This is interesting. Would be more useful if it also contemplated income tax differences.
As to the food cost chart–I am surprised the range is as tight as it is.
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That has already been noticed long ago, and is the reason that Social Security and Medicare exist.
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If a company declares bankruptcy, the pension may be backed by the PBGC, but the amount may well be greatly reduced. I have a number of friends who lost well over half their pension amounts when Delphi went bankrupt - some lost up to 70%. In this day and age, when companies are able to cut pensions legally (ask GM salaried employees), it’s really, really important to have savings in addition to a pension … that is, don’t count on the full pension amount being there for the rest of your life.
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So here’s an example of income building.
Right now you can buy Harris County Texas Water GO - insured no less and AA rated 3.75% at 86.49.
That means you but 10k of paper for $8649.
Your yield is 4.33% and there are no federal taxes due.
The call is 1/24/25 so they can call it then - in a month.
If they do, you win - they pay you $10k and in addition to interest, you just made $1351.51 on your $8649 investment.
And yes - there’s risk that rates will be lower but you were paid handsomely for that risk. So that $1351 will most likely cover any interest reduction.
Or you can buy Linestone County AL at 4.25% for a price of 95.86. That’s a 4.4% yield. You are assured it at least ten years b4 it could be called. It’s not insured but AA- rated (near bulletproof as backed by water/sewer revenue).
I prefer the 2nd bcuz for income I want call protection. I want to be paid at least ten years.
But others will prefer the first because of it gets called, they get paid handsomely earlier.
Btw the fed has cut .75% and these yields are better than most anything in my portfolio. I can’t wait til Jan 1 when I take my next interest payment and buy more. Hoping these rates are still there.
Don’t assume just because the fed cuts that bond yields go down. They’ve, in fact, risen.
For those who are conservative and want a simple strategy to generate income, individual munis are a great way to go.
Safe, reliable, and without the fees that large companies who manage your money and share fears with you to get you to trust and pay them fees.
For anyone interested in simple, easy to understand and frankly boring, it may be the right way for you to build a portion of your nest egg - that part that allows you to sleep at night and build yourself an income stream.
I am someone who has invested this way with great success - both financially and nerve wise - which for many is most important. Bond values fluctuate no different than equities but I don’t care. Why ? When it’s called or matures, I’m getting back my 100 cents on the dollar.
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When I have health issues I ask a doctor, for legal concerns a lawyer and car problems a mechanic.
I will share that I use an outside financial consultant to help manage our families investments (in spite of having an MBA, numerous licenses and 30 years of markets experience). Simple reason is that I don’t believe in being cheap when outcomes matter. I seek out informed and unbiased expertise and am willing to pay for it. I do believe you get what you pay for when it comes to certain things.
Others can differ and flaunt their claimed results or wealth (we are private about such matters) and I tip my hat to their financial road not taken and frugality. Good for you and happy holidays.
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Personally, when I have an issue I am pondering and can’t come up with a good answer, I ask it here or on Bogleheads. I’ve talked to many financial advisors and for the most part do not consider them only interested in my benefit, fiduciary or not. I do trust the advice and wisdom of many people on this forum, however, who are helping just because they are thoughtful and have experiences that could help others.
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Just saw this post and it made me think.
I think based on social media, we live in a world where many people validate themselves based on the perceptions of others. I see this manifesting itself generally amongst three groups.
We know several families that outwardly had all the trappings of wealth but unfortunately experienced real hard times. In all cases it was quickly apparent these folks had been living above their means. These were people who were well known in the community who felt compelled to try and impress others locally.
We all see influencers who seek fame by posting about extravagant trips and expensive life styles. These folks tend to be very public but seldom know those they are trying to impress.
The group however I find most vexing is the stranger on stranger variety. I fail to understand why anonymous people would share their self perceived wealth or financial accomplishments with people whom they don’t know. Seems like puffery.
Where I live there is a saying all bling and no cha ching. Translation being, those with loudest voices professing their financial prowess and fortune are often seeking validation above and beyond some shortcoming.
As stated previously we treat such matters as private.
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I agree. It’s an open website to share info.
Too often people want to delve into - but they went there (sometimes 10 years ago) or I live this.
That’s great too - but it’s an open forum for all opinions or experiences, not just some. And people should embrace that.
