When Is It Enough? (Retirement Funds)

[DMRick]

I've got my eye on a 105-day around the world cruise that Holland America currently runs. No way we could do that kind of thing pre-retirement.

And you know what Steve? We thought we'd like to do extended vacations too. But those grandkids keep coming to mind. I couldn't bare to be away from them that long. We were going to go to Florida this past winter for 3 months, and my granddaughter was just crushed. So was I, when I realized I would be so far away from them. We couldn't do it. You may plan that 105 day trip, your (we'll assume married by then) daughter calls your wife and says, guess what? We're pregnant. And your wife says..nope, I'm not leaving her LOL. These are things you don't realize until the grands start coming..the pull on your heart strings they have
Nice to see you, Steve, pointing out that since you won't need to be saving so agressively once you retire, that you (not you per se) could save less, and still have the same amount to live on as you have now. I've been saying that for the past 6 months on these threads, and someone generally tells me I'm wrong to point out the difference in living expenses pre and post kids living at home.

 

[dvcgirl]

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You have just done a great job of proving my point.. That is what you and your DH want out of retirement - not what everyone wants.. Obviously you will need a substantial amount of money - but not everyone is you - or the "average family"..

I'm not trying to prove a point here. I really and truly do understand that retirement is an individual thing. However, I get the sense from your posts that you equate those of us who are actively and aggressively saving for the "extras" as being people who don't get the "real value" of retirement, meaning...spending time with family, kicking back and relaxing, stopping to smell the roses that are right here in our very own backyards. Almost as though, because some folks haven't saved enough to do the kinds of things that other can do, that their "experience" is somehow richer. That those of us who want lots of money for travel and leisure are somehow shallow. I guess I don't see it that way.

I was really honest in saying that I'd be disappointed if my retirement doesn't play out the way I envision it. And I think if you pose the question to most folks...."If money isn't really an object, how would you spend your retirement?" I'm betting that a huge percentage would include lots and lots of travel and money hanging around just for the extras in life.

 

[dvcgirl]

This is news to me. We're always being told we are in a high cost area. I live in the same area as C.Ann. Her circumstances are different. She's just far enough away that her main home is now a lake home, where it is mostly vacation properties (camps). Her taxes and utilities are much less than the norm here, (generally, the camps are a lot smaller, and so are the taxes, and the utilities are not for the entire year), and she lives several months with her daughter. I think she is doing very good with her budget..but I think the point she was making, was, that is her budget (and even her budget can be blown to smithers if she suddenly had a catastropy, or needed expensive medical care, but the OP said not ot consider those things). You have to know your own budget and needs. Living in the same area, we would starve (2 people, she is one), and fall behind on our nimo bill if all we had was $12,000 a year. However, we don't need anywhere near $40,000 to pay our taxes, food, car expenses and travel. We can make do on a lot less because our home is paid for, the kids college is done, and we only have to feed two, instead of 5. You have to know your budget, and go by that..not other people wants and needs.

lol...you and C.Ann will argue just about any point with me...that's okay though. Upstate NY is not an expensive place to live. I understand the difference between a lake house and a regular house...but still....that area is not expensive. NY Metro area is an entirely different story. I have friends and a family member in upstate NY ..and it's cheap comparable to many parts of the country. The Rochester area for example...housing is still quite cheap, mostly because so much industry has left or is leaving that area. I think it's remarkable that C.Ann can live on 12K a year...and wonderful too. However, I would argue that there just aren't many people who can do that without very special circumstances which I think apply in C.Ann's case.

Personally, our grocery bill per year is a little under $10,000 a year, and so I know right now that there is no way *ever* that we could live on so little. And before you say it, yes, I get it...that's *me*, which is why I said that is our situation. Here in Orlando, I have a house that is a bit large for us, and so if I take just a third of my housing costs (which puts me in a small condo) I'm still at $7200...just for the house, with no mortgage payment. Cut our food costs in half to 5K , because we eat lots of organic...and I'm at 12,000 right there....and I have no supplemental health insurance, no auto insurance, no money for gas, fun, travel....nada. And so it would be pretty tough to live on so little for most people.

