Hopefully those habits rub off on your boy.

Much respect for doing it on your own!

I will admit that I was always adamantly SAHM, up until it came time for her to quit. We now have 3 little ones. She's HR with an F100 company. Direct comp is relatively modest, but benefits are great…6mo PTO for each birth, 401k, pension, cheap family health plan. Best of all, she's 100% WFH, no travel, and her flexible/light workload means she gets to spend every afternoon with the kids. It's really the best of both worlds. Not sure how long it will last but we're gonna stick with as long as we can.

RightWingConspirator said:

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If I didn't know better I'd think you were talking about my wife. I could not have done it without her. I know it's been stated before on this very thread, but one cannot underestimate how important choosing the right spouse is. In my opinion, it's the most important decision one can make when it comes to gaining wealth.

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this can't be emphasized enough. my wife and i started dating in undergrad, and she was pretty early on the FIRE trend when we graduated in 2011 and got me into it. both of us paid our way through school with scholarships and internship money, so no student debt. we both got well paying gigs in the o&g industry after school and immediately maxed 401k, ira, hsa every year, and threw whatever else we could spare into brokerage. no fancy investing strategy, just parked it all in index funds. we lived well below our means and saved/invested most of the money we made, and a lot of those habits stuck as we got older: bought a cheap starter home at 25, lots of bulk cooking and meal prep, buying used for major purchases, credit card points churning for vacations, moved close to family when we had kids to save on childcare, etc.

we hit $1 million at 28, $2 million at 32, and then made well-timed jumps over to big tech during the pandemic. i got lucky with the timing of my last move, the stock has gone crazy and my rsu comp ballooned absurdly. our goal for retirement was $3 million liquid by 40 but we hit that six years early, at this point we're just gonna wait until all my rsus vest and our youngest starts kindergarten next year. our jobs are 100% wfh and pretty low-demand, so we don't mind holding out.

all credit to my wife for putting us on this path while we were young, couldn't have done it without her.

P.H. Dexippus said:

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I will admit that I was always adamantly SAHM, up until it came time for her to quit. We now have 3 little ones. She's HR with an F100 company. Direct comp is relatively modest, but benefits are great…6mo PTO for each birth, 401k, pension, cheap family health plan. Best of all, she's 100% WFH, no travel, and her flexible/light workload means she gets to spend every afternoon with the kids. It's really the best of both worlds. Not sure how long it will last but we're gonna stick with as long as we can.

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Yes, this seems like a no brainer.

Red Pear Realty said:

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Quote below from the article you posted. The average person won't be able to retire and live on their 401k and IRA. But yes, the headline about 401k millionaires growing sounds nice.

Quote:

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The average 401(k) balance ended 2023 up 14% from a year earlier to $118,600, Fidelity found.

The average individual retirement account balance also gained 12% year over year to $116,600 in the fourth quarter of 2023.

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That's a function of people not taking advantage of it rather than the 401k being at fault.

Very few people save in this country regardless of the savings vehicles available to them.

probably also need to consider the fact that some people might have 4-5 401ks or rollover IRAs...

YouBet said:

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Red Pear Realty said:

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Quote below from the article you posted. The average person won't be able to retire and live on their 401k and IRA. But yes, the headline about 401k millionaires growing sounds nice.

Quote:

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The average 401(k) balance ended 2023 up 14% from a year earlier to $118,600, Fidelity found.

The average individual retirement account balance also gained 12% year over year to $116,600 in the fourth quarter of 2023.

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That's a function of people not taking advantage of it rather than the 401k being at fault.

Very few people save in this country regardless of the savings vehicles available to them.

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Yep. He's using a cherry-picked stat to make a weak connection to his argument.

My whole point from the beginning was that you cannot rely on a 401k to make you wealthy. You have to invest via other means. With the stats above, even assuming every American has 4-5 accounts with that average balance, the average person will be living below the poverty line.

krosch11 said:

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Speaking of 401ks my wife's has sat stagnant for awhile while staying at home. Is there something I should be doing with that besides letting it accrue dividends ?

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Make sure it's invested in a low fee, broadly diversified fund through someone like Fidelity, Vanguard, Schwab, etc. The number of people who I've heard of not taking the second step of actually investing their 401k/IRA funds after placing them in the account is staggering. Definitely make sure the funds are actually invested.

VTSAX is an example.

Red Pear Realty said:

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I cherry picked? The article headline talks about average 401k millionaires and balances being up YOY.

There's a reason the article doesn't mention median numbers. 401k millionaires are the unicorns. This argument is like encouraging people to play the lottery because someone won big one time. It's not realistic.

And to be exact, the article says 401k balances are up 14% YOY. Meanwhile the S&P is up 24%. And we've established that employers offer these accounts out of benevolence so they are doing some generous matching, right? With their match, they barely returned half of the S&P. Looks like contributors lost again.

This article is bread and circuses.

