Jump to content

Menu

Exactly how much retirement money?


Night Elf
 Share

Recommended Posts

How does one calculate what they need to live in decent retirement. DH has a decent 401K but it certainly won't last decades. He'll be 70 when he retires and I'll be 59 then. We'll have his social security as well, but if I don't get mine until I'm 70 that's a long time we'll be living on his resources which will obviously be much less than what he's bringing home now. The only large expense we have now that we won't have then is dd's college expenses. We're helping fill the gap between what she can borrow and the real cost of college. That's a pretty chunk of money but that should stop in 3-4 more years. How do I know if we'll be okay in retirement? The thread about what would it take for me to go back to work made me think of this. If I have to work, I'll be lucky to bring in $800/mo. I guess that's better than nothing but still, that's not a lot compared to the income we have right now with DH working full-time.

Link to comment
Share on other sites

http://www.doughroller.net/go.php?id=Personal_Capital_Retirement 

 
This calculator was recommended to us. Mostly, I love it. My only pet peeve is that it doesn't allow us to calculate DHs military retirement very easily but all other accounts that we have can be tracked simultaneously. That data is then used to run various scenarios and calculators so we can get a fuller picture of our current position. No one can tell you exactly what you need because it depends on your lifestyle and retirement goals, current assets, etc.
Edited by Sneezyone
  • Like 3
Link to comment
Share on other sites

I say try the calculators online.  

 

 

Can you work now?  Your children are older, so I would think there isn't as much hands on stuff. 

 

Can you do something that is better than min. wage? 

 

Tutor

Sub

walk dogs

I know there is a lot of online work from home you can do. 

Link to comment
Share on other sites

I say try the calculators online.  

 

 

Can you work now?  Your children are older, so I would think there isn't as much hands on stuff. 

 

Can you do something that is better than min. wage? 

 

Tutor

Sub

walk dogs

I know there is a lot of online work from home you can do. 

 

Well, first I'll say I would rather not go back to work. I enjoy being a housewife a whole lot more than I ever did working and I had a fantastic job.

 

It is true my children are older but my youngest two don't drive yet, for reasons that make perfect sense to us at this time in our lives. Therefore I have to be available to taxi. I enjoy being available for them.

 

The best job I had was a very specific skilled job. It was running refunds from a state government fund. Some law offices do that type of work so the private company I was working for was really top notch and awesome that they trained me to do the work. However, I don't even know if that fund is even around anymore, let alone how to find a company that does that type of work. The company I worked for can't be found so I'm assuming they're out of business. I left in 2001.

 

My clerical skills are likely way behind the times. I'd need classes of some sort to really get a handle on current office work.

 

My favorite job is working at a daycare. My last daycare job paid me $10/hr which was fine but I can't go back there. They think I left without giving a resignation and I most certainly did turn it in. In fact, when my two weeks was up, they asked if I could please stay on until they found a new teacher. Two weeks later I had to leave for family reasons and they determined I didn't turn in a resignation giving that date because I told them I was leaving the  day before I left. I won't even use them as a reference. I don't know how employable I'm considered at my age. I'm 49 and I was one of the oldest ladies at that last daycare job and that was 7 years ago when I was only 42.

 

I have some college credit but I didn't graduate. I don't want to go back and finish my degree, especially right now with a dd in college. I cannot justify the expense which would be considerable. There is no financial help for me like my dd has. Our state help stops at 127 credit hours and I have over 130.

 

I don't feel qualified to tutor in anything! I couldn't even help my kids do much in high school once they hit 10th grade. 

 

I'll check out those calculators. 

  • Like 2
Link to comment
Share on other sites

Do you have enough social security credits to draw social security in your own name?  Or, will you be drawing solely based upon your husband's earnings?

 

Another factor when considering how much is needed in retirement is whether you own your own home and what the property taxes are, if you do.

Link to comment
Share on other sites

I've heard (from reading personal finance blogs for awhile) that a good rule of thumb is a 4% withdrawal rate each year from your accounts.

You can possibly do a combination of no house payment, part-time work, passive income, and downsizing to raise the income and lower the expenses.
Our goal is roughly a million dollars, living frugally on $40K.

  • Like 3
Link to comment
Share on other sites

Well, there is a "rule of thumb" that you can spend 4% of your retirement nest egg each year (and that goes up each year, about with inflation, as your investments will continue to grow . . . this is assuming they are in a reasonable mix of stocks and bonds). So, that means, for each million you have, you can spend 40k a year. And, of course, that's "today's" money, so if we're talking retirement 20 years from now, that won't go nearly as far as it would today . . .

