When Is It Enough? (Retirement Funds)

[arminnie]

So I think when people are considering "how much is enough" in terms of retiring, the first thing they have to do is to determine the "kind" of retirement they want and then make their decisions based on that - not the numbers that financial planners place on the "average" family that they don't know squat about.. If you want a "rich" lifestyle, then you're going to have to be "rich" - if you want an "average" lifestyle then you're going to have to be "average" - and if you want a simple, low-key comfortable lifestyle then that is what you will need..

It's all about priorities and what you really need and/or want..

I SO agree with you on this. All of those "average" type numbers are really not that helpful.

The 80% of current income figure is often referred to in retirement planning. That is not gospel. Depending on your priorities and what you need/want (C.Ann's advice) you might need way less or way more.

If you live in a low cost area of the country, but have plans to retire to a large home someplace VERY expensive like Pebble Beach you are probably going to be spending a lot more on housing. Maybe you just want to move near grandkids, and they live someplace expensive.

The same with travel. If it is important for you in your retirement to travel internationally and domestically while staying in 5 star hotels, then your retirement needs may be more than your current income.

Many people these days are having children later in life and may plan to pay tuition for Stanford or Harvard for their children while they are in retirement.

Those are some of the "upscale" scenarios. Maybe more realistic is the couple saving a large portion of their income now, paying off a house in 15 years (big payments), and paying tuition for children pre-retirement. Maybe at retirement they will have none of those expenses and could live on 30% of current income.

I left the San Francisco area so my living expenses were dramatically reduced. The condo that I now own cost approximately 30% of similar CA housing. My vet bill for the same procedure was $400 in CA and $100 in Arkansas (and I go to the most expensive and best vet in AR).

The tab at a top restaurant in New Orleans is less than 50% of a similar meal in San Francisco. Gas is about 50 cents a gallon cheaper. Car insurance is much less.

I don't spend all of my current income so technically I am saving, but I no longer have to make contributions to a 401K.

My income is not 80% of what I had before, but I have WAY more disposable income. I could live on my social security benefits alone if I had to.

My advice is to do what C.Ann said - make a realistic determination of what kind of expenditures will be required for the lifestyle that you are planning. Subtract social security and expected pension benefits (if any) and that is the minimum amount of after tax income that you need to generate from your investments.

Starting early with savings helps so much, but for those of you who have not done that let me tell you. I was flat broke in my early 40s because of real estate losses in Texas (even had to liquidate 401K and IRAs). I just had to work harder to catch back up.

 

[DVCLiz]

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It may be completely unrealistic in your world, but it isn't in ours and I'm old enough to remember the days when generations of families all lived together in the same house and it made for a very happy, loving atmosphere for all involved.. I guess we're just "unique" - much the same as the uniqueness of what I want and need out of my retirement doesn't jive with the expectations of others.. All I know is that it works for us, so it's all good..

I don't think anyone would wish it were otherwise for you, and I'm also sure everyone is happy for your close and loving relationship with your daughter and son-in-law. Lots of us have that kind of relationship with our families, too. But it's not usual by today's standards and by today's cultural norms to expect family visitors for a month or more, and I don't know anyone who has that happen to them. And I don't think North Carolina is any less "family friendly" than New York!!

You know, we are only 8 years apart, but sometimes I think you must be 90 years old!!!! There just aren't any examples in my life of seeing the generations live together - that's more of a picture from at leat two generations before my grandparents. I don't think it's an accurate picture to paint.

 

[DVCLiz]

I SO agree with you on this. All of those "average" type numbers are really not that helpful.

The 80% of current income figure is often referred to in retirement planning. That is not gospel. Depending on your priorities and what you need/want (C.Ann's advice) you might need way less or way more.

If you live in a low cost area of the country, but have plans to retire to a large home someplace VERY expensive like Pebble Beach you are probably going to be spending a lot more on housing. Maybe you just want to move near grandkids, and they live someplace expensive.

The same with travel. If it is important for you in your retirement to travel internationally and domestically while staying in 5 star hotels, then your retirement needs may be more than your current income.

Many people these days are having children later in life and may plan to pay tuition for Stanford or Harvard for their children while they are in retirement.

Those are some of the "upscale" scenarios. Maybe more realistic is the couple saving a large portion of their income now, paying off a house in 15 years (big payments), and paying tuition for children pre-retirement. Maybe at retirement they will have none of those expenses and could live on 30% of current income.

I left the San Francisco area so my living expenses were dramatically reduced. The condo that I now own cost approximately 30% of similar CA housing. My vet bill for the same procedure was $400 in CA and $100 in Arkansas (and I go to the most expensive and best vet in AR).

