Thanks Joe for your efforts. And, I am sorry for getting confused.

On Dec 10, 5:06 pm, joetaxpayer <joetaxpa...[at]nospam.com> wrote:
- quote -

I did not realize you changed it for the sake of an example when you
posted it the first time for me. I jumped to an conclusion which was
improper of me.


Thanks for your aid and time.

Thanks for the reply.

On Dec 10, 5:04 pm, jIM <noreplysoc...[at]hotmail.com> wrote:
- quote -

It seems I did not explain my situation clearly enough in my previous
posts.
My parents and brother's expenses will require 50K per year in about 3
years from now as in 3 years my dad plans to retire, my brother wants
to go to medical college and that is not counting my expenses(marriage
and buying a house, vehicle). My expenses (marriage, vehicle and
house ) can and most likely have to wait. Can you please clarify how
can I manage in 3 years?

- quote -

the past 5 years or buying and selling houses on interest only loans(a
few years ago which yielded about 50% in areas like California,
Washington DC for a short while according to what I hear from some
real estate folks here) that is pretty high.

I now understand starting early, with a large sum and investing
properly is the key to retire well.

Thanks for your clarification and time.

Justin wrote:
- quote -

The snipping has now attributed to me remarks that are not mine.

I briefly adjusted my online spreadsheet to show $60K as a starting
salary for the OP.

It now shows 17K at 20, so with 43 years of employment, one ends at
$60K. Regardless, I've gone through much effort to find and create a web
page which will allow online web-based editing of the numbers. Needing
to pick a starting point, I used age 20. These can be changed to suit
one's situation. I also chose the other assumptions, inflation 3%,
percent saved, 15%, and annual return 8% to stay somewhat conservative.

As one changes careers, is promoted, or gains education, increases
beyond inflation would be expected. The 15% is based on the common 'save
10%' and company match of 5%. Whether the market return will be 8% over
the next 40 years is debatable, and I wasn't looking to go there.

I am very aware of actual income data, and post this so s (the OP) might
see where he fits in to the demographics:
http://en.wikipedia.org/wiki/Househo..._United_States

JOE

- quote -

picture.

If you think your parents need 50k per year, the suggestion is to set
aside around 10-15% per year now, and the amount set aside will grow.
Once it reaches a critical mass, you could draw this down with little
impact to current income. This combines the issues behind
joetaxpayers posts and Skip's initial response.

50k per year for 20+ years suggests the amount needed might approach
$1.25 M needed prior to assisting parents (assumes 4% starting
withdraw rate). This would allow you to spend the 50k from earnings
on the $1.25 M principal, without touching any salaries you make that
year.

To get to $1.25M, I see setting aside $10,000 per year for 25 years,
earning a 10% return achieving that goal (so it takes you $250,000 of
earnings over 25 years to have $1.25 M).

You could cut this another way to get to $1.25 M. You could set aside
20k per year and earn 15% returns for 20 years. You get the goal
faster, but also need a much higher (and unrealistic) return.

This goes back to understanding basic investing, knowing what
variables you have control over (time, amount invested) and what
variables are tough to control (return).

8% is a moderate return, requires some risk
10% is an aggressive return, requires more risk
15% is an obscenely high return, requires significant risk, real
significant. And sustained risk over long period in this case. You
might have better odds in Vegas.

On Dec 8, 12:46 pm, s <s...[at]mailinator.com> wrote:
- quote -

reiterating a point from earlier-

the most successful people in life (financially) will be good at their
chosen field. I don't think working two jobs is the way to go for a
professional... I would think being real good at one job is much
better than getting income from two.

Getting a second income is a good thing- I get income from a hobby 6
months a year. Not enough to pay bills, but I clear 5 figures from
it, and take some good vacations because of it.

Saving to get to a retirement goal is about knowing several things
1) compound interest
2) time value on compounding (the biggest factor)
3) what to invest in
4) having a reasonable goal

Having just a goal is not good, if the goal is not reasonable. For
example your reaction to having $1 M suggests what many think is
reasonable (including myself) is not. So part of problem solving is
managing expectations.

You have a goal of providing income for family and need to manage
their expectations, the same way you need to look within yourself and
set goals and manage your expectations of yourself.

