When Is It Enough? (Retirement Funds)

[BethR]

OK everyone. Sounds like some of us may be cranky from losing that hour of sleep last night.

My suggestion is that everyone get to bed and leave this thread alone for the rest of the evening. And then hopefully in the morning, after everyone has had a GREAT night's sleep, everyone can get back to the question asked by the OP - how much is enough for retirement.

 

[DVCLiz]

No, I'm not any of those nationalities - and my DH is my ex-DH, so thankfully I've purged them completely, LOL!

I can certainly see that it would help out with retirement savings, though, to have one big "family" home so that no one had to fully absorb the costs of taxes and maintenance. But I'd never want to be that close to anyone other than a spouse or minor children. I can't conceive of living with my mother!!! I'm not saying it's a bad thing, but my mother was my mother and my best friends are my friends, and never the twain shall meet (or live together!)

 

[dvcgirl]

No, I'm not any of those nationalities - and my DH is my ex-DH, so thankfully I've purged them completely, LOL!

I can certainly see that it would help out with retirement savings, though, to have one big "family" home so that no one had to fully absorb the costs of taxes and maintenance. But I'd never want to be that close to anyone other than a spouse or minor children. I can't conceive of living with my mother!!! I'm not saying it's a bad thing, but my mother was my mother and my best friends are my friends, and never the twain shall meet (or live together!)

I don't know how common it is to live like one big happy family, but my neighbors across the street do this. Husband, wife, two very small children, one set of grandparents and another young 20-something. I don't know how they do it...but they do.

 

[DMRick]

I wish you would re-read this carefully. Your style of writing is just so interesting. It's not the info that blunt..it's you.

If people think some of the info here is blunt, they wouldn't last a moment over there.....those guys can be brutally honest.

What do you mean by brutally honest? While they may be able to tell us what they save, and how much they think they will need, and how much the average person is saving (that the government knows about)..well, they really can't beat up and tell us we have to have XXX amount of dollars. I am retired. Have been since 2000. There is nothing they can tell me about what is best for me. I'm living it. So how brutally honest would they be..tell me I'm not doing OK? They can talk national averages, til the cows come home, but I'm living it. Just this year, I've had about 5 trips to Disney, I'm fresh back from Ireland, I travel a lot in our paid for travel trailer and truck, and I'm doing that on way less than you keep insisting everyone needs LOL.

 

[DMRick]

OK everyone. Sounds like some of us may be cranky from losing that hour of sleep last night.

Not me Beth..I forgot to change the clocks. I was late to church this morning LOL.

 

[BethR]

Can we please all agree to disagree on certain issues?

Ahhhh Steve, always the voice of reason.

Yes, can't we all agree to disagree about things? And instead of looking for arguments, please take people's thoughts, insights, and input for what they are, and don't take it all so personally.

 

[dvcgirl]

I wish you would re-read this carefully. Your style of writing is just so interesting. It's not the info that blunt..it's you.

What do you mean by brutally honest? While they may be able to tell us what they save, and how much they think they will need, and how much the average person is saving (that the government knows about)..well, they really can't beat up and tell us we have to have XXX amount of dollars. I am retired. Have been since 2000. There is nothing they can tell me about what is best for me. I'm living it. So how brutally honest would they be..tell me I'm not doing OK? They can talk national averages, til the cows come home, but I'm living it. Just this year, I've had about 5 trips to Disney, I'm fresh back from Ireland, I travel a lot in our paid for travel trailer and truck, and I'm doing that on way less than you keep insisting everyone needs LOL.

Oh, there are lots of people over there living it too, and many about to head out down Retirement Road. It is interesting though the other boards I mentioned seem to attract more men to it and so there is lots more straight talk and lots of numbers thrown out. Here, when people use numbers they risk the chance of unintentionally offending someone. Especially if the numbers are high...beacause then it's seen as gloating instead of just giving the facts. Also, here it depends more on who the poster is, because if I said I took 5 trips to Disney plus a trip to Ireland in about four months, it would be seen as gloating and obnoxious. If you say it...it's good old fashioned advice with a twist of common sense thrown in. Go figure huh?

 

[BethR]

Not me Beth..I forgot to change the clocks. I was late to church this morning LOL.

Note that I said SOME people, DM.

(And I doubt that you were the only person missing part of the services this morning. )

 

[DMRick]

Also, here it depends more on who the poster is, because if I said I took 5 trips to Disney plus a trip to Ireland in about four months, it would be seen as gloating and obnoxious. If you say it...it's good old fashioned advice with a twist of common sense thrown in. Go figure huh?

