<p>We converted all of our IRAs to Roth’s a couple of years ago.</p>
<p>I found the fairmark website quite useful,</p>
<p>[Roth</a> IRA Rules of Thumb](<a href=“http://fairmark.com/rothira/thumb.htm]Roth”>http://fairmark.com/rothira/thumb.htm)</p>
<p>Just a note on the wonders of Roth IRAs - if you lose money in your Roth account you end up eating a loss you can’t deduct. I know some folks that happened to during the downturn. All of the above analysis assumes that you’ll have gains in the future which will be tax free after you pay tax on the income you put into the Roth. If that doesn’t happen it’s a bad deal. </p>
<p>I have a Roth which I funded during a low-income year along with a regular deductible IRA and 401(k). The thing I find comforting about the latter is that I will pay tax on the income when I use it. If there’s gains that’s fine - it’s all income to me that year. I may not be minimizing my lifetime tax bill but I know that I’ll be paying taxers on my income when I spend it, and only as to the amount I’m spending in a given year.</p>
<p>You guys made me nervous, so I spent some time over the weekend checking. I feel much better now. Both of us a pension, him 401K, both IRA rollover from previous employers, me 403b, both SS. If we don’t splurge, but live comfortably, we should be fine until the age of 80. It all starts in June of 2014. SS won’t kick in for the first 7 years.</p>
<p>^^But what happens when you turn 80? No more money except for SS (and who knows if/how much will be in your SS check by then)?</p>
<p>Not to sound grim, but family history doesn’t have me living that long.</p>
<p>That’s what my dad said when he retired at 62. He’s soon to be 84, and in fine health. Fortunately they are doing OK financially.</p>
<p>Mom has friends in their 70’s, 80’s and 90’s. Some are starting to worry because money will be running out soon. And these are upper middle class people (ex corporate executives).</p>
<p>Half of our income in retirement will come from our real estate investments, the other half will be a combination of SS, 401k, and IRA.</p>
<p>So hopefully we will be ok even if we live to a very old age, and even if (when) SS gets gutted or means-tested at some point.</p>
<p>“Mom has friends in their 70’s, 80’s and 90’s. Some are starting to worry because money will be running out soon. And these are upper middle class people (ex corporate executives).”</p>
<p>For some reason younger upper middle class people think they are immune to the problem of running out of money. </p>
<p>The one thing that SS has going for it is that the payments increase over time and there is some inflation protection. There is going to be less inflation protection going forward.</p>
<p>Besides SS, people better have inflation protection elsewhere. I talk to
smart people and they don’t understand how inflation is going to eat up their principal. I am talking millions of prinicipal is going to be chewed up and swallowed. </p>
<p>If your nest egg is your only means of support and and you spend<br>
125,000 after tax with 3 percent inflation and a 5 percent after tax
return on your money…after 20 years you spent a little over 2 million
bucks of your net worth. In other words, in the above scenario, if you started with 2 million in net worth, you are broke in 20 years. </p>
<p>You can see how upper middle income people can get into trouble.</p>
<p>SS and pensions reduce the risk. You don’t need as many assets to live if you get a pension and/or SS.</p>
<p>If medicare becomes more privatized, good luck. You are going to need more assets.</p>
<p>It’s good to have diverse sources of income if possible. Contrary to doom and gloom predictions I hear now (which echo what my Mom told me in the 60’s and 70’s) I am fully confident that social security will be around for my lifetime, although it might be tweaked a bit more. But my retirement savings and real estate have been on the same roller coaster everyone else has ridden over the past 10 years, and there’s no guarantee that won’t continue. I think the reasonable insecurity a lot of people feel is that once you retire, that’s it. You don’t have a realistic prospect of a “do-over.” On the other hand, if you plan on spending $125,000 a year on top of your social security benefit you’re going to need over $2 million.</p>
<p>My answer? Plan to live on less than $125K per year. Most people do. Works for me.</p>
<p>There are a lot of optimistic people here.</p>
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<p>Not just most, isn’t it something like 90%?</p>
<p>We have friends that are experimenting around with living in other countries and are eager to hear about their experiences.</p>
<p>Well…we are talking about upper middle income people…</p>
<p>I had dinner Saturday with a couple and they said their relatives don’t make much… Just 400,000 a year plus benefits and a pension. 
</p>
<p>At first I was surprised when this couple told me the husband has to keep working, but then I thought, “maybe they need 400,000 a year”. </p>
<p>I actually agree with what you wrote, Kluge. It is true, if you can live on less, you need less of a nest egg. Just don’t get sick. </p>
<p>In the above example, you only need 1.67 Million if you start out spending 100,000 a year.</p>
<p>My parents live on 80,000 a year. They live in an assisted-independent living center.
They could run out of money. They are spending more than they make.</p>
<p>I don’t know what my mother lives on but she has two pensions, social security and a bunch of dividend stocks. And a paid-off house. She’s never asked her kids for financial help but we are all in a position to help out if needed.</p>
<p>Your mom sounds like she is in good shape.</p>
<p>My parent’s costs would be lower but they can’t really live alone anymore. My dad has the beginnings of dementia. He is expected to get alzheimers and then my parents costs rise to over 100,000. </p>
<p>I think I will have to take care of their financial needs if there is a problem. I don’t think my siblings are going to be able to help.</p>
<p>Anyway, my parents are a side issue. I guess my issue. :)</p>
<p>I would hope our kids would help us if we ever needed it, but we’ll do whatever we can to make sure they won’t have to support us. We sure have poured a lot of money into them that could have been put into savings. Our pension will be 260K/yr if we retire at age 60, which seems like we shouldn’t have to save much, as the pension is well funded and the company is stable. But I don’t trust any business (or government program), because how can you possibly predict what could happen in 20-30-40 years?</p>
<p>I am not an advocate of getting rid of social security at all. So many people get dementia as they get older and don’t have the mental capacity to take care of themselves, even if they used to be capable. Not everyone has children, or people who can take care of them. I don’t want to see old people out on the streets.</p>
<p>my pension will be 30% of my salary, plus social security, plus my retirement savings… I figure the first two will get me to 45/50k (and stay up with inflation). Right now I am maxing out the IRA, but that will change if I buy a house/condo soon. Should still be able to make substantial contributions though (15% or more).</p>
<p>I hope this plan will be enough in 35/40 years. Probably also be able to sell a house (/whatever I upgrade to after the condo) and move somewhere cheaper than DC.</p>
<p>Ok…soccerguy315, you are young. You are on the right track. Have fun. Life is short. Have fun.</p>
<p>I like soccer too.</p>