 

I'm using that general concept . . . 

 

Figure out your SS income, any other pensions/guaranteed income . . . how much you want to spend . . . and then that gives you your goal. 

 

My goal is to save as much as possible. Right now, I'm aiming for 3 million, as I think that'll do us alright. 

  • Like 4
Link to comment
Share on other sites

Could you do private nannying/babysitting? I have a hard time finding sitters who are reliable and available during the day and if you were near me I'd be all over it. Maybe consider posting in your local homeschool groups? I pay ten an hour but would pay more! And I'm in a low col area. And if you could supervise school that would be even better. There is care.com where I found some of my sitters. But it's still hard. Have a low number of people from which to choose.

Link to comment
Share on other sites

So is this money in addition to, or in place of, any type of pension, SS, etc.?

 

We are nearly 50 and don't have much of a savings at this point, although dh will have a pension that is full pay, and he will also get the max SS. I think I'll get a small amount as well from working in the past.

 

We will have no debt, as our house will likely be paid off within about 7 years.

 

Since dh co-owns the family business with his brother, I don't really see him actually retiring for a good while.

 

We also have the option of selling our house and property and downsizing (and it's likely we would do that), which would give us a large chunk for savings in addition to our monthly incomes.

 

Just looking at it briefly recently, it was looking as though he'd bring in between 5,000 and 5,500/month between his pension and ss. I'm thinking with no debts, we'll be able to do most of what we want and still put aside 1500-2000/month.

Edited by StaceyinLA
  • Like 1
Link to comment
Share on other sites

We go until we have a 4% withdrawal rate yearly until we are each 100. We assume no social security, so this is all stocks, bonds, and dividends from material assets like land or rental properties. That's pretty conservative but it works.

Edited by Arctic Mama
Link to comment
Share on other sites

Well whatever it is, for me I am including the cost of full time nursing home memory care, so the burden will not be on my children. I am thankful that my proactive husband started contributing to his 401K while still in the womb. He has already said that he will be bored if he retires, so if all holds steady, he'll work quite a bit past the point of all the kids' major expenses (braces, cars, college, weddings) being tackled. If anything happens to him or me early on, we will lean on God.

  • Like 3
Link to comment
Share on other sites

Not necessarily. I automatically get half of my husband's SS. He has maxed. At this point, I cannot work enough to get more than that. It makes more financial sense to take his.

At least in the past, a wife could take 1/2 of her husband's benefit at an early retirement age and then quite receiving that benefit and receive her benefit at an older age, delaying the start of her benefits so as to maximize them.

 

Two of the major concerns when there is a larger difference in the ages of the spouses is medical coverage for the younger spouse once the older spouse retires and the possibility of medical bills and long term care of the older spouse having a significant financial impact on the younger spouse

  • Like 1
Link to comment
Share on other sites

I would work enough to draw my own SS.

 

It is one of the few things you can really affect at this point.

 

Why are you waiting until age 70 to draw SS?

 

I have not worked a lot in my life so my benefits are little. I can draw at age 62 and get a pittance. If I wait until I'm 70 I'll get the max amount which is nearly double what I'd draw if I started at age 62. That's my understanding.

  • Like 3
Link to comment
Share on other sites

At least in the past, a wife could take 1/2 of her husband's benefit at an early retirement age and then quite receiving that benefit and receive her benefit at an older age, delaying the start of her benefits so as to maximize them.

 

Two of the major concerns when there is a larger difference in the ages of the spouses is medical coverage for the younger spouse once the older spouse retires and the possibility of medical bills and long term care of the older spouse having a significant financial impact on the younger spouse

I believe that was changed last year. My mom retired last year planning to draw my dad's 1/2 social security and transition to hers when she was older, but they eliminated that option the year she retired.

  • Like 1
Link to comment
Share on other sites

Yikes! I need $9,000,000. Really, how on earth do these calculators come up with that? All I know is I need a good heart attack in about 10 years.

Did you indicate a high monthly income needed in retirement? Most can count on a paid off house and slightly lower food and clothing expenses, and medical mostly covered by Medicare. 60-70% of your current salary is usually considered a good benchmark to aim for as a monthly draw.

Edited by Arctic Mama
Link to comment
Share on other sites

Actually I looked at a ss statement dh received in 2012 (can't find current ones), and his ss will be over 3,000/month if he waits til 70 to draw (I'm sure it's a little higher now because his last 4-5 years of income have been a lot larger than previous years). His pension is actually going to bring us to around 7500/month income. If I'm entitled to ss based on his, that'll be added in as well.