 

[disneysteve]

And you know what Steve? We thought we'd like to do extended vacations too. But those grandkids keep coming to mind. I couldn't bare to be away from them that long.

None of us know what our situation will be. For example, my aunt and uncle retired to Florida (West Palm Beach). Their daughter and her family live in Connecticut. Their son and his family live in California. So an extended vacation for them might be 2 weeks in California followed by 2 weeks in Connecticut before returning home to Florida. That way they get to visit with all the grandkids.

 

[dvcgirl]

DVC Girl, I hope you don't mind me quoting you but you've nailed a philosophy I must comment on. You've said that you're an aggressive saver, living on just about half of what you would be living on in retirement. You've also said that you look forward to doing things in retirement (such as travel) and are dreaming of it. Why not do some of it now? You may not live to see retirement. You may be ill in retirement. You may not even be married to the same person in retirement. And yet, you've banked all your plans, all your hopes and dreams on retirement.

I believe there is a balance that should be achieved when living today and planning for tomorrow. You should always keep one eye on your goals but you should not sacrifice your dreams of today because you may not reach tomorrow. And I see many people who are aggressive savers doing just that. It's not for me to comment on any of it but you did strike a note of ******* in me. And it's not my life so I certainly have no say in your plans. But I figured I'd throw this on the table for conversation's sake.

No problem asking the questions. We are big savers...we save 40% of our income currently and we're also spending a fair amount right now paying some of the costs for our nephew to get through college. However, we also have no children, no mortgage and we have a big combined income. I'm not looking for any medals or pats of the back , because I know that we are fortunate, but we do not live our lives like the friends we have who make the kind of money we make. We are fairly frugal and have a budget that we really stick to.

But we do travel now. And that's why I know we'll want to do even more of it when we retire . We're doing almost two weeks in Germany, Austraia and Czechoslovakia later this year and we take longer weekend trips inbetween as we can to places closer to home. We look ahead for our travel, plan and save from our budget accordingly. We have our eye on a more exclusive Mediterranean Cruise in 2008 (for our 10th anniversary) and so we'll likely not take a big trip in 2007. We do really shop for travel bargains whereas our friends just don't. And we don't spend a small fortune on our home (either on accessories of hired helpers), clothing, cars and entertainment like our high earning friends do.

We're pretty happy with the balance we've found. There are times when I feel like we both work too much, and more travel would be nice. But honestly, like most people, finding the time can be a challenge. This is why I know that for *us*, when we finally do have all the time in the world...well, we'll want to see as much of the world as we can comfortably afford.

 

[disneysteve]

I'm betting that a huge percentage would include lots and lots of travel

Actually, I'm not so sure that's true. Though I certainly share the travel bug with you, not everyone does. I know plenty of people my age (40's) who have traveled very little in their lives and have no particular urge or desire to start doing it later. It just doesn't interest them. I've spoken to many people who have never left the US and don't ever intend to. And I know a fair number of people who have never left the local area (NJ, PA, DE, NY). And these are not poor folks. Many of them earn perfectly good livings. They just have no interest in going other places. Seems strange to me, but to each his own. So travel likely won't be a significant part of their retirement budgets.

 

[fac]

Almost as though, because some folks haven't saved enough to do the kinds of things that other can do, that their "experience" is somehow richer. That those of us who want lots of money for travel and leisure are somehow shallow.

I must have missed it, I do not see anyone making the above statements.

 

[wide awake]

I haven't read all of these posts, and given our personal situation...DH is ADAF, so he has a guaranteed pension...not lots, but guaranteed, and along w/ it medical for $450 per year for everything, free flights all over the world...at this time, for the two of us. I have CalSTRs...excellent retirement, goes on income and years of service. We have $270,000 equity in our house...enough to buy, furnish, landscape, etc...lots of places. So we don't worry about saving...I'll work unless health dictates otherwise, because I enjoy working, get antsy if I don't have something I HAVE to do. Right now we travel because all of us, including autistic DS enjoy it...we spend extra income...quite a bit, on travel and uncovered med expenses for DS. Right now we're looking at getting him independent...which I think is going to happen. Right now I live for us, for being a family w/ things to look forward to, and w/ the ability to try anything to fight DS's autism. And yes, I do accept that things may not turn out the way I want...DS is vaccine damaged, hopefully there will be a settlement for him...if not...DH and I have lots of life insurance...if I have my way...DS will be paying his student loans, and living in an apartment because he can !!! All of you that are saving and planning...more power to you...but you have no idea what can happen in the next 10 minutes...that savings turns out to be nothing...been there, done that. And if your expenses are taken care of, you don't have debt, have a decent retirement income...don't deny yourself things that give you pleasure. I've seen too many impaired people on vacations...I'm wondering what they get out of it...guess they've saved and darn it they're going to say they've gone to whereever. My FIL worked himself to death for years...he has been retired about 2 years, they haven't gone anywhere, and now he has Parkinsons. What were the 55-60 hour weeks for ?

