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Interest rates for conservative investors are killing many retirees. And investing in bonds or the market are not where most retired conservative investors are putting their savings...having seen what has happened over the past few years.
I feel sorry for the retirees that were used to getting 6%-8% interest on their savings that are now lucky to get 2%. Many of them are having to dip heavily into their principle [amount] to make-do.
funny thing its all relative..although we complain rates are low to non exsistant the real return after they factor in the inflation index and taxes is pretty close to the range where it always is regardless of rates...
like water we all find our own levels..some like tuborg and myself are actually planning to move up in retirement and hope to live better then before.. our plans include 2 places to live
others will seek levels lower then when working and they will level out at what they need to do..
the key to both ways is plan ofton and plan early... unless you have a road map of where you want to end up you will just drift into whatever life brings you.
That's why I always liked Money Magazine for retirement. Kiplinger and Smart Money were likes also. Money may not have been the best road map but they gave you great motivation and offered insight into what retirement could be like. That left it up to us to go for it or not. There is a wave of us that have hit things just right. The real estate boom if we sold at the right time and for many it did provide another leg along with our pension, SS and INVESTMENTS . In fact our retirement had a 4th leg that had not really been that great before and has diminished considerably but is still there some and that is/was home equity. If you bought your home 30 years ago in many parts of the country and have paid it off now you still can have a decent amount of equity. Now because of the current real estate market we have the opportunity to acquire another home for a change of pace if we want. Yes there may be questions about pensions but they are more secure than most peoples jobs. Another plus for them is if available the option to take a reduced payout so your spouse gets your benefit and if fortunate vice versa. We know that our current income level is the lowest it will be even if something happens to one of us. We still have my SS to eventually add into the mix down the road. We are very fortunate and things have worked out for us. Yes the housing market has caused some pain and others gain but now is a great time to buy and rates are dirt low if you finance. Retirement is a mixed bag and we are thankful for our mix and aware that not all are as fortunate.
I don't think how much you managed to save is nearly as important as preparation for retirement and for living on a reduced income.
To me preparation is:
Start preparing a minimum of 5 years, 10 if possible, before reaching retirement age.
Sell the McMansion and move down to a smaller, more affordable home. Two people do not need 2,800 sq. ft. they should be able to do nicely in a 1,200 sq. ft. home if properly laid out. Purchase with an eye to reduced real estate taxes and lower utilities cost.
Move to a lower cost area. We estimate our retirement income will be between $40 and $45k and while that may be poor house in New York we will do very nicely were we live. Fact is we live in an area where $40k is above the average family income. This isn't a "I think I can" but it is something we are currently doing even though I am still working. Fact is we have discovered we can live very comfortably on $30k.
In preparation our house is paid for ad we do not have any bills other than real estate taxes ($120/month) and utilities that average $200/month.
While working we purchased new windows, had a new 30 year roof put on and all new electric and plumbing installed with an eye towards energy conservation in the future. All this work has been accomplished in the last year with the rest finished in the next year or two.
We also selected a state where retirement income up to $60,000 for a couple is exempt from state income taxes.
I know we can live on 70% of our expected retirement income because we already are.
Sounds like some common sense advice, but If you are going to be using $40k per year in retirement you will have had to have saved 1 Million 2 hundred k if you retire at 60 and expect to live another 30 years, thats a lot of money to accrue if you are only starting to save it 5 to 10 years before actually retiring,
Sounds like some common sense advice, but If you are going to be using $40k per year in retirement you will have had to have saved 1 Million 2 hundred k if you retire at 60 and expect to live another 30 years, thats a lot of money to accrue if you are only starting to save it 5 to 10 years before actually retiring,
Not necessarily. They could have a pension that is supplying part or all of that $40k. Even without a pension, their combined Social Security income could exceed the $40k by itself. (Obviously not at 60, but shortly thereafter. In that case, their savings would only need to cover the $40k for a couple of years, not 30.)
People who are ALREADY retired are home free. The people who worked mainly BEFORE wages stagnated in the 1970s. I thought everyone knew that; Washington considers current retirees as the ultimate favored class and continues to increase their benefits as the national debt explodes.
It's the people who are 10 years or more away from retirement who will pay for everything, and get virtually nothing in return.
Well, I didn't graduate from college until 1979, so I joined the work force after the 70s, but I still managed to do just fine. Of course, I spent my 20s, 30s and 40s saving, investing and planning for retirement in my 50s. And like your second bolded statement above, I should be "10 or more years away from retirement," but thanks to my planning, I am enjoying the first of what I hope will be many years and decades of retirement.
Well, I didn't graduate from college until 1979, so I joined the work force after the 70s, but I still managed to do just fine. Of course, I spent my 20s, 30s and 40s saving, investing and planning for retirement in my 50s. And like your second bolded statement above, I should be "10 or more years away from retirement," but thanks to my planning, I am enjoying the first of what I hope will be many years and decades of retirement.
Yup, yup and triple yup. Others failure is not the foundation for yours. You builit a solid foundation by planning and thinking for yourself after careful research.
Not necessarily. They could have a pension that is supplying part or all of that $40k. Even without a pension, their combined Social Security income could exceed the $40k by itself. (Obviously not at 60, but shortly thereafter. In that case, their savings would only need to cover the $40k for a couple of years, not 30.)
We retired at 59 1/2 with two pensions as our foundation. Didn't need to touch investments. At 62 the wife started SS and that was a big bump up. My eventual SS will be an even greater bump up. Investments are there for medical down the road or as desired. For many people the term fixed income changes as new income strands enter the equation. There is an advantage to retiring on just your pension prior to SS. It gives you a base to live off and if you do it comfortably everything else helps to balance out inflation, increased health cost or to just live a grand life as they kick in.
Now I get it your parade is going to be rained on. As you say most of the posters in here have a sunny sky overhead. From the many posts on here most of us are in or near retirement.
Ah, so you are of the group that says "I got mine, let my kids and grandkids pay the bills and scr## their quality of life!" Congratulations. You have a lot of company in the scum that make financial decisions for our formerly-great Country.
Well, I didn't graduate from college until 1979, so I joined the work force after the 70s, but I still managed to do just fine. Of course, I spent my 20s, 30s and 40s saving, investing and planning for retirement in my 50s. And like your second bolded statement above, I should be "10 or more years away from retirement," but thanks to my planning, I am enjoying the first of what I hope will be many years and decades of retirement.
I'm probably more financially secure than you are, due to 2 professionals working constantly, minimizing debt, and living below our means, but I care about the rest of my generation that is barely scraping by. And I care that our incomes are constantly being confiscated more and more for benefits that are both smaller every year, and farther away every day.
I'm probably more financially secure than you are,....
LOL. Okay.
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