 

I guess what I'm wondering is - do I need to have savings other than that? WWYD? This thread has me wondering.

Edited by StaceyinLA
Link to comment
Share on other sites

Did you indicate a high monthly income needed in retirement? Most can count on a paid off house and slightly lower food and clothing expenses, and medical mostly covered by Medicaid. 60-70% of your current salary is usually considered a good benchmark to aim for as a monthly draw.

 

I believe you meant Medicare?

  • Like 2
Link to comment
Share on other sites

We go until we have a 4% withdrawal rate yearly until we are each 100. We assume no social security, so this is all stocks, bonds, and dividends from material assets like land or rental properties. That's pretty conservative but it works.

 

Were are dubious about SS as well but I plan on working for a good while unless physically / mentally unable to do so.

Dh may retire and do consulting work or keep working at least part-time.

If I remember correctly, we are doing the 4% thingy as well but increase every year by a little.

 

Link to comment
Share on other sites

And remember too, if you can substantially raise your savings rate (say 30-40% of take home pay instead of 10%) or increase your income and keep the same savings rate, you can accelerate your path to retirement.

 

For example, if DH retires at 65 we are already 80+% of the way to what we need to live comfortably based on our calculations. But if we up our savings rate by reducing debt and rolling that payout into retirement accounts we can get the same monthly draw and he can retire closer to 50-52. And that assumes he does nothing to make any income after that point, which is highly unlikely. We consider retirement not having to work for a living, but it doesn't preclude jobs we love, other investments, etc.

 

Early retirement/financial independence sites like Radical Personal Finance, Go Curry Cracker, Afford Anything, and the ever popular Mr Money Mustache, have lots to say about this topic and joe to calculate what you really need. We discovered just cutting our consumption and rolling more into retirement was a big help with the financial picture. Debt really eats into savings rate, you know?

Link to comment
Share on other sites

To be honest, we do not include ss in our calculations. We think it will be phased out, run out of money or we won't qualify because we've saved too much. So we don't count on the government giving us any 💰.

Ditto! We don't count our pensions either, because we cannot guarantee those companies will be solvent when it comes time for us to collect. If they do it will be a fantastic bonus but I want to be very conservative in my calculations so I don't end up widowed, 80, and living off my children :(

Edited by Arctic Mama
Link to comment
Share on other sites

Actually I looked at a ss statement dh received in 2012 (can't find current ones), and his ss will be over 3,000/month if he waits til 70 to draw (I'm sure it's a little higher now because his last 4-5 years of income have been a lot larger than previous years). His pension is actually going to bring us to around 7500/month income. If I'm entitled to ss based on his, that'll be added in as well.

 

I guess what I'm wondering is - do I need to have savings other than that? WWYD? This thread has me wondering.

 

 

Well yes and no. 

 

If SS is there and his pension has money when it comes time unless your bills are over 10500 bucks a month it sounds like you will be doing fine!

 

But if the pension runs out of money or ss doesn't pay out and you don't have any other savings than I would save.

 

We don't have a pension but in this day and age even if we did I would still be saving on top of it.   You just never really know if it will be there or not.  I would rather have the problem of having to much money, than not enough.  

 

I do not include SS in our thoughts or calculations. 

Link to comment
Share on other sites

Actually I looked at a ss statement dh received in 2012 (can't find current ones), and his ss will be over 3,000/month if he waits til 70 to draw (I'm sure it's a little higher now because his last 4-5 years of income have been a lot larger than previous years). His pension is actually going to bring us to around 7500/month income. If I'm entitled to ss based on his, that'll be added in as well.

 

I guess what I'm wondering is - do I need to have savings other than that? WWYD? This thread has me wondering.

It is important to know if the retirement/pension plan is a defined benefit plan (retirement income calculation is based upon a formula) or a defined contribution plan (retirement income depends on how well your investment choices do).  With a defined contribution plan, you have more say regarding how the money is invested; with a defined benefit plan you do not have to be concerned about that, but you do have to be concerned about whether the employer will be able to make good on the promise to pay the benefit.

Link to comment
Share on other sites

Well yes and no.

 

If SS is there and his pension has money when it comes time unless your bills are over 10500 bucks a month it sounds like you will be doing fine!

 

But if the pension runs out of money or ss doesn't pay out and you don't have any other savings than I would save.