 

[dvcgirl]

Actually, I'm not so sure that's true. Though I certainly share the travel bug with you, not everyone does. I know plenty of people my age (40's) who have traveled very little in their lives and have no particular urge or desire to start doing it later. It just doesn't interest them. I've spoken to many people who have never left the US and don't ever intend to. And I know a fair number of people who have never left the local area (NJ, PA, DE, NY). And these are not poor folks. Many of them earn perfectly good livings. They just have no interest in going other places. Seems strange to me, but to each his own. So travel likely won't be a significant part of their retirement budgets.

Well, then let's just say that many people would like to have some extra money around just for *whatever*, like money for the kids, the grandchildren, their favorite charity, painting supplies......you get my drift . I really don't think that there are too many folks who would say that they wouldn't like to have a little extra money laying around. I'm fairly confident that my husband and I aren't the only two people who would like to live comfortably over the poverty level when we hit 60.

 

[dvcgirl]

I must have missed it, I do not see anyone making the above statements.

Nobody made the statment, more of a sense that I get from reading her posts.

Like this comment...

Sometimes "less" is "more".. It all depends on the type of lifestyle that will truly make you happy..


I think that implies that "more", meaning having some extra money to do things, is "less".

 

[mickeyfan2]

That those of us who want lots of money for travel and leisure are somehow shallow.

This does not make a person shallow, but having to tell everybody how big your combined salary is, how much more you have in savings then family/friends and bragging about personal belonging makes somebody shallow.


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I make it a point to try to answer others financial questions but not use my networth as part of the answer. I find C. Ann and DMRick have great points to be made and they seem to be more in touch with the average american, so all of their opinions are very valid. Disneysteve, I give you credit at seeing others views and acknowleging them as valid. Just saying you get it does not mean you get it.

I for one see no reason to point out the expensive trip(s) DH and I are taking for our Anniversary/Birthday/Christmas etc. If somebody asks me about my plans I will tell them just enough to answer it but leave off enough details so they cannot decide if I am spending $100K or $100 for the trip.

I also find it interesting the assumptions others make about my personal education and financial position. How do you know anything about this? Did I tell you? Nope, but that does not stop you.

I do not need to wait until retirement to give to charities, I feel that is something that is on my mind everyday. If I were to see somebody who needed something and I could help them I will and prefer to do it anonymously.

Rather than us only discussing the look how much/little they have saved, we could discuss the pros/cons/differences between hedge funds, trading in commodities, mutual funds, index funds, investment allocations, domestic vs. internation funds, small/mid/large cap value or small/mid/large cap value just to name a few.

It seems we tend to discuss traditional IRAs, Roth IRAs and 401Ks mostly. Well all of the above can be included within all of these.

Also the 4% rule others always use is not valid for all. Assuming you earn 6% on your portfolio per year and only draw 4% you will die with more than you retired with. Unless you have a disabled kid who will need constant care thier entire life, why do you need to have so much in your estate? One can save enough to draw the amount they need per year (adjusted for inflation) and eventually at a set age 90/100 use up all the money. At that time one would still have the paid for home and could either sell it to free up more funds or take a reverse mortgage (I know not all like these, but the option is still there. This might be a good discussion point too).

This is how I see it here now and how I think we can approve it and have more participation. I think we have beat to death the no CC debt comments.

