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Old 08-04-2017, 07:04 AM
 
Location: Philadelphia/South Jersey area
2,879 posts, read 1,408,105 times
Reputation: 10108

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Quote:
Originally Posted by mathjak107 View Post
people live on whatever they have . they make do with it. it may be a lifestyle they rather not have ,and it may be filled with stress over every unexpected bill. they may have little choices in life and have to always go with the cheapest even if it means not seeing family and friends because they had no choice but to live in cheapsville somewhere .

the more you have the more you can throw at problems as well as the more choices in life you can have. it isn't a scare tactic . it is just a warning that while we can live life in a trailer park for very little somewhere it may not be the choice you want . so examine the lifestyle you want and plan accordingly .

no one can say what anyone else needs or wants . we don't need much more than a tent in a warm climate but is that what we want .
The reason I call it a scare tactic is that studies have shown (and yes I'll try to dig up a link) that when most, not all but on average, when folks are told these "you have to have 5 million dollars" endpoints they grow despondent and don't do ANYTHING.

I work for a fortune 500 huge international chemical company, when we ended our pension, our 401K participation rate was dismal. we couldn't figure out why. it's a pretty competitive package. dollar for dollar match on the first 6%, an extra 3% bonus every year anyone puts in more than 10% and a pretty decent variety of investment choices. what we found out was when we ended the marketing of "you will need x dollars to retire" to a more "reward based" marketing our participation increased.

you tell a guy he needs 10 million bucks, his most likely reaction will be "why bother, I'll never accumulate that amount".

look at it this way, on any given day you can find, usually on yahoo some doomsday scenario about how ill prepared we are in this country for retirement. You would think with all the articles on it every day, every american would be participating but we know that's not true.
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Old 08-04-2017, 07:08 AM
 
Location: Philadelphia/South Jersey area
2,879 posts, read 1,408,105 times
Reputation: 10108
Oh thanks for the firecalc link. If I'm understanding it correctly, I'm feeling really positive. without any social security I'm at 87% of never running out of dough for 33 years at 72K. this was without changing any thing. If I put in my late husband and mine ss amounts I'm at 100%.

I also played with a couple of scenarios. like the one where my spending decreases as I get older. I may play around with higher numbers, lol see if I can go living la vida loca. see what would happen if I start spending 82K a year.
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Old 08-04-2017, 07:21 AM
 
1,041 posts, read 486,225 times
Reputation: 1435
Quote:
Originally Posted by eliza61nyc View Post
Oh thanks for the firecalc link. If I'm understanding it correctly, I'm feeling really positive. without any social security I'm at 87% of never running out of dough for 33 years at 72K. this was without changing any thing. If I put in my late husband and mine ss amounts I'm at 100%.

I also played with a couple of scenarios. like the one where my spending decreases as I get older. I may play around with higher numbers, lol see if I can go living la vida loca. see what would happen if I start spending 82K a year.
Yeah, I don't know why but Firecalc does feel like it's overly optimistic, but they are basing it on historical numbers so the numbers are what they are which in my case is good
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Old 08-04-2017, 07:34 AM
 
Location: San Diego
477 posts, read 511,065 times
Reputation: 881
Quote:
Originally Posted by reneeh63 View Post
FIVE million? Do I hear TEN, just in case? Seriously, I guess no one is really ever set to retire...how do people do it?
I think a lot depends on passive income as well. I'm 34 and not planning for social security to be available at retirement age. If it is then great but I'm certainly not counting on it. My job doesn't offer a pension or anything either as most don't anymore. And health care is a complete mess as well so who knows what will happen with it in 30 years. I guess it's the whole hope for the best but plan for the worst scenario. Also we live in a very high COL area but I will never leave because the weather makes it worth it.
And modern medicine is allowing for a longer life expectancy. Both sets of grandparents lived into their late 90s and one grandma is 100 right now. And nice care home costs about $50k a year and after working in them I wouldn't want to ever be in the less expensive ones those places can be horrible. I also don't want to burden my kids at all.
And as a former hospice nurse I've seen way too many people with cancer and terminal illnesses. That can drain the bank account VERY fast if especially you want to try anything experimental or other non covered treatments. Health care costs are a ton for the elderly if you want proper care. Many things aren't covered that can really help so that all comes out of pocket (hearing aides, steroid injections hit or miss, etc).
AND we are going to have to financially support my mom and my husbabds mom who don't think about any of this (must be nice) so we are already building them a home on our property so we only have to pay for one caregiver instead of them being in a care home since neither have any savings.
It's definitely not impossible though and I fully intend of hitting that retirement goal.
And no we don't vacation much because our kids are perfectly content to play at the park or the beach and with their friends. And so are we.

