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Old 06-27-2008, 06:04 AM
 
Location: Forests of Maine
30,677 posts, read 49,423,020 times
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Quote:
Originally Posted by valleys_of_hills View Post
I read recently that generally surveys/polls/studies show that seniors typically are more content having a lower income than younger people. Maybe when you retire/get older, you find you don't feel like you need as much money as you thought you would.

Or the need to compete and maintain the stress level fades.
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Old 06-27-2008, 07:11 AM
 
1,861 posts, read 3,023,912 times
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Let me ask you something - my mother lives on social security from my father's income, and some from his pension - since he died. No real savings - just enough to fix things if they're broken. And, the house is paid for, and owned by us kids now.

How come financial people tell us all the time that we need millions to retire? My mother sure doesn't have it. But, she's fine. Maybe the main thing is that the house is paid off?
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Old 06-27-2008, 07:43 AM
 
Location: Forests of Maine
30,677 posts, read 49,423,020 times
Reputation: 19129
Marketing.

'financial people' are salesmen.

Most of them earn a living from convincing others to invest through them.

During my Naval career, I can not count how many insurance salesmen / mutual fund salesmen I have encountered. Trying to convince young sailors that they 'needed' $1m of life insurance and they 'needed' to start portfolios for their un-born children.
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Old 06-27-2008, 08:44 AM
 
Location: DC Area, for now
3,517 posts, read 12,048,324 times
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Fees will eat your wealth alive. The financial section in the last retirement class I took - someone who does not take clients - said the best thing we could do is learn to manage our money and investments ourselves because fees can remove most of your earnings.

Besides, the statistics show that the vast majority of financial advisers do not earn their keep over just investing in index funds. Turns out trading is the big money loser.

The rule of thumb they rely on is for every $50k of inflation-proof retirement income you need to live on, you need $1 million. The average income in the US is less than that. Not having to spend money on housing is a big money saver. They also assume you need some 80% of your working income to retire comfortably and securely, but this assumes you still have a mortgage to pay.

My calculations show that I can retire on 60% of my current income with no changes in my current standard of living without a mortgage to pay and still have several thousand a year left over. The truth is that I could tighten my belt quite a bit more. I am stepping down my costs in preparation but some things are just too time-consuming while I still have to spend 12-13 hours/day working and commuting.

My mother lived on about $11k/yr for many years but major disasters (big car repairs) forced her to ask me to fund it - which I was happy to do. When my father died, she had 1st dibs on his survivor SS and that increased her income about double. Now she feels quite flush. She always was a master at frugality but doesn't seem to mind.
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Old 06-27-2008, 11:14 AM
 
Location: Oxygen Ln. AZ
9,321 posts, read 16,573,689 times
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My 93 year old mom has a decent income from my dad's LAPD pension and a small SS check from him as well. Her SS check is $400 a month. We have her here with us, so she pays no property tax, utilties, etc. She only covers her little medicine bill, suplemental insurance and her groceries. She could live on her SS check alone and have some change. She has always had the depression era mentality and is very frugal. I am not sure she could spend $12,000 a year. Of course if she were still in her home, she would expend more of her income on taxes and upkeep, but she did just fine on around $15,000 a year.
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Old 06-27-2008, 11:49 AM
 
Location: Forests of Maine
30,677 posts, read 49,423,020 times
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Quote:
Originally Posted by Tesaje View Post
Fees will eat your wealth alive. The financial section in the last retirement class I took - someone who does not take clients - said the best thing we could do is learn to manage our money and investments ourselves because fees can remove most of your earnings.
Good advise.



Quote:
... Besides, the statistics show that the vast majority of financial advisers do not earn their keep over just investing in index funds. Turns out trading is the big money loser.
Big surprise!

If the 'pros' can not support themselves from index funds, then why is it that so many are drawn to their advice?



Quote:
... The rule of thumb they rely on is for every $50k of inflation-proof retirement income you need to live on, you need $1 million. The average income in the US is less than that. Not having to spend money on housing is a big money saver. They also assume you need some 80% of your working income to retire comfortably and securely, but this assumes you still have a mortgage to pay.
My pension is 1/4 of what my take-home salary had been;
Our investment portfolio paid off the retirement home;
And my DW's part-time job brings in about 1/5 of what I was making.

So I guess that we are moving along on about 45% of what I brought home when I was working. Our portfolio is growing again of course, and we have not touched it since buying this home.



Quote:
... My calculations show that I can retire on 60% of my current income with no changes in my current standard of living without a mortgage to pay and still have several thousand a year left over. The truth is that I could tighten my belt quite a bit more. I am stepping down my costs in preparation but some things are just too time-consuming while I still have to spend 12-13 hours/day working and commuting.
Perhaps a more complete a rule of thumb would be that you will still need 80% with a mortgage, and 45% to 60% without a mortgage.

