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Author: bether One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 294  
Subject: How much is enough? Date: 7/14/2000 11:18 AM
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Warning: long post.

I posted this on my Rule Maker Seminar board, but thought it Foolish to get this board's comments as well...

I hear a lot of the emphasis on saving for retirement (which does need to be a priority), but once I know I'm okay with the amount I have in investments (401(k), Roth IRA, etc.) I don't want to be setting money aside for retirement at the expense of other legitimate needs. And, I guess I don't know when there is "enough" socked away for retirement.

I'm almost 30, and my husband and I have about $45k in retirement accounts of one form or another. (And he is still contributing to his current 401(k)). If we get a return of 10%, which I hope to beat, in 35 years we'll have almost half a million dollars. Even after Uncle Sam takes his share, that's still quite sufficient to live on! (And that's the minimum return I hope to get!)

So I guess my real question is, how do I know that I have enough for retirement so I can start directing some of the money that I could allocate for Roth IRA contributions, etc., toward saving for our next home, kids' college, etc.

We live below our means on my husband's salary, and our only debt is our mortgage - but since I'm a stay-at-home Mom, we don't have that much extra money each month and I want to be Foolish about where that money goes.

PS We were able to accumulate so much in our retirement accounts because all I knew about saving for retirement when I starting working after college was "direct as much as you can, as early as you can toward your retirement" -- and that limited knowledge has reaped great rewards.

I guess this "newbie" is looking for someone to say "Hey - you have enough for retirement already -- direct that cold cash to something else!"

It's a good "problem" to have.

Beth
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Author: dan2 Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 44 of 294
Subject: Re: How much is enough? Date: 7/21/2000 1:58 AM
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Hi Beth,

You wrote I guess this "newbie" is looking for someone to say "Hey - you have enough for retirement already -- direct that cold cash to something else!"

I feel like the teller of a good news bad news joke. The good news is that the $45,000 you have in your retirement accounts is more than enough to retire on in 30 years. The bad news is not at a 10% return. If inflation averages 3% per year for the next thirty years, you will need almost two and one half times your current income to maintain your current life style.
In addition, as the years go by and your family income increases, you will find that your wants will be greater than they are now. When it is time to retire, it is better to maintain your life style than to have to cut back because of financial needs.

The best news is that if you can compound your returns at a rate of only 20% for next thirty years, your 45,000 will grow to over ten million dollars.

The Foolish Workshop board is dedicated to mechanical investing techniques and suggests many different ways to invext that have over the last 30 years surpassed a 20% compound annual growth rate. Below is a link to the Foolish Workshop.

http://www.fool.com/workshop/workshop.htm

Regards,

Dan

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Author: bether One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 45 of 294
Subject: Re: How much is enough? Date: 7/21/2000 10:10 AM
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Thanks for your message Dan, I'll take a look at the link you provided. To be honest, I
started investing in Nov using the Foolish Four (RP4)...but haven't been pleased with it so
far. It seems like investing in individual companies makes more sense to me than a
"mechanical investing" program, but I haven't researched that assumption yet, if nothing else, I'm sure I'll learn something by looking into it.

Thanks again.

Beth

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Author: sonny36 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 60 of 294
Subject: Re: How much is enough? Date: 11/9/2000 8:01 AM
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There several good articles in the fool.com archives dealing with the 5% solution and using the twenty factor that deals with this question. These articles started during 1997 reacting to Peter Lynche's article, The five percent solution, in the Worth magazine, 1996. I have developed an Excel spreadsheet called, When Can I Retire that helps you answer this important question. If you would email at;
gstipps@iquest.net, I would be happy to send you a copy of this spreadsheet with instructions on how to use it.

glenn

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