When Is It Enough? (Retirement Funds)

[C.Ann]

I know that you and C.Ann sort of present the "Retirees on the Street" view here, and you are both obviously very down to earth, live beneath your means....all of that good stuff..

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And I'm sure there are many, many more just like us.. Living "beneath" your means is always a good idea - even when you retire with those millions..

 

[tinaluis]

I just wanted to clear a few things up about my particular situation. DH and I have saved some for retirement, as much as we comfortably can and still pay the bills, saved some for emergencies and save enough to take a vacation or two each year. Currently we live on less than $2700 a month (with just over $1300 of that going to our mortgage), so we should have no trouble doing so when we retire and our mortgage is long paid off. Is our debt to income ratio high -- you bet it is, but owning a home is important to us so we do what we have to do. Could we make lots more $$$ if DH worked instead of staying home to take care of our DDs? Of course, but having one of us home for our DDs is more important than any amount of $$$ we could possibly save, even if that means we have to eat cat food when we retire. The "sacrifices" we make for our family work for us and we have no regrets!

 

[DMRick]

I know that you and C.Ann sort of present the "Retirees on the Street" view here,

I hadn't noticed this before and I'm not sure if I should laugh or be insulted...since I'm not sure what this means. But if it means I get my own shopping cart to return bottles when I'm destiture I'm all for it.

 

[Lyn5]

In answer to the OPs original question, "When is it enough?", I think it is enough when I am content with what I have....I relate it to my present life, when is enough is, well, enough. Last year I was offered a higher paying job, which I declined, because DH and I are content and I rather keep my current job and have more family time....lately, it seems like someone is always sick and needs some loving care .

I expect the same thing in retirement, if DH and I have our home paid for and enough to live our lifestyle (which is greatly based on family ties and contact) I think that is enough. For some people, no amount of money will be enough, the house will never be big enough, the car not nice enough, etc. I think some just aren't content or may never be. Honestly, I would not be content on $12000 a year, but I know someone who lives on less than that and is perfectly happy. I do think DH and I will be content with what we have planned for retirement.


Also, I can see how some people save very little or not much while the kids are home. I have two little ones now and my childcare cost is significant.

 

[sandraB]

Also, I can see how some people save very little or not much while the kids are home. I have two little ones now and my childcare cost is significant.

and they only get more expensive!! LOL! It is hard saving for retirement when you have kids, and want the best for them......I know I gave up a lot of potential retirement savings to stay home, but I am glad I did. Also, I went back to school this year, and the joke was to get done before my oldest needs to go......(in 6yrs)

I do think you should save, but not at a cost to the quality of your current life......

I feel comfortable with our decisions, even though we wont have that much money in retirement, I expect we will have enough....It's hard though, to compare ourselves with others, and we all have different values....

I have learnt many things on these boards....and appreciate everyone's point of view...

Sandi

 

[dvcgirl]

I hadn't noticed this before and I'm not sure if I should laugh or be insulted...since I'm not sure what this means. But if it means I get my own shopping cart to return bottles when I'm destiture I'm all for it.

Sigh...not trying to insult you, although you seem to read every single word I write that way. By that I mean that you seem to dispute nearly every result from every study or poll written about retirees. That's what I meant....nothing more..nothiing less.

 

[mickeyfan2]

Putting a child through college, dealing with elderly parents, having a spouse or child ill, perhaps a wedding coming up, or a spouse about to go overseas..there are lots of reasons why people can't start saving for retirement now. My thought was to give them hope, that once the kids leave, it's not to late to work on that.

DMRick this is just an addition to your comment: Also one maybe saving but hit a road block (like the tech field did in 2000) and one needs to halt continuing savings to just make it thru the hard times. One can then start again and try to make up for the lost time. But eating today, while unemployed, or saving for retirement may not be possible at times during a career.
Not everybody has full employment every year of their lives.

 

[crisi]

My husband is a person people. This is his dream job..I just won't let him apply for it.

