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Being skeptical about the future of SS, is strongly advisable for younger folks, but anyone who thinks the government is going to abruptly shut down the system for current recipients doesn't understand politics.
Congress will beg, borrow, and print money before that happens.
I don't see how they could get away with suddenly cutting off SS.
The biggest variable I see in retirement is housing expense.
My father has a retirement income of $42K per year. My father-in-law has a retirement income of $36K per year. My father-in-law has a better standard of living because he owns his condo outright and only pays a modest property tax bill and condo fee each month. My Dad pays $950 in rent each month.
Yes I know. I could decrease my living expenses by a lot, if I moved. I would rather stay here though.
I could also buy a mobile home, or something like that, to have low monthly expenses. I'm thinking about it.
When you retire, the average person contemplates he will live another 30 yrs. On average, inflation will cause the cost of things to double every 30 yrs, so as a minimum if you do ok with 30K per yr now, by the time you hit that 30yr mark you will be spending 60K do do the same thing. On top of that, the cost of 'things' tends to rise much faster than inflation, such that those things might cost another 2 to 4 times as much at the end of those 30 yrs. So your cost to live like you do now can be 180K per year for that last year. And that does not include extra medical needs. How to stop the craziness? As often as possible avoid buying anything that requires a loan. Keep your cars forever, buy a house and pay it off. Have good medical insurance, invest wisely to offset some of this devaluation of your dollars.
Standard model is to assume you need 70%-80% of your working income. So let's split the difference and take 75% of your working income, subtract out any pension and SS income you will be receiving, and if the result is positive multiply that by 25 to get the assets you should have to be able to retire.
Do I think that is a good model for everyone? No, but it is one of the ways that financial planners will crunch the numbers for you. Some people can live on much less, and some will need far more.
Thanks for sharing this info as I have never seen this calculation before,
Standard model is to assume you need 70%-80% of your working income. So let's split the difference and take 75% of your working income, subtract out any pension and SS income you will be receiving, and if the result is positive multiply that by 25 to get the assets you should have to be able to retire.
Do I think that is a good model for everyone? No, but it is one of the ways that financial planners will crunch the numbers for you. Some people can live on much less, and some will need far more.
I have never ever understood the 70-80% of your working income. I really dont. I am planning now for having AT LEAST what I am making while I am working, and will try to get even 10-20% more.
My expenses are the same, when I retire. Same household expenses, same insurance, same groceries, same electric bill, same mortgage payment (until its paid off). I will even need more, as I will then have time to do a whole lot more things than I can do now,and most things arent free. Id be in trouble retiring on 70% of my income now.
I have seen the formulas, like multiplying the income you will need by 25, etc. And, of course, we can't predict inflation or our health, so there is no way to be certain.
I guess I have been looking for survey data, some kind of reports about what people actually have been experiencing with retirement.
I know that everyone is different, but everyone is also similar. I realize that I can live on half of what someone else feels is adequate, and someone else can live on half of what I feel is adequate.
But we all have the same basic needs, and we all live in the same society.
I have read a lot about retirement, but haven't really found exactly what I was looking for.
In addition to research data, I would like to read what people actually say about their experiences. I didn't find much of that here, because even if they are anonymous people don't reveal much about their finances.
And I can't ask friends. Even close friends won't tell me their net worth, even if I tell them mine.
So I have felt in the dark, like I'm just guessing. Well yes, we are all guessing about this.
I could hire an expensive advisor. But after spending thousands of dollars, I still wouldn't be sure he was right.
I recently read an article in Consumer Reports that says that the average person will need at least $660,000 to retire. Two reasons mostly, don't depend on Social Security becauseit probably won't be around at all by 2025. .....................................
Quote:
Originally Posted by BLS2753
Being skeptical about the future of SS, is strongly advisable for younger folks, but anyone who thinks the government is going to abruptly shut down the system for current recipients doesn't understand politics.
Congress will beg, borrow, and print money before that happens.
Quote:
Originally Posted by Good4Nothin
I don't see how they could get away with suddenly cutting off SS.
