If your goal is to reach 65 broke, with no way to retire, then this article is for you. Here are 10 surefire ways to retire broke:
- Don't invest until you can afford to: The last thing you want to do is invest in risky stocks and bonds before your debt-free. Wait until you can comfortably afford to invest, and then dip your toe into the stock market. Wait to have children until you can afford it, too.
- Keep switching mutual funds until you find the perfect one: You don't want an average mutual fund that at best keeps up with the S&P 500, do you? You deserve the best mutual fund out there, so keep switching your money until you find it.
- Remember, you get what you pay for: This is as true with mutual funds as it is with cars. So always invest in funds that charge front-end loads and high annual expenses. I'm sure these funds wouldn't charge so much if they weren't worth it.
- Borrow from your 401(k): It's your money, after all, and the interest you pay goes back to you. Besides, you deserve that vacation.
- Never roll over your 401(k), just spend the money: Changing jobs? What a great opportunity to liquidate your 401(k) from your old employer. But don't roll it over into an IRA or your new 401(k) plan. I say its time to celebrate having survived that last job. They'll be plenty of time to save for retirement in the new 401(k).
- Always turn away free money: So your new employer matches 401(k) contributions. You don't need handouts!
- Remember, diversification is for the ignorant: You're smart, so put all your eggs in one basket. If you can, keep your entire 401(k) in company stock. I'm sure it will do great.
- Ignore all those myths about compounding: You know better than to believe all those silly stories about compounding. You know, invest early and the money will grow into a fortune over the long term. Yea, right.
- Never reinvest dividends: Spending the dividends now is great way to reward yourself today. Besides, reinvesting those few dollars today can't have much of an impact at retirement.
- Keep your money safe: If you do invest, keep all your money in saving accounts and other safe investments. Who can sleep at night knowing the stock market may go down?
- Where To Invest When You’ve Maxed Out Contributions To Retirement Accounts
- A Cautionary Tale: The importance of asset location when ‘bad’ investors head for the exits
- Are Mutual Funds for the Poor?
- My Annual Investment Portfolio Tune-up: Asset Location and Donor Advised Funds
- 10 Reasons Direct Reinvestment Plans (DRIPs) Should Flood Your Portfolio
{ 2 comments… read them below or add one }
After my recent retirement I wrote my feelings in my blog and for some interesting content I Googled, retiring broke in America, and you url was list. I Loved your Writing on 10 Surefire Ways to Retire Broke. I linked it in my blog. They say hin-sight is always better than fore-sight. I think it should be a required subject in schools and at home [but you can't teach what you don't know] about money. And I don’t mean how to write a check and balance your checking account, I mean about the value of saving, investing etc. You see I didn’t have a clue, poof, just wasn’t there. So here I am, starting from scratch. But I believe it’s never too late to start!
Keep up the writings, I’ll keep sending folks here to read.
Thanks
Sharon
Completely agree with all of these, but especially #1 Don’t invest until you can afford to!
Investing early gives you that many more years of compounding, and that translates into way more money in the end. I wrote an article about how, when it comes to investing, time in money, which can be found here: http://www.btgnow.net/2008/08/compound-interest-is-free-money-part-3-time-is-money-friend/
I think it goes very well with your first point. Great post!