Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I wonder if some of these folks who are struggling live in a very high COL place like NY, NY, MD, CA, etc.? Almost like they refused to move for whatever reason, never downgraded their homes after the kids moved out, and still pay an outrageous amount in taxes/utilities?
Maryland is not a high COL place if you don't have much money. For example, we don't tax groceries or medications. Real property taxes are also reduced for those with low income.
Maryland is not a high COL place if you don't have much money. For example, we don't tax groceries or medications. Real property taxes are also reduced for those with low income.
Also depends on where in the state you live and local housing cost.
Maryland is not a high COL place if you don't have much money. For example, we don't tax groceries or medications. Real property taxes are also reduced for those with low income.
But what if you don't qualify for that? Is it expensive to live there for an average income family? There are many retirees from Maryland in my subdivision. They claim housing costs alone were outrageous. For example, the mortgage on a very modest 1,000 sq ft home in/near Silver Springs was over $2,500.00 and the property taxes were also high. They've also made comments about the utilities being high. Let's just say they were glad to move away from there. I couldn't imagine.....yikes.
But what if you don't qualify for that? Is it expensive to live there for an average income family? There are many retirees from Maryland in my subdivision. They claim housing costs alone were outrageous. For example, the mortgage on a very modest 1,000 sq ft home in/near Silver Springs was over $2,500.00 and the property taxes were also high. They've also made comments about the utilities being high. Let's just say they were glad to move away from there. I couldn't imagine.....yikes.
Housing costs in some areas are very high. However many a senior or near senior benefited from the housing cost run up when they cashed out at retirement. In part it helped pay for their New Bern retirement.
But what if you don't qualify for that? Is it expensive to live there for an average income family? There are many retirees from Maryland in my subdivision. They claim housing costs alone were outrageous. For example, the mortgage on a very modest 1,000 sq ft home in/near Silver Springs was over $2,500.00 and the property taxes were also high. They've also made comments about the utilities being high. Let's just say they were glad to move away from there. I couldn't imagine.....yikes.
Housing costs in some areas are very high. However many a senior or near senior benefited from the housing cost run up when they cashed out at retirement. Salaries in those same areas were higher than the national norm and helped boost SS, savings and pensions if they had them. If retired they are probably thankful for now.
I wanted to call out these two items -- yes, they are correct today as costs that disappear in retirement. But the government has changed similar rules in the past. And both of these "sacred cows" have been bandied about lately as potentially subject to change.
(1) Payroll taxes.
The federal government has already broken the glass wall on this in a general sense. It used to be that only wages were ever subject to payroll taxes. Now, the Medicare portion of the payroll tax applies (for some taxpayers) to all types of income: ordinary income, capital gains, dividends, interest. I think it is probable that this taxation will soon be extended to more and more taxpayers (via lower thresholds), and then I think the same strategem will be applied to the Social Security portion of the payroll tax.
Can you explain how the medicare tax one pays is based on cap gains, div and interest. I never heard of this.
Did anyone mention emergency funds for catastrophic events (tree falls on house, the car needs a major repair, refrigerator goes kaput)
I can sort of see what the op is saying but she has a different mentality about life, I'm guessing. She is content with what she has and can be happy with a simple life. I'm much that way myself. I like being at home puttering around, reading, cooking, doing a little yard work...Boring...just the way I like it.
Before you drop dead at 99, you will most likely have to have living assistance in the form of assisted care or memory care. This will be quite expensive. Along the line you will have to trade cars at least once, pay for most of your catastrophic dental care, pay real estate taxes, feed and clothe yourself, and purchase the services of people to do the things you can no longer do.
And then there is the practically zero raise in your social security and the probable flat line of your present pension, if you have one. Inflation will eat into your budget and require you to dip into savings.
I received a small inheritance recently. I am investing the bulk of it. I really don't want to die poor.
I know lots of people with NYS pensions who have retired at 55 or 56 and live comfortably. They look forward to adding in SS at 62 or 66. Having a NYS pension is like having $1-2 million in a 401k only better. It's for life ... and for your spouse's as well if you take that option; it's fiscally sound; and it's protected by the NYS Constitution. It's also tax-free if you continue to live in NYS. I know because I have one, too. That puts you and me in an entirely different ball park than the lady that you referenced in your post who had no pension at all, only a 401k.
We've talked about this before. Your roots are NY and you love it. I do not. I also have not made a lot of money for enough years to be getting a 'comfortable' pension. Without SS, I cannot retire. My tentative retirement date is May 31st. I will be 62.5 years old and will be taking the SS hit. So be it. Contrary to my extreme desire, I will not live forever. If I get out of hand, my younger sisters will probably euthanize me.
The lady with the 401K will probably be just fine - very vague, but that is my intuition.
1. No more 7.65% payroll taxes
2. No more $1,500 monthly 401(k) contributions (or whatever)
3. No more IRA deposits or pension plan contributions.
Bottom line, when you retire you can stop saving for retirement. For many, that means 75 or 80% of pre-retirement income is the SAME disposable income when retired.
Also, a newly retired 62 year old spends more than a 72 year old or an 82 year old, on average. Spending tends to decline in retirement, on average.
Also your formula totally ignores investment income; I say you can average 9% on a diversified portfolio, take 5% for income and still have some growth in capital AND income to offset inflation. So if you have capital of twenty times your annual net cash need after SS and pension, you can invest on a permanent endowment basis. But you have to do the investments right.
Also, if your spending is so restrained that SS takes care of most living expenses, you HAVE a big inflation hedge as SS is indexed above the COL.
My opinion, it is a free country, you can disagree.
in retirement the one thing you have that you didn't have while working is TIME. for many time cost money. i know with us we can't go anywhere without it costing us money. our budget early on is greater than while working. if time cost money the one thing we will have plenty of is time.
we also do not know if spending amounts changes as we age ,there has never been proof of that. many times spending merely shifts from spending on ones self to spending on kids and grandkids as we age or medical costs and or long term care costs..
there is a huge flaw in the idea we spend less as we age . the flaw is we assume that folks spend less because they want to or it is natural to do so.
but more often than not it is a forced spending cut as they age. assets start to run thinner , they have health issues and need to keep more powder dry, they become more nervous about outliving their money, etc etc.
but those with the resources may not cut spending at all they just change patterns.
you could say for many if they have the money they will continue to spend the money.
don't forget the BLS study is flawed as well.
80-90 year old grew up in another culture being depression kids. they may have spent less their entire lives than the 60-70 year old group and really have not changed at all now that they are 80-90.
the 60-70 year olds have higher ss paymments , higher pensions and due to 401k's and profit sharing may have bigger nest eggs. they show they spend more than 80-90 but they have more to spend.
unless you followed a group all the way through i would not assume you spend less as you age. medical costs and long term care costs can make that untrue all to easy just by themselves.
Last edited by mathjak107; 04-25-2014 at 04:19 AM..
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
For example, we don't tax groceries or medications. Real property taxes are also reduced for those with low income.
