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Old Yesterday, 02:35 PM
 
Location: Tennessee
24,264 posts, read 18,075,952 times
Reputation: 28537

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Quote:
Originally Posted by Teacher Terry View Post
We cut our expenses and work part time. This has made it so we could afford to travel. Serious, I am so sorry your parents are such train wrecks. I really don’t understand it as I don’t want many things anymore but enjoy experiences. I have 5 pairs of shoes and 2 purses. Nothing designer. It must be hard for you to watch. Don’t let it become your financial problem.
She has known her health has not been good for quite some time.

She has some fairly significant medical issues, but how much of that is "not preventable" and how much is exacerbated by lifestyle choices (poor diet, obesity, extremely sedentary) is hard to tell.

What gets me is that retirement is something you, ostensibly, plan for. They had a paid for 2010 Camry and 2004 Corolla that he used to get to work. The Corolla gave some trouble, but if you know your income is going to be reduced, I'd have gotten a used budget something and paid that off as quickly as possible. If she had to have new and shiny, she should have kept working until they paid it off. She really hadn't been talking about retiring until this winter/spring. I think she's been looking for an "exit ramp" as quickly as possible and getting SS at 62 is just her way out of it all.

He brings around $3,600/month net. The mortgage and car are about $1,000 of that. As long as he can keep working, they can make it for now, but it's going to require a drastic lifestyle change that I don't think they're ready for (especially her) or even really understand. At 62, they're doing the same things they did at 42 when I was little and pretty much living the same way.

Dad's line of thinking is that once she stops working and rests for awhile, that she'll be more active around the house, cook more, clean the hoard up, etc. I don't think so. She's always shopped a lot. She's always sat and watched a lot of TV from the time she gets in to the time she goes to bed. I don't have any reason to believe that her shopping habits will change or that she'll somehow get more active or productive around the house. She is who is she is at this point.

What's disconcerting is that they are speeding toward the financial wall, but seemingly have no clue. The lack of savings, lack of paid off house, making payments on a car then retiring, no significant pension, etc., is tough enough, but the continued excessive shopping, never eating at home, and doing no "prep work" for retirement is mind-boggling. There's no psychological "soft landing" at all - it's going to be a very hard adjustment for them.

I'm not sure what will happen, but my guess is she will continue the spending and buying things even once retired. I don't think he'll take it well at that point. Honestly, I wouldn't be surprised if they don't have significant marital issues in a few years. I also wouldn't be surprised if she just lays in the chair from daylight to dark, then goes downhill quickly. Unless she pulls a rabbit out of her hat here, I don't see this ending well.

A lot of couples are like this.
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Old Yesterday, 02:43 PM
 
Location: Monroe NJ
14 posts, read 6,635 times
Reputation: 12
Quote:
Originally Posted by lottamoxie View Post
I think the first question is: do you have a good sense of how much of a total nest egg you'll need for your retirement?

It's a math equation generally calculated thusly: (avg annual expenses expected) x 25.

Assumptions are: retirement horizon of 25 to 30 years, starting withdrawal rate of 4% per year then adjusted for inflation, maintaining an equity exposure or comparable of no less than 40%.




My approach:

1. Understand yearly expenses by tracking them. I've used the free aggregator website Mint.com by Intuit for the last 9 years, but there are other tools as well. That's made it easy peasy to see what I'm spending, where I'm spending it, and how my expenses are tracking compared to my monthly budget.

2. Calculate my expected total nest egg needed for my retirement (see formula above).

3. Get my social security benefits report (updated each year), to understand how much I can expect each month in retirement. Total amount of SS benefits will get subtracted from the total nest egg needed.

4. IF there's a pension, get an updated report to see how much is in the account. In my case there is no pension. Any expected pension amount total will be subtracted from the total nest egg needed.

5. Maximize contributions to retirement buckets as much as possible while earning income, and utilize as many retirement buckets available, to the extent reasonably possible. That means combos that include 401K pre and after-tax, IRAs (Roth and Pre-tax), Backdoor IRAs.

6. Learn what types of investments (mutual funds, ETF funds, index, active managed) are best in pre-tax and what ones are best in after-tax. This is best to learn as early as possible long before retirement.

7. Learn about taxes, what gets taxed, when, how much, divs vs cap gains, qualified vs unqualified divs, what all makes up MAGI and what account(s) to withdraw from first, next, last. All this info is available online -or- a tax professional can assist if needed.

8. Based on understanding yearly expenses needed in retirement and using the above formula, minus expected income from pension/social security/other determine total nest egg needed. Compare nest egg needed to current total portfolio amount. Don't include current domicile in nest egg calculation unless you're planning to sell it. However, do include any income from rentals, net value of other property owned after any mortgage.

9. Once your current nest egg total ≥ net nest egg needed, you are at the point where you can retire IF you want to. If you don't want to retire and don't have to, then keep working.
This is it. Many thanks for putting this in bullet points. I see many of the steps I have done. I too have been using Mint for many years and maintain an excel spreadsheet. But I am going to use this post to put things in sharper focus and revert with my what I see.
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Old Yesterday, 02:45 PM
 
Location: Monroe NJ
14 posts, read 6,635 times
Reputation: 12
Quote:
Originally Posted by Serious Conversation View Post
She has known her health has not been good for quite some time.