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Over 3% have a million dollars so that is far from a unicorn. If you were to see how many people have their money invested, you would see why it returned less than the S&P because a lot of people wrongly think they can't risk their retirement money. At our company a few years ago, they said over 20% were invested in money markets and short term UST.

We had a similar percentage that didn't even invest in the 401K to get our 1:1 match up to 6%.

Also, retail investors have been proven time and time again to underperform the market because they tend to buy at the top and panic sell at the bottom.

Red Pear Realty said:

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These are all reasons you shouldn't rely solely on your 401k/IRA and should have other investments.

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I haven't heard anyone here saying they should be the only investment for retirement but your comments sound like you think they are a virtual scam and a bad investment. For most people, they should be one of their two largest investments when they retire. They can be one of the best wealth creators but most Americans want to live beyond their means and not save for the future so many don't take advantage of them.

Red Pear Realty said:

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I cherry picked? The article headline talks about average 401k millionaires and balances being up YOY.

There's a reason the article doesn't mention median numbers. 401k millionaires are the unicorns. This argument is like encouraging people to play the lottery because someone won big one time. It's not realistic.

And to be exact, the article says 401k balances are up 14% YOY. Meanwhile the S&P is up 24%. And we've established that employers offer these accounts out of benevolence so they are doing some generous matching, right? With their match, they barely returned half of the S&P. Looks like contributors lost again.

This article is bread and circuses.

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Employer match are contributions. Just ask the IRS. So comparing balances to SPY returns is meaningless for a few reasons.

A majority of people invest in target date funds. You can also invest it all in SPY equivalent and obviously the returns would be literally the same as the S&P.

Balances include withdrawals. You have to read a bit further into the Fidelity report, but the +14% is net of contributions, withdrawals (olds are people too with 401(k)s) and market returns. It makes no sense to compare rate of SPY returns and YoY balance increase.

Red Pear Realty said:

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My whole point from the beginning was that you cannot rely on a 401k to make you wealthy. You have to invest via other means. With the stats above, even assuming every American has 4-5 accounts with that average balance, the average person will be living below the poverty line.

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I don't think anyone is arguing that. Go back to 2/19 where I summed this up. This entire conversation was kicked off with a comment that being "in the market" won't make you wealthy. You distilled the market down to just a 401k. The market is larger than the 401k but to trash that vehicle as essentially pointless doesn't make any sense.

It's the lynch pin of the vast majority of peoples wealth that they do have. Not everyone can just go start a business. Somebody has to work at public companies.

Medaggie said:

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I have some in IRAs but I think having RE or a business is more advantageous. The deductions are great.

When you hit retirement, you have to begin withdrawal and in theory should get closer to zero when you get older. You typically can not withdrawal without penalty until you hit your 60's. Being forced to work unless you have other passive forms of income.

If you have RE, the asset doesn't go down and likely goes up, plus you get to take a "dividend" as income. Also it is a hedge against inflation.

if you have a business, assuming the business continues to do well, you get to take "Profit sharing" and the business chugs along.

I think diversification is the best, so I have (by happen chance more than planning), my wealth as follows

30% business - 60% of income
10% IRAs - 0% income
10% syndications - 5% income
50% RE - 10% income.
Work - 35% of income

If i stopped working and have paid off RE, then RE will account for 25% of income. It is a good place to be because the goose (Business and RE) continues to produce and likely go up in value.

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I'll give a few counterpoints (there are many more):

1) 9% of Americans own a business. We are talking about the other 91%, generally. And a large % of businesses fail, which makes it clear why everyone doesn't do it that way.
2) IRA =/= to a 401(k), where employer matching funds can boost returns by 50-100% upon vesting. Pretty nice return. IRAs are fine, but 401(k)s can produce much more wealth because many companies match contributions. Between tax advantages and employer matching, I challenge anyone to consistently perform better with an equal amount of after-tax funds than a simple diversified 401(k).
3) Generally, syndications, private equity, alternative investments and the like are not for everyone, due to their complexity, risk, and unavailability to the masses. They might be great for those who have access, but I think most would agree they're not equally available for everyone.
4) Real Estate investing can be very hands-on and time consuming. For those who have the financial wherewithal to hire out the formation and management, it still has a lot of risks that a well-balanced equity portfolio does not (i.e. interest rate risk, liquidity risk, liability, etc.).
5) Actively managing an investment portfolio takes a lot of education, time, and experience. Most people have other time requirements in their day job, family responsibilities, and lack of flexibility that preclude them from succeeding the way others might.

Bottom line - - your way isn't wrong, but it certainly isn't right for everyone. I don't understand why people like oldarmy1 and Red Pear Realty insist that people are stupid if they don't do it their way. Isn't it better to share some ideas, suggestions, and experiences with others, rather than belittling people who can't or won't do it totally their way? Not all of us have a billion dollar payday that we backed away from to attend a soccer practice.