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Old 02-23-2016, 07:49 AM
 
71,511 posts, read 71,674,131 times
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i know so many who have lower amounts of resources and they live such stressful lives . they are always worrying about the next big unexpected expense that kills their cash flow and budget .

as you age you want choices in life as well and they can cost extra money .

not having choices in life is one of the most horrible feelings at times . more so when it is about your health .

 
Old 02-23-2016, 08:04 AM
 
Location: Massachusetts
207 posts, read 131,930 times
Reputation: 533
Quote:
Originally Posted by marino760 View Post
This is nothing more than another absurd notion that one can't be happy unless they retire wealthy. Not true.
"Money isn't the most important thing in life, but it's reasonably close to oxygen on the 'gotta have it' scale."

- Zig Ziglar
 
Old 02-23-2016, 08:16 AM
 
6,551 posts, read 1,344,624 times
Reputation: 16600
This is another, imo, stupid thread because if it is addressing younger people (say, those under 45), it is a simple fact that no one can predict the future, and maybe NONE of us might be here in 50 years (or even less). Don't misunderstand that -- I am a firm believer in hoping for the best, but planning for the worst. However, I certainly do not advise anyone living like a miser and denying themselves any pleasure because of worrying about their old age. I have known too many people who have saved and saved, only to die just before or just after retiring.

And if the thread is addressing older people, I firmly believe that most of them (us) don't need $2 million before retiring! My husband and I are 60-ish, and we own our own home (worth about $370k), and so with that and about $250k in savings and the approximately $4,000 we will have monthly in social security and pensions after we both retire, we will have plenty to live on, even after one of us dies. (However, this is because we are both determined not to incur massive medical or ALF bills, as we are both determined to die rather than have a SEVERELY decreased quality of life; and we also do not need expensive vacations, country club memberships, etc. to be happy.) In fact, I know one retired single woman who owns her own (modest) home, and although she has no savings and her income is only about $900 a month, she is doing okay -- not great, of course, but okay.

IMO, single home ownership (without HOA fees) is KEY to feeling financially comfortable in retirement if one is not financially well off.

P.S. Sometimes I think these threads and/or the links provided are started by stockbrokers or financial advisers of some kind who are literally trying to scare up business!
 
Old 02-23-2016, 08:30 AM
 
Location: Tennessee
23,572 posts, read 17,544,804 times
Reputation: 27640
Quote:
Originally Posted by mathjak107 View Post
i know so many who have lower amounts of resources and they live such stressful lives . they are always worrying about the next big unexpected expense that kills their cash flow and budget .

as you age you want choices in life as well and they can cost extra money .

not having choices in life is one of the most horrible feelings at times . more so when it is about your health .
But there's a good middle ground between being hand to mouth and truly stressed over money and retiring with a couple million bucks.

Big expenses like a heat pump, roof replacement, car replacement, etc., should largely be able to be planned for and money set aside for those purposes, aside from some sort of one-off event. If the roof is fifteen years old, you might want to start setting some money aside for it. If a hurricane blows off your roof, you can't plan for that.

The people I know who are truly broke are screwed anyway. Most of the rest can muddle through and find some sort of decent, compromise choice.
 
Old 02-23-2016, 08:30 AM
 
Location: Gilbert, AZ
3,180 posts, read 1,956,881 times
Reputation: 3315
The numbers seem daunting, but if one puts $1000/month into their 401k and gets a return of 7%, they will have over two million in less than 40 years.
 
Old 02-23-2016, 08:40 AM
 
Location: Colorado Springs
4,833 posts, read 4,947,484 times
Reputation: 17302
Quote:
Originally Posted by hikernut View Post
The numbers seem daunting, but if one puts $1000/month into their 401k and gets a return of 7%, they will have over two million in less than 40 years.
And your investment strategy to achieve that monotonic 7% annual return rate is????
 
Old 02-23-2016, 08:43 AM
 
51,901 posts, read 41,774,553 times
Reputation: 32374
People clamoring for pensions here don't have a robust life-experience. Here, let me have you talk to my steel-mill working retired uncle that is on 50% pension because his company hit hard times and couldn't keep funding up....or my Illinois school teacher retiree relatives whose pensions they've been trying to cut.

I'll hang on to my own 401k money thankyou very much.

The 2mil number would be for people with higher incomes that have diligently pushed money into their 401k from a young age.

I started out at age 22 making 32k a year in 1992. First raise? Moved my 401k from 6% to 9%...lived in a crappy apt. and went without a car because it was an expensive convenience.

9% +3% company match on say 35k of salary back when I was 23 at 8% interest (long term stock market) is 62k by the time I'm 58 for that one year of work.

The key is to start early and diligently keep at it and consider ways to save more than the minimum.
 
Old 02-23-2016, 08:45 AM
 
51,901 posts, read 41,774,553 times
Reputation: 32374
Quote:
Originally Posted by Vision67 View Post
And your investment strategy to achieve that monotonic 7% annual return rate is????
Go google 30 year stock market returns.

Monotonic makes no sense when you are duration matching.
 
Old 02-23-2016, 08:49 AM
 
Location: Tennessee
23,572 posts, read 17,544,804 times
Reputation: 27640
Quote:
Originally Posted by whocares811 View Post
This is another, imo, stupid thread because if it is addressing younger people (say, those under 45), it is a simple fact that no one can predict the future, and maybe NONE of us might be here in 50 years (or even less). Don't misunderstand that -- I am a firm believer in hoping for the best, but planning for the worst. However, I certainly do not advise anyone living like a miser and denying themselves any pleasure because of worrying about their old age. I have known too many people who have saved and saved, only to die just before or just after retiring.

And if the thread is addressing older people, I firmly believe that most of them (us) don't need $2 million before retiring! My husband and I are 60-ish, and we own our own home (worth about $370k), and so with that and about $250k in savings and the approximately $4,000 we will have monthly in social security and pensions after we both retire, we will have plenty to live on, even after one of us dies. (However, this is because we are both determined not to incur massive medical or ALF bills, as we are both determined to die rather than have a SEVERELY decreased quality of life; and we also do not need expensive vacations, country club memberships, etc. to be happy.) In fact, I know one retired single woman who owns her own (modest) home, and although she has no savings and her income is only about $900 a month, she is doing okay -- not great, of course, but okay.

IMO, single home ownership (without HOA fees) is KEY to feeling financially comfortable in retirement if one is not financially well off.

P.S. Sometimes I think these threads and/or the links provided are started by stockbrokers or financial advisers of some kind who are literally trying to scare up business!
I'm pretty well in agreement with you.

I'm 29 and this figure may be accurate for my generation. Even so, I wholeheartedly believe these retirement planning articles way understate the impact of black swan events. In twenty years, I'll be 49, and will have ten to fifteen working years left, maybe even twenty. However, by then it's likely we'll see robotics and automation destroy many current positions, even ones we consider secure today. With the way politics in this country is today, I don't have much confidence in politicians of any flavor to be able to make rational, well thought-out decisions that makes the country competitive going forward. I wouldn't be surprised if we don't have even worse gridlock/political bickering that retards progress, or even civil unrest, in the next ten or twenty years.

I know several people who are basically planning everything around retirement and saving money, and many of these are in their 20s-30s. They don't take vacations (even a lot of day/weekend trips are deemed too expensive), don't have many hobbies (hobbies cost money), don't really partake in many of the same activities as their peers, etc. The best, most healthy years of their life are passing them by while they try to hoard wealth for a future that might not even arrive for them. I don't think that's really living.

With that said, I think the paid for house with low HOA fees/property taxes (can't retire in NY/NJ/CT/MA or some other high tax state? Tough - go somewhere you can afford), no debt, SS, moderate other income streams, and moderate savings to act as a cushion is sufficient for most. Once the expenditures are reduced and you have cash flow coming in and enough savings for most of the predictable big expenses, you're way ahead of the curve.

A buddy of mine back in Tennessee is around 60 and has been semi-retired for nearly a decade. He has several rental properties of his own, averaging around $1k net/month each, runs a consulting business on the side, and his wife works (he only married about two years ago, so not a big factor) and also has a rental or two. They're probably making $4k-$5k month on the rentals alone after his management fees (8%) are taken out. I think he said the consulting business made $30-$40k last year (which he only works 25-30 hours/week doing), plus whatever she brings in is just gravy. He had a costly divorce in his 40s, so it's not like he's had the steadiest of lifestyles either. He is ridiculously cheap (just "upgraded" to a 2005 Accord a couple years back, ran off an iPhone 4 for years, rarely eats out, etc.) and could live the lifestyle he lives now single. IMO, the key for him have been low fixed costs plus the constant cash flow from the rentals.
 
Old 02-23-2016, 08:58 AM
 
Location: Tennessee
23,572 posts, read 17,544,804 times
Reputation: 27640
Quote:
Originally Posted by Mathguy View Post
People clamoring for pensions here don't have a robust life-experience. Here, let me have you talk to my steel-mill working retired uncle that is on 50% pension because his company hit hard times and couldn't keep funding up....or my Illinois school teacher retiree relatives whose pensions they've been trying to cut.

I'll hang on to my own 401k money thankyou very much.

The 2mil number would be for people with higher incomes that have diligently pushed money into their 401k from a young age.

I started out at age 22 making 32k a year in 1992. First raise? Moved my 401k from 6% to 9%...lived in a crappy apt. and went without a car because it was an expensive convenience.

9% +3% company match on say 35k of salary back when I was 23 at 8% interest (long term stock market) is 62k by the time I'm 58 for that one year of work.

The key is to start early and diligently keep at it and consider ways to save more than the minimum.

Illinois is a mess, but there are plenty of states out there that are more sufficiently funded and who knows what, if any, ramifications the Illinois situation will have for the common person in the IL pension funds. The federal government may end up bailing them out. I would much rather have a pension through the IL state government than through a private company at this point.

$32k in 1992 might not have been phenomenal, but it's a lot better than the average sap out of college getting $32k-$40k today. I graduated college in 2010 in Tennessee, where the economy is pretty much ruined, and only made $29k to start, and had to commute a hundred miles roundtrip a day to make that. In town, I'd have been lucky to make $10-$12/hr. On such limited income, it was nearly impossible to just meet day to day expenses, much less save. I'm doing a lot better today (around $65k), but I'll be 30 in April, have lived in six states since 2010 (and racked up tons of moving expenses), and had a really down year in 2013 where I made only $21,000. Most people in GenX and older did not have to move so frequently or as far to just get a middle class income.

$2 million really requires starting right after college, a significantly above average salary or HHI, reasonable frugality, favorable market returns, and not hitting life's bumps in the road.
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