Last edited by scgali; 08-04-2017 at 08:09 AM..
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Old 08-04-2017, 08:01 AM
 
71,736 posts, read 71,853,273 times
Reputation: 49289
Quote:
Originally Posted by FREE866 View Post
Yeah, I don't know why but Firecalc does feel like it's overly optimistic, but they are basing it on historical numbers so the numbers are what they are which in my case is good
they are based on the worst cases we have seen in more than 40 years. that is not optimistic at all .if anything can be a bit more optimistic it is compared to fidelity's planner , firecalc does not inflate healthcare and long term care costs automatically by more than the rate of inflation . fidelity was doing healthcare at 5.50% and long term care at 7% . now they do both at 5.50% since cost inflation came down a bit.
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Old 08-04-2017, 08:02 AM
 
1,831 posts, read 2,139,669 times
Reputation: 2602
I have found a 4% withdrawal rate recommended by the financial adviser to be correct over the years.
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Old 08-04-2017, 08:05 AM
 
71,736 posts, read 71,853,273 times
Reputation: 49289
Quote:
Originally Posted by eliza61nyc View Post
Oh thanks for the firecalc link. If I'm understanding it correctly, I'm feeling really positive. without any social security I'm at 87% of never running out of dough for 33 years at 72K. this was without changing any thing. If I put in my late husband and mine ss amounts I'm at 100%.

I also played with a couple of scenarios. like the one where my spending decreases as I get older. I may play around with higher numbers, lol see if I can go living la vida loca. see what would happen if I start spending 82K a year.
90% is considered the minimum you want to see in success rate. what firecalc is really doing is if you say you want to spend 100k , but ss and pension are entered as 40k ,firecalc subtracts the income and stress tests just your portfolio to see if it can produce the rest of the needed income .

remember nooooo decent calculator tells you what you need . good calculators only tell you how many times you would have failed to meet your income you entered over the past 116 rolling 30 year cycles or more based on the allocation you choose .

there is no such thing as an amount needed . there is only the success rate you want to achieve based on numbers and allocations you pick
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Old 08-04-2017, 08:30 AM
 
Location: Philadelphia/South Jersey area
2,879 posts, read 1,408,105 times
Reputation: 10108
Quote:
Originally Posted by mathjak107 View Post
90% is considered the minimum you want to see in success rate. what firecalc is really doing is if you say you want to spend 100k , but ss and pension are entered as 40k ,firecalc subtracts the income and stress tests just your portfolio to see if it can produce the rest of the needed income .

remember nooooo decent calculator tells you what you need . good calculators only tell you how many times you would have failed to meet your income you entered over the past 116 rolling 30 year cycles or more based on the allocation you choose .

there is no such thing as an amount needed . there is only the success rate you want to achieve based on numbers and allocations you pick
oh thanks Mathjack.

let me ask another question if you don't mind. when I did it, I put in the 6K a month for spending. that amount includes 1700 for my mortgage that will go away in a few years when I downsize. should I lower my spending figure.
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Old 08-04-2017, 08:45 AM
 
660 posts, read 311,796 times
Reputation: 1242
Firecalc is strange. It becomes LESS optimistic if I put in my pension but not sure why . . .
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Old 08-04-2017, 09:53 AM
 
Location: SoCal
13,265 posts, read 6,351,451 times
Reputation: 9885
Quote:
Originally Posted by scgali View Post
I think a lot depends on passive income as well. I'm 34 and not planning for social security to be available at retirement age. If it is then great but I'm certainly not counting on it. My job doesn't offer a pension or anything either as most don't anymore. And health care is a complete mess as well so who knows what will happen with it in 30 years. I guess it's the whole hope for the best but plan for the worst scenario. Also we live in a very high COL area but I will never leave because the weather makes it worth it.
And modern medicine is allowing for a longer life expectancy. Both sets of grandparents lived into their late 90s and one grandma is 100 right now. And nice care home costs about $50k a year and after working in them I wouldn't want to ever be in the less expensive ones those places can be horrible. I also don't want to burden my kids at all.
And as a former hospice nurse I've seen way too many people with cancer and terminal illnesses. That can drain the bank account VERY fast if especially you want to try anything experimental or other non covered treatments. Health care costs are a ton for the elderly if you want proper care. Many things aren't covered that can really help so that all comes out of pocket (hearing aides, steroid injections hit or miss, etc).
AND we are going to have to financially support my mom and my husbabds mom who don't think about any of this (must be nice) so we are already building them a home on our property so we only have to pay for one caregiver instead of them being in a care home since neither have any savings.
It's definitely not impossible though and I fully intend of hitting that retirement goal.
And no we don't vacation much because our kids are perfectly content to play at the park or the beach and with their friends. And so are we.
The younger you are when you retire, the more money you need. I think perhaps you are only 34, of course you should like working at this age, but $5 million is not realistic savings for anybody. My sister's best friend died at 63 with $5 million, she was worried about health insurance, so kept working. Had breast cancer and didn't let anybody know, didn't treat it. I'm sure she could retire and pay for Cobra for two years until she gets Medicare, but she didn't. She didn't have the right priority.
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