Browse Category: Personal Finance

Russians Don’t Want Their Pensions Touched Either!

Early RetirementWe’ve recently written a lot about the U.S. Social Security program and the long-term funding problems it faces. We’ve outlined the problem, talked about potential solutions, and discussed how I’m thinking about Social Security in the context of our quest for financial independence and early retirement.

While it won’t solve any of our domestic problems, it’s interesting to note the U.S. is not the only country where demographic changes are having a major impact on how politicians are thinking about retirement.

Last week, Bloomberg posted an article noting that Russian President Vladimir Putin has faced criticism at home following a proposed plan to raise retirement ages in his country he originally announced in June.

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How I’m Thinking About Social Security and FIRE

Retiring On My TermsOver the past few weeks, we’ve taken a look at the Social Security program’s future funding problems, as well as a number of potential solutions that could close the coming funding gap.

Today we’re going to get more personal, and discuss how I’m thinking about Social Security as we continue down our path towards financial independence and early retirement.

I’ve written in the past that I haven’t factored any potential Social Security benefits into the framework I’ve developed to measure our progress during our quest for financial independence and early retirement.

But I’ve also mentioned I do expect to eventually receive something from the Social Security program when I am old enough to claim retirement benefits.

So how do I explain this seeming contradiction?
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How To Fix Social Security

Early RetirementLast week, I wrote about some of the problems facing the U.S. Social Security program.

Although the combined Social Security trust funds had $2.9 trillion in assets at the end of 2017, demographic changes over the next decade and a half are expected to eliminate that surplus by 2034. At that time, anticipated tax income on workers is expected to fund only 79% of scheduled benefits to retirees and disabled beneficiaries.

Fortunately, there are a number of potential solutions that could help close the Social Security funding gap. The question is whether American politicians will come together to make some difficult choices today, or keep kicking the can into the future, when the problem will likely be more difficult to solve.

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What’s Wrong With Social Security?

RetirementThe Social Security Board of Trustees recently released its annual report on the status of the programs it oversees, which currently provide benefits to around 62 million Americans.

By and large, the numbers were consistent with where they were a year earlier.

Near term, the Social Security system is fine.

Longer term, changes need to be made to Social Security to maintain its viability given expected demographic changes.

The good news is the numbers may not be as dire as the mainstream media has led some to believe, and relatively modest changes could ensure Social Security will continue to provide benefits to tens of millions of Americans for many decades to come.

The bad news is the necessary changes will likely require copious amounts of common sense and bipartisan collaboration, both of which seem in short supply in many parts of the United States these days!
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Retire Early and Live Longer?!?!?!

Financial IndependenceIn February, I wrote a post about a recent Stanford University study that examined the trade-off between saving more money today and working longer tomorrow.

Last month, Steveark at Slightly Early Retirement took things to another level, writing an interesting post in which he asked Will Early Retirement Kill You?

While Steveark didn’t find a definitive answer to his question, he posits that a longer life – regardless of whether one has retired or is financially independent – might be driven by two things: taking care of one’s health and identifying one’s purpose.

As a Baby Boomer who has already retired early, he suggests that Gen Xers and Millennials pursuing financial independence and early retirement might want to spend some time thinking about what’s next once they achieve FIRE, in case his hypothesis that purpose is correlated with longevity is accurate.

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What the Media and Academics Don’t Understand About FIRE

FIRELast month, Stanford University Professor John B. Shoven, and three former Stanford students, Gila Bronshtein, Jason Scott, and Sita N. Slavov, published a paper entitled “The Power Of Working Longer” through the National Bureau Of Economic Research.

One of their key findings was “that working 3 to 6 extra months has an equivalent impact on the affordable sustainable standard of living as saving one percentage point more for 30 years.”

Their “primary conclusion is that working longer is relatively powerful compared to saving more for most people.”

The media jumped upon their research, with Bloomberg View columnist Justin Fox gushing that a 49 year old “could take the drastic step of upping your retirement savings by 10 percent of your salary. Or you could achieve the same result by retiring two years and five months later than you had been planning to.”

Which left me shaking my head.

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An Unexpected Raise!

Financial IndependenceI’ve intentionally tried to keep Retiring On My Terms a politics-free zone.

There are some political issues I care deeply about and others that matter less to my family and I.

I’ve found when discussing U.S. politics, unless you surround yourself only with people who think exactly the same way you do, roughly half of the people will agree with you, and roughly half of the people will disagree with you – and in some cases, think you are ignorant, nuts, or evil!

So I do my best to avoid going down that path at all here.

That said, what happens in Washington D.C. impacts our family on a daily basis, and recent developments have been positive for the ROMT family’s finances!

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Great Games to Teach Children About Money and Personal Finance (and Math!)

Personal Finance GamesAs we head into the holiday season, many are looking for gift ideas for the children in their lives.

Today I’m going to share some great games we have played with our children, and in some cases also played while growing up. In my opinion, each of these games help teach important lessons about money and personal finance. In their own way, these games have helped shape the financial decisions – both smart and dumb – I have made, and continue to make, in real life on my path towards financial independence and early retirement.

Plus, each of these games is a lot of fun to play!

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How I Saved Over 20% While Shopping For Groceries

AldiLast week, the Wall Street Journal ran an article about the German discount grocery chain Aldi (subscription required).

In the article, author Zeke Turner notes that Aldi already has over 1,700 stores in the United States, and recently announced it would invest $3.4 billion over the next five years to increase its store count to nearly 2,500. If Aldi’s planned expansion is successful, it would rank as the third-largest grocery retailer in the U.S. by locations, behind only Wal-Mart and Kroger.

Aldi entered the U.S. market in the Midwest in the 1970s, and currently has stores in nearly three dozen states. Aldi stores are known for their low prices, small size, limited selection, and focus on their own store brands.

If frugality is your thing, you might like Aldi. If you like to be pampered while shopping, Aldi may not be for you.

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The Financial Advantages of Blogging About Personal Finance

Early RetirementIf you’re reading this post expecting to learn how to make unimaginable riches on the Internet, my deepest apologies, but you are in the wrong place.

I have only been blogging for three months.

Retiring On My Terms has not generated one cent of income, while costing hundreds of hours of my time, in addition to expenses for web hosting.

And I still have no clue how to effectively use Pinterest, even though I have heard it can be an incredible social networking tool.

That said, the discipline required to think and write about our finances on a regular basis has already paid great dividends to the ROMT family. I’ll highlight a few of the ways our finances have improved as a result of the time I’ve spent blogging.

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