Sounds about right.

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Old 06-27-2008, 01:08 PM
 
Location: North Carolina
531 posts, read 1,804,957 times
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Quote:
Originally Posted by cousinsal View Post
Let me ask you something - my mother lives on social security from my father's income, and some from his pension - since he died. No real savings - just enough to fix things if they're broken. And, the house is paid for, and owned by us kids now.

How come financial people tell us all the time that we need millions to retire? My mother sure doesn't have it. But, she's fine. Maybe the main thing is that the house is paid off?
This does work because the currently retired have this little gem called MEDICARE. If she had to actually pay for her medical bills, she (and therefore you, her kids) would be wiped out in no time. Those of us who are <55 or so should be shaking in our boots because ain't gonna be no Medicare for us!

I retired when I was 38 and have lived on far less than 12K a year. My biggest expense? Health insurance!! And I have a crappy crappy policy, all that I can afford. Really, medical care is the big fly in the retirement ointment. STAY HEALTHY!! (yeah, I know, not always under your control!)
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Old 06-27-2008, 01:29 PM
 
365 posts, read 1,130,295 times
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Quote:
Originally Posted by goat1of2 View Post
This does work because the currently retired have this little gem called MEDICARE. If she had to actually pay for her medical bills, she (and therefore you, her kids) would be wiped out in no time. Those of us who are <55 or so should be shaking in our boots because ain't gonna be no Medicare for us!

I retired when I was 38 and have lived on far less than 12K a year. My biggest expense? Health insurance!! And I have a crappy crappy policy, all that I can afford. Really, medical care is the big fly in the retirement ointment. STAY HEALTHY!! (yeah, I know, not always under your control!)
Medicare doesn't pay for everything; you need a supplemental policy. And supplemental insurance won't cover everything, either. (Rule of Thumb: If Medicare doesn't cover it, supplemental won't either.) So, once you reach the infamous Donut Hole, you have to come up with thousands of dollars on your own for your Rx, until Medicare kicks in again. Medicare does not = No Medical Bills. Far from it.
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Old 06-27-2008, 07:16 PM
 
Location: Out there somewhere...a traveling man.
39,528 posts, read 47,687,050 times
Reputation: 110326
We're retired and it costs us approximately $44,700 anually.
Medical we pay our share $3000.00+ per month
Taxes $1500.00 yearly
Food and eating out once a week $1800.00 yearly
Insurance for home and vehicles(2) $1000.00 yearly
HOA $400.00 yearly
Misc, gasoline, clothes etc $1500.00 yearly
Utilites $1800.00 yearly.
(Figures were rounded off for convenience of figuring)
A good portion of retirees have medical expenses that they did not have when they were younger. Different insurance plans pay different amounts. You still pay something. God forbid you have heart problems, cancer, M/S etal of the serious medical categories. You pay a lot out of pocket. Prescriptions cost an arm and a leg even after insurance, medicare/medicaid payoffs.
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Old 06-28-2008, 09:22 AM
 
Location: North Carolina
531 posts, read 1,804,957 times
Reputation: 302
Quote:
Originally Posted by CarolL View Post
Medicare doesn't pay for everything; you need a supplemental policy. And supplemental insurance won't cover everything, either. (Rule of Thumb: If Medicare doesn't cover it, supplemental won't either.) So, once you reach the infamous Donut Hole, you have to come up with thousands of dollars on your own for your Rx, until Medicare kicks in again. Medicare does not = No Medical Bills. Far from it.
No, but it does a damn good job of paying for most of it. After escorting two parents to the grave and managing their finances through it all, I can say that out of the hundreds of thousands of dollars of med bills my parents ran up, they only paid about 8% out of pocket. Over five or six years, my mother alone cost the taxpayer well in excess of 300K. We only ended up paying about 25K out of pocket, usually about 5K per year.

Medicare sends you statements, cutely entitled "THIS IS NOT A BILL" in which you can see how much the charge would be were you uninsured versus how much you have to pay. So long as you have at least 10K in savings, I don't see why you need supplemental insurance or even Part D prescription drug coverage. Okay, maybe those whose drugs cost thousands per month do well on Part D, but my parents never needed it. Had my mother decided to fight her final cancer, probably Part D would have been handy since a single dose of some chemo drugs can be 15K!

The big bugaboo is nursing home care which Medicare does not cover. Once my father could no longer live alone (Alzheimer's), then the money started disappearing to the tune of 50K per year. So, my take on all this would be: if you have heirs and want them to inherit, buy long term care insurance. Otherwise, plan to spend down and go on Medicaid.

Just one person's experience. Well, two people's actually. Someone trying to imagine upcoming scenarios might find actual experience useful.

Getting old is only for the brave!
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