Retirement approaches...maybe.

[Sirius]

So...since I quit the smokes and spend a bit more time trying to keep healthy it looks like I may have to do some retirement planning.

 

Apparently the advice is to have 10 times your annual income saved by age 67.

 

So...how is everyone doing on that target figure?  Just curious.  

 

The good news is the money saved from forgoing the smokes makes saving for (or indeed, just having) retirement a bit easier.

 

Still, are we really supposed to have north of a half million in the piggy bank?  OMG!

 

 

[Reciprocity]

What you will need for retirement is pretty much dependent on how long you will live and none of ever really know that so it's pretty much a crap-shoot as far as I'm concerned, unless you have one of those "cash for life"  pensions. By quitting smoking we are at least helping our chance for longevity and, we are saving money at the same time

 

 

[Runfree]

And that's if you own your home outright and is a no frills retirement.  

 

edited to add:  i'll be in a van down by the river if anyone wants to compound

Edited December 28, 2017 by Runfree

[Boo]

6 hours ago, Runfree said:

 i'll be in a van down by the river if anyone wants to compound

 

That's my plan as well.  Well, it's a "plan" in the academic sense.  Just say to hell with the hassles of the modern world and become a full-time dirtbag.  Earn a little money guiding whitewater rafts and leading tourists on overpriced fishing expeditions.  Just cruising from mountain to mountain...out there where the free winds blow and the government doesn't know you exist.

 

Yep...solid plan.

[bakon]

I am planning on Florida. I got a pension so income is set. Controlling spending is just as important and keeping busy. There is the fight. 

[Reciprocity]

Yup - keeping busy at something you enjoy is as important as having the financial part in place. So many people just fade away after retirement because they suddenly have no reason to wake up each day.

[Doreensfree]

Don't wish to be the party pooper..

But smoking took care of our retirement plans...my advice.... Keep the quits ...and make sure your dreams come true...

Now some one help me down of this dam soap box !!!!!

[Dee]

I work in finance and what dollar amount is required for retirement is dependent on how you normally live. I see clients with millions saying they don't have enough and others who maybe have 250k-500k feel they are fine.

My boyfriend and his brothers live very frugal they vacation and such but the focus on no debt. Bob's brother retired at 50 (granted he had no wife or children but lives a modest life.) The rest of the brothers worked to have no mortgages before 60. So it all really depends on what you need. 

[sgt.barney]

Sarge calls "shenanigans"

 

You will be SORRY BEYOND BELIEF to retire on a mere "10 times annual income" 

 

Source: Sarge retired at age 39. (Currently 48.5 years old - call it a decade into the game). 

 

The suggested long-term withdrawal rate is for retirees 4% of The Nest Egg ( or less ) to not outlive your money. 
This implies you'd need 25 times withdrawal (what you want for "annual income") to retire without destroying your principal and reaching Broke. 

Sarge would suggest that the suggested number is bollocks, and if you don't want to outlive your money you'd better not withdraw more than 3% a year - meaning you'd need a METRIC **** TONNE more than a mere "10 times". 

 

We live on about 2% of our assets.  
Do. The. Math. 


EZPS

[Sirius]

Good advice Dee.

 

I'm happy to see all of the responses.  Looks like folks have given this more then just a passing thought.  

 

Feed the pig.  

 

 

[Reciprocity]

1 hour ago, Sirius said:

Feed the pig.  

 

 

Be my guest ........................ Please!

[Doreensfree]

It doesn't matter how much money you accumulate... If your too dam sick to spend it...

I've seen some folks be so mean with themselves ...sitting on big nest eggs...then in a blink ..they have become ill and died...

Not enjoying any of it...

There are no pockets in shrouds.... Your health is your fortune..

Getting the balance right..having enough to enjoy it while you can..this is the secret...

[Sirius]

 

Hi Doreensfree,

 

The balance appears to be 10X yearly salary according to financial planners.  This is a very general rule of thumb and not meant to be a straight jacket 

 

Some of us have minimal requirements, others want to travel (in style) and order room service.

 

We cannot determine what the correct balance is going to be until after the fact as much of this is going to depend on how long we live.