The tab at a top restaurant in New Orleans is less than 50% of a similar meal in San Francisco. Gas is about 50 cents a gallon cheaper. Car insurance is much less.

I don't spend all of my current income so technically I am saving, but I no longer have to make contributions to a 401K.

My income is not 80% of what I had before, but I have WAY more disposable income. I could live on my social security benefits alone if I had to.

My advice is to do what C.Ann said - make a realistic determination of what kind of expenditures will be required for the lifestyle that you are planning. Subtract social security and expected pension benefits (if any) and that is the minimum amount of after tax income that you need to generate from your investments.

Starting early with savings helps so much, but for those of you who have not done that let me tell you. I was flat broke in my early 40s because of real estate losses in Texas (even had to liquidate 401K and IRAs). I just had to work harder to catch back up.

arminnie, this is susch a nice post! Respectful and logical.

And it brings up a point that I think some people are missing. One of your sentences said, "...that is the minimum amount of after tax income that you need to generate from your investments."

And that, I think, is the key to this and other disagreements about savings. People like me and disneysteve and dvcgirl and others who throw out large amounts of money aren't saying we'll need or have a three million dollar retirement. Goodness, that's a lot of cash to blow on one old lady!!! It's that our retirement planning is based on receiving the amount we think we'll need to enjoy our retirements FROM INVESTMENT INCOME.

It's very easy to say, "Goodness, I can find peace and love and happiness on MUCH LESS than that!!" Well, we all can. It's just that we've made different decisions about retirement spending. Some of us want to spend the interest and save the principal, whether for something unexpected in our lifetime or for our future generations, and some of us are going to spend the nest egg and leave the nest empty. Again, that's an entirely personal decision - I wouldn't plan to leave any money if I didn't have children, and my plans would be completely different if I had a handicapped child or a relative needing special care.

Different strokes for different folks!

 

[dvcgirl]

I for one would like to actually like you on these boards. Maybe our comments are to try and show you a gentler way to make your point and still preach the same message. Also an apology, when you unintentionally hurt somebodies feelings, goes a long way to healing. The only person we know is the one that you present to us via your written word, and that is the only one you know of us.

We all don't need to like each other Mickeyfan, and so you don't need to like me...it's okay, really. I would never intentionally attack anyone on this board...ever. However, if people want to read a comment that I make, or anyone else makes for that matter, about a certain demographic....and then take it personally because it applies to them...then so be it. I wonder how people like that even watch the news, or read the paper. Seriously, I may be blunt at times, but some people are incredibly sensitive. In this thread or was it the other one going now, a poster commented on something I said and how unrealistic it was for most people to save money by not "trading up to a Lexus". And so what....should I not say that....because some people can't relate? Should we only post things that apply to people who make less than 40K. Why don't the people who make less than 40K start chiming in with how *they* save money instead of complaining how our (meaning mine or someone making more than the median income) advise does them no good?

 

[disneysteve]

Well, leave the computer for a couple of hours and all kinds of things happen.

Can we please all agree to disagree on certain issues? C.Ann is living just fine on 12K/year. My property taxes alone are 6K/year and there is no way possible we could eke out an existence on the other 6K so yes, my retirement needs will be substantially higher than hers. Neither is right or wrong.

And DMRick is right that some folks won't need 80% of preretirement income. As I said earlier, I'm not entirely sure that I will since we only live on 72% of our income now when you carve out what goes to savings. But even though some existing expenses like mortgage, college savings and disability insurance premiums will vanish, new expenses will come along like long term care insurance and higher health insurance costs. There is no simple formula for calculating exactly what you'll spend in retirement. The rules of thumb are good, though, and based on actual data of folks already retired, so don't disregard them. That 70-80% "rule" wasn't just made up - it's based on real people's experiences.

 

[SlightlyGoofy]

We have been retired for five years and counting. I have always been a saver so we are comfortable but nowhere near as comfortable as some think we should be. That might be because of where we live the COL is much less than in many areas. Here are some truths (mine) that I have found.

When you retire you have more time to find things to spend money on.

If you have been big savers as we were you can deduct that percentage from your retirement budget.

SS is not taxable if you have an income under a certain amount. That saves some big bucks as we used to be in the 30% bracket.

Spend your after tax dollars before dipping into your pretax money and that greatly decreases your 'income'but you will still have cash to spend.

The earlier you start to save the less painful it is. The dollar put away at twenty is worth five of that put away later and possibly more the later you start.

Unless you are very lucky your income will not rise as fast as prices. We do not have COL except for SS and that is not enough to cover the increases in stamps.

