Retirement account and buying car

Society Religion & Philosophy
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Re: Retirement account and buying car

Dont drag me into the debate of "free-lunchs" and the "of the people-by the people-for the people governments" because everyone very well knows what is my take on this entire issue. And you'll have nothing else to say back except the usual adjectives.

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Re: Retirement account and buying car

It is sad to see how a simple question on 401K has generated Islam vs. Kufar (un-Islamic) debate.

You guys don't have anything else to do. Is Islam bashing, or pseudo-defense of Mullahs is the only purpose left?

BTW if your fiqh doesn't allow retirement savings then don't do it.
However there are other fiqh who are perfectly OK as long as you follow their guidelines.

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Re: Retirement account and buying car

Peace Rebel X

Thank you for your links, but all of them are referring to the permissibility of the account and that the amounts in there will be zakatable. The fact that there is an absence of criticism of gathering wealth does not mean that gathering wealth is not shunned. Most of those links are muftis answering a specific question, it is not one of them recommending the better stance i.e. to save or to spend in the way of Allah.

Thanks again for your links you seemed to have done a lot of research. May I remind you that Divorce is also permissible in Islam but again it is shunned. No scholars say it is haraam, but in the case of wealth hoarding wealth and being miserly falls in this category.

We need to realise that having too much faith in wealth and retirement funds is not enough faith in Allah, we need to understand that we may not even live to see our fund or our beneficiaries may become evil with wealth. So all of these things are to be considered when we are saving money. It is not my stance that saving is haraam, but I solemnly believe it is not important for our success in this life.

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Re: Retirement account and buying car

Peace antiobl

Unfortunately people ask the wrong questions to muftis these days. They don't ask "what is better for me?", they ask "Is this permissible?" then inevitably they will be given a ruling in accordance with that question.

I read you post earlier about the 401K account and the magazine article you mentioned that the earlier a fund is setup the better.

You see this is the beauty in Islam and the zakat system, not only does it purify wealth zakat also prevents too much money being saved or lent and so on. This is because the amount remain zakatable.

Consider that 25 year old is earning a good wage on $50 k per annum putting away $200 per month will bite in his cash flow. He will heavily reduce his standard of living for the majority of his youthful years. I don't how the tax works in the US so lets assume 20% ... He will have $40 k per year to spend. This around $3300 per month.

If his savings get to an amount where they have reached a value of say $350,000 then the zakat would be around $8750 per year, and per month that would be around $730. That would reduce cash flow to $2570.

You see the more one saves the more zakat he has to give if his salary is not strong enough then this will cap the reasonable amount of savings he can make.

A zakat paying Muslim will therefore need a strong salary to support a large saving, this is evidence in itself that Islam has manufactured mechanisms to prevent people from over saving and over lending.

I don't think this is becoming an Islamic vs unIslamic debate. It was the original question that prompted this line of discussion.

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Re: Retirement account and buying car

Peace

Some calculations they may be a bit off due to some assumptions.
Here I have assumed that if people are willing to give up to 25% of their monthly salaries in zakat ... And May Allah (SWT) be pleased with that, then they can have a maximum saving based on a given monthly wage. To use the table scroll down the salary until it meets your amount and check to see what amount you can save up to without you having to pay more than 25% of your monthly earnings.

Salary per month ... Max. Savings for 25% of salary going to zakat
2000 ... ... 240000
2500 ... ... 300000
3000 ... ... 360000
3500 ... ... 420000
4000 ... ... 480000
4500 ... ... 540000
5000 ... ... 600000
5500 ... ... 660000
6000 ... ... 720000
6500 ... ... 780000
7000 ... ... 840000
7500 ... ... 900000
8000 ... ... 960000
8500 ... ... 1020000
9000 ... ... 1080000
9500 ... ... 1140000

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Re: Retirement account and buying car

None of the links are talking about saving being shunned either, if they are going to go into as much detail as they have about what actions in a 401K are allowed surely they could have written a sentence that it is disliked.

Its not a question of having too much faith in wealth and retirement funds = not much faith in Allah. he has blessed us with a brain to try and do what we can, fully knowing that in the end its all in god's hands. do we lock our doors, do we try and find a safe neighbourhood, do we have burgular alarms, fire alarms, smoke detectors? do they guarantee safety? No.. but are taking necessary precautions allowed? do we watch our health, atch what we eat...but is health ultimately in our hands? does it mean we just have 10 doner kebabs everyday

Now as far as 401ks go, u said excessive, and I asked you for definition of excessive, 401Ks have an annual cap soo its not like one can put tons in it to begin with.

and yes we may not live to see the funds, but then it may help our off springs and others in their education. or could be used for charity.

regardless prudent planning for future is important, for health, for expenses etc. Otherwise one may become a burden on others. whether thats means burden on relatives and friends or burden on society by taking benefits that they really would not have needed to rely on had they taken some personal responsibility for themselves.

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Re: Retirement account and buying car

can u explain what this is?

