Budgeting for Retirement. (conversation, social security, federal, crying)

[mathjak107]

i tried to sum it up better but i ran out of time and couldn't edit .

but it all boils down to you are asking us how to predict tomorrows weather and you can't . but what you can do is build your home around the worst weather your area has ever seen and add even an extra cushion ..

that is the idea of retirement planning . we don't need to know what markets , inflation or rates will be , no one can do that .

but if we get to the gate based on the worst case's ever and plan around what it took to get through them both balance wise and investment wise and not have to take a pay cut than hopefully you are pretty well covered for any future weather .

in this case it has been more than 50 years since anyone saw a worse combo of rates ,markets and inflation than the 1965/1966 group and they were worse than those who retired in 1929 . .

you want the odds on your side so at least a 90% success rate is considered the minimum . that means you would have made it through 90% of all the worst retirement outcomes to date . when coupled with life expectancy statistics and the fact odds are you will not live 30 years in retirement that boosts odds to almost 100%

you can see here the more conservative you get the less you can draw out . at 4% fixed income is totally unacceptable . 50/50 equities and fixed income is optimal . 35% will work for 30 years but your ending balance may be a buck at 4% with little for heirs .

[goodlife36]

Originally Posted by nicet4

I've been on this forum for seven years and a couple things I've learned is we are all unique, our living standards are all different and what someone needs in New York City or San Francisco places Mobile, Alabama on a different planet.

In another year I will be retiring at age 70 and to answer your question I am not drawing social security yet. I will do whatever it takes to put off drawing benefits for another year. It is part of my plan.

I recently took out a mortgage, at age 68, for our final home; a two bath/three bed condo in a nicely kept gated community that appears to be limited to seniors but it is not. Just who lives there. Very nicely kept and that is one of the things that drew us to it.

Had to take out the mortgage because we purchased in south Georgia before the collapse and it never recovered.... we took a bath but that is the way life is sometimes. Now we moved 800 miles north to a more affluent area but that is the way it goes sometimes. Totally opposite what most retirees look for.

Oh, and the association takes care of all snow and ice removal. We also have an attached and heated two car garage but being retired without a job if I don't feel like going anywhere I won't.

The major draw is it's 6 miles from the grandchildren and we have a pool which I call a grandchildren magnet. Yep, you know where the 8 and 9 year old's will be in the summer.

Reasonably close to everything and the best hospital in the state is located just 8 miles away. Everything is close it will be a rare day for us to have to travel more than 20 miles for anything.

We have a total of about $45k in retirement savings. Yep, that's it. $45k.

The biggest reason I didn't save as much as I should have is I flew airplanes most of my life. For 20 years I betcha I spent $20k a year on an airplane.... and if I had to do it all over again I would do it exactly as I did because I did it my way. I have no regrets.

How much should I have in savings when I do retire next year? Personally I don't care... If for some reason I couldn't work tomorrow and if I had to I would spend every last cent of our savings to put off collecting social security benefits to age 70. If I had to I think I would have about $20k left but pfffftttt... I really don't care. Actually I would like to keep hold of the money but it doesn't matter to me that much.

But instead of savings I got lucky another way.... at age 70 I calculate my wife and will receive $5,014 in combined social security benefits plus two pensions and nearly all this is exempt from state and federal taxes. The big question here is how much would I have to have saved to take $5,014/month for the rest of our lives?

That is about what I take home in my full time job now.... when I retire I won't take no stinking pay cut.

What if we had a combined social security benefit of $2,600 how much would I have had to have saved to make my goal of $5,014 per month?

After taking all our fixed medical and insurance costs, which includes life insurance for me in the event of my death my wife will be able to pay off the mortgage, the mortgage, HOA fees, insurance, utilities, cell phones, internet, $150/month for pharmacy (it isn't that high now but who knows?) along with $150 monthly for gifts we will have $1,726 monthly left over for food, entertainment, hobbies, clothes, vacations and emergencies.

Unless something special happens I don't see is spending more than $1,000/month on food, entertainment, clothes and hobbies because we're not that type and I don't fly anymore. I figure this leaves us $726/month left over for savings and emergencies.

The condo association takes care of all maintenance on the outside... new roofs, etc is all of them. The only things I have to worry about is HVAC, water heater, washer, dryer and dish washer.

