Author Topic: Only $54k in IRA (VTSAX) with 17 years to go…  (Read 3274 times)

kilogulf

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Only $54k in IRA (VTSAX) with 17 years to go…
« on: August 21, 2017, 01:04:48 PM »
What would you do?  If I contribute $400 a month to my $54k, the compound calculator at 6% shows $280,000.  That will be $14k per year for 20 years.  Social Security for me, at age 70, will be about $25k a year.  I have to do something extraordinary to get that IRA figure UP.  And I have to do something NOW because in 17 years I will be 70.  Yes, the mortgage will be paid off by then as well as other expenses, but some choppy math shows a potential cost of living equal to the income.  Am I discouraged?  Am I depressed?  No.  I am MOTIVATED!  So, if you were in my shoes, what would you do?

-Learn to trade options (so I can make money when the market drops)
-Join an investment club
-Refi our 30-year mortgage to a 15-year (downside being less money to contribute to VTSAX)

I am all ears…!

Ken in Dallas

ooeei

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Re: Only $54k in IRA (VTSAX) with 17 years to go…
« Reply #1 on: August 21, 2017, 01:20:18 PM »
Getting the number up is actually very simple (although not necessarily easy), invest MORE. This has a double impact of reducing the amount you need for retirement (because in order to save more, you have to spend less), along with increasing the amount you have available for retirement.

http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/ is about early retirement, but applies just as well to traditional retirement.

Chasing higher numbers with options trading or investment clubs is a losing proposition. If there was a reliable way to beat the market, we'd all be doing it. There are many ways to have a CHANCE to beat the market, but you're just gambling and are more likely to underperform. It's like deciding to be a music star to get rich. Even if you do everything right, you're most likely going to fail just due to bad luck/timing/whatever.

As for refinancing, it's basically saving more for retirement, except instead of saving the money in an investment account you're saving it in your home equity. If that helps motivate you it's not a bad idea, although mathematically likely isn't optimal.

dandarc

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Re: Only $54k in IRA (VTSAX) with 17 years to go…
« Reply #2 on: August 21, 2017, 01:25:57 PM »
Find a way to invest more than $4800 per year?  You can put $6500 / year into the IRA, for example.  Fund a 401K or similar employer-sponsored plan if available.  Anything else just buy your VTSAX in a taxable account.  Basically, if all you have to invest is $400 / month, that's your problem - look at your income and expenses and find a way to make the difference larger.

I wouldn't do any of your 3 suggestions.  First 2 are chasing returns, and entail more risk than I'd be comfortable with.  The main problem is not low returns - it is a low savings rate over the last 30 years.  And if your goal is to have more money in 17 years, pre-paying the mortgage isn't a good idea, at least according to the math.  Refinance to another 30 year if you can get to a better rate, significantly lower your payment, cash-out a decent amount of equity or some combination of these factors that makes sense to you.  Invest the proceeds.  Profit.

kilogulf

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Re: Only $54k in IRA (VTSAX) with 17 years to go…
« Reply #3 on: August 21, 2017, 01:34:33 PM »
Quote
As for refinancing, it's basically saving more for retirement, except instead of saving the money in an investment account you're saving it in your home equity. If that helps motivate you it's not a bad idea, although mathematically likely isn't optimal.

The motivating part for me is having the peace of mind in knowing, out of all the budget items in retirement, that "at least the house if paid for."  I admit, it leans toward being alarmist, but our 30 year now is 3.5% and hopefully a 15 year refi can get below 3%. 

kilogulf

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Re: Only $54k in IRA (VTSAX) with 17 years to go…
« Reply #4 on: August 21, 2017, 01:37:53 PM »
Quote
cash-out a decent amount of equity or some combination of these factors that makes sense to you.  Invest the proceeds.  Profit.
  I love this idea...i really do.  The only drawback I can see is how little principle I'll have built up in say 10 years.  And all that interest going out the window.  Damn those amortization charts!  :-)

dandarc

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Re: Only $54k in IRA (VTSAX) with 17 years to go…
« Reply #5 on: August 21, 2017, 01:52:06 PM »
Quote
cash-out a decent amount of equity or some combination of these factors that makes sense to you.  Invest the proceeds.  Profit.
  I love this idea...i really do.  The only drawback I can see is how little principle I'll have built up in say 10 years.  And all that interest going out the window.  Damn those amortization charts!  :-)
Remember to also look at the 6 figure additional amount that will most likely be in your investment accounts, and make a judgement call.

koshtra

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Re: Only $54k in IRA (VTSAX) with 17 years to go…
« Reply #6 on: August 21, 2017, 01:55:11 PM »
The only people who win long-term at options trading are people with in-depth (usually insider-ish) knowledge of the industries concerned. Who are also lucky. It's a terrific way to lose your shirt.

kilogulf

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Re: Only $54k in IRA (VTSAX) with 17 years to go…
« Reply #7 on: August 21, 2017, 02:13:57 PM »
Thanks everyone thus far...I love this forum.

Takeaways at this point:

1.  Don't trade.
2.  Invest more.

Honestly, if I could see a path to $500k at age 70 rather than $280k I would be encouraged.  It would take $1000 a month for 17 years at 6% to get me close...


boarder42

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Re: Only $54k in IRA (VTSAX) with 17 years to go…
« Reply #8 on: August 21, 2017, 02:18:19 PM »
Thanks everyone thus far...I love this forum.

Takeaways at this point:

1.  Don't trade.
2.  Invest more.

Honestly, if I could see a path to $500k at age 70 rather than $280k I would be encouraged.  It would take $1000 a month for 17 years at 6% to get me close...



ar your age 1000/month should be an easy sum of money to invest. 

dandarc

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Re: Only $54k in IRA (VTSAX) with 17 years to go…
« Reply #9 on: August 21, 2017, 02:22:02 PM »
You might consider posting a case study.  We don't know your income / other expenses, but $1,000 per month isn't a very lofty goal for most people on this forum.  A lot of people manage to find that much just from reducing bills like cable and cellphones and gym memberships.

kilogulf

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Re: Only $54k in IRA (VTSAX) with 17 years to go…
« Reply #10 on: August 21, 2017, 02:42:22 PM »
Case Study....gotcha. 

Thanks All....  :-)