Hillary vs. Trump: Who's better for your Wallet

Hillary vs. Trump: Who's better for your Wallet

      With both candidates claiming they are the best for the future of the United States, you might be wondering, “ which one is going to be the best for my finances?” The answer might seem clear at first as one candidate, Donald Trump, is boasting quite the tax cut for all income levels. However, the more you dig into each candidate's plans, the more difficult it becomes to determine who will truly be better for your wallet in the long term.

    Since we already mentioned him, let's start with Mr. Trump's plans. The main goal of his trade policies are to keep and create jobs in the U.S. This is no small task since our citizens demand their goods at great values and we are a member of several free trade agreements. To do this he wants to hold foreign governments accountable for unfair trade policies like artificially deflating prices and manipulating their currency. While his plans aren't extremely detailed, he centers their completion around imposing tariffs and using international trade law to get countries to compete fairly in global markets. This would theoretically then stimulate exports from the U.S., and create more jobs here for our citizens.    

    This idea may actually work regardless of whether foreign governments decide to compete fairly or not. If they decide to stop artificially decreasing the prices of their goods, then it would be more economically viable to produce goods in the U.S. If the countries do not stop trading unfairly, then tariffs will drastically increase the prices of the goods to make it viable for companies to produce those goods here in the U.S. instead.

    However, his plan has several undesirable consequences. First, it will increase the price of goods for consumers here in the U.S. If wages don’t increase as well, which could occur due to stagnation in wage growth, then consumers will consume less, producers will produce less and jobs will be cut. If tariffs are enacted, then it is likely that the other countries would impose tariffs on our exports as well, and both economies would hurt.

    Donald Trump's tax plans are probably the highlight of his policies and embody a pretty standard republican view, lowering taxes and simplifying the U.S. tax code. U.S. income tax currently has 7 brackets: 10, 15, 25, 28, 33, 35, 39.6%. Qualifying for each bracket depends on both income and filing status. Trump's plan wants to reduce it to 3 brackets which would be 10, 20, and 25%, however he is currently rethinking his tax brackets. In addition, anyone filing singly with income less than or equal to $25k, or jointly less than or equal to $50k would pay no taxes (also being rethought). Additionally, he wants to reduce the corporate tax rate to a flat 15% from it's current 39.1%.

    The main benefit of these cuts is that it puts a significant amount of money back in the pockets of consumers and corporations to hopefully spend on products, increase production, or research new technologies. In turn, the boost in consuming and spending would lead to more employment and

thus more taxpayers. Some estimates peg economic growth at up to 11% in GDP and an addition of up to 5 million jobs. With these tax cuts must come a serious debate of what government spending should also be cut. Mr. Trump has already voiced that he does not want to cut any spending from Social Security or Medicaid, and wants to have an even greater military than what we already have. Without cutting spending from any of these three areas, it would be impossible for him to also claim to be able to reduce our nation's debt. When adjusting for economic growth, it would be a loss of about $1 Trillion a year from tax revenues! If this were to continue into the future, it would create a scenario where our country's debt would reach catastrophic levels.

    Again, you might be wondering, "but how will this affect my wallet?" The biggest positive (and only guaranteed) outcome with this plan is that you will have an increase in after-tax income, meaning what actually gets deposited into your bank account and can be spent by you. This is a great thing for you but only a great thing for the country's economy if you decide to spend it--saving doesn't really do much for economic growth. Next, you might find it easier to secure employment because of an increase in domestic production of goods created out of the hypothetically fair global market. There is one major problem with the latter, and it’s that the World Trade Organization, the international body that helps make global trade fair,has been something Mr. Trump has been very critical of.) I guess he has never learned that you can't have your cake and eat it too.

    While Mr. Trump's plans seem to be very centered around what might be best for our country, they could have secondary and tertiary effects that have lasting negative impacts on our country and it's economy. There is a serious dichotomy between what he is saying he will do and what he can actually do if he were elected to be the next president of The United States.

