s/o: How to retire financially secure?

[kubiac]

The thread about destitution in old age is scaring the pants off of me, even though we are probably at least moderately well situated for our stage in the game.

 

For any of you that are near retirement or who have seen friends/parents/etc retire with plenty, do you have any tips or observations about how that came to pass?

 

Just looking for best practices to implement and/or pass on to the kids for their futures!

 

 

Sent from my iPhone using Tapatalk

[La Condessa]

I don't have any personal knowledge on the topic, but enjoy reading mrmoneymustache.com for my own financial education.

[Guest]

We sock away money into assets like misers, and we also cultivate very broad and differentiated skill sets so that if we cannot use one area anymore we stand a good chance of making some income in another, especially as we grow older.

 

Differentiated and diversified assets and higher risk investments when one is young are the way we go, along with having taken advantage of 401k matching by employers since we became legal adults. We would actually prefer to let that fund grow without additional investment because we have met our personal goal for it but it's like throwing away free money to not take advantage of employer matching.

 

Everyone has a different number, but we try to keep out debt ratio good, our accounts growing, our assets appreciated and not depreciating, and live lean now so we don't have to later. We already have about three times our current income retirement and are feeling good about it, but we never know when lean years will come so we just save now while we can even if it means less vacations and extras, because we know building a solid nest egg in our 20-30's will just continue to grow and benefit us later.

 

I agree MMM is a great blog for this. We use a lot of the same tips, modified for a northern climate and big family. But the basics are solid :)

[Guest]

As for our family, one side is doing phenomenally, one set of parents is struggling, and one is middle of the road.

 

Some is just plain luck and life circumstance. The family doing well hasn't had massive health crises or lost a large asset, whereas the family struggling to figure out retirement lost s job and had to raid retirement to survive for three years, refinanced and remodeled at a bad time and is now upside down on a huge mortgage, lost a ton in the stock market drop and tech bubble. etc.

 

Common features for those doing well are basic common sense investing principles like I detailed in the previous post! Very diversified assets. Extremely frugal living, especially well below their means while the kids were still young. Not moving around homes but paying off their mortgage as quickly as possible and setting aside an account and bonds specifically to grow and pay taxes on the property so they'd likely never lose their house. Appreciating, solid, diversified physical assets where they could hedge their bets that if one lost value not all of them would.

 

Did I mention luck?

[SKL]

I think 401K and similar tax-advantaged plans are still the best way for average folks to save a modest amount of retirement funds.  Save as much as you can while you can.

 

Owning one's own home free and clear, preferably one without too many repairs needed, fuel efficient, and not too hard to maintain.

 

Having kids who love you and make a lot of money.  ;)

 

Understanding how scammers work and being on guard.

 

Having a kid who is a lawyer, who can look up all the important senior / low income discounts and health insurance stuff, and who can do your taxes.  If you don't have a lawyer for a kid, have a fund for lawyer and accountant fees.  Accessing your various retirement benefits is going to be a full-time job at some point.

 

Being wired, so you can do most things via computer when mobility is an issue.

 

Having a community that keeps you socially / intellectually engaged at a low cost.  Silver Sneakers at the gym, church or other house of worship, senior volunteering, library, Bingo, whatever.

 

Having easy-to-nurture pet(s) and/or plant(s). A vegetable garden if you're up to it.

[Scarlett]

We are 50 ish and have no savings. We keep our expenses very very low. And tr not to worry about the future we can't control.

[Liz CA]

I think that "financial security" is a myth. You can have a lot of assets and it can be gone real fast with tragedy striking or the stock market collapsing.

Sure, we should be prudent and prepare but it still cannot guarantee me a worry -free retirement. In fact, I don't think I will actually "retire" since I like my job and it's not overly physically taxing so as long as I have some brain cells left...I'll retire when I drop.  :)

[Melissa in Australia]

live very frugal, live below your means and put every single cent possible to paying off debt. and once that is paid off then save save save. Never any takeaway or entertainment, secondhand furniture only. Grow as much food as possible and save save save.

 this is how we have lived for our whole marriage We have lived way below the poverty line  for quite a few years and have no debt and last year had saved enough to buy a investment fixer upper with cash.

Edited February 3, 2016 by Melissa in Australia

[DawnM]

We have 401Ks and retirement.

 

I worked 17 years in public education and have some $$ there.  I plan to try to work at least 15 more, but in a diff. district and state, so that will be a detriment as I won't get the same benefits as having worked in the same district/state, but it can't be helped.

 

DH has 401Ks and has since he started working.  He is a finance guy, so he has it all worked out for retirement, although he plans to continue some form of work even after retirement, many in his line of work do continue part time past 70.  

[Joyofsixreboot]

We have lived our lives on less than we made no matter how little that was. We have always put money away in whatever plan our employer offered along with saving on our own. Over 30 years it has added up. It ain't exciting but it worked. Seeing retirement looming 10 years in the future I suspect we won't live crazily but well enough that we can go see a movie or have dinner out if we choose and visit whatever future grand babies might eventually show up. Slow and steady. Boring but true.

[MotherGoose]

Saving and living below your means. Understanding that you don't "deserve" a vacation, new car, nice house, etc. if you are fortunate and hard working you can pay cash for these things (except a small mortgage) provided you can still save.