I’m going to learn from @SOSConcern about an annuity in fact. And I appreciate that !!
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My very prim and proper grandmother once told me, “Money is like sex. Those who talk about it don’t have it”. Happy holidays everyone. 
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In my experience living in a bedroom community where there was a lot of wealth, the parents or grandparents of the young couple contributed to buying a home, paid the private school tuition, paid for the expensive summer camp that was a family tradition. Vacations were family affairs or to family properties.
It wasn’t a secret but it also wasn’t publicized. Wealthy parents also employed their children in the family business, paid for the country club membership and funded a way of life.
Not always the case. With my children, where there isn’t family wealth, both partners have no school debt and worked for a decade or more before having children. Had children a decade after we did. They could have a parent who stays home. They have many friends who do.
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I would assume so, seeing as this is a thread about retirement that focuses much upon financial issues, so yep, people talk about money here. I have gotten loans, exchanged real estate, balanced my portfolio, sought out financial advisors and platforms, spoke to estate attorneys and made decisions about gifting among other things due to the excellent advice I have received from those on this thread.
I appreciate all the guidance I have received here over the years, it has surely helped my retirement. Merry Christmas Eve, everyone!
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But these generations know better.
We were married for 15 years when we had our DDs - the years we turned 38 and 40. My parents bought out a family business with inheriting a third, so many years we were on a big thrifty living plan. I had 3 family vacations (two within the state and when I was 12 we visited our relatives in my parent’s home country Switzerland).
Our DDs are aware of how fortunate they have been to have had a pretty good life standard, having good education. No school debt with undergraduate degree - saw where other students had to struggle with working and cobbling together enough money to go to college.
We are expecting grandchild #5 in March. Have started stock accounts with all of the grands. Some inheritance helped DDs and us at a critical time in our lives.
My parents had an opportunity to travel quite a bit in the 50’s. Dad died at age 64 of cancer. Mom was able to travel some until she experienced neurological issues and dementia gradually thereafter, dying at age 77. Their estate was set up well, and had income generating from 21 apartment units. The apartment building by commercial area had a large parking lot, and the buyer of the other buildings did purchase the apartment building in 2009 - so we received some inheritance money then. The two apartment buildings were the nicest in town - two townhomes on the ends with 2 car garage (3 BR, 2 BA), eight 2 BR, 2 BA each with a garage), and six one bedroom apartments each with a garage. Those were sold just slightly below appraised value direct to a buyer.
We have a lot to be grateful for - and people sometimes don’t appreciate what they have (like good health) until it gets diminished.
May everyone’s end of year be grand and a Happy New Year.
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@SOSConcern, that is terrific. Like you, we feel really grateful for how things have turned out. Nothing is perfect. And, we are trying to work on health.
@threeofthree, we live an a fairly aflluent exurb but made a choice to raise our kids in the part of the town where incomes were more normal (middle to upper middle class, though the middle has been pushed out for the most part over time). I did not want to raise my kids in a neighborhood where kids thought going to Cayman Islands for spring break was a birth right. In that neighborhood, we knew what people did and I thought I had a fairly good idea of the incomes of many of the couples. I was surprised to see that their kids dressed more nicely than mine, they took vacations to really nice places, and they had newer cars than we did and I probably made considerably more that my guess about what they made. ShawWife and I were relatively frugal and we were saving for college and retirement. I wondered if there was something that I didn’t know, or if they just were not saving. Later, when it was time to send kids to college, many of these same people were talking about merit aid and financial aid and limiting the schools the kids could apply to, etc.
Before the Pandemic, we move to the fancier side of town though not the fanciest street. Our street is mostly a series of mega-houses (not McMansions because they are a lot more tasteful). We haven’t really gotten to know much about too many of our neighbors so I can’t make the same assessment. (One of the neighbors made money in tech years ago and the spouse is a CMO; another more normal family has a CPO and a BD person so more normal incomes and the latter couple does not have a mega-house). But, generally, the couples in beautiful mega-houses only have two kids and may well have a second house as we don’t see the kids around over the summer (though you mostly don’t see people in the neighborhood anyway). [Not that we should throw stones as there are just two of us in a newly renovated house in a wonderful place].
@Catcherinthetoast, no one has bragged to me about their money, but many of my neighbors have very nice houses and very nice cars. So, not the Puritan modesty of the old Northeast.
On another note, I have always had a problem answering the questions of the thread – how much do we think we need to retire and at what age will we retire. On the latter, ShawWife and I love what we do and will retire when we are physically or mentally unable to do it. [We saw an extraordinary 5 story tapestry/sculpture at the MOMA last weekend and I suggested to ShawWife that she contact the textile workshop that manufactured the piece from the artist’s drawing (and likely collaboration) so she could continue to work big even when that became to hard for her physically].
But, on the how much, I think it depends upon what fraction of the assets is in tax-deferred plans, what fraction is in Roth’s, probalby what fraction is in annuities, and what fraction is after-tax. I know the 4% rule is very simplistic, but it matters if you have to pay income tax on the withdrawals. So, with $1 MM in after-tax money, you are getting $40K in money to spend the first year and with $10 MM in after-tax money, you would have $400K in spending money that year. But, with $1 MM in pre-tax money, you have, after Federal, Medicare, SS and state tax, your probably have $30K to spend (compared to $40K). And with $10 MM in pre-tax assets, you might have something like $250K to spend compared to $400K. Do you know if the 4% rule is intended to apply to pre-tax or post-tax assets?
Both of our financial advisors have done financial plans using Monte Carlo analysis, one more recent. The more recent one concludes that there is a 1% chance that we would run out of money when I was 94 (which coincidentally is the year it is assumed I’ll expire) and a very substantial chance that we will leave a lot to the next generation. The downside scenarios are less worrisome as we would make choices to cut our costs if we thought we thought we were going down the wrong path. I’ve asked for the first firm to redo their analysis.
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From my understanding, the 4% is the withdrawal rate, which would be straight off the top, before any taxes, etc.
So, the great news is, for the majority of retirement income, you are no longer paying into Medicare or SS. Unless you have a job, you can just focus on federal and state taxes. The state taxes will vary by your location but you can easily discern that and many states are more favorable for retirees.
As for how much you’ll have after taxes, thats somewhat easy to calculate and not really as dramatic as your speculating. Also, the standard deduction ($15k for single, $30k for MFJ) gets taken off the top, with zero taxes owed. A couple withdrawing $40k, using the standard deduction, would potentially owe less rhan $1,000 in federal taxes and much less in state taxes. That same couple withdrawing $400k would owe about $75k in federal taxes. Of course this doesn’t apply to roth withdrawals so even easier to calculate those numbers.
Regarding traditionsl vs roth accounts. For most people, traditionally a higher percentage is contributed into a traditional retirement account thus amounting to a higher retirement account balance when withdrawing that 4%. For many people, it makes much more sense to contribute to a traditional account and save say 30% or more in taxes up front and then pay those taxes later when they will potentially be in a lower, perhaps much lower tax bracket.
These are things rhat individuals need to take a look at for themselves. Everyone’s situation is a bit different.
I have a question about Roth contribution. What happens if your income suddenly increases at the end of the year? You get a huge bonus pushing your income over the Roth limit and you had already made the annual contribution to Roth?
For some of us, when Roth IRAs came on the scene, people like DH and I didn’t take full advantage in part because I didn’t take the extra effort to carve out from 401k contribution to do the Roth the first couple of years since I was very busy with leadership job and two small children with a husband that traveled quite a lot for work (and no relatives within 750 miles but I did have an excellent weekly house cleaning lady which was a great help).
Right now we are continuing to do some upgrade and remodel of our home which we lived in since we built it in 1992. Glad the funds are available to do this. The bedroom decks are getting measured in the next day or two and will be done with the very hardy material (twice the cost but worth it so in 10 years they will still look like new). As soon as I can catch my breath I will get new quartz kitchen countertops (to replace the original Formica, which looks nice but want to upgrade for when we do sell our home). As a custom home, it should have features not available in 1992 while also have nice features that we incorporated that often get cut out now due to construction costs. I need to focus on decluttering and cleaning before considering any further house upgrades. I would like to add a 4 season room off the family room and a two car carport. We have a good contractor, just have to make sure there is no other need for the money when I can work it through. A friend had used a person whose business is helping organize rooms, and I might contract her to help me get my house into shape.