 

We don't have a pension but in this day and age even if we did I would still be saving on top of it. You just never really know if it will be there or not. I would rather have the problem of having to much money, than not enough.

 

I do not include SS in our thoughts or calculations.

I agree. I'll have a pension, but I don't count it or our SS in my calculations.

Link to comment
Share on other sites

Actually I looked at a ss statement dh received in 2012 (can't find current ones), and his ss will be over 3,000/month if he waits til 70 to draw (I'm sure it's a little higher now because his last 4-5 years of income have been a lot larger than previous years). His pension is actually going to bring us to around 7500/month income. If I'm entitled to ss based on his, that'll be added in as well.

 

I guess what I'm wondering is - do I need to have savings other than that? WWYD? This thread has me wondering.

 

Yes, things like assisted living are not covered by Medicare so you want some money for that.

Link to comment
Share on other sites

Did you indicate a high monthly income needed in retirement? Most can count on a paid off house and slightly lower food and clothing expenses, and medical mostly covered by Medicare. 60-70% of your current salary is usually considered a good benchmark to aim for as a monthly draw.

 

Lifestyle plays a role in that calculation. I would be miserable on that portion of our current salary as that would not leave money to travel in the budget. Some expenses might go down but traveling and recreation will go up for as long as I'm physically able. Therefore, our planning is aimed so that combined pension and 401k withdrawal will give us that life style until the age of 80 and then decreased after that............  but not too much to assume one might need things like assisted living.

Link to comment
Share on other sites

Lifestyle plays a role in that calculation. I would be miserable on that portion of our current salary as that would not leave money to travel in the budget. Some expenses might go down but traveling and recreation will go up for as long as I'm physically able. Therefore, our planning is aimed so that combined pension and 401k withdrawal will give us that life style until the age of 80 and then decreased after that............ but not too much to assume one might need things like assisted living.

This may depend on current salary too. Ours is quite high and we won't be feeding six other mouths, so we have plenty for travel and recreation. It is somewhat lifestyle dependent but also absolute dollars. If your salary is 5k a month that calculation wouldn't work - and it also depends on where you live.

Link to comment
Share on other sites

This may depend on current salary too. Ours is quite high and we won't be feeding six other mouths, so we have plenty for travel and recreation. It is somewhat lifestyle dependent but also absolute dollars. If your salary is 5k a month that calculation wouldn't work - and it also depends on where you live.

 

True, we are basing it on a relatively upper middle class, lower upper class income, so we are looking at maintaining that lifestyle. But I think most people are trying to maintain whatever lifestyle that they are used to having........... I intend to travel a lot more than I do now.... and to help with grandchildren as much as can, especially with funding things like college and having family travel with us. I do not want to scrimp during the early years of retirement. Hence a strong commitment to having enough to live on with approximately the same amount of money per year as we do now.

Edited by QueenCat
Link to comment
Share on other sites

My mom is making really cold calculations to spend money to travel while my step-dad's health is good/better, and they started his SS earlier with a lower payment coldly, too.

 

They don't think he will live as long, and there is a calculator where you see how long you have to live to break even with a higher payout for SS, and they (probably more my mom) looked at it and picked early pay-out.

 

She will take the late pay-out.

 

My step-dad has had some health problems and this is what she is looking at. She also will travel alone (or with another woman, as part of a group, etc, without him) but she wouldn't travel if he was having health problems and she was taking care of him.

 

She expects to be taking care of him and unable to travel so she is going ahead.

 

It is hard for me to think about it all.

Link to comment
Share on other sites

My mom is making really cold calculations to spend money to travel while my step-dad's health is good/better, and they started his SS earlier with a lower payment coldly, too.

 

They don't think he will live as long, and there is a calculator where you see how long you have to live to break even with a higher payout for SS, and they (probably more my mom) looked at it and picked early pay-out.

 

She will take the late pay-out.

 

My step-dad has had some health problems and this is what she is looking at. She also will travel alone (or with another woman, as part of a group, etc, without him) but she wouldn't travel if he was having health problems and she was taking care of him.

 

She expects to be taking care of him and unable to travel so she is going ahead.

 

It is hard for me to think about it all.

 

This is a major reason that we do not believe in saving everything for the future. We do save for the future but the "present" is also important.

  • Like 2
Link to comment
Share on other sites

This is a major reason that we do not believe in saving everything for the future. We do save for the future but the "present" is also important.

 

YES!

 

We could save a lot more of course.   We could drive older cars, eat rice and beans all the time, not have the kids in classes, and not travel.  But you know you just never know what the future holds.  I think you really need to enjoy the life you have today because you are not promised tomorrow. 

