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Old 12-14-2018, 07:36 PM
 
923 posts, read 253,784 times
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Not surprising. I doubt I will be retiring until I'm physically unable to work anymore. I save for my retirement, but you can only save so much, and down the road inflation will get me, never mind the fact that I could live for 20-25 years past the "retirement age" of 70 and that's a lot of money to save up-- gone are the days when you can expect to retire and not last long past that. The miracle of modern medicine means you can live longer-- not necessarily healthier, just longer-- and that's going to take some cash. You'll need 1,250,000 if you live to 95 (retiring at 70) and have an "income" of $50,000 per year... that's assuming inflation doesn't make such an income impossible to live on and that you don't have much in the way of medical bills, which is a big assumption. This means that if you save from age 25 to age 70, you'd have to save $27,777 every year. Who has that much spare every year to put away? Yes, there's the stock market... unless it crashes right before you retire; I had coworkers a few years from retirement who lost tens of thousands of dollars.


Quote:
Originally Posted by Lodestar 77 View Post
And the SIL goes off on the union/company without knowing all the facts of the situation. Where was he and the couple's daughter when Dad was planning to retire/signing the paperwork to retire? People need to educate themselves throughout their 30's, back in the day hitting that age made one part of "the establishment".......
Perhaps they were speaking out against it, but since their parents were (I assume) competent adults, what could they do about it?


Quote:
Originally Posted by Blue Wave View Post
I can't imagine many things more depressing than having to work until you drop dead.

You can retire in your early 60s on a measly $1k monthly SS check though. There are low-income senior housing complexes (many of which are quite nice), food stamps, heavily discounted senior public transportation, and Medicare/Medicaid. Alternatively, you could expatriate to some third world country and live comfortably for next to nothing. If my finances were horrible, I'd do that before having to find a job in old age.
And some low-income senior housing is crap... plenty of people in my mom's building hated it there (a lot of stupid prohibitive rules and a "ruling clique"), but were stuck because they couldn't afford full, non-subsidized rent. Public transportation only goes so far, assuming there even IS good public transportation in your area.

Third-world countries are... third-world. Not somewhere to go when you're probably going to need significant health care in future. Not necessarily somewhere to go if you won't have any family to help care for you or won't be able to afford a nursing home and would need Medicaid's help in paying for it.
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Old 12-15-2018, 02:57 AM
 
Location: RVA
2,164 posts, read 1,264,175 times
Reputation: 4451
Re: the stock market. I too lost 10’s of thousands in the market. Didn’t really care one bit. Because I had gained hundreds of thousands. Its called the magic of compounding. Try it some time. People that come up with numbers like that should know that they are bad at financial math before letting everyone know that they are. For instance, if you saved 1000 a month (less than half of what you said is required) for the same 50 year period, and only earned on average 5% a year, which is WAY less than the stock market has earned on average over the last 70 years, you would have over $2.6M. The 4% rule would allow you to take out over $100k a year for life on that, inflation adjusted as well. Plus your SS, which on average is another $26k/yr. not a shabby retirement.

Heck, even if you only START saving $250/mo and increase that amount by only 3% a year, so after 50 years, you are only saving about 1000/mo, you still have over $1.25M. And in a 401k where there is a company match of 50% on the first 6%, for that same meager savings, the number is near $2M.

I was taught this back in high school. Except the 401k part because they didn’t exist back then.

There are over 15 million millionaire households in the US alone, out of about 125 million. And the vast majority made less than an inflation adjusted $100k/yr in the final earning years of their lives. It is very possible if you have a skill and don’t mind a LBYM attitude during your working years. That seems to be the hardest part for most.

Engineers graduating today make $60k a year or more out of school. Attorneys, often $100k or more. Get a degree in a desired skill. LBYM. And it just happens.

Last edited by Perryinva; 12-15-2018 at 03:14 AM..
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Old 12-15-2018, 03:36 AM
 
1,137 posts, read 569,034 times
Reputation: 4370
There is a huge difference in outcome while having small investments in the market, and have it crash when you are accumulating, and having small investments and have the market crash at the beginning of the decumulation stage. Context is everything, so I totally get where k12244's statement came from.
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Old 12-15-2018, 03:43 AM
 
71,463 posts, read 71,652,652 times
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yes and no . in actuality, someone who retired in 2008 really did not get impacted much because it was a short v-shaped recovery . a much more extended modest decline would be much more hurtful .

so it is not the magnitude of the drop in the early part of retirement as much as the duration that can be hurtful.

everything is relative too . had someone avoided markets for fear of a drop , well odds are pretty good when you have that drop eventually you may still fall to levels at the worst , that you would never even be at had you avoided investing all the preceding years .

markets tend to be made up of higher highs as well as higher lows . we can always assume 80% of the time our balance will be somewhere between the last low and the last high . we don't stay at highs more than a day before we find a new level ,generally lower .

so allocations can be important in retirement because these rides up to the top and down to the valley usually end up in the middle to top somewhere anyway , so you may as well take the most direct path to that point rather than ride up to the peak and down in to the valley only to end up in the same spot .

