My wife and I don't have any children, and I could understand the desire of those that do to leave an estate. But as it stands, there's a good change we're going to be making a high-seven or low-eight figure gift to whatever organization is most important to us the last time we revise our will. We're happy to do that, but I think that we're also entitled to enjoy some of the wealth we've worked and sacrificed for, even if it means that some good charities get a bit less.
Are you "lucky"if you have a secure retirement?
- Thread starter JDgreen227
- Start date
- Views: 82537
- Status
My wife and I don't have any children, and I could understand the desire of those that do to leave an estate. But as it stands, there's a good change we're going to be making a high-seven or low-eight figure gift to whatever organization is most important to us the last time we revise our will. We're happy to do that, but I think that we're also entitled to enjoy some of the wealth we've worked and sacrificed for, even if it means that some good charities get a bit less.
Ridgewalker
Platinum Member
Capricious
Platinum Member
I have read the Fidelity report.
Others quote figures of 10 or 11 times earnings up to 15 times earnings, which I tend to think are unrealistic, but sometimes that does not include social security.
And then just how SURE do you want to be that you will have enough? 80% sure? 95% sure?
Other figures oft quoted are 24 or 25 times expected annual expenses, or 30 times expected annual expenses if you want to be conservative.
With social security and no other income, my opinion is that 8 times earnings is a little thin, at least for the lifestyle I would want in my elderly years.
MinnesotaEric
Super Member
You need more than that because if you're not working, you suddenly find yourself with more time to spend money. As a result, you need more annual income in retirement than you had when working in order to maintain the same level of quality of life. That, or join me at the local social club that sells a dollar cup of coffee with free refills and sit around all day jibber-jabbing with your neighbors.
RSKY
Veteran Member
- Joined
- Oct 5, 2003
- Messages
- 2,475
- Tractor
- Kioti CK20S
I have not read all the posts in this thread so I may be saying the same thing that others have.......but I'm going to say it anyway. When I retired for good at age 56 I talked to a group that I worked with and these are the notes I made for the ten minute talk. Only a few were within ten years of my age, most in their twenties. The place was closing and most of them were going from $60-$80,000 a year to unemployment. Most of the older ones had borrowed all the money they could over the years and were eyeball deep in debt.
1. Do not borrow money to buy toys!! If you have to borrow to pay for it, you don't need it and can't afford it. This includes everything except your home, broke appliances, and primary vehicles.
2. EVERYBODY has to borrow to buy a home. Don't overdo what you buy and pay it off as soon as possible.
3. Save money. Use your employers 401K or an IRA but put money back for retirement. A lower paying job with a good 401K plan is better than a slightly higher paying job without.
4. Don't sleep easy at night until you have two to three months wages in an account for emergencies.
5. Get a safe deposit box and put all important papers in it. Also keep some cash or easily convertible bonds in it for emergency. (Met a guy once who had both hands bandaged and useless from running into his house and grabbing a strongbox with $30,000 cash in it. He didn't trust banks!)
6. Plan, plan, plan! Don't buy anything without thinking of the consequences. Look a year, five years, ten years in the future.
Just the ramblings of a hick Kentucky boy.
RSKY
1. Do not borrow money to buy toys!! If you have to borrow to pay for it, you don't need it and can't afford it. This includes everything except your home, broke appliances, and primary vehicles.
2. EVERYBODY has to borrow to buy a home. Don't overdo what you buy and pay it off as soon as possible.
3. Save money. Use your employers 401K or an IRA but put money back for retirement. A lower paying job with a good 401K plan is better than a slightly higher paying job without.
4. Don't sleep easy at night until you have two to three months wages in an account for emergencies.
5. Get a safe deposit box and put all important papers in it. Also keep some cash or easily convertible bonds in it for emergency. (Met a guy once who had both hands bandaged and useless from running into his house and grabbing a strongbox with $30,000 cash in it. He didn't trust banks!)
6. Plan, plan, plan! Don't buy anything without thinking of the consequences. Look a year, five years, ten years in the future.
Just the ramblings of a hick Kentucky boy.
RSKY
I think it all comes down to your lifestyle. If you've been consistently saving 20% of your income, then 8x your gross annual income is actually 10x the gross income you've been living on. But I agree that it still doesn't seem like enough and that's why I'm shooting for much more.
Another rule of thumb I have seen is to withdrawal 4% of your savings every year. Here are some scenarios based on that number. Let's say that you make $100k/yr and want to replace all that income. You'll need $2.5 Million (25 times your gross annual income). However, if you've been saving 20%, then you really need to withdrawal $80k/yr to maintain your lifestyle. So now we're at $2 Million in savings, which is 20x your income. But if you factor in social security and you're going to gross $1300/mo from Social Security, that pays you over $15k/yr (and SS for someone making $100k/yr should be quite a bit more than that). Subtract that out and now you need $65k/yr from your savings or about $1.6 Million in savings. Which is about 16 times your annual income.
So you can see why my goal is a lot higher than the 8x number. As a matter of fact, the 16x number for us is sort of a worst-case-scenario number. There's a good chance we'll have a lot more, because I don't want to count on Social Security at all by the time I retire (we're still a long ways away).
Capricious
Platinum Member
At 56 (wife is a lot younger, and also better looking) our tax deferred retirement savings/investments are just about at that 8 times figure. Before I call it quits @ about 62 or so I would like it to be about 10 times, which should be a pretty easy goal. And as I had mentioned previously we both have pensions, although mine is not very good, and she will only have 20 to 25 years on hers. Still I figure we will be in pretty good shape. The old suburban house is paid-off, as is the rural land and vehicles. No debt.
While we are certainly not wealthy, I am satisfied enough with our prospects that at this point capital preservation takes precedence over appreciation. Meaning, very conservative investing from this point on. You kids out there can play with the risky stuff. I am not going to risk a fairly certain "comfortable" old age for the prospect of a 'luxury" old age, but also with the possibility of a "broke" old age if things go wrong.
OP
JDgreen227
Super Member
A LOT of your spending is going to determine what you were like before retirement...however I do
agree 100% with his statement about having more time to spend money...I go to the local Goodwill store almost every day...and grocery shop thrice weekly. HOWEVER....I was a careful man with my dollars prior to retiring and still am, always will be careful about spending. My ex was the exact opposite, she would throw her money away on crap she didn't need. When I was married to her I purchased three new coats for work purposes over a 20 year period...the rest...leather jackets and down parkas, etc. came from thrift stores. My ex had EIGHT nearly new fur coats that sat in the closet collecting dust 360 days of the year. Her money paid for them, but that is the kind of foolish spending she did.
My primary truck is a Y2K GMC, I am happy with it. After the divorce my ex went out and traded in a low mileage, super clean and like new 2004 Lesabre in on a Cadillac, she needed a new car like she needed another stupid fur coat. She is always going to be foolish with her spending...thankfully, not my problem.
vtsnowedin
Elite Member
I take a different view on the amount of income needed after retirement. When you retire your house should be paid for and your children should be grown ,educated and on there own so your expenses should be a lot less then when you were working full time with a house full of dependents. Let's for the sake of round numbers say that when you were working you brought in 100K, Of that you paid 7.65 % in social security and medicaid taxes or $7,650. then you probably paid 17% state and federal income taxes Or $17,000. Depending on when you bought your house and how big it is your mortgage payments might vary from $600 to $1300 per month or more but lets say $800/m not counting property taxes So $9600 per year. Then you were commuting to work about 20,000 miles a year at $0.50 per mile for $10,000. Lets skip feeding , clothing and educating kids as not everyone has them. So you were living on $ 100 -7.65-17-9.6-10 which equals 55.75K
Now if your retirement income was $56,000 and it came from SS or a pension plan you would not have to pay SS and medicare taxes on it and at that lower income the income tax bite might be just 10% or 5600 your house is paid for, and you don't have to commute to work and your Beemer can sit in the garage and appreciate. So assuming the kids have moved out you have $50,400 to spend on what you want as apposed to $55.75 net from $100K while working. That comes out to your only gaining $2.68 per hour for working a full 2000 hour year.
Oops I forgot that you were contributing 6% a year to your retirement plan or 401K. So you were living on less then $50K.
Now if your retirement income was $56,000 and it came from SS or a pension plan you would not have to pay SS and medicare taxes on it and at that lower income the income tax bite might be just 10% or 5600 your house is paid for, and you don't have to commute to work and your Beemer can sit in the garage and appreciate. So assuming the kids have moved out you have $50,400 to spend on what you want as apposed to $55.75 net from $100K while working. That comes out to your only gaining $2.68 per hour for working a full 2000 hour year.
Oops I forgot that you were contributing 6% a year to your retirement plan or 401K. So you were living on less then $50K.
- Status
