Do you ever expect to retire? Ever?

In My Humble Opinion
41

I’ve never been able to figure this one out properly (and I work for a company that manages retirement plans - although I’m in IT). How much money does one need to retire? When you start looking at the all of the calculators available online it just gets even more confusing, in my mind. The way I look at it is just to stash as much money in the 401k as possible, invest some money in the stock market, buy some bonds to balance things out, cross my fingers and hope for the best.

Where do you want to live? How much annual income will you need? Do you plan to travel, or just veg? I have no idea! I just want to retire and not have to put up with all the political BS that corporate America loves to dish out.

I’m in my early 50’s, have about 500k in the 401k, another 100k in stocks, 65k in bonds, and probably 200k equity in the house. The best I can figure out is that by the time I’m around 60 I should have (barring catastrophe) 800-1m available. Is that enough for 2 people to retire? Damned if I know.

42

That depends very much on what you think you need to be happy.

You need about one penny more than the two of you will spend just after you die. Quite the gamble huh? I asked my dad that question once and he said if he had any idea how long he was going to live, he sure would like to spend more money.

I said no problem, spend it all, then when you run out, step in front of a bus. He didn’t find it very funny. (Ironically, he died at a relatively young 62.)

The neighbors have done excessively well for themselves, being a blue collar lower middle class family that go into investing, then learned to do it themselves when they realized the big companies wouldn’t really pay attention to them. A year or so ago they dropped a good $250,000 on three Corvettes, a lift and other Garage modifications to jump into that lifestyle. It kinda upset a number of the neighbors. I thought it was great.

They determined that they had no one to will the money to that they really cared to shower with money and decided to spend some of it unwisely. Seems to have worked out well for them.

And that’s the thing. Nobody in this though experiment had considered that what they don’t spend on themselves will be willed to someone.

43

This may be a little too simplistic, as I’m not a financial manager, but if you have $1 million and can invest it so you get a 5% return (not difficult, I think), that’s $50k a year in interest. You can live off that and never lose the seed, which can be passed to your children when you go.

44

I did already! :stuck_out_tongue:

45

In 2001 I figured I was right on track for a comfortable retirement. I wasn’t all invested in tech or anything like that - I worked in the field and saw the bubble getting ready to burst, so I saw a financial advisor and balanced my portfolio fairly conservatively.

If, as I expected, I had averaged even 7-8% annually, I’d be in fantastic shape. Instead in seven years my protfolio has grown by about 8% in total, plus the cash I have been putting in. I am behind the eight ball now. The good thing is that I have 20 years to go before retirement. The bad thing is that the market is still very sluggish.

Sometimes I think it’s all a matter of timing - hit a nice hot streak in the market in your 50’s, then put your money in cash investments until you retire.

46

I certainly expect to retire. I’ve been contributing to a superannuation (pension) fund since I started work over twenty years ago, and I expect to build up a reasonable amount of money in it by the time I retire. I also have separate investment funds and I own my own home. I’m looking to build up enough capital to allow me an income of about 70% of my pre-retirement salary.

47

I’m 51, single, have finally gotten to the point of earning $24,000 a year, have absolutely no assets, no savings (a divorce and subsequent poverty saw to that), 61 cents in my State Teacher’s Retirement Fund account from two years of subbing, and a lot of debt from medical bills, etc.

I will not be retiring, ever. I will be 85 years old, at the window at McDonald’s saying “you want fries with that?” Unless some kind of miracle occurs, I will be scrabbling along for the rest of my life. I have not ruled out taking things into my own hands if nature doesn’t see fit to kill me off early. The $650 a month Social Security expects to pay me will barely cover the electric bill and gas bill and some food. The retirement pay I’m entitled to in my divorce won’t be coming…my ex won’t be getting it, either. The Army made sure to deny him the chance to re-up after his last tour, because one one year would have qualified him for his pension, and they want to avoid that if possible.

I’ll have a house to live in, but no money for repairs. Or taxes.

48

As a kid in college now I can honestly say this whole idea scares the willies out of me. With quite a few friends graduated last spring (10 or 11) not a single one has a job above “shift Manager at Pier1”. Besides that I went to college for enjoyment not money (major wise, not partying). Lucky for me parents paid for college, some of my friends though, are finishing college with 100k+ in debt. I’m also under the impression that social security is just going to crash and burn sooner than later. Also my families involvment with the stock market has been bleak a few of my cousins went to college with AT&T stock we had as a family…I think I somehow managed to owe the market money :confused: .