 

I'm of the opinion its better to have "too much" then "not enough."   So we leave money on the table.  That just adds to our legacy.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Sirius]

2 hours ago, sgt.barney said:

Sarge calls "shenanigans"

 

You will be SORRY BEYOND BELIEF to retire on a mere "10 times annual income" 

 

Source: Sarge retired at age 39. (Currently 48.5 years old - call it a decade into the game). 

 

The suggested long-term withdrawal rate is for retirees 4% of The Nest Egg ( or less ) to not outlive your money. 
This implies you'd need 25 times withdrawal (what you want for "annual income") to retire without destroying your principal and reaching Broke. 

Sarge would suggest that the suggested number is bollocks, and if you don't want to outlive your money you'd better not withdraw more than 3% a year - meaning you'd need a METRIC **** TONNE more than a mere "10 times". 

 

We live on about 2% of our assets.  
Do. The. Math. 


EZPS

 

Actually, 25 X annual salary may be a bit overkill.

 

I realize 4% withdrawal rates match the 25 X annual salary but there is also social security and the fact that many of the demands on your working salary are no longer present.

For instance, we no longer need to save for retirement when we are retired.  That should be a good 10 - 15 percent of your income freed up.

 

Also, the nest egg will continue to earn interest depending how it's invested.

 

[bakon]

Been reading a few books on retirement lately. The 10x saved and 4% are common numbers BUT all of the plans will tell you these are averages and all dependant on debt/spending/investment return/age of retirement  and length of life after retirement.  That is a bunch of unknowns and everyone is correct/wrong.  

Retire at 39 and live 50 years will cost more than retiring later and live to same age. But have dept and spend more and it can cost the same.

 

Read a good line about debt: spending is bigger problem than income. Can make a million a year and still be in debt by spending 1.1 million.  Can live off less, by spending even less.

 

My advise is to educate yourself just like we did for smoking.

[BAT]

I came into this world with nothing and baby that's how I'm gonna leave it ........ STRAIGHT OUTTA COMPTON!!!  CRAZY MUTHAFU .....

Edited December 29, 2017 by BAT

[Boo]

1 hour ago, bakon said:

Been reading a few books on retirement lately. The 10x saved and 4% are common numbers BUT all of the plans will tell you these are averages and all dependant on debt/spending/investment return/age of retirement  and length of life after retirement.  That is a bunch of unknowns and everyone is correct/wrong.  

Retire at 39 and live 50 years will cost more than retiring later and live to same age. But have dept and spend more and it can cost the same.

 

Bullshit!

 

You didn't read a book.

[Doreensfree]

Bakon..I've seen your counting...ask your wife to count your assets.... Just to check...you can actually retire !!!!!

[bakon]

9

[Sirius]

Okay Sgt. Barney,

 

I did the math.

Assuming average income of $50,000 for 40 years.

Defer 11% of income into 401K (tax free) yields a 

net income of $38,550.  Good for $3,212.50 a month.

 

Depositing $350/month for 40 years with an 8% return on investment yields $1,221,852 

which is close enough to 25X annual income.

==============doable but very difficult===========

 

Here's where it gets interesting.  Assuming I was a military man who did twenty and then retired...

 

For a Sergeant First Class to retire at age 39 would require a military pension plus an amazing savings rate.

 

Assuming start of career was 19 we have 20 years of service so pay grade E-7 for (end of career)

average annual salary of $54K (we will call it $50K) and 20 year pension covers 50% of this.

 

So from savings we would need to come up with a match to reach roughly $25K/yearly.

 

If we are only living on 2% of our assets then our assets are worth $1,250,000.

$25,000 / .02 = $1,250,000

 

Now to invest to reach $1,250,000 in twenty years time requires....uh...

Something like committing $25,200 a year of our salary every year for 20 years.

Which is theoretically possible until we consider that we probably didn't start a 

career in the military as a SFC which would substantially reduce investments.

 

Not saying it couldn't be done.  Maybe day trading individual stocks or dumping the 

re-up bonuses into the savings could make it work?

 

So Sgt. Barney, do you have advice on this?   

 

You stated you retired at the age of 39 and only live on 2% of your investments.

 

I would dearly love to see your road map.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Doreensfree]

Wow !!!

[bakon]

I made 11k in 1989 as e5. Thought to myself if I could make $8 an hour I would be ahead.