Being debt free in retirement means you need less money to pay for the interest charges.

Benjamin Franklin said "Fish and visitors smell after three days". I admire those who have family they could live with but unfortunately mine, who HAVE all lived with me at one point or another, are the types who move in, demand certains foods and such and do no work at all. I love them from a distance and visit a few times a year and even let some of them visit me, but for no longer than 3 days.

It is so hard to find information about retirement and finances because you do not feel comfortable asking others and do not want to disclose too much of your own info either.

The biggest problem that we have found is in the cost of health insurance. It is not so slowly eating up what small pension we had.



What works for one family will not for another.

Most important of all, make sure to plan ahead for all those Disney World vacations that you will finally have the time to take, especially when you can get FREE FOOD!!

Slightly Goofy

 

[punkin]

You know, we are only 8 years apart, but sometimes I think you must be 90 years old!!!! There just aren't any examples in my life of seeing the generations live together - that's more of a picture from at leat two generations before my grandparents. I don't think it's an accurate picture to paint.

I am 39 years old and my grand mother lived with my parents until her death (there were 3 years when we lived separately). I lived with my parents after college; my DH moved in when we married and I had my first child while living with mom (2 family house). We lived 3 blocks away from each other after that until my mother's death.

My husband's (also 39) mother lived in the same 2 family house as her parents until both her sons graduated college.

Of course this was all in New York, not North Carolina.

 

[DVCLiz]

I am 39 years old and my grand mother lived with my parents until her death (there were 3 years when we lived separately). I lived with my parents after college; my DH moved in when we married and I had my first child while living with mom (2 family house). We lived 3 blocks away from each other after that until my mother's death.

My husband's (also 39) mother lived in the same 2 family house as her parents until both her sons graduated college.

Of course this was all in New York, not North Carolina.

Shows how much I know!!!

Interesting, though - what's a two family house? Maybe this is the difference when people talk about families living together. I'm picturing grandma and the cousins stacked up on the sofa in the den. Maybe it's a little easier if there's a whole other house on the other side of the wall!!

I think it's different if you're down the block - I do know lots of people who are still living in their hometown with parents or other relatives nearby. Just not anyone who has family other than spouse and children in the same (one family!) house.

 

[dvcgirl]

We have been retired for five years and counting. I have always been a saver so we are comfortable but nowhere near as comfortable as some think we should be. That might be because of where we live the COL is much less than in many areas. Here are some truths (mine) that I have found.

When you retire you have more time to find things to spend money on.

If you have been big savers as we were you can deduct that percentage from your retirement budget.

SS is not taxable if you have an income under a certain amount. That saves some big bucks as we used to be in the 30% bracket.

Spend your after tax dollars before dipping into your pretax money and that greatly decreases your 'income'but you will still have cash to spend.

The earlier you start to save the less painful it is. The dollar put away at twenty is worth five of that put away later and possibly more the later you start.

Unless you are very lucky your income will not rise as fast as prices. We do not have COL except for SS and that is not enough to cover the increases in stamps.

Being debt free in retirement means you need less money to pay for the interest charges.

Benjamin Franklin said "Fish and visitors smell after three days". I admire those who have family they could live with but unfortunately mine, who HAVE all lived with me at one point or another, are the types who move in, demand certains foods and such and do no work at all. I love them from a distance and visit a few times a year and even let some of them visit me, but for no longer than 3 days.

It is so hard to find information about retirement and finances because you do not feel comfortable asking others and do not want to disclose too much of your own info either.

The biggest problem that we have found is in the cost of health insurance. It is not so slowly eating up what small pension we had.



What works for one family will not for another.

Most important of all, make sure to plan ahead for all those Disney World vacations that you will finally have the time to take, especially when you can get FREE FOOD!!

Slightly Goofy

Nice post....and good info. We plan to tap those taxable accounts first too. And we're planning on several years before age 59....so we'll need to cover those years.

The healthcare cost question mark is the scariest unknown for my generation. This will be the biggest unpleasant surprise I'm afriad.

I also agree with the the idea that we'll find additional ways to spend money with all that free time. That's the chief reason we're personally planning on having some extra solely for fun.

I don't find retirement info too tough to find actually. I read a few early retirement forums. If people think some of the info here is blunt, they wouldn't last a moment over there.....those guys can be brutally honest. Some of the people over there are die-hard "live beneath their means" types though...and will really slash their spending in order to retire earlier. I've shared more info over there than I have here because people go there looking for straight answers. And that's what they typically dole out.

Agree on big savers and getting a "raise" when they retire.
I have a tough time even imagining not having to save any longer....

 

[disneysteve]

When you retire you have more time to find things to spend money on.