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Re: Retirement account and buying car

Peace Rebel X

My links did however, point in the direction showing that saving up for the intention to second guess the future is shunned .. I did try to explain that the links you presented were only answering the question they were not involved in saying which is better.

I also recommend reading up about investment and planning in Islam ... You will find time and again it will emphasise Tarbiya of children and faith in Allah (SWT).

My best planning method is not to plan for retirement. I intend to work inshaAllah as long as my Lord gives me life and ability. To be a burden on others is not my intention, nor should it be a burden on me if anyone close to me needs to share in my excess wealth. This is the essence of Islam - sharing whereas the essence of the capitalistic way is to save and invest for oneself.

I will at this stage also include the important note that being carefree with wealth and over indulgent is also shunned so we should not ruin ourselves by spending too much either. We should help with what Allah (SWT) has given. If he gave us wealth then we should give wealth, if health then we should give our time and effort and so on.

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Re: Retirement account and buying car

Peace again Rebel X

This is referring to my post that came before the table.

It shows that as and when the amount in saving increases we will be reaching a practical threshold for the saving.

The left column is a fiscal salary per month and the assumption is that 25% of ones monthly cash flow will have to go towards paying zakat to cover 1 years worth of zakat on the maximum possible saving.

So for example an extreme example a person who earns $4000 per month and has a saving of $1 million. His yearly zakat will come to $25000 which is equal to $2083 per month just in zakat payments. That will reduce his living standard because that will bite half of his monthly earnings away.

A person earning $2500 per month will never be able to afford a saving of $1 million because the zakat will control over savings by nature of its function. That will leave him only $417 per month to spend. No one is that stupid to earn so much but to use so little and give the rest in zakat just to ensure a huge pay out in years to come that may or may not come to be.

Punjabian di Thread
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Re: Retirement account and buying car

Not a single scholar that I have talked to has said that having a financial plan is disliked, as humans we need to do what we think is needed, and leave the rest to God. it does not mean that we dont plan.

alhumdulillah, i have read mainstream and contemporary views regarding investments of different schools of thought, and saving for future has nothing to do with faith.

but at some point in time you would not be able to work and would need to rely on some source of funds, the reality of the situation is that you will have to depend on means such as relatives, your own investments, or govt support to make ends meet. do we live on a day to day basis that we spend all our money from salary or other income each month? do we not save any? would that be considered excess wealth?

agreed.

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Re: Retirement account and buying car

Peace to you psyah.

However I urge you to post stuff on topics that you are not an expert in.

Wealth accumulation (and limits on it) is a much bigger question and it should not drive this thread to the ground.

Your tables and other stuff is largely inaccurate as it is not specific to the tax laws and retirement account set up in the USA.

So please follow Islamic directions that forbid you to be a "neem hakeem" [a pseudo-adviser who has no knowledge of the topic].

If your fiqh (weather you follow a fiqh or have your own), doesn't allow you to save for future, then don't.

But don't try to impose your fiqh on others! Please! Because the imposition of your fiqh will violate your greetings "peace on you".

Thank you.

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Re: Retirement account and buying car

Saving for future is halal for muslims but Islam never encourages to save for the future, like Talaq is halal but the most disliked halal act.

In Surah Baqarah one of the quality of Muttaqun is that

3. Who believe in the Unseen, are steadfast in prayer,** and spend out of what We have provided for them;**
also
"Believers are merely those whose hearts feel wary whenever God is mentioned and whose faith increases when His verses are recited to them. On their Lord do they rely. Those who keep up prayer and spend some of what We have provided them with are truly believers" (Quran 8:2-4).

There's a hadith in Bukhari and Muslim:

Asmah related that the Prophet said: Spend, and do not count, lest Allah counts against you. Do not withhold your money, lest Allah withholds from you. Spend what you can. (Bukhari, Muslim)

Also

Abu Huraira related that the Prophet said: The Lord's commandment for every one of His slaves is, ‘Spend on others, and I will spend on you'. (Bukhari, Muslim)

Abu Huraira narrated that the Prophet said: Wealth is not in having vast riches, it is in contentment. (Bukhari, Muslim)

Ibn Masud said I heard the Prophet saying: There is no envy except in two: a person whom Allah has given wealth and he spends it in the right way, and a person whom Allah has given wisdom (i.e. religious knowledge) and he gives his decisions accordingly and teaches it to the others. (Bukhari).

Nowhere it says that save up money and wealth for the future and you'll be among the believers or you'll get reward for it.

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Re: Retirement account and buying car

Would you like to give the accurate tables and other stuff according to the tax laws and retirement account in the USA?

You said:
If your fiqh (weather you follow a fiqh or have your own), doesn't allow you to save for future, then don't.

psyah never said that saving for the future is haram so don't lie.

