Retirement

[DCJenn]

I've always maxed my retirement because as a social worker I wasn't making any money so a paycheck of $500 isn't much different than a paycheck of $600- you still can't do a whole lot! I got lucky though and was able to have an on-campus job that paid for three classes a semester in grad school (I went full time to get it over with) and my parents covered undergrad. I also have a life insurance policy that they bought when I was a baby that is actually worth money now.

On the advice of our financial planners, we contributed no more than 1% to the TSP (gov't retirement) because we were paying far more in interest in credit cards and other debt than we were making and given the market the past few years, that was good advice for us. I'm now partially vested where I work and they're offering a 3% match so I'm once again maxing contributions. We're not changing the TSP contribution until we're not paying all of the expenses of running two households in two states. The DC house goes on the market in September.

Jenn

Well SO and I have just started on this path to "retirement" as well as an "emergency fund." It wasn't easy to decided, even though I knew that's what I wanted, I didn't know much about those things, so I looked to my bank. USAA is military family bank, but I'm sure other banks would be just as helpful. I discussed our goals with long term saving, and needing to some savings "just incase" but the caveat being that we didn't have a lot of money now or for the next few years. I felt we start somewhere, but SO was def thinking we would not be able to start saving anything until after residency and fellowship etc. But after talking to my bank, I knew it something we could realistically do and we moved forward.

With the help from my bank, I was introduced to the ROTH IRA and Short Term Bonds. I was told that because the economy isn't in the best state, this is the time you can buy into these investments for a low as 50 dollars a month, but with no commitment. Meaning, that you can put 50 dollars in each to start, but if you can't next month it's okay. You can put more money into them as well. What makes it so ideal now, is that you no longer need 2500 or 3000 to start, like it has been before: you can invest very little when you are short that month, or a little more a few months later when things are a bit better. There is no commitment on how much you put away monthly, just 50 dollars to start.

Roth IRA: LONG TERM 30 OUTLOOK: A married couple can put up to 10,000 dollars a year into (5,000 single). I was reminded that the ROTH IRA is a shopping basket. So let's say that you right now, need to be very conservative so you would pick a level 1 conservative fund to start your ROTH (+2.5 growth to -1 loss) . But let's say 5 years from now you guys are wanting to maybe try a little more risk, say level 2. Well you can keep your very conservative fund, and add a level 2 to your shopping basket. Meaning you can make your ROTH IRA as diverse as you want. I started about with a level 3 (+4 points up and up to -4 point loss), (meaning 50 stocks/50 bonds) because it's long term. I believe the economy is going to pick up in the next 30 years. So because it's longterm, watching the marking daily isn't going to be my focus. I'm just hoping in the long term that those stocks and bonds improve. You can't take money out of your ROTH without paying a penalty, so know when you put money in there, it's in there and not as accessible as short term bonds.

Short Term Bonds: Money Market: It's like a saving account, but depending on the level of risk you want, it can yield more in the short term. Short term: 10 YEAR OUTLOOK. So you can invest as little at 50 dollars a month, same as ROTH IRA, but the difference is that this money is FULLY accessible. You put 100 dollars in it next month, and lets say you need 50 to cover an expense, you can easily, sell those (transfer) 50 dollars of that investment into your checking account. Now only caveat I have to that is that it could take 2-3 days for those bonds to sell and go thru the market. So extreme last minute, no, but last minute yes. A broker as well might be able to help quicken this process, but remember they usually come with a fee. Now for the short term, I went with level 1 ( not a whole lot of gain, but little risk of loss) because the economy is recovering and because it's money that I may be needing; so I need it to retain most of it's value in the short term. It's better than a savings account, more accessible than a CD, and you don't need a broker to be able to easily sell 200 dollars of it and have it deposited in your bank account(not this may vary depending on how you start your investing: thru my bank, everything is free, and easily completed online: inquire at your bank or investment agent for more details).

I hope this was helpful. For me, just starting investing has really made me good. I wish I had known about these things before, and could have started 5 to 10 years ago. Nobody teaches you these things. So just a little each month, disappears, and is working towards our retirement and emergency fund. It works for us Talk to your bank, they may be able to help guide you.

[v-girl]

My retirement was gone by April 2009 (I quit working Oct 2007). That paid some Catholic school tuition, a trip to DisneyWorld, a trip to San Antonio & car payments until the car died as well as other unexpected expenses. Yes, it would be great to have all that money in an account for later. But I would do it all again in a heartbeat for the look on my kids' faces during those two vacations and all the time we just enjoyed ourselves instead of worrying about how we would pay the mortgage and cover tuition without my income (I made 10K more than DH's intern salary).

He has some money in a retirement fund from residency, but it isn't much. We'll save when fellowship's over.