    At first glance, Hillary Clinton has a far wider array of ideas for the future of the United States to include actual names of existing or proposed policies with extensive explanations. But in many cases, just because they are detailed doesn't mean that those plans are going to work.

    Having said that, let's air out some of her basic ideas regarding Taxes, trade, and job creation. When it comes to trade, she generally wants the same things as Mr. Trump-- fair trade deals that provide economic opportunity to all, and better enforcing of current and future deals in order to prevent unfair practices. Currently Hillary is against signing the Trans Pacific Partnership, or TPP,

Yes I made this Meme

and has expressed interest in renegotiating NAFTA. If President Obama gets the TPP signed before he leaves office then his successor will have a difficult time renegotiating NAFTA because of stipulations regarding preexisting deals. Hillary also wants to impose stricter rules on countries who trade their goods illegally, provide unfair subsidies to their manufacturers, or those who manipulate currency to make their goods cheaper. To be fair, she doesn't just want to impose a bunch of rules on foreign countries and hope everything sorts itself out. She is proposing that we hold U.S. companies accountable for shipping jobs overseas and use tax inversion to bypass our tax system. She proposes any U.S. company shipping jobs overseas would have to pay back any tax incentives taken from the Federal government in addition to adding exit taxes to companies that shift their profits overseas to avoid taxes.

    Her reasoning behind those decisions is essentially the same as Mr. Trump's-- to promote keeping and creating jobs in the United States. All of the outcomes of her ideas are essentially the same as well. If tariffs are enacted, then foreign governments may do the same to us again and possibly create a trade war. However, Hillary has many other plans that encourage U.S. companies to keep jobs in the United States. Most of her proposals offer some type of tax incentive for investing in U.S. manufacturing, and further incentives for creating jobs in specific hard-hit areas that need to be revitalized. She also wants it to be easier for companies to bring jobs back to the United States by streamlining the process between governments.

    Similarly, her tax plans are focused on top wage earners in the U.S., but conversely she plans on increasing taxes for top earners. For example, she plans on imposing a 4% tax on anyone that makes more than $5 million a year, a mandatory effective tax rate of 30% on anyone making more

I made this one too

than $1 million (Buffet Rule), she wants to close loopholes that are available to those that can afford them, and increase capital gains taxes. She also plans to make it easier, quicker and less expensive to start a business and to file taxes for those small businesses.

    The reason for her tax changes is to pay for the plans she wants to implement which will hopefully increase economic opportunity for lower and middle-class Americans. These plans provide federal funding to state and local programs that help increase youth employment, supply re-entry programs for the incarcerated, aid entrepreneurship and infrastructure programs for underserved areas, as well as create affordable housing. These plans, in addition to  everything else she has proposed, would cost about $1.8 trillion over a period of 10 years. She has current planned offsets of $1.6 trillion which are largely funded by the tax increases on the wealthy which we have already discussed. The difference would hopefully be bridged by certain corporate taxes creating a proposed $275 billion in revenue.

    So how will Hillary's plans affect your wallet? As far as her trade policies, they would be quite similar to Mr. Trump's. Just like Trump's plans, hers is proposed to create an increase in jobs in the United States. Therefore, if you are looking for employment, this could benefit you! Unfortunately, a fairer trading arena will likely increase the cost of the products we consume making it more expensive for us to live. Hillary and Trump’s tax plans are also similar in the sense that it targets the highest wage earners. Bottom line: the people reading this (mainly middle class Americans) will not be affected by her tax plan. It is targeted at the highest wage earners, increasing their taxes in order to pay for the plans that will benefit those that earn the least.

    Who is really better for your wallet? It’s hard to say at this point because both candidates have some good and some bad policies that end up offsetting each other. In my opinion, if Mr. Trump wasn’t so against free trade he might actually be the best economic choice. His tax cuts will put more after tax income into everyone’s pockets. Both have a very serious shortcoming though, they offer no serious plan to reduce the country's looming debt crisis. This, by far, is one of the more serious but never talked about issues we should be addressing that could seriously hinder our future financial well being. If you want real financial security for the future vote for someone that addresses this issue.

