Archives for category: retirement

I am currently losing money on my retirement accounts. Not because the portfolio itself is losing value on the market. No, I am losing money because of fees.

Since I work as a contract employee and adjunct instructor, I have four different 401k accounts as well as a Roth IRA.

Account 1, which is from my current employer, has cost me $39 since March. The return on my investment over this period is $36. Part of the issue is I get paid weekly, and thus my contributions are made on a weekly basis. Each week costs money. In addition, the employer charges $7.33/month in fees to provide the plan. So even though I chose Index Mutual Funds with low fees, a low rate of return and multiple fees eats into my retirement.

Account 2,which is from a previous employer, has no fees from the employer. Crappy employer, better plan.

 

Currently, I have $2478 in various retirement accounts. Two factors have contributed to my having saved virtually nothing for retirement: an accelerated pay off of student loans (about $190,000 in 7 years) and temp jobs that either have no retirement or retirement contributions that start after the project ends.

At 54 years old, assuming I keep my physical and mental health, I have 15-20 years to prepare my finances for 30 years of retirement. Talk about anxiety! How can I save enough in 15 years to live off of for 30?

As in most cases, however, I found that looking at some data relieves my anxiety somewhat. The Social Security Administration actuarial table from 2011 says I will likely live for another 29.54 years. That is less than the standard time advised by financial planners, who generally say to plan for a 30 year retirement. If I work until 70, I will likely live another 16.33 years. It’s still a little unbalanced–work for 15 to live on for 16.33–but more doable than 15/30. My family tends to be long-lived, and advances in medicine may allow for a longer life, so I probably should plan on 20+ years, not 16.

In addition to life expectancy, there is the magic of compounding. The more I can front-load my retirement contributions, the better. That money will continue to grow. And if the market is bad, then my contributions have more value when the funds I purchase into then increase. Bankrate’s retirement planning calculator says I am on track if I work until 70, live til 90, keep my current income level and retirement contributions, and have a 7% annual growth in retirement accounts. Most important, I need to live on less than 55% of my current income in retirement. Tough, but conceivable. If I live off 80% of my current income, which Wells Fargo recommends, then my money runs out in 5 years.

The Wells Fargo calculator is more pessimistic (or maybe more accurate), so I ran some numbers through it, too. Bad news at my current income and contribution level.

wf retirement

Luckily, my options are still open. I can increase my income and/or decrease my spending and increase my contributions to an IRA or other retirement account. Doing both is beneficial because I will be increasing my Social Security amount, increasing the amount to “save”, as well as getting accustomed to living off less so retirement will be an easier adjustment. Alternatively (and more likely), I work until I die so I don’t need to worry about money for retirement at all.