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Old 01-30-2016, 02:22 PM
 
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A lot of this this discussion is based on how much do you need healthy and not how much do you need when older and not healthy. How many sit down and contemplate What they would need when health deteriorates and levels of needed service increase
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Old 01-30-2016, 04:58 PM
 
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Quote:
Originally Posted by TuborgP View Post
A lot of this this discussion is based on how much do you need healthy and not how much do you need when older and not healthy. How many sit down and contemplate What they would need when health deteriorates and levels of needed service increase

I used to live in Point Pleasant NJ. The area I lived in at the time was fairly high end. It is primarily Irish and Italians, many big name "families," and it was understood that despite their wealth, they took care of each other. [ and talking to friends this has not changed much] Husbands were usually considerably older than the wives. That makes for fairly young widows, who would often take care of their grandkids, start their catering or baking business, whatever. She, like the others, would portion a good part of her time for those in the family [and friends] who were infirm. I can not think of ANY person who was left to muddle through with only one or two, or worse yet, no support people. it was part of life.


We are still in the planning stages of our Autistic community, but I learned much from the [ mostly mafia] culture that surrounded us. Most of the non-Autistic mothers of Autistics who are interested, have one huge fear. That is the fear of what will happen to their adult child when they [the parent] die. I tell them that what we are shooting for is that when non-Autistic mama is laying on her death bed, and starts to think, "who will take care of my child when I am gone?" they will immediately be able to say something reassuring to themselves. That they will be able to say to themselves, " These same people who are surrounding me now, holding my hands, caressing my hair and stroking my forehead and singing me songs. These same people who have been here for my child and myself for years, as I have been for them."


If things go as planned [ and I am not much good at anything BUT the nearly Impossible] the cost of living will not go significantly up. We will be taking care of each other in a community and many of us have been caretakers our entire lives.
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Old 01-30-2016, 10:50 PM
 
Location: Copenhagen, Denmark
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To live a very average lifestyle in the Bay Area will cost a person about $60-80,000 a year, if you're mortgage is not paid off. If you have saved $1,000,000 in liquid assets by the time you are 67, you are expected to live to be between the age of 82-85. That's a period of 15-18 more years. Let's say that economic growth will be slow in the US for the next 20 years and your assets will only earn about 2-5%/year and that you will need $80,000 a year, you will run out of $ in the 16th year of retirement at 2% and year 21 at 5%. For expenditures of $50,000 a the draw down period is 26 years at 2% and never at 5% Since 5% of 1 million =50,000 This does not include inflation. If you only need to take out $25,000/year and you die at age 85, say,your assets will be worth roughly $878,500 at 2% and about $1,826,450 at 5%.
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Old 01-31-2016, 02:27 AM
 
71,490 posts, read 71,652,652 times
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Originally Posted by Frihed89 View Post
To live a very average lifestyle in the Bay Area will cost a person about $60-80,000 a year, if you're mortgage is not paid off. If you have saved $1,000,000 in liquid assets by the time you are 67, you are expected to live to be between the age of 82-85. That's a period of 15-18 more years. Let's say that economic growth will be slow in the US for the next 20 years and your assets will only earn about 2-5%/year and that you will need $80,000 a year, you will run out of $ in the 16th year of retirement at 2% and year 21 at 5%. For expenditures of $50,000 a the draw down period is 26 years at 2% and never at 5% Since 5% of 1 million =50,000 This does not include inflation. If you only need to take out $25,000/year and you die at age 85, say,your assets will be worth roughly $878,500 at 2% and about $1,826,450 at 5%.


the calculations here are not really correct because in the real world we have the all and powerful sequence of returns risk working for or against us .

the problem is average returns like saying 2% a year or 5% average returns don't work when spending down . because when spending down the sequence of gains and losses that make up that average return take over and become the ruling factor .

you can have the exact same average return and have how long the money lasts vary by as much as 15 years compared to looking at a reverse amortization calculators results with an average return put in .

a straight line calculator assumes you never spend down in a down year since it is figuring the same positive return year after year . you have three variables changing every year that make up your average real returns . you have market returns that year , interest rates that year and inflation that year all varying in the real world .

that can create up to 15 years difference in how long the money lasts with the exact same average return .