An airplane would cost me at least $1,500/month and my wife forbids it anymore. Not in the budget. Sob!

So asking the question how much you need is impossible to answer. If asked you how much I needed to retire what would your answer be?

Thank you for sharing your journey thus far.You are in good shape. Wow! You bought a property at 68. I am freaking about paying off a property I have not bought yet by 67. Lol!

[goodlife36]

Originally Posted by mathjak107

i tried to sum it up better but i ran out of time and couldn't edit .

but it all boils down to you are asking us how to predict tomorrows weather and you can't . but what you can do is build your home around the worst weather your area has ever seen and add even an extra cushion ..

that is the idea of retirement planning . we don't need to know what markets , inflation or rates will be , no one can do that .

but if we get to the gate based on the worst case's ever and plan around what it took to get through them both balance wise and investment wise and not have to take a pay cut than hopefully you are pretty well covered for any future weather .

in this case it has been more than 50 years since anyone saw a worse combo of rates ,markets and inflation than the 1965/1966 group and they were worse than those who retired in 1929 . .

you want the odds on your side so at least a 90% success rate is considered the minimum . that means you would have made it through 90% of all the worst retirement outcomes to date . when coupled with life expectancy statistics and the fact odds are you will not live 30 years in retirement that boosts odds to almost 100%

you can see here the more conservative you get the less you can draw out . at 4% fixed income is totally unacceptable . 50/50 equities and fixed income is optimal . 35% will work for 30 years but your ending balance may be a buck at 4% with little for heirs .

Thanks for your information. It is difficult to determine what I will need in 24 years. I cannot project what real estate prices will be in two years.

There is so much I do not know. I have no idea how long I will survive at this job. It is a new world folks. Longevity at a job just does not exist anymore. Benefits today are terrible.

All I can do is my best. I do think it will be beneficial to see a financial planner after I buy my home.

[mathjak107]

it is not a question of what you will need so far out . it will be a question of what you have to work with and you base how and where you live on that as you get closer .

you just do your best to save as much as you can . it is all you can do . what you have will determine how you live , not the other way round

[snowtired14]

Originally Posted by goodlife36

Thanks for your information. It is difficult to determine what I will need in 24 years. I cannot project what real estate prices will be in two years.

There is so much I do not know. I have no idea how long I will survive at this job. It is a new world folks. Longevity at a job just does not exist anymore. Benefits today are terrible.

All I can do is my best. I do think it will be beneficial to see a financial planner after I buy my home.

Absolutely DO NOT skip this step!!!! If you don't have a grasp on where you stand, or how to project your finances, a good FP will be worth their weight in gold. Even though there is no-one who can predict the financial future with certainty, there are calculators that can offer probability profiles for sustaining your retirement, ours is in the 90+ range and we are very conservative. Be careful though, be sure their services are fee based and not on commissions, you want an FP that works for you and not a bank. Why do you want to wait until after you buy your home? Are you afraid of what they will say? IMHO- see someone before you get into a major purchase like a home. Good luck!

[nicet4]

I found nearly 24 years out it's nearly impossible to plan.

On my 50th birthday I was all set up for early retirement at age 60 until my largest customer decided to go Chapter 13 leaving me, along with a number of other contractors, holding the bag.

All the sudden I saw myself holding the bag for over $200k in costs with very little in ways to get out from under other then grit your teeth, pay your bills and march ahead like a man and not a little boy.

I didn't go bankrupt, I paid all my bills on time, this towards keeping my good name and reputation, taking several years to get out from under that one I didn't see coming.

Eventually I did get a small check in settlement years down the road but it didn't help much. I had to take out loans to cover the debt and I even cashed in an IRA account to keep from going bankrupt but I did it anyway.

My name and reputation meant more to me than anything else. I was, at the time, making money with the big boys and it was my turn to take it on the chin like a big boy.

Lesson learned... check the companies credit stuff before you sign a contract and just because their name is in lights with reported sales of half a billion annually it doesn't mean much in the way of protection.

I never saw this one coming; how could I when I had been doing business with them for years?

It shortly before I turned 60 that I saw the only way out of this was to continue working to age 70. For me the difference between 62 and 66 was $1,650 vs $2,250 while the difference between 62 and 70 was $1,650 and $3,050 or a difference of $1,400 monthly.