Look for realistic goals- most goals are SMART
Specific
Measurable
Achievable
Realistic
Timable
put this to finances and you will create success for you and your
family.

- quote -

I can confirm my company will hire a new college grad with a
Mechanical Engineering degree, a Computer Science Degree, or similar
technical degree and put them in at around $45-55k starting. I work
for worlds 12th largest employer, I believe (we are top 20 in world
employees- the only two things in more countries are the Catholic
Church and FIFA).

I started at 39k 11 years ago.

Not all 22 or 24 year olds make this, but it is clearly possible.

Thanks for the reply.

On Dec 10, 2:27 pm, Tad Borek <bore...[at]pacbell.net> wrote:

- quote -

Sorry, it seems I misunderstood Joe's point. I briefly glanced at
http://www.joetaxpayer.com/spreadsheet2.html
which mentioned age 20, salary of 60K and assumed most people of that
age earn that much. I at that point did not recall it was just a
hypothetical dataset.
I now realize it depends on field, area of living and many other
factors. Yes, someone in New York City or California in some fields at
that age might pull that income, but in other parts it is quite rare.

- quote -

I understand that, but the fact that I am new to this area of
investing and savings coupled with the fact that I will have lot of
expenses in the coming three years or so makes me think I am not
earning enough. Another factor is some links heavily biased me like
http://studentcenter.ja.org/aspx/Pla...s/stories.aspx
where teenagers were earning quite a bit
and http://www.mymoneyblog.com/archives/...our-story.html
but as Rick explained such folks are rare.

Someone mentioned to me most MBA graduates from top 5 colleges start
with 6 figure packages and some of them cross the 7 figures in some 10
years. Some other folks like my landlord who earn about 900K per year
without a high school diploma in real estate in his middle thirties,
sports/TV/movie stars stories who pull in 700K per month
http://biz.yahoo.com/hmoney/071106/1...ymag.html?.v=5
made me more confused. I was comparing myself to wrong people.

I apologize again. I am much clearer now that these people are a small
fraction of the society as John explained. I need to examine anything
before accepting it on face value. Presently, I am jumping to
conclusions which is what led to this misinterpretation.

I appreciate all the people who are trying to assist me in this group.
I just need to be lot more wiser in financial matters and read a lot
more.

Thanks so much for your advice and clarification.

On Dec 10, 2:27 pm, Tad Borek <bore...[at]pacbell.net> wrote:
- quote -

Another factor was a banker I talked to told me social security will
be depleted by the time I retire in some 40 years and one at my age
should not depend on that which made me more alarmed. The media
reports on social security and the link
http://www.mymoneyblog.com/archives/...th-update.html
which mentioned that the blog earner at age 29 had a net worth of 204K
made me even more confused and think that lot of people at 29 have a
net worth of 204K.

It seems I need to think twice before judging people in financial
matters.

Thanks for your clarification.

Default User wrote on [Mon, 10 Dec 2007 14:27:45 -0600]:
- quote -

I wasn't aware that the spreadsheet that JoeTaxpayer shows was for
software developers

It seems to assume that at age 20 everyone earns 60,000 dollars and goes
up from there

- quote -

$50K for software developers may be within the realm of possibility for
someone starting out, but the average 20 year old doesn't make anywhere
near that.

Justin wrote:

- quote -

Yeah, no way. Here's an interesting site with some salary data. I can't
say for sure how accurate it is, but it serves as a starting point for
research.

<http://www.payscale.com/research/US/..._States/Salary
It shows the median salary for people with relatively low experience to
be somewhere around $50K. That's the median, meaning half make under
that. Now, I seem to recall that that OP is in software development.
Looking at that are specifically:

<http://www.payscale.com/research/US/..._%2f_Developer
_%2f_Programmer/Salary
Sounds like he's fine, with better things to come with experience.



Brian

Tad Borek wrote:

- quote -

As often happens, between good snips and attempts to answer the OP, the
dialog wanders away from the general.

Two issues: The OP remarked that a million seemed unimaginable. I tried
to show that 1 million is the retirement investment needed to generate
$40K an income he's already well above. He can also expect inflation to
change these numbers by 2.5X or so, his $60K income inflating to $150K,
and a nest egg approaching $3M. This achievable (for him) by saving only
15% of net income, and using 8% as a rate of return.