So, at 20 I’m just confused as to how I’m going to afford my apartment, food, insurance (medical/auto/renters), cell phone, tv, internet AND manage to save any sort of money at all. Lotto? Genius of a financial planner? I think I’m gonna go the way of my grandfather, and most likely my father and quite literally work everyday until the day I die.

49

[QUOTE=NinjaChick]
Nope.

Social Security, if it’s still around in forty some years, will be vastly different, as will our economy. I have a ton of student debt, and plan on pursuing a career that I will enjoy. Neither of my parents successfully did that (because they starting having kids without thinking about their financial situation), and I’ve seen what being in a career you don’t really enjoy does to you.

I don’t understand why people spend the good years of their life worrying so much about how to get fat and lazy in their old age. There’s no guarantee you’ll live that long anyway, and seriously, why add the stress of worrying about it when you’re young and healthy?
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Because one dollar invested when you’re your age is worth five of my dollars invested at my age is worth twenty dollars a few years down the road is worth a couple grand of those middle aged dollars. Those aren’t real numbers, but it’s time that makes money. When you wake up in your mid-forties and realize that you’re going to be lucky to get cat food in your old age you’re going to have to work a hell of a lot harder to just start saving then than if you had started putting pennies in your piggy bank at age 10.

50

[QUOTE=NinjaChick]
There’s no guarantee you’ll live that long anyway, and seriously, why add the stress of worrying about it when you’re young and healthy?
[/QUOTE]
There’s no guarantee, but there is a fairly high chance, and it’s that chance that sensible people provide for.

51

My dad lives on around $20k-$25k/year. He’ll be 79 in a couple months. He could be living MUCH better than he is, but being a Depression Child, the thought of running out of money and relying on his children is horrifying to him. He wants to leave the money to us.

Another think that changed things for him was my mom’s death. He doesn’t want to travel without her. He doesn’t go out to eat. His whole concept of retirement went right in the crapper when she died.

52

[QUOTE=Superfreaknduper]
I’m also under the impression that social security is just going to crash and burn sooner than later.
[/QUOTE]

This is an idea the younguns have had since before I was in college <shudder> 20+ years ago.

I got around it by working for the Government. There’s a BUNCH of jobs, stability, and the opportunity for a free frontal lobotomy.

53

Unless something happens that is vastly different from the way I am living now, I am going to go with no. I make under 30 grand a year and every time I have tired to save for retirement, something has happened where I needed the money. Though even then there wasn’t a lot saved. I got divorced and had nothing. After taking what I had in IRAs and what not, it was only 10 grand. Hardly able to live on that.

I’m saving now, but I suspect something will come up where I will need it. There’s always something.

54

Wanted to add something one of my golfing buddies said when he retired a few years back in his mid-30s. May seem obvious, but strunk me as kinda insightful.

He said there are 3 things you need “in adequate amounts” when you retire: money, health, and an interest. While you don’t need to be rich, you probably will be happier if you aren’t eating catfood and living in a cardboard box. And you don’t need to be running marathons, but you probably want to take steps to keep yourself in decent shape as major health problems will make aging a drag. Regarding interests - whether it be golf, gardening, travel, investments, or whatever - you need something to get yourself out of bed each day and distinguish one day from the rest.

I think many people make the mistake of neglecting one of these 3 areas, and then paying for that oversight with an unenjoyable final few years. I find looking at it in this way gives me a framework to assess my preparations for my future. It is very important to decide not only whether you will be able to afford to retire, but also what quality of life you will be leading when you do.

55

[QUOTE=Bosstone]
This may be a little too simplistic, as I’m not a financial manager, but if you have $1 million and can invest it so you get a 5% return (not difficult, I think), that’s $50k a year in interest. You can live off that and never lose the seed, which can be passed to your children when you go.
[/QUOTE]

Little simplistic. The rule of thumb is that you want between a 8 and 10% return on your money - but you want to be able to LIVE off 4% of it. The reason is that $50,000 when you retire in 2030 (or whenever) is not $50,000 when you die in 2045 (or whenever) and you not only need to cover the income, but the inflation. So you want to dump money back into your account every year so you don’t draw down the principal due to inflation before you die.

In ideal circumstances (for most of us, I suppose) you want to draw out the principal so that you run out of money and die on the same day. That’s a little hard to do unless you take the “step in front of the bus” plan. Another plan is to try and run out of money when you run out of health - nursing homes will eat through most people’s nestegg quickly - but timing THAT isn’t much easier (though that is what a good deal of estate planning is about nowadays - how to gift your money so the nursing home doesn’t get it - then worry about the estate taxes). I think the ideal situation is to have enough that you die able to leave money to a worthy cause (your kids, charity, college, a home for homeless cats), but that takes a LOT of money or an early death.

56

[QUOTE=Dangerosa]
Little simplistic. The rule of thumb is that you want between a 8 and 10% return on your money - but you want to be able to LIVE off 4% of it. The reason is that $50,000 when you retire in 2030 (or whenever) is not $50,000 when you die in 2045 (or whenever) and you not only need to cover the income, but the inflation. So you want to dump money back into your account every year so you don’t draw down the principal due to inflation before you die.

In ideal circumstances (for most of us, I suppose) you want to draw out the principal so that you run out of money and die on the same day. That’s a little hard to do unless you take the “step in front of the bus” plan. Another plan is to try and run out of money when you run out of health - nursing homes will eat through most people’s nestegg quickly - but timing THAT isn’t much easier (though that is what a good deal of estate planning is about nowadays - how to gift your money so the nursing home doesn’t get it - then worry about the estate taxes). I think the ideal situation is to have enough that you die able to leave money to a worthy cause (your kids, charity, college, a home for homeless cats), but that takes a LOT of money or an early death.
[/QUOTE]

The cumulative inflation rate is currently 3.42% Historically, though, I believe it’s closer to 3 (we always used 3/3.3/3.2 depending on granularity in class problems). It’s currently high right now because of the increased price to commodities and oil.

So, with 5% return, the nominal increase is around 8% return (I’m being overly simplistic in these calculations), but the real increase in buying power is more like 2%. However, you’re right in that the rule of thumb advice is to live with a 4% drawn down because rampant inflation might take effect (like in the present day). However, the more money one has laying around, the less likely one is going to feel the shock of losing principle. Anyway, by the time one retires the car and house should be paid off and there should be no kids to support, so spending around 4% should be relatively easy.

As for me, I like my job, so I’d like to work here as long as possible. Plus, I have this strange feeling that if I stick around long enough, I might make GC (or hopefully at least a DC for one of the major divisions). I don’t see retirement as an issue, and I save 10% (which is probably too much as I’m accustomed to living below my means anyway.) I have a 401(k) and a pension. I’m not counting on Social Security, and I wouldn’t draw on it until I was 72 anyway. I’m also half-heartedly counting on my pension (I don’t contribute to this), just because my company’s stock isn’t doing so well, and I can see mismanagement coming in out of nowhere.

If one can live on 70% of their current income, then I don’t see how retirement can be a problem to anyone, if they start saving now (like at age 25 now).

57

I plan to retire within 10 years (I’m 48), and I’ve been saving for a long time to make it happen. I’m not counting on Social Security, not because I think it will go away (in my libertarian dreams!), but because I can’t draw full benefits until I’m 67, and I have no intention of working until anywhere near that age.

58

Thanks for the clarification, Dangerosa.

Between this thread and the $100k debt one, I’m getting mighty depressed. I’m 26, and my current goal is to pay off my $15,000 debt, save up $6000 or more, and use that to pull up roots and move somewhere else. That alone is a daunting task, and I’ve already figured it’s going to take me three to five years to accomplish it, which seems like an eternity right now. It makes me wonder how I’m going to be able to even start putting money into a retirement fund, and whether it’ll be too late when I do.

59

You may be pleasantly surprised how little it costs to live once you have retired. You no longer pay superannuation, mainly ( I guess) you own your home car etc, tax is less and you find less things to spend money on. You don’t need to buy clothes- you have them from 20 years ago.

I am not referring to those who wish to go to Monaco every year.

60

Nor are you referring to the people who haven’t paid off their house by retirement, decide that they still need a new car every three years and want to keep spending on fashion. For a lot of people, being retired means they have more time on their hands, and the ways they find to fill that time often involve spending money.

People with little money sense prior to retirement, who refinanced their house to get cash out at 50, don’t suddenly develop sense when they retire.