Do you really need a million dollars to retire? (social security, coverage, vacation)
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It is NOT a good idea in my estimation to speak in terms of a "couple" retiring. If you are like me, you have seen many a woman left virtually destitute because her husband died much sooner and in a sense took it all with him. The pension stopped because he failed to have an amount withdrawn from his pension check that would have meant his widow would draw at least part of his pension for the rest of her life. Older generations of women too often were left out of the financial picture by their husbands only to find out that the pot of gold was empty when they had to face reality. I realize times have changed with fewer marriages, more females in careers but I suspect there are far too many women who have no idea what they are facing if the "old man" checks out first and perhaps very early after retirement. I would suggest to any wife to know where she stands in the event she is left alone. Never mind the growing tendency of long term marriages to go into divorce again leaving a woman in dire financial straits. Often it seems the golden years are more like lead rather than gold or even silver.
Although I am male and was divorced a long time before I retired, you raise an excellent point. However I wonder how many husbands are actually so thoughtless, or heartless, as to make no provisions for the financial survival of their wives in case they should die early? I do not deny that it happens, but I am questioning the frequency of the pattern. Shame on any man with a stay-at-home (i.e., non-career) wife who has not given serious thought to her! I find it unimaginable.
It is NOT a good idea in my estimation to speak in terms of a "couple" retiring. If you are like me, you have seen many a woman left virtually destitute because her husband died much sooner and in a sense took it all with him. The pension stopped because he failed to have an amount withdrawn from his pension check that would have meant his widow would draw at least part of his pension for the rest of her life. Older generations of women too often were left out of the financial picture by their husbands only to find out that the pot of gold was empty when they had to face reality. I realize times have changed with fewer marriages, more females in careers but I suspect there are far too many women who have no idea what they are facing if the "old man" checks out first and perhaps very early after retirement. I would suggest to any wife to know where she stands in the event she is left alone. Never mind the growing tendency of long term marriages to go into divorce again leaving a woman in dire financial straits. Often it seems the golden years are more like lead rather than gold or even silver.
I second this! In fact, it would behoove couples to plan their retirement under the premise that there's only going to be 1 SS/pension earner. Generally, even if pensions and social security don't stop with the death of the person bringing them in, they will be greatly diminished.
I disagree about the rules of thumb being useless. For those early in their career, it's a good starting goal especially since you'll have no idea what you'll need 30 years down the road. I do agree that as you get closer to retiring, you need to refine your estimates by answering the questions.
As I've said, I started with the $1 million goal, based on the 25x. As I got closer, retirement income streams became clearer and our current expenses better reflect what it will be like in retirement. Over the years, the goal has been reduced. Without the refinements, I'd likely work past 67, trying to reach that $1 million goal.
there is nooooo real estimating decades, rules of thumb that far in advance . just to many variables and to far away.
that far away the only goal is to save as much as you can , there is nothing to figure.
once you get within serious distance of retirement perhaps 5 years before ,then you can start running the calculators to get an idea.
Last edited by mathjak107; 07-30-2013 at 04:48 PM..
Baloney. This is why I get exasperated at retirement guides, articles, books, seminars, TV programs, etc. The never ending pitch is that unless one has this amount saved up, you might just as well lie down and die right now. Sorry, but not going to turn the gas on. Folks of all ages are often like the government, they do not have an income problem but a spending problem. Knock off the nonsense spending and any frugal retiree with even a modest source of income such as SS and/or an IRA to draw down should do fine on a fraction of that big One Mil.
Although I am male and was divorced a long time before I retired, you raise an excellent point. However I wonder how many husbands are actually so thoughtless, or heartless, as to make no provisions for the financial survival of their wives in case they should die early? I do not deny that it happens, but I am questioning the frequency of the pattern. Shame on any man with a stay-at-home (i.e., non-career) wife who has not given serious thought to her! I find it unimaginable.
I've not seen any "studies" on the matter. Just in my 67 years I've seen too much anecdotal evidence that this is not uncommon. In some cases, the husband spent it all on "investments" or "toys" thinking he'd live forever. I would hesitate to say that most husbands do this with selfishness or malice but more unthinking. Retirement requires a LOT of thought. I suspect too often that people with some resources rely too much on a financial advisor who ultimately really has no skin in the game.