I'm sure that's true, but I would also imagine we will have more time to comparison shop and get the best deals rather than buying something where we happen to be because we're pressed for time. Have you found that to be the case?

If you have been big savers as we were you can deduct that percentage from your retirement budget.

Thanks for mentioning that. That's what I've said in this thread. Its nice to hear it from someone actually living it.

 

[disneysteve]

I don't find retirement info too tough to find actually. I read a few early retirement forums. If people think some of the info here is blunt, they wouldn't last a moment over there.....those guys can be brutally honest. Some of the people over there are die-hard "live beneath their means" types though...and will really slash their spending in order to retire earlier. I've shared more info over there than I have here because people go there looking for straight answers. And that's what they typically dole out.

Can you please share the websites you are referring to? I'd love to check them out.

 

[DVC Sadie]

--------------------------------
No crossfires, but I am amazed by the number of people who feel this way about their relatives.. It's really sad to me and I'm not quite sure how "I love them all dearly" and "more than 10 days can be too much togetherness" fits in the same sentence..

When I told my DD, her DH and my DGD that I was coming up here to the mountains for the weekend all I got was moans, groans, and comments such as, "It's WAY too early! You never go up there this soon!! Are you sure you're only staying a few days?" Then once I arrived here the daily phone calls began.. "Are you really staying all weekend?" "The weatherman says it's going to get pretty cold - you might want to think about coming home.." And on and on.. Everyone was taking turns calling trying to get me to come home.. I am SOOOOOOO blessed!!! I knew my family was special, but after hearing how others feel, now I know they're REALLY special!

We were also very close to my parents that we lived with them by choice for years without ever feeling put out or put upon. My mother and I were simply best friends and found ourselves wanting to spend a lot of time together. It never occured to us that our choices were odd or very unusual.
I am so sorry for the loss of your dh.

 

[mickeyfan2]

We all don't need to like each other Mickeyfan, and so you don't need to like me...it's okay, really. I would never intentionally attack anyone on this board...ever. However, if people want to read a comment that I make, or anyone else makes for that matter, about a certain demographic....and then take it personally because it applies to them...then so be it. I wonder how people like that even watch the news, or read the paper. Seriously, I may be blunt at times, but some people are incredibly sensitive. In this thread or was it the other one going now, a poster commented on something I said and how unrealistic it was for most people to save money by not "trading up to a Lexus". And so what....should I not say that....because some people can't relate? Should we only post things that apply to people who make less than 40K. Why don't the people who make less than 40K start chiming in with how *they* save money instead of complaining how our (meaning mine or someone making more than the median income) advise does them no good?

It is obvious that you either can not or will not understand anything that I have tried to said so I no longer see a need to try to explain it to you. And yes you do attach people but hide behind the I tell it like it is or I am blunt, so be it. And yes this was blunt. I did not make a commment about a Lexus or only catering to those who make less than $40K so no need to discuss this here.

And yes there are people here who I do like.

------------------------------------------------------------------------------
THESE ARE GENERAL COMMENTS:

C.Ann has showed us how to live and be extremely happy on $12K per year. So she does chime in. I wish we had more of these examples as well as other examples. I believe that many more would if they were not made to feel that not saving X% was just not enough or earning in the top 20% ment you were a lesser person. Look at how the CC threads go. Every person who has CC debt is told all about it so they stay away. In an ideal world we would all make way more than we needed to live on, save way more than we would need for retirement, live debt free, have nobody with wants and all have the best of everything. We don't live in an ideal world and I would think it would be a very boring world too.

I realize that the top 20% of US households earn more than ~$80K, but that makes 80% of all US households earning less than $80K with the median being $45K and I feel we do not need to alienate that many people by all of the financial discussions. We should have threads geared to people of all ages and income brackets. We can have one for people who earn less than $40K and for those in the top 1%. We can have people who are retired and ones who are just starting out their life. I feel we are trying go only show people in the top bracket. Now that is all I want to say on this.


ETA: This is a budget board of a larger Disney board, so what brings us here is Disney and being able to get the the most out of our Disney money. If I wanted only to hear about saving and investing I would be on a board about that. How would it be if I was talking only about WDW on a financial only board? That would be odd in the least and potential rude at the most. I believe that there is a need to have some financial information here, but we don't need to be rude in the process of doing it.

Sometime watching to many shows about the coming doomsday can make one overly concerned about it and it can then control their every waking moment.