How much would I have to have saved to take out $1,400 monthly over 25 years? At least $420,000 and then there is cost of living increases that who knows?

In other words working another eight years was how I saved up my $420,000 after taxes. Even if you stumble there are ways out.

For me I would rather have $1,400 monthly guaranteed by the federal government than $420,000 in an IRA fund I would have to pay taxes on. When I was 52 I learned the hard way how a quarter of a million could disappear and disappear it did. With Social Security benefits there is little that can be done to take this away from you unless you stupidly guaranteed a federal student loan for your kid who took studies in social justice.

We each have our own path to blaze and each of us must do it our own way because our individual travels through life are all unique.

Could I have saved more? Of course but for me retirement was never a goal it was something I would do when I could no longer work and in the meantime I lived life on my terms doing what I wanted to do. My wife and I have flown all over the United States, taken vacations in the Bahamas to an island hide out where the only way to get there is private yacht or private aircraft into a very small field. We had the entire island to ourselves it was great. I will never forget we had a white sandy beach a mile long and we were the only two people on it.

Retirement is simply a stop on a journey and should not, in my opinion, be considered a final goal. Enjoy life first because it is the only one you'll get.

[StealthRabbit]

Originally Posted by goodlife36

Thanks for your information. ...
All I can do is my best.
I do think it will be beneficial to see a financial planner after I buy my home.

If you are serious about your goals / finances / planning You should consider mapping this out and seening the Planner BEFORE you buy a house (erroneously referred to as 'the biggest INVESTMENT of your life")

I don't consider a personal residence as an ASSET / investment. It is truly a liability that can milk your finances and energies DRY. In some cases personal residences can assist with your wealth building, but in general they are a HUGE Diversion of your time, energy, talent and wealth building objectives.

Today (current market) one needs to be very wise in making a home purchase decision. Putting the same equity to WORK for you in another investment (maybe commercial real estate) should spin off enough extra cash flow to avail you to RENT the best place in town. AND that investment is WORKING FOR YOU & will continue to grow. Your home may never 'deliver' as an investment. The BEST I currently see, is rolling your personal investment home every 24 months for $500k TAX FREE gain (if married, only $250k if single). Very possible, but your gotta be wise, good investor, evaluator, and have insight and a stomach for RISK!

Each situation and market is different, get advice from a seasoned investor in your current area.

The planning dept and the tax assessor is the FIRST place I look, BEFORE shopping for homes or properties.
It is SO EZ to get stuck with an ANCHOR as a home. Of 30+ properties I have only used a realtor 2x (both were expensive, miserable, and very slow experiences).

[jonesg]

Originally Posted by goodlife36

How do I figure out what I will need for retirement? Let us say my expenses are $2000 per month. How do I figure out what it will be 23.5 years from now? I would appreciate the details of how you arrived at your number. Thank you.

Enjoy life, at the least max out your IRA and you'll be ok when you get old.

[JIMANDTHOM]

We had a pretty good handle on our expenses for a few preceding years, so made it easier to budget.

I go on the "guess" that our investments will basically keep up with a general inflation rate. Direct sources of retirement income, Jims pension and my SS are also inflation adjusted. Cant really say if the inflation adjustment is adequate, won't know for awhile.

We also moved to a lower(sort of ) COL area, and it is also very walkable for us.

The walkable part though has had a huge impact on our food consumption.


We run about 35% higher up here on food because of all the walking we do. We can walk to the hardware, PO, Dr. Office, favorite restruants, grocery, college. We don't put fuel in the car every month, just our stomachs.

[JustMike77]

I'm turning 65 next month and I have never planned for retirement. Early on I developed the mindset that "it's better to want what you have than to have what you want". In a few weeks I will have lived in the same house for 28 years. I've had the same boat for 18 years. Could I afford a bigger house or a bigger boat? Yes, but why ? I am happy with my surroundings. My friends say that I am "irrationally content". That's OK with me, because all of the money I've saved by not keeping up with the Joneses is sitting there working away for me. As a result, I have enough to support myself for the rest of my life....and my kid's life. I am also so woefully in love with my business that I might not ever fully retire.