retiring

[MH8675309]

I am about as conservative as they come, but something does have to be done about the cost of Medical care. Not who pays for it, but the COST. Until the cost is controlled we will not be fixing this problem. Normal market forces are not in play here.

Agree 100%

 

[KennyG]

So much about retirement planning would be easier if we knew when our time will be up.

So true, but I still think it's a "plan for the worst" situation (but in this case the worst is actually the best - you live to over 100). After I retired, I had plenty of assets to do everything I wanted without tapping SS, 401K, pension annuity or IRA. From my perspective there was no downside in delaying and lots of potential benefits, especially since my wife is 11 years younger than I am. Others will have different situations.

Relative to the question on expenses, mine have gone up after retirement. Items like having to pay for health insurance, especially with my wife not being on Medicare. We spend about 2 months a year traveling internationally, which I never had time to while I was working. And there's some minor cost to all the projects I didn't have time for before.

 

[3Ts]

For those of you are retired, have you seen a decrease in your expenses or have they stayed the same and what was the change?

Be sure to include the inflation rate in your retirement calculations - that's probably the biggest factor. As for expenses it's hard to say for me - we've gotten by on 60% but had to be careful of expenses. Our investments have done well and have matured so now I have more money available than when I was working, so we are doing more and traveling more. Most guides I've seen say to plan on 80% of your income being needed to maintain your lifestyle in retirement which assumes any mortgage is paid off. That seems to be pretty valid. Your 2 biggest expenses are going to be inflation and healthcare. Good health insurance is important.

 

[Chris616]

When to take government benefits for the retired?

In Canada we have a similar system to the US where the government incentivizes people to delay receiving benefits by increasing the amount.

It's easy to find websites that help to determine the "break even" age that you'd have to live to in order to get the same amount as you would have taking the money as early as possible. That's useful to know if your family history doesn't predict longevity.

I've read here about people taking the benefits as early as possible in order to "get their money back" but that might not be the best financial decision. If your only interest is ensuring that you have enough to fund your lifestyle after retiring, then pulling money from your own investments earlier and deferring taking gov't benefits to maximize them is something to consider. That way when you're older and possibly less capable of managing your investments, more of your income will be a stable monthly income from the gov't to your bank account.

And yes, I'm assuming that money coming from the government will be reliable. If it isn't, I have even less faith in what will have happened to our other investments.

And yes, you might die before you collect the benefits, but that's not going to bother you at that point.

Chris

 

[Travelover]

And have a very good income thru your working years. What was you highest year?

It doesn't matter. My advice is to spend less than you earn and invest early. There is always the excuse that "I'll invest later when I have more money". For most, that time never comes because of lifestyle creep.

 

[ovrszd]

I retired at 57. My pay was a little less than my co-workers because I'd put time in the military (Vietnam Vet) and didn't have as much applicable experience as those who were not in the service. However, I always lived below my means and maxed out my 401k and invested bonuses when I received them. If I couldn't afford it, I didn't get it. I drove cars until they wouldn't get me to work anymore. I did not take vacations to exotic places. Always paid off the credit card every month (that's the worst way of borrowing money). So, I do claim to have managed my money wisely and hopefully I'm not thought of as boasting, certainly not my intent, but rather to point out that with careful planning it can be done. Now we are in a situation where we can help others from both a time, materials/tools, and money standpoint. Most of what we try to do is thru the church or Masonic lodge so our name is not directly associated with the help.

What was your highest annual income?

 

[ovrszd]

For those of you are retired, have you seen a decrease in your expenses or have they stayed the same and what was the change?

The necessities decreased. Clothing costs, mileage on vehicle especially. Otherwise not much change.

 

[ovrszd]

It doesn't matter. My advice is to spend less than you earn and invest early. There is always the excuse that "I'll invest later when I have more money". For most, that time never comes because of lifestyle creep.

It always matters. You might have been making twice as much as someone else reading this thread.

My advice is to be debt free at retirement.

 

[dnw64]

None of us actually "KNOW" our time will be up.

Let me introduce you to "Dr" Kevorkian...

 

[dnw64]

In answer to polkwrangler's original question:

I second what others have written. If you're unable to do the complex calculations to work this out yourself, it is money well spent to get independent financial advice. And by "independent" I mean going to a "fee only" financial advisor where you pay to get unbiased advice from someone who is not in the business of selling financial products. It is very easy to make a mistake doing retirement financial planning on your own that will cost more than the price of the advice from a professional.

Chris

Well put, sir!

 

[caver]

For those of you are retired, have you seen a decrease in your expenses or have they stayed the same and what was the change?

Gasoline since I had sold my little car the year before I retired as was driving the F250 300 miles a week on commute. Food...I find myself eating a late breakfast and often skipping lunch since I'm not hungry. Laundry cut in half by not having to wash work clothes every 4-6 days. Also, when you are retired you are less likely to just burn money because "I'll make more money tomorrow." I now look at loads of junk I bought over the years that I really don't need but "hey I have a job and it's on sale." I even started changing my own oil which I had not done in 26 years. Some of these examples may seem silly to some but just sharing some observations. The big thing is be debt free and health insurance is a big kick in the shins.

