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I am reading all your posts and it scares me.
I am almost 50.
And I have no savings. Due to single parenting, taxes up the ying yang, student loans.
Not due to frivilous spending at all. I am also not smart in this area.
I have some 401 and 2 other retirements I am putting into.
But not much.
I have worked since the day I was 14 years old.
I do not count on Social Security being there for me.
I believe the only thing that you can truly count on is social security being there.
to some extent we are all subject to the sequence risk of the market gods.
i had mentioned in another thread that two people can behave exactly the same , meaning same starting amounts ,same exact investments,same savings rate and just start 1 year apart with the exact same average return and have have totally different balances by retirement.
in monte carlo studies the order of gains and losses left 2 hypothetical investors behaving identically with same average returns only starting 1 year apart with vastly different balances .
one had 17x their salary saved and the other 27x salary saved. imagine ,identical behavior ,identical returns can end up so far apart..
that shows you how hard it is to project based on using market averages .
don't forget a 40% drop at the end on a substaintial portfolio is very different than a 40% drop in the beginning and having the same average return applied.
a 40% drop on my portfolio now would likely wipe out the first 20-25 years gains
You need 42k to live off of after medical expenses, property taxes, and assuming your house is paid off (what was assumed by the OP's directive? Holy!! That's a lot of food, vacations, car payments, and toys. If that's what it's for, great. Have fun. But if it's what you need to just "live" then living is very different between me and you.
You right we probably could live off less, but our income is almost 150k a year now, 42k doesn't seem like a lot to me. If we downsized we could get by on much less.
but remember , as long as everything is not a need our spending patterns change big time as we age. by mid 70's spending takes a dive and stays down until mid 80's when healthcare costs ,gifting and charity kicks up.
that spending reduction offsets more than the price increases generally on the stuff we still do and buy.
that factor has a huge difference in inflation adjusting needed through our older years and hense the amounts we need.
of course if you have no descretionary income because everything is a need there is nothing to cut out as you age .
to some extent we are all subject to the sequence risk of the market gods.
i had mentioned in another thread that two people can behave exactly the same , meaning same starting amounts ,same exact investments,same savings rate and just start 1 year apart with the exact same average return and have have totally different balances by retirement.
in monte carlo studies the order of gains and losses left 2 hypothetical investors behaving identically with same average returns only starting 1 year apart with vastly different balances .
one had 17x their salary saved and the other 27x salary saved. imagine ,identical behavior ,identical returns can end up so far apart..
that shows you how hard it is to project based on using market averages .
don't forget a 40% drop at the end on a substaintial portfolio is very different than a 40% drop in the beginning and having the same average return applied.
a 40% drop on my portfolio now would likely wipe out the first 20-25 years gains
why the difference starting one year apart? What causes that?
I am reading all your posts and it scares me.
I am almost 50.
And I have no savings. Due to single parenting, taxes up the ying yang, student loans.
Not due to frivilous spending at all. I am also not smart in this area.
I have some 401 and 2 other retirements I am putting into.
But not much.
I have worked since the day I was 14 years old.
I do not count on Social Security being there for me.
I am scared I will not be able to live off what I am able to put away now
I envy all you you have been able to do so
I know it was due to your hard work.
You still have 15 - 20 years to build yourself a nest egg. You can still build some financial security, and you absolutely should.
SS will be there for you. Worst case scenario is the trust fund goes bankrupt and payments will be made only from current payroll taxes; you will still receive about 70% of your benefits.
Trim your expenses wherever you can and put more away for yourself. Invest sensibly. Make a reasonable asset allocation plan, re-balance regularly, keep your costs low.
I'm of the opinion there is no such thing as retirement. You just change what you do.
For example, most people consider me retired. From my perspective, I have 5 year, 1 year and quarterly goals that I work on. I get up early every morning and "work" (not in the usual sense) towards my objectives.
Having said that, I will say that working for a living is highly over-rated.
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