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How to Retire One Day
diclaimer: This is written by a USA. The direct, specific advice is directed at my fellow yanks. Those are the numbers and nuances I know. There will be something here for other folks, mostly in the sections that cover mindset. I'm going to talk about things as they are, not as they should be. I am not an expert, I have read several books on this and this a summary.
0. How do you live? 1. Personal Finance 2. The Dark Forest Ahead 3. F.I.R.E. 4. The Well Trodden Path 5. The Paths to Gold 6. The Paths to Time 7. On Work 8. On Financing, Loans, and Homeownership 9. On Death 10. In Conclusion
0. How do you live? MUSIC: Low Key Gliding - Hal Walker Who are you? What do you value? How much risk can you tolerate? What is you capacity to tolerate catastrphy? Getting finances in order is about making concious decisions when you were not doing so before. One who trods down this path–treating it with the gravity it deservces–will rebuild their finicial world in the image of what they value in life. Finances should be a mirror of what you want your life to be in all stages; iin youth, in middle age, in the elder years, and in death. It's a tool that enables you to live the life you desire, a filter to remove foolish decisions, and a scale to measure things by their proper weight. If you haven't yet sit down in a comfterable spot. For me it'd be with some hot coffee, some tastey lunch food, on a cozy blanket, in a spot overlooking the great river that runs through my city, and with my brother in tow to run my thoughts by. Have a think. How do you live?
1. Personal Finance MUSIC: Drive45 - Everything I own
1a. Savings 1b. Spending 1c. Monitoring 1d. Interest 1e. Taxes 1f. Investing 1g. Insurance
2. The Dark Forest Ahead じぶんがいない - salyu × salyu
2a. Tax Advantaged Investments 2b. Pensions and Social Security 2c. Real Property 2d. Children and Community MUSIC They Caught us Doin' it - The Vaudevillian
To retirement your money must be working for you. Money in a bank, in a mattress, or in non-appreceating assets are not retirement savings. A healthy retrement savings is one in which those savings are growing heavily in value. The most common way folks invest their retirement savings is into the stock market. It is the safest way to get to retirement.
2a. Tax Advantaged Investments
The main way most folks save for retirement is tax advanataged investments. These are in two broad catagories, Tax Differred and Tax Exempt. Both reduce the amount of taxes you pay on income, just at different points in your life. Withdrawls from tax advantaged are penalized if done before retirement, with some exceptions and nuances. Broadly speaking they protect your money as well; they can't be seized if you go bankrupt, are generally sheilded if you get sued, and are hard for creditors to access.
Tax Differred
Tax Differred accounts reduce your immedate tax burden. You should put more of your retirement savings into a tax differed account if you expect your income to be lower in retirement than what your current income. Most folks will make less in retirement than they make for most of their career, and as such they ought to place most or all of their retirement savings into a tax differed account. A 401K (offered by private employers) is the most common type of tax differed account, but there's also 403(b) (offered by nonprofits), TSPs (for government workers), and Tradtional IRAs (available to everyone). These work mostly the same, but there are nuances. You should read about the details of these accounts when they're made available to you. If you don't have access to these (e.g. you are self employed) you should read about and invest into a Traditional IRA.
Example: If Oliver made $50,000 and invests $3,000 into a tax differed account they'd only be taxed on $47,000 of their income. When Olliver retires they to withdraw $40,000 to cover their living expenses. The $40,000 withdrawn is treated as income, and will be taxed as such.
Tax Exempt
Tax exempt accounts are accounts that reduce your tax burden in retirement. You still pay income tax on tax exempt accounts, but you will not need to pay it in income taxed when you withdraw from your retirement accounts.
3. F.I.R.E. MUSIC: Fire Sale - Church & AP Remix
4. The Well Trodden Path
5. The Paths to Gold SWEAT - MUSIC: Nice Things - Tank and Bangas
6. The Paths to Time MUSIC: Drugs - The Philharmonik
7. On Work
8. On Financing, Loans, and Homeownership MUSIC: An Elusive Nightmare - Rockos
9. On Death MUSIC - Waiting for Death - CandleKid
10. In Conclusion MUSIC: Back when I was 4 - Jeffery Lewis
Good Music listened to while writing this:
Brain breakers:
Tsu No Guemi - Rory in early 20s. lolil0 0pz - Goreshit HD.189733.B- c678924