And for a lot of people, it fills the retirement hours with something they enjoy doing. I just rather not be forced into saying "Welcome to Wal-Mart" when I'm 75.

 

[mickeyfan2]

There was an article on CNN.com about that study that we've been discussing. They reported that polls of retirees show that 55% of retirees are living on 95% of their pre-retirement income....

56% of people over age 55 have less than 50K in savings.

Sorry there two comments are contradictions. If they only save "peanuts" then how do they retire on 95%? Even the best pensions don't pay 95%.

 

[mickeyfan2]

I'm not saying that at all. Please try not to twist my words if at all possible. You have said that you live quite well on 12K a year. All that I have said is that you are the exception to the rule in that regard, because not many people would be satisfied or even be able to live on 12K a year.

Now I am all upset for poor MIL who died a few years back. She was living in her home doing exactly what she did preretirment on ....... GASP........ $870/month. Yes you read that right. That is $10440/year. So see C.Ann is not the only one. And many of her friends lived the same way too. And my MIL never at cat food.

The problem, as I see it, is that those making $150+ have a very skewed view on what the "poor folk" want and need. I have found that one can learn a great deal about happiness from the "poor folk".

They did a survey on can money buy you happiness, the answer is yes and no. Yes if you need food, clothing or shelter, but once you have all of those then more money does not bring you happiness. So that "poor retiree" living on $20K, with a home, cloths and a full fridge knows that happiness is in the life you have lived (memories) and the joy of your family who visits you often and help you when you need it.

 

[DMRick]

Sigh...not trying to insult you, although you seem to read every single word I write that way. By that I mean that you seem to dispute nearly every result from every study or poll written about retirees. That's what I meant....nothing more..nothiing less.

I don't believe that's true. I don't dispute them all. However, I also don't believe every poll or write up can be true. I believe they can be made to look true depending on what the poller is looking for. Sometimes it's all in how you ask a question as to how you'll get an answer.
Yes, you do have a way to be just a wee bit insulting..without making it really obvious. Not all of the time..but you "toss" it in here and there.
Wow, 55% of retired people have retired on 95% of their income??? I missed the boat there..and I missed the comment on this article as well. That has to be a typo.

 

[disneysteve]

She was living in her home doing exactly what she did preretirment on ....... GASP........ $870/month. Yes you read that right. That is $10440/year. So see C.Ann is not the only one. And many of her friends lived the same way too. And my MIL never at cat food.

The problem, as I see it, is that those making $150+ have a very skewed view on what the "poor folk" want and need. I have found that one can learn a great deal about happiness from the "poor folk".

I think there is one extremely important piece of information that is lacking from all of these discussions about how much people are living on in retirement - How much did they live on BEFORE retirement?

I would suspect that someone retiring on 10K or 20K or 30K/year, earned a somewhat similar income pre-retirement. Someone who earned 50K while working would be a lot less likely to retire on 10K without making significant cutbacks to their lifestyle. Obviously, someone who earned 25K while working wouldn't be likely to need much more than about $1,500/month in retirement, and maybe even less. If SS provides part of that, the retiree might only need pretty modest savings to make up the difference.

So we just can't look at a number out of context and say it is enough or not enough for someone to retire. It all depends on what they are used to living on.

 

[C.Ann]

I think there is one extremely important piece of information that is lacking from all of these discussions about how much people are living on in retirement - How much did they live on BEFORE retirement?

I would suspect that someone retiring on 10K or 20K or 30K/year, earned a somewhat similar income pre-retirement. Someone who earned 50K while working would be a lot less likely to retire on 10K without making significant cutbacks to their lifestyle. Obviously, someone who earned 25K while working wouldn't be likely to need much more than about $1,500/month in retirement, and maybe even less. If SS provides part of that, the retiree might only need pretty modest savings to make up the difference.

So we just can't look at a number out of context and say it is enough or not enough for someone to retire. It all depends on what they are used to living on.

