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Old 03-27-2015, 11:23 AM
 
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Quote:
Originally Posted by Emigrations View Post
Since I make $58k, eight times this is $464k. This is a lot of money, and if you're debt-free, reasonably healthy, and retire around 65, that should provide for a decent lifestyle. A 4% withdrawal rate rate from that is only about $18k, but it seems like you're assuming that $464k has no growth at all and is just a static amount being siphoned from. One is likely to have other sources of income/wealth, like home equity (if they downsize, they'll save on property taxes, insurance, utilities, etc), some pension funds, possibly rental property.

I know a lot of current retirees who probably made less than $58k, have less than $464k in retirement accounts, and are doing fine.
Certainly the portfolio can continue to grow, but we are talking about balance at retirement, correct? "Withdrawal rate" is a function of current balance, not projected balance at some point in the future. Withdrawing at 6.6%, I would not count on the portfolio continuing to grow.
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Old 03-27-2015, 03:35 PM
 
Location: Eastern Washington
14,268 posts, read 44,963,902 times
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Quote:
Originally Posted by Emigrations View Post
As a spin off to the current thread about seniors and income inequality, when do you think one really needs to be "on-track," so to speak, in order to retire in the normal range, say between 60-67? Obviously the more you have the earlier, the better, but is there a point where someone who has zero saved will probably never get on track? If that age exists, is it 30? 40? If you're in your 50s and only have $50k or so, are you pretty much out of luck?

Assuming no windfalls, when do you think people can get really screwed from being behind the curve?
I don't think there is a numerical answer to your question. Depends on how much money you make, and when, and if any of that money is due to an equity stake in a business or similar.

Consider Colonel Sanders, who started up KFC when he was in his early 60's - not sure what he had in retirement accounts before then, but what came after meant he retired wealthy.

In general, the more you save and the earlier in life you save it, the more you will have in 401K or similar.

Also depends if you will get a pension. Most don't anymore, but some do.

Also depends heavily on how much you will depend on cash to live in retirement, or will you work part time, have some income generating properties, do a lot of DIY stuff such that you don't need a lot of cash coming in from retirement accounts?

For someone working for wages, no pension, 50 years old with only $50K in a 401K - yeah, I would consider that to be behind the curve, not necessarily fatally so though. The problem is that with so little time for market gains and/or interest to add to the account, say 15 years, you are essentially using the 401K as a "piggy bank" - you get out of it later what you put into it today, with little gains.

There is an example anecdote going around, 2 people with otherwise identical careers. One saves say 12% in the 401K from 20 to 25 and quits saving. The other starts at 25 and saves all the time till 65. Assuming something like a 7% rate of return, the one who saved from 20 to 25 has more money at 65 than the other person. I don't have this exact, but someone will post it up in all it's glory I expect.
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Old 03-27-2015, 03:49 PM
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Great thread here. I'm 25 and have begun getting serious about this lately.
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Old 03-27-2015, 05:55 PM
 
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Great thread and the posts from others give great hope to late starters. In my mid 30s I had a financial wipeout caused by excessive debt that set me back to ground zero and my only asset was a little 401K that was worth $25,000. Fortunately I had a steady job and understanding wife, and worked two extra jobs and got rid of the debt in a few years by reducing expenses a huge amount (bought clothes for the family at garage sales for $1 and ate 99 cent lunches) and by continuing to have very low expenses after the debt was paid off was able to save an amazing amount that I put into lowcost equity ETFs like SPY and QQQ nonstop and continued even through the 2008 crisis and now in my early 50s I have no debt and what I consider "significant" 401K and taxable accounts and on track to retire in my mid-50s. So from my personal experience retirement planning is not a slow and steady climb but it's an up and down and up process like a roller coaster but belt-tightening is an essential part of the pre-retirement equation.
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Old 03-27-2015, 07:41 PM
 
48,516 posts, read 83,999,418 times
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Quote:
Originally Posted by mathjak107 View Post
many were doing fine but are now having their money eaten away by soaring healthcare costs .

Many retirees didn't need much inflation adjusting around 72-80 because what they stopped doing tended to cancel out the rises in what they still did and bought.

actual savings amounts needed were far lower than the calculators that figured yearly inflation adjusting.

But soaring health care costs now are wiping away that lack of needing inflation adjusting in a big way.

lately 7% average increases in healthcare have been what we are seeing.

many will run short of money because of it way before they run out of time.
Well a lot of that was changes in healthcare ;meaning you were not sent home to die. Also most here retired can likely remember when healthcare insurance meant Hospitalization insurance. As care changes and suit were filed the medical profession bought insurance and started procedures to not leave anything undone if they could. Very few retirees had any insurance if they retired before 65 and Medicare.
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Old 03-27-2015, 09:29 PM
 
2,409 posts, read 2,643,635 times
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Quote:
Originally Posted by mathjak107 View Post
many were doing fine but are now having their money eaten away by soaring healthcare costs .

