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Old 09-22-2013, 07:52 AM
 
Location: Woodbury, MN
1,465 posts, read 1,533,501 times
Reputation: 1885

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Wow! A lot of information in this thread, "How much money do you plan to retire on?". It took me weeks to go through this thread, since I also read many other posts on the City-Data forum. It's an old thread, about six years old now, but still very relevant today. Maybe some of the early posters that were nearing retirement and now retired, if they met their goals and what retirement is like for them now.

I think you have to start your preparation for retirement very early, as early as possible. Earning a good income and living on a fraction of that income is essential. My wife and I are a good example of exactly how you can accomplish that goal.

In my 20s and 30s I wasted those decades working as a customer service representative for many companies earn low wages, working lousy hours, with lousy benefit and lousy working conditions. At age 40 I radically changed that and got a 2 year AAS degree in Computer Networking. I graduated in 1 year and 1 quarter to accelerate the process, graduating with a high GPA. After working in IT for ten years, I increased my earnings by four times. The work was actually easier and the working conditions were better.

My wife came here from Vietnam a little over 20 years ago. At that time she was thinking of being a janitor, since that would give her a life much better than she had in Vietnam. Her brother told her to go to school for IT, which she did. She transformed her life about 20 years ago, making a high income.

You need to straighten out your financial life. I used to always have a credit card balance just like most Americans. Today, we have no debt. We paid off our house in 10 years about 3 years ago. We buy new cars, but keep them 15 years, and pay for them with cash saved ahead of the car purchase. We have no credit card debts that are not paid off monthly. No other debts. We live on about $4K per month, but earn several times that amount. We max the retirement funds, plus save extra money. If you can live on less than what you earn, that will make it easier to get a better feel for what it will be like in retirement, and allow you to save more for retirement, so you can actually live on more in retirement than you're used to in your working career. There's a lot of people who spend all they earn, buying things they don't need, like luxury cars.

We both work for major employers in Minnesota, which are stable and both have pensons. When we retire, the pensions will pay us about $4K a month. In addition, the retirement accounts are over $1M now, which could produce more income, which we may defer collecting. We will defer social security, which will provide even more income later. The extra money should help offset costs if we live 20 years into retirement when the costs might double by that time.

I think doing budgeting down to the penny is unrealistic and the budgets will actually differ from those numbers anyway. A general budget is good though. Saving money by turning off lights and not flushing the toilet is absolutely unacceptable to me. Using CFL and LED lights is a wise idea if the lights are used many hours a day. If you can live without cable and replace it with local channels and Netflix, it will save you a lot of money. On cable, you typically watch movie from the middle of the movie, on Netflix, you watch movies from the beginning. It's also very annoying you have to subscribe to hundreds of channels you don't want to get the few channels you do watch. It also helps to record all the TV programs you watch and skip the commercials, this saves you 20 minutes per hour. I typically never watch commercials when watching TV. The local news is on when we want to watch it, not when it is scheduled. We can also watch many different news broadcasts, not just one network. Improving TV really improves your life, unless you are one of those rare people that never watch TV.

It makes more sense to simply invest in yourself with education that has a high return on investment. Most majors in college have zero or a poor return on investment. There's also a lot of college level free education available on the Internet, which did not exist in my younger years when going to school. It makes no sense to go to college and later work at a job making the same income you could make without going to college. I see a lot of people who made that huge mistake. You have to select the major that has a good return on investment, even if it isn't something that is not your ideal career. If you didn't improve your ability to earn a higher income, and haven't saved a lot of money when you were younger, it gets harder to do that every year you get older. It is tough to make that type of change in your life at age 40, but I did it.

I'm not sure if the 4% withdraw on the retirement savings is the correct amount. I think the assumption here is that the fund will grow at an average of 4% per year, leaving the principle untouched. I don't think it necessary to pass the money onto the next generation, and you can't take the money with your when you die, so maybe that percentage could be higher.

One thing that can really screw up your whole plan is health care, even if you've saved a lot of money. There are people that we know that had major medical events, like a stroke, which drastically changed their life. An accident can also change your life in seconds with no warning. I think you can cover some of this risk if you believe and put it in writing that you only want to be kept alive if you're quality of life is at a certain level. For me, a condition which would not allow me a good quality of life is not worth living. I think everyone needs to think about those issues and put it in writing legally. Most people never do that while they can do that.

So how much money does it take to retire? It depends on how you live as many people already posted. Living on $1k to $2K a month would be tough compared to the way I live now. A higher income stream opens up a lot more options and raises your standard of living. The 'key' to having enough money for a good retirement is to invest in yourself so your can have a higher income earning career. You should work long enough so you never have to go back to work in your 70s to a low paying job flipping burgers or greeting people. However, you should work too long, or you won't have a retirement!
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Old 09-22-2013, 08:36 AM
mlb
 
Location: North Monterey County
3,181 posts, read 2,856,933 times
Reputation: 4876
So how much money does it take to retire? It depends on how you live as many people already posted. Living on $1k to $2K a month would be tough compared to the way I live now. A higher income stream opens up a lot more options and raises your standard of living. The 'key' to having enough money for a good retirement is to invest in yourself so your can have a higher income earning career. You should work long enough so you never have to go back to work in your 70s to a low paying job flipping burgers or greeting people. However, you should work too long, or you won't have a retirement!


