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one other point is in order for her medicare to start the 1st of the month in which she turns 65 she has to enroll at least within the 3 months prior. if you wait until you are 65 it won't start until the month after. if you pass 3 months of within your birthday different rules apply and the wait can be up to 13 months if you blow it.
DaveinMtAiry, I am very sorry for the loss of your friend.
Thanks for your thoughts. The woman who gave me the the news on Friday was busy digging up a beautiful dwarf apple tree. Todd had a yard that looked like a botanical garden. She explained that his brother had contacted his garden club and encouraged everyone to come and take what they could. The house is no doubt a tear down and all his hard work would be bulldozed over. So yesterday, the day before a snow, i took my truck and helped myself to 6 large bushes and small trees. Not exactly teh best time of the year to be transplanting shrubs but I hope they survive. Todd would want that.
DaveinMtAiry, I am very sorry for the loss of your friend.
Thanks for your thoughts. The woman I learned told me the news that day was busy digging up a beautiful dwarf apple tree. Todd had a yard that looked like a botanical garden. She explained that his brother had contacted his garden club and encouraged everyone to come and take what they could. The house is no doubt a tear down and all his hard work would be bulldozed over. So yesterday, the day before a snow, i took my truck and helped myself to 6 large bushes and small trees. Not exactly the best time of the year to be transplanting shrubs but I hope they survive. Todd would want that.
[quote=bustoff1;38140807]It's really more about income rather than savings. Determine what portion of annual expenses (all expenses) are not covered by guaranteed sources of income such as Social Security and/or pension. The amount that's not covered is called your residual expenses. Many experts agree one should have 20-25 X residual expenses accumulated and held in extremely safe assets.
/QUOTE]
It's about income. If you can pay off all your debt and own your house and cars and if you can delay taking SS until at least FRA, you may not need as much saved as you think.
Just do a cash flow analysis, i.e. what your checkbook looks like month to month to see what will work for you.
It also helps if you live in a low cost of living area because your SS benefit is the same amount no matter where you live.
If you are able to delay retirement and work longer the difference from 62 to 70 can make a world of difference in having a workable plan.
Saving 8 years of withdrawals, earning money and adding to savings, growing existing savings and an almost 80% bigger check from ss can beef up a weak crappy plan into a pretty solid good one.
Perhaps they need to rename 70 full retirement age since most folks can really use the extra working time.
Truth be told, I have witnessed many occasions here in Metro DC where the choice of when to retire is not the employee's choice, but the employer's. Frequently the fat lady sings wellll before FRA.
Then you're in a fine pickle (if you're in your 50s or later). The area is too expensive to stay without a job (assuming you don't want to dip into capital). If you bought your house at the wrong time (two RE bubbles from 2005 on) you're going to take a heckuva haircut. If you're in your 50s or above, the odds of landing a similar well-paid job are vanishingly small, since the area is one of the Millennial Magnets because of the good jobs it DOES have.
Put those circumstances together - horrific cost of living, horrific back to back housing bubbles, and competition for your job classification from lower paid, less experienced economic refugees - you'd have to be plumb nutz to be anything but a renter.
For a household earning the national median HHI ($50,000), the retirement savings you'd need to generate the kid of (semi) indefinite income that would enable you to continue living your current $50K lifestyle (assuming no pension) would be close to $2 million.
I'm conservative, but that estimate of $2M is simply too high. At the highest, it's $1,650,000 (3% withdrawal rate, plus increases every year for inflation). Even at a normal conservative withdrawal rate of 4%, you'd only need $1,250,000.
And if you get any kind of Social Security, then you need significantly less. If your house is paid off by retirement, once again, you need less. If you were already socking away at least 10% of your salary, then you don't need the whole 50K to live on, which means you don't need as much savings. Social Security & Medicare tax also go away in retirement, although it could be argued higher health care costs can offset those taxes.
So even if you're going to get a very modest 10K in Social Security, plus you're saving 10% of that 50K, and you retire your modest mortgage payment of $416.67 per month (5K per year) that means your portfolio only needs to generate 30K. For a very conservative withdrawal rate of 3% plus annual inflation adjustments, that means you only need $990,000 if you're retiring at 62 or older. For a conservative withdrawal rate of 4% plus annual inflation adjustments, you'd only need $750,000. These numbers are doable.
