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My thought is that over preparedness is better than being unprepared. Do you want to over or under shoot.
I think that's an oversimplification of the problem most people face. Overpreparedness, in this context, prompts decision-making that could adversely impact the overall aim of preparedness. As with most things, balance is the key.
I am not a believer in conspiracies. I think Lee Harvey Oswald killed Kennedy, case closed. However every time there is an article on retirement savings or SS like:
"You must have 8 times your pay in retirement savings"
" Only take 4% per year in withdrawals"
"Delay SS until 70.5"
The board lights up with "financial institutions want you to have more money so they make more money" and the "government hopes you die before 70.5".
Is this just good advice or do you believe there is an alterative motive to all these articles?
The short answer is that all of these articles are written about someone else. Keep in mind there are trilions of different outcomes because there are so many rules. These articles are written for a hypothetical audience that may not include you.
The best source that I have found is Laurence Kotlikoff, mainly because he answers his email and I haven't seen him write anything politically movitivated.
You can't ignore the politics of the system. Today someone who is 67 expects to live longer than Social Security pays full benefits. Yeah, yeah.. the system will change blah, blah, blah. The reason that you should delay to 70.5 is that benefit levels are higher. These articles assume that SS will be changed in favor of 70 year-olds.
It is easy to hurt yourself here. If you defer, chances are that you are going to deplete your outside savings. That will mean that while you get more SS benefits, you are more dependent upon the system and subject to changes to the system which are out of your control.
If you start collecting sooner, you will preserve some of your outside savings, but keep in mind that outside savings make trigger Social Security's means-test on people with 'substantial outside savings'.
I think that's an oversimplification of the problem most people face. Overpreparedness, in this context, prompts decision-making that could adversely impact the overall aim of preparedness. As with most things, balance is the key.
And just what is the overall aim of your preparedness? I know what mine is and my decision making in retirement is consistent with. Isn't that the goal and name of the game. We as individuals designate targets based on our retirement wants balanced by our working resources to provide/create? I mean getting there is in some ways a collective endeavor but isn't the goal setting more individual? Yes I am what many would consider over prepared but that's the way WE want it. We are blessed to be there now and with the good Lords continued guidance hope to stay there. Yes for some faith is part of retirement planning.
You do realize, though, that in this latest message you've acknowledged personal value in over-preparedness, in the same way others place value on family, travel, etc. For many, if not most, people, preparedness is not a goal in itself but only a means to an end.
Yes to both of you. I didnt bring in the quotes as I believe that both of you are pointing at the same thing in different ways. Tuborg you are in most respects absolutely right that we and I will do as you did WE need to plan and prepare for the eventuallity we will live once we are retired. bUU is correct in that the how it is described is a bit oversimplification but we are talking in general terms here. Caco54 didnt give any specific information as to their situation and finances. His/her question was more or less rhetorical in nature specifically to ascertain and assess his/her own situation. Everyone needs to decide based on resources and needs how best to proceed.
The best source that I have found is Laurence Kotlikoff, mainly because he answers his email and I haven't seen him write anything politically movitivated.
I think that his financial advice is among the worst, especially that regarding consumption smoothing, and that most of what he writes is politically motivated:
The short answer is that all of these articles are written about someone else. Keep in mind there are trilions of different outcomes because there are so many rules. These articles are written for a hypothetical audience that may not include you.
The best source that I have found is Laurence Kotlikoff, mainly because he answers his email and I haven't seen him write anything politically movitivated.
You can't ignore the politics of the system. Today someone who is 67 expects to live longer than Social Security pays full benefits. Yeah, yeah.. the system will change blah, blah, blah. The reason that you should delay to 70.5 is that benefit levels are higher. These articles assume that SS will be changed in favor of 70 year-olds.
It is easy to hurt yourself here. If you defer, chances are that you are going to deplete your outside savings. That will mean that while you get more SS benefits, you are more dependent upon the system and subject to changes to the system which are out of your control.
If you start collecting sooner, you will preserve some of your outside savings, but keep in mind that outside savings make trigger Social Security's means-test on people with 'substantial outside savings'.
Joe, why are you posting this stuff? Most everything that you have said is incorrect.
For example, you seem not to understand the difference between "someone who is 67 expects to outlive" and "the life expectancy of a 67 year old exceeds . . ."?
No competent advisor suggests delaying SS til 70.5 -- the key age is 70.0
Chances are that you won't deplete your outide savings by waiting for SS unless you are a real meathead. The idea is that you will reduce them (not the same as deplete, unless somebody is trying to spin something).
The SS means test does not depend on the level of outside savings -- it depends on the level of other income . . .
And on it goes.
Really, who is behind your blog and its misinformation?
I'll likely retire from full-time work, hopefully from all work, at the end of next year (I'd be 66+). At that point I'll have saved just about 5x my annual salary level at retirement, in my 401k. No other investments, other than an apartment.
With the estimated monthly amount I expect to receive from Social Security, and drawing down just 4% annually from my 401k ... I think I can live comfortably, but not lavishly (I don't live "lavishly" now).
My family health history isn't good and I've already had heart surgery (stents) and prostate cancer (thus far successful surgery - about 6 years ago). My father died at 44, my mother at 52, my older sister just died last week at 66 and my 67 y.o. brother has had serious bouts of cancer.
I recently listened to an interview on NPR with someone who seemed to understand statistics, investments, etc., and I think I heard him correctly when he said 50% of us don't make it to our average life expectancy age and when we take into consideration family and personal health histories ... many of us may be skimping a bit too much in retirement to amass a larger pool of funds, to make our money "last" until our last day on Earth.
As I get closer to my retirement and think about the mortality issues, I've been looking at the savings/retirement issue a bit differently. Although I'm in reasonably good health in comparison to other family members, past and present, I expect my health will probably deteriorate ten years from now (if I'm lucky to last that long). So I want to enjoy a different, less stressful lifestyle in the interim, starting with retiring next year. Though my mortgage is less than the market value of my condo, I'm still underwater (when I consider purchase price and improvements) by over $100,000. I could probably sell the condo and get back maybe $50,000 in the next year or two if the real estate market continues to gain strength.
Nobody is going to die and leave me an inheritance, so my 401k and Social Security monies will have to maintain the lifestyle I choose to live.
Yes, it's the principal interest of the brokerage houses and mutual fund managers to have us continue to invest in and/or maintain our accounts at as high a level as possible. But if we spend some time reading and researching these issues we see that there's some threads of truth and good advice which some of them give us. Good investment advisors will most always offer conservative advice. My 401k account is with Vanguard. 15 years ago Vanguard was advising that it would be okay to draw down 8% a year. Today the advice is 4%. I have no criticism with the Social Security Administration and the advice it offers; it's basic common sense IMO.
The truth is, however, that relatively few people are saving for retirement. It's as if people think an Angel will descend and provide for them. So all of this discussion, if it does nothing else ... maybe it will cause some people to more carefully consider their situations and make a correction for the better.
I think that's an oversimplification of the problem most people face. Overpreparedness, in this context, prompts decision-making that could adversely impact the overall aim of preparedness. As with most things, balance is the key.
Most people are not in danger of saving too much for retirement, so I don't see the problem.
What you're saying essentially implies that there is no point in preparing for retirement since most people won't ever be prepared.
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