Again, it's how it's said. (Did I say in four months I did that. Sorry, I meant the past year). I actually knew this was what you would say when I wrote that LOL.

Most on these board are OK with Disney trips LOL..after all it's a Disney board (heck and many know I usually stay at a value, (and get my airfare for $40 - $60 each way) and happy to do it). And many know that trip to Ireland was a visit to my son who lives there. I can't think of a better way to spend our money, than by being with our family. The point I was making was..I'm living on way less than you/stats propose I need. And still able to fit those vacations in, without going into debt.

 

[DMRick]

If you say it...it's good old fashioned advice with a twist of common sense thrown in. Go figure huh?

And if I had said this about you, you would say I was picking on you and was just under the mod's radar.

 

[C.Ann]

Not me Beth..I forgot to change the clocks. I was late to church this morning LOL.

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Phew! Glad I'm not the only one who goofed.. I actually remembered to change the clocks, but that meant I went to bed an hour later so I overslept this morning.. Gonna take a few days to get "back in the groove"..

 

[DVCLiz]

The point I was making was..I'm living on way less than you/stats propose I need. And still able to fit those vacations in, without going into debt.

Here's the real point - you're doing it TODAY, in today's dollars. Now project what you have and try and guess what you would need 15 to 20 years from now, so that it would last you 25 to 30 years. That's the difference as I see it, and the reason some big numbers are being thrown around. dvcgirl has said over and over that she is in her late thirties and wants to retire early, before or by the time she is 55, I think. She has a different reality than you.

Another point, to those who argue that this is a Disney board, etc. We went through this a month or two ago, when some people asked about the possibility of a financial board, because so many of these topics were out tof the usual realm of "how to save money so you can afford a trip to WDW." The consensus was that one board was better than two, and that people who weren't interested in the personal finance threads could easily avoid them. And it's true - I didn't title this thread "How Much is Enough(So You Can Go To Disney)?" It was clearly about retirement funding - easy for anyone to avoid if they weren't interested.

 

[C.Ann]

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.

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Thank you - in regards to my DH.. And thank you for your posts about your living arrangements.. Somehow I just "knew" that my family wasn't the only family who shares and enjoys our time spent together regardless of if it's days, weeks, months or years..

Reminds me of something funny that happened a couple of weeks ago.. One of my son-in-laws best friends and his wife were over to the house.. DD and my son-in-law were talking about the new house and who would be getting which bedroom - how the two extra rooms in the finished basement were being set aside for me to use as office space and a craft/ebay room.. Suddenly the friend and his wife piped up and said, "Can she go with us instead?" Before my DD could even open her mouth my son-in-law replied, "Over my dead body!!" I know I'm extremely lucky.. I guess I just wish everyone could be so lucky..

 

[C.Ann]

Here's the real point - you're doing it TODAY, in today's dollars. Now project what you have and try and guess what you would need 15 to 20 years from now, so that it would last you 25 to 30 years. That's the difference as I see it, and the reason some big numbers are being thrown around. dvcgirl has said over and over that she is in her late thirties and wants to retire early, before or by the time she is 55, I think. She has a different reality than you.

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That's a very valid point - an excellent one, in fact! Maybe in future discussions it would be helpful if posters were to say "I'll be retiring in 15 years" - or "I'm planning on retiring next year" - or "I'm already retired".. If it were broken down into time frames it would be easier to determine what someone needs now and what someone will need 20 years from now..

 

[DMRick]

Here's the real point - you're doing it TODAY, in today's dollars. Now project what you have and try and guess what you would need 15 to 20 years from now, so that it would last you 25 to 30 years.

Again., my savings are not anywhere what is being bandied about. However, since we seldom touch our savings now, I do expect the amount I do have to last me the 25/30 years (we've been getting a great return with the investments my hubby has picked out), along with our pension and SS (and life insurance, in case that was to stop). I know about inflation..I've lived it and been here when gas was .29 a gallon. For us, it's not about never touching the principle and making sure I have enough saved, to never have to. I also have nice equity in my home, which is also something to fall back on. Lucky for us, that original $9,500 investment is worth a lot more.

Yes, she has a different reality than I do, and different from other people as well. Some here talk about living on the interest, or never pulling out more than 4%. I don't intend to end my life (if possible, I really don't know what is ahead of me) with a large savings. We don't intend to leave a large inheritance. Our kids are doing fine on their own. We helped with their college expenses to make that so.

Another point, to those who argue that this is a Disney board,

I'm not arguing that this is a Disney board. etc. I did mention my Disney trips, however because it is a Disney board and I assume many people here will want to go to Disney once they retire..and I guess I'm proof it doesn't take a fortune to do that.

