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MI-Roger, I would append that statement to say that PRIVATE SECTOR pensions are nearly non-existent. Public sector pensions are still very much available. Pretty much my entire family and most of my friends are retired now, or will retire soon, with one or another sort of public sector pension. Just in our little circle we have those who worked in municipal government, municipal utilities, teachers, school bus drivers, state government workers, postal workers, state troopers, county fire department employees, state university employees, the list goes on and on. These pensions aren't going away, although the formulas and vesting are becoming less generous. Our public sector employers also emphasized the importance of 401K's (although they didn't provide any match), and other investment vehicles, and offered retirement planning classes.
Sorry, but it doesn't matter who the intended audience.....
The obvious fallacies,.....
or
5. the option of purchasing a single premium immediate annuity, which provides two to three times the income for life than the oft-repeated 4% draw calculation, which NEVER TOUCHES THE PRINCIPAL!
How convenient for darkening the horizon, yeah?
One does not need graduate courses in economics nor to have studied the mathematics of investment (tho it helps) to see the holes in the swiss cheese.
Agree with much of what you said, mainly, that if you are able to amass $1M in savings, chances are much higher you will have a high SS as well. So a $25k SS + a $40k SWR, is a decent $65k income for life, with the home equity and the $1M still earning. Not a hard retirement at all, really compared to how the article makes it sound.
THe “articles” (more like sound bites) points out the obvious; oneo has to make an amount of money beyond ones expenses and save and invest it, avoiding temptation for 40 years. Someone that makes $60k, has to CHOOSE to live like they make $40k and save and invest the rest in order to amass a solid nest egg. While I know they exist, I know of NO people that earn $60k and save $20k of it. It is far far easier to make $100k and save $20k. Its the living threshold without salary inflated standards of living that determines savings success. I know of too many that did well in saving for 15-20 years, then decide to spend it on a bigger house they don’t need, with the logic that a bigger house appreciates more, and they will downsize in retirement. That is a chancy plan, as many found out.
I too was dead broke at age 37, (but employed, & well educated with good salary potential) because my minimum desired standard was equal to what I was earning, coupled with an expensive divorce. But in 23 years, thanks to increasing salaries, better investing, and some lucky sweat equity home sales, I am at a point that far exceeded where I thought I would be at 60, when I was 37. I assumed I would work until 67, but now can retire at 62. It is possible, but there are never any guarantees.
But your annuity claim is WAY off. Current annuities only pay about a 5.2% of invested amount, with a 1% cola at age 62, male. That’s only about a 30% increase, not even close to the 200-300% you mention. Most people that saved and earned from investing that nest egg would rather hang on to their money , even conservatively invested and meet or beat the annuity.
The exception is using the savings to delay SS, where for instance, instead of $25k at 62, they segment $125k for distribution of $25k for 5 years, and end up with a $37k SS at 67. There one ends up with an annuity that has the flexibility of paying or not at any time, if one has to change their mind or plans, it has spousal benefits, and end up with the equal of a $12k annuity for $125k instead of a purchased $6500 without spousal benefits one for the same amount. And under current law, with that same SS earnings every year one delays and funds their own equal SS income earns them $2900/yr for that $25k or about an 11% annuity rate based on taking SS at 62 or 8% based on taking it at FRA. Both easily beating todays annuities. The only difference is the SS limit of course.
So at 67, a $1M nest egg at 62 is reduced to $875k (assuming earnings and withdrawal of 4% of the remaing $875k), but SS increases to $37k. So now the 67 year old has an income of $37k + $35k from their savings for a $72k income with 51% tax free, instead of $65 income and only 38% tax free. All while still retired at 62, while living with the same income they would have had, had they filed at 62. That’s a huge difference if your retirement income requirement is $50k after taxes.
Last edited by Perryinva; 03-07-2018 at 06:14 AM..