It is preposterous to say that Social Security won't be around at all by 2025. I'm not sure whether Consumers Reports actually said that or if Kathy Munoz is misinterpreting what they said, or if that's her own conclusion.
In the worst case scenario, benefits will be cut to 75% of current levels. That would be a serious matter, but it would not be the same as Social Secuirty not being there at all. BLS and Good4Nothin are correct.
Be sure to consider inflation. Your income has to grow over time. You probably need some stocks. Might want to hire a financial planner for a coupler of hours to review your situation and give you some suggestions.
I have seen the formulas, like multiplying the income you will need by 25, etc. And, of course, we can't predict inflation or our health, so there is no way to be certain.
I guess I have been looking for survey data, some kind of reports about what people actually have been experiencing with retirement.
I know that everyone is different, but everyone is also similar. I realize that I can live on half of what someone else feels is adequate, and someone else can live on half of what I feel is adequate.
But we all have the same basic needs, and we all live in the same society.
I have read a lot about retirement, but haven't really found exactly what I was looking for.
In addition to research data, I would like to read what people actually say about their experiences. I didn't find much of that here, because even if they are anonymous people don't reveal much about their finances.
And I can't ask friends. Even close friends won't tell me their net worth, even if I tell them mine.
So I have felt in the dark, like I'm just guessing. Well yes, we are all guessing about this.
I could hire an expensive advisor. But after spending thousands of dollars, I still wouldn't be sure he was right.
multiplying x 25 assumes at least 40% equity's are used . that is the draw rate at 4% . 4% inflation adjusted requires at least 40% equity's or you risk running out of money before running out of time if going out 30 years or more.
bernstein found 2% inflation adjusted returns are safe using only fixed income . any higher and the risks go up . 3% is taking a chance and 4% you better own a good shopping cart to move your stuff under the bridge .
Last edited by mathjak107; 04-19-2017 at 03:36 AM..
I have never ever understood the 70-80% of your working income. I really dont. I am planning now for having AT LEAST what I am making while I am working, and will try to get even 10-20% more.
My expenses are the same, when I retire. Same household expenses, same insurance, same groceries, same electric bill, same mortgage payment (until its paid off). I will even need more, as I will then have time to do a whole lot more things than I can do now,and most things arent free. Id be in trouble retiring on 70% of my income now.
i never understood it either unless you sit in the house and do nothing different with all that time you now have and you don't do much more than you did when you were consumed by working .
with us time cost money and one thing we have in retirement is time . our discretionary spending is almost as much as our living expenses .
we actually clock in about 10k higher a year in retirement than we did working , mostly because medical insurance is far more costly and now we have a long term care plan too .
if we were able to double our retirement income we could easily spend it just because there is so much to do and places to go and 5 grand children can make it real easy .
many people will relocate and have little clue in advance of what they will need in both discretionary and non discretionary spending so basing it on what was is like driving and looking in the rear view mirror .
to many times all you see is a list of the non discretionary stuff and many times with all that time it is the discretionary spending that is just as much .
today , true retirement financial planners that cater to the 2nd half of the game and cater to retiree's use complex lifestyle software .
it plans around you and your timeline . many retiree's want a bigger budget up front while they are active and healthy and will taper off down the road .
it can plan for those expensive cruises and trips early on .
the software adjusts for that and structures a variable matching draw rate .
we were going to retire in the pocono's where life was a lot less than here in queens in nyc . but after 5 years there part time we realized we would go stir crazy there as well as it lacked most everything we would want in retirement .
a good public transportation system if we couldn't drive or for doing things in bad weather
it lacked world class medical care ,specialists and facility's .
if i wanted to work a bit it was all low paying jobs .
nothing to do all winter .
even in the summer we found that walk around the lake or in the woods getting stale .
so we ended up selling and retiring right here and do not regret it for a second . of course the budget is far different compared to the one we set up for the pocono's .
Last edited by mathjak107; 04-19-2017 at 03:42 AM..
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