 

[drssg]

One time I did get "lucky" on a 'two-bit-play' that wound up making some pretty good money.

This part got me curious. This is absolutely none of my business, so I'd happily accept that as an answer.

I'm guessing that your "two-bit-play" resulted in a possibility life-changing "two-bit-score". Would you care to elaborate on the details?

 

[Travelover]

It doesn't matter. My advice is to spend less than you earn and invest early. There is always the excuse that "I'll invest later when I have more money". For most, that time never comes because of lifestyle creep.

It always matters. You might have been making twice as much as someone else reading this thread.

My advice is to be debt free at retirement.

No, it doesn't matter how much I was making to the guy making half as much. He still needs to live below his means, save and invest if he wants to get ahead. There is always someone making twice what you do unless you are Bill Gates or Warren Buffett - that is just an excuse to fail. And, of course, you want to be debt free at retirement. I was debt free long before retirement because I didn't buy stuff I didn't need with money I didn't have to impress people I didn't even know, to paraphrase you know who.

 

[ovrszd]

No, it doesn't matter how much I was making to the guy making half as much. He still needs to live below his means, save and invest if he wants to get ahead. There is always someone making twice what you do unless you are Bill Gates or Warren Buffett - that is just an excuse to fail. And, of course, you want to be debt free at retirement. I was debt free long before retirement because I didn't buy stuff I didn't need with money I didn't have to impress people I didn't even know, to paraphrase you know who.

Easy to say when you are in a higher income bracket looking down. Much harder when you are looking up.

Not arguing. Just asking for income clarity to put things in perspective.

So how bout this. Was your high year gross income above $80K or below?

 

[RickB]

Easy to say when you are in a higher income bracket looking down. Much harder when you are looking up.

Not arguing. Just asking for income clarity to put things in perspective.

So how bout this. Was your high year gross income above $80K or below?

Easy answer. He mentions the guy making half as much as him but not the guy making twice as much.

 

[ovrszd]

Easy answer. He mentions the guy making half as much as him but not the guy making twice as much.

These discussions always make me wonder,,, what's considered poverty level income for a family of 4 now?

 

[RickB]

Having moved partway across the country I can say the real answer is location dependent regardless of what the Fed says about it. I moved from not the richest place to not the poorest place and the difference in cost of living is substantial.

 

[ovrszd]

Having moved partway across the country I can say the real answer is location dependent regardless of what the Fed says about it. I moved from not the richest place to not the poorest place and the difference in cost of living is substantial.

Yep. These variances make income amount critically important.

Another consideration.... what would you say is a healthy investment into one's retirement fund? 10% maybe? Let's go large and say 15%.

15% of $40K annual income is $6K per year. 15% of $80K is $12K. Spread over 20 years that's $120K. Throw in compounding interest and it doubles again. Then really throw a wrench in by considering employer matching contributions. Now the 20 year results might have a $500K spread.

So income absolutely matters.

We can't sir here on our pedestals and tell the younger men readings this that it's their fault if they can't retire at a young age. They just poorly managed their income.....

 

[RickB]

My wife and I each put about 20% of our gross income in various retirement accounts for about 25 years. We both contributed to plans that had a 3% employer match. I don’t have a company sponsored pension, she has a modest one over and above the plan she contributed to. We also are skilled at living below our means.

Edit: we were very aggressive. A realistic goal for many would be in that 15% area you mention. 12% could be a stretch for those on the lower end of the income scale. My wife retired at 65 last year. At 62 I am very happy to have shifted down a couple gears and am working a 3 day 20 hour week.

 

[3Ts]

No, what someone makes is not the issue here. To retire comfortably, one has to live within their means and invest wisely. The cost of living does affect living within your means and investing so that is part of the equation. Since you want to know how much I made, I'll do it this way:

First, the maximum amount someone makes is typically just before they retire so there is negligible contribution to their retirement. Compounding interest is the most important part of the retirement nest egg. So I contend the high year gross income is irrelevant. It's more important to invest young when you can take advantage of compounding. And, yes, it is hard but can be done.

Second, put money away for retirement out of your paycheck BEFORE any other expense. Then live on what's left over. Since you want actual numbers, here you go: When I graduated from college I went into the military at $6k per year (I had a choice of volunteering or being drafted) and my contemporaries went to civilian jobs at $10k per year. I lived on $50/week not including housing. My flight pay and combat pay went into investments. I lived frugally, but not to the extent of being a hermit. I dated and married my now wife while I was still in the military and was able to buy a house when we got married. We continued to live within our means and we now have a comfortable lifestyle where money is not an issue. By not an issue I mean we have gotten used to a particular lifestyle over the years and are continuing that in retirement with an occasional vacation to places we've not been yet.