[lmrich]

Living below your means. We started saving with our first paycheck even if it meant we barely had enough money to make it through those first few months. You save. When we made a little more money, we saved. When we made a lot more money, we saved. We are now living on my income as my dh is starting a business, and we still save. We don't go out to eat; we don't buy a lot of stuff, and I work as I much as I can to earn enough so we can pay our bills, but one of our 'bills' is contributing to our retirement. 

[The Girls' Mom]

My in-laws are doing well.  They built a modest house in the 70's and paid it off.  They never moved.  FIL worked until retirement at, mostly at the same place.  They lived frugally and he participated in whatever pension/401K his employer (government nuclear research facility) offered. He was a machinist.  While MIL has had a lot of surgeries and health issues, most of them were after she hit 45, and their insurance is very, very good...so no financial drain there.  

 

My dad and step-mom will probably have to work until they die.  He's never held a steady job (a painter or factory worker his entire life). And my step-mom lost her job of many years when a factory shut down.  They were both out of work for a long time during the recession.  She's working at another factory until she cannot any longer.  They have no savings.

 

We, on the other hand, have managed to do all the wrong things, it seems.  We've moved a lot.  We have 27 years left on a mortgage.  My husband has had some major health issues, and our insurance is NOT as good as my in-laws.  I don't see him being able to work until retirement age.  We took out our 401K after the crash (and watching it vanish before our eyes) and bought a much needed vehicle.  The only things working in our favor is that dh has worked for the same company for over 20 years, and he is fully vested in their pension plan.  Right now though, it will not pay out anything near what he currently makes.  

I'm our retirement plan.  Back in college to get a degree, so I can hopefully work for 20-25 years, have health insurance and get us set up enough to pay for our old age.  

Edited February 3, 2016 by The Girls' Mom

[Katy]

nm

Edited July 22, 2016 by Katy

[kewb]

Don't get sick with a disease that is not recognized by the cdc. Insurance won't pay for your treatments and your required specialist(s) don't take insurance. You will spend your life savings and every spare dollar on seeing specialists to find out what is wrong with you, drugs, treatments, supplements, and some woo simply because it promises to help and you are desperate.

 

All the savings/planning/frugal living will not save you from an unrecognized chronic illness.

 

In the meantime definitely invest in disability insurance, take advantage of 401k opportunities, and sock away as much as you can for a rainy day.

Edited February 3, 2016 by kewb

[Jane in NC]

What works for one generation may not work for the next other than frugal living.  High school grads of my father's generation could get jobs with good health insurance and even a pension.  Today, few employers offer 401Ks let alone pension plans.

 

I would recommend a high deductible insurance policy to a young twenty something with a Health Savings Account.  This is a way to save tax free for medical expenses down the road.

 

While it is nice if a 20 something maxxed out their IRA or 401-K (if their employer has one), I would suggest to a young person that they at least get started saving,depositing whatever an employer is willing to match so as not to leave free money on the table.

 

Read about investments. I don't think that real estate is the answer for everyone. Not everyone has the disposition for the stock market.  I happen to be a fan of dividend bearing stocks and bought one for my son from an inheritance when he was five. He has seen quarterly checks arrive, money that went into savings when he was young, fun money as a preteen, book money as a college student.  Today he puts those dividends back into savings.  It has been a good lesson.

 

Modeling is important.  When parents receive a windfall (inheritance, tax return) do they rush to spend or do they save?  I also think that not rewarding yourself is also a mistake--just decide what is important.  For example, in our family we like bicycles and kayaks.  We don't buy top of the line bikes and kayaks but we don't buy Walmart ones.  I am going to replace my old Trek bike with a step through Trek with some bells and whistles for comfort--hey I'm getting old.  A bike is transportation and recreation, a good investment in my opinion. 

 

Take care of yourself.  I don't agree with the Ramen noodle diet if it affects health for the sake of a savings account.  A good diet and some reasonable exercise need not cost a fortune though.  Avoid fads.

 

Young people will probably need either a college degree or some sort of post-secondary training/certification. Figure out how to do this with minimal debt.  As parents we viewed this is part of our responsibility.  Due to our frugal natures, my son graduated from college without debt and without a ding to the retirement accounts.  There is no one path for any family or any kid within a family but it takes some conversation and research to help our kids.

[Pawz4me]

I agree with starting as early as possible saving and keeping at it.  Make paying yourself (saving) as much a priority as paying the electricity bill.

 

Take advantage of every penny of employer matching you can.  But don't assume that's enough -- save outside of employment.  Find a good investment adviser whose philosophy matches your own.

 

Build an excellent credit score, keep it and make it work for you.

 

I'm not anti-debt.  I think making being debt free some kind of Holy Grail is a massive mistake many poorer/less financially savvy people make.  Wealthy people by and large aren't afraid of carrying some debt.  Use your excellent credit score to your advantage -- you'll qualify for the best rates on mortgages and car loans, such that your (wise) investments will almost always earn more over time than you're paying in interest.

 

Also, don't be afraid to use a credit card IF you have the self-discipline to use it appropriately.  If you have that excellent credit score referenced above you'll be able to get a good rewards card.  Use it to your benefit and "earn" hundreds or even thousands of dollars a year.

 

These strategies (along with a hefty dose of good luck--staying reasonably healthy, DH having chosen a very good career, etc.) have served us well over the years.  Our boys will graduate from the colleges of their choice debt free and w/o having to worry about scraping together every penny of scholarship money they can find.  We won't be able to live lavishly in retirement, but at this point I don't see us having to worry over how we'll pay the bills or living off Ramen noodles.