 

My personal favorite

   


      

Going Bankrupt: Not Just a Saying

Going Bankrupt: Not Just a Saying

   
     Bottom line up front, Bankruptcy is bad m'kay!? Seriously, this is the last thing you want to do if you are having financial troubles. You are much better off trying to use a commercial debt consolidation agency or trying to argue better loan terms with your creditors. Bankruptcy will ultimately destroy your credit and make it extremely hard to secure any future loans. But here are the basics of it...

     What happens when you have no money, not enough or zero income, and your debts and bills still need to be paid? You go bankrupt and no, that is not just an idiom. It is actually a legal matter that you file with the federal court system under the federal bankruptcy code, and for individuals specifically chapter 7 or chapter 13.
     Chapter 7 filing is the greater of the two evils that individuals can file, to be eligible for Chapter 7 you must be in this case an individual,  partnership, corporation or other business entity. Your income must not be equal to or over the median income for your state, if it is then you are subject to a test to determine if your filing is abusing the use of bankruptcy. If the test is not passed your bankruptcy will either be converted to Chapter 13 or be dismissed.
     What happens under chapter 7 bankruptcy? It includes the liquidation of all eligible assets in an effort to pay off a debtors creditors, note that there are assets that are exempt from liquidation. The exemptions include things that will help you get back on your feet such as dwellings, transportation, household goods, clothing, and retirement accounts. These exemptions usually have a cap on value for instance in Ohio they include:

• Homestead: $132,900
• Vehicle: $3,675 in one vehicle
• Household goods: $12,250 with up to $575 in one item
• IRAs (including ROTH): $1,171,150

While this may sound like a good option you are still losing assets and may potentially lose the assets that you think might be exempt because they are over the value limit for that specific exemption. 

     If you still choose to file for chapter 7 you must give a petition to the bankruptcy court that includes multiple forms that require you to know: your creditors and the amount you owe them, income (source, amount, frequency), your property, your monthly expenses, and several other financial schedules (detailed lists in well organized manner), and a tax return. It also costs you money to file for chapter 7, $245 to file the case, $75 admin fee, and a $15 trustee fee (the person that liquidates your assets). There are also a wide range of nuances in the chapter 7 filing that could eventually still allow for loss of exempt property as well.
     The lesser of the two evils is chapter 13 bankruptcy. It essentially makes a plan to pay off your creditors in three to five years, three if you make less than median monthly income of your state (or have cause for longer) and five if you make over the median monthly income of your state. Your liabilities must not exceed $383,175 in unsecured debt (debt not backed up by collateral) and $1,149,525 in secured debt. You also must have been to credit counseling in the last 180 days (this applies to chapter 7 as well). Just like Chapter 7 you must submit a petition with all the same schedules, this is important in Chapter 13 because this information is used to notify your creditors to stop or not start their collection actions during the period of bankruptcy. There are also fees, $235 to file and $75 admin fee.
     If approved the debtor must submit a payment plan to the courts with the petition or within 14 days of filing. The debtor then has 30 days to make his first payment even if the payment plan hasn't been approved of yet. The payments will be submitted by the debtor to the trustee for distribution to the creditors which usually aren't paid in full unless they are a priority creditor such as a tax collection agency.
     Chapter 13 allows the debtor to stop all collections against their assets or property by creditors. This allows the debtor to keep much needed property such as housing and transportation, however this doesn't mean the debtor can pay the smallest amount possible. Priority debts will more than likely be paid in full unless the creditor agrees otherwise. Secured debts will have the outstanding payments paid off in full during the bankruptcy period and continue to pay throughout the life of the debt (typical of home mortgages). However smaller secured debts may be reduced to the liquidation value of the collateral borrowed against. If your payment plan is violated the court may convert your case to a chapter 7 and your assets would be liquidated or it may be dropped altogether and you would no longer have collection protection.