Last edited by mathjak107; 01-31-2016 at 03:15 AM..
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Old 01-31-2016, 02:35 AM
 
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DR MOSHE MILEVSKY wrote a very interesting paper a few years ago , RETIREMENT RUIN AND THE SEQUENCE OF RETURNS.

he took an example of a constant 7% return year after year based on a 7% average return over 30 years and drew 7% or 950 a month out starting at age 65 . the money was exhausted by age 86. this is typical of what uninformed folks do in an excell spread sheet or reverse amortization calculator when they have to enter a growth rate so they use an average.

next he took the same 7% average return and made it happen in different orders.

he made year 1 up 7% ,year 2 minus -13% and year 3 up 27% and repeated that pattern . the same 7% average return went broke at 83.


again , same 7% average return ,making the first year up 7% , next year up 27% and 3rd year minus -13%. you went broke at age 90. your money lasted 7 years longer than the example above with the same 7% average return.


next he did first year minus -13% , 2nd year up 7% and 3rd year up 27% . you were broke by 81.

that is also the same 7% average return

lastly he made 1st year up 27% ,2nd up 7% and 3rd year down 13% , same 7% average return and you lasted until 95.

that is almost 10 years longer than just figuring a constant 7% year after year ,.

the variation on the same 7% average return in how long your money will last is largely controlled by the order of those gains and losses.

in this case the same 7% average return most folks just throw in an excell spreadsheet and spend down didn't last until 86.5 like the spread sheet said. they went broke based on the order of that 7% average anywhere from 81 to 95.

as you see being down early on can drastically reduce your failure age by a lot even though the average return over time is identical. it isn't just the sequence of returns that has this effect ,it is the sequence of inflation too. now you have the two working against each other as well altering outcomes even more.
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Old 01-31-2016, 02:37 AM
 
Location: Silicon Valley
18,081 posts, read 22,924,480 times
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Oh for God's sake. I became disabled and live on SSI of $889.40/month. My medical is free. I have Section 8 housing and my rent is $197/month.

Point being, if you lose everything, you'll still be fine. There are alot of businesses out there who profit on the fears of people afraid of retiring without enough money.

If you need to live in a million dollar home and go on cruises four times a year, you'll need to be rich.

I live in a pretty, but affordable part of CA on my meager income and my medical is free.

So worry if you want to. But, you don't have to.
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Old 01-31-2016, 02:50 AM
 
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it is all about what you want out of life . we all earned different amounts when working too . we adapt and good or bad we make it work . but that sure does not mean many would much prefer NOT to have the lifestyle they had to adapt to and were forced in to .

we have folks living on just ss here in nyc . would i want that life if i could avoid it ? no way . so we all adapt to fit within our means good or bad .

i can say that honestly , no matter how much i had it would never fill my wants and dream list for all the things in life i would want to experience while i could .
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Old 01-31-2016, 03:05 AM
 
Location: Silicon Valley
18,081 posts, read 22,924,480 times
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Quote:
Originally Posted by mathjak107 View Post
i can say that honestly , no matter how much i had it would never fill my wants and dream list for all the things in life i would want to experience while i could .
Mathjak, thank you for admitting to this. So, for anyone trying to live up to Mathjack's advice of how much you need to retire, please note, that no matter how much you acquire, you would never have enough in his world.

My point mainly being that you need to find happiness with what you have. Quit stressing over it. I live on $890/month in a beautiful part of the world, and I'm pretty happy.

In fact, I recently went on a trip and found the mattress to be overly firm, and my dog was very unhappy with the new noises in the motel. We were both much happier when we got home to our little apartment.

It's all relative.

My mother accumulated a million dollars just about the time she got Altzheimer's. The state has liquidated her assets to pay for her care. Once those funds are gone, the state will take care of her in the same facility.

My mother will help fund the system, that would have taken care of her anyway. She spent way too many years worrying about it, and she would have been cared for either way.

Just sayin". Worry about having a million dollars, or enjoy what you have. It's all up to you.
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Old 01-31-2016, 03:10 AM
 
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i don't think anyone really worry's about having a number in reality . they do the best they can and adapt in to whatever it is , good or bad .

having lived my early years in a nyc housing project i just knew the lifestyle i never wanted to go back to , but i never really had a number in mind for retirement .

i just did the best i could and whatever the number is you adapt in to .

usually the lifestyle isn't far off from how we lived while working . we may relocate to a cheaper area but the lifestyle tends to hold about the same for many of us .
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Old 01-31-2016, 06:07 AM
 
Location: Colorado Springs
4,830 posts, read 4,944,472 times
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I think the articles that say you need to save $1M are written primarily by financial advisers and firms that stand to benefit by collecting commissions.

The reality is that what you need in retirement is a predictable monthly income that will last as long as you do.

It also helps to have paid off houses and cars and be on Medicare. That greatly reduces risk.

Sure, having $1M helps, but the reality is that very few people achieve that number.
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