We live on 2K very well. The rest goes into retirement. Has for over 13 years. We are generating more income in retirement than we have had during our working years.

Higher income earning careers are not key. Living below your means is. No matter what that number is.
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Old 09-22-2013, 08:56 AM
 
50 posts, read 112,651 times
Reputation: 21
This is a great thread.
I'm 56, and I'm trying to find a way to not need a job, being that the market where I live is seasonal and the most you can expect to find is a low paying, less than my qualifications type job (that's probably the case everywhere). I do still have my own business which doesn't do too bad, but far from paying the bills. My husband is 10 yrs older, gets a pension and social security, and not bringing in any additional income.
Ok, so if we sell our house, buy something less expensive for cash, I'm worried that all other expenses will still eat at our savings, so obviously a major life change is in order, in particular moving somewhere south where I know no one.......anyone have similar woes and found a way out?
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Old 09-22-2013, 12:30 PM
 
29,782 posts, read 34,871,258 times
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It is one thing to get your budget inline with revenues when you first retire. The challenge is keeping it that way over the years. You can only keep cutting so much. Compared to previous decades inflation has not roared it's ugly head but low interest rate policies can only be around and effective for so long. Regardless what we personally think it is the most likely future direction is up.
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Old 09-22-2013, 01:31 PM
 
Location: Woodbury, MN
1,465 posts, read 1,533,501 times
Reputation: 1885
Quote:
Originally Posted by mlb View Post
So how much money does it take to retire? It depends on how you live as many people already posted. Living on $1k to $2K a month would be tough compared to the way I live now. A higher income stream opens up a lot more options and raises your standard of living. The 'key' to having enough money for a good retirement is to invest in yourself so your can have a higher income earning career. You should work long enough so you never have to go back to work in your 70s to a low paying job flipping burgers or greeting people. However, you should work too long, or you won't have a retirement!


We live on 2K very well. The rest goes into retirement. Has for over 13 years. We are generating more income in retirement than we have had during our working years.

Higher income earning careers are not key. Living below your means is. No matter what that number is.
I think you are correct. Living below your means is the key to saving enough money for retirement. However, If you can invest in yourself and increase your income level, then living below your means is a whole lot easier to do. I wasted a couple decades of my life before I turned my life around. If I would have learned those life lessons earlier, I would probably be retired 6 years earlier.
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Old 09-22-2013, 03:13 PM
 
2,038 posts, read 1,948,524 times
Reputation: 3449
Quote:
Originally Posted by davephan View Post
I think you are correct. Living below your means is the key to saving enough money for retirement. However, If you can invest in yourself and increase your income level, then living below your means is a whole lot easier to do. I wasted a couple decades of my life before I turned my life around. If I would have learned those life lessons earlier, I would probably be retired 6 years earlier.
It's amazing how far you've come from when you were 40. What age do you anticipate to retire? Do you mean if everything you worked out you would be retired 6 years ago from today or 6 years earlier than your anticipated retirement?

Last edited by fumbling; 09-22-2013 at 03:22 PM..
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Old 09-22-2013, 07:40 PM
mlb
 
Location: North Monterey County
3,181 posts, read 2,856,933 times
Reputation: 4876
I'll be happy to be able to stay in the middle class when I am retired.

Again - not everyone can have a "high income career"... and with the way the economy has been - a lot of people - even those who had high income careers - are treading water trying to keep that which they saved - many - and I know quite a few people - have had to cash in their retirement - because they've been out of work for so long.

I think it's going to become very obvious in the next 10 years as the boomers age - that we are in a world of hurt because people cannot retire - or are retiring and they do not have enough to survive on.
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Old 09-22-2013, 10:04 PM
 
Location: Woodbury, MN
1,465 posts, read 1,533,501 times
Reputation: 1885
I was thinking of retiring at 62, but I recently decided to keep working till 65, since I would take a 30% reduction on my pension at 62. So I've got 6 years to go from now.

I've heard the stories on the news about many people that had very good paying jobs, lost them, and could find anything close to the same income level. I have a couple friends who are also IT professionals who have been out of good IT jobs for years and can't get another good IT job. There might be some luck mixed into the situation too.

Although my wife, who is also an IT professional knows several people who got laid off in recent years from IT jobs, and all of the found new IT jobs very quickly at the same pay level.
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Old 09-23-2013, 03:32 PM
 
Location: Mount Airy, Maryland
10,461 posts, read 5,928,514 times
Reputation: 16156
Quote:
Originally Posted by macarpenter View Post
This is a great thread.
I'm 56, and I'm trying to find a way to not need a job, being that the market where I live is seasonal and the most you can expect to find is a low paying, less than my qualifications type job (that's probably the case everywhere). I do still have my own business which doesn't do too bad, but far from paying the bills. My husband is 10 yrs older, gets a pension and social security, and not bringing in any additional income.
Ok, so if we sell our house, buy something less expensive for cash, I'm worried that all other expenses will still eat at our savings, so obviously a major life change is in order, in particular moving somewhere south where I know no one.......anyone have similar woes and found a way out?
I'm kind of in your situation. I'm 54 but have been trying to plan for a while. Not sure where you live but here in Maryland the cost of living and taxes are very high. So the plan is to cash out this big old house (literally) move to neighboring West Virginia, and buy a home at half the price and 1/4 the taxes. That additional $150,000-$200,000 will help supplement our retirement.
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