What's The Number (married, support, benefits, security)
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When I got serious about retirement my goal was to adjust my life style so we could retire comfortably without any savings at all. Not one dime of savings.
Some of the changes we made, selling our old home and buying one half the size, turned out to be great moves because there's less to clean. Two people should be able to tough it out in 1,400 sq ft.
We did save some money but we don't consider that in our retirement planning because each of us are leaving that to the surviving spouse be it ten, twenty or thirty years down the road. Savings to me doesn't matter.
We're close to Thomasville, Georgia just 30 miles north of Tallahassee so we're not totally in the woods.
For comparison sake Santa Clara County has the highest median household income in the nation, at $93,500 compared to Thomasville, GA which came in at $29,103. Nassau, New York has a median household income of $93,696.
I can tell you my wife and I can live better in Thomasville, Georgia on $40,000, this would be the amount left after paying all health insurance and supplements, than if we were in Santa Clara with an income of $80,000 and I know because I was born in Redwood City and grew up in Santa Clara going to Wilcox High School right after it was built.
As I said $40,000 here is equivalent to $80,000 there so it isn't a matter of dollar amounts but where you live.
I'm always concerned with the retirement number, and am never comfortable with what I read - the financial planning sites tell you to save huge amounts, and my calculations based on my living expenses bear no resemblance to those projections. So I worry that I'm doing it wrong. When I read the numbers ($2 - 3 million!) people think they need, I worry that I'm way off base with mine, though I do understand that it is different for everyone. I worry a lot. But my current living expenses are less than a third of my income (excluding taxes), and have been so consistently for a couple of years. I can do this because I got rid of debt and mortgage - freed up lots of income for savings, and I have more stuff than I need (though I bought a new bike today!).
I have three retirement numbers (exclusive of SS, which for me will be small). I am currently saving more than half my income, and will be very lucky if I don't get laid off in the next few years in my unstable industry- hence the three numbers, to account for different retirement scenarios. I expect SS to be my buffer, and for a few extras depending on annual economic conditions.
The first is a baseline number ($500k) that covers basic living expenses, and will accommodate only a very minimalist, frugal life. I think it is useful to calculate that baseline number - job loss happens, and it's good to know what you need to cover the basics indefinitely if you have to go into survival mode. My second number ($650k-ish) will cover my current living expenses (simple living, few extras because I'm in saving mode). The third is the number I'd like to have ($800k plus), because I love to travel and eat out. Not likely I will get that third number, and I don't want to work for too many more years. I might as well die in the cubicle if I wait that long, because I'm sick of my job. I think it's realistic for me to end up with $650 - 700k-ish, but I'm not counting on it.
I have that baseline amount, which is a big relief because I know I can survive on it if I need to. I'm closing in on the second number in the next 2-3 years. The third number ($800k) is still far less than financial planners say I need, but it's enough to do what I want. I assume a 4% withdrawal rate of the balance as of the beginning of the year (just to make it easy), meaning some years I will have to reduce my spending. I can be flexible and frugal as needed, and will have SS as a buffer - though I hope to put off SS til 67 even if I retire at 62. I prefer to live very simply, so my basic living expenses will always be low. I like reading, walking, cycling, and my cats - even the baseline retirement will accommodate these. I can have a good life with any of the three scenarios.
I am aware that future medical costs could totally ruin these plans. Don't know what to do about that, except move to Panama or Mexico where medical costs are cheaper. I'm saving as much as I can, but I expect that, as for many people, the time of my retirement will be determined by my employer.
^^^^^^^^^ If only everyone were as disciplined, rational, and clear-headed as you, MissMischief, the world would be an infinitely better place.
I agree! MissMischief, your plan makes a lot of sense. If only the cost of health care wasn't such a wild card. I worry about that too, but figure we will just have to deal with it when the time comes.
I agree! MissMischief, your plan makes a lot of sense. If only the cost of health care wasn't such a wild card. I worry about that too, but figure we will just have to deal with it when the time comes.
Thanks all! Writing out my plans clarifies things for me, and they do evolve as I learn more. Have learned a lot from this forum and others.
I'm always concerned with the retirement number, and am never comfortable with what I read - the financial planning sites tell you to save huge amounts, and my calculations based on my living expenses bear no resemblance to those projections. So I worry that I'm doing it wrong. When I read the numbers ($2 - 3 million!) people think they need, I worry that I'm way off base with mine,...
The biggest risk is that you are going to live a long time. That only happens to the lucky few, but someone is going to have to pay for it.
If your statistical life expectancy is age 85, there is probably a 1 in 4 chance you will live to 93 and a 1 in 10 chance you will live past 100. That is the reason for the big numbers. By buying deferred annuities you can manage this risk. Please see my article in the Financial Analysts Journal at https://larrysiegeldotorg.files.word...on-promise.pdf. (Moderator please do not delete this link; it is a scholarly article that I wrote myself, with no commercial benefit to me if C-D readers read it.)
I really think that firecalc is a good overall indicator. As we all acknowledge- medical is the true wild card.
After re-reading the firecalc page, it does not anticipate any social security or pension. So it is a very preliminary but very conservative indicator and knowing that we will indeed have social security I think I am feeling better and better.
I really think that firecalc is a good overall indicator. As we all acknowledge- medical is the true wild card.
After re-reading the firecalc page, it does not anticipate any social security or pension. So it is a very preliminary but very conservative indicator and knowing that we will indeed have social security I think I am feeling better and better.
It does take SS and Pension. It's on the 2nd tab "other income/spending".
My number is whatever I can grow my net worth to by the time I retire. I've been 100% focused on lining up my ducks for retirement since age 51. I don't have a defined benefit pension. I have Social Security, my IRA/401(k) accounts where I've never had employer matching, and what I've managed to accumulate for assets in my life. When I stop working, I'll adjust to my financial circumstances. At age 51, I spent 5 1/2 years making sure I have the paid-for and fully remodeled home I can live in and feel good about for the rest of my life with low ownership costs. Now that that is knocked off, at age 57, I'm focused on saving. Assuming I don't have an employment glitch, if I keep my eye on the ball, I should be OK to retire at age 65. It won't be a lavish 1%-er lifestyle you see in commercials during golf matches but I'll be comfortable and able to do the things I like to do in life.
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