     Now that we know bankruptcy is bad hopefully you will be more careful about going into debt in the first place. The easiest way to go into debt is to not take out any loans or arguing for better terms with whoever is trying to loan you money. What is the worst that could happen? They say no and you move on to the next bank that may or may not agree to your terms. After all they should fight to get your business since you are paying them more money than you took from them in the first place. But don't take my word for it...do your own research. 

Should I buy a house?

 

Housing:

Why buying is not a good long term investment 

 

 

     If you are buying a house as an investment then you might want to reevaluate your choices in what you invest your money in. If you are buying your house so you can live in it and have a place to raise your family then you are making a great decision with your money.

     In the investment world a good long term investment is something that you can buy at a fair price and will eventually be worth much more than you bought it for when you sell it. In the investment world a bad long term investment is something you purchase that will eventually be worth around the same or less than as when you bought it. And you generally don't want to have to put any more money into your investment than what you already have when you first purchased it.

 

     The average sale price of a home in March of 2015 according the the U.S. Census Bureau was $343,300. And the average interest rate on a 30 year fixed rate mortgage in march 2015 was 3.77% according to Freddie Mac.  Based off of your purchasing price with a down payment of about 20% ($68,000 which is very unrealistic) your loan amount comes out to $275,300. If you paid off in full in 30 years the amount of money you would have paid into your mortage would be $460,108.80.

     The final price of $460,108.80 is what it would cost you to own a house in 30 years in a perfect world. However, there are many more expenses to owning a home such as property tax, home owners insurance, and home maintenance. If you based your tax rate off of my home towns of 2.76% (2014), the national average of $952 for home owners insurance, and the national average of home maintenance of 1% of value annually ($3433) it would cost you an extra $131,632.8. So now your house needs to be worth $591741.6 if you decide to sell it in 2045 to break even. You are paying $248,441.60 in order to own your house at the price of $343,300. Paying more than something is worth to own it is by definition a bad investment.

 

     What we have discussed so far goes against what a long term investment should be. As we stated it should be something that you can sell for considerably more than when you first bought it. A house purchased at $343,300 should be worth considerably more than that in 30 years for it to be a good long term investment. However appreciation of .2% annually would give your house a value of $364,506.64 netting a profit of $21,206.64. But that profit would be wiped out by all the interest due on your loan, the property taxes, home owner's insurance, and home maintenance.

     On the inverse let's look at what would happen if we took that $68,000 down payment and $1,643.72 monthly payment and invested it into a low cost index traded fund that mimmic'd the SP 500. From 1950-2009 the average annual return was 11% adjusted for inflation it was 7.2%, which is what we will use to find out what our new long term investment would yield over the same 30 year period. The principal amount that would be invested is $659,739.20 however the interest we would accumulate amounts to $1,893,866.82 for a combined value of $2,553,606.02. Even if you got taxed at a rate of 20% you would still come out ahead of your housing investment by a long shot with an after tax profit of $2,042,884.82.

     So what does this all mean to you? Well I am for one not telling you to never buy a house. It actually is a good idea to be a home owner but just not if the idea for owning a home is for investment purposes. There are a few things that aren't expressed in dollar signs when you buy and eventually own a home, specifically the pride of having your own piece of land and dwelling where you can have the freedom to do what you like within the confines of laws. It is also usually cheaper if you buy for the long term than rent for the long term, especially since you have an asset at the end of your 30 year mortgage  that can be sold or borrowed against.
     What I am telling you is to find "the perfect house" which is very cliche but it is quite true. An investment that isn't very good sure better make you happy in the long run otherwise you will be kicking yourself in 30 years. That perfect house also won't mean anything when you retire if you don't have any money to retire on, so make sure that you live within your means when purchasing a house otherwise you are going to have to sell that perfect house in the future because you need money to live off of. But with the right research in the area that you will be living you might be able to break even if you ever do decide to sell your house.