One persons decent retirement income is paltry for another. As with anything in life it is our personal goals and aspirations that determine our goals and how we work toward them. Life can throw many obstacles in our path but we our the ones who set our goals. People making 100k a year are not desiring a 40% cut income during their retirement. They may end up there but was it their goal?
In sports there are some teams happy to go 500. Fans may even be satisfied. Other franchises fans boo and coaches get fired and players want out.
So in summary have your 60k enjoy it and have a great retirement.
Please allow others to want, strive for and achieve mote.
Still, at 36-37 I had pretty much zilch saved. I'd just come out of an unfortunately timed divorce which forced the sale of our home at an inopportune time in the housing market, so we both walked away with bupkis. But being free of my unemployed spouse allowed me to start planning and saving because I realized that I was probably going to pull this weight all by myself. For some this would have been viewed as a financial misfortune, for me it was empowering and I look back with gratitude. When I suddenly realized this might be a solo venture, I was free to make the decisions needed to get my house in order and create a future for myself. Mid-thirties is not too late to start, but you have to be more aggressive with your strategies and look for alternatives that will allow you to achieve your goals.
I'm still pretty goal oriented financially, even in retirement. I refuse to let fear or inertia hold me in place.
My question here is were you accruing years of service in your public sector pension plan at that time? If I had, say, a $3,000/month inflation protected pension plan, I could retire right now with zero personal savings.
I don't want to say the mid 30s is too late, but you're going to need to be a relatively high income earner saving aggressively to catch up at that point if you're in the private sector. I've been at my employer over a year and a half now and haven't received one cent of matching funds. Given the way things are in this day and age, I'm certainly not expecting a pension or even company matches - about all I can expect is a pre-tax vehicle to put funds into.
Quote:
Originally Posted by TuborgP
One persons decent retirement income is paltry for another. As with anything in life it is our personal goals and aspirations that determine our goals and how we work toward them. Life can throw many obstacles in our path but we our the ones who set our goals. People making 100k a year are not desiring a 40% cut income during their retirement. They may end up there but was it their goal?
In sports there are some teams happy to go 500. Fans may even be satisfied. Other franchises fans boo and coaches get fired and players want out.
So in summary have your 60k enjoy it and have a great retirement.
Please allow others to want, strive for and achieve mote.
Everyone can aim for the stars. $100k is probably doable for quite a few couples. With that said, it is not absolutely necessary to have that much to live a decent lifestyle in most places, though I guess that depends on you frame "decent."
As far as the author goes she isn't young and out of college that is obvious from her picture. She has a rich history and variety of reporting and winning awards. Of interesting not and sorta funny because of other comments she also writes for HGTV magazine. So she doe have a lifestyle angle to much of what she does. Worked for CNN money at one time.
This is twice you have told us that the author has won awards and you think she is proficient. So I get my second opportunity to say I think she just cranks out low quality articles and is probably paid by the word.
In any case, what did you learn from the article? All I saw was an attempt at a sensational title. Even that was deceptive because the 42% unprepared includes all age groups.
As a non-home owner, I get the shock of my life when I watch HGTV shows like House Hunters and the demands some folks have for the house they want to buy. I grew up in a 3 bedroom, 1 bathroom ranch. There were 4 of us (mother, father, sister and me).
I don't understand these people who won't buy a house if it doesn't have the color backsplash and kitchen cabinet color of the wife's dreams, a three car garage, 3-4 bathrooms (in case they have company), a window their pets can look out of, a bedroom with an attached bathroom for their toddler, a separate play room for the one kid they have and maybe another room to store the kid's toys, 3 - 4 floors of house with a grand staircase so they can make an entrance, a man cave (when the h*** did that happen?) so the guy doesn't have to be in the same room with his family when he comes home from work and that fits all of the husband's toys in it, a media room (we used to call it sitting in front of the TV in the living room), a spa-like en suite (double sinks and a jetted tub or the house is a NO!) for a master bedroom the size of which you could hold the high school prom, separate walk-in closets bigger than the state of Rhode Island, not more than 10 minutes from work otherwise it's a tragedy, a back yard their dog(s) would like and at least an acre or two of land. Oh yeah, and anything they don't like means the whole room needs to be gutted. The Governor's Mansion for their state is smaller than the house they want...and some of them are first time home buyers.
