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Old 01-11-2016, 04:34 PM
 
6,353 posts, read 5,163,159 times
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Quote:
Originally Posted by mathjak107 View Post
yes but inflation is not a straight line up as it is when raising a family .

how it effects retirees varies and it is really linked to how much discretionary spending you do .

we tend to spend our money in a smile shape as we age if we have discretionary money .

early on we spend lots of money going and doing early on , then by mid 70's it drops like a rock as we do less , buy less and use less , it holds that pattern until the 80's when healthcare kicks up .

a lot of what you no longer buy and do offsets the inflation in what you continue to use and do .

if you have a fixed rate mortgage or a paid off home inflation effects are even less .

over all a lot less inflation adjusting usually needs to be done then those charts and calculators imply .
Well, it depends on how long you live and whether the monetary authorities act crazy during those last decades. My grandfather lived to 103 and his $2000 a year (not a month, a year) pension, which was a survivable amount in 1952 when he retired, didn't pay a month's rent in an old folks' home by 1980. Some folks don't remember the Great Inflation but I do.
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Old 01-11-2016, 05:01 PM
 
Location: Idaho
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The last time that I 'sharpened my pencil' (i.e. doing the financial spreadsheet) was 4 months ago when I had to make the decision whether to take a buyout and retire earlier than my original plan.

The stock market had suffered some significant losses lately. One of my most conservative 401K account with about 25% cash 25% bond and 50% had a YTD loss of 3%. The one with 75% stock (60% domestic, 15% foreign, 20% bond and 5% cash) had YTD loss of 5%.

Interestingly enough, I find myself not at all concerned about the market condition unlike when I was still working. I think it is because I already have a good idea of our spending and income barring some catastrophic event like an accident or serious illness which may put one of us in the nursing home.

We still plan to continue our way of living (being frugal in everything but spend money on activities which are keys to our happiness and life like flying our little plane and traveling). We also anticipate having to spend some money to fix/upgrade the house to get it ready for sale.

I had set aside enough cash for 4 years of living expenses but expect to draw on these fund in less than half the time. We are likely to be able to live just on my husband's SS when he collects it at the age of 70 + his small pension + my annuity (I will take my prior pension plan payment as annuity instead of a lump sum when I turn 65). The total will be about $50K which is more than enough to cover our yearly expenses (which I calculated to be about $40K/year in the last few years). Our income will be up to~ $67K when I collect my spousal benefit at the age of 66, and ~$93K when I collect my own at the age of 70. It is more than likely than we can live on the expected guarantee income and may even be able to save some money. So I fully expect that we will save and not spend any of our RMDs. The bulk of our retirement income is from SS which is adjusted for COL so I am not all worried about inflation.

Bottom line is that we will stay the course, keep our investment allocation the way it is for probably a long time. The only financial move I will make this year is to convert portion of my husband's IRA/401K to Roth IRA to reduce his RMDs when he turns 70 1/2 in 2017. Our income is lowest this year so it is the best time to do this conversion. We will continue doing the conversion for both my husband and myself for a while. My financial spreadsheet will be updated each year mainly to figure out these conversions.

All the expert advices about asset rebalancing each year etc are great advices but I much rather spend my time enjoying my retirement, figuring where to go, what do to, to learn, to have fun instead of being mired daily in financial details and concerns.

Last edited by BellaDL; 01-11-2016 at 06:02 PM..
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Old 01-11-2016, 05:22 PM
 
12,825 posts, read 20,148,018 times
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Quote:
Originally Posted by Caltovegas View Post
I was messing around with an inflation calculator and was surprised at the calculations. I looked back 20 years.
$10 in 1995 dollars today would have to be about $15 to be close to the same spending power. For some retirement could be 20-30 years. Doesn't look to great being on a fixed income.

Here's a calculator I found online. What were you making per hour say back in 1970, 1980, 1990, or whatever compared to today's wages. Did you really increase in pay as the years went by?

Inflation Calculator 2016
Inflation is way less now than it was in 1995. Some aspects of the economy are in outright deflation.
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Old 01-11-2016, 05:35 PM
 
13,921 posts, read 7,416,674 times
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Quote:
Originally Posted by Mircea View Post
Why would they be, since you collect a reduced amount of Social Security benefit as a penalty for taking early retirement?
You fail to understand what question I was trying to answer. I was trying to understand a statement about COLA impact on when you opt to start taking Social Security. I'd assumed it didn't matter and that it would be the same ratio. What I learned is that the impact of compounding from the COLA increase makes it even more advantageous to defer until age 70.
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Old 01-14-2016, 04:30 AM
 
45 posts, read 31,126 times
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Quote:
Originally Posted by Larry Siegel View Post
Well, it depends on how long you live and whether the monetary authorities act crazy during those last decades. My grandfather lived to 103 and his $2000 a year (not a month, a year) pension, which was a survivable amount in 1952 when he retired, didn't pay a month's rent in an old folks' home by 1980. Some folks don't remember the Great Inflation but I do.
I was in Detroit in the early 70s and the UAW was giving a pension of 300 a month without inflation protection. I knew a man who retired from Packard Motor Car and his pension was zero when they shut down the day he retired then when they finally started paying got enough for Blue Cross and a month of groceries. Over his retirement it got to where it only paid his Blue Cross. His wife hadn't worked since the great depression so no SS except based on his work. She was widowed at 81 and lived to 94 on just a tiny SS check not sure if she got the pension or lost the Blue Cross but she was dirt poor. Her mortgage was paid off at 80 so that helped but this was before SS was adjusted for inflation so every year was poorer than the one before.
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Old 01-14-2016, 05:19 AM
 
29,782 posts, read 34,876,173 times
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Quote:
Originally Posted by aliceacrasperfolk View Post
I was in Detroit in the early 70s and the UAW was giving a pension of 300 a month without inflation protection. I knew a man who retired from Packard Motor Car and his pension was zero when they shut down the day he retired then when they finally started paying got enough for Blue Cross and a month of groceries. Over his retirement it got to where it only paid his Blue Cross. His wife hadn't worked since the great depression so no SS except based on his work. She was widowed at 81 and lived to 94 on just a tiny SS check not sure if she got the pension or lost the Blue Cross but she was dirt poor. Her mortgage was paid off at 80 so that helped but this was before SS was adjusted for inflation so every year was poorer than the one before.
Can happen again.
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Old 01-14-2016, 11:11 AM
NCN
 
Location: NC/SC Border Patrol
21,135 posts, read 21,891,633 times
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Quote:
Originally Posted by Caltovegas View Post
I was messing around with an inflation calculator and was surprised at the calculations. I looked back 20 years.
$10 in 1995 dollars today would have to be about $15 to be close to the same spending power. For some retirement could be 20-30 years. Doesn't look to great being on a fixed income.

Here's a calculator I found online. What were you making per hour say back in 1970, 1980, 1990, or whatever compared to today's wages. Did you really increase in pay as the years went by?

Inflation Calculator 2016
That's why you diversify your investments.
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