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Home > Is a 16.5% return worth 30 years of delayed gratification??

Is a 16.5% return worth 30 years of delayed gratification??

April 27th, 2011 at 01:02 pm

Let me explain....Lately I have been really second guessing myself. Can I really keep this up to another 13 years.

If not I better make changes. Currently I am investing the MAX into my retirement. Because I do this it results in an earned income credit of $2640 more than I would get if I didn't save any in pre-tax dollars. This is basically 16.50% return on the deposit BUT I can't touch it until I am 65 years old.

I wonder is that 16.5% or $2,640 worth it, or should I start funding my Roth IRA and investing in the stock market then when I make a career change I can slowly sell my stock and use it to make my mortgage payments.

I guess option 2 is to instead of putting money into the Retirement account put that amount into my mortgage and then refinance/downsize when I make the change. But will I be refinancing with a higher interest rate? Applying 16,500 a year would take 8 years to pay off my mortgage. If I made it 8 more years in this job I would be crazy to quit.

Truthfully I have been unsatisified with my work life for about 2 years but I have been hanging in because I did not see any other choice. If I change jobs unless I downsize I will be house poor.

I wish I had been able to sell my house when I got divorced because then I would have had a smaller mortgage and would feel like I could make a change. Right now if you figure reducing my income by that 16,500 per year I need a job that makes 36K a year or approx $16 an hour, just to keep maintaining without any retirement savings.

I need a personal cheerleader, the reward is AWESOME if I can hold out in this job another 13 years. The reward is good if I can hold out in this job part time for another 9.5 years.

I am just getting burnt out, I am tired of working 40 hours a weeks plus having to work one weekend which means once a month I have a 12 day streatch without a day off. Once a year I have to leave my son with family for two weeks minimum. Next year I will gone from home for a whole year. I will make approxmately $500 more per month BUT my bills because of this go up MORE than $500 per month.

Last year I signed a 6 year extension but truthfully I am starting to think I should request a hardship discharge. The 6 year extension does not mean I could not switch to part-time, which would be alot easier. I could also go part-time then IF my part-time does not work with my new job request ING then possibly Discharge based on employment conflict.

Everytime I leave for Annual Training, for Job Training, Flood Duty it is getting harder and harder mentally on my son.

I need to start planning short term instead of long term because I don't know how much longer until I burn out. I guess another problem is I am tired of fighting the weight battle. I am allowed to weigh 149 pounds or % body fat. At 149 pounds I wear a size 7/8. My body naturally falls at 165 so the % body fat option has been my option for YEARS. Right now I need to drop weight to get down to my % body percentage. Some times I just wish I could eat what I want and exercise because I enjoy it instead of doing it because someone is going to be putting a tape measure to my body or counting my reps or timing me and judging me.

4 Responses to “Is a 16.5% return worth 30 years of delayed gratification??”

  1. retire@50 Says:

    There are several ways you can get to your 401/IRA money without penalties before 65. You might want to check out this website.

    specifically the section on withdrawing from an IRA before 59 1/2

    Also check out the IRS site. I withdraw money to cover my medical expenses including insurance premiums each year and don't have to pay any penalties.

    Early retirement is fabulous. Smile

  2. baselle Says:

    I don't think any return like that is worth if the choice is 30 yr (or 8 yr or 13.5 yr) doing a job that you hate or fear. You are burning out right now because you feel (and are) trapped and you need some money so that you can develop some options. Even if the developing options is just in the thought stage, it means that you are less likely to burn out.

    I'd vote for the Roth. Whatever money you put into the Roth means you can take it out again, you are only penalized in pulling out the money that your money made (cap gain, dividend, interest).

    Remember that your mental health is worth something ... its probably your biggest asset.

  3. MonkeyMama Says:

    Unfortunately (or fortunately?) getting at retirement money is extremely difficult. I think it's safe to assume you won't want to touch it for 30 years, if it is any retirement vehicle. If I wanted money to use sooner, I wouldn't put it in a retirement vehicle. ROTHs are interesting - easy to get at, but probably the last thing you should touch! Why tap money that is tax-free for the rest of your life? Hard to do if you really think about it. That said, the ROTH is probably a fair choice.

    So what percent are you saving to your 401? Is that like 30%? I personally wouldn't do it. There is a time in my past I would, and probably a time in my future. But in the here and now I have too many other priorities, when 10-15% to retirement is quite ample.

    Anyway, I am sure if I put 30% of my money to retirement, too, I could squeeze our some awesome tax deal, but I wouldn't do so because it wouldn't make any sense. Moderation/balance is extremely important to me. Spending time with my kids is far more important to me than saving 30% of my income during their short youth.

    I personally wouldn't waste 10 years of my life in a job that made me miserable or unhappy. Life is too short!

  4. LittleMsMom Says:

    Thank you all for your comments and suggestions.

    MonkeyMama: Yes my 401K which is actually a TSP account is currently saving at 31% of my total pay which is 52% of my taxable pay. Yesterday I actually dropped it to 1% of taxable basepay. It will stay at 1% until I have funded my Roth and figure out what I want to do.

    I guess I feel like I started so late (saving for retirement) that I am now overdoing it. I am so confused, because I can't figure out when I am to a point where I can say okay I am on track and can now save just 10-15%.

    My new plan is to use that extra money to save for my Checkbook Cushion then I will fund a Roth IRA, then I will invest the rest in the stock market.

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