I'm 19, starting my first job and thinking about retirement.

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I'm 19, starting my first job and thinking about retirement.

Postby christopherwhitener » Wed May 08, 2013 8:49 am

My uncle has talked to me about starting for my retirement now, so that I have less to worry about when I reach my 70's. He told me an index fund would be the best option with a good rate of return, but less volatility, fees and surcharges than a mutual fund. By starting now and putting up 20% of my pay. I know it is not that much money at this time, but if I start now it will be in the end. I should be set with my pension and social security and any other benefits from my permanent job, once I finish school. I just want to make sure I have my own retirement plan set up, because my uncle says that you are not guaranteed a pension and 401k from corporations anymore. But what are some good index funds that I can look into and research. Also, what should I be looking for when choosing my fund. Please remember that I will be handling this fund on my own for the next 50 years. This is my personal retirement account, outside of anything any future employer may offer me. I watched Mr. Bogle on frontline with my uncle and I hope you can offer me some good advice for the future. Thank you.
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Re: I'm 19, starting my first job and thinking about retirem

Postby Grt2bOutdoors » Wed May 08, 2013 1:09 pm

christopherwhitener wrote:My uncle has talked to me about starting for my retirement now, so that I have less to worry about when I reach my 70's. He told me an index fund would be the best option with a good rate of return, but less volatility, fees and surcharges than a mutual fund. By starting now and putting up 20% of my pay. I know it is not that much money at this time, but if I start now it will be in the end. I should be set with my pension and social security and any other benefits from my permanent job, once I finish school. I just want to make sure I have my own retirement plan set up, because my uncle says that you are not guaranteed a pension and 401k from corporations anymore. But what are some good index funds that I can look into and research. Also, what should I be looking for when choosing my fund. Please remember that I will be handling this fund on my own for the next 50 years. This is my personal retirement account, outside of anything any future employer may offer me. I watched Mr. Bogle on frontline with my uncle and I hope you can offer me some good advice for the future. Thank you.


Hello and welcome to the forum!
You are off to a great start and your uncle has done you a great favor in explaining the merits of starting a savings and investment program sooner rather than later. The key thing to remember is to save often, invest according to your ability, need and willingess to accept risk and to watch your expenses. I would recommend you borrow The Bogleheads Guide to Investing or The Little Book of Common Sense Investing (John Bogle) from the public library so you can understand the concepts of investing. Have you visited the wiki yet? http://www.bogleheads.org/wiki It is chockfull of information on personal finance and investing (including retirement planning). A reasonable fund for you to use for your IRA would be one of the Target Retirement funds - low minimum of $1,000 to open the account - it is indexed and is well diversified with investments in the domestic and international equities markets and fixed income investments. The key to the Target Retirement fund is "you don't have to manage it" - it is managed for you, all you need to do is to save, invest and "stay the course" - you have a long time horizon in front of you before retirement comes.
"Luck is not a strategy" Asking Portfolio Questions
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Re: I'm 19, starting my first job and thinking about retirem

Postby BuckyBadger » Wed May 08, 2013 1:14 pm

Remember, too, that at 19, it's unlikely that there will be many pensioned jobs when you're in your working years. The number of pensions these days (not to even discuss underfunded ones) are decreasing, and even jobs that are known to have pensions now may not have them in 10-20 years, or may be phasing them out. And who knows if the first permanent job you get will be one you keep for life. That kind of employment is also getting rarer and rarer.

So you're doing great - start saving 20% of your pay and keep it up even when your pay increases and you'll be well on your way to a nice (and maybe even much earlier than in your 70s) retirement. But don't count on a pension. (Or even on a lot of social security. I'm sure it'll be around, but it's going to have to change in the next 50 years, so I wouldn't count on it being the same as it is today.)

Good luck!
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Re: I'm 19, starting my first job and thinking about retirem

Postby Grt2bOutdoors » Wed May 08, 2013 3:26 pm

BuckyBadger wrote:So you're doing great - start saving 20% of your pay and keep it up even when your pay increases and you'll be well on your way to a nice (and maybe even much earlier than in your 70s) retirement. But don't count on a pension. (Or even on a lot of social security. I'm sure it'll be around, but it's going to have to change in the next 50 years, so I wouldn't count on it being the same as it is today.)

Good luck!


If you can not save 20% - do not be discouraged. The key thing is to Start Today! Even if it is with the bare minimum until you can save more.
"Luck is not a strategy" Asking Portfolio Questions
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Re: I'm 19, starting my first job and thinking about retirem

Postby BL » Wed May 08, 2013 3:41 pm

Your uncle is doing you a great service by encouraging you to start saving now with index funds. I agree that saving up until you can put $1000 into a Target Retirement fund in a Roth you can set up at Vanguard. I believe you can add to it in $100 increments, either automatically or going into their web site. I also believe there is no cost (except for the Expense Ratio, ER, of under 0.20% within the fund itself) if you agree to all correspondence online. The TR funds are made up of Total Stock Market Index, Total International Index, and Total Bond Index funds in varying proportions. I would chose by desired proportion rather than just the date, as many here think they are too aggressive and may scare you when stocks drop 50%.

Would also encourage you to start an emergency fund of ready cash so you do not have to go into debt when the unexpected pops up. Living below your means is a good philosophy, it does not mean not to have fun as well.
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Re: I'm 19, starting my first job and thinking about retirem

Postby jasg » Thu May 09, 2013 8:07 pm

Grt2bOutdoors wrote:
BuckyBadger wrote:So you're doing great - start saving 20% of your pay and keep it up even when your pay increases and you'll be well on your way to a nice (and maybe even much earlier than in your 70s) retirement. But don't count on a pension. (Or even on a lot of social security. I'm sure it'll be around, but it's going to have to change in the next 50 years, so I wouldn't count on it being the same as it is today.)

Good luck!


If you can not save 20% - do not be discouraged. The key thing is to Start Today! Even if it is with the bare minimum until you can save more.
You have a great uncle. Let me share a couple of things from the point of view of a guy who really didn't start saving in earnest until he was 40.

    - At that time, I read an article that pointed out that if you saved the same amount weekly from age 20-30 and stopped, you would be ahead of someone who started at 30 and continued until 65. Such is the power of compound interest.

    - Work towards a goal of contributing the maximum allowed amount in a retirement account.

    - NEVER borrow against your retirement account (if you end up with one that allows that).

    - Once you hit that goal, start a brokerage account and fund it with raises and bonus money. Don't let that money hit your checking account first! After you route the raise to the brokerage account, decide how much of it you might need to live better - but remember that before the raise, you might have been doing OK.

As a real life example of compound interest, some years ago I found out that firm I worked for from 1975-1980 had put 3% of my pay in to TIAA/CREF and it had vested before I left (a grand total of $2168). It is now worth over $53K - roughly 9% per year.
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