retiring

[ovrszd]

Many people cannot live within their means.

Current federal minimum wage is $7.25/hr. Let's be generous and say you are making double that, $14.50/hr or $30k/yr. Unless you're single with no health ins., buy a tent every year, squat where you won't be driven out, walk to work and eat ramen every day, you will be lucky to put $10/year into savings. Most will be increasing CC balances most months, with no real hope of ever paying them off.

Would love to hear a verifiable story of someone making minimum wage retiring at any age and living comfortably.

Good post. Supports both sides of my point.

If your cost of living matches your income there's no retirement regardless of what the numbers are.

When we talk about our retired income and networth it's important to talk about frugal spending. It's equally important to talk about our income.

 

[ovrszd]

I don't believe min. wage was ever set up for someone to make a living. It's a starter job wage for a teenager, high school kids, etc,
Min wage was what $1.25 ? (I can't remember) when I was young.
A min. wage job was never meant for someone to raise a family, or retire from .

If you aren't making enough money in your job, don't cry about what you make. Get out and find better,or do better.

I got tired of working for the man and started my own business. If I can do it, anyone can. No one gave me a dime !

Another good post.

When I was 24 I bought a dump truck and became self employed. Two years later the economy tanked, operational costs sky rocketed. Two years later I was bankrupt. None of that had anything to do with my casual spending. There was no income beyond the cost of necessities.

 

[fishheadbob]

1) It takes 12 years from when you begin drawing early SS until you break even. (I worked there 28 years.)
2) Medicare cannot kick in until you turn 65. The cost of health insurance before Medicare begins should be a major factor in your decision.
3) Take everything anyone tells you with a heavy dose of skepticism. Social Security is a complex, some say bizarre, system. Your brother-in-law is NOT an expert, and us experts made a lot of mistakes too. Lawyers, CPAs, talk show hosts, and financial consultants are human beings who deal with many different things for many different people; they cannot always get it perfect.

All you need to retire and live comfortably is a crystal ball and a lot of money, or at least one heck of a pension. Tell your kids to sock away as much as they can since SS was never intended to provide a big retirement, just a part of it. For the rest of you it's either pat yourself on the back for having done things right decades ago, or be a greeter at Wal-Mart. Your ship has already sailed.

 

[MossRoad]

Many people cannot live within their means.

Current federal minimum wage is $7.25/hr. Let's be generous and say you are making double that, $14.50/hr or $30k/yr. Unless you're single with no health ins., buy a tent every year, squat where you won't be driven out, walk to work and eat ramen every day, you will be lucky to put $10/year into savings. Most will be increasing CC balances most months, with no real hope of ever paying them off.

Would love to hear a verifiable story of someone making minimum wage retiring at any age and living comfortably.

When my wife and I got married, we planned everything on two people making minimum wage, but it was full-time jobs with insurance. We could make our house payment, pay utilities, save 15% in retirement funds, buy used cars and take camping vacations. The cost of living here is dirt cheap. You could get a decent house in an older neighborhood for $20k. Today, minimum wage has doubled to $7.25. You can get a decent house in an older neighborhood $60-75K, even less if you're willing to fix it up. Jobs paying $12-14 and hour are plentiful. That's two people making $25-30K each, so $50-60K per year. It's very easy to save 15% of that, send your kids to public or catholic schools with our state voucher program, pay off your house, buy used cars, take vacations, etc....

People just need to get a full time job with insurance. That's the hard part. Finding those benefits. The actual wage is not the biggest part of the equation. It's the value of the benefits.

 

[kenmac]

Another good post.

When I was 24 I bought a dump truck and became self employed. Two years later the economy tanked, operational costs sky rocketed. Two years later I was bankrupt. None of that had anything to do with my casual spending. There was no income beyond the cost of necessities.

I know what you mean. I have been there.

I was in business when the economy tanked in 2008 . If I hadn't saved, I would have not been able to have gotten through it.

I was able to pay all my supply houses for equipment I had bought and keep the doors open, pay people. There was no xtra.
Not going to say it wasn't tough because I was stiffed by many contractors.

I was able to hang in and was able to recover, when all the banks, and mortgage companies begin to call to have equipment, and plumbing replaced, that had been stolen from foreclosed homes.

