Financial Samurai

I spoke to my father yesterday and curiously asked him about his thoughts on assisted living facilities.  “Absolutely depressing!“, he said.  I couldn’t agree more that assisted living programs are depressing given it reminds us everyday about our mortality.

Who wouldn’t want to stay put in a home they’ve lived in for years instead?  I know I would.  Home is a special place that makes us feel comfortable and warm.  Ideally, you own your home outright in retirement and no longer have payments.  However, this is a topic for another post.

We can only hope that we remain healthy for the rest of our lives, but we’ll eventually need some help thanks to injuries or illnesses.  Some of us will have the financial strength to comfortably pay for our healthcare in retirement.  Others might have wealthy children to rely on.  But what if you do not want to burden anybody, and don’t have that much money to last?

Buying long-term care could be an ideal solution for your retirement years.

THE IMPORTANCE OF LONG-TERM CARE Read more…

Are you a man if you cannot take care of your family?  Are you noble, if you do not have a job and let your wife slave away at the office, so you can latch onto her healthcare insurance, and eat the bacon she brings home?  Hell yeah brothers!  Stay at home men of the world, unite!

The beauty of equality is that we men don’t have to work the majority of our lives away anymore.  We can be the homemakers, and be proud of it too!  With our big muscles, we can re-arrange the living room furniture with ease.  Being relatively taller, we can change fire alarm batteries every year without fear of breaking our necks.

When the general contractor comes over to remodel the bathroom, ladies can rest assured we men are less likely to get scammed by superfluous charges, such as a $1,000 wonder wall replacement.  And when the cable guy comes, you can also breathe easy knowing that we aren’t going to have a romantic encounter either!  I mean, how many times have you ever had a cable gal come over?  Never!

IS EARLY RETIREMENT CHEATING IF YOU HAVE A WORKING SPOUSE? Read more…

The wooden bar shimmers with beer stains as I stubbornly try to wipe them away.  Each jab of the napkin gets stuck, like a fly to Venus.  Eventually I give up as my friend returns from the Thomas Crapper smiling.

“Sam, when I get my bonus this February, I will have hit my goal of saving $1,000,000 in the bank!” said my 38 year-old friend Paul over his Guinness.  He went on to explain, “I’ve been saving my bonus every year for the past 16 years so that I can one day quit my job and do something more relaxing and fun.”

“Well done Paul!” I respond as I pat him on the back.  “But what else are you going to do?  Not many jobs in the world pay your type of income.  Are you sure you’re willing to give it all up for a life of leisure?”

“Hmm, I don’t know Sam.  I guess all I have to do is work another year, and I’ll get another $100,000 or so in bonus after tax.  Maybe I should just continue to work?” questioned Paul.

“I think a lot of people would give up their left nut to receive a $100,000+ after tax bonus every year.  Maybe you should think about taking a sabbatical instead to rejuvenate?” I replied.

“A sabbatical would be great!  But, I think my company just demotes, underpays, or ultimately lays off people who take them,” explained Paul.

“Well isn’t getting let go exactly what you want?  That way, you can get all your deferred compensation without a hitch!” I said.

“Good point!  Time to kick back and get faded baby!” Paul cheered as we chugged our beers in unison.

MORE MONEY, MORE QUESTIONS Read more…

$180,000 by age 30, $500,000 by age 40, $1 million by age 50, and $2 million by age 60. These are the rough estimates for what I think everybody needs to have in their 401Ks to have a reasonable attempt at a comfortable retirement. If you read the comments from my “401K amount by age” article, you will notice that those in their mid-30s and below tend to disagree with these amounts, while those older generally agree, verify, and accept.

I don’t know why younger folks aren’t willing to follow along. It’s often times just rebel and justify why they aren’t saving.  ”Live life!“, they say.  True, but who says you can’t live life while saving?  The easiest way to learn, is to listen to an older person who has gone through what you will go through. Perhaps it’s immaturity, or the way things are where every generation needs to question the next generation and the status quo.

There’s really no mystery to money. The more you have, the more you can make.  It’s all about building the NUT large enough so that when you make a fortuitous 10% return, you’re pulling in an extra $50,000-$100,000 on your $500,000-$1 million portfolio.  Saying you doubled your returns from $10,000 to $20,000 due to contributions is fine, but it’s really chump change and misleading.  Build the nut, so that you can have real returns.

If you aren’t on retirement track based on my 401k age chart and disagree with my figures, just do the math YOURSELF and see whether you’ve saved enough to retire on. I don’t think you’re going to like the results.

There’s one question that kept coming up over and over again, and that’s, “How can I save so much, if I don’t make so much?” It’s a fair question that needs addressing. One commenter mentioned my table must be of “California Currency”, which made me chuckle. The problem of not making enough and therefore not being able to save enough is an honest problem which I’d like to address via a change in mindset and a chart. Read more…

The 401K is one of the most woefully light retirement instruments ever invented.  The worst is the pathetic IRA which limits you to only $5,000 if you make under $58,000 a year for a traditional IRA to completely participate.  Meanwhile, you have to make less than $110,000 a year for the privilege of contributing after tax dollars in a a Roth IRA.

Give me a pension that pays 80% of my last year’s salary for the rest of my life over a 401K any time!  With the government only allowing individuals to contribute $17,000 a year in pre-tax income into their 401Ks in 2012, once again, our politicians fail us with their regulations.

You know from a previous post that the average 401K balance is around $70,000-$80,000, which is incredibly low given the median age of an American is 36.5.

As an educated reader who is logical and believes saving for retirement is a must, I’ve proposed a table that shows how much each person should have saved in their 401Ks at age 25, 30, 35, 40, 45, 50, 55, 60, and 65.  We stop at 65 because you are allowed to start withdrawing penalty free from your 401K at age 59 1/2.  Meanwhile, I pray to goodness you don’t have to work much past 65 because you’ve had 40 years to save and investment already!

HOW MUCH YOU SHOULD HAVE IN YOUR 401K AT DIFFERENT AGES Read more…

Greetings from somewhere in the Adriatic Sea!  I’ve been on vacation this past week and I’m hoping you couldn’t tell.  It’s a little hard staying away given how addicted I am to writing and interacting online.  If I didn’t care so much, I probably wouldn’t have responded to 150+ comments, published three new posts, written six new posts, and spent $200 on satellite internet connection!

As I was sitting at a lovely seafood restaurant eating linguine, grilled octopus and sipping Mythos beer, I began pondering whether I would really be able to retire early eg 40-45.  It wasn’t just a financial question, because that’s simply mathematics.  The question was really from a philosophical point of view.

If you’re still in your prime, and much of your life has been shaped by what you do for 12 hours a day, is it really as straight-forward as walking away after 10, 15, 20, 25, 30 years on the job?  It can’t be that easy.  Those of us who are the most financially meticulous probably have some target age we’d like to retire by.  We’ve got a nice 20-line spreadsheet and most likely will achieve our goals.  But, a lot of us enjoy what we do.  It’s not like we can’t have a pleasant day job and then aggressively pursue our hobbies after hours, right?

I write a post on Yakezie.com entitled, “How Do You Know When To Retire?” where I ponder not so much the how, but the how come.  Perhaps you’ll agree.  Either way, share your thoughts here or there!

Best,

Sam

One of my favorite income streams is rental property.  I’ve bought several apartments over the past decade and plan to continue buying more.  A particularly popular rental I have is a two bedroom, two bathroom condo with parking and a view of the park.  It’s not fancy, but the location is fantastic and it has everything one needs to live a good life in one of the best areas of San Francisco.

My first tenants lived there for 5 years and actually got married after their second year.  Incidentally, my second tenants also married after two years of living there and now want to extend for a third year.   Perhaps the apartment is just blessed with love and good feng shui.  Whatever the case may be, I’m putting the two marriages in my marketing material if I ever sell!

What I do know for sure is that owning rental property is like running a business.  The goal is to maximize revenue, reduce turnover, and control expenses.  Landlords aren’t evil and aren’t always rich as some tenants might believe.  Instead, most landlords are just trying to build their own retirement portfolios with the best product offering possible.  Raising rent is nothing personal.  It’s just business between two willing parties.

RENTAL PRICE THEN VS. NOW – EVERYTHING TURNS TO GRAVY Read more…

For the first time in a while, I attended our regular Friday home game last night from 9pm to 2:30am.  I used to love going all the time until I started this site actually.  Now, the thrill of writing and interacting has taken over.  Furthermore, I realize how hard it is to make a decent buck online.  To lose a couple hundred in one hand when you play well, yet get runner runnered is a horrible feeling!

No longer are my poker outcomes compared to my normal salary.  They are now compared to my online income which makes things that much more painful when I lose since my online income is so much smaller.  In fact, I use my online income as the barometer whenever I’m thinking of spending frivolously to help keep me in check.

A lot of us poker players like to justify our habits by saying that poker isn’t gambling and that it’s skill.  Although I believe poker is 60% skill, that still leaves 40% left to chance.  Would you bet someone $500,000 if you had a 60% chance of winning and a 40% chance of having your hand chopped off?  I wouldn’t, but some would!

THE ADDICTION RETURNS TEMPORARILY Read more…