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Old Yesterday, 10:17 AM
 
Location: SoCal
11,483 posts, read 5,513,640 times
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Quote:
Originally Posted by GeoffD View Post
More significant, 80th percentile net worth for age 60 to 64 including home equity is only $1 million and it drops off very quickly from there. Very few people who are age 60 these days have pensions. 80th percentile wealth with nothing but a Social Security check isn't a lavish retirement. Anything below 75th percentile is going to be quite lean.
Honestly, we can live on just SS alone when I’m 70. This is why I delay taking SS until 70. Yes, we still have a mortgage then, plus high property tax in HCOL, and we just bought our house not too long ago, so the benefit of Prop 13 is not that apparent yet.

It’s just dawned on me that my other income can be used for LTC if needs be. No traveling once you’re in nursing home either.
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Old Yesterday, 10:18 AM
 
12,706 posts, read 6,643,907 times
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Quote:
Originally Posted by athena53 View Post
This is a good point; my FB friends who use "millionaire" as a pejorative are not happy when I point out that the market value (what you'd pay for an annuity) of a $40K/year public service pension is about $1 million if you're age 65. Many of them are retired teachers.

Most of those public sector pensions also have COLA protection and really nice supplemental Medicare plans. That makes that $40K public sector pension worth considerably more than $1 million. My mother was a university professor in the state college system. I look at her Medicare supplemental plan and the cost rather enviously. I won't have access to anything like that when I turn 65. It's cheap and it covers pretty much everything. She's been hospitalized 3 times this year and the out of pocket for the year is maybe a hundred bucks other than Rx co-pays.
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Old Yesterday, 10:28 AM
 
12,706 posts, read 6,643,907 times
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Quote:
Originally Posted by NewbieHere View Post
Honestly, we can live on just SS alone when Iím 70. This is why I delay taking SS until 70. Yes, we still have a mortgage then, plus high property tax in HCOL, and we just bought our house not too long ago, so the benefit of Prop 13 is not that apparent yet.

Itís just dawned on me that my other income can be used for LTC if needs be. No traveling once youíre in nursing home either.

Yep. We've been through this topic before. My age 70 Social Security check is a bit over $45K/year. My girlfriend is about $40K/year. My house is paid for. I'm in a supposedly HCOL state but my home ownership costs between taxes, insurance, and utilities are about $6K. I'll be 61 in May. Even if I spend everything else to zero at some point, I'm not going to be poor.
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Old Yesterday, 10:47 AM
 
720 posts, read 134,721 times
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Quote:
Originally Posted by athena53 View Post
... SS benefits haven't really kept up with inflation. COLA is based on a particular CPI (CPI-W) that gives more weight to food, clothing, transportation expenses and "other goods and services" and less weight to housing...
Actually, it gives a different weight to housing.

Quote:
Q. The CPI used to include the value of a house in calculating inflation and now they use an estimate of what each house would rent for -- doesn't this switch simply lower the official inflation rate?

A. No. Until 1983, the CPI measure of homeowner cost was based largely on house prices. The long-recognized flaw of that approach was that owner-occupied housing combines both consumption and investment elements, and the CPI is designed to exclude investment items. The approach now used in the CPI, called rental equivalence, measures the value of shelter to owner-occupants as the amount they forgo by not renting out their homes.

The rental equivalence approach is grounded in economic theory, receives broad support from academic economists and each of the prominent panels, and agencies that have reviewed the CPI, and is the most commonly used method by countries in the Organization for Economic Cooperation and Development (OECD). Critics often assume that the BLS adopted rental equivalence in order to lower the measured rate of inflation. It is certainly true that an index based on home prices would be more volatile, and might move differently from other CPI indexes over any given time period. However, when it was first introduced, rental equivalence actually increased the rate of change of the CPI shelter index, and in the long run there is no evidence that the CPI method yields lower inflation rates than some other alternatives. For example, according to the National Association of Realtors, between 1983 and 2007 the monthly principal and interest payment required to purchase a median-priced existing home in the United States rose by 79 percent, much less than the rental equivalence increase of 140 percent over that same period.

Quote:
Originally Posted by athena53 View Post
... medical care and recreation
https://www.gao.gov/archive/1996/gg96166.pdf

Quote:
Although it is often referred to as a cost-of-living index, the CPI is not designed for this purpose. A comprehensive cost-of-living index does not exist. Members of Congress have questioned the use of the current CPI for adjusting federal benefits and taxes. One outcome has been the Senate Committee on Financeís appointment of an expert commission to study the CPI.


The Ranking Minority Member of the House Committee on Banking and Financial Services, concerned that taxpayers may be negatively affected if the estimation problems of the CPI are not well understood, asked GAO to(1) determine if a change made to the housing component in the early1980s made the CPI either more or less suitable for use as a cost-of-living measure and (2) identify the advantages and disadvantages of changing the current measurement of medical care costs to an approach that more closely matches a cost-of-living measure. GAO surveyed recognized experts to obtain their views on how the change affected the housing component and on the advantages and disadvantages of changing the medical care component. As agreed with the Ranking Minority Member, GAO did not try to identify and address all of the policy issues that would be relevant to determining whether the CPI should be moved further toward a cost-of-living index.[

The medical care component of the CPI is based only on out-of-pocket medical expenses that consumers pay, including health insurance premiums. The CPI does not include payments by third-party payers.
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Old Yesterday, 10:49 AM
 
1,146 posts, read 356,465 times
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Quote:
Originally Posted by NewbieHere View Post
Itís just dawned on me that my other income can be used for LTC if needs be. No traveling once youíre in nursing home either.
That's my plan; I'm widowed (and will not remarry unless the guy has the resources to support his own LTC). I figure that if I enter LTC nearly everything else goes to zero: car, housing, travel, charitable donations, groceries, etc. There's a lot of leeway there.

Although there's a middle ground: Dad, age 87, is in a community where he gets meals, cleaning, yard work, etc. but still has his own car and a kitchen. One lady there is 92 and just got back from a European cruise with her family. I want to be that lady.
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Old Yesterday, 01:10 PM
 
24,929 posts, read 32,020,523 times
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Quote:
Originally Posted by GeoffD View Post
Yep. We've been through this topic before. My age 70 Social Security check is a bit over $45K/year. My girlfriend is about $40K/year. My house is paid for. I'm in a supposedly HCOL state but my home ownership costs between taxes, insurance, and utilities are about $6K. I'll be 61 in May. Even if I spend everything else to zero at some point, I'm not going to be poor.
Those are high SS amounts. I'd say you are a much higher earner than the average joe. The average monthly Social Security payment to retired workers is $1,461 in 2019. That's $17,532 a year.
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Old Yesterday, 02:14 PM
 
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
21,629 posts, read 38,679,991 times
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Quote:
Originally Posted by GeoffD View Post
More significant, 80th percentile net worth for age 60 to 64 including home equity is only $1 million and it drops off very quickly from there. Very few people who are age 60 these days have pensions. 80th percentile wealth with nothing but a Social Security check isn't a lavish retirement. Anything below 75th percentile is going to be quite lean.
and, as per yet another survey...
What Is The Average Retirement Savings in 2019?
How much does the average American have saved for retirement? Nothing. Nothing at all.
Eric Reed Updated Mar 3, 2019 11:05 AM EST Original: Mar 2, 2019
https://www.thestreet.com/retirement...HOO&yptr=yahoo

Retirement savings - USA general populace

Workers With Savings
Following are the mean and median retirement accounts for people who have one. That is to say, this data only shows what a representative account looks like without factoring in figures for accounts that don't exist. This data comes per the Federal Reserve's Survey of Consumer Finances. (Numbers rounded to the nearest hundred.)
• Age 55 - 64:

Average retirement account: $374,000
Median retirement account: $120,000

• Age 65 - 74:

Average retirement account: $358,000
Median retirement account: $126,000

Including Workers Without Savings
When accounting for people who have no retirement savings the picture looks considerably worse. Following are the median retirement accounts when including the figures for people with no retirement savings. The following do not include mean retirement accounts, as this would be statistically less informative than median data.

• Age 32 - 37: $480

• Age 38 - 43: $4,200

• Age 44 - 49: $6,200

• Age 50 - 55: $8,000

• Age 56 - 61: $17,000

How Much Should You Have Saved For Retirement?
I figure... can never have too much. $17,000 might be a tad light.
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Old Yesterday, 02:15 PM
 
25,355 posts, read 27,661,591 times
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Quote:
Originally Posted by eliza61nyc View Post
agreed. but there is a wide range between 300k and 5 million that the gurus throw out.
Yes, absolutely. The $5M number is ridiculous so if that number is being thrown around in the media, it's hype. But at the same time, the typical senior citizen net worth of 250K, which includes your house, is simply not enough. It is a crisis, even if it isn't as bad as the sensational media reports.

Quote:
Originally Posted by eliza61nyc View Post
So I guess one question to ask is how they are defining "crisis".
The median household has very little income from other investments in addition to Social Security, and that will become more true in the future one all the people with pensions die off.

Quote:
Originally Posted by eliza61nyc View Post
Are we including pensions in this number? When they say you need 5 million to retire are you saying you need 5 million saved or are they also including total ss?
what are folks spending levels.
It's a good question, but somewhat of a moot one. Younger people aren't going to have pensions except for maybe government workers. Even those who work for the government are going to get less than what the Baby Boomers got.
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Old Yesterday, 02:41 PM
 
68,148 posts, read 69,017,679 times
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Quote:
Originally Posted by ChessieMom View Post
Those are high SS amounts. I'd say you are a much higher earner than the average joe. The average monthly Social Security payment to retired workers is $1,461 in 2019. That's $17,532 a year.
average would mean half are lower and half are higher. no one is average.


Data released by the Social Security Administration in April showed that over 42 million American retirees receive Social Security checks totaling $59.6 billion every month. That averages out to a monthly payment of about $1,400 per person.

you can see that really is not very meaningful . some may get very little and some a whole lot and you average out to an amount no one gets
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Old Yesterday, 02:46 PM
 
1,673 posts, read 709,455 times
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They used to say if you fail to plan, you plan to fail. I also retired at 62. One thing I realized was that you can't afford to make a financial mistake in retirement. There's no time for do overs. I had a pretty good idea of what it would cost to retire and I was correct. I retired with a paid off house, no credit cards or loans, SS, a pension, good insurance, and savings. In the 10 years since, my savings balance is a bit higher than when I retired. We haven't needed any of it. We still live on less than we take in and save a little every year. We don't worry about money and live a comfortable middle class life style without having to work.
Quote:
Originally Posted by athena53 View Post
I get a lot of "Suggested posts" from facebook that are retirement-related, many from AARP and many of those with comments from people who didn't plan very well. One whined that she hadn't bought a Medigap policy because it was too expensive and-surprise!- she ended up with an expensive health issue and her 20% share was even less affordable than the Medigap premiums. I personally know contemporaries who quit at 62 and started collecting SS but have come close to depleting their savings (one went with her husband on their dream trip to Europe and figured they'd be OK on SS alone- and recently she told me she was waiting till she had the money to fix the crack in her car's windshield).

People who think they're well-prepared and who ARE well-prepared are not the same thing.

By the way, I retired 5 years ago on "only" $2.6 million in a LCOL area and my net worth has been increasing at 2.5% annually AFTER withdrawals and I live a life that's pretty darn good by the standards of my friends who are working for a living. If I had $5 million I'd just leave a bigger legacy, even under the scary nursing home scenario.
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