  • Like 4
Link to comment
Share on other sites

My mom is making really cold calculations to spend money to travel while my step-dad's health is good/better, and they started his SS earlier with a lower payment coldly, too.

 

They don't think he will live as long, and there is a calculator where you see how long you have to live to break even with a higher payout for SS, and they (probably more my mom) looked at it and picked early pay-out.

 

She will take the late pay-out.

 

My step-dad has had some health problems and this is what she is looking at. She also will travel alone (or with another woman, as part of a group, etc, without him) but she wouldn't travel if he was having health problems and she was taking care of him.

 

She expects to be taking care of him and unable to travel so she is going ahead.

 

It is hard for me to think about it all.

 

When I was in college I did the backpacking thing in college during one summer.   I will never forget one day at Pompeii there was a old folks tour group.   You know how sometimes you somehow just know things from looking at people?   About half the people on the trip were people that had saved with their spouse for 'the big trip to Europe" and then the spouse died beforehand.   It was a real eye-opener for me.   

  • Like 3
Link to comment
Share on other sites

What is this retirement you speak of?

 

We will be working until we drop dead, which will probably happen at work.

 

In theory Dh will have a bit of SS.

 

The medical bills will probably kill us before SS has to pay out at this rate.

Edited by Murphy101
  • Like 4
Link to comment
Share on other sites

Did you indicate a high monthly income needed in retirement? Most can count on a paid off house and slightly lower food and clothing expenses, and medical mostly covered by Medicare. 60-70% of your current salary is usually considered a good benchmark to aim for as a monthly draw.

 

 

I'm not the person you were talking to, but anyway... Somebody earlier in this thread mentioned needing $1M in today's dollars to have $40k/year in today's dollars. Since I don't have a clue what will happen to SS and Medicare, and all that kind of stuff, and medical insurance out of pocket will cost insanely much in old age, I'd guesstimate needing at least $80k/year for the two of us to also be able to do some fun stuff (which is more than we currently make per year, but my wife's employer pays for almost all of our health insurance, and it's a lot cheaper to insure a 32yo than a 75yo, I'd imagine). So, let's say we need $2M in today's dollars. If inflation stays the same over the next 40 years as over the past 40, then that'd be about $9M 40 years from now. 

 

It's extremely unlikely that we'd be able to save that much (I mean, we maybe technically could, but we don't want to do beans and rice for 40 years so we can be reasonably financially secure in retirement). 

Link to comment
Share on other sites

My littles,who we adopted in our early 40s, are going to attend public school, in part so that I can return to work.

 

We bought a much bigger,more expensive house this year with much higher expenses to run (electric plus heating,old house was solar with Woodstove). But it was the right decision for us with the age spread our kids needing space and in town.

 

But, old house would've been paid off soon, new house...17 more years.

 

We did not save $ for the big kids for college, so I'm hoping to help pay for that with my job,plus payoff Newhouse faster, save more for retirement, & help thelittles pay for college when their time comes. High aspirations, indeed.

 

I like not working full time with littles, but won't mind too much working part time,or teaching full time once they are in middle school.

 

IHave no clue what our budget willbe in 20 years!

Edited by Hilltopmom
  • Like 1
Link to comment
Share on other sites

then that'd be about $9M 40 years from now. 

 

 

So, anyway, even if I were to count on the future not being as dire as it could be (my estimate above was obviously not for a worst case scenario, but it was for a not-good scenario), and I were to go with the 60-70% of current income thing, we'd need like $5M. And our household income is only a little above the national average... we're not even near the top quartile. 

 

Afaik, we've got as much saved as Scarlett does. Now, I do plan on starting a career after my youngest moves out (in my early 40s), which should enable us to save some... but, that's obviously 2 decades later than the best time to start saving, even though that would still leave about 3 decades to save. 

Link to comment
Share on other sites

I'm not the person you were talking to, but anyway... Somebody earlier in this thread mentioned needing $1M in today's dollars to have $40k/year in today's dollars. Since I don't have a clue what will happen to SS and Medicare, and all that kind of stuff, and medical insurance out of pocket will cost insanely much in old age, I'd guesstimate needing at least $80k/year for the two of us to also be able to do some fun stuff (which is more than we currently make per year, but my wife's employer pays for almost all of our health insurance, and it's a lot cheaper to insure a 32yo than a 75yo, I'd imagine). So, let's say we need $2M in today's dollars. If inflation stays the same over the next 40 years as over the past 40, then that'd be about $9M 40 years from now.

