduation in 2008. @Andy. Bro you live in Manhattan, probably got a nice FO gig. I’d say go baller status. Thoroughly enjoy the city for the next few years as you won’t be in your 20’s forever. Keep us posted on what chicks you nail.
mar350 Wrote: ------------------------------------------------------- > AndyPettitteIsGreat Wrote: > -------------------------------------------------- > ----- > > CFAcountry Wrote: > > > -------------------------------------------------- > > > I thought I’m not allowed to withdraw from the > > ROTH IRA until I am 59. Otherwise I pay a 10% > > penalty on whatever I withdraw… > > > i’m pretty sure you can still use the balance as > collateral to secure a loan/mtge > > get a place with a pool/hot tub No penalty on principal contributions withdrawn like Country said. Can’t use IRA as collateral (legally). Get the pool and hot tub. Don’t get married and have kids yet. Pop bottles and models. Don’t let the haters hate for living with your parents (although don’t do forever). They’re jealous you’re worth more than them, although you paid a cost to do so (could be pretty minimal, especially if your mom cooks breakfast for the skeets you bring home and was cool with you blowing floor boards out).