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"Earnings" don't necessarily determine what a persons lifestyle was prior to retiring - nor does a persons lifestyle after retiring tell you what their earnings were prior.. My parents never had a lifestyle equal to what my Dad made because like me, they were not big spenders, not world travelers, and could never see the need for a big fancy house, or a brand new car every two years, and didn't run out and buy this and that just because a new style or new color came out.. They lived their entire lives without ever having a mortgage (although they owned several different homes in their lifetime); never had a car payment (although they each had their own vehicle); and never used a credit card in their lives.. It was cash on the line - all the way.. This is why I have such a hard time with opinions, polls and articles based on "averages".. I know of at least two families right now who are retired.. If you looked at their lifestyle you would "assume" that while working their yearly income was probably in the $50,000 or less range.. One made a six-figure income and the other is "the millionaire next-door".. Although every financial article I have ever read tends to "generalize", you really can't make those assumptions without knowing the particulars..

 

[disneysteve]

"Earnings" don't necessarily determine what a persons lifestyle was prior to retiring - nor does a persons lifestyle after retiring tell you what their earnings were prior

I know of at least two families right now who are retired.. If you looked at their lifestyle you would "assume" that while working their yearly income was probably in the $50,000 or less range.. One made a six-figure income and the other is "the millionaire next-door

This is defnitely true too. Heck, DW and I are a perfect example of this. As I've said, 28% of income goes to savings, so someone analyzing our lifestyle today might estimate that we earn 28% less than we actually earn. In retirement, all things being equal, we will no longer be saving all that income so we could live just fine on 28% less than we currently earn.

I'm reminded of that woman a few years ago who earned a very modest income - I think she was a teacher or librarian or something. She lived a very simple lifestyle but when she died, she left an estate worth millions shocking everyone who knew her.

 

[C.Ann]

I'm reminded of that woman a few years ago who earned a very modest income - I think she was a teacher or librarian or something. She lived a very simple lifestyle but when she died, she left an estate worth millions shocking everyone who knew her.

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Yup! And I bet if some financial planner or magazine writer just eye-balled the way she was living they would automatically "assume" that this poor old woman never saved a dime for retirement and was doomed to a life of eating cat food..

 

[Julia M]

I think there is one extremely important piece of information that is lacking from all of these discussions about how much people are living on in retirement - How much did they live on BEFORE retirement?

I would suspect that someone retiring on 10K or 20K or 30K/year, earned a somewhat similar income pre-retirement. Someone who earned 50K while working would be a lot less likely to retire on 10K without making significant cutbacks to their lifestyle. Obviously, someone who earned 25K while working wouldn't be likely to need much more than about $1,500/month in retirement, and maybe even less. If SS provides part of that, the retiree might only need pretty modest savings to make up the difference.

So we just can't look at a number out of context and say it is enough or not enough for someone to retire. It all depends on what they are used to living on.

That's exactly it. What you make prior to retirement (and did it make you happy or unhappy) will make a significant difference in how you view what numbers you need to retire.

Another thing people tend to forget is LOCATION, LOCATION, LOCATION!! I live in an area of the country that is very expensive. Median income is 70K. A newspaper article came out yesterday, and we are in one of the 10 places where there are the most millionaires. My sister lives in rural Missouri. My part time teachers salary here is what her dh makes full time as a college professor, and it's enough to send 4 boys to catholic school! Assuming they stay where they are, their retirement numbers and mine will be very different.

My parents are just 70 and reasonably healthy (and I pray it stays that way ), but if and when something happens, my sister and brother and I will likely inherit some amount of money (My dad tells us ALL the time our college education is our inheritance, but he's so conservative, I can't see the money running out totally) So, we'll inherit the same thing, but financially, it will mean very different things to us.

Julia

 

[C.Ann]

Another thing people tend to forget is LOCATION, LOCATION, LOCATION!! I live in an area of the country that is very expensive. Median income is 70K. A newspaper article came out yesterday, and we are in one of the 10 places where there are the most millionaires. My sister lives in rural Missouri. My part time teachers salary here is what her dh makes full time as a college professor, and it's enough to send 4 boys to catholic school! Assuming they stay where they are, their retirement numbers and mine will be very different.