She has some fairly significant medical issues, but how much of that is "not preventable" and how much is exacerbated by lifestyle choices (poor diet, obesity, extremely sedentary) is hard to tell.

What gets me is that retirement is something you, ostensibly, plan for. They had a paid for 2010 Camry and 2004 Corolla that he used to get to work. The Corolla gave some trouble, but if you know your income is going to be reduced, I'd have gotten a used budget something and paid that off as quickly as possible. If she had to have new and shiny, she should have kept working until they paid it off. She really hadn't been talking about retiring until this winter/spring. I think she's been looking for an "exit ramp" as quickly as possible and getting SS at 62 is just her way out of it all.

He brings around $3,600/month net. The mortgage and car are about $1,000 of that. As long as he can keep working, they can make it for now, but it's going to require a drastic lifestyle change that I don't think they're ready for (especially her) or even really understand. At 62, they're doing the same things they did at 42 when I was little and pretty much living the same way.

Dad's line of thinking is that once she stops working and rests for awhile, that she'll be more active around the house, cook more, clean the hoard up, etc. I don't think so. She's always shopped a lot. She's always sat and watched a lot of TV from the time she gets in to the time she goes to bed. I don't have any reason to believe that her shopping habits will change or that she'll somehow get more active or productive around the house. She is who is she is at this point.

What's disconcerting is that they are speeding toward the financial wall, but seemingly have no clue. The lack of savings, lack of paid off house, making payments on a car then retiring, no significant pension, etc., is tough enough, but the continued excessive shopping, never eating at home, and doing no "prep work" for retirement is mind-boggling. There's no psychological "soft landing" at all - it's going to be a very hard adjustment for them.

I'm not sure what will happen, but my guess is she will continue the spending and buying things even once retired. I don't think he'll take it well at that point. Honestly, I wouldn't be surprised if they don't have significant marital issues in a few years. I also wouldn't be surprised if she just lays in the chair from daylight to dark, then goes downhill quickly. Unless she pulls a rabbit out of her hat here, I don't see this ending well.

A lot of couples are like this.
I am quite saddened to read your post about your parents' situation. Whilst we do spend but we always have the savings done upfront first. So we have been saving but it just has not been long enough to kick in the compounding effects of time quite that much. A personal situation where we could not start saving enough earlier.
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Old Yesterday, 02:49 PM
 
Location: Knoxville, TN
1,487 posts, read 668,940 times
Reputation: 3471
Quote:
Originally Posted by TheShadow View Post
All great ideas up to the bolded part. A new car, if maintained, will last much longer than that. My husband is still driving my car I bought new 17 years ago. I just got a new one. I could have kept driving the old one, but he wanted it. It runs great, looks good, even with 170,000 miles on it. To me, a new car every 7 years would qualify as unnecessary spending on things I don't really need. But obviously it worked out for you, so that's cool.
My Prius is a 2010 and still serving me well, so it isn't a question of whether it has "lasted." It is still a great car! However, I don't have a backup camera and some of the other newer technology I might like to have. I also have a bit more worry on road trips with my car aging. I am thinking 2020 might be the year to replace it. I can afford to do it. But, if replacing it would be a financial hardship, yes, this car has many years left in it.
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Old Yesterday, 02:49 PM
 
Location: Wisconsin
17,464 posts, read 17,750,921 times
Reputation: 42776
Quote:
Originally Posted by Teacher Terry View Post
We cut our expenses and work part time. This has made it so we could afford to travel. Serious, I am so sorry your parents are such train wrecks. I really donít understand it as I donít want many things anymore but enjoy experiences. I have 5 pairs of shoes and 2 purses. Nothing designer. It must be hard for you to watch. Donít let it become your financial problem.
Teacher Terry said it well. Serious, I can not imagine anyone with that many expensive purses and pairs of shoes (unless they were a multi-millionaire). I also have about five pairs of shoes that I wear on a regular basis, plus about four more pair (that are all five to ten years old) that I wear for weddings or funerals or various special occasions. I have two purses, one for summer and one for winter.
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Old Yesterday, 03:07 PM
 
154 posts, read 76,359 times
Reputation: 599
Quote:
Originally Posted by Serious Conversation View Post
She has known her health has not been good for quite some time.

She has some fairly significant medical issues, but how much of that is "not preventable" and how much is exacerbated by lifestyle choices (poor diet, obesity, extremely sedentary) is hard to tell.

What gets me is that retirement is something you, ostensibly, plan for. They had a paid for 2010 Camry and 2004 Corolla that he used to get to work. The Corolla gave some trouble, but if you know your income is going to be reduced, I'd have gotten a used budget something and paid that off as quickly as possible. If she had to have new and shiny, she should have kept working until they paid it off. She really hadn't been talking about retiring until this winter/spring. I think she's been looking for an "exit ramp" as quickly as possible and getting SS at 62 is just her way out of it all.