 

[Chris616]

Many people, including lots on TBN, are enduring an unnecessarily frugal retirement. Here's a quote from the link below:

"On average across all wealth levels, most current retirees still had 80% of their pre-retirement savings remaining after almost two decades of retirement."

One of the reasons for this that isn't even mentioned in the article is because it is difficult to do the calculations required to understand what level of yearly spending can be sustained by a certain "nest egg" plus adding in any outside sources of income like government benefits. Because they don't really know what level of spending they can sustain, most people are inclined to spend as little as they need to. I'll guess that the reason this isn't mentioned in the article is because people in the financial business assume that the rest of us are getting good retirement financial planning advice, which I don't think is the case.

One argument in favour of hanging on to assets is that people want to leave an inheritance to their kids, but if you had real confidence in your spending ability it would probably benefit your kids a lot more to give them the money 20 years earlier.

Chris

Terms and conditions - Institutional | BlackRock

 

[RickB]

I plan on having the check to my undertaker bounce.

 

[Chris616]

<snip>
Social Security is a complex, some say bizarre, system.
<snip>

Yes, I tried to figure out how much, if anything, I'd get from Social Security from my stint working in the US, but gave up after a while. Ditto for trying to do my own income tax filing when I lived there (here I can do it in about 20 minutes).

For comparison to a simple system, here's how the two main government payouts to retirees works in Canada (there are others for low income folks):

Contributing to the Canada Pension Plan (CPP) is mandatory for most workers. How much you contribute is tied to how much you earn. How much you receive is dependent on how much you contributed and when you choose to start taking the pension from age 60-70. The maximum payout at age 65 is around C$1150/month (US$880) and the average is about C$680/month (US$520). The pension is indexed to the cost of living and is not dependent on your net income. If you're a billionaire you'll still get your CPP pension.

Old Age Security (OAS) is supported by general income taxes as opposed to a specific deduction on our paycheques and is determined by how long you've lived in the country after age 18. For an unmarried person, the maximum payout (age 65) is about C$900/month (US$690) and can be increased a bit by deferring it to age 70. OAS is indexed to the cost of living and is reduced if your income is over about $75,000/year (US$57K). The government calls this the "OAS Recovery Tax" but it is universally known as the "OAS Clawback".

Chris

 

[drssg]

Many people, including lots on TBN, are enduring an unnecessarily frugal retirement. Here's a quote from the link below:

"On average across all wealth levels, most current retirees still had 80% of their pre-retirement savings remaining after almost two decades of retirement."

One of the reasons for this that isn't even mentioned in the article is because it is difficult to do the calculations required to understand what level of yearly spending can be sustained by a certain "nest egg" plus adding in any outside sources of income like government benefits. Because they don't really know what level of spending they can sustain, most people are inclined to spend as little as they need to. I'll guess that the reason this isn't mentioned in the article is because people in the financial business assume that the rest of us are getting good retirement financial planning advice, which I don't think is the case.

One argument in favour of hanging on to assets is that people want to leave an inheritance to their kids, but if you had real confidence in your spending ability it would probably benefit your kids a lot more to give them the money 20 years earlier.

Chris

Terms and conditions - Institutional | BlackRock

I can see the point here if someone feels like they are "enduring" their lifestyle. The people I've known who are living well below their means are not enduring anything. They are living the life they choose. If they already have everything they truly want, then why spend more money, just because it's available.

Another point is that there are many unknowns in future planning. It's not just a matter of having the ability to do somewhat complex calculations.

Many people don't have guaranteed returns on their investments. It depends on the overall market. The unknown rate of return can have a huge impact on money that is available.

Inflation is unknown, lifespan is unknown, and medical costs can be a huge unknown. My dad lived to be 94, and he needed 24/7 care towards the end. Home health care was not covered by insurance. If he was near the end of his means, he would have needed to go into a nursing home. It was much nicer for him to live in his own house with his own dog on his lap during his final days.

 

[Storm56]

I don't believe min. wage was ever set up for someone to make a living. It's a starter job wage for a teenager, high school kids, etc,
Min wage was what $1.25 ? (I can't remember) when I was young.
A min. wage job was never meant for someone to raise a family, or retire from .

If you aren't making enough money in your job, don't cry about what you make. Get out and find better,or do better.

I got tired of working for the man and started my own business. If I can do it, anyone can. No one gave me a dime !

Could not have said it better!