For my part, my wife has a "just in case" folder which we keep updated and in a fire proof safe. Our children know about it and have access to that and our safety deposit box. All the information she would need is in that folder; every account, every dime, numbers and addresses to notify so that she would continue to receive part of my pension etc. She doesn't sleep with it under her pillow but she does relax a bit more knowing that there would be no surprises. Not a million bucks, but enough if she manages it properly and DOES NOT REMARRY. That presents a whole set of problems.
there is no golden amount you need . it is just as personal as your salary is. like i said the easy part is setting a budget . the hard part will be in determining how much level of comfort you want or need in generating that income.
for someone with a million bucks and who only wants to utilize cash instruments they may be looking at a high rate of success of only 2% inflation adjusted. that isn't alot of income at all.
if they step up to using short term bonds , inflation proof treasuries and later annuities as longevety insurance they can get away with 3% inflation adjusted.
go at least 40% equities /fixed income and 4% inflation adjusted at a high rate of success becomes possible.
does that mean you can't take more? of course not but your odds of making it through less than good scenerios without taking an income hit become less and less as you pull more and more .
it is all about getting the odds in your favor as much as you can.
could someone using all cash instruments pull 4% ? sure they can but historically their odds of making it through 30 years without taking an income cut is low . in fact they stand only 38% of having their money last 30 years and an 18% chance of 35 years drawing 4% inflation adjusted..
anything under 90% is considered far to risky to bet your retirement on , as there are no do overs.
as you see there is no set number you can pull pull as an amount. it is only your odds of not running out of money that changes as you save more , draw less or invest more aggressively and that is the part most do not undertand..
you hear people figuring 4% withdrawals all the time like it was some magic number . it is not . there is alot more in paramaters that have to be met to be able to draw that 4% inflation adjusted with no income hits in bad times.
but somehow all the other parameters are left out of that statement.
i highly recommend anyone interested in understanding retirement planning to read bill bernsteins the ages of the investor.
Last edited by mathjak107; 07-30-2013 at 05:09 PM..
My wife is set if I should pass first and I am set if she passes first. We planned it that way. Each of our pensions were reduced from taking survivor options and she has her own SS which she is taking now and I am taking mine at 70. We know multiple people who did it this way. Not all but many.
I've not seen any "studies" on the matter. Just in my 67 years I've seen too much anecdotal evidence that this is not uncommon. In some cases, the husband spent it all on "investments" or "toys" thinking he'd live forever. I would hesitate to say that most husbands do this with selfishness or malice but more unthinking. Retirement requires a LOT of thought. I suspect too often that people with some resources rely too much on a financial advisor who ultimately really has no skin in the game.
For my part, my wife has a "just in case" folder which we keep updated and in a fire proof safe. Our children know about it and have access to that and our safety deposit box. All the information she would need is in that folder; every account, every dime, numbers and addresses to notify so that she would continue to receive part of my pension etc. She doesn't sleep with it under her pillow but she does relax a bit more knowing that there would be no surprises. Not a million bucks, but enough if she manages it properly and DOES NOT REMARRY. That presents a whole set of problems.
I was not intending to say that I disbelieved you. Excellent and thoughtful post. Perhaps some of the husbands who have not made adequate provisions for their wives are suffering from denial of the unpleasant thought that they may die prematurely. Even if so, that doesn't excuse their lack of foresight.
It is NOT a good idea in my estimation to speak in terms of a "couple" retiring. If you are like me, you have seen many a woman left virtually destitute because her husband died much sooner and in a sense took it all with him. The pension stopped because he failed to have an amount withdrawn from his pension check that would have meant his widow would draw at least part of his pension for the rest of her life. Older generations of women too often were left out of the financial picture by their husbands only to find out that the pot of gold was empty when they had to face reality. I realize times have changed with fewer marriages, more females in careers but I suspect there are far too many women who have no idea what they are facing if the "old man" checks out first and perhaps very early after retirement. I would suggest to any wife to know where she stands in the event she is left alone. Never mind the growing tendency of long term marriages to go into divorce again leaving a woman in dire financial straits. Often it seems the golden years are more like lead rather than gold or even silver.
For my pension, your spouse is required to sign-off if there won't be a spousal benefit upon death. For the most part, I'll leave my wife with the most I can leave her and she'll have to learn to live with what I believe will be an adequate income for one. I can give her the maximum income upon my death. What I can't do is control her spending after death (not to say she'll overspend). For my wife's pension, I'll be taking the minimum spousal benefit just to maintain the health benefits associated with the pension and I know I'll be able to live on it.
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In fact, it would behoove couples to plan their retirement under the premise that there's only going to be 1 SS/pension earner. Generally, even if pensions and social security don't stop with the death of the person bringing them in, they will be greatly diminished.
A Million Bucks?
Sorry, but not going to turn the gas on. Folks of all ages are often like the government, they do not have an income problem but a spending problem. Knock off the nonsense spending and any frugal retiree with even a modest source of income such as SS and/or an IRA to draw down should do fine on a fraction of that big One Mil.
