Retirement savings - are you on track?

[Friendly Frog]

Double post

 

[Friendly Frog]

Nope. Neither my husband or I have ever had a job with a penson plan or matching 401k contribution. We did have very good savings at one time but life hit us with some very unexpected blows.

 

[nunzia]

To me some of those calculators are just crazy..especially for lower income earners...it looks so out of reach it's discouraging.nWe are at the age where we will probably get SS..neither of us had a job that had a pension, and we were at very low income levels for most of the kids growing up years. What I have done is figured out our SS..at various ages of retirement, and figured out our budget..House is paid off as are cars, live in a rather low cost of living area, so only bills are utilities, insurances (the biggest) taxes and living exp. Our SS will cover all that with a bit to spare (medical insurance and costs are, of course, the huge wild card). Then I look at our savings and allow myself to plan on taking out no more than 3% (I think the 4% many suggest is too high) yearly for supplemental things like emergencies, travel, etc. So, for every $3,000 extra I want I need $100K in savings. That's my formula. We are pretty close to goal, but we've had a few set backs and I am quitting my job at the end of Sept because life is too short to be in the atmosphere I am at work. I'm undertaking a new endeavor and kicking up some other things and will try some part time things like subbing, but my goal now isn't to save but to not withdraw. We'll see how that goes. Of course we now need a new roof and that will be a hit. TMI, but that's my formula.

 

[sandynd]

Well, sort of. If it was just me, I would feel pretty good about my pension savings, social benefits etc. But it's going to be my hubby too, and he is already retired due to health reasons, with the soaring medical costs that entails. We have hope that his health will improve due to drastic measures that we are working on, and then maybe he can get a part-time job to fund himself (hobbies and such) while I keep working to pay family expenses. Mortgage is done in six years, kid will have to work through college, although we do have a small fund for her and a summer money-making opportunity all set up (it will be a few years before she is ready for it - she is only 11 now, but hopefully the business will be profitable by the time she is ready to run it.) All in all, I am doing what I can, and it will have to be enough or I will have to throw myself on the mercies of the taxpayer. Fortunately (?) women in my family are not particularly long-lived, so hopefully I won't be out on the street at 100, begging for spare change.

 

[tvguy]

Our financial guy put all our info in his firms retirement planning software, and we will be able to retire at 62 with at minimum, the same income as we have now working. He shifted us into annuities 6 years that lock in rates, so the guaranteed payments can only go up. The unknown, of course, is the cost of health insurance from age 62 to 65. While my wife has made it clear she is DONE with working in 6 years when she turns 62, I'm not so sure I will feel the same way then, we're the same age. So if I continue to work, my work would take care of the insurance. But, I realize I am stupid to work any longer than I need to.
We have put 15% into retirement for 33 years, but very conservative investments.
However, my "conservative" investments in my work 401k have returned 34% over the past 12 months.

But the most interesting thing is what my neighbor, who is 60 , said. "a million dollars really isn't much money any more, it works out to what my wife and I make in 10 years, so with social security, it would only support our current life style for about 15 years, and I sure hope to live more than 15 years in retirement.

 

[aprilchem]

But the most interesting thing is what my neighbor, who is 60 , said. "a million dollars really isn't much money any more, it works out to what my wife and I make in 10 years, so with social security, it would only support our current life style for about 15 years, and I sure hope to live more than 15 years in retirement.

I think he's thinking about it wrong; you want to live off the interest on that million, not the million itself. That way it never runs out.

We are on track to have about $3M at retirement, which will gross about $150k a year in interest (less with taxes). We still have ~30 years until retirement.

 

[crisi]

I think he's thinking about it wrong; you want to live off the interest on that million, not the million itself. That way it never runs out.

We are on track to have about $3M at retirement, which will gross about $150k a year in interest (less with taxes). We still have ~30 years until retirement.

I don't know about you, but I think I'm pretty likely to run out - or my heart/liver/kidneys and brain function eventually will. I'm not interested in my money never running out. I'm interested in me running out BEFORE my money runs out. I'd like to have a little something left for the kids/charity - but the idea isn't to leave them with the amount I have on the day I retire.

Maybe I'm making the wrong bet and sometime before I'm 85 we will have solved the health problems in aging. But I don't think so.

 

[tvguy]

I think he's thinking about it wrong; you want to live off the interest on that million, not the million itself. That way it never runs out.

We are on track to have about $3M at retirement, which will gross about $150k a year in interest (less with taxes). We still have ~30 years until retirement.

That certainly would be ideal. But if people can't save $1 million, they certainly can't save $3 million.
Starting to save early helps, but other financial decisions you make along the way can have a huge impact on how much you need. I managed my moms finances for the past year. She and my dad made decisions 63 years ago that had a major impact on her living expenses in retirement. Her house had been paid off for 25 years when she retired. Her car was 9 years old when she retired, and she drove it another 18 years (and a total of 77,000 miles) before replacing it. Her expenses added up to half her social security check each month. Her pension and IRA distributions went right into her travel fund.

 

[crisi]

I think he's thinking about it wrong; you want to live off the interest on that million, not the million itself. That way it never runs out.

We are on track to have about $3M at retirement, which will gross about $150k a year in interest (less with taxes). We still have ~30 years until retirement.

Ideally, if you NEVER want it to run out, you want to invest in to get 8% (a fairly low estimate on the long term stock market return) and then only use 4% - leaving 4% gains to cover inflation (which averages 2-3% a year).

 

[snarlingcoyote]

I think we're on track to retire. We were thinking we'd move back to the Louisiana countryside to live in retirement because of how cheap it would be and planning accordingly, but then we were talking to some of our friends out there, and reality slapped us in the face (Too many, ah, well. . .intolerant people.) so now we're not sure. Hoping that by then the younger generation will be in charge and at large, because we both love quite a bit about that region.

 

[ilovemk76]

I think he's thinking about it wrong; you want to live off the interest on that million, not the million itself. That way it never runs out.

We are on track to have about $3M at retirement, which will gross about $150k a year in interest (less with taxes). We still have ~30 years until retirement.

We are planning on enough money to live until I turn 90. At that time I still will have property assets that can be sold to pay the rest of my life. By that time I should be at a nursing home or getting in home care. I have LTC insurance to cover both of those.

If I leave a lot of money, then DH and I either died way to young or did not enjoy our retirement. It is not our job to leave others rich, so they never have to sacrifice for the future.

 

[aprilgail2]

I am pretty set- between my pension and railroad retirement (we don't pay into or get social security) I make more retired than I do when I work, plus my medical is paid by my job! Plus have a 401K which will be there for emergency money.

 

[huhwhat]

the company I worked for had a self funded retirement account made up of mostly company stock...as employees we were restricted on when we could sell...the company went belly up and my $300k+ went with it....so unless the lawsuit pans out I am at $0

 

[annsteere]

Doing the best we can, but no we are not "on track."

Based on this thread, I'm gonna smile and think "at least we are out of the station."

 

[Hisgirl]

It can be a frightening subject for most.

The majority of Americans have less than $50K saved for retirement. Retirement in the past, has been called a 'three legged stool'. It was made up of social security, a pension, and investments. Very few folks will get a pension at this point, and the way the social security is going, they are tracking a 25% reduction in predicted payouts beginning in about 25 years (2037).

Regarding investments, one must be aware of the amount of risk you can tolerate and how much your portfolio can stand to lose. The old formula was, you subtract your age from 100 and that was the percentage of your funds you placed at risk in the market. This has changed over the years due to many variables.

Those of us looking to retire in less than 10 years are needing to be creative. If you can afford it, I recommend have rental income. My generation will most likely need to continue working part time to supplement income. Rental income is considered investment income and will not count as earned income, which can negatively affect your social security check if you have started drawing early.

Inflation is going to a big issue. Get your house paid off, get yourself healthy and thin if you can, get out of debt, make sure you are living in a house you can 'age' in, start saving as soon as you possibly can.

Three scenarios:
A 20 year old saves $200 per month for 9 years then stops.
A 30 year old begins saving $200 per month and saves for 35 years.
A 40 year old saves $400 per month for 25 years.

The 20 year old, upon retirement at 65, will have considerably more money than the other two due to compounding.

 

[njmom47]

Probably not. I do have a pension that hopefully will still be intact by the time I retire. (How do administrators get to be so careless with pension plans? That could really mess up someone's future!)
We shall see. Sigh.

 

[tvguy]

I should note I have left Social Security income out of my retirement planning. And, while I can not answer if social security will be there, my estimated Social Security benefit is only $300 a month less than my net pay per month working. And after handling my mom's expenses, I do have to wonder what expenses people have that they have such trouble getting by on social security.

 

[RitaE]

I should note I have left Social Security income out of my retirement planning. And, while I can not answer if social security will be there, my estimated Social Security benefit is only $300 a month less than my net pay per month working. And after handling my mom's expenses, I do have to wonder what expenses people have that they have such trouble getting by on social security.

The average social security wage in the US is a little under $15,000 a year. I certainly don't find it hard to understand why people would struggle on that amount.

 

[scottmel]

We are actually ahead of schedule, knock on wood. We are a single income family so God willing all continues well. We paid our mortgage off when we were 40 and have always saved A LOT. When I got my first job out of college 20 years ago, my dad made me max out my 401 and stock savings. I knew no different and taught DH the same. WOW the power of compounding is all I can say. But to all that haven't, never ever too late to start. NEVER.

 

[tvguy]

The average social security wage in the US is a little under $15,000 a year. I certainly don't find it hard to understand why people would struggle on that amount.

How you lived your life prior to retirement certainly would be an issue. But I would expect someone who has been out in the working world for 40+ years to have fewer expenses. No kids at home, most would have no parents to support, house paid for. Like I said, I managed my mom's affairs for over a year, and her expenses were less than $700 a month. $90 a month for yard car, $90 a month for supplemental healthcare insurance, $100 for property taxes, $75 a month for gas and electric and phone. $50 a month for car. The rest was food and miscellaneous.