Retirement...

The recent thread about social security got me to thinking about how many people actually think about their retirement early in life. Even for only being 20 years old, I am constantly thinking about retirement and how I can ease my retirement years. Once you sit down to think about it, there are a hundred different things you can do to set yourself up for when you want to retire, whatever that age may be (50, 60, 65).

My first job, when I was 16, is the same job that I have right now that I am 20. This September, I will have been working fast food for 4 years, and my plan is to work at least one more year. Some people, those that think fast food is below them, or that it won't amount to anything, always ask me, why am I going to stick it out for 5 years. I always joke that it's because I get a leather band watch at 5 years, and who could pass up a free watch :p But the truth is, after 5 years, I am eligible to draw retirement from my job at 65, regardless if I continue on with the company or not after that. And most people don't realize that you can get retirement from the company I work for, or how it works. But I took the time to ask the questions, get the pamphlets, and read up. Because, granted, the money will not be a lot since it's based on the last three years wage, but even if I only get 200.00 a month, that's still more money than if I wouldn't have stayed, and I make pretty decent money where I work (9.01 an hour with benefits), and it's supporting me while I go through college, and until I'm out of college, there isn't really an excuse to get a new job at any rate.

So this is one way that I am planning for retirement, another way that I've thought of is stocks. Now, people are always talking about their 401k, and then we had the dot-com bust, and a lot of 401ks shrank considerably. People need to realize that 401ks are about turning a profit fast, so they go with these new companies that are a sure-fire bet, trying to get the faster increases.

I have an alternative solution. Pick a company that has been around a while, and has steady gains. A company that is no way going to be dying out anytime soon. Remember, sure and steady wins the race, and this is your retirement, not money you need tomorrow (for most of us at any rate). So the stock that I picked was Wal-Mart. They are the leader in department stores, hands down. They have been around for a while, and will continue to be around for a while. Checking their stock charts, I see that they average a 3 dollar gain for stock each year over the past 5 years. Right now, the price of stock for them is ~50.00 each, so if I were to buy 2 (or more if it's in your budget) each month (perhaps saving up money for multiple months to avoid brokerage fees), over the period of 40 years I would have 960 shares (unless there were stock splits, which are almost certain over 40 years, but we'll just go with 960 for a moment). And then, the stock gains 3 dollars in value each year for 40 years. So the stock that was once 50 dollars, is now worth 170 dollars (now, it probably would have split by this point a few times, but it will still even out in the end). So now, the shares of stock that you have are worth 170,000.00 or more, depending on how the market goes. So you made 170 thousand dollars by putting aside 100.00 a month. Imagine if you put 200.00 a month away, or more. The money you have at retirement would be seriously increased.

There are also other easy ways to plan for retirement. Pick a hobby, something that increases in value as the years progress. For me, I have 40 years for something to increase in value, and while I might not be able to make a lot of interest on objects, it certainly could be something to leave to kids, family members, etc. to give THEM a solid start on their retirement. Something like baseball cards, comic books, things that are known to increase in value over the years. Collectibles, antiques. If you spent 100.00 a month on a "hobby", you might very well double or triple that depending on if you get the whole collections, get signatures, take good care of them.

Well, here are just a couple ideas, and I'm curious to hear what everyone else has to say about their retirement, and if they've even thought about it, let alone planned it :)

Michael

Ok, an aussie perspective yet again.....

All employers are required by law to pay superannuation at a rate of 9% on top of gross income for all employees over the age of 18!

This goes in to a super fund for you to have access to when you turn 65 and are no longer working full time.

Pretty cool, most companies will also allow salary sacrifice payments to be added to the same pool of funds as well allowing for potential tax benefits.

So whilst we are not perfect downunder by any means we certainly have that area covered - the 9% is scheduled to increase to 10% next June too I think.

Cheers,

Allan

Win the lottery? :$$$:

Okay in my dreams maybe, but I'd go with a RRSP in mutual funds providing all income tax refunds also went into it, which helps to further maximize the growth.

Also invest in rental properties as real estate is always good, specially if you live on an island like I do.

Third, make sure the other half stays working and gets top dollar for it cause I have expensive tastes and like to be kept in a luxories style befitting my age.:egypt: