When Is It Enough? (Retirement Funds)

[DVCLiz]

On the recent thread about the couple profiled as being good savers, one of the posters made a joking reference to having the "problem" of no longing being able to put unexpected or other chunks of money away for retirement, because they were already retired and had been for a few years!!! Good for you two!!!! So it got me wondering, what would it take for you to feel financially "set" so that you could say, "Hey, I'm finally at the end of my retirement saving phase!!"

Assume no great loss in the market, no big setback medically, etc. Just a nice, normal unfolding of a pleasant life.

For me, I think it would be -

Home paid off, furnished, decorated, landscaped and maintained easily with current income

Late model safe car, based on my taste, fully paid for

All children grown, educated through whatever level they chose, with no debt, and with good self-supporting jobs AND a sound financial knowledge that I had taught them as children and young adults!!

Easily able to pay all monthly bills and indulge in any extras, like hair, nails, massages, hobbies, etc.

Easily able to travel and especially to take trips to interesting cultures (a trip to China, a cruise in the Baltic, etc.) if I chose to go there

All financial business taken care of - insurance, long term health care needs, etc. and all paperwork up to date and accessible

Good planning in place to settle estates and trutworthy people to carry out my wishes for the future - discussions held and agreed to

And the biggie - 2 to 3 million in the bank to fund it all for my lifetime and leave an estate to my children!!!!

What would be your "snapshot" and how much do you think it would take???

 

[imsayin]

I actually like yours. I think I'll steal it.

 

[suezpqt]

As many people will see, I don't post often but "lurk" daily!!! I just had to respond to this thread - I love it!!

I don't believe I will be able to meet the criteria to retire like that -

 

[DMRick]

And the biggie - 2 to 3 million in the bank to fund it all for my lifetime and leave an estate to my children!!!!

What would be your "snapshot" and how much do you think it would take???

I think I'm that retired couple LOL.
Is it ok that we mow our own lawn? We prob will eventually sell and move into a more cared for type place.

Except for the last, you have us covered (if it's ok that our long term care will be with my darling daughter). Hubby is our financial planner, so of course if we have an "estate" he's gone with me, but he's training one of our girls in finances, so she can take over LOL.

Oh, and I just for the first time in my life, ever, had my hair professionally colored..instead of doing it myself. I think I'll get used to that..although I think I did just as good a job LOL!

 

[DVCLiz]

I think I'm that retired couple LOL.
Is it ok that we mow our own lawn? We prob will eventually sell and move into a more cared for type place.

Except for the last, you have us covered (if it's ok that our long term care will be with my darling daughter). Hubby is our financial planner, so of course if we have an "estate" he's gone with me, but he's training one of our girls in finances, so she can take over LOL.

Oh, and I just for the first time in my life, ever, had my hair professionally colored..instead of doing it myself. I think I'll get used to that..although I think I did just as good a job LOL!

LOL, yes it was you!!!! You sound like such a fun, great couple - I hope you are really enjoying yourselves!!!!! Yes, you can keep mowing your own lawn!!!

I was just interested in how different people see their retirement. Some want to have certain luxury items, others time off from work earlier, etc. Some want to leave significant assets, others spend down to the last dime. I think it's interesting!!!

I wonder how many people, if any, ever get to the point where they feel "OK, that's done, check that off the list" and just live out their retirement fantasies??? It will be interesting (gee, there's that word again, I've used it three times now!) to see what people say!!!

 

[disneysteve]

I want a portfolio that will allow me to draw about 4%/year equaling 90-100% of our current income. So that $3 million range is our goal too. Less, if Social Security still exists.

 

[DMRick]

LOL, yes it was you!!!! You sound like such a fun,

We've been accused of that LOL! I'm just planning on a "mystery" dinner at church..to loosen up some of those other older folks!

Seriously though, I forgot to mention, that with our retirement, we'd give up all our money to remain healthy. I'm willing to do without a lot of "things" to enjoy life..and I don't mean the money part of life.

(we're again spending part of our children/grands inheritance..we're going to Disney again on May 2!)

 

[tinaluis]

I would be comfortable having enough $$$ to pay the bills (utilities, property taxes, groceries, dr visits, prescriptions) and some travel here and there -- basically the same life I lead now minus the mortgage payment. I'm not too concerned about leaving an "estate" for my DDs. I just want to make sure that DH and I have enough $$$ to take care of ourselves so that the burden of our care doesn't fall on them. Anything left over (think "estate") will be gravy as far as I'm concerned. I've seen many families torn apart by fighting over inheritances.

 

[DVC Sadie]

On the recent thread about the couple profiled as being good savers, one of the posters made a joking reference to having the "problem" of no longing being able to put unexpected or other chunks of money away for retirement, because they were already retired and had been for a few years!!! Good for you two!!!! So it got me wondering, what would it take for you to feel financially "set" so that you could say, "Hey, I'm finally at the end of my retirement saving phase!!"

Assume no great loss in the market, no big setback medically, etc. Just a nice, normal unfolding of a pleasant life.

For me, I think it would be -

Home paid off, furnished, decorated, landscaped and maintained easily with current income

Late model safe car, based on my taste, fully paid for

All children grown, educated through whatever level they chose, with no debt, and with good self-supporting jobs AND a sound financial knowledge that I had taught them as children and young adults!!

Easily able to pay all monthly bills and indulge in any extras, like hair, nails, massages, hobbies, etc.

Easily able to travel and especially to take trips to interesting cultures (a trip to China, a cruise in the Baltic, etc.) if I chose to go there

All financial business taken care of - insurance, long term health care needs, etc. and all paperwork up to date and accessible

Good planning in place to settle estates and trutworthy people to carry out my wishes for the future - discussions held and agreed to

And the biggie - 2 to 3 million in the bank to fund it all for my lifetime and leave an estate to my children!!!!

What would be your "snapshot" and how much do you think it would take???

We retired retired early. I am 51 and my dh ie 44 however we do not have any children. That is a huge difference. We still put money into mutual funds and stocks and probably will continue to do so for a long time. Your snapshot is us without kids. If I die before my dh then he will get most of my estate except for those listed charitable trusts. If my dh dies before me then everything that is left will go to charitable trusts.

 

[cats mom]

Well, I think you started us off with a great list. Kind of hard to add much to it.

We do have the added pressure of needing a much larger amount set aside in a savings/estate fund than we would otherwise since our oldest DD (still a teenager now) has a chronic disease w/no cure.

I know you said assume no medical setback. Unfortunately that is our reality.

We're on the right path now - but we appreciate how tenuous a position it is and how quickly it could change if DD has a significant relapse.

So I guess our financial strategy has to have a plan for the worst and hope for the best clause.

 

[DVCLiz]

Well, I think you started us off with a great list. Kind of hard to add much to it.

We do have the added pressure of needing a much larger amount set aside in a savings/estate fund than we would otherwise since our oldest DD (still a teenager now) has a chronic disease w/no cure.

I know you said assume no medical setback. Unfortunately that is our reality.

We're on the right path now - but we appreciate how tenuous a position it is and how quickly it could change if DD has a significant relapse.

So I guess our financial strategy has to have a plan for the worst and hope for the best clause.

Well, my list doesn't have any vacation homes, expensive jewelry, or charitable giving (which I DO hope to include!) so I guess there's always room for more!!!! And my list probably isn't going to be fully achieved - but it's nice to dream about!!!

Your situation does serve to make people aware that circumstances can easily change, though. I'm so sorry about your daughter, and I certainly hope for the best along with you!!!!

 

[dvcgirl]

On the recent thread about the couple profiled as being good savers, one of the posters made a joking reference to having the "problem" of no longing being able to put unexpected or other chunks of money away for retirement, because they were already retired and had been for a few years!!! Good for you two!!!! So it got me wondering, what would it take for you to feel financially "set" so that you could say, "Hey, I'm finally at the end of my retirement saving phase!!"

Assume no great loss in the market, no big setback medically, etc. Just a nice, normal unfolding of a pleasant life.

For me, I think it would be -

Home paid off, furnished, decorated, landscaped and maintained easily with current income

Late model safe car, based on my taste, fully paid for

All children grown, educated through whatever level they chose, with no debt, and with good self-supporting jobs AND a sound financial knowledge that I had taught them as children and young adults!!

Easily able to pay all monthly bills and indulge in any extras, like hair, nails, massages, hobbies, etc.

Easily able to travel and especially to take trips to interesting cultures (a trip to China, a cruise in the Baltic, etc.) if I chose to go there

All financial business taken care of - insurance, long term health care needs, etc. and all paperwork up to date and accessible

Good planning in place to settle estates and trutworthy people to carry out my wishes for the future - discussions held and agreed to

And the biggie - 2 to 3 million in the bank to fund it all for my lifetime and leave an estate to my children!!!!

What would be your "snapshot" and how much do you think it would take???

For us, well, we have "the number" in mind, but "the number" is the amount that would allow us to draw 80% of our current income in retirement. We'll need a lot...because we plan to retire in our early 50s. Whether or not we'll actually retire remains to be seen, sometimes I have a tough time picturing that only 15 years from now. But we're both in love with the idea that it will be an option for us.

We are able to save a lot now, because our expenses are low and since saving won't be necessary in retirement...that's why we determined that 80% will be enough for us. That final number would allow us to hit that 80% figure yearly only drawing 4% of our retirement nest egg per year. We have no pensions, and so what we have saved and invested is all that we'll have. And that will need to last a long time. This house is paid for, as are the cars...I know that we won't ever go into debt for anything ever. We have no children, and so leaving an estate isn't a huge issue for us, but it is quite likely that we'll leave our nieces and nephews with a nice chunk...and that would be nice. We may decide to gift some of it earlier, I guess we'll see how it goes.

Travel is one of the reasons that we're planning on needing so much money when I know we can live on far less. We love to travel and we plan on doing a lot of that.

 

[disneysteve]

I just wanted to mention one detail: your cars. I've seen a lot of people want their car paid off before they retire. They speak as if that will be their last car purchase. But that is pretty unlikely. Even if you retire at 65 and keep your car for 10 years, there is a pretty good chance you will purchase at least one more car in your lifetime. And if you are a 2-car family, you may purchase another 2 or more. So don't forget to account for that in your planning. My mom is almost 76 and just bought a new car this past year.

 

[Kay7979]

Well, my reply is going to be wandering off topic slightly, but this thread makes me think about The Typical American. I assume the government statistics about the number of millionaires in this country takes into account retirement savings, and let's face it, there aren't currently very many millionaires. It is unlikely that in the next 15 - 20 years when many of us retire there will be THAT many more millionaires (even in inflation adjusted dollars.) So, while it might require 1 -2 million to live very comfortably if one formerly had an upper middle class lifestyle, statistics show that savings reaching this level is not likely. Unlikely to the degree of laughable for most people.

Based on the government statistics we have seen posted, people have saved maybe $50,000 - $200,000 at most. Maybe some of these people will have pensions, but I bet not many do, so that leaves social security, savings, and maybe a part time job. Actually, I bet a lot of people think they are in pretty good shape for retirement with only $100,000+ saved. They figure they are going to have fewer expenses (house paid for) and that the money they have saved is only going to be used to supplement Social Security and or pensions when big purchases like a car or home maintenance come up. I am sure they know they can't LIVE off $100,000.

I am not suggesting that people should not increase their savings, and shoot for high levels of accumulation, nor am I saying that Social Security is going to be available, in the same form, when we all get to retirement, but I am saying that people are living in retirement NOW, somehow, with only $50,000 - $200,000 in savings, so although the situation 15+ years from now looks a LOT more iffy, and people may need to retire at an older age, they will manage.

I know elderly people who never made more than $25,000 - $35,000/yr in their lives and have no more than $50,000 in savings, who have lived in retirement for years on social security and a tiny pension ($200/mo). They never had a lot, so they don't need a lot now, and they are content. I think this scenario is not uncommon. I also think that this is what the Typical American is thinking when they assume that their modest savings of $50,000 - $200,000 puts them in pretty good shape. If someone came on the television now and told them they wouldn't make it without saving at least a million dollars they would either A) laugh or B) slash their wrists!

So, while I heartily agree with the idea of Americans saving more, and trying to reach that million plus mark, and we are trying to do so ourselves, I think government statistics bear out the fact that people can get by on a lot less. People right now are retired and living fine with a tiny fraction of that in savings. I wonder how many people in their 40s and 50s have read threads like this where everyone is planning to have 1-3 million when they retire, and they feel a sense of hopelessness. I hope they won't panic, or despair. A "what's the use, I can never save that much" mentality may turn people OFF from savings, rather than encourage them to save more. So, I just wanted to throw these thoughts out, in case anyone reading this thread is discouraged by some of the posts. What I see here represents a very small minority of Americans, however much we believe it should be otherwise.

 

[DMRick]

What I see here represents a very small minority of Americans, however much we believe it should be otherwise.

I'm with you Kay. We didn't save a million (or close) before we retired, and I don't think I know a single friend who did. But, we do have a pension, as do all of our friends. I think that makes the difference.

 

[dvcgirl]

So, while I heartily agree with the idea of Americans saving more, and trying to reach that million plus mark, and we are trying to do so ourselves, I think government statistics bear out the fact that people can get by on a lot less. People right now are retired and living fine with a tiny fraction of that in savings. I wonder how many people in their 40s and 50s have read threads like this where everyone is planning to have 1-3 million when they retire, and they feel a sense of hopelessness. I hope they won't panic, or despair. A "what's the use, I can never save that much" mentality may turn people OFF from savings, rather than encourage them to save more. So, I just wanted to throw these thoughts out, in case anyone reading this thread is discouraged by some of the posts. What I see here represents a very small minority of Americans, however much we believe it should be otherwise.

I agree, that hearing you need 1-3 million can really turn people off from saving, but in reality, that's what many *will* need without experiencing a dramatic drop in their quality of life. One million to generate 40K in income. 500K per 20K. Social Security, in it's current form is supposed to make up no more than 30-40% of your income in retirement. With pensions disappearing at an alarming rate, that leaves it up to us to save enough to make up the other 40-60% depending on what you think your needs will be in retirement. Some folks here are planning on living on 100% of their income, some 70%..it's a personal thing. The thing is, to replace even 30%...well it can be a very large number, especially for higher income earners.

A couple with a combined income of 50K nearing retirement (without a pension) will need to have amassed $500,000 to pull just 20-25K a year in retirement to supplement their SS (benefits would be around 20K). And that still gives them a 20% paycut over what they made right before they retired. I also hope that the numbers don't turn them off, but rather that it motivates them. Or, that at least they understand that they need to adjust their expectations of what they thought retirement would be. Better to know ahead of time that you'll need to work a several more years than be shocked with the news at age 55 (and this happens all the time).

 

[MrsPete]

I know elderly people who never made more than $25,000 - $35,000/yr in their lives and have no more than $50,000 in savings, who have lived in retirement for years on social security and a tiny pension ($200/mo). They never had a lot, so they don't need a lot now, and they are content. I think this scenario is not uncommon.

I know you're right. I'm thinking of an elderly couple at our church. The man is retired from some type of manual labor job; his wife has never worked. They raised two children, who are now prosperous adults. Their idea of "eating out" is a pot-luck at church. He and my husband were talking one day while they were doing some work at church, and he said proudly he'd never borrowed money in his whole life. They had a tiny house, then they bought the small brick ranch in which they now live. They've always had only one car (in fact, his wife no longer drives now that her health is going downhill fast). I think they have very little but are content.

However, while I know there are plenty of these people around, I don't think we'll see many of them in my generation (folks who are currently 35-45 year olds). Why? Our generation is largely missing out on a benefit that these folks had: the company pension. Plus, our generation has been raised to expect more: we expect to eat out, go to the movies, have new clothes, take trips, buy the latest electronic toys . . . my elderly friends do NONE of those things. While these people exist, I think they're going the way of the dinosaur.

 

[stemikger]

I'm hoping for the best and preparing for the worst. I like the OP's list of things, however, if I don't reach my goal I would just scale back on lifestyle. I really am not in love with what I do, so even if I could quit my job and lead a humble existence, I think I would be happy. My wife on the other hand might have a problem with that.

If I could take a nice Disney vacation and have all my bills paid, I'd be happy with that. Having said all that, if you have your health, you have everything, so the money stuff will somehow fall into place.

For those of you who are starting late and haven't saved, go and read the Book Start Late Finish Rich by David Bach, it might put you on the right path. The bottom line, whatever you save will be better then not saving.

 

[golden1]

I think your list sounds good and if we we are lucky that is where we will be at someday. My Dh is saving tons in his 401K right now and has been for years so if DH's income stays stable we will be at that $2-3M range by the time we are 60-65 assuming an 8% rate of return. I am a SAHM now which definitely hurt our financial picture but I should be back to work as a professional in 3-5 years and I'll also pack a ton into a 401K. We have good college funds for our kids as well. We also have a few investments that I hope will pay off pretty well in the future. It is weird to think about retiring in 25-30 years. It is a ways away but not too far. I don't count on social security so it would be nice if there is something left over by then!

 

[golden1]

Oops! Double post!