Many retirees didn't need much inflation adjusting around 72-80 because what they stopped doing tended to cancel out the rises in what they still did and bought.

actual savings amounts needed were far lower than the calculators that figured yearly inflation adjusting.

But soaring health care costs now are wiping away that lack of needing inflation adjusting in a big way.

lately 7% average increases in healthcare have been what we are seeing.

many will run short of money because of it way before they run out of time.
Doesn't Medicare cover most of healthcare costs anyway?
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Old 03-27-2015, 09:57 PM
 
48,516 posts, read 83,999,418 times
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NO. For that you need to buy additional Medigap to pay either all or some of rest that is the responsibility of Medicare insured. But he is talking about retire not 65 yet; I think. If you plan on retiring before 65 its a major expense as at older age you have increased risk. A heart by pass could easily be 20k your cost after Medicare.
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Old 03-27-2015, 10:28 PM
 
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Quote:
Originally Posted by texdav View Post
NO. For that you need to buy additional Medigap to pay either all or some of rest that is the responsibility of Medicare insured. But he is talking about retire not 65 yet; I think. If you plan on retiring before 65 its a major expense as at older age you have increased risk. A heart by pass could easily be 20k your cost after Medicare.
So what medical expenses after age 65 does Medicare not cover and how much do these cost per year on average?
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Old 03-28-2015, 02:52 AM
 
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medicare only covers 80% of COVERED expemses, plus a donut hole in prescription coverage. they cover up to 2900 or so in drugs ,then you are on your own for a few thousand , then they kick in again.


what is not covered :

alternative medicine, including experimental procedures and treatments, acupuncture, and chiropractic services (except when manipulation of the spine is medically necessary to fix a subluxation of the spine. A subluxation is when one or more of the bones of the spine move out of position);

most care received outside of the United States;

cosmetic surgery (unless it is needed to improve the function of a malformed part of the body);

most dental care;

hearing aids or the examinations for prescribing or fitting hearing aids (except for implants to treat severe hearing loss in some cases);

personal care or custodial care, such as help with bathing, toileting and dressing (unless homebound and receiving skilled care) and nursing home care (except in a skilled nursing facility if eligible);

housekeeping services to help you stay in your home, such as shopping, meal preparation, and cleaning (unless you are receiving hospice care)

non-medical services, including hospital television and telephone, a private hospital room, canceled or missed appointments, and copies of x-rays;

most non-emergency transportation, including ambulette services;

some preventive care, including routine foot care

most vision (eye) care, including eyeglasses (except when following cataract surgery) and examinations for prescribing or fitting eyeglasses.

Keep in mind that even for Medicare-covered services, Medicare does not usually pay 100 percent of the cost.

they only pay up to a certain number of days stay a year in a hospital.

projections are a realively healthy couple will go through 220k over their retirement on healthcare costs.

just medicare and gap insurance can run 10k a year for a couple with an f-plan depending on location plus all the other things not covered by medicare. a gap plan only covers covered charges.. a couple can be looking at about 17k a year in out of pocket stuff. .

gap plans are priced wildly by state.

here are some rough guess's by fidelity, not all charges will apply to everyone . i know just our dental for the two of us the last few years has been running 5 digits by iself. and we ain't talking a cents column.



Medicare 'A' premium
(There is usually no cost for Medicare A premium if a you have worked at least 40 quarters over your lifetime.) $ 0

Medicare 'A' deductible $ 29

Medicare 'A' co-pay $ 6

Medicare 'A' skilled care $ 11

Medicare 'B' premium $ 102

Medicare 'B' deductible $ 9

Medicare 'B' co-pay $ 105

Other misc $ 82

Dental/Vision/Hearing $ 49

Medigap $ 229

Prescriptions $ 100


Total per month $ 722 = 17,328 for a couple. in our area an f-plan is 261 from aarp and goes up from there.

This breakdown of health care expenses was estimated using Fidelity's Health Care Cost Calculator


we will likely clock in just under 20k not including dental , with me on cobra until 65 , marilyn on medicare and a gap plan and our long term care policy.

Last edited by mathjak107; 03-28-2015 at 03:23 AM..
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Old 03-28-2015, 06:28 AM
 
Location: New York Area
15,966 posts, read 6,283,568 times
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Quote:
Originally Posted by Emigrations View Post
As a spin off to the current thread about seniors and income inequality, when do you think one really needs to be "on-track," so to speak, in order to retire in the normal range, say between 60-67? Obviously the more you have the earlier, the better, but is there a point where someone who has zero saved will probably never get on track? If that age exists, is it 30? 40? If you're in your 50s and only have $50k or so, are you pretty much out of luck?

Assuming no windfalls, when do you think people can get really screwed from being behind the curve?
I think people need to live within their means at all times. If they're still, on a net basis, wracking up debt after their student days, they need to rethink their ability to afford their life style.
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