This ignores that OP spoke of net, not gross income, and that my post,
since he didn't directly ask how much he needs to save, ignored social
security, which for the average person will provide a good chunk of
replacement income. At 26, netting $60K, he's in the top few percent as
you suggest.
JOE

s wrote on [Sun, 9 Dec 2007 10:08:54 -0600]:
- quote -

Most folks at 20 are earning 60K a year? That sounds completely wrong to
me.

s wrote:
- quote -


This newsgroup needs a reality check! Let's get some perspective here -
otherwise you're setting impossible-to-achieve financial goals.

A million bucks, in 2007 dollars, is still a LOT of money. Sorry to
burst any bubbles, but it's much more than the majority of Americans
have any hope of accumulating in their lifetimes. But that's OK because
it's also much more than most Americans retire on, or than is required
to live a perfectly adequate lifestyle without having supplemental
income (which you will, via Social Security). I hope this is obvious in
a thread where the OP talks about living on what $700/month? Even that
conservative $40k-from-$1M is $3,333/month, more than 4X that - that's
leaves some wiggle room for discretionary spending doesn't it?

And we're talking about a 20-something right? In 2004 the median net
worth for households headed by someone under age 35 was...$14,200, less
than the value of an automobile. Obviously, at age 20 or 26 it's well
below that. Even the median household net worth for all households, all
ages was only $93,000. For near-retirees (ages 55-64) it was about $249k
(home equity was a large piece of that, it was nothing like $249k in
cash-generating investments). $1M is rare indeed.

And $60,000 is an extremely high income for a 20 year old - so high it's
not even worth discussing as a starting point. I would be surprised if
2% of 20 year olds earn $60,000 per year, excluding trust
fund/inheritance recipients. The median income for ages 20-29, in 2004,
was $28,000. Obviously, the 20-year olds are at the bottom, on average,
within this 10-year age group - low-$20's or even high-teens is likely
as a median income there.

It's great that people hear the alarm bell about saving early, but the
flip side is that so much commentary focuses on what is really a very
small group of upper-class households. Financial planning is a lot more
manageable if you shoot for the 80th-percentile kinds of levels of
income and savings. Becoming a respectable pick-up ball player, not
signing a 10-year deal in the NBA. If you get beyond that, great...but
it's no failure to earn "only" $60k or accumulate "only" $300k.

And S, no offense but it seems like you keep seeing only these little
nuggets that confirm your (false) assumption that you have no money, and
are making a pauper's wage. The complete opposite is the case. Until you
have a realistic self-assessment of your finances, it'll be impossible
to achieve anything resembling financial success!

-Tad

"s" <s[at]mailinator.com> wrote in message
news:5fef9dad-f389-4c85-9859-112c43d6bc5d[at]s8g2000prg.googlegroups.com...
- quote -

I believe Skip means that you should start living on what you would have
left over after spending to support your parents and brother. Can you
continue to save toward your own retirement, save toward your house
purchase, etc. on what you have left? If not, then you either need to
increase your income, or you need to scale back the amount of help you can
give to your parents and brother. Live now as if you were supporting your
family and see if you already have sufficient income to do this.

By the way, I think the suggestion to get additional certifications in your
chose field is an excellent way to increase your future income. This is
something you can do now and will not take either as much cash or time as
getting an MBA. If you are comfortable working for the government, stay with
it as it can pay excellent financial benefits as you get older.

Elizabeth Richardson

On Dec 8, 11:54 pm, joetaxpayer <joetaxpa...[at]nospam.com> wrote:
- quote -

I sincerely appreciate yours and Elle's financial calculators.
- quote -

key to retiring properly in addition to starting as early as possible
as you indicated in your spreadsheet how most folks at 20 have a gross
of 60K per year at http://www.joetaxpayer.com/spreadsheet2.html
I wish I also were working and saving from that age.
Thanks

Thanks for your reply.

