Money Monday: Retirement

I stopped contributing to my 401k earlier this year when I maxed it out, but I don’t plan on making a contribution to the plan ever. Not a cent. I don’t even know what the formula is for accessing that money. Don’t you have to be a septuagenarian or close to it so as not to be penalized? And by the time we middle-agers reach that age, we should count on the rules changing and working until we’re octogenarians. It’s retirement Catch 22.

That’s supposed to be the American dream? Maxing out our 401ks and living off of that while we whittle away playing bingo at the old folks’ home. No way.

Here’s my genius plan. By the time I’m 50, my mortgage will be paid off. Once that’s paid off, I’ll continue to rent it and use that rental income to pay for the ex-pat life I plan to lead in San Miguel de Allende, Mexico. The location is up for debate, but I won’t be in this hell-in-a-hand-basket country, that’s for sure. I had lunch with a friend who said he is scouting out foreign real estate to buy. That’s a smart guy right there.

Anyone else have non-mainstream retirement plans or purchased real estate outside of the U.S.? Let’s hear from you.

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Comments

  1. Funny, this same subject has been on my mind when I saw that our retirement account balances had been stagnant for so very long. My attitude used to be that with enough time and consistent savings I’d eventually get the return I wanted. I no longer feel this way, however, nor do I believe in the system. Sure, I appreciate the immediate tax benefits that come with contributing to a retirement plan. But real estate has continued to be, for us, our best investment. So, with that in mind we are going to start making additional monthly principal payments against our mortgage so that the loan is paid off in ten years instead of the scheduled fifteen. We’ll still make contributions to our retirement accounts, just not the maximum allowed. And we are going to start finding other investment opportunities that are not money fund-related. In ten years, when we no longer have a monthly mortgage expense, we’ll start looking to invest in real estate for retirement. Personally, I’ve always wanted to spend my golden years on the North Coast of California. But over-seas could be nice as well.

  2. Good post. You might want to re-consider your position on 401Ks. here are some reasons:
    #1 at the very least contribute up to the employer match (if any), or else its money left on the table.
    #2 between you and your hubby, 401K contributions minimize your adjusted gross income for the year so as to prevent tax filers (whether married or single) from appearing in a higher tax bracket. this is very situational from couple to couple (some may prefer to play with this and go the other route of Roth-401K if they are no where near the next tax bracket).

    Also, a non-mainstream retirement plan you’d really be interested in is the investment of real estate via 401K or IRA funding. I don’t recall the name for this, but the concept is to withdraw from a retirement-classified fund and invest-in real-estate, thus reclassifying that property as an ‘IRA.’ I don’t know the rules around this, but wonder if it can be applied to purchase residential housing for the investor. I’ve heard about this relatively unknown financial vehicle from two separate sources at work. One was a retiree (former attorney) who diversified his retirement funds across properties, and another is a young co-worker of mine who opted to move a majority of his retirement savings from stock/bond funds to lower-middle income property investments in Arizona.

    I also have to mention for fellow poster, Kitty… paying down principal is well intentioned but not the best use of money that can be invested in a short term savings account to gain interest (e.g. smartypig.com) until its required for mortgage payments. Also, if you plan to pay a 15 year mortgage in 10 years, and can handle the payments, why not refi to a 10 year mortgage?

    BTW – I have a quick suggestion for this blog too, since you’re good about having different categories for your posts, is there anyway for you to have categories in the header of the blog so we can filter for Monday Mondays, Fashion, etc.?

    Also, regarding the web post check “Is water a liquid or not?”, isn’t the answer actually ‘sometimes’ because its also a gas or solid?

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