 

[dvcgirl]

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And you "expect" this why? My sister is old enough to collect Social Security now and after the Medicare portion is automatically deducted from her check, her supplemental health insurance (with prescription coverage) is minimal at best.. And contrary to your numbers regarding living in Florida, her expenses have actually gone down from what it previously cost to live in the particular area of upstate NY that she previously lived in..

As for "living" with family members for a third of the year, I wouldn't call it "living" with them (although I often refer to it that way just out of habit)and neither do they.. My DD and her family would be devastated if I didn't spend the holiday months with them and the only way I can see my sister and brother is if I travel to Florida.. I wasn't able to make it this year because of business I had to attend to here and they were absolutely crushed.. My brother literally cried on the phone.. I think it's so sad that there are families out there who wouldn't want to have other family members visit them or vice versa.. I guess I truly am blessed..

I've considered the possibility of making my seasonal home into a year-round home.. It could be done quite easily at a minimal cost, but my family won't hear of it.. To do so would increase my living expenses very little, but it's simply something that my family prefers that I not do..

Sometimes "less" is "more".. It all depends on the type of lifestyle that will truly make you happy..

Well, we're very close to both sets of parents, and in my experience anything over 2 weeks is more than a "visit"....lol! This may be different if it was just one parent as opposed to both. I do think that my Mom in particular would be very easy to live with. My Mom and Dad together....different story...lol! Having my in-laws here for a six week "visit", was more than a bit too long.....both for me and my DH. Obviously, if either set of parents ever needed to live with us for any reason we'd welcome them with open arms, but they really want to remain independent for as long as they possibly can.
And so if "more" means that that my in-laws live on their own as long as possible....give me MORE....lol!

I fully expect our supplemental health insurance to be expensive when we hit 65....we're only 38. Find me anyone out there predicting that health care costs will go down. My parents are shopping for a good supplemental policy w/ prescription coverage to go along with Medicare and it's going to run them over $6,000 a year. They want to avoid major out of pocket expenditures....and so that's why they're going this route. If my parents are paying $6,000 now, I would say we'll see some pretty huge number by the time we hit 65, over 25 years from now.

 

[disneysteve]

Well, then let's just say that many people would like to have some extra money around just for *whatever*, like money for the kids, the grandchildren, their favorite charity, painting supplies......you get my drift

True. Everyone has their own passion whether it be travel, dining out, antique cars, theater, charity, etc. Never hurts to have a few extra dollars in your pocket to indulge those interests. I was just pointing out that even though you and I have travel at the top of our retirement lists, it isn't on everyone's.

 

[dvcgirl]

This does not make a person shallow, but having to tell everybody how big your combined salary is, how much more you have in savings then family/friends and bragging about personal belonging makes somebody shallow.


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I make it a point to try to answer others financial questions but not use my networth as part of the answer. I find C. Ann and DMRick have great points to be made and they seem to be more in touch with the average american, so all of their opinions are very valid. Disneysteve, I give you credit at seeing others views and acknowleging them as valid. Just saying you get it does not mean you get it.

I for one see no reason to point out the expensive trip(s) DH and I are taking for our Anniversary/Birthday/Christmas etc. If somebody asks me about my plans I will tell them just enough to answer it but leave off enough details so they cannot decide if I am spending $100K or $100 for the trip.

I also find it interesting the assumptions others make about my personal education and financial position. How do you know anything about this? Did I tell you? Nope, but that does not stop you.

I do not need to wait until retirement to give to charities, I feel that is something that is on my mind everyday. If I were to see somebody who needed something and I could help them I will and prefer to do it anonymously.

Rather than us only discussing the look how much/little they have saved, we could discuss the pros/cons/differences between hedge funds, trading in commodities, mutual funds, index funds, investment allocations, domestic vs. internation funds, small/mid/large cap value or small/mid/large cap value just to name a few.

It seems we tend to discuss traditional IRAs, Roth IRAs and 401Ks mostly. Well all of the above can be included within all of these.

Also the 4% rule others always use is not valid for all. Assuming you earn 6% on your portfolio per year and only draw 4% you will die with more than you retired with. Unless you have a disabled kid who will need constant care thier entire life, why do you need to have so much in your estate? One can save enough to draw the amount they need per year (adjusted for inflation) and eventually at a set age 90/100 use up all the money. At that time one would still have the paid for home and could either sell it to free up more funds or take a reverse mortgage (I know not all like these, but the option is still there. This might be a good discussion point too).

