I'm giving a serious look at retirement...at 30.

[MomToTwoBoys]

I grew up in a family that you could consider to be low-income. My mom raised three kids and worked 2 jobs (sometimes 3) at a time to help make ends meet. We always had clothes on our back, a roof over our head and food to eat but we strugged alot too. I never had alot of what every other kid had but at least I was alive and well.

It's given me a good outlook on life in financial terms and I can truly say that although I am not in the same situation I was while growing up, there are alot of similarities. My decision to become frugal and stick to a budget has done alot of good for my health and that's something that I think contributed to my mother's otherwise poor health. I think my mom worked herself too hard and didn't take good enough care of herself, always putting us kids first. I've found that I'm still able to take care of myself and put my kids first, but I'm not totally neglecting my own health in the process.

I live in a country now where I know I'll be taken care of when I get older. I'm covered by health benefits from more than one company, while as a kid my mom had to put us on Medicaid. My main concerns right now are how things will be when we get to where DH retires. My mother never had enough money to put into any savings plan and she didn't hold a career that allowed her to put money into a retirement plan. I've realized that if I want to be comfortable when I get older and not have to struggle, I need to start looking to the future and its financial obligations.

Our mortgage will be paid off in roughly 2026, which means I'll be 48. Our youngest will be all grown up and hopefully out of the home, but we may be looking at our oldest living here permanently. DH and I would really love to be able to travel and if everything goes according to plan, the only debts we'll have is the property tax and car insurance and house insurance. I'd like to explore ways to invest our money now into something more "solid". I'm afraid of things based on the markets, so I guess I'm asking what our best bet would be to start out. I'm pretty clueless as far as investing goes, so any website and/or hardcover literature would be great.

Thanks!

[suki]

Nothing will match the money that can be made through investing in the market. Safe investing = slow growth, low rate of return. In general, the advice is that if you are younger, you have time to regain whatever you might lose in the market... therefore, it is worth the risk to play it. These days, most folks hedge their bets by playing with mutual funds. Mutual funds are several stocks bundled together... basically giving you almost a full portfolio in one purchase.

You can also purchase bond funds, similar to mutual funds these are a bundle of various muni bonds and such. If you want to be safe... this is about as safe as it gets unless you want to just buy gov't bonds and call it good.

Check your CD rates and invest there also.

Without playing the market, you will not see the exponential growth that most who are aggressively seeking retirement achieve.

Good luck with your plan!

As for your comment about knowing you will be taken care of when you get older... I wouldn't bank on that. You might want to read up on Medicare and the impact of the Boomers. Definitely consider adding long term care insurance to your big picture and educate yourself a little more on the facts of "being taken care of" when you are older...

For starters, I recommend, "Get a Financial Life".

[Greebo]

Its never a bad time to start investing long term. A down market can be good for you, because when it bounces back, you'll see bigger gains.

What you want to look into are investment/retirement accounts, with a long (10 yr plus), strong (10%+), track record. T. Rowe Price has a long term mutual fund called New ERA, started in 1968, that averages 12%/yr since inception.

You really need to talk to a financial expert though - someone to review your Now in detail. Personally, I like Dave Ramsey, and I would use his site's references to help you find someone local to help you out.

[MomToTwoBoys]

I've been flirting with the idea of sticking a small amount into an RRSP now and seeing how that is when I get older. My inlaws have been investing for retirement and they have a pretty decent amount in it, but FIL is still working under contract with Access Pipelines as a cost analyst at 65. He was making roughly 85k/yr base before he stopped working for TransCanada and I know he was making at least 200/hr under contract with a few places. While we don't have that kind of cash kicking around, I figured it might be good to start now.

We'll at least have DH's pension when he retires and my VA pension when the times comes. I just want us to have enough to where I'll leave both kids something financially to stand on when we pass on. This includes any care that DS #1 will need since he's disabled.