The stuff about fees is greatly exaggerated, too. Contrary to the impression given by mainstream media, mutual fund fees have actually been coming DOWN...over the last 20 years. Not as fast as they should be, but down nonetheless (High fee 401Ks are a problem in smaller companies. Large companies generally have reasonable cost plans with decent funds). As another poster said, there are plenty of low fee index funds these days, as well as low cost actively managed funds from Vanguard or Fidelity and the 2nd cheapest fund family, Dodge & Cox. But even companies like Fidelity & T. Rowe Price have pretty reasonable cost funds. Most of their funds charge under 1%, some significantly less. (i.e. Fidelity Balanced and Fidelity Puritan both charge .56%....not dirt cheap but reasonable and they're good performing funds diversified between stocks & bonds....These are just a few examples I could give).
Last edited by mysticaltyger; 08-03-2015 at 04:14 AM..
that 4% swr will be dependent on how it is invested.
cd's , bonds and tips are only bullet proof up until about 2%. 3% is hit and miss and 4% will more often than not end in a failed retirement .
the swr of 4% is not open ended , it is based on at least 40% equity's.
however income is only part of the story , emergency money and money for heirs are another as well as living beyond 30 years .
a 4% swr only means there is a high degree of certainty that the income will survive 30 years but it takes in no factor that there may be 1 penny left for heirs or you live 35 years . so you may very well need more aggressive investing or more savings if both income and legacy money are important .
it is important to fully understand what these rules which were never meant to be rules actually mean .
those that retired in 1907 , 1929 , 1936 and 1965/1966 made it through 30 years but barely had anything left by those standards .
even drawing 4% from a 50/50 mix may be to high today by some measurements . the hypothetical y2k retiree may very well be on par right now with someone who retired in 1929 at this point in time . the numbers are that close when crunched .
as someone who just retired 3 days ago i can say , " there is no such thing as saving to much for this day "
Last edited by mathjak107; 08-03-2015 at 04:49 AM..
Truth be told, I have witnessed many occasions here in Metro DC where the choice of when to retire is not the employee's choice, but the employer's. Frequently the fat lady sings wellll before FRA.
I agree. People are delusional about how long they'll be able to work at decent paying employment. A lot of people lose good paying jobs in their 50s. This has been gong on for like 20 years now. I think people need to prepare for what I call "quasi-financial independence" in their 50s. That means, they need to have an investment portfolio that will provide at least a poverty level income by their 50s so they can combine it with income from a low paying job if they lose a good paying one.
Quote:
Originally Posted by jane_sm1th73
Then you're in a fine pickle (if you're in your 50s or later). The area is too expensive to stay without a job (assuming you don't want to dip into capital). If you bought your house at the wrong time (two RE bubbles from 2005 on) you're going to take a heckuva haircut. If you're in your 50s or above, the odds of landing a similar well-paid job are vanishingly small, since the area is one of the Millennial Magnets because of the good jobs it DOES have.
Same problem we have here in the Bay Area.
Quote:
Originally Posted by jane_sm1th73
Put those circumstances together - horrific cost of living, horrific back to back housing bubbles, and competition for your job classification from lower paid, less experienced economic refugees - you'd have to be plumb nutz to be anything but a renter.
I'm a renter, but I'm not sure it always works out. It depends if you are going to rent a smaller place than the one you'd buy. High cost areas are generally ruthless about stiff rent increases, unless you have strict rent control (which causes other negative economic side effects for sure) or some other special situation.
But the biggest problem renters have is even if their housing costs are lower, they don't take the difference and save/invest it. The money gets blown on other things. I think this is the real reason why renters are not usually as financially well off as homeowners.
homeowners are usually just a wealthier bunch to start since by definition they are home owners and can afford to buy in the first place ..
renters are a more diverse mix ranging from very poor to very rich so over all they can never show fairing as well as homeowners as a group in any measurable terms . .
kind of like saying those who buy rolls royce have a higher net worth . it isn't the fact buying the car makes them wealthier , it is the fact they can afford to buy the car .
but i do agree that when most middle class renters see a spread between renting and buying they will not invest that difference .you will see more investing going on in upper middle class to wealthy renters though .
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