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Old 12-29-2017, 05:48 PM
 
Location: Denver CO
19,063 posts, read 10,093,838 times
Reputation: 27915

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OP already has 6 figures in a 401k. That money will cover any expenses of settling her estate and for a funeral or whatever arrangements she want to make, there is absolutely zero need to pay for additional term life insurance for a non-dependent. (and as I pointed out earlier, it's likely she already has 1 or 2 times salary through work anyway)

I can only assume 17thAndK sells term life insurance for a living based on his or her inability to accept reality.

As for current income vs current expenses, I think that claiming there is some huge distinction is mostly semantics, frankly. They are both merely a baseline proxy to work with for what is at best an educated guess as to what your financial needs will in retirement.
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Old 12-30-2017, 12:43 AM
 
24,760 posts, read 26,839,776 times
Reputation: 22799
Quote:
Originally Posted by JrzDefector View Post
So there's a really good matching program at the company I work for and I intend to take full advantage of that. I'm 41, likely to remain single and unlikely to have any cash windfalls come my way. My two best friends and I are looking to retire together, and really, our tastes are simple. (And yes, I understand that a lot can change before retirement but we've been besties for 25 years and there have been no signs of that or our single status changing. They are also white-collar professionals.)

My main focus right now is on clearing all the (mostly low-interest) debt I carry beyond my mortgage, and I should have that taken care of within the next 18 months-2 years. With any luck, there will only be low-interest debt in my future.

I currently have $170K in a diversified portfolio (stock and bond index funds) and with the matching, I will probably be putting away $12K-$15K a year, with that slowly increasing with my salary. I plan to retire late because there is a great deal of longevity in my industry and I enjoy my job, so I've got another 30 years of contributions ahead of me.

Is that going to be enough? My Fidelity simulation basically comes back with a "maybe to meh" evaluation, but I kind of feel like that's the equivalent of a magic 8 ball and I'm not sure how biased their model is. I anticipate a pretty quiet life - my mother is always going on cruises and doing tons of shopping, but that's not really me. Also, I'll be living back among my extended family by the time I'm ready to retire (again, if all goes as planned), so I will have a good support system, which I've found cuts costs.

I've just been thinking a lot about this given the way Social Security and Medicare are so up in the air. I'm just trying to have an idea of what's coming down the pike as I age.
It really comes down to your savings rate as a percentage of your after tax income. Once your savings hit 25X your living expenses, you are pretty much financially independent. So if you expect to live on $40,000 a year in retirement, and Social Security pays you $20,000, then you'll need a $500,000 portfolio in addition to your SS. This might be lower or higher depending on the lifestyle you want to lead. Maybe you own a house and it will be paid off by retirement. Then you won't need 500K. If you're a perma-renter, or want to upgrade your lifestle or have more for medical expenses, then you'll need more than 500K, etc.

Mr. Money Mustache did a great article on this topic here:

The Shockingly Simple Math Behind Early Retirement
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Old 12-30-2017, 12:56 AM
 
24,760 posts, read 26,839,776 times
Reputation: 22799
Quote:
Originally Posted by JrzDefector View Post
I made a major life change several years ago by moving across the country, and ended up relying on credit cards to handle some unexpected emergencies that tapped out my savings. That got compounded when it made more financial sense to buy a house than rent, as property costs are skyrocketing in my area. It was a good idea since the house is a great investment (I got in while prices were still reasonable with a low interest rate), mortgage is far less than rent, and I have no intention of moving before retirement, but it needed more repairs than expected at first, so more debt. My job is finally paying the kind of money that will enable me to live comfortably, so the debt is the first thing I'm tackling - just put my full end-of-year bonus towards the credit card and will do the same with my tax rebate. The next bonus in a couple months will go towards a cash cushion to prevent me from turning to the credit cards.

The Fidelity projections seem like they're a bit steep to pad their AUM, exactly as you point out, and all my reading on retirement suggests that most people find they see their spending greatly reduced. I know I'm ahead of the general population in terms of retirement savings for my age cohort, but that's not reassuring. But given what is going on with taxes and so-called entitlements, I'm not sure what would make me feel confident. I know I'll have enough to get by on based on my current course, but I would like to have some idea of what to expect. I fully understand the lack of predictability in the stock market, but I'm not sure what's a reasonable retirement savings expectation at my age.

Disability insurance is something I'll be looking into as well.
It sounds like you have a reasonable head on your shoulders. It's certainly possible the financial companies incentivize people to save more than they need to. But I have seen plenty of seniors with very limited options due to low incomes and all I can say is the only thing worse than being young and poor is being OLD AND POOR. IT SUCKS! Overall, it sounds like you're on a decent track. But as others have said, it's not wise to assume you'll be able to work until you're 70. Lots of people lose good paying work in their 50s due to age discrimination and health issues. I think it's very wise to set up your financial life so that you'll at least be able to semi-retire in your 50s. You are probably on track to do that, but you're on the lower end of that range. So after you get your debt paid off and your savings cushion, I'd definitely bump up the retirement contributions.
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Old 12-30-2017, 08:14 AM
 
Location: Fairfax County, VA
1,387 posts, read 603,917 times
Reputation: 2723
Quote:
Originally Posted by Ared78hel View Post
No single person without dependents needs a term life insurance policy.
Very bad advice, no matter who offers it. As cheap as term-life is, it is abusive not to provide a pool of instant capital to those who will have to clean up after you.

Quote:
Originally Posted by Ared78hel View Post
No sensible person would think it is possible to accurately estimate the income needed for a retirement that's 30 years away. The various retirement calculators are guesstimates at best. The OP just needs to concentrate on saving as much as he/she can.
You've missed the point entirely. Pre- and post-retirement expenses are very different. Using the wrong one for planning purposes will create problems of one sort or another. If one does not have any planning purposes in mind, then of course, none of it will matter.
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Old 12-30-2017, 08:35 AM
 
Location: Fairfax County, VA
1,387 posts, read 603,917 times
Reputation: 2723
Quote:
Originally Posted by Lowexpectations View Post
You are ill informed. If you die unmarried and no kids as Iíve prefaced no one you know has to settle your estate or pay for the final expenses of desposing of your body generally
You insult others by calling them "ill-informed" while believing yourself that local politicians can be trusted to do a good job for you. Also that these are the only bases you will need to have covered at the time. That's a long way beyond short-sighted.

Quote:
Originally Posted by Lowexpectations View Post
Current income is often used as a starting point but using current expenses is a better starting point and you make adjustments from there.
Why would you want to make all these "adjustments?" It sounds like you are just wasting a lot of time. Your current income and expenses are not material to your post-retirement wants and needs. Why not put your time into seeing what the latter are and how they could be met? That's the direction that a rational person would be expected to go in.
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Old 12-30-2017, 08:50 AM
 
Location: Fairfax County, VA
1,387 posts, read 603,917 times
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Quote:
Originally Posted by emm74 View Post
I can only assume 17thAndK sells term life insurance for a living based on his or her inability to accept reality.
I'm retired for a living (although my wife still works), and as a long-time financial guy, I have a good idea of that side of what the transition from worker bee to retiree involves. And of course, you keep changing the "reality" here by adding new bits and pieces to it.

Quote:
Originally Posted by emm74 View Post
As for current income vs current expenses, I think that claiming there is some huge distinction is mostly semantics, frankly. They are both merely a baseline proxy to work with for what is at best an educated guess as to what your financial needs will in retirement.
As a cautionary tale, mistakes you make in the beginning will be more serious than the same errors made later on. In the end -- and an end does come, sooner than most ever expect -- you are stuck with whatever mess you have made of things. There are no go-backs or do-overs if you've screwed things up. You make your bed and then, for better or worse, you lie in it.
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Old 12-30-2017, 11:32 AM
 
Location: Omaha, Nebraska
6,318 posts, read 3,495,835 times
Reputation: 15022
Quote:
Originally Posted by 17thAndK View Post
Very bad advice, no matter who offers it. As cheap as term-life is, it is abusive not to provide a pool of instant capital to those who will have to clean up after you.
Why should I provide the State of Nebraska with a pool of instant capital? It will be the state, not my non-existent spouse or kids, who be settling my estate when I pass on.
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Old 12-30-2017, 11:46 AM
 
Location: Fairfax County, VA
1,387 posts, read 603,917 times
Reputation: 2723
Another argument from the outliers, but perhaps you should not have lived as such a recluse.
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Old 12-30-2017, 12:01 PM
 
Location: Denver CO
19,063 posts, read 10,093,838 times
Reputation: 27915
Quote:
Originally Posted by 17thAndK View Post
I'm retired for a living (although my wife still works), and as a long-time financial guy, I have a good idea of that side of what the transition from worker bee to retiree involves. And of course, you keep changing the "reality" here by adding new bits and pieces to it.


As a cautionary tale, mistakes you make in the beginning will be more serious than the same errors made later on. In the end -- and an end does come, sooner than most ever expect -- you are stuck with whatever mess you have made of things. There are no go-backs or do-overs if you've screwed things up. You make your bed and then, for better or worse, you lie in it.
No changes, this is the OP's reality. Unmarried, no children, no dependents. Saving enough for her own retirement, with some left over to make sure she doesn't run out is the goal. Whatever's left will go to someone, whoever she chooses to designate, but there is absolutely no need to pay for term life to increase the amount that someone ends up with upon her death. Obviously, if you've got a spouse or children, there is a much different analysis because for most people, leaving some money to your loved ones is a motivation to have an estate and/or an insurance policy. But it's far from a necessity.

Quote:
Originally Posted by 17thAndK View Post
Another argument from the outliers, but perhaps you should not have lived as such a recluse.
Wow, so you are rude as well as wrong. In case you hadn't taken the time to read the thread, the OP is also an "outlier" without a spouse or children and financial planning should reflect the situation of the individual, not be some cookie cutter plan forced upon you by someone who can't believe that his approach doesn't apply to everyone.
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Old 12-30-2017, 12:12 PM
 
Location: Omaha, Nebraska
6,318 posts, read 3,495,835 times
Reputation: 15022
Quote:
Originally Posted by 17thAndK View Post
Another argument from the outliers, but perhaps you should not have lived as such a recluse.
Being unmarried with no children doesnít mean a person is a recluse. It does mean they may have no close relative alive when they die, and their estate planning can reflect that.
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