DD1, soon to be mother of 5 is doing really well with juggling all the balls with home and work. I have been a very good household assistant - kitchen and laundry help, babysitting help (older two kids have break from school and still having daycare for younger two kids some days), doing fun things with the kids and also some extra reading and learning. SIL is coming around to fuller participation at home, and also realizing his career will be with the many opportunities in their city (he actually entertained the idea of DD sacrificing her well paying job and the kids great educational setting so that he can move around with a government job like his dad did) - he is on catch up mode with his career but is on the right track. His parents barely have enough for retirement, in part because his dad had to retire at 55 with his law enforcement federal job, and he was experiencing Parkinson’s and really was not of a mindset anyway to work another job.
In getting ready for child #5, additional furniture is coming and we can help get the rooms rearranged. IKEA furniture - a lofted bed. The baby will be in the Master BR for a while, and thankfully their home works well with proper organization. Today we were changing out the clothes/shoes as the 3YR has outgrown clothes and shoes, the 5YR needs new school shoes. DD with GD1 and my help got through getting clothes organized. I ordered some additional clothing including long sleeve shirts for GS1 and GS2. GD1 got to pick out the dresses she liked online with me - she has strong likes and if she doesn’t like something, she won’t wear it.
DH really enjoys his activities at home and is a bit like a duck out of water with the extended time with DD1’s family. He is on his computer with his headphones on quite a bit, takes good naps.
Working out the dates when I arrive to help while mom/dad are busy with baby delivery. They plan to baptize the baby within a few weeks of delivery (like they have with baby #4). DH will fly in. We have been at all the baptisms (as they were only 100 miles from out home for the first 4).
If DD1/SIL only had one or two, or even three children, they would not be needing the level of help with their family. DD1 especially knows what it takes to do it all, and is willing to make the sacrifices - but the kids are expected to behave and they are very good kids. DD1 is 30 and SIL is 34, so they have the ‘energy’ to operate with busy lives.
I know when DDs were growing up, we didn’t always feel 100% secure on all fronts - the sandwich generation with sometimes needs with both our parents, uncertainty with primary income (thankfully was always able to maintain employment even with salary/benefits ‘frozen’ for about last 15 year on the job and loss of pension due to company being sold).
DD/SIL will feel better about SIL’s parents when SIL’s parents move close to his only brother’s (about 6 hours drive from DD/SIL). They cannot manage well in their current home and rely on friends to maintain independence - SIL’s father has more of the health burden.
We are happy to be a safety net for our DDs/family. DDs/SIL/BF are all responsible and I am happy to dedicate time, attention and resources to ensure our grandkids grow up with our presence and can be all they can be.
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This is a good problem to have.
My husband’s parents, their financial advisor wants my husband to meet with him and they want to transfer money to an account in his (our?) name.
And for the first time in their lives, my in laws have gifted an amount of money to us (which was very generous of them) plus smallish checks to the grandchildren.
I’m confused what the purpose of transferring money into an account in our name is for? My husband claims his parents have a trust but he has no idea what that entails because his parents really haven’t shared anything with him and only recently have suggested that he meet with the FA. At the FA request. The in laws are 88 and 89.
My husband argued that there is no 10 year look back on the money gifted and that taxes have already been paid.
I guess we will find out later this month when my husband meets with the FA. I’m not sure what we can do with any money gifted. Is it supposed to remain with the FA and we let it sit and have him invest it? We have our own FA and account, although it sounds like my in law’s investments have done better than ours.
If there is tax paid money, would it be better to spend that before taking money out of our accounts which we still need to pay the tax on?
Is this a way for my in laws to control their money?
Like I say, it’s not a bad problem. We have enough resources that we don’t need any so any money gifted is gravy for us.
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D1 is a MD at a major IB and her H works at a technology company. They are in their mid 30s. They own a 3 bedroom condo in a brownstone. D1 laughs that most of her peers own brownstones and they only have a floor through. Their 3 year old has asked when they were going to get a bigger house with stairs (brownstone) and she has also asked if they could get another nanny for her baby sister. D1 said other than going to a private school she wants her kids to have a “normal life,” which means limiting material goods.
A lot of their peers are bankers, lawyers or in technology, with both parents (couple) working. They often do make high 6 figures if not 7 figures, so I do not think when young people own expensive homes/cars it necessarily means they are paid by parents or trust funds.
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