Edited February 3, 2016 by Pawz4me

[Laura Corin]

Things that we have done/are doing:

 

- we live in a country with a national health service, so we are not wiped out financially by illness; the decision to move to the UK rather than the US (Husband is a dual citizen and I could have obtained US citizenship) was partly because of the better safety net here

- be really adaptable: we have moved for work repeatedly (UK to China to France to Taiwan to California to London to Hong Kong to China to Scotland)

- buy a house not when you would like to but when (you think) the market is close to bottom.  Our major retirement income is from a property that we bought to live in but which we now rent out.  It cost us every penny to pay the mortgage when we bought, but the investment has been very worthwhile

- maximise any tax-efficient savings

- be really adaptable (again): I worked in admin jobs, then got my MBA, while Husband worked in managerial; the children came along and I looked after and then home educated them; I went back to work part time then full time, whilst Husband was laid off and now works part time/looks after the house and family.  My salary is now our safest source of income and I am building a small but useful pension through work.

[MSNative]

Great advice. I am reading while snuggling so forgive me if this was mentioned. Diversify by purchasing an annuity. We also kept our home when we moved. It's in the dc area which is a bit more recession proof and is very easy to rent out. Now we own two mortgages. Currently the rent covers the mortgage and most repairs. We are still on the hook for the big ones like a new roof, etc. Our hope/plan is to pay it off and use the rental income to supplement our retirement savings. That has worked for my parents along with the other strategies mentioned.

ETA: We also work multiple jobs. My husband has his corporate job and moonlights as an adjunct at the local uni. I work three part time, flexible jobs.

Edited February 3, 2016 by MSNative

[2squared]

Our strategy has been:

• Pay ourselves first.  I have save at least 15% of my income in retirement accounts since I graduated college, and I have forced dh to follow suit.  We took a year or two off during a period of planned low income, but we also added a partial military pension during that time period.  Retirement is my #1 priority.
• Our income source is our #1 asset, so we protect it.  Not only did we nurture higher paying careers, but we have made sure we are both employable at a rate that will support our family on one income and we have back-up plans for unemployment scenarios.  Part of this strategy is realizing that relocating for employment is a likely scenario, and we have done it multiple times. 
• Live below your means, always.
• Realize that "not retiring" isn't really an option.  No one can truly work until they die, unless they die an early death.  Also, jobs are harder to maintain and nearly impossible to get once you pass a certain age....which is often before retirement age. 
• We keep fixed expenses low which means we have cash in the bank, low mortgage, low fixed payments, and we save for major expenses. 

We are in our mid-40s and our retirement is looking healthy, despite recent stock market performance.  We will have a 25%-50% increase in income this year since we have some large purchases we want to make and we need to start saving for college.  I plan on paying for at least 50% of the kids' college, but preferably 75%.  We already have 20% "saved" via military GI bill benefits.

 

I don't know what the future holds for us, but we have done everything we can to financially protect ourselves.  Unfortunately this means we are both working right now, but this is what we need to do now to make the best future for our kids.  We have one in public school, three in parochial school, and one in public school preschool.  We all prefer homeschooling, but B&M school has been a very good option as well.  Nothing is perfect, not even homeschooling.   :)

[Chris in VA]

I lucked out, I think--and I married well. :lol:

 

Dh is an Episcopal priest and we have excellent pension/benefits. He theoretically could retire with 30 years in 4 years at 57 years old.  Not everyone can work a job that has those bennies. He has his doctorate so that gave him the opportunity for a really good job. I do think education is key, whether it's a doctorate or just a Bachelor's, or just extra training of some kind that you can add to or diversify over the years. He didn't have a lot of student loans, either, because he worked extremely hard and is bright, and got scholarships for his Master's and his doctorate.  Again, not everyone's deal.

We have saved some, but mostly bought a house as an investment, and it's value has really gone up (we don't live there but used it as a source for a line of credit, which saved us from student loans for our eldest). We will remodel and sell when we retire. It will be paid off in 6 years.

We've always driven used cars, and we drive them into the ground. Dh learned how to fix them--again, education saves $. He can do brakes, oil changes, timing, headlights, whatever.

We have excellent insurance, which has helped with health stuff. I do think prevention is absolutely key here--but of course, you can't prevent everything. I do think spending more on good food is worth it in health savings down the line, but we certainly ate our share of HHelper and so on--I wish we'd done better in that area.

We have fewer clothes than many people, and our furniture isn't really that nice. I'm not a decorator--I know there are ways to bring beauty into a home that aren't expensive, but I'm not that interested in the time it takes to learn those things, so I fail there at saving $.

We travelled a lot, and made sure not to live so frugally that we could not make good memories (not that all memories require $, but trips certainly provided us with good ones--of course, when dh was in school, we camped a lot instead of going overseas or using a lot of hotels). 

 

Tiny things that add up--shopping with a list, eating store brands, making do with less, researching good plans for cells, no cable, etc.

 

 

Edited February 3, 2016 by Chris in VA

[Faithr]

I don't know.  I am absolutely sure that there are many retirees who are impoverished through no fault of their own, just bad luck.  But in my own little world, everyone who is hard off made terrible financial choices all their lives, while the ones who are doing pretty well, used common sense and were frugal and planned ahead.  And that includes the ones who are pretty well off dealing with bad health as they get older.  Somehow they are still able to stay afloat.