This is how I see it here now and how I think we can approve it and have more participation. I think we have beat to death the no CC debt comments.

Heh, you don't even know what we make....did you ever think that what we make is just large to us? I won't share that number, nor will I share our portfolio total. I have shared that we are in the top 5% of earners as per the census, which puts us over 150K. I wasn't the first person here to share that nugget of information....many have.

The 4% rule is tied to inflation. Believe it or not, I didn't make that one up. If you're making 6%, and inflation is at 4% (slightly over the 3.5% history of inflation), and you draw 6%, you're in big trouble. You may outlive your money. If you plan on drawing 6%, you're going to need a return of 10% year over year, and your portfolio will have to invested very aggressively for that....not worth the risk.

I have no idea what you are talking about with respect to making assumptions about your life Mickeyfan....seriously, I'm lost there.

And I like to read what C.Ann, DMRick and Disneysteve have to say too. Always a good read....

 

[C.Ann]

I'm not trying to prove a point here. I really and truly do understand that retirement is an individual thing. However, I get the sense from your posts that you equate those of us who are actively and aggressively saving for the "extras" as being people who don't get the "real value" of retirement, meaning...spending time with family, kicking back and relaxing, stopping to smell the roses that are right here in our very own backyards. Almost as though, because some folks haven't saved enough to do the kinds of things that other can do, that their "experience" is somehow richer. That those of us who want lots of money for travel and leisure are somehow shallow. I guess I don't see it that way..

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Now, now...don't go putting words in my mouth that I didn't say.. I see nothing wrong with people saving aggressively - I see nothing wrong with people not saving aggressively..

I never said that you (or anyone else) doesn't get the "real value" of retirement - because again - each persons retirement needs and wants are individualized.. If anything, it is your messages that seem to indicate by all of your various posts that there is only "one" way to retire and only "one" amount that will be sufficient.. You tend to generalize when speaking of what people will need to retire when you don't really have any idea at all of what their retirement plans are.. I merely pointed out my situation so that people will be aware that not everyone does (or wants to) fall under the "average family" label that is used so often..

People really need to take a long hard look at what they want out of retirement and then plan accordingly.. And you know what? You'll have just as many different types of plans as you do the people who are making the plans.. There is no "average family" - every family is unique - and so are their retirement plans..

 

[DMRick]

lol...you and C.Ann will argue just about any point with me...that's okay though. Upstate NY is not an expensive place to live. I understand the difference between a lake house and a regular house...but still....that area is not expensive. .

Maybe we "argue" the points with you because you seem so determined that most want to be where you are at...and I don't think you are correct. You talk a lot about what you have..and yet, our friends with money never mention their "things". I think that always talking about how you will have millions and still have all these things, make several people feel inadequate. You may not be meaning that, but I know it's happening, because there are now people who won't post..except via PM.

I have friends that have very comfortable amounts of money, and yet they don't do the type of traveling you are talking about, (and seem to have no interest..some of them have modest RV's which are used in this area) and while they could certainly afford a fancy hotel and maid service, you wouldn't know it by how they act and talk..and certainly while they may give ideas on saving and investing, around the campfire, they never talk about what they have.

I also think you are not familiar with the Albany or even a lot of the Upstate NY area. While there are pockets of areas, just like anywhere, where it is less expensive area to live, for the most part, people leave our area because it's expensive. Believe me, we have our share of homes with high taxes. If you are putting our area against the NYC area, or DC, we would lose, but I'm not. I'm putting it against the Florida area, where so many of our friends and neighbors have moved to get away from our taxes and high food prices.

 

[DMRick]

And I like to read what C.Ann, DMRick and Disneysteve have to say too. Always a good read....

At least you said a good read, and not a good laugh LOL!

 

[C.Ann]

Well, we're very close to both sets of parents, and in my experience anything over 2 weeks is more than a "visit"....lol!