Last edited by mathjak107; 12-15-2018 at 03:57 AM..
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Old 12-15-2018, 03:55 AM
 
71,463 posts, read 71,652,652 times
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investor behavior is the big factor . but when doing these laboratory evaluations , like firecalc or fidelity's planner we have to rule out certain variables in order to have apple to apple results .

the truth is gun shy people tend to be gun shy at any allocation . they just seem to have lower trigger points to bad behavior . they can be in very conservative models and be just as reactive to a loss and bail .

one thing about us humans is we are pre-programmed to hate losing money more than making it and it makes us do bad things .


what is interesting is it is the fear of losing money that causes this irrational thinking . but once we are actually down the feeling subsides .

it is like we can have a 500-600 point drop now , and move 40-50k in a day and my wife and i are like whatever... once the drop is under way the fear subsides for most .
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Old 12-15-2018, 04:24 AM
 
Location: RVA
2,164 posts, read 1,264,175 times
Reputation: 4451
Thats just timing and sequence of returns, couple with irrational fear. Unless they invested in something foolish, when the market declined, they still owned the same exact number of shares. Time is your ally in investing. Let it do the heavy lifting. I fully understand where that comes from, but those numbers were absurd. And to claim the stock market is the cause is even more so. Its not hard at all to point to the vast numbers that became wealthy with conservative investing in equities.

The biggest losers are uninformed that invest in risk & what they don’t know. I have been guilty of that, and it is all part of the learning curve. Had I listened to those smarter than myself and just stuck to index funds, as was always advised, I’d be far wealthier than I am now. And I also realize that saving steadily for 50 years is a huge outlier. Very few ever do that. Mainly because if you do it for 20 years, you realize how successful it is and concentrate more on it so only 30 years is needed. Virtually all my net worth was gained in the last 20 years. I was a slow learner.

I agree about not counting on assisted or senior housing rather than work. I’d much rather work until I drop and have a nicer life than be “retired” and live a meager existance. By far. No thank you. Some people don’t mind working hard to avoid work. I never got that.

Last edited by Perryinva; 12-15-2018 at 05:48 AM..
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Old 12-15-2018, 04:36 AM
 
71,463 posts, read 71,652,652 times
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most of what we accumulated came in the last 20 years too . but that is usually how it is because it takes balances to get up high enough where bull markets have the biggest effect or you are privy to the bigger deals and ventures . .

i started in 1987 . that was the start of 17 years of almost 14% cagr returns . all well and good , but i was just starting out and my balances were low . it was great we had such powerful market years but with little money accumulated yet the effect was muted .

it took me until i was 50 to hit a million but only 16 years to multiply it many times over .

the deals got bigger i was privy to , the moves got bigger as time went on and balances got bigger that were compounded on .

the longer the time frame you invest the less dependent you become on hitting the best years when your balances are highest . by delaying you really put pressure on the narrower time frame having to be a better one or above average .

this is what many fail to realize when they decide to pump any extra money in to paying off a mortgage first and then beefing up the savings . they can really hurt themselves if that narrower time frame is another lost decade or not so hot . you can't make up for time and the longer you keep investing the better and less time frame dependent you become because average works fine . but shorten the time frame and you may need above average returns to reach the same place .

Last edited by mathjak107; 12-15-2018 at 04:56 AM..
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Old 12-15-2018, 05:09 AM
 
2,442 posts, read 2,068,483 times
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Quote:
Originally Posted by mathjak107 View Post
most of what we accumulated came in the last 20 years too . but that is usually how it is because it takes balances to get up high enough where bull markets have the biggest effect or you are privy to the bigger deals and ventures . .

i started in 1987 . that was the start of 17 years of almost 14% cagr returns . all well and good , but i was just starting out and my balances were low . it was great we had such powerful market years but with little money accumulated yet the effect was muted .

it took me until i was 50 to hit a million but only 16 years to multiply it many times over .

the deals got bigger i was privy to , the moves got bigger as time went on and balances got bigger that were compounded on .

the longer the time frame you invest the less dependent you become on hitting the best years when your balances are highest . by delaying you really put pressure on the narrower time frame having to be a better one or above average .

this is what many fail to realize when they decide to pump any extra money in to paying off a mortgage first and then beefing up the savings . they can really hurt themselves if that narrower time frame is another lost decade or not so hot . you can't make up for time and the longer you keep investing the better and less time frame dependent you become because average works fine . but shorten the time frame and you may need above average returns to reach the same place .
I once heard/read this and I might be a little off but here goes. If someone was to contribute X amount of dollars each year and stop at age 30 they will be further ahead than someone who starts at 30. I don't recall dollar amounts or if it is even true.
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Old 12-15-2018, 05:49 AM
 
Location: Washington State
18,445 posts, read 9,548,793 times
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I'm getting ready to retire in a couple of weeks at just north of 60 and I'm very thankful. I believe all of my bases are covered financially. Key for me was getting educated, taking opportunities and underspending my income.
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Old 12-15-2018, 05:57 AM
 
Location: RVA
2,164 posts, read 1,264,175 times
Reputation: 4451
Yes, quite true. By having the significant amount early, that earning & compounding is more significant than adding the savings does. Time does the work, not you. When you have a million and it makes 10%, thats $100k. Very few can add $10/mo to match that. It used to be a joke, “how do you make a million bucks a year? Easy, first, get 10 million bucks and earn 10% a year on it! “

Like they say, the first million is the hardest. Because thats when you are learning and making “sacrifices”. After that, it gets much easier.
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