And it's true - I didn't title this thread "How Much is Enough(So You Can Go To Disney)?" It was clearly about retirement funding - easy for anyone to avoid if they weren't interested.

I'm not sure why you mentioned the above...who said they weren't interested? I'm interested in what others think is enough. I just don't like being told what I think is enough for my life, isn't. Your title says it all.."When is it enough"..I assume you wanted people to say what they thought was enough..not others to say what they thought was enough for others.

 

[disneyfreakk]

Hello everyone! Very interesting thread! Here is a little background : I am 29 and my DH is 32 and we have been trying to figure out what we will want/need for retirement for the last 5 years. We have both been contributing 15% with a 4% match to our 401k for the last 6 years, as well as a good savings, investments. We pretty much work all of the time with the exception of taking a full month off every year for vacation. I have a number in mind and it certianly is within our reach, but I often wonder if we will really need that much? Our goal is to retire when I am 50. So here is my question... are we supposed to plan on living off of the intrest of our ivestments or is it "better" ( relative term there I know ) to have xxx amount to last us x amount of years will a zero balance when the bell rings? I know we could live off of very little money, but we did that when we were young and in college and didnt care for that much! LOL

 

[disneysteve]

So here is my question... are we supposed to plan on living off of the intrest of our ivestments or is it "better" ( relative term there I know ) to have xxx amount to last us x amount of years will a zero balance when the bell rings?

The inherent problem in planning to live on your principal is you don't know when you will die. If you spend based on living to 90, what happens if you make it to 95?

That's why the 4% rule exists. If you have a balanced portfolio and draw about 4%/year from it, your odds are good that you will never run out of money. Of course, depending on inflation, spending patterns and investment returns, you may be able to draw more than 4% some years. And as you get older, you could start drawing down the principal. But if you start spending principal right away when you retire at 50, you will almost certainly run out of money (unless you've got the winning Powerball ticket in your wallet).

 

[mickeyfan2]

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

Using the above link I found this page:
http://www.retireearlyhomepage.com/careeradv.html
and found it interesting reading. It makes good points about college and homes that one must think about. The college part is great to teach the kids.

I did some limited reading in these two links (one I have removed) and did not see brutally honest and blunt as much as explainations (I am sure they are there, I just did not find them). I did like the 4% rule explaination they used. Again maybe a discussion here would be nice. I know our plan has this (love the graph) but we use the how much do you need to retire on in todays rule rather than number of times our salary. We remove non-reimbursed business expenses, 401Ks, additonal savings, IRAs, SEPs and on (and no we don't have all of these, just wanted to make a general list) from our salary. We also play to scale back to a single car and will need to replace it during retirement. DH and I have no desire to travel outside of the US. DH hates to fly. I have no interest in going without him. We love to drive and want to see National parks when we retire. Another trip to the Grand Canyon would be nice. Yes and Mickey will be part of our retirement too.

 

[mickeyfan2]

The inherent problem in planning to live on your principal is you don't know when you will die. If you spend based on living to 90, what happens if you make it to 95?

That's why the 4% rule exists. If you have a balanced portfolio and draw about 4%/year from it, your odds are good that you will never run out of money.

I understand the 4% rule, but we do plan on spending down our principle in the later years of our life. Our graph goes up for a while after retirement and then eventually goes back down to 0 in my 90th year. When we run out of money we still own our home, so that is the next source of money. Also if I run out of money when I am 90 there is a good change I will be in an assisted living facility and my LTC insurance will be paying some of that. They also will pay for care in my home at 100%, but I may not want the house then.

So here is the question. When someone says they need $3 million to do the 4% draw, what do they do with the value of the home? Is that included in the $3 million or is it in addition to it?

 

[DVCLiz]

I'd be perfectly happy to include the value of my house in my hypothetical $3 million!! It has appreciated nicely in the three years I've owned it, and it's probably one of the most substantial assets I'll own.

BUT - and this is a big but - anyone who does that has to be prepared to cash out, so to speak, if needed. And that's a BIG event. There you are, 90 years old, in the same house for your adult lifetime, and suddenly you need to sell your house in order to free the equity. I do think a lot of people do this - it's just that the timing needs to be on your side!!! Remember, you're at the mercy of the real estate market, so it's not as simple as cashing in an investment at the bank.

Also, at that point in life, you have to have planned for your next step. Where will you go? Live with family? In assisted care? What kind of expenses will you have then? And so on...

I guess the answer is that there's not an easy answer. But a house is certainly a major player in the retirement game.