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To the OP: despite everyone else's opinion, I find that having some serious CASH always available is a very calming and reassuring thing. That means in a safe, not in a bank. You just never know about banks.
We both retired 2-1/2 years ago. I was 65, wife was 63. I had owned a business prior to that, so I didn't actually "retire", I just sold the business. However, I retain an interest in it, and will be a perpetual employee for lifetime, in order to keep the high-end medical and life insurance for self and spouse. Neither one of us wants Medicare. We have seen the horror stories, with family members.
We have no mortgage and no debt. But that's pretty much the way we have always lived. Both of us were always frugal, and yet...we have lived a very good life. Certainly, we can have nearly anything we want now, in retirement. We did move to Maine, a state that we both love. It has reduced our COL quite a lot. Now we have a new vacation home in TN, which looks promising.
I agree with the foregoing about budgeting, and separating "wants" from "needs". But I still advocate a large cash reserve, under your own control. You just never know what will happen. Medical bills, a totaled car, a new roof, a grown child who has fallen on hard times and needs help...all things that you can't plan for, and which could throw a monkey wrench into your best-planned budget. Having that "cushion" makes for sound sleep, indeed!
What horror stories are there re Medicare?
I personally haven't had one problem with Medicare. It is very similar in quality to my prior health insurance.
I'd be more worried that your health insurance company might simply drop out of offering health insurance to those 65+ than perceived problems with Medicare.
I do understand the feeling of confidence that comes from "cash." I like to have at least 6 months available. For me cash takes on different meanings. I don't think green pieces of paper are any more secure than money in an FDIC insured bank account. In fact I have pretty much given up handling paper or metallic money. $100 in paper can last me for many months. I use a credit card for even very small purchases. I get double points. I have the convenience. I have complete expense tracking without the need for any receipts. The report even does an almost 100% reliable job of sorting my expenses which helps at tax time.
If you do not trust a bank account, I do not understand why you would trust paper money.
We did a similar exercise to that of Mathjak. We produced a budget from the ground up. Starting with all our expenses that we could itemize including everything from our housing, utilities, food, insurances, auto expenses (including periodic things like new tires, etc), pet costs (including a vet contingency fund), dining out, entertainment, etc.
Then we figured out what our various sources of income (pensions, small annuity, rental income, SS) would produce and when they would begin, and end (I have a temporary annuity from a past employer). I did a timeline chart in the form of a horizontal bargraph, stacking the incomes to indicate our total cashflow at any given year in the future. This allowed us to see what our income would be if we delayed one or both SS or sold our rental home, etc. With a little rejiggering we were able to establish a relatively flat income stream over the years, with a boost coming when each of us starts taking SS. With this done, we were confidant that our income stream will support our needs for life. Med insurance is not an issue, thank you former employers. As the younger spouse, I also carry a LTC policy for myself. I AM the LTC policy for DH. LOL!
We have found that purchasing our new retirement home has been a bit more of an investment than we intended due to deferred maintenance that we are having to take care of now. Our savings is taking care of that, and since we can't travel much right now anyway, we are okay with that. Our investment dividends are all reinvested for now and left to grow. We will start to draw on our investments as our travel money or for special purchases in the future. They are not enough to impact our lifestyle right now anyway.
the big difference about going from the ground up is that level of descretionary income you build in.
by doing so it forces you to buy less house or cheaper cars since many of us could buy a lot more expensive homes , live in better areas with what we can generate . but then most of the budget ends up being a non discretionary expense and then you get the issues that go with that when it happens.
from the ground up lets you design in a spread between the two unless you are already so locked in that everything is non discretionary.
in which case using equities can be a big risk and inflation will bite you a lot harder.
if i was in the position of having little discretionary income my plan would be to use
cd's , short term bonds and TIPS and plan on no more than 2% inflation adjusted withdrawals. since if my budget was that tight legacy money wouldn't be an issue as much as income so i would add an spia immediate annuity to the mix down the road because the income is greater than you can do on your own
Last edited by mathjak107; 05-22-2015 at 08:48 AM..
It appears that most people have done planning similar to mathjak although quite likely not as extensive as his.
I developed a retirement model for us 11 years ago and have very much stuck to it since then. The major difference is that my pension and social security provides the majority of our income. We do have an IRA and it pays a very nice New Years bonus (started w/d from it at age 67).The remaining portion of our income is from the business that my wife and I started 10 years ago (as part of the model). We do not rely on it for any day-to-day expenses nor really for anything else but it is there for whatever.
to be able to live nicely and not be dependent on the market and interest rate gods for our paychecks must be wonderful.
i think my dream plan for my wife if i am gone would be an annuity for a nice juicy income , life insurance for heirs and giving away most of her money to the kids , grand kids and charities.
I see a lot of threads here talking about retirement. My husband is retired at (52-53 can't remember exactly) and hopefully my turn will come soon. It's part my fault since I don't feel I have enough. Even though I know everyone is different, even in different in different parts of the country. I"m curious, if you are retired or will soon be please post at what age, state, cash flow from different sources (pension, social security, investments), debt and mortgage if any. I want to see where I stand in my plans or if I am being overly concerned and won't let myself relax enough to retire.
I retired at age 64 due to health problems (I needed eye surgery due to glaucoma). I live in central NY state. Cash flow is not wonderful but it pays the rent, puts food on my table, etc. I went through a couple of job down-sizings which adversely affected my income during that time and also adversely affected my retirement money. The first down-sizing occurred when I was 52 when I had moved to another state for a job with the company I had worked for for 25 years. They had an office/plant in that city and there was a job for me there. However, it suddenly was "no longer available" for me after I got there. After a year of attempting factory work in their plant (I was pretty lousy at it) I returned to Syracuse only to be told I had nothing to offer them (after 25 years). Took some classes and became a medical transcriptionist for about 13 years and another down-sizing (a woman my age and I were let go). Did a short term per Diem. Found a p.t. transcription job. Then the eye problem. During these years, income was low and bills were high. Lots of medical that my insurance did not cover.
Currently looking to relocate out of state. Was looking at NC but now focusing on VA. I don't need a lot. I've gotten used to living with a limited income and don't feel sorry for myself anymore. I'm grateful to be alive and able to do what I can do.
That's my story and I'm sticking to it.
I see a lot of threads here talking about retirement. My husband is retired at (52-53 can't remember exactly) and hopefully my turn will come soon. It's part my fault since I don't feel I have enough. Even though I know everyone is different, even in different in different parts of the country. I"m curious, if you are retired or will soon be please post at what age, state, cash flow from different sources (pension, social security, investments), debt and mortgage if any. I want to see where I stand in my plans or if I am being overly concerned and won't let myself relax enough to retire.
I think instead of asking what others did you will get better opinions if you give your information for the sources of income and your estimated expenses. At 52 you could be retired for 40 years or more so you investments would have to be several million or else you have a good pension. Remember the pension could be in ended or reduced if the payer ends up in financial difficulty.
if you look on the chart i posted you will see for 40 years success rates fall a lot vs 30 years. you need a lot more of a savings or a lot less in withdrawals .
while dropping from 4% to 3% does not sound like much that is a 25% pay cut .
at 4% 50/50 has failed to many times to be considered a high rate of success.
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