Retirement account and buying car

Society Religion & Philosophy
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Re: Retirement account and buying car

If you don't save for YOUR retirement, nobody will save it for you. To compare saving enough to live on for retirement to "acquiring riches" or materialistic is foolish. So is not saving for retirement. How are you going to live? In the streets? Off the government? Hamper your childrens' future by being financially dependent on them?

Saving for retirement is respsonsible, not love of worldly life and materialism. It's not selfishly hoarding riches. It's preparing to live a long life without being a burden to others.

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Re: Retirement account and buying car

Says who? I've heard this from more conservative maulvis, but where is the proof that saving for a rainy day is haraam or even shunned???

Piling up and collecting money to let it sit there and then greedily count it day after day like Scrooge in Mickey Mouse's A Christmas Carol is probably offensive. However, NO ONE has the authority to make saving money illegal nor discourage it, because whether you are greedily checking up on that money daily or not is between you and God, and how the heck can the State police that?

Again, you people have bad habits of trying to restrict people's choices and movements because of your own miseducation.

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Re: Retirement account and buying car

Haven't you figured out that the guys who discourage this sort of stuff are very anti-wealth? Its because in their eyes, no one should hold money. And you know what's rich? Its these pseudo-maulvi wannabees who are out pimping the Mercedes and BMW's on Eid namaz.

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Re: Retirement account and buying car

Peace Sister PyariCgudia

I'm amused at your cynicism sometimes ... but that scene is quite funny maulvis with beemers pumping the tilawat checking out hijabis ... surreal don't you think!

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Re: Retirement account and buying car

A riot, I'm sure.

Reminds me of one our more "religious" elders in the community back home. I put religious in quotes, because I don't necessarily think wearing some traditional Pakistani clothes and putting on a beard makes you a more pious person.

He goes around to everyone preaching against materialism. He says its a fitna.

Do you know the man has the audacity to own a 5 acre ranch, his own collection of barnyard pets, a nicely furnished 4-5 bedroom house (they only have 1 kid), with a fireplace (they live in Florida...really now), and the latest model SUV for the wife, and a Mercedes for the Dad, and I don't care to know what the daughter drives. Daughter goes to school at a private school, which they pay tuition for, when she could have easily gone to a public school that would have been a little farther from home to get the same degree.

Yeah, fitna my *^$.

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Re: Retirement account and buying car

Peace PyariCgudia

You see it is a fitna especially in the hands of those people who preach against it but take no heed of their own advice ... Pray we get better examples of religious Muslims or that is it.

As for the money things ...
you said this earlier ...

**because whether you are greedily checking up on that money daily or not is between you and God, and how the heck can the State police that?

Again, you people have bad habits of trying to restrict people's choices and movements because of your own miseducation. **

I thought you knew me by now. It is no interest for me to discourage people from saving up. I was merely presenting the Islamic stance that people aught to feel and understand on their own accord. It is merely my duty to present the info. So with regards to saving loads ... it can never be a policed thing really and I hope you aren't insinuating that I meant the Shari'ah will monitor people's savings and take it off them, because that would be a grave injustice to what I have said.

Planning financially is a good idea, I was just saying that Islam prefers the giving of money over saving it. That hoarding money is abhorent can be seen clearly in the Qur'an.

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Re: Retirement account and buying car

***You meant 2.5% Right,

zakat is always 1/40th of your savings 1/40 = 2.5%***

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Re: Retirement account and buying car

Here you say all these wonderful things, and then yet again, your conclusion is that Islam prefers the giving of money over saving it. Again, a conclusion that is not supported by the religious texts at all.

Lets be clear what the Quran says. I would say a more accurate statement would be "Islam prefers the donation of money or investment in the community of the money over HOARDING it only to examine its chamak when you're bored"

I think if I have 10 dollars in my pocket at the end of the day, and I have to choose what to do with the 10 dollars, I DO NOT think it would be unIslamic for me, as a young woman, to put the 10 dollars in the bank, to help maybe pay my next month's bill. I could just give the 10 dollars to someone on the street, but then what am I to do when I fall short in paying my bill next month? Is that not unwise of me to now become a burden on others by having to ask for a loan of 10 dollars tomorrow, when I could be smart today and save the 10?

This is why its an individual choice, and I would discourage you from making those sorts of blanket statements, because the term "saving money" means different things to different people. And there are plenty of contingencies. So some unwise bechara 18 year old testosterone pumped "Islam zindabad" emotional teenager might read this and start yelling at his parents for saving up funds for his college and demand they give it to the poor. Not a wise choice.