 

[pearlieq]

We all don't need to like each other Mickeyfan, and so you don't need to like me...it's okay, really. I would never intentionally attack anyone on this board...ever. However, if people want to read a comment that I make, or anyone else makes for that matter, about a certain demographic....and then take it personally because it applies to them...then so be it. I wonder how people like that even watch the news, or read the paper. Seriously, I may be blunt at times, but some people are incredibly sensitive. In this thread or was it the other one going now, a poster commented on something I said and how unrealistic it was for most people to save money by not "trading up to a Lexus". And so what....should I not say that....because some people can't relate? Should we only post things that apply to people who make less than 40K. Why don't the people who make less than 40K start chiming in with how *they* save money instead of complaining how our (meaning mine or someone making more than the median income) advise does them no good?

Amen! I've been trying to find a way to say this for the last several days. I still fail to how ANYONE can be harmed by reading a financial article. If it doesn't apply to you or explores a reality that you don't see happening for you, so what? Move on to the next thread.

I don't see how anyone is being alienated simply because there are discussions, posts, or articles that don't necessarily pretain to them.

Are we really setting up the expectation that only families with below median incomes have valid financial information to impart? Or that people with incomes above the median aren't entitled to discuss finances in a way that pretains to them?

Finally, if there's a poster that bothers you so much, use your ignore function! It's better than picking at them and constantly complaining about what they post.

 

[dvcgirl]

Can you please share the websites you are referring to? I'd love to check them out.

Sure.....here ya go.

http://www.early-retirement.org/forums/index.php

http://www.retireearlyhomepage.com/cgi-bin/yabb2/YaBB.pl

Kiplinger.com also has some nice forums Steve....here's the retirement forum (lots of post from non-retirees on saving/investing strategies)

http://forums.kiplinger.com/forumdisplay.php?daysprune=&f=74

 

[DVC Sadie]

Shows how much I know!!!

Interesting, though - what's a two family house? Maybe this is the difference when people talk about families living together. I'm picturing grandma and the cousins stacked up on the sofa in the den. Maybe it's a little easier if there's a whole other house on the other side of the wall!!

I think it's different if you're down the block - I do know lots of people who are still living in their hometown with parents or other relatives nearby. Just not anyone who has family other than spouse and children in the same (one family!) house.

DVC Liz, My parents and my dh and I all lived together in the same house from 1998 unti they died. My mother died 2 years ago and was the last parent. My dh and I would not have chosen any other way. My mother was my best friend and went to lunch almost everyday. We (dm and I) chose to spend every day together.

 

[mickeyfan2]

DVC Liz, My parents and my dh and I all lived together in the same house from 1998 unti they died. My mother died 2 years ago and was the last parent. My dh and I would not have chosen any other way. My mother was my best friend and went to lunch almost everyday. We (dm and I) chose to spend every day together.

What great memories you now have of those wonderful days.

 

[DVC Sadie]

What great memories you now have of those wonderful days.

Thanks mickeyfan2. I would like to share one last thought. My dh and I would spend most if not all of our life savings to have our son, my brother and my parents back. I know from other peoples posts that they too would choose a loved one over money everytime even if it meant giving up a early retirement or whatever.

 

[dvcgirl]

ETA: This is a budget board of a larger Disney board, so what brings us here is Disney and being able to get the the most out of our Disney money. If I wanted only to hear about saving and investing I would be on a board about that. How would it be if I was talking only about WDW on a financial only board? That would be odd in the least and potential rude at the most. I believe that there is a need to have some financial information here, but we don't need to be rude in the process of doing it.

Sometime watching to many shows about the coming doomsday can make one overly concerned about it and it can then control their every waking moment.

This is interesting coming from you mickeyfan....because you are a regular participant in the financial threads on this board. So now it's rude just to bring up the topic on a Disney Board? Have you visited the community board on this website? Those people talk about a whole lot....and practically *none* of it is about anything remotely close to the topic of Walt and his World. What about the 30% off at Target threads...nothing to do with Disney...American Girl.....Free Silver Jewelry!.....rude?

Again, it's usually incredibly easy to tell from the subject of a post what the topic is...this one couldn't be any clearer unless perhaps it was all caps and blinking in neon. Anyone who really doesn't want to read about the topic, for whatever reason, will probably skip it.

 

[C.Ann]

! There just aren't any examples in my life of seeing the generations live together - that's more of a picture from at leat two generations before my grandparents. I don't think it's an accurate picture to paint.

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

Then I take it you're not Italian, Irish or Greek - and neither is your DH?

You don't see it that often now - although it does still occur with a few certain cultures living in the US.. (Actually there's a Chinese family that lives in my DD's neighborhood with 3 generations living in the same house.. They also run a family business together..) But I definitely saw it in my lifetime and before my lifetime, it was very, very common..