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How Much Money Is Needed For Financial Security?

Discussion in 'Friends & Neighbours' started by anika987, Mar 30, 2022.

  1. lavani

    lavani Platinum IL'ite

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    a lot depends on the field they want to go. medical is a long route to specialization. technology is faster. do not know much about finance
     
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  2. Mehana

    Mehana Platinum IL'ite

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    Hope your husband already started doing retirement savings (IRA). Every year we deposit some amount for retirement (most of the people in USA does this).

    College fee: all depends what the kid wants to choose. But others said they get loans or you can help your kid little they can still go for part time job if needed.

    Not sure how old is your kid, you should be able to afford other extra activities for her...music, sports, academic tutor which is most important before they go for higher education.

    If you are US citizen you should able to get health care free or reduced cost(not sure) when you become senior citizen.
     
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  3. SGBV

    SGBV IL Hall of Fame

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    I wish I was you!
    I always wanted a life like yours, that is simple, yet content :)

    I had this type of life back in my childhood. I miss that life now.
    Just that, my dad was earning. It was a decent income. Mom stayed home, and we believed we had everything back in our childhood.
    There was no major expenses, mostly home cooked food, decent yet normal cloths, normal car, normal house yet full of happiness.

    Our parents never stressed much about the future, even though there wasn't much savings.
    What dad saved back then for our marriage was enough to run the house for 1 full year upon his demise. Yet, he believed he could manage our marriage functions with that saving.

    Yes, because their expectation was simple. They did not plan a 7 day function with 1000 people in a resort.

    We studied, excelled well in our careers. Earn big in dollars and worry so much about the family's finances and the kid's future as if the kids were handicapped

    In fact, the worry is to maintain this level of luxury as we believe happiness lies in our status and the comforts. We don't wanna lose this; hence work hard like horses without knowing how much we are loosing on the go.

    It is like catching a tiger by the tail. You can't leave, though you wanna leave :)
     
  4. SGBV

    SGBV IL Hall of Fame

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    Contentment is being able to live happily within our limitations. Ignorance is not contentment.

    Having said that, I have close relatives who have started their lives in the US back in 70s just like how you described above. With basic salaries, minimum savings etc....

    Their kids graduated mostly on loans. Some even joined part time jobs to pay for their college.
    They did graduated, and excelled well after that. Of course they have always been happy.

    We also have another group of rich relatives. Whose parents earned so well, and saved everything to cushion their children's future.
    Their educational expenses are covered, vacations are covered, and more importantly their parents bought apartments in their children's name, so that they don't have to suffer later.
    Does that guarantee their happiness? I don't know

    If I were you, I would do what I can afford to do.
    Live your life & do your best. That's all.
    Don't waste anything. Save as much as you can. But don't over do anything at the cost of your own happiness.
    Leave the rest to destiny.
     
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  5. Thoughtful

    Thoughtful Gold IL'ite

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    This is good advice. I will try to expand on this with my view point.

    Here is some homework for you

    1. Calculate how much you are spending monthly now:
    - Rent/Mortgage
    - Grocery
    - Gas
    - Cable/Phone/Internet
    - Eating out
    - Vacation - ( including india trip if you take it every two years and spend 6,000 break it into 6000/24 )
    - Kids expense
    - Clothing, etc
    - Doctor visit

    Basically go through your credit card bills for the last two years and write down each and every expense and put it in a bucket. Total them by category. This should more or less tell how much you spend monthly.


    2. If you spend $3000 per month now and are renting, rent will go up and so and other things due to inflation. Lets not worry about inflation but only think about $3000 per month.

    3. After retirement if you and your hubby live until 95 ( 30 years after retiring ), you want to be able to generate 3000 * 12 * 30 = 1,080,000.

    Discounting the interest your money can generate, you want roughly a million dollars when you retire.


    These are very vague but are to show you what to look for.

    Like @chanchitra said, there will be medical expense. While there are government programs, insurance is a complicated business and you will always end up needing lot more money than you think. Also, aging means more health related expense.

    Couple of other quick things:
    1. How much have you saved for your kids college. If you haven't already, start saving now.
    2. How much have to saved for retirement ( IRA, 401K, Roth ). If you haven't already, start now. Don't miss out on the employee match.
    3. If you feel your income is low, don't fret. Its just a start. You will earn the amount of money you wish. So wish big and then think later on how you will be able to do it. Can you be a part time realtor? Can you be a part time tutor? Can you be a part time fitness instructor? Can you grow on your current job or is there some other job that interests you which will bring more money and give you job satisfaction.
     
    Mehana, sweetsmiley, anika987 and 5 others like this.
  6. MalStrom

    MalStrom IL Hall of Fame

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    One caution with relying on government programs like Social Security and Medicare for retirement planning is that they are subject to the whims of politicians who like to deride these as entitlement programs.
    And while Medicare in principle might sound good there are many excellent doctors in my area who will not accept it because the reimbursement rates are very low and there is a lot of paperwork involved. So many people end up supplementing with private insurance if they have ongoing health conditions. Just something to keep in mind.
     
  7. EverydayBloom

    EverydayBloom Gold IL'ite

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    Dear OP,

    Financial Independence(FI)/security/literacy are all terms that are getting major light during/post pandemic and not to forget Inflation which is creeping in leaps and bounds. If you want to maintain the same lifestyle either simple or luxurious or somewhere in between, its better to plan for it. Never doubt how you are doing with your FI you have at current situations with others worries, we never know how they are planning their present/future lifestyle.

    Always take advantage of work sponsored retirement benefits like 401k, open a Roth IRA (which gives major benefit of withdrawing tax-free after 591/2) and major one is "Live Below Your Means", we don't have to spend it all to satisfy the society lifestyle standards.
     
    anika987 likes this.
  8. mangaii

    mangaii Finest Post Winner

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    property tax, mortgage payment and car loans might stress them out.
    with inflation it is very hard. gas bill and grocery bill have doubled over last few years
    If you have one kid vs more that also makes lot of difference
    If kids do competitive activity then traveling, food and stay eats a big chunk of money. Just a weekend trip cost around $1500 for us .
    There is never dearth of expense. Expense to Savings is relatively less in US. That is my personal opinion
    Even if you cut down on expenses still just to keep up with life you need quite a bit .
    if you have managed savings with one salary that means you are already doing good
     
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  9. MalStrom

    MalStrom IL Hall of Fame

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    Another thing to note is to not take everything someone says literally. Some people will complain even if they have everything. These people might be better than okay but feel the need to somehow make others think they are not in good shape.
     
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  10. anika987

    anika987 IL Hall of Fame

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    Hmm true
     

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