On Dec 8, 4:33 pm, "HW \"Skip\" Weldon"
<skip5700removet...[at]hotmail.com> wrote:

- quote -

I did not quite understand this part. If I have to spend some , say
for sake of an example, some 50K per year due to my parents, brother,
spouse and children a few years down the road do you mean I should
send that amount to savings account right away and whatever the
interest(5-6%) I obtain from that savings account I should use that to
support them a few years henceforth? I realize with an inflation
factor of about 4% per year and taxes due on that interest will take
away much of the gains from the 5-6% obtained.

Did I understand you correctly?

Can you please clarify?

Thanks a lot.

s wrote:

- quote -

s, I'd offer you a spreadsheet I wrote at
http://www.joetaxpayer.com/retirement.html
It offers a simple glimpse at how saving 15% (this can be 10% from you
and 5% employer match) and getting a return of 8% on average, will lead
toward having 20X your final income as savings. You can change any
variable and see the result, but the point is that a conservative long
term return can afford you a good retirement by starting young, and
saving a reasonable percentage.
A million dollars isn't much any more. To match your $60k/yr take home,
you'd need about $2M saved. Add 24 years of inflation and both numbers
double. Today's retiree with $1M can withdraw about $40k/yr gross. This
is fine as it approaches median income, but you're already well above
that. Good luck to you.
JOE

On Wed, 5 Dec 2007 05:36:36 -0600, s <s[at]mailinator.com> wrote:

- quote -

One of the problems I encounter in financial planning is where
good-hearted souls divert so much of their resources to helping others
that it virtually assures they themselves will need help at some
point. In other words, the money they give away (and the future
earnings thereon) is what would have made them financially secure.

My experience is that the most prudent gifting plans are grounded in
giving income from investments, not principal. This ensures that we
can continue to help others as the need arises and do so from a
position of financial strength. No amount of good intentions will
make up for a weakened financial situation.

So a suggestion: Come up with a rough idea of how much help you plan
to give. Then start sending that amount to a savings account now,
before it is needed. You can't touch it.

Then start saving 10% in your 401k, saving for a house down payment,
save for future big ticket items like cars, and staying out of debt.

If you can do that, then your plan will work.

In other words, run a test and see how it feels. Then you won't have
to ask about "what ifs" and you'll be moving forward with your eyes
wide open. Good luck.


-HW "Skip" Weldon
Columbia, SC

- quote -

Thanks for your reply and useful suggestions.

I at present might be earning eight times my expenses, but my expenses
will dramatically increase in a few years so I am unclear if I will be
able to break even at that point.
Another factor was I see lot of people doing two jobs at my age or as
a teenager going to college and working full time so I thought it
quite common these days. You might be aware of people sell things on e-
bay, create a blog, become a part time real estate agent and so on.
Some of such folks I have talked to mentioned that people like me who
will have a lot of expenses in the future should have ample savings
for the future and taking on second job is not an option if I want to
ensure my future expenses will be covered properly. They mentioned
that most people take on two jobs because they are in a similar
situation like me(which is they are earning a decent amount, but not
enough for their future expenses). Another factor as Elle pointed out
is at present it is a good time in view that I have less
responsibilites(don't have a spouse or children) and some time to
carry out that.

I fully agree with you that money is a means not the end and helping
our community, people in need is the proper way to find solace and
satisfaction in life.

By the way, your last goal(become a millionaire) seems the most
difficult. I did not realize anyone just working for someone(govt. or
corporate sector) could become a millionaire. I thought they needed to
invest properly from an early age with substantial amount, start a
business or go into real estate etc to achieve that goal.

I hope now you can understand my reasons for thoughts on taking a
second job.

Thanks for your advice and time.

Will Trice wrote:

- quote -

From http://en.wikipedia.org/wiki/Househo..._United_States

2006 Median Household Income: $48,201
19% are above $100,000

In 2005 it took $250,000 to get you in the top 1.5%.

In another section of that wiki article, NYT is quoted as defining
'class' by quintile of income. $88,000 will buy your way into the 'upper
class.' I found that quote odd, as I recall another article stating that
a plumber (I don't know why they chose that particular profession) no
matter what his income cannot be 'upper class' which is reserved for
doctors, lawyers, politicians, and CEOs of certain companies.

But I agree, Will, one city does not reflect the entire country.
JOE