I also totally forgot about DS #2 and his college aspirations when he gets to be 17/18. He's 4 now and while he'd be able to at least go to the technical college here (SAIT), I'd like him to be able to pick a university and for us to help him out with that. He's a pretty smart kid but I don't want to bank on him being a complete bookworm to the point of driving himself crazy. I guess we have both college AND retirement to plan for. He's a dual citizen, being that I was born in the US and his father was born in Canada, so I'm not sure what we can give him in terms of being able to go to school either in Canada or the US.

I'll check out both the RSP and the RESP (the RESP being the education savings plan and the RSP being the retirement plan) and what my bank has to offer. I'll also check out the Dave Ramsey stuff, though I don't know how much that'll apply to me since I live in Canada.

Thanks!

[frugal-fannie]

Unless you are getting a tax break for retirement your best bet is pay your house off early. Set up a biweekly payment, it will knock approximately 3years off a 15 year and 7 years off a 30year loan.That is if you are debt free except for the house. if not pay those debts first the high rates of interest on cc are hard to make in the market.

[The Muse]

Set up a biweekly payment, it will knock approximately 3years off a 15 year and 7 years off a 30year loan.

Good advice, but many mortgage companies require you to pay an enrollment fee and a monthly transaction fee to set-up biweekly payments. This is a "stupid tax" since the objective/advantage of the biweekly payments is that you'll simply end up making 13 principal payments vs. 12.

The free way to do this is to either add an additional principal payment at some point during the year, or add a little extra to principal each month so that at the end of the year you've made the equivilent of an extra principal payment.

[dancar3]

I'll also check out the Dave Ramsey stuff, though I don't know how much that'll apply to me since I live in Canada.

Thanks!

Dave Ramsey is awesome and what he teaches pretty much applies to wherever you live......even in Canada!

[azangie]

That's good advice about paying your house off early. That's what allowed us both to retire at 50. We paid the house off while we were still working and had 2 years of no house payment before we retired.

[frugal-fannie]

Good advice, but many mortgage companies require you to pay an enrollment fee and a monthly transaction fee to set-up biweekly payments. This is a "stupid tax" since the objective/advantage of the biweekly payments is that you'll simply end up making 13 principal payments vs. 12.

The free way to do this is to either add an additional principal payment at some point during the year, or add a little extra to principal each month so that at the end of the year you've made the equivilent of an extra principal payment.

I like the idea of adding the biweekly and making an extra payment.I only paid around $300 one time start up fee and that paid for itself in the first year.

[MomToTwoBoys]

We actually set up our mortgage when we bought the house for it to be taken out bi-weekly. It's good because it comes out the same day that DH gets paid. We were locked into a 25-yr mortgage for the amount of $119,500 at 4.35% interest (I think). We're looking at it being paid off in about 20-21 years instead of 25 years.

[The Muse]

I like the idea of adding the biweekly and making an extra payment.I only paid around $300 one time start up fee and that paid for itself in the first year.

I don't understand how it "paid for itself" when you could've gotten the same end result free by making the extra payment yourself. Seems like you paid $300 for the "privilage" of making an extra payment each year.

Am I missing something?

[Greebo]

No, you're not missing anything.

Mortgages don't usually compound interest daily, they compound monthly.

So it doesn't matter if you pay 2x a month or every 2 weeks or 1 time a week - your interest is calculated on the balance of the mortgage on the same day each month.

If you get paid biweekly, just pay your mortgage payment and a half on those 2 months a year you get 3 paychecks. Those are the ONLY months where you're actually seeing a real drop in principal.

[frugal-fannie]

I don't understand how it "paid for itself" when you could've gotten the same end result free by making the extra payment yourself. Seems like you paid $300 for the "privilage" of making an extra payment each year.

Am I missing something?

Probably not because I am not that good to remember or wouldn't have the extra payment by the end of the year. It is easier for me that it is taken out automatically. I don't have to think about it.Most of us don't have an extra payment around. If you divide it out over the life of the loan. I think it is worth it.Some banks don't charge anything for it, mine did not offer it at the time.