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I've really started thinking about retirement very seriously this year. I'm 33 and have $50K saved - I know I'm behind, but I have a plan!
I've run some calculators online and the numbers just seem to hypothetical to me. The other thing that I noticed in the calculators is that it only counts the individual. How do people on this forum calculate their retirement goals - individually or with your spouse. I do plan on having two of us when we retire, so obviously that makes a big difference since we only will need one rent payment, possibly one car payment, and other shared expenses.
First, please re-read your posts before hitting the "submit" button. '...to hypothetical to me.'? what does that even mean?
also, i think if you're planning on renting and having a car payment in retirement, you're doing something wrong.
Everything is hypothetical, as others have said, and it's trickier the more years to retirement, because your lifestyle can change tremendously between now and retirement.
That said, I'd start with "how much am I/we making today, and of that, how much are we spending?" If you make 50K but put 10K in savings of whatever sort, then you don't need 50K in retirement, you need 40K. You can either get all mathy about taxes or just say "OK, we may need a little less than 40K because we won't pay FICA taxes when we retire" (I mean, who knows what income taxes will look like 20-30 years from now?). So say "OK, we currently spend about 35K (or whatever) after taxes".
Any big expenses you have now that you won't in retirement? If so, you can subtract them. But maybe you'll want to spend more on travel or whatever that you don't spend now. OK, add that in.
Maybe you'll earn more later and spend more. You can adjust then. But at least you have some idea of what you would need to support yourself at a similar level to what you're living at now, and then adjust that up or down as desired. You can subtract out a social security income estimate or not, your preference. Or do both. "I think we'd need 40K in today dollars per year to retire. Multiply that by 25 (if you use the 4% rule of thumb) and we'd need about a million. But if we get about 18K year in 'today' dollars from social security, we'd only need 22K/yr, which would be about 550K".
It's all guesswork, but that's a way to start and at least get in the ballpark.
SS will chop most people's need in half(maybe not half but a considerable amount) so if you needed 80% and you finished at 50k it would breakdown to something like this and while it's more complicated I think it's worthwhile to take a look at
[snip]
Food for thought
None of us know what Social Security will look like in 30 years. Everyone is free to count on it if they want, but I don't. Any SS payment will be a bonus that will make my retired years more extravagant, but I exclude them from any calculations. It's too much of a variable IMO to be useful in retirement planning.
None of us know what Social Security will look like in 30 years. Everyone is free to count on it if they want, but I don't. Any SS payment will be a bonus that will make my retired years more extravagant, but I exclude them from any calculations. It's too much of a variable IMO to be useful in retirement planning.
It's not include in my plan or goal of 10mm but I do know that a lot of people rely heavily on SS income. It's not going to zero I'd wager a large sum of money it will be there are my retirement
First, please re-read your posts before hitting the "submit" button. '...to hypothetical to me.'? what does that even mean?
also, i think if you're planning on renting and having a car payment in retirement, you're doing something wrong.
Dude, give the OP a break. They forgot one "o" in the word "too". My brain parsed the sentence perfectly fine. We all make typos and word slips when typing on these forums. It was a good question overall.
In addition, why would a retiree renting an apartment automatically be "wrong"? If you're going to complain about people's posts (which is getting increasingly common from you), at least back it up with something constructive.
None of us know what Social Security will look like in 30 years. Everyone is free to count on it if they want, but I don't. Any SS payment will be a bonus that will make my retired years more extravagant, but I exclude them from any calculations. It's too much of a variable IMO to be useful in retirement planning.
I agree with this, I am not counting on SS being around when I retire. If it is, thats a bonus. That being said, the "inflation" variable is something thats difficult for me to wrap my head around. How much I need is a nebulous number--I plan to accumulate as much as I can. But exactly how much you need monthly (or yearly) at 65+ cannot be budgeted on todays dollars.
Dude, give the OP a break. They forgot one "o" in the word "too". My brain parsed the sentence perfectly fine. We all make typos and word slips when typing on these forums. It was a good question overall.
In addition, why would a retiree renting an apartment automatically be "wrong"? If you're going to complain about people's posts (which is getting increasingly common from you), at least back it up with something constructive.
NO! NO BREAK FOR YOU!
As i mentioned, "I THINK" that retired folks should own the place they live in as opposed to throwing money away on rent. Also, "I THINK" if you plan properly, you will not have any car payments in retirement because your expenses should be minimized before you enter retirement, and having a car payment goes against that.
any car payments in retirement because your expenses should be minimized before you enter retirement, and having a car payment goes against that.
What? If you are retired for 20 plus years, chances are you will have a few cars during that period, so just saying "have a paid off car" means that you will be paying cash for each of those purchases, not that you will have the same car that you paid off pre-retirement for the whole retirement period and just hope it lasts.
Paying cash for each of them in retirement is alright advice, but the cash flow variability from year to year of living on investments instead of steady earned income may make more sense to have small loans; it depends on the person.
As i mentioned, "I THINK" that retired folks should own the place they live in as opposed to throwing money away on rent. Also, "I THINK" if you plan properly, you will not have any car payments in retirement because your expenses should be minimized before you enter retirement, and having a car payment goes against that.
What if the car payment is on a <1% car loan that the retiree does not want to spend up front? What if the retiree has plenty in their budget to lease a car every three years? Not to mention that most retirees will STILL have to replace their car at least every 10 years!
What if the retiree sells their house because they don't want to deal with the ownership hassels anymore? What if the retiree never achieves home ownership in their lifetime (such as can happen in a high COL area)?
I agree with this, I am not counting on SS being around when I retire. If it is, thats a bonus. That being said, the "inflation" variable is something thats difficult for me to wrap my head around. How much I need is a nebulous number--I plan to accumulate as much as I can. But exactly how much you need monthly (or yearly) at 65+ cannot be budgeted on todays dollars.
SS is an inflation hedge itself
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