I mean, who in their right mind looks at a house and says the bathroom has to be gutted because she doesn't like the light switches and the color of the cabinet under the sink?
This thread subject makes me think of them. I swear that HGTV goes looking for divas but that's another story. I think most of them will wind up getting divorced but I also think they could be saving some money for retirement with less grandiose houses. I wonder how many of them don't have any money saved for retirement.
I definitely think HGTV wants the "contestants" to be overly dramatic, but it's TV. Who knows - they may very well be coached to be dramatic.
With that said, who wants to pay top dollar for something that looks awful or very dated? I live in northeast TN and property prices are generally fairly low, but it's not uncommon at all to see a $300,000 house with a kitchen straight out of the 80s/90s. It's functional, but dated and probably not what people want by today's standards.
Moving is stressful. You want to be able to come in and relax a bit. Most people don't want to move in then have some sort of major problem that's going to require significant repair before you can get back to a normal lifestyle.
My question here is were you accruing years of service in your public sector pension plan at that time? If I had, say, a $3,000/month inflation protected pension plan, I could retire right now with zero personal savings.
I don't want to say the mid 30s is too late, but you're going to need to be a relatively high income earner saving aggressively to catch up at that point if you're in the private sector. I've been at my employer over a year and a half now and haven't received one cent of matching funds. Given the way things are in this day and age, I'm certainly not expecting a pension or even company matches - about all I can expect is a pre-tax vehicle to put funds into.
Everyone can aim for the stars. $100k is probably doable for quite a few couples. With that said, it is not absolutely necessary to have that much to live a decent lifestyle in most places, though I guess that depends on you frame "decent."
You have your world and we have ours. May we each enjoy ours. We do and from your posting you seem to be very happy so that is good for both of us and those we do and have shared life experiences with.
This is twice you have told us that the author has won awards and you think she is proficient. So I get my second opportunity to say I think she just cranks out low quality articles and is probably paid by the word.
In any case, what did you learn from the article? All I saw was an attempt at a sensational title. Even that was deceptive because the 42% unprepared includes all age groups.
I responded to you once and another poster a second time. Will there be a third?
This is twice you have told us that the author has won awards and you think she is proficient. So I get my second opportunity to say I think she just cranks out low quality articles and is probably paid by the word.
In any case, what did you learn from the article? All I saw was an attempt at a sensational title. Even that was deceptive because the 42% unprepared includes all age groups.
I commented in my original post that if didn't reflect all situations.
What did I learn to feel blessed and thankful we are in the situation we are. Wife felt the same way and we gave each other a hug and kiss. Thanked the Lord for this and many other things.
Yes I check the standings to see how my team is doing. Hoping they are doing better than other teams and hoping they win their division and ultimately the league championship.
Just like when playing sports stats are important and stats provide a comparison for those who are interested in. Especially competitive sorts.
Yes in the game of retirement I want more than others and have percentage goals and it is important to have my standing reinforced.
If we were playing one on one B-Ball wouldn't you want to beat me?
Don't you like the big play?
Do you believe in life there are winners, losers and almost winners? Which would you want to be?
Do you have percentage targets for things like income and wealth and do you have a goal of what percentage and a floor for what is acceptable?
Perhaps not. I do and many others like me do and that's why we like personal finance stories especially those in CNBC, Just love that station and website. Oh yeah and many of those like me love it also.
So we each have our life targets goals and aspirations. I know where I have fallen short (drats) and I know where I have (Bada Bing)!
Where the article fell short as just about all do is helping me to get a handle on Pensions, SS and Wealth combined. Not sure how we compare there. I know high but not sure just how high.
Remember you asked. So if anyone finds my comments offensive. Remember I was asked a question and I answered. Oh well done for now. Gotta shower and head out of town to the beach.
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