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How much do YOU think YOU need to retire? ...and at what age will you (and spouse) retire?

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Replies to: How much do YOU think YOU need to retire? ...and at what age will you (and spouse) retire?

  • 3togo3togo 5218 replies15 postsRegistered User Senior Member
    A good rule of thumb is that you should have 25x your annual needs (post SS, post pension) in savings. That number is arrived at via a SWR (safe withdrawal rate) of 4%. Some people think that in today's environment, drawing down more than 3% is unwise (which makes the requirement 33x)

    I'm OK with this strategy but implied in the strategy is the goal is keep the principle intact ... essentially the SWR is pulling the expected gains/dividends from the account without touching the principle. If I have something like $1.5M in assets for retirement I will not be denying Mom2ToGo and I expenditures to maintain all of the principle. To me planning for something like a drawdown from $1.5M to $0.5M at age 90 seems reasonable to me.

    The standard approach to me is so conservative it traps a lot of money so it can't be used ... I am banking on my kids to help out if something terrible happens that wiped out that last 1/2 million ... and yes we have LTC insurance so the bad event will have to be pretty bad to wipe us out ... and it is that bad it probably would wipe out whatever we held back.
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  • DrGoogleDrGoogle 11023 replies24 postsRegistered User Senior Member
    edited May 2014
    @HImom, high tax in retirement; that is a problem that I suggested to my brother to retire early. I ran my situation in Turbo tax and decided it's best to retire early(I will be 55), rather then work and pay it all back. What's the point of that? Even if you love your job, it's time to let it go to the younger generation or someone else that needs it most.
    edited May 2014
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  • 2016BarnardMom2016BarnardMom 1849 replies3 postsRegistered User Senior Member
    I'll be living on half my income once my debts, other than my mortgage, are paid off in August. The other half will be paying tuition and parent plus loans for the next 6 years or so. At that point, I'll put 1/4 of my income in the 401K and my HSA and the other 1/4 will go toward extra principle on the mortgage until the mortgage is paid off. Once that is paid off, I'll be living on about $1500 a month, including groceries, gas, etc. All the extra will go into retirement and the HSA. I love that I have an HSA now because it can follow you into retirement and help with all those medical expenses. I don't expect to stay in my house once it is paid off, but will either purchase a condo with the proceeds from the house, keeping the extra to cover the condo association fees. Insurance, property taxes and utility bills are much lower in a condo. I may also consider just renting a small apartment to avoid all of that and using the proceeds from the house to cover that rent for a long time.

    I don't expect to live very long. While Crohn's Disease in and of itself is not terminal, there are side effects and issues (like not being able to eat most forms of fiber) that will cause me other problems. People in my family typically just don't live very long although my parents generation is doing better than my grandparents did. 3 of my 4 grandparents died at 67. My mom died at 69. I'm hoping to retire at 65 and hope I make it to 75. At 49, I'm starting to really be affected by arthritis pain and have been told there's really nothing I can do. I'm not sure life will be very bearable as that gets worse.

    I'm not looking forward to this whole aging thing. Since being diagnosed with a chronic illness at 37, it's all been downhill physically and it's only been 12 years.

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  • SOSConcernSOSConcern 3840 replies8 postsRegistered User Senior Member
    First thing to do with retirement is to take care of yourself, health wise. Exercise, eating right. That will help keep costs down on medical, and you will feel better!

    We bought long term insurance in our mid to late 40's - got really premium plan with CNA who has a few years later got out of that insurance and into physician malpractice (better profitability for them). We currently have 3 years of premium increases, but then it should level off. Since I had stage III cancer at age 52, it is a good thing I had the policy, because I could not buy it now. To me, having LTC insurance is more important than homeowner's insurance. If you buy it when you are healthy, you can obtain and also have more affordable rates. I truly believe I will live into my 90's, and I want good care!

    I have been pretty good with our investments, despite the market dips over the years. We hired a great financial planner, but unfortunately cannot turn over more of our 401 k money from H's company plan until he quits or retires. We plan for him to continue working there until he retires (age 65 or 67, depending).

    We took a bad retirement hit when H's company got sold and they eliminated retirement plan (kept 401 k) - so we lost last 8 years of retirement plan and next 8 years (until H retires). 16 years of additional growth and years of service for payout. Oh, and H maxes out on 4 weeks of vacation; other company maxed out at 5 weeks; however for the most part, job is solid and H is not too stressed out with job. Also annoying that he sometimes is forced to take certain days off when plant has shut down. Sometimes it is hard for him to have a week or 8 days off for planned vacation - they won't allow more than 5 days carrying over to the next calendar year. Previous owner was much more flexible.