 



Credit: The Middle Class's Welfare

Credit: The Middle Class's Welfare

     Credit has turned into something much different than it used to be. Credit combined with modern day consumerism has created a trap for the average citizen in which they can fall into overwhelming debt. Do not be confused by "good" interest rates, reward & cash back credit cards, or any other gimmicks to get you to own one. If people could live within their means then credit would not be such an issue for so many.
     Credit started a long time ago presumably when one person did not have enough of their product to exchange for someone else's product that both parties were interested in possessing. Thankfully the party that had enough goods, the creditor was willing to give up their goods to the party with less, or the debtor, because they believed that the other party would give the agreed amount of goods back at a later date. This was more than likely done between people that knew each other in small communities. Their knowledge of each other would give them assurance that the debtor was going to pay their part of the deal and more than likely at little to no interest.  These deals were also largely based off of buying or trading goods that were needed to stay alive.

     In the 1920's the U.S. citizen had access to all numerous manufactured goods but no way to pay for them in whole. This is where today's definition of credit begins. Modern day credit was born when a diner patron couldn't pay for his meal because he forgot his wallet and created credit cards to avoid embarassment again, eventually called The Dinners Club Card.
     Flash forward almost a seven decades and it is 2015 a midst the height (every year is the height that's how it works) of consumerism. Credit has morphed into something extraordinary, very profitable for a few, and potentially suffocating for others. There are many types of credit now, but we will focus on one, consumer credit. Consumer credit materializes itself in many forms, the most popular being credit cards (you can buy almost anything on this), auto loans, and mortgages. Consumer Credit paired with modern day consumerism has allowed millions of families and individuals to buy things that they really need (definition of needed things has changed over centuries) such as adequate housing, transportation, and household appliances. In contrast it has also allowed millions of families and individuals the opportunity to buy things that they really don't "need" at quite a cost.
     Credit is now a very one sided deal what once started as an agreement between friends or family members has shifted into an agreement between corporations and individuals with very little human interaction. Creditors make money off of consumers by loaning out money in a lump sum that will purchase a need or want of a consumer and eventually be paid back in more than full based on the interest rate the creditor will give you.  While many Americans will be able to pay back their debts in full many (surprisingly a lot) also will not be able to, an article published in U.S.A. Today outlined this. One third of all Americans have debt that is negligent meaning they are not paying their bills on time. Those debts have been moved to collection agencies that will take a debtors assets in order to pay off the debts, meaning you would lose the goods (or other assets) you took a loan out for and not get back any money you have already paid toward the debt. However the majority of people that are negligent aren't negligent on mortgage debt, which is generally regarded as good debt.


Taken from myFICO.com

      Credit has been so ingrained into our society that it is almost impossible to live life without ever taking out a loan or owning a credit card. This has led to a way to evaluate someone's ability to repay credit, behold the almighty Credit Score. It allows corporations to evaluate you as a customer, the higher the score the less risk you are of not repaying your debt/credit. You get better credit by paying all your bills on time credit, loan, rent, utilities, etc.      Should I take out loans or own a credit card even though they are "bad"? The short answer is Yes, but the longer more painful answer is no. Most people don't have the funds or the patience to pay for everything with cash which is why loans and credit are so popular today. It is also extremely hard to buy a house without a good credit score or any credit score at all, almost forcing you to build credit through loans or a credit card in order to have a score to get a mortgage. If you are unwilling to go against the norm you have to make the most out of this horrible situation. First thing is first, stop buying things you don't need, luxury is good for personnel morale but don't make it a habit. Never, I repeat NEVER carry a balance (money left unpaid on your credit card month to month) on your credit card. If you carry a balance on your credit card you will soon figure out why 1/3 of Americans can't pay their bills because of the ungodly interest rates that they hold, usually around 15%. Build up a savings of about 3-6 months of your monthly expenses in order to pay for emergency bills like car repairs or even worse, income if you lose your job.
     If you want to go the rebellious route you must be an extremely financial savvy person to buy everything in cash. This requires you to build a huge savings for surprise purchases like housing or vehicle repair or for planned things like appliances, cars, and houses. To prevent yourself from waiting till you die to buy anything, living within your means will help as well. Just ask yourself if that dryer that folds your clothes, car the drives itself, or house that has one too many bedrooms is worth it. It might be perceived as a harder life but you will own your house, car, appliance outright the moment you buy it. There is nothing better than not having a monthly debt to pay off and you can brag that you paid for your possessions in cash, most people can't do that. But don't worry with a spot on budget and patience you can accomplish all of these things.