[chiguirre]

My parents are doing well in their retirement (well, sort of retirement, my mom works a 9 month/year job by choice). They had a good nest egg from living frugally during my dad's working life. When he retired he took a lump sum distribution of his pension because he worried that the company might tank (it did) and invested it in both safe and growth assets. The growth assets really grew, even with the 2000 and 2008 crashes, his money has tripled. My parents don't live on that money. They can live on SS and my mom's salary so they haven't touched their savings for living expenses. They do use them for travel but they are bargain hunters. If there's a cut rate tour to Bulgaria or Namibia, they're on it. They are not staying at 5 star hotels.

 

We've followed a similar game plan. Both dh and I have MBAs and, before kids, we both had good jobs. We lived on my salary and invested his in the stock market. Even with the crashes, it's grown and grown. Once the boys were diagnosed, I stopped working and we moved to a much higher COL country. For a few years, we didn't save much (less than 10%) because we had to pay for treatment out of pocket and I no longer worked. Eventually, Geezle finished intensive (expensive) therapy and insurance started to cover GW and we went back to saving a larger chunk of our income. We don't have any debt now because our mortgage eventually became more of a pain than it was worth in tax benefits. We live in a much less expensive neighborhood than we could and, although we eat out and subscribe to the ballet, opera, symphony and regional theater company, we tend to choose the economy options. So, I guess we're frugal-lite.

[MercyA]

For those interested in a basic introduction to investing, my dh always recommends Investing Made Simple. It's easy to understand and contains excellent advice. 

[creekland]

For us it's a mix of living now and saving for then.

 

I learned quite young that we need to live now because some people I knew well who saved everything and didn't do anything never lived to use what they had saved.  Essentially, they never lived.  It made an impression on me.

 

Couple that with those who are older and didn't have anything - living on next to nothing.  That's not what I want either.

 

So... for us?  We decided we would scrimp on everything that's not meaningful to us.  We don't buy new (or used) furniture unless it's a need.  Ditto with clothes, shoes, etc.  We don't need an up to date house - old appliances and flooring are perfectly fine.  We scoff at House Hunters. These are only examples, but doing this saves us a ton of money.

 

And then we spend without guilt on things that are important to us - travel, eating out, experiences with our kids when they were ALL ages.  Our kids were literally brought up traveling and going out with us.  We only left them behind on our Anniversary trips or monthly nights out.

 

BUT, for as much as we spend on things like that, we also save.  As soon as we get enough, those savings are put into investments that technically earn more than savings accounts.  ("Technically" because there are always risks.  We lost a ton in the economic downturn, but that made me really glad we hadn't saved everything, 'cause we'd have lost everything.)

 

On lean years we looked for very inexpensive outings - parks, camping, geocaching, board games, etc.  On good years we splurged on trips to HI, NS, and out west (while keeping the inexpensive things going too).  It's been a lot of fun with raising the boys - tons of fond memories for all of us.

 

Since we split what we have, I could pass away today and have no regrets about how we chose to live or we could live to be ??? and probably have enough $$.  Our boys are our back up plan and are ok with this as they know we took some of what we could have saved for retirement to live with them.  They are thankful we made that choice.

 

We also are members of Health Share, so have inexpensive health coverage - that alone has saved us financially.  If we'd had insurance we'd be out somewhere in the 5 digits of what we have.  It scares me to think about it.  Without either Health Share or insurance... I'm not sure where we'd be - literally.  Health issues can be unexpected and costs are real.

 

Then luck... yes luck... hubby has a good job and while we took a hit in the economic downturn, we didn't sink as some others did.  We're both very thankful.

 

As a pp said, we're not opposed to debt.  Leveraging debt (esp for properties) has gotten us most of what we have now and gave us those splurge years.

 

Debt for college (not excessively high, but in the 5 digits) paid off handsomely.

 

Debt for a decent car (not necessarily new) sure beats oodles of charges in the repair shop and being stuck along the road.  We've also paid cash for some used cars, so it all depends on what's available and at what price.

 

Debt for a new wardrobe (except perhaps for a new job)?  That's dubious in value.  We don't.

 

Credit cards?  Those we use get us a ton of freebies!  I always make sure there's no annual fee or a fee for using the card (from the merchant) and I won't use them in mom & pop places so they don't have to pay the fee, but everywhere else?  Why not with so many rewards there for the taking?

Edited February 3, 2016 by creekland

[J-rap]

Long-term disability sure saved us, and will allow us to live decently even if my husband never returns to work.  He was in perfect health too, and took it out just one month before his illness hit.  

[Bluegoat]

Hmm, that's a good question.

 

I think in the case of my relatives, the key seems to have been long-term investemnt in a reliable job.

 

My in-laws had some very lean years as a young couple while my fil did a masters degree part time, and then he worked in the civil service, and my mil in teaching.  So - two pensions.  They saved like the dickens to buy their dream property (very tiny cottage on the water) and owned it right around the time they both retired.  Their house before that was a wee bungalow.  No fancy vacations, kids worked as teens for their own spending money, one car.  They always paid of anything bought on credit before accruing interest.

 

Overall I'd say this is the pattern among those who have done well.

 

My mom and step dad have lived quite well because he makes a fair bit, but their finances are always in order and they are choosy about what they spend on.  Not so much vacations, but an expensive home, say.  And step-dad plans to work I think for quite a few years even though he is at retirement now - he likes his work and as a doctor is self-employed.  So in this case, not so much being super-frugal but still living within means.