 

Think you don't make up the 25k with investments. Most need 70-80% of working wage after first year and settling in.  Also you can work a second career if only 39. Most retired military do something.  So you really only need a 2.2k a month job to be in same 50k range.  Also the 4% spend assumes you are dipping into principle unless you plan on saving it for someone else .

[JB 883]

So what about people who reach retirement age and have pretty much nothing like what will probably be my case? I am not being smart alec or funny, but mostly serious. Do you just keep working until you drop over dead one day?

 

Plus, even if people DO save whatever recommended amount - how do they know they will not out live their money? If they are truly retired and not working even part time at some menial job to pass time, they are gonna have a lot of free time to sit around and think of ways to spend "just a little" on something fun. And much like our smoking, shopping can become an addiction.

 

And what about the fact that unexpected expenses are always coming up? What about the fact that they may not be able to do house repairs like when they were younger? Something you once did for a couple hundred bucks might cost several thousand to have a pro come out and fix it.

 

 

On 12/27/2017 at 11:19 PM, Runfree said:

And that's if you own your home outright and is a no frills retirement.  

edited to add:  i'll be in a van down by the river if anyone wants to compound

Unfortunately that will probably be my final years as well. At my age and low income, along with whatever debts, it looks pretty bleak. I am not exactly some 21 year old kid with a bright future.

 

On 12/28/2017 at 10:03 AM, Doreensfree said:

Don't wish to be the party pooper..

But smoking took care of our retirement plans...my advice.... Keep the quits ...and make sure your dreams come true...

Now some one help me down of this dam soap box !!!!!

 

What do you mean by "smoking took care of your retirement plans"? As in, wanting to have fun but dealing with aftermaths of smoking instead?

[Doreensfree]

What do you mean by "smoking took care of your retirement plans"? As in, wanting to have fun but dealing with aftermaths of smoking instead

 

 

That's exactly it....emphysema.... Forget your plans ...

Imagine being attached to a oxygen machine 16 hrs a day....it doesn't matter how much money you have..!!!!!

 

[Sirius]

Jetblack. 

 

Nothing to be embarrassed about.  You're in good company.

 

I'm not a fiduciary so any retirement advice is going to be in generalities.   Advice is for entertainment purposes only.  

Objects in mirrors are closer then they appear.  Your mileage may vary.  Caveat Emptor.

 

That being said...

 

Most retirement planning is based on at least twenty years of savings in various investment products/vehicles/ouija boards.

 

The common denominator is steady deposits of savings over long time horizons to leverage compound interest in your favor.

 

If you own your home you might consider down-sizing or carefully consider/explore a reverse mortgage.

 

Reverse mortgages tend to have "fees" and expenses, along with restrictions but they might provide you with a revenue stream and 

you get to live in the house.

 

Renting out a room is another possibility but one fraught with complications.

 

Other options...

 

Delay retirement as long as you can and save like a madman into a IRA with a Vanguard index fund (gotta keep those fees low).

if you can sock away $1,000/month @6.5% interest for 10 years you will have around $168K which is good

for a $560 dollar per month supplement to social security assuming you're only taking 4% of the principle on an annual basis.  However, given that we are ex-smokers and 

probably in our seventies at this point (saving for 10 years) I'd take 6% for $840 a month.  You will burn through your savings in a dozen or so years but by then 

you're into your 80s.  Actuarial - ily speaking, its a good bet.

 

If you can find part-time work or a hobby that earns a bit of cash...woodworking, car repair, baby sitting, wall-mart greeter, collecting cans 

and bottles.  The problem with part-time or even full time work is that we can only hope we can work into our seventies.  It's not really a 

plan.  We break down as we get older.  Still, it's a possibility and we are keeping all options on the table.

 

If you haven't done so already, figure out your net worth.  What can you sell off to fund your future?  Art, Real Estate, Numismatics, Old base ball cards.

 

Some geographic areas are cheaper to retire in then others.  If you are not tied down to an area you may wish to consider moving to areas where the cost of living

is low.

 

Delay taking Social security for as long as possible.  The $1,600 you get per month at age 62 could be $3,000 a month if you can hold out till age 70.

 

Anyhow, your options are going to revolve around reducing costs, maximizing social security,  liquidating assets, and delaying retirement for as long as practical.

 

I'll see you down by the river.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Edited January 15, 2018 by Sirius
401k vs IRA