From creditcards.com

     The concept of buying things on credit has morphed from a gesture of good will to an opportunity to make money off of someone. Reallistically it is unlikely that you will be able to live your life to a standard you deem liveable without taking on any debt, most people that own credit cards have multiple ones. The best course of action is to live without it until you truly need it to buy a house or car, pay for school, or pay any emergency bills (that your savings can't cover). And lastly live within your means and try your best to not take out a loan for frivolous things like self driving cars. Trust me, accomplishing the "American Dream" will feel much better if you do it without the "middle class welfare" that we all know too well.

     

     

     

Five Basic Financial Tips

The Top Five: 

A Few Basics For Everyone

     In order of importance here are the things you need to focus on to insure you can secure your own future: 

1. Get an education 
2. Pay off your debt quickly
3. Get insurance 
4. Save for emergencies
5. Invest your money as soon as possible

     

     Getting an education is one of the single most important things anyone can do in their life to secure their future. It is as easy as looking at this graph I found in the "College Pays 2013" 

When you acheive a higher education you are more likely to earn more money. The median income of a person with a Bachelor's Degree is more than 60% over that of a person that only received a high school diploma. This graph doesn't show you that you are also more likely to have health insurance, pension plans, lead healthier active lifestyles, and yes are more likely to have a job. 

     But college costs way too much, can't I just get a decent job right out of high school and earn money while college kids are studying? Yes you could but as the study says the average college graduate will earn enough by age 36 to compensate for the four years they were out of the workforce and the expenses of tuition & fees. To top it off the gap between high school diploma and bachelor's degree earners widens with age giving more of a long term incentive to obtain a higher education. 

     Paying off your debt comes in at a close second in the realm of intelligent financial decisions. First, avoid debt at all costs! I can't stress this enough because debt comes with interest and that means you are actually paying more for the money you borrowed. For example, you buy a house worth $200,000 at a 3.7% interest rate with a 30  year term. If you pay off your house in that 30 year period and pay your exact amount monthly of $920.57 you will have paid $331,405.20 for that original $200,000. I am not saying you shouldn't take out mortgages, credit cards, or student loans. What I am saying is you should pay for the things you want in cash if you can, if not then Pay off your debt as quickly as possible!
     This brings me into the second part of this debt portion. Focus all of your financial ability on paying off your loan as soon as possible without neglecting other necessary things. The sooner you pay off loans the less money you are losing. Take a look at that loan again from the last paragraph, same principal (original money borrowed),  same interest rate, same term, same minimum payments. But you decide to pay more than the minimum by $300, which is called pre-paying a loan. If for the rest of the life of the loan you pay $1,220.57 you will save $52,425.12 and pay the loan off almost 11 years early. While this is a bit of an extreme case it applies to all types of debt and in special cases like credit cards you can get away with 0% if you pay off your monthly balance.

