<p>We are meeting with a financial planner this week; to try to tackle a mess of issues that we’ve long ignored.</p>
<p>One way to have your home help with your cash flow is if you rent out a room or more and/or allow free rent in exchange for some caregiving. This can be a useful option for folks who have space in their homes but could use some extra help…</p>
<p>Financial planners can be helpful but do have a lot of limitations–their crystal balls are pretty cloudy like the rest of us. They can help predict as long as all the assumptions are agreed upon and spelled out.</p>
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If at least one of you worked for most of your adult life, you’ll probably get $20K-$30K per year from Social Security, possibly a lot more.</p>
<p>I think we would find it difficult to live on $30K/year without severely crimping our lifestyle, we are probably spending 10% of that just on cable, internet, and cell phones.</p>
<p>If anyone retired before 60, how did you cover the gap before you could tap your 401k’s and IRA’s? Did you just live off of savings?</p>
<p>I would love to retire at 55 when I’ll be done paying for college, but I haven’t figured out how to keep from starving.</p>
<p>notrich, it’s hard to say what people will get from social security. My most recent social security statement basically said something along the lines of social security only having enough money to be projected to give me 70 percent of what my statement says i will get.</p>
<p>“The Cheapskate Next Door” has suggestions on what it takes to live with less income. I have not heard of anyone with a magic wand. Folks who can live on less money comfortably through a combo of luck, where they live, how they like to live, have more options than folks that need a much larger sum of funds to be comfortable. If you don’t need as much, you can earn some funds by renting out a part of your home, working part-time, turning a hobby into a job, or other creative options. If you need LOTS of funds to maintain a comfortable lifestyle, you may need to do several of these things at the same time to get a sufficient income stream to supplement your savings and allow yourself to remain comfortable.</p>
<p>How much folks need in retirement does seem to me a combo of whether you plan to bring in ANY FUNDS after you officially “retire” or whether you plan to just draw down savings. In either case, how much you (& any spouse or dependent) needs to live comfortably is a HUGE factor in the equation.</p>
<p>It is a good exercise to periodically track your expenses and estimate what will happen to each of them once you retire. Some may increase while others decrease; some will vary depending on your STAGE of retirement–the go/go, some/go and no/go years (e.g. travel and medical costs).</p>
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<p>Well, that assumes that SS doesn’t get fixed, or at least modified to avoid such big decreases.</p>
<p>Us seniors will be the largest, wealthiest voting block. No way SS doesn’t get fixed. :)</p>
<p>I wouldn’t bank on any SS or other fixes until I see them in ink & passing Congress and the president. There is still a lot of red ink–in states & our federal government that has yet to be addressed.</p>
<p>^^^ We’re actually not banking on SS existing at all (or if it does, assuming it is means-tested down to nothing).</p>
<p>But assuming it doesn’t exist means working a lot longer. Plus, we get our health insurance through my job, if I retire I need to find another option, which will also not be cheap.</p>
<p>We attended a financial planning class (3 nights at CC), trying to get in gear for some preliminary planning on retirement ages etc. It was a good reminder to look at will too. Not sure what we will do about ours yet. The kids are now “adult”, but not necessarily mature enough to handle a windfall if something should happen to both parent.s</p>
<p>I’d say it’s a lot easier to work a little longer (maybe with reduced hours & responsibilities if you can finagle it) than to quit/retire & then frantically start job hunting when you realize you didn’t save enough to have the leisurely, comfortable retirement you had envisioned, complete with nice travel and other perks. Job hunting as an older person can be very humbling and exhausting–despite what is claimed, age discrimination (or at least consciousness) is alive and well. Employers like young, healthy workers who help keep their health insurance premiums down rather than older, experienced, over-qualified workers that they assume just want to further feather their nest before retiring. Some employers may fear older workers whom they may feel threatened by while others worry that older workers may be set in their ways and resistant to learning employer’s ways of doing things and all the technology that is part of many businesses these days.</p>
<p>This thread has been so helpful - thanks everyone.</p>
<p>I have a question: at retirement, I will have the choice to either
a) accept a monthly pension. In this case, I have to choose what age to start it (62, 65 or 67); and then I have to choose whether to go for the guaranteed pay out opion (i.e., H would receive for a guaranteed 10 year period, even if I die before the end of the 10 years. Or
b) get a one time payout in a lump sum. </p>
<p>Does anyone have any thoughts? Obviously it would be concepts only, since I don’t know the exact numbers.</p>
<p>Well…the exact numbers are kind of key. :)</p>
<p>Other issues…</p>
<p>the strength of the entity that is paying the pension…
your health and your husband’s health…life expectancy?
do you have cola with the monthly payments…
do you receive other benefits if you don’t take a lump sum…like medical benefits?
kids, you might like to leave something to…</p>
<p>“So if you are someone like mini who can live on 30K/yr, then you’d want to have about $1million saved away.”</p>
<p>My pension and Social Security alone will be $38k if I retire early, my wife (who makes more than I do) will be working at least another 7-10 years after I retire (and she can get relatively inexpensive health insurance for the two of us through her work), my retirement savings are fat, and my mortgage (which will be gone in 5 years) is $295/month. (and when I live at my place in India, I can’t spend $2 a day). </p>
<p>Never figured it was gonna turn out this easy. (now if I could only get them to lay me off! 99 weeks of unemployment sounds GREAT to me.)</p>
<p>dstark, I thought when you reach retirement with a defined benefit plan, typically the employer buys an annuity so that the company is no longer the prime payer? Is that not true? As you can see, I don’t know much about this area.</p>
<p>That’s news to me…</p>
<p>I would ask the administrator of the pension plan…</p>
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<p>Never going to be able to retire then.</p>
<p>mini, you are correct- as long as your pension and social security stay reasonably solvent. You are also smart to have fat retirement savings and a wife who is well compensated.</p>
<p>Hayden – A lot would depend on the stability of the company (government?) and pension fund. If it looks pretty stable, generally the monthly pension is a much better deal than the cash-out – you definitely won’t outlive the monthly pension. Many couples find that a joint & survivor type of pension choice (where the pension does not decrease when the person who earned the pension dies) is the most stable funding for retirement, though it certainly decreases the amount of the monthly pension. My father and mother chose the pension option that paid him only (with a 10 year guarantee) and didn’t say anything about it to the rest of us – my mom ended up dying a year before he did, but it would have been devastating for their finances (which were ALL based on pension & SS) if she’d outlived him.</p>
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<p>This assumes you never touch your principal. While it might be nice to think about leaving the kiddies a nice windfall, you shouldn’t be eating cat food to make it happen.</p>
<p>If you assume you make 3% on your $1 million, and take out $40k, your money lasts 46 years. Take out $50K, and your money lasts 30 years. At $60K, your money lasts 23 years.</p>
<p>And you will get something from social security.</p>
<p>arabrab,
I have heard of 2 stories from friends whose parent chose the “pay until I die” option with no guarantee for the spouse, and they died shortly after they retired, leaving the spouse in a world of hurt. My father had a (small) pension that paid until his death. Mom’s was a 10 year fixed (to my surprise) which lasted only until shortly after her death. My dad lived for another 7 years. He could have really used her pension $$ as both it and her SS ended when she died, cutting his monthly income in half.</p>
<p>As for retirement income, my dad probably way undercalculated what his COL would be as he aged, and we had to use both interest and principal from his annuities and investments, and he rapidly ran through it. He thought he had enough to live on. He didn’t. He needed a lot of expensive care. Thank heavens for the long term care policy for the last 2 years. </p>
<p>notrichenough: I am terrible at understanding those numbers and projections. How’d you calculate how long the $$ would last?</p>