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Re: Retirement account and buying car

Nowhere does it say that planning and saving for future is not allowed, or that it will make you one of the non believers.

its not even frowned upon. as I stated, what is one's definition of wealth..a million dollars? 30 years from now, what would be a million dollars buy? and if that is your primary source of funds..how much can you use each year?

its not a whole hell of a lot really. with lifespans increasing, healthcare costs sky rocketing and inflation.

this thread was a simple thread someone asked is it allowed, its proven that it is allowed, information was also provided to help ppl understand what sort of investments are the safest approach from a religious viewpoint.

Now we are stuck in a vicious circle of oh its disliked, but not haram oh it makes sense and is practical.

The restof the world is not like UK where state takes care of everything, i.e. through taxes of working people. People have to plan for future whether its short term or long term.

do you guys not save? for next week, nexty month, next year? kids education? trip to Pakistan?

do islamic foundations and masajid not have investments and financial plans to keep them afloat?

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No

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Peace antiobl

You are only confirming what I am saying. You are right I am not an expert in this field. I also specified that my calculations are estimates so you are agreeing with me that the data is inaccurate, but it is not totally wrong. There is truth in it and if you lay over all the rules of the 401 K on it and then put the zakat factor into it you will still see that I am right.

Give it a go and see!

To say that I am not an expert you must know at least more than I about this subject then please explain it mathematically to me, show me where the essence of my concerns are wrong, please do.

2 Likes
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Re: Retirement account and buying car

Peace Rebel X

You keep saying that its not even frowned upon ... I've given you references from Qur'an and Hareem01 from Sunnah to show just that now either you are not getting the point or you are lying.

Have you read the story of Qarun?

Qarun - the capitalist or feudalist who takes opportunity from the unjust and oppressive laws, spending fortunes for the tyrannical leader in order to profit and amass more vast returns, bleeding and exploiting the toils of the people. The origin of Qarun was that he came from Prophet Musa's own clan who colluded with Fir'aun due to the love of worldly life and materialism.

...

Qaarun
Qarun's (Kora) story serves as a typical example of opulent people whose wealth infused them with pride and arrogance and made them forget the role of wealth in mans life. Wealth should be used for the achievement of the welfare of man and his society in accordance with the will and commandments of Almighty Allah, Who has granted man his existence, faculties, powers, sustenance and resources. 

        His story is told in the Holy Qur'an:“ Such were the treasure We had bestowed on him, that their very keys would have been a burden to a body of strong men. Behold, his people said to him: Exult not, for **Allah loveth not those who exult (in riches).**” (Qur'an, 28:76) Then,“ So he went forth among his people in the (pride of his wordly) glitter.” (Qur'an, 28:79). 

        When he was in the heyday of his glory, worldly people envied him and thought how happy they would be if only they were in his place. 

        **But wise people were not dazzled by Qaarun's fabulous wealth, because they realized the transient nature of worldly treasures and they were certain that the true wealth is the reward of Allah (in the Hereafter) for those who believe and work righteousness. (Vide the Qur'an, 28:80) **

        Qaarun lived ostentatiously and appeared to many of his people “ a lord of mighty good fortune.” They admired his glorious appearance but forgot his reality. All this was 'illusory happiness' or, at least, transient happiness, just like a dream or a movie. 

        What was the end? What happened to all that pomp, wealth, pride and arrogance? “ Then, We caused the earth to swallow up him and his house; and he had not (the least little) party to help him against Allah, nor could he defend himself.” (Qur'an 28:81).

Read this and continue your claims that saving up beyond requirements is not shunned!

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Re: Retirement account and buying car

Nobody is perfect and I don't hold it against you. There is no use of haggling over made up figures.

People who set up and manage these plans do it for living and do it for a fee. If you want to work with me, then PM me and I'll give you the fee structure.

However if you want to work with someone else in setting up 401K, then you should consult a tax adviser and a financial adviser. Pay them their fee, give them your financial data, your risk-tolerance and they will surely provide you with a complete plan for savings.

Then you use whatever fiqh you have to calculate zakat (and in some cases Khums) on it.

But I urge you to quit giving "fatwas" [religious opinions] as to what is haram and what is halal based on very little understanding of the topic. It is unIslamic and immoral to give someone incorrect advice.

Peace and love to all,

Dil khooN hey dil ka haal raqm ho to kis tarha
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Re: Retirement account and buying car

its rather hypocritcal to start a sentence with peace and end it with an accusation of a person lying.

I very clearly stated on several occassions that first of all there are limits to how much one can put into a 401K each year,

Secondly, I asked for a defintion of excessive, which you dont have, and lastly i even showed you how a number that seems rather large, like a million dollars is really not excessive if it is going to be the major source of funds for someone post retirement age for a number of years, it is barely enough to meet 'requirements'

Anyways, I am done with this useless vicious circle of discussion, I had not expected ridiculous statements and taunts as I have only treated you with respect in this thread. It appears expecting that in return was naive on my part.

good bye

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Re: Retirement account and buying car

Thats exactly what I understood thus did not participated in 401K. Thank you for a good explanation.