I fully expect our supplemental health insurance to be expensive when we hit 65....we're only 38. Find me anyone out there predicting that health care costs will go down. My parents are shopping for a good supplemental policy w/ prescription coverage to go along with Medicare and it's going to run them over $6,000 a year. They want to avoid major out of pocket expenditures....and so that's why they're going this route. If my parents are paying $6,000 now, I would say we'll see some pretty huge number by the time we hit 65, over 25 years from now.

-----------------------------------
I'm sorry that you feel that way about both sets of parents.. That's really sad - but again, not all families are the same.. I'm very, very lucky to have the family that I have that would be prefer that I be there, rather than not..

Funny - I was going to ask what age group you're in because I figured that might have a bigger impact on your agressiveness towards saving, but I didn't know if you would want to reveal that here.. Now I understand a little more if you're talking about 25 years from now.. By then I'm fairly certain I'll be dead, so I guess I have that covered..

As for your parents spending $6000 a year on supplemental health insurance, where the heck do they live? My sister doesn't pay anything near that much nor did my mother before she went into assisted living.. Neither have (or had) major out-of-pocket expenditures..

Again - you can't generalize.. Every area and every person is different.. I just hate to see people being scared away from these threads because they don't have millions saved for retirement and they're being frightened into thinking they are going to be doomed to live out the remainder of their days sleeping on a piece of cardboard on the sidewalk.. If that makes me a bad person, so be it - but if you're going to have these conversations it would be much more helpful if you had a broader base of knowledge than what you read.. Get out there and talk to people in all walks of life and you may be very surprised by what you learn.. Listen to what DMRick has said about people from different walks of life.. Read what I've said about my own situation - but read it without the skepticism..

Retirement is not - and will never be - a "one size fits all" situation.. Maybe you could at least acknowledge that..

 

[dvcgirl]

Maybe we "argue" the points with you because you seem so determined that most want to be where you are at...and I don't think you are correct. You talk a lot about what you have..and yet, our friends with money never mention their "things". I think that always talking about how you will have millions and still have all these things, make several people feel inadequate. You may not be meaning that, but I know it's happening, because there are now people who won't post..except via PM.

I have friends that have very comfortable amounts of money, and yet they don't do the type of traveling you are talking about, (and seem to have no interest..some of them have modest RV's which are used in this area) and while they could certainly afford a fancy hotel and maid service, you wouldn't know it by how they act and talk..and certainly while they may give ideas on saving and investing, around the campfire, they never talk about what they have.

No, I don't think that most want to be where we are, not at all. During our many discussions about retirement savings, I often say that most aren't saving enough, regardless of income level. I stand by that statement because it's the truth. I think that the major difference between the way that you and C.ANN think vs. me.... is you say that most people don't have to reach that 70-80% of their pre-retirement income, and that for most people that number is unrealistic. I disagree, most won't reach that number because they aren't saving enough, or they started way too late, or a combination of the two. And so they have to make their retirement picture fit the amount that they have saved. I would prefer to encourage people to try and hit that 80% number so that they have more options available to them. Really, that's all...

I guess me talking about needing millions of dollars (oh, which others have done by the way), is something that is misinterpreted. In fact I believe DisneySteve mentioned he's aiming for 3 million, and since he's likely to stick to the "4%" rule, we can determine that he's looking to pull about 120K per year when he retires. I would even venture to say that like us, DisneySteve would say that the 3 million would never in a million years make him feel wealthy....not in least. Because that's going to be his income for many, many years in the style to which he has become accustomed to living.

 

[C.Ann]

Nobody made the statment, more of a sense that I get from reading her posts.

Like this comment...

Sometimes "less" is "more".. It all depends on the type of lifestyle that will truly make you happy..


I think that implies that "more", meaning having some extra money to do things, is "less".

--------------------------------

Please don't try to twist my words into something to support your stance.. There is absolutely nothing wrong with that statement and if you were able to look at it unemotionally, you would get the meaning of it..

You have stated over and over what your retirement goals are - they are much "more" than what I want out of retirement.. I am perfectly happy with "less".. That doesn't make me better and you worse or vice versa.. It all depends on the type of lifestyle that will truly make you happy..

You would like to travel the world - I have no interest in that.. Does that make one of us "better"? No - just different.. You read far too much into that statement..