Julia

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Exactly! And another piece of the picture that is rarely taken into consideration when these generalizations are made.. If I lived full-time in the area that I am right at this moment (at my DD's) my numbers would be different than where I will be living 7 to 8 months out of the year..

 

[crisi]

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Exactly! And another piece of the picture that is rarely taken into consideration when these generalizations are made.. If I lived full-time in the area that I am right at this moment (at my DD's) my numbers would be different than where I will be living 7 to 8 months out of the year..

I think that frequently location is factored in. That is why so many retirees have flooded the American Southwest. Sun City used to be a pretty cheap place to live. So was Florida. And its still cheaper than New Jersey. But the advice is for "Joe Average." And if Joe actually exists, I've never met him. If Joe is the exact center of a circle of the whole population, some people have a reality close to Joe and some people are way out on some edge. And it isn't even linear.

As DMRick said earlier in the thread what you think you'll do and what you actually do may be different. My parent had planned to live in Utah by now. But then grandchildren arrived. I never hear my parent talk about living out of state any longer - and they have gone from wanting to move into a smaller home to trying to figure out how long they can stay in the home they have - because its on a lake and my kids love the lake. My sister recently had some health/personal problems - she lives out of state - and some of their savings disappeared in helping her. That was unforseen.

In an ideal world, people would plan for a number of possibilities. They would figure out what they'd like to do ideally, and how they'd scrape by on a minimum. They'd say "what happens if my spouse gets ill and we spend every penny within two years of retirement on health care?" They'd say "how much would I need if my taxes went up and gas was $9 a gallon?" "What happens if my kids need me to be their daycare provider?" "What happens if my husband leaves me when I'm 60, and my next husband really does enjoy travel, even though I'd be content at home?" Because as much as we have a better perspective of what we will need in retirement than anyone else, none of us has a crystal ball that says our own assumptions about our lives in retirement will come true. AND, they'd do all of this while maintaining balance and enjoyment in their pre-retirement life. However, in that ideal world, we'd probably all need to be on anxiety drugs to manage the possibilities, so its probably better to avoid that Utopia.

 

[dvcgirl]

Sorry there two comments are contradictions. If they only save "peanuts" then how do they retire on 95%? Even the best pensions don't pay 95%.

Two different results. 56% of people over 55 have saved less than 50K. Another finding....55% of all retirees are living on 95% of their pre-retirement income. Those could be the people who have saved a bundle, and between what they have saved, SS and possibly a pension....they are spending it all. Could be a lot of travel....that sort of thing. You are right though, the people without pensions who have 50K or less in the bank at age 56 will be living on far less than 95% of their income. SS is supposed to replace roughly 30-40% of your income (of course, higher income earners get a far lower percentage), and so someone without a pension and very little saved will never see 95% of their pre-retirement days. Not that this means that they won't be happy....just making a comment.

 

[disneysteve]

I agree that the "average" retiree doesn't really exist, but I still think there is value in the guidelines, formulas and calculators that exist to try and project your needs in retirement.

There are many variables that will alter your personal needs. You will need more, for example, to retire at 62 than at 67. You will need less if you have been living in Manhattan but are retiring to a shack in Tennessee. You will need more if you have a list of exotic places that you plan to visit. You will need less if you are all traveled out and plan to spend your golden years sitting around the pool and playing bingo. I could go on and on but we all get the point that everyone's retirement will be somewhat different.

But the rules of thumb still can't be ignored, especially for younger people who are many, many years from retirement and can't possibly know yet what type of retirement they want to have. For someone who is in their 20's or 30's or even 40's, they need to be saving aggressively. On the other hand, if you are in your 50's or early 60's, you've probably formulated a pretty good idea of what retirement will look like for you. At that point, you should be able to take a look at what you have saved and figure out if you are on track or need to make any adjustments. But at that point, it may be too late to catch up if you haven't been saving adequately all along. You may not be able to have the retirement you had hoped for. That's what the guidelines and rules of thumb and averages are intended to avoid.