    Oh, and all of a sudden some years back, H's built up sick time was wiped out (new company policy). I will be investigating (I have the pay stubs showing the hours of sick leave available) as I think the old company would pay out sick time unused at retirement - and I think the gov't might protect that retirement 'benefit'. Seriously, it was like 1000 hours (so half a year of pay).

    Financial planner asked what we thought our retirement annual 'needs' would be, and I said $50,000 (about half of current income). I think that is do-able both on growth of funds and what we can comfortably live on.

    Financial planner said many downsize in home later than they should. I am thinking about how to have our home sell once H retires (we would probably move out of the area, and possibly have two smaller places). Thinking about getting a job and piling up money to make home improvements over time, now that we will be empty nesters (both kids in college). Since we can be patient for the house to sell (if the market is not right at first), we can do whatever improvements, take it off the market for a time to have a 'new listing' later. We have so many new homes built in our area that we have to do many things that are in the new houses for people to appreciate our home.

    I subscribe to 'Money', 'Smart Money', and Kiplingers - have issues piled, but plan to go through them.

    If you are thinking about ways to make retirement happen and looking at the problems other people have (unexpected variances in their retirement spending and priorities), you can find a way to have it happen.

    One thing I recently read which is also true - do not subsidize your kids' lifestyles. (MSN Money - 7 realistic strategies for retirement).
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  • ucbalumnusucbalumnus 77150 replies672 postsRegistered User Senior Member
    DrGoogle wrote:
    Cell phone, I can get rid off, go back to be caveman for a change.

    Basic cell phone service is cheaper than basic (standalone) landline service.

    http://www.cellguru.net/prepaid_compare.htm
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  • ucbalumnusucbalumnus 77150 replies672 postsRegistered User Senior Member
    thumper1 wrote:
    The more you have, the more you spend.

    I wonder what percentage of people will automatically ratchet up spending to consume any additional income or wealth, versus those who will continue to spend at previous levels (saving the extra). Obviously, more people belong in the former group than the latter (examples include the too-high-income-for-college-financial-aid families who have nothing saved for their kids' college, as well as the majority who have far too little savings for their retirement).
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  • BunsenBurnerBunsenBurner 38586 replies465 postsRegistered User Senior Member
    "We've run the Monte Carlo simulations for free with several CFPs and they all say we are fine--100% likely to have a substantial estate in 50+ years--more than we currently have."

    For folks who are handy with Excel, there is a free 30-day trial of Oracle's $1000 program called Crystal Ball that can be used to run your own simulations.

    I highly doubt Mr B will ever retire! He will be one of those "professor emeritus" types, so since I'm female and younger, I have at least 20 years until I even begin to plan retirement. Time to start a new career - yay?
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  • busdriver11busdriver11 15187 replies28 postsRegistered User Senior Member
    "Busdriver11, would you please describe some of the steps you've taken to diversify? Dh has similar concerns about our current retirement savings. He's mentioned precious metals and land, among other things, but my concern is liquidity as well as safety."

    @silpat, really all the diversification we have done is 401K, Roth, pension, and the newest item is rental properties. We are also trying to pay off debt as much as possible. But in the last couple of years we have a fair amount in the rentals. Not for everyone, but I'd say about 30 % of our net worth is now in real estate. At least it was something that we could understand and were comfortable with.

    "busdriver: The government doesn't hold your 401K or Roth so technically they can't raid it. What some "paranoid siders" think may happen is that the "tax free" or "tax deferred" status may go away and you may not get the amount out that you counted on"

    @evergreen1929, I know they don't hold the 401K's or the Roths, but they fully realize that is where trillions of dollars lay. I absolutely do not trust politicians to not nationalize them, like they did in Argentina. Confiscate the money and give people a small percentage back annually. When the debt gets high enough and the majority of people are getting entitlements and have little savings, where are they going to get the money? The politicians will still get the votes from the majority that haven't saved, and what is the guarantee that your money isn't safe? I guess if I trusted the people with the power I wouldn't be concerned about this, but I certainly don't.
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  • busdriver11busdriver11 15187 replies28 postsRegistered User Senior Member
    I'm sorry for what you have been going through @2016BarnardMom. I hope things work out far better than you expected, and that you have a long and pain free life.
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  • IxnayBobIxnayBob 4372 replies42 postsRegistered User Senior Member
    A good rule of thumb is that you should have 25x your annual needs (post SS, post pension) in savings. That number is arrived at via a SWR (safe withdrawal rate) of 4%. Some people think that in today's environment, drawing down more than 3% is unwise (which makes the requirement 33x)

    I'm OK with this strategy but implied in the strategy is the goal is keep the principle intact ... essentially the SWR is pulling the expected gains/dividends from the account without touching the principle. If I have something like $1.5M in assets for retirement I will not be denying Mom2ToGo and I expenditures to maintain all of the principle. To me planning for something like a drawdown from $1.5M to $0.5M at age 90 seems reasonable to me.