He brings around $3,600/month net. The mortgage and car are about $1,000 of that. As long as he can keep working, they can make it for now, but it's going to require a drastic lifestyle change that I don't think they're ready for (especially her) or even really understand. At 62, they're doing the same things they did at 42 when I was little and pretty much living the same way.

Dad's line of thinking is that once she stops working and rests for awhile, that she'll be more active around the house, cook more, clean the hoard up, etc. I don't think so. She's always shopped a lot. She's always sat and watched a lot of TV from the time she gets in to the time she goes to bed. I don't have any reason to believe that her shopping habits will change or that she'll somehow get more active or productive around the house. She is who is she is at this point.

What's disconcerting is that they are speeding toward the financial wall, but seemingly have no clue. The lack of savings, lack of paid off house, making payments on a car then retiring, no significant pension, etc., is tough enough, but the continued excessive shopping, never eating at home, and doing no "prep work" for retirement is mind-boggling. There's no psychological "soft landing" at all - it's going to be a very hard adjustment for them.

I'm not sure what will happen, but my guess is she will continue the spending and buying things even once retired. I don't think he'll take it well at that point. Honestly, I wouldn't be surprised if they don't have significant marital issues in a few years. I also wouldn't be surprised if she just lays in the chair from daylight to dark, then goes downhill quickly. Unless she pulls a rabbit out of her hat here, I don't see this ending well.

A lot of couples are like this.
I'm amazed you are from the same gene pool. I just hope your help never exceeds from giving them advice. Trying to financially help them is likely a lost cause. It is up to you to turn your family tree around and that likely can't happen if you allow your Parents to bring you down financially. This isn't about being selfish, it's about helping the generations after you the ones that haven't yet created their own problems.
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Old Yesterday, 03:23 PM
 
Location: NJ
10,946 posts, read 21,598,545 times
Reputation: 9303
Quote:
Originally Posted by eternalsands View Post
Folks who are thinking about retiring in 5 to 7 years and feel that they would not have enough to sustain them through the rest of life how would you plan ahead.

I am sure there are many who simply had life events or started saving late or did not save enough for any reason and are now figuring out using all the online retirement calculators that they might not have enough.

What is your approach to tackling this momentous life-altering issue?

I know the obvious ones.. move to lower cost of living area... move out of USA.. curtail your spending.

I would welcome it if anyone can share their real-life experiences.
Your profile says Location: Monroe NJ. Which Monroe? The one by Turnersville that has high taxes? If yes, my suggestion is to move.
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Old Yesterday, 03:27 PM
 
Location: SoCal
14,025 posts, read 6,706,386 times
Reputation: 10682
Quote:
Originally Posted by germaine2626 View Post
Teacher Terry said it well. Serious, I can not imagine anyone with that many expensive purses and pairs of shoes (unless they were a multi-millionaire). I also have about five pairs of shoes that I wear on a regular basis, plus about four more pair (that are all five to ten years old) that I wear for weddings or funerals or various special occasions. I have two purses, one for summer and one for winter.
I have exactly 2 purses, all worth less than $200. One I use to travel overseas because it has a lock, keep out the thieves for pickpocketing . I have about 5-10 pair of flip flops and a few pairs of tennis shoes.
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Old Yesterday, 05:01 PM
 
7,104 posts, read 3,932,155 times
Reputation: 14654
Quote:
Originally Posted by eternalsands View Post
Folks who are thinking about retiring in 5 to 7 years and feel that they would not have enough to sustain them through the rest of life how would you plan ahead.

I am sure there are many who simply had life events or started saving late or did not save enough for any reason and are now figuring out using all the online retirement calculators that they might not have enough.

What is your approach to tackling this momentous life-altering issue?

I know the obvious ones.. move to lower cost of living area... move out of USA.. curtail your spending.

I would welcome it if anyone can share their real-life experiences.
That's all they can do, except to also wok a few more years. Three more years would make more difference than a person thinks, sometimes. It should be invested in mutual funds. It depends on how little they have saved.

They will also get Social Security, right?
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Old Yesterday, 05:20 PM
 
Location: Coastal Georgia
37,457 posts, read 46,198,470 times
Reputation: 62450
Quote:
Originally Posted by EllieKay56 View Post
One plan we have, I will still be working at 66. DH will be collecting his Social Security. I will take 1/2 of his and we will bank it. We do this for 2 years we will have some money to fall back on. At 66 I can make as much as I want and not have to worry about collecting SS. It is only a little more then 2 years away so light at the end of the tunnel. DH will work part-time. I also plan to work part-time when retired. I took a 2nd job teaching English to kids in China and that will help accelerate paying down debt.
We did have a decent amount saved but 10 yrs ago when economy tanked DH lost his job that paid decent and has since made a lot less. We did have to dip into our savings.
So, why donít you both take the maximum? I dont get it. Keep working as long as you want or can and bank the rest unless you need it.
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