 

I also have a cousin who is well set up, though as he's younger it is harder to say for sure.  His biggest mistake was getting a BA which he had to pay for though I think family helped out.  But he got qualified as an electrician, and bought a very modest house, so his wife could stay home.  Two cars though one was a hand-me-down.  When they say a place they wanted in the village they grew up in, he took a high paying fly-in job for a few years.  Not a way to live long-term but it allowed them to do a few things, like keeping the first house as a rental.  He left that job around the time their youngest went to school and his wife went to work part-time.  He's now teaching, but they have a fair amount of flexibility depending on the job market.  It's the ideal way to manage really in a very rural community.

 

Of most of those who haven't done well, or have been very uneven, there are two factors that seem to be at work directly  - inability to stay in a job, and inability to live within means.  In a lot of cases this has affected their ability to become qualified at anything too.  It seems to me to be related to different kinds of poor impulse control.  In a few cases its been extreme like an aunt whose husband died and she immediately blew though all the money she had been set up with for a good retirement.  Mental illness or in a few instances addiction or ill-health have contributed.  Even my aunt who is really disabled and has a public pension would be much better off if she had more ability to avoid spending poorly. (Of course, if her income were larger it might be much easier.)

Edited February 3, 2016 by Bluegoat

[Spryte]

Don't get sick with a disease that is not recognized by the cdc. Insurance won't pay for your treatments and your required specialist(s) don't take insurance. You will spend your life savings and every spare dollar on seeing specialists to find out what is wrong with you, drugs, treatments, supplements, and some woo simply because it promises to help and you are desperate.

 

All the savings/planning/frugal living will not save you from an unrecognized chronic illness.

 

In the meantime definitely invest in disability insurance, take advantage of 401k opportunities, and sock away as much as you can for a rainy day.

 

:grouphug:

 

We finally paid off the medical debt incurred by that constellation of crummy diseases.  Last summer, after a good ten years.  We'd had to use the equity in our house.  Sold it last summer.  It's hard not to view that $100K as a loss, but we just deal with the cards we're dealt, I guess.

 

There is still on-going medical care, but we have a better handle on paying it monthly now - it's not thousands per month any more, like it was for years.

 

I'm sorry you deal with this, too.  It's just criminal how difficult treatment is, and that the insurance companies can deny based on such political, corrupt situations.  So unethical.  :(

[EmseB]

I think this thread has a lot of really good advice.  We do a combination of the above, and aside from a lot of that we've given a lot of our years to military service in order to have a "guaranteed" income stream into our old age.  I put guaranteed in quotes, because a lot of times military retiree benefits seem to be fungible to TPB.

 

However, I also think that anything can happen, and living with the expectation of not having to work in some capacity for the last 10-20-30 years of life can be unrealistic for a lot of people.  I think pension-style retirements on company dollars that the WWII generation set up for themselves (working for one company for 40+ years in a manufacturing job or some such) are not necessarily sustainable.  My grandpa retired at 65 after working for 45 years at the same place, and his company has paid him a pension for over 20 years now.  While that was what he was promised, I don't think anyone really thought about the idea of paying a huge contingent of workers who were not working for decades and the actual financial ramifications.

[Night Elf]

DH has a good bit of money in a 401K. He started saving when he was a young adult. He had to give part of it to his first wife when they divorced, but I don't know how much. Anyway, he says he doesn't feel we have enough but hopes he'll have enough by the time he retires. He'll be 65 in 6 years. I'd rather him wait and retire when he's 70, mostly because he's going to bored out of his gourd at home. We don't travel and he has no hobbies. The only part-time work he would be interested is something related to his field and I don't know how easy that is to find.

 

I may or may not work again. I'd rather not, but DH says we have to wait and see how things go.

 

We've always lived under what we could afford. We don't buy expensive things or take extra expensive trips beyond our annual visit to his family out of state. We buy used cars and drive them until they require too many repairs. We're helping the kids pay for college, but only as much as we have freed up. DH won't alter his 401K savings to pay for the kids. We both had college loans so our kids expect they'll graduate with some, hopefully very little. We don't plan on an expensive retirement. We'll live in our house until one of us cannot manage the stairs anymore. I don't know what we'll do by then. We may still have an adult child at home, it depends on how our Aspie can manage on his own.

 

So a modest life before and after retirement.

[RKWAcademy]

I agree with most of what is here.  Luck gives you a huge head start, but it's possible to start from zero.  Also, I really think delayed gratification while young (20's) is key.  Investing and saving and not buying the most house/car/furniture/dinner's out you can afford is boring when you're 25 but can make all the difference for the future.  The slow and boring route almost always wins in finances.

[fairfarmhand]

We've decided that it's not our job to make our children's childhood's magical. Yes, we do fun stuff. But it's not lavish. We don't pay for 5 different types of lessons. We don't pay for cars. We don't pay for college. We give them a fun, cheerful childhood with fun, low cost activities. No lavish vacations. Simple is good. No lavish holidays or birthday parties.  We give them a fabulous quality elementary/middle/high school education. They'll qualify for scholarships. They can go to state schools.

 

Because this is the lifestyle we can afford.

 

We will have our house and land paid for in 10 years. Then we will really be able to sock it back.

 

We're also trying hard to care for our health so hopefully (I know you can't always pllan for this, but we're doing all we can) we will stay healthy for a long time. We keep our weight healthy and eay good food.

 

We pay cash for almost everything. Except for our house payment we're debt free.

[Guest]

Don't get sick with a disease that is not recognized by the cdc. Insurance won't pay for your treatments and your required specialist(s) don't take insurance. You will spend your life savings and every spare dollar on seeing specialists to find out what is wrong with you, drugs, treatments, supplements, and some woo simply because it promises to help and you are desperate.

 

All the savings/planning/frugal living will not save you from an unrecognized chronic illness.

 

In the meantime definitely invest in disability insurance, take advantage of 401k opportunities, and sock away as much as you can for a rainy day.

That's what I meant by luck. So much is about avoiding sickness, property loss, divorce, etc, and those aren't exactly plannable events beyond a certain point. As we keep paying more medical debt every year with my issues I definitely see the lottery-of-health side of it, since I'm already conscientious and live very cleanly and care for my body and it STILL keeps crapping out on me.

 

And longer term unemployment really did my parents in - losing a high paying job at 50 and then bring essentially told he as overqualified for everything else was awful for my stepfather. He was too near retirement for anyone to want to gsee re and eventually began doing construction work with a friend and is now a contractor. But he is also 69 now? Physically he can barely manage it and because they are the upside down on a mortgage they can't even move to a cheaper state.

 

Hubby and I have reflected on it and see several points where better choices could have been made, but so much was just out of their hands. In a lot of ways my other parental set and my husband's parents just had better luck in investments, jobs etc. That's not all of it but it is a definite factor.

Edited February 3, 2016 by Arctic Mama

[Rachel]

The key for my great grandparents, grandparents, and my husband's grandparents seems to have been paying off their house, living within their means, and not having debt.

 

My one great grandmother never went to college and supported herself and her sister from age 14 on, my great grandfather was mostly unable to work due to health problems so she supported her family. She invested in stocks including oil companies when they were booming and did quite well. She paid cash to live in her retirement home for the last decade or so of her life using her investments. She was always preaching to us about not having debt.

 

Two of my grandfathers were self employed so they don't/didn't have pensions. My grandmothers never really worked. Their healthcare is quite expensive now but they make it work. They live in nice neighborhoods, drive nice vehicles.

 

My one grandfather and my husband's grandfather are both retired military and that's how they cover health care expenses. They have modest but paid for homes that have been paid off for years. They don't believe in credit cards even if they are paid off every month.

 

My parents and inlaws are not close enough to retirement to know how they will fair. I think things will be fine but who knows.

[Katy]

nm

Edited July 22, 2016 by Katy

[TranquilMind]

The thread about destitution in old age is scaring the pants off of me, even though we are probably at least moderately well situated for our stage in the game.

 

For any of you that are near retirement or who have seen friends/parents/etc retire with plenty, do you have any tips or observations about how that came to pass?

 

Just looking for best practices to implement and/or pass on to the kids for their futures!

 

 

Sent from my iPhone using Tapatalk

No one is financially secure today, given the health care debacle, except for, perhaps, billionaires.   Couple that with the virtually nonexistent job market for anyone over 50 and it is a big issue. 

 

The best the rest of us can do is live beneath our means. 

Edited February 3, 2016 by TranquilMind

[TranquilMind]

Long-term disability sure saved us, and will allow us to live decently even if my husband never returns to work.  He was in perfect health too, and took it out just one month before his illness hit.  

Wow.

I don't know the story but I hope he gets well. 

[Katy]

nm

Edited July 22, 2016 by Katy

[tm919]

Slightly off topic, of all the financial tools out there, I like the ones from the CRR: http://crr.bc.edu/special-projects/interactive-tools/

 

Aside for that: how we've managed to mostly hit the targets for what we are supposed to be saving: We live far, far below our means.... we've never gone away for vacation and everything has to last far beyond when it really should.

 

But... even though our budget FEELS really tight because I am subtracting out 30% (retirement, college) before we ever see it, we are above the median US household income...if we were right at the median US household income, we could barely keep ourselves fed and a roof over our heads. It reminds me how much literature there is out there about not borrowing from your 401K, yet people go on doing it even when they "shouldn't"-- partly because of bad choices, partly because they have no choice. There is so much good financial advice out there, but it assumes that people have some money to save/invest, are smart about those investments, and are lucky as well.

 

Edit: I should mention that I don't consider us close to retirement -- my husband will be 40 soon and while some retire at 50 or so, that probably won't be us. In fact, I'd like to work forever because I like to work, I just know it's not always possible and many people get retired by circumstances, they don't choose it.

Edited February 3, 2016 by tm919

[SKL]

I have gone the frugal, save-every-penny-you-can route, but I want to push back a little on that. 

 

Live life.  Have fun.  Put time into finding ways to really enjoy the moment with (or sometimes without) your family.  The more effort you put into it, the more likely it is that you will find opportunities that are cheap or free.  But whatever you do, don't shut yourself up in the office and work and save because you want to do all the fun stuff later.  You may not be able to enjoy it later.

 

I am at a point where I have very low required expenditures compared to average.  I have some money in the bank.  Is it enough?  Who knows.  I'll find out when I die, I guess.  Right now (almost age 50) I am not saving more, I am spending money on experiences that I may not be able to enjoy later.  A lot of older people won't or can't travel for various reasons.

 

The other thing I am doing is fixing my house so it (hopefully) won't fall down around my ankles when I am too old and poor to do anything about it.

[Tanaqui]

Higher taxes on capital gains and obscene income rates, back to the levels they were around the middle of the last century, and enforcing serious controls on foreign products that are produced using coerced or severely underpaid labor, allowing for us to institute universal healthcare and a guaranteed minimum income plan that a. uses data on the actual poverty level and b. allows for people to have some luxuries - internet, the occasional movie night, a new book every once in a while - thus keeping the economy afloat. We could also get some serious money back into the system by starting a second WPA, which would incidentally help mend our seriously crumbling infrastructure. One suspects it would function rather like food stamps - every dollar you hand out in food stamps brings nearly two dollars back into the community, because money trickles up, not down. Poor people spend their money, while rich people shove it back into the bank. After all, once you cover all your basic needs and gold-plate all your toilets, what's left to spend it on? There's only one thing that trickles down, and it may be golden but it's sure not gold.

 

...oh, wait, the socialist paradise isn't here yet? The corporate welfare mooches don't want this? Oh. Then your best bet is probably to not have any kids, work like a dog, invest wisely and put a reasonable amount into retirement funds. Too late for that.

[Spryte]

 

 

Live life.  Have fun.  Put time into finding ways to really enjoy the moment with (or sometimes without) your family.  The more effort you put into it, the more likely it is that you will find opportunities that are cheap or free.  But whatever you do, don't shut yourself up in the office and work and save because you want to do all the fun stuff later.  You may not be able to enjoy it later.

 

 

I love this.  Really.  We can save, and live.  

 

Suddenly, despite a clean-eating, extremely fit lifestyle, facing life in a wheelchair and selling one's home to get a more wheelchair accessible one in one's 30s will wake one up to the "life is short" specter.  I am so deeply grateful to the doc who got me out of that future, and to the care and time she put into getting me well when all of the other specialists had given up.  But I will always be aware that I could find myself facing that future again, and I don't want to have regrets.  

 

We save, we reduce debt (I still have student loans), we live frugally.  We prioritize our spending in ways that make sense for us.  We reuse, and make things last.  We buy used, but good quality.  We don't do retail therapy.  And we have multiple streams of income.  

 

But we live, and we live happily and well, and we do the things that we love.

 

And we always prioritize our kids' education.

 

ETA:  I'm always fascinated by DH's French CFO's thoughts on our financials and how they are impacted by our health care.  He is astounded by  the amount the company pays for its US citizens' health care, and how little it covers in comparison to the Europeans' health care.  For DH and me, health care has been the stumbling block that always gets in the way.  And we are fortunate, with very good policies, paid in full by DH's company.  But recovering from our health crisis ten years ago has not been easy.  We were covered, but the coverage then was woefully inadequate to my needs.  

Edited February 3, 2016 by Spryte

[Guest]

Yes, don't be a miser. Frugal and miserly are different! I knit and crochet and spin and embroider and do every other fiber art I can get my hands on. I buy books instead of use the library. I LIKE date nights. I get my nails done regularly and chiropractic too.

 

These are the things that bring me some happiness day to day and make my life easier and not feel desperate or tight.

 

We don't go on lavish vacations, own multiple or expensive homes, collect new vehicles and big kid toys, or spend excessively on even needed home improvements. Any big ticket item we take at a slow pace and chunk away at it so we don't get over our heads in debt for it. For *us* these things aren't worth it. Everyone has different priorities but enjoying life, however you define it, should certainly be balanced with not being a financial moron :)

Edited February 4, 2016 by Arctic Mama

[Matryoshka]

We will be fine. 

 

Ok, I'd like to talk realistically about what "be fine" means.  We did all the right stuff.  We are waaaay better off in this department than the vast majority of Americans.  We've maxed savings into our 401ks since we started working, we have bought our cars with cash, and mostly used, and drive them till they die.  We bought a house that was within our means and paid it off.  We don't take lots of big vacations, and when we do we mostly live with friends and relatives to save money.  We pay off our credit cards every month, and are are debt free.

 

But we've only got less than 3x dh's annual salary in retirement accounts.  It could have been more if a big chunk hadn't been wiped out around the crash - and if anything, that's made us more conservative in our investments and probably has meant why it hasn't multiplied.  And now we've got college to pay for (and dd's are either going to state school, or going someplace they can get scholarships so it doesn't cost more than state school... and we will not be taking on debt, and hope to minimize or prevent any for them).  I just hope and pray that dh stays employed for at least the same salary for the next decade or so. (he's already 57).  I'm trying to figure out a way to start earning money that I'll be able to continue even as I get older.

 

BUT... that 401k, imho, is not even close to enough to retire on.  What with the interest rates being so low, we can't ever hope to live off any interest.  We do have other money saved, but much of that will go to college costs - at least we won't have to raid retirement funds.

 

What multiple of your current salary in 401k and IRA money do you (generic you, not asking specific person I quoted) consider 'enough' to 'be fine' to retire on for at least a couple of decades?  Please help me with some realistic math, if your number seems low to me. 

 

And that doesn't even start to get into what happens about health care of if you need assisted living.

 

What worked for our parents generation will not work for us.  My parents had good interest rates on their savings and investments, so if they stayed debt-free, they could earn money.  The something like 16% compounded interest on my retirement accounts they kept saying it would average out to in my 20's never even came close to happening, and savings accounts now earn less than 1%!  And our parents' generation got pensions.  Well, my dad didn't, but at least my mom did.  Her pension, and the healthcare that came with it, along with, yes, being frugal and saving wisely, have given my parents a very comfortable retirement.  Which on the one hand is great, because I don't have to bail them out.  But I worry that we will be able to give the same gift to our kids.  I just hope we can continue with good enough health that we can earn enough to supplement SS and not be eating cat food with no heat in the house, and not have to go live with the kids or to a nursing home.  We, unlike the previous generation, will not be able to afford those nice assisted living facilities.  Where will we come up with thousands of dollars a month to pay for it years into our retirement??  I wonder who they think will be able to afford those places ten years from now?  401ks were set up to be a supplement to company pension plans, not a replacement.  And many/most places that even have 401ks don't bother to match them.  We'd put more in them, but we're not allowed to.  And yeah, the max amount does not change based on the COL in your area.  I honestly don't want to move states away from my friends and family when I'm old just to avoid starvation and freezing to death, when we've done nothing but try to live below our means and do all the 'right' things our whole lives.

 

If we are in such 'good shape' compared to most people my age, it just terrifies me what this country is going to look like over the next few decades.  The younger generation is going to be so up in debt from college that how will they ever be able to take care of their destitute elders, their children, and save for their own retirement?  What are we going to do when old people start starving and/or dying of hypothermia en masse?  The system is so broken, it's downright terrifying.  Most of the people talked about on this thread who made 'good choices' and are having a nice retirement had choices that are no longer available to our generation and younger.  So looking back for a plan is meaningless.

 

[EmilyGF]

Die at a young age. :-)

 

Seriously, my grandparents all had very comfortable retirements, but they died in their late 70s/early 80s. They all were children of the depression who saved like crazy and lived way under their incomes. Even my grandmother on my mom's side, who was abandoned by her husband in her 40s after not working for 20 years (and him emptying out the savings account) paid all her expenses, including nursing care, left a sizable inheritance. When she was first divorced, she got a minimum wage job in a cafeteria. When her daughters cleaned out her (rented) apartment, they found thousands of dollars of cash in her monthly envelopes around the place.

 

OTOH, my husband's grandmother, who retired with a teacher's pension, barely scraped by at the end because she lived until 98. 

 

Morbid, yes. 

 

Emily

[HS Mom in NC]

Here's the short version:

http://www.amazon.com/Total-Money-Makeover-Classic-Financial/dp/1595555277/ref=sr_1_1?s=books&ie=UTF8&qid=1454536935&sr=1-1&keywords=dave+ramsey

[Azalea]

 

 

What multiple of your current salary in 401k and IRA money do you (generic you, not asking specific person I quoted) consider 'enough' to 'be fine' to retire on for at least a couple of decades?  Please help me with some realistic math, if your number seems low to me. 

 

 

Take your expected living expenses at time of retirement, say $50,000, multiply by 25, so 1.25 million. That is what you need to have saved for retirement. This is according to Mr. Money Mustache, I'm pretty sure just started perusing his site.

 

Firecalc.com is a fascinating site which you can use to run projections. Love, love, love Firecalc

 

Do think about how much your expenses will change in retirement. Some things we can't plan for, but many we can. I probably will only be feeding two people, who will eat less and I will have a paid off house, things like that, so I will need far less in retirement than I do now.

[Matryoshka]

Take your expected living expenses at time of retirement, say $50,000, multiply by 25, so 1.25 million. That is what you need to have saved for retirement. This is according to Mr. Money Mustache, I'm pretty sure just started perusing his site.

 

Firecalc.com is a fascinating site which you can use to run projections. Love, love, love Firecalc

 

Do think about how much your expenses will change in retirement. Some things we can't plan for, but many we can. I probably will only be feeding two people, who will eat less and I will have a paid off house, things like that, so I will need far less in retirement than I do now.

 

Yep, that's pretty much what I figured.  We're screwed.  Did the people saying they're fine really manage to squirrel away that much, or even close to it?  We must really suck at investing our 401k.

 

They say the average American with a 401k  has only a tiny fraction of that saved (way less than what we've managed).  And many people don't have a 401k, have no savings, or are in debt.  How will these people not starve and die of hypothermia?  Are we as a country just going to sit and watch it happen?  Because the writing has been on the wall for over 30 years, and if anything, the situation has gotten worse.

 

I just did some googling and found the amazing statistic that Among middle-class workers, $250,000 is the median amount they're aiming to save.  How does anyone think that will last them 20 years including failing health and all that might entail?  Maybe I'm a bit skewed because I'm in a high COL area, but...

 

 

 

Edited February 3, 2016 by Matryoshka

[Laura Corin]

Take your expected living expenses at time of retirement, say $50,000, multiply by 25, so 1.25 million. That is what you need to have saved for retirement. This is according to Mr. Money Mustache, I'm pretty sure just started perusing his site.

 

Firecalc.com is a fascinating site which you can use to run projections. Love, love, love Firecalc

 

 

Are you expecting Social Security to be completely gone by the time you retire? On current projections, Husband and I will get around USD 15,000 a year from the UK government. I will get another 7,000 in work pension. With a paid off small house and just one small car, we won't need millions more.

[Azalea]

All of this is my humble opinion. First don't despair, it might not be as bad as you think. 

 

Read the Boglehead books on Retirement and Investing. There is also a Boglehead's forum. Bogleheads are investors who follow the advice of John Bogle who founded Vanguard Funds. Vanguard is the place to buy Total Stock Market (and Bond Market) Index Funds, while paying the lowest amount in management fees.

 

From the books you will learn to take into consideration that you may  have several streams of income in retirement. Social security, investments, house you can downsize from, part-time work, etc. Go to the Social Security website and find out how much you can expect to receive, it may be more than you think! I know I was surprised.

 

Then think of just how much more frugally you can live when you are retired. I don't believe that I will need anywhere near the 70% of current income that is often stated.