 

It's extremely unlikely that we'd be able to save that much (I mean, we maybe technically could, but we don't want to do beans and rice for 40 years so we can be reasonably financially secure in retirement).

DH and I can't save that much either, our fixed and kid related expenses are too high. So what we do is let compounding interest work for us. We invest what we can in total market index funds and leave it alone for a few decades. I am doing this for my kids too, so they have a nest egg for a house downpayment or seed money for their own retirement. Our portfolios have almost doubled over the course of our marriage (eleven years, woohoo!) but we have contributed only some of that directly and the rest is market gains from time and interest. That's the beauty of investing, because even people like us who are smack in the middle of our household income band for our area, with many more than average people, can still watch our money grow over the course of our lifetimes.

 

Even with down market times, those are essentially a sale on everything from an investment purchasing perspective. And the market is built with an inherently upward bias, as low performers drop off the index and are replaced but high performers retain and gain value. So long term it's a win, but not generally in anything shorter than 1.5-2 decades.

 

But even my mom, who is entering her sixth decade of life, still could have 20-40 years of growth in invested assets, even if she had nothing invested today. There are some really great series online about this and I can try to scrounge up the links, but even older families who have been squeezed by college and low pay aren't necessarily hosed forever. There is definitely a benefit to retirement investing and savings when young, but time is time and even an older investor can still get some good compounding if they keep their withdrawal rate low and up their savings rate for a few years to gain a bit of a chunk to move forward with.

 

I chatted with DH about this last night and he told me he'd feel better if we had closer to 75-80% of our current income in monthly withdrawals in retirement, and thinks it will take longer because of the cost of college kids compared to littles. He's probably right and I'm just an optimist 🤣

Link to comment
Share on other sites

DH and I can't save that much either, our fixed and kid related expenses are too high. So what we do is let compounding interest work for us. 

 

 

I know how compound interest and the stock market work and all that. I meant that even with that, I don't think we'd be able to scrounge up $9M. 

Link to comment
Share on other sites

One thing to consider is if you will be able to afford your "paid off" house. I am seeing a lot of retirees forced into low income housing because they based their savings on not having a house payment, but didn't stop to consider that the roof they put on when they were 40 will have to be replaced when they are 70, the appliances will wear out, the property tax will increase, the sump pump gives out, the foundation leaks, etc. House maintenance and repair is very costly, and while many couples did the physical work when they were young, 75 and arthritic means not being able to do it. Labor is costly. Home owner insurance goes up.

 

My mom is in this boat. The roof has sprung multiple leaks as the 30 year shingle only lasted 20, and contrary to popular belief on the subject it is nigh unto impossible to get "warranty" from the manufacturer. They always, always, always claim incorrect installation and refuse to pay. Due to many of the "guaranteed" shingles being crap, the local contractors will not guarantee their installation once they drive the last nail and leave the property. She has a basement leak. She has two windows that need to be replaced. She has a ceiling that needs to be replaced because of the leaks.

 

She can't afford any of it. If we don't pay it, she really can't keep the house and will need to sell as is for not much money at all. She kind of can't afford rent either. We have two kids in college and a third entering in 2018 so paying thousands of dollars to maintain her house is not going to happen either. It looks like it will be us paying rent at the low income senior center apartments which is cheaper than the insurance, repairs, and property taxes.

 

I know people feel they shouldn't have to go back to work to save for retirement, or cut corners now, or whatever. But when we don't make an effort - my parents never did - the burden falls to our kids. There really isn't a safety net in America. Social Security is generally for most people if they did not earn a handsome salary over the long haul, not enough to live on, and the societal and familial pressure to provide for mom and dad is HUGE. And frankly, whenever I've talked to people who didn't save but could have, they feel very strongly that their still working middle aged children should provide for them. Unfortunately, we are the not just sandwiched but steam rolled generation who saw company pensions go the way of the do do, higher ages instituted at which we can draw our own social security, insanely rising health care costs, insanely rising college and trade school costs, and Baby Boomer parents who out live their money by a LONG margin leaving us with gargantuan stress. I actually think life expectancy for my age group will go down, way down because we'll die of the stress and having to work long past our own health holding out in order to provide for our elders.

 

I do not mean to be offensive, but as someone who living through this mess right now and may end up on blood pressure meds and something to help me sleep at night due to it, I have to say I do resent my parents for their irresponsible monetary decisions. They had so many opportunities to not leave us in this position, and blew every single one of them on the "live for now" mentality. It worