I don’t think the marginal dollar invested in a retirement account yields anywhere near the utility of the marginal dollar spent elsewhere, even with the tax advantages. Freezing your money for decades is a huge deal. If you’re 55, sure, go ahead; if you’re in your twenties, putting money into a retirement account is almost as bad as setting it on fire.
There are various ways you can take money out of your retirement accounts if you need to, with and without penalty. For instance, you can take loans against a 401K.
Meanwhile I’m updating my outline for a rational financial planning sequence. I think I may have to begin with posts on why it makes sense to plan for retirement, and how cool compound interest is.
You (general ‘you’, not elharo) know someone is “out to get you” when they downvote your comment saying that you will enjoy something someone else is planning to do, and encourage them with a smile, and that correlates perfectly with all your comments in a single post being downvoted by one since last you saw.
If you ever need to make sure, try it. Now that there is no more way for people to go to someone’s name and downvote everything they wrote, it will be a good way of knowing if haters are haunting you.
Sort of, but the value of money is not linear in utility. If we simplify our assumptions and pretend it’s really a binary choice, would you rather buy some flying lessons when you’re in your twenties, or your own airplane when you’re in your fifties? Some trips to Hawaii in your twenties, or a house in the Maldives in your fifties? I may exaggerate, but my point is that larger sums of money can buy an entirely different class of things.
I actually agree with you, however, if only because I believe it’s unlikely that the economy will still be around when I’m 55.
Good insight. Can you elaborate on why you think it’s unlikely that the economy will still be around when you’re 55? Also by economy to you mean the world economy, the U.S. economy, or the economy of some other specific country or region?
I suspect this gives me two more posts for the rational financial planning sequence:
Why existential risk does not mean we should ignore common, personal risks.
I was being tongue-in-cheek, gesturing towards the basic transhumanist stance that everything will be different. What I mean is that any investments I make today are tied to many implicit assumptions about the world’s trajectory over the coming years, and that I don’t expect these assumptions to hold true over that time frame, especially considering the accelerating change I’ve observed in my lifetime so far.
None of this actually stops me from investing a reasonable amount in boring investments like index funds because I simply don’t have that much stuff I want to spend money on.
Jimrandomh’s point (which I strongly agree with) was regarding saving in tax advantaged accounts. The withdraw restrictions, even after retirement age, would not let you make those massive purchases anyway.
I don’t think the marginal dollar invested in a retirement account yields anywhere near the utility of the marginal dollar spent elsewhere, even with the tax advantages. Freezing your money for decades is a huge deal. If you’re 55, sure, go ahead; if you’re in your twenties, putting money into a retirement account is almost as bad as setting it on fire.
There are various ways you can take money out of your retirement accounts if you need to, with and without penalty. For instance, you can take loans against a 401K.
Meanwhile I’m updating my outline for a rational financial planning sequence. I think I may have to begin with posts on why it makes sense to plan for retirement, and how cool compound interest is.
I’d love to read that :)
You (general ‘you’, not elharo) know someone is “out to get you” when they downvote your comment saying that you will enjoy something someone else is planning to do, and encourage them with a smile, and that correlates perfectly with all your comments in a single post being downvoted by one since last you saw.
If you ever need to make sure, try it. Now that there is no more way for people to go to someone’s name and downvote everything they wrote, it will be a good way of knowing if haters are haunting you.
Sort of, but the value of money is not linear in utility. If we simplify our assumptions and pretend it’s really a binary choice, would you rather buy some flying lessons when you’re in your twenties, or your own airplane when you’re in your fifties? Some trips to Hawaii in your twenties, or a house in the Maldives in your fifties? I may exaggerate, but my point is that larger sums of money can buy an entirely different class of things.
I actually agree with you, however, if only because I believe it’s unlikely that the economy will still be around when I’m 55.
Good insight. Can you elaborate on why you think it’s unlikely that the economy will still be around when you’re 55? Also by economy to you mean the world economy, the U.S. economy, or the economy of some other specific country or region?
I suspect this gives me two more posts for the rational financial planning sequence:
Why existential risk does not mean we should ignore common, personal risks.
How to ignore financial hucksters and doomsayers
I was being tongue-in-cheek, gesturing towards the basic transhumanist stance that everything will be different. What I mean is that any investments I make today are tied to many implicit assumptions about the world’s trajectory over the coming years, and that I don’t expect these assumptions to hold true over that time frame, especially considering the accelerating change I’ve observed in my lifetime so far.
None of this actually stops me from investing a reasonable amount in boring investments like index funds because I simply don’t have that much stuff I want to spend money on.
If you’re expecting a 3.5% ROI, then after 30 years you’ll only have 2.8 times what you put away. (Assuming no taxes)
“only”
Jimrandomh’s point (which I strongly agree with) was regarding saving in tax advantaged accounts. The withdraw restrictions, even after retirement age, would not let you make those massive purchases anyway.
You can withdraw money from a traditional IRA for a first time home purchase without penalty, I think.
Only $10K.