Believe it or not, there are people who get very carried away with this sort of principle that you're proposing. I know one gentlemen who refuses to save a penny for his family, has no job in fact, and spends his entire time in preaching, etc. He has squandered his entire inheritance on the preaching of Islam, and therefore, this has left his wife in charge of family finances - she dips into her own inheritance to pay for their bills and groceries. They're a very elderly couple. The husband has been trying to take her inheritance money to spend it all on a bunch of Qurans to hand out for free on the street, and his wife is adamant on not giving it to him, recognizing that his over-enthusiasm for Islamabad is going to land them in a charity home. I only fear for the couple that if they get too sick, then their financies wont be able to carry the cost of their illness, and then is it MORALLY CORRECT for them to be a burden on the American taxpaying community for their health expenses?

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Re: Retirement account and buying car

An ideal example of a "jalne waley ka mooN kala"

Even if we forgive her for all the generalizing...iam sure she's omitted tonnes of details in the entire story. The guy would very well be giving away his due Zakaah and loads of Sadaqah....and if despite all that Allah places bakarah in his wealth, he should spend it on himself and his family....which he is doing.

The Random Thread
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Re: Retirement account and buying car

Peace SindSagar

You haven't understood what I mean.

Let's break it down further.

Say person x is earning 2000 dollars per month. There is no Zakat to pay on this amount agreed?
Because it is not a saving that person has had for more than 1 year.

If person x has managed to save 600,000 dollars however in a retirement fund and this amount has been in the account for 1 year then the amount of zakat payable on this amount is 1/40th of the total. This amount comes to ... 15,000 dollars. It is acceptable to pay zakat over the course of one year in installments. Assuming those installments of 15,000 dollars of zakat money are split in to 12 months. That makes 1250 dollars to pay out in zakat every month.

If a person is only earning 2000 dollars per month and is due to give out 1250 dollars every month this makes only 750 dollars to spend every month. Because of the large saving the zakat is preventing the person x from having a resonable living standard. The effective percentage that goes out in zakat every month is 62.5%. My 25% above in the table assumes that people are willing to give up to but no more than 25% of their monthly income in zakat, which means based on their monthly income they will have a limit to save to, if they save any more than that limit they will end up giving more than 25% of their monthly salaries just in zakat.

I hope you understand now ... To add the zakat column below you will see that these are the amounts that go out on zakat to fulfil the 2.5% zakat on the zakatable amount in saving which is the right column in the above table, the left column in the above table is the monthly salary or monthly income this amount is not zakatable, but the amount of zakat from the savings will either come out of the salary or the saved amount. The saved amount being a retirement fund will not be accessible so the zakat will have to be paid through the nose on live cash ... reducing the cash flow.

500
625
750
875
1000
1125
1250
1375
1500
1625
1750
1875
2000
2125
2250
2375

Zakat itself is a mechanism to prevent people from saving too much.

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Re: Retirement account and buying car

Peace Sister PyariCgudia

When a person saves a large amount of money it does not include the amount that is due for expenditure. The monthly out goings is easily calculated the money required to support those outgoings is not considered savings. My conclusion stands ... Islam does prefer the giving of money over saving it. Even if it means giving it away for good when you consider yourself to NEED it. Ayat of the Qur'an were revealed due to the sacrificial behaviour of the couple with children who made their children go to sleep hungry on account of a visitor to their household who was the guest of Muhammad (SAW). They gave up their rights and this act was beloved to Allah (SWT) ... I don't recommend this act for the wary or weak in body or faith. Putting oneself in to a state of ruin is wrong, which means that one is becoming a burden on the state. However, it should be the responsibility of the Muslims to support one another and provide of their own excess to one another, families first. In fact ... sons are responsible for their weak and elderly parents upkeep ... This is a fact according to Qur'an ... so this is a better investment that saving money for oneself ... by giving the tarbiya to ones son he will be giving him the ability to earn himself reward for following the injunctions in the Qur'an accurately.

If you have debts then you should settle them ... So your statements about the bank to settle a bill comes under this category. Keeping money to pay bills is not considered saving money, it is considered getting out of debt.

I know of another gentlement who refused to save a penny for his family ... he was Umar Ibn Al-Khattab who found out his wife was saving money over the course of some time and she made a sweet dish for him out of kindness ... He exclaimed that had he known she was doing that he would have reduced his salary because they were getting too much for them to be able to save up for something he considered a luxury. This was during his Caliphate ... (RA).

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Re: Retirement account and buying car

Peace All

Planning ... If a person plans for the future then the amount he or she saves is not subject to zakat, until the whole amount has been in saving for one year. So if you want to get a car or a ticket to go to Pakistan ... if it is done in one year then the circulation for the wealth remains fairly even and zakat is payable on the amounts in saving other than cash.

If I were to be asked how much in the future one should be planning ... for myself I would do so for 1 year.

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Re: Retirement account and buying car

Look, I think there are some very basis knowledge you are missing here.

  1. If the below quoted definition of zakat (that I googled) is correct then the 2.5% is only on the portion that is in excess of what the dude needs to live. Which means if he cannot live on his monthly income he can reduce his savings for that month or even take money out of the savings.

  2. In what planet can a dude making $4k monthly would have saved up $1Million? If he always made 4k monthly, paid 10% tax and saved 30% of after tax, he saves a bit over 1K monthly. At that rate it will take him a 1000 months (not counting interest or capital gains). Or atleast 500 months if you allow him compound interest and capital gains. In those 40 years he would reach 60+ and would make a lot less than 4K, so he will start withdrawing from his savings.

Not saving for retirement is nothing but stealing from future generations

ZAKAT: (Alms) The Zakat is a form of giving to those who are less fortunate. It is obligatory upon all Muslims to give 2.5 % of wealth and assets each year (in excess of what is required) to the poor. This is done before the beginning of the month of Muharram, the first of new year. Giving the Zakat is considered an act of worship because it is a form of offering thanks to God for the means of material well-being one has acquired. –An introduction to Islam

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Re: Retirement account and buying car

Planet earth.
its the power of compounding

if someone is making 48K, i.e. 4K/month gross
and saves 6% pretax in a 401K
has a 3% employer match (fairly common) and
has an avg gain of 7% each year
each year the person has a 3% salary increase
if this person particpates in the 401K for 37 years
they would have over a million dollars pre-tax in their retirement account :)

if the same person puts away 10% pretax for 37 years, he would be at $1.5M

and if the same person has an avg increase of 5% instead of 3% and he does not change anything else he would be almost at $2M

as I tell people, start finding your 401K early, even if it is a couple of hundred a month, the sooner you start the better results you will see.

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Re: Retirement account and buying car

That is my whole point! It would take them 35 40 years of savings by which time they are ready to withdraw and therefore there is nothing wrong in saving in a 401(k) or in any other legal way.

You can do your 401(K) calculations here yourself

Now, these dudes are een questioning compound interest. So you know what happens without that!

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Re: Retirement account and buying car

:) thanks for explaining. I thought you were one of the people who juast did not get 401Ks, I stand corrected.

as far as interest goes, thats why i had mentioned investing in equities and not bonds or moneymarket, not that moneymarket will give u the type of annual gains u need. and hey with equities u dont have the interest issue.. unless someone then says that the companies whose stocks are in the portfolio benefitr from interest based transacations and thus some of the benefits of interest are passed on to you, .. some hardcore folks stick to that and I just have to tell them that they are getting indirect benefit of interest even when they use electricity, walk on the streets or buy orange juice :)

I seriously hope that teaser starts a 401K now, early start is key.

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Re: Retirement account and buying car

^ yes.

I think some people get a bit over enthusiastic about what is said about riba and start preaching against interest. For example look at what this guy (or girl) psyah has written - very painstaking, courteous posts but based on that erroneous confusion between riba and interest.

Psyah - a question for you. How would a person who doesn't have children support himself past his earning age? if he has built up no or insufficient nest egg, he will become a parasite of society. What if he has a health issue?

If we all live in a Rama Raj, yes there will sufficient public institutions and foster children that will be able to take care of all such. But we are not in the Sathya or Tretha Yuga but live in kali Yuga. The dharmic nature of Kali yuga are different.

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Re: Retirement account and buying car

Peace StirCrasy

The term parasite of society is one which undermines the humanity of humans. As humans we should accept the responsibility of supporting one another especially if some get to old age and can no longer work.

A big problem in our societies regarding the lack of compassion for one another is seen in such statements. Allah (SWT) gives to all, He gave to them before they became sick and elderly he gives to those who are not, what right do we have to not give up from our luxuries to support those people who created the world we live in for our benefit?

The materialistic approach to life causes people to become loners and households to become selfish and broken. The moment we cater for ourselves only then when we become old our children will not take care of us, but our money will be used to pay a third person who will not necessarily be concerned about our welfare rather will be viewing their role as a job. If a person does not have children then they should have family, if they no family then the neightbourhood should support them.

If all this is too hard to swallow then what right do we have to call ourselves humans? Let's all be animals ... survival of the fitest right?

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Re: Retirement account and buying car

Peace StirCrasy

Does the 401K account allow money to be taken out before retirement?

~~~ Missing someone ~~~
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Re: Retirement account and buying car

Would'ves, could'ves and should'ves are all fine and dandy. But expecting your family (assuming you have any) or you your "neighborhood" take care of you in your old age is not realistic. It's not going to happen in this society. That's why SS, 401ks, Medicaid and retirement accounts exist. To hark back to yesteryear in hopes of someone taking care of you is just plain silly. It's like expecting the milkman every morning or the ice man deliverying a block of ice for your icebox. It's not going to happen. Realities change.