    It seems like you're preserving principal at a 3-4% WR, but not if you consider inflation and taxes on the gains/dividends. I use www.ESPlanner.com (there's a free version, but the paid version does Monte Carlo) because my aim is for consumption smoothing. www.firecalc.com does a good (free) job of illustrating what can happen over a 20, 30, even 40+ year retirement.
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  • PizzagirlPizzagirl 40174 replies320 postsRegistered User Senior Member
    I agree with IxnayBob. Our plan is not to touch the principle either til as late as possible - that becomes a cushion for a true emergency. We have already faced 2 emergencies in our spending - one was an unexpected medical expense of nearly six figures and the other is still ongoing but will easily be six figures as well. We are very conservative financially, have absolutely zero debt, paid off our house years ago, have 2 good, secure well paying jobs - but one never knows what the future brings. Frankly we intend to have a very active retirement, biking, traveling and doing all the things we never had time for during the productive years. So it's aggressive savings, but living on the interest for the most part.
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  • jym626jym626 55110 replies2860 postsRegistered User Senior Member
    I wish I could predict what we will find ourselves facing with some family expenses my DH will step up to the plate to handle when the time comes ( I am not to keen on enabling other family members poor planning and decision making, but I digress) this affects my comfort level and ability to really discern "how much is enough".
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  • PizzagirlPizzagirl 40174 replies320 postsRegistered User Senior Member
    I hear ya, sister :-)
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  • deb922deb922 5586 replies188 postsRegistered User Senior Member
    edited May 2014
    I think if I start talking about this, I'll never stop. Retiring is something I think about a lot. Makes me very nervous.

    H has a pension and 401k. 401k is not going as well as I would hope. With paying for college and the Great Recession we had some losses that we are just now back to pre recession levels. 401k also didn't rise as much before as some because 401 was tied to company stock until 10 years ago and co stock underperformed.

    I think that we paid more for college than many others in our same income bracket. I will always be happy that we did this but it took us back a bit and we have to recover. We also put off a lot of home maintenance and major purchases that now we have to do also. But it's hard. Still paying off loans, trying to do major purchases and play catch up. And save more for retirement. Ugh!

    I think the past clouds your future also. My parents retired early and moved to a retirement location which they couldn't really afford. My dad's family was short lived and so he wanted to have retirement and be able to enjoy it. They made a lot of decisions based on they thought they wouldn't live very long. It is not a way to live. Now my dad has passed away and my mom is not in a great position, money wise. She lost his portion of SS and it has really hurt. They lost much of their savings in the Great Recession and there is no way to recover now. Too little left.

    I have many neighbors and friends who are 15 years older than we are and retired. I'm so jealous. They travel extensively, do major home improvements every year and live a great life. I think they were able to make money on the houses they lived in before the housing market tanked. I also know that they didn't spend anywhere close to what we did on our kids college. College costs were much less 20 years ago, many of my friends kids either paid for their own college or didn't go to college at all. Things were different with even the generation before us.

    So I worry. Will it ever be enough? Will the pension disappear or retiree health insurance, which is great now. But won't be able to count on either.

    I am glad that our children are self supporting which is not the case for many I know with newly graduated children. But do worry about what people do for their kids. We paid for college, do we now have to pay for their weddings? It's hard, sometimes I think the kids think we have limitless resources when while we aren't struggling, we have our own things we want to do.

    I'd like to travel and buy some of the things we went without while the kids were growing and in college. I can see some less expenses when we retire, but there is more we would like to do as will finally have time. How to fund that? I think about these things all the time.
    edited May 2014
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  • 3togo3togo 5218 replies15 postsRegistered User Senior Member
    Frankly we intend to have a very active retirement, biking, traveling and doing all the things we never had time for during the productive years. So it's aggressive savings, but living on the interest for the most part.

    This topic is a lot like the discussion about how much to pay for a college. If a family has the funds saved to live a full active retirement while not touching the principle of their assets ... then it's pretty easy to not draw on the principle ... and congrats on the great work getting to position.

    But what if someone's retirement funds are not at a level where they can live only off the gains/dividends and live the full active retirement they would like. It seems to me their are 3 main choices ...
    1) Keep working and saving until the nest egg is big enough ... delay retirement
    2) Cut back on how they live in retirement ... cut back their retirement
    3) Retire when you want and live how you want while cutting into the principle in a prudent way.

