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Old 03-07-2016, 08:28 AM
 
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many folks in higher cost of living areas like the tristate area sell those homes and relocate to cheapsville and live very nice retirement lives .
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Old 03-07-2016, 09:42 AM
 
Location: Los Angeles area
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Default But actually, it is quite possible.

Quote:
Originally Posted by Leo58 View Post
So what about the other 95%? Those that have pensions might be OK, but that seems to be a smaller and smaller group these days. Owning your home is great, but you have to sell it to get the equity out. It seems like a large number of folks are planning on living off Social Security. I just don't see how that is possible.
You have too narrow a definition of the word "possible". First take a slightly higher than average monthly Social Security retirement benefit - the average is around $1200 per month, but that includes a lot of people who didn't work the full 35 years under SS wages. For example my SS is $165 per month gross, so I and people like me bring the average down.

So let's assume $1600 per month for the principal breadwinner (still on the low side if we assume 35 years of earnings) plus, say, $1000 for the spouse who maybe stayed home to raise the kids for a certain number of years. That gives us $2600 a month for a couple to live on, which is very doable given a low cost of living area and frugal habits.

The hypothetical $2600 per month doesn't allow for things like designer clothes, country club memberships, frequent travel, frequent eating out, a recent model BMW or Mercedes in the garage, extra bedrooms beyond one or two, and so forth, but lots of people never had those things while they were working. This forum is skewed towards the well-to-do. It's embarrassing to come on here and admit that one has to scrape and scrounge to get by; my guess is that some posters just don't mention their personal circumstances.

So it is very possible to live off Social Security without eating dog food or getting handouts from the local food bank. Whether you would consider it a tragedy if you had to do it is another matter altogether. Personally I am glad I don't have to live on, say, $1600 a month, or even $2000 a month. But that doesn't mean it is "not possible". There is more adjustment to life style (without going hungry or being cold) than you seem to allow for.
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Old 03-07-2016, 09:55 AM
 
Location: Paranoid State
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Quote:
Originally Posted by Escort Rider View Post
Well, this reporting was a little more sophisticated than some, as they reported the percent of people with zero savings who had a defined benefit pernsion, a definite game-changer.
A reasonable defined benefit pension is the equivalent have having $2 million to $4 million in savings.
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Old 03-07-2016, 10:24 AM
 
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except it isn't really the same thing as the money . 90% of the time drawing 4% has left you with more then you started with and that can be passed to your kids . your pension can't .

you also can't pay big expenses that don't conform to the amount of the cash flow .

while a pension of that amount is nice it is no sub for having the cash
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Old 03-07-2016, 10:29 AM
 
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Quote:
Originally Posted by mathjak107 View Post
except it isn't really the same thing as the money . 90% of the time drawing 4% has left you with more then you started with and that can be passed to your kids . your pension can't .

you also can't pay big expenses that don't conform to the amount of the cash flow .

while a pension of that amount is nice it is no sub for having the cash
I agree. For me, give me the asset to control/spend as I like. That having been said, a pension's appeal does increase significantly in rate environments like we are currently experiencing, and the prolonged outlook for a below normal rate environment makes that especially true.
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Old 03-07-2016, 02:54 PM
 
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Quote:
Originally Posted by mathjak107 View Post
except it isn't really the same thing as the money . 90% of the time drawing 4% has left you with more then you started with and that can be passed to your kids . your pension can't .

you also can't pay big expenses that don't conform to the amount of the cash flow .

while a pension of that amount is nice it is no sub for having the cash
And that is why many pensioners have both pensions and investments. There is no reason for it to be either or. Much of the many with 403B investments are public and private non profit pensioners.
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Old 03-07-2016, 03:16 PM
 
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Quote:
Originally Posted by hikernut View Post
That's one I have yet to figure out. All of the solutions I can think of are not so appealing...

(1) Buy long-term care insurance.
(2) Just risk it, in which case the surviving spouse could have a rough time of it.
(3) Split up assets and get a divorce of convenience.

Other?

I've read about bad experiences with LTC insurance, and have a tendency to not trust insurance companies.

Question to all... In the case of unpaid LTC expenses, is the surviving spouse's SS benefit at risk? I would feel much better knowing my wife would at least get to keep all of that check even in the worst case scenario.
If you can get survivor benefits on the pension that is major plus for dealing with number 2. It is a matter of crunching numbers and trying to factor in projected fixed income (pension and SS) as a percentage of projected long term health cost. Factor in projected investments (FireCalc) a long with home equity ( that's when a reverse mortgage becomes helpful) in deciding when and if 3 becomes necessary if you both are alive with one in a nursing home and the other not. That is what we are doing now and why I am pricing and trying to model future cost. Remember it will ultimately be the market and the number of available health care clients able to pay that will be what does and doesn't drive costs up. This is also part of the what age to take SS at question. The longer you delay the higher your later in life fixed income unless you are investing the earlier benefits and sitting on them. That is another equation based on your investment returns and length of time invested.

Last edited by TuborgP; 03-07-2016 at 03:49 PM..
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Old 03-07-2016, 03:54 PM
 
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Quote:
Originally Posted by Escort Rider View Post
So it is very possible to live off Social Security without eating dog food or getting handouts from the local food bank. Whether you would consider it a tragedy if you had to do it is another matter altogether. Personally I am glad I don't have to live on, say, $1600 a month, or even $2000 a month. But that doesn't mean it is "not possible". There is more adjustment to life style (without going hungry or being cold) than you seem to allow for.
If you're paying rent, a $2,000/month Social Security check would be challenging in any higher cost of living area. Around me, there is a 10 year wait for subsidized housing if you're at that kind of income level and not disabled. You'd be forced to move to a low cost part of the country where housing costs wouldn't eat you alive.

If you look at all the "where should I move..." threads here, lots of people have to do this math.
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Old 03-07-2016, 04:05 PM
 
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Quote:
Originally Posted by GeoffD View Post
If you're paying rent, a $2,000/month Social Security check would be challenging in any higher cost of living area. Around me, there is a 10 year wait for subsidized housing if you're at that kind of income level and not disabled. You'd be forced to move to a low cost part of the country where housing costs wouldn't eat you alive.

If you look at all the "where should I move..." threads here, lots of people have to do this math.
Moving to a lower cost area isn't just about having enough to live and have s good retirement it can also be about having more to invest throughout retirement and being better prepared for later in life health needs
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Old 03-07-2016, 04:11 PM
 
Location: Los Angeles area
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The thread title is "Average Retirement Balance". In my years of reading this Retirement Forum, my conclusion is that the majority of posters are well balanced, but that a few are seriously unbalanced to the point where counseling would be in order.
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