     The worst part of insurance is that it is usually quite expensive and you don't get much out of it, a part from housing and loans it will probably be your third largest expense overall (vehicle, property, health, etc.). One common example is insuring a vehicle. In 2015 it cost on average $1,403 to insure one of the most popular vehicles, the F-150. That coverage gave you $100,000 single injury, $300,000 multiple injury, and $50,000 property damage.But some may decide insurance is too expensive and you would rather save the money. If you don't get pulled over or get in any accidents you will save money. If you get pulled over you face a list of legal actions possibly including losing your licence (could lead to losing your job), registration, traffic tickets, and other fines. If you get in an accident you may possibly become liable for injuries and property damage that occurred in the accident. Check out these statistics from Rocky Mountain Insurance Information Association:

"In 2013, the average auto liability claim for property damage was $3,231; the average auto liability claim for bodily injury was $15,443. In 2013, the average collision claim was $3,144; the average comprehensive claim was $1,621"

     While the average amount of coverage people buy may seem outrageous it isn't when you realize what might happen in a serious accident that was caused by you. If you cause a crash in which a vehicle was totaled, say that vehicle was a 2015 Ford F-150 it would cost you almost $35,000 if you weren't insured to buy them a new vehicle. If that person was seriously injured say a fracture in their lower body you would be liable from almost $6,000 (single) to almost $40,000 (multiple fractures). If you don't have cash to cover that they will come after your assets like cars, house, or any valuables.
     This information is just for one car in one accident! What if you are the sole cause for multiple cars being totaled? That would equal your finances being totaled, that is if you were uninsured. Bottom line, get insured, and not just automotive, purchase health, dental, vision, property, etc. as well.

     You can usually buy insurance for just about anything, but sometimes it just isn't cost effective to do so. That is why you save for emergencies. Think of it as paying yourself for an insurance policy. These emergencies include things like home repairs not caused by natural disasters (average of 1-4% of homes value per year), vehicle repairs not caused by accidents (average of almost $400), and the loss of a job to cover monthly expenses while job searching. The average emergency savings you should have on hand at one time is 3-6 months of your current monthly income.

Average Vehicle Repair Cost

     The last thing I would like to talk about is investing your money. This is a pretty scary decision for most since there is risk involved in it, the risk of losing your money that you invested. This is especially so for young people that have entered the work force and don't understand the concept of saving for retirement. For those that don't really understand it simply look at the following example. This graph will

show how much money can be amassed  if you start contributing the maximum of $5,500 (about $458 montly) to an individual retirement account at the age of 22 and didn't take it out until the age of 65.

I would like to point out that the average mutual fund will return about 8-12% annually. This will give you according to the graph anywhere from $1.8 million to well over $3.2 million. This however is very dependent on the stock market and the risk you are willing to accept in your investment portfolio.
     The next question would be, will that money last me through my retirement? This is very dependent upon your lifestyle, however either of those numbers should be more than enough to live comfortably baring financial disaster. Here is why, when you finally hit your retirement your investment portfolio will be converted into something that is much more risk averse and easily liquidated for income purposes. These types of portfolios only give returns of about 3-5%. While this return rate is low it serves the purpose of not having to withdraw any money from the principal (money you started with at retirement) and living off of the interest you will receive. To get a better picture of how your $1.8-$+3.2 million will serve you in retirement take a look at this next graph. Note that this graph is based off of retiring with 30 years left to live in life at an annual rate of return of 3%. The bottom axis will tell you what your monthly income would be based off of the the amount of money you have saved at retirement.

     Right off the bat you might notice that our minimum return ($1.8 million) that we had figured would bring us a monthly income of $8000 ($96000 annual) in retirement. Our top range of $3.2 million which isn't even on our retirement graph would last us 32 years at a monthly income of $13000 ($156000 annual). While these incomes are all fine and dandy I would not recommend drawing the maximum that you can while being able to live 30 years on the money. This will give you a buffer for financial disasters and if all goes well give your children a nice inheritance.

     It all starts with an education, paying off that education as quickly as possible, purchasing insurance for the things you buy in life, saving for the uninsured things, and investing in your retirement. Balancing the top five is difficult at times and they are not the only things in life that will matter financially, however if you follow them to the best of your abilities you should end up in a secure position once you would like to retire.