    Personally I do not see #1 or #2 as great choices ... I've cut back on my retirement and then leave all my principle to my kids. I love my kids but by the time I get to this retirement stuff I'll already have helped with college, grad school, house, and grandkids ... the retirement funds are for Mom3ToGo and I and I want to leverage the money as much as possible. If I plan on having $0.5M left when I'm 100 ... and only spend down at that rate ... the odds that doesn't work out are miniscule. I am not advocating running the assets dry at 75 ... but allowing some withdrawals while protecting against a long life and major issues in the future ... keeping a $1.0M pile until you die while forgoing things seems silly to me.
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  • 3togo3togo 5218 replies15 postsRegistered User Senior Member

    I have no idea how I got a quote in a quote in that last reply .. maybe another one of the new features.
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  • IxnayBobIxnayBob 4372 replies42 postsRegistered User Senior Member
    3togo, when you're close but not quite there for retirement, that's where SPIAs (single premium immediate annuities) come into play. Do NOT confuse them with the dozens of other annuity types, which mostly make for a nice retirement for the salesmen.

    A SPIA is a way to pool the longevity of a large number of owners, so that the ones who die early fund the larger payments to the ones who live longer. The downside, of course, is that if you die a month after buying one, the money is gone. Otoh, if you live to 100, you'll get a check every month even if your nest egg would have gone to 0 by then.
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  • oldfortoldfort 22866 replies290 postsRegistered User Senior Member
    I am a planner or a worrier. I thought I was pretty much set until few recent issues in my life, which may entail me losing a big chunk of my savings. The blessing is it is happened now rather than later when I am closer to retirement. I have reworked my spreadsheet. Even though I could manage fairly well continuing with what I am doing, I have decided I may go back to finance for few more years. I took a job at a start up, hoping for better life/work balance, but I am considering a more intense job again. I have 10+ years until retirement, but would like to retire earlier. Like Pizzagirl, when I retire I want to be able to do all the things I enjoy to do - travel, eating out and maybe even picking up a real hobby. I don't want to have to worry about if I could get on a plane to visit my grandchildren.
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  • mom2collegekidsmom2collegekids 83959 replies1009 postsForum Champion Financial Aid, Forum Champion Alabama Forum Champion
    <<<<
    One thing I recently read which is also true - do not subsidize your kids' lifestyles. (MSN Money - 7 realistic strategies for retirement).
    <<<<


    this is very true for SEVERAL reasons....

    You dont want your child used to the finer things in life (funded by you) because they wont likely have the funds to continue that lifestyle when they launch...and they will either look to you to fund, or be very angry/annoyed at their sudden drop in lifestyle (what? no more $40 mani/pedis? no more $120 hair highlights? no more $300 designer bags? )

    there was a post yesterday about a very modest income mom who will struggle to pay EFC for college-bound D. BUT....a 20 year old son lives at home, contributes nothing, uses his income for fun and luxuries, while struggling mom pays for everything (cell, car, food, etc). Crazy on two counts....son is getting too used to only using his income for unnecessary stuff, and mom needs to use the money that she spends on HIM to help pay for D's college.


    back to retirement talk.....

    H just retired from a large well-established company which supposedly has a sound retirement. Thankfully, H falls under the Old Plan (for those hired before 1993) which is extremely generous for both pension and medical. We opted for the 100% surviving spouse choice, so I will get the same amount if he dies first (the options were 100%, 75%, 50%, 0%....but the monthly amounts werent that much different, so dont know why anyone would choose less than 100% for a spouse). His pension has some sort of COLA calculation for future inflation increases but I dont know how accurate that will be.

    We will leave 401k alone for now because pension and rental income is enough. SS will start for H in a few years. I'm not sure how much that is, but I think it will be about 2000 a month...and then at some point, I think i will get a payment based on half of his amount. Is that right?




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  • momofthreeboysmomofthreeboys 16617 replies66 postsRegistered User Senior Member
    I'm with you there oldfort. I took a step-back job and I do worry that it might return to bite me in the next 10 years. I'm willing to work a part-time job after I "retire" because I like to keep busy but that will need to balance what the tax implications might be. I'm under 10 years to retirement....I'm hoping our kids are financially secure in that time so we can shed some of our property tax burden and help increase their assets by turning something over to them so some of "my" plan depends on the kids and that is alittle un-nerving also as I don't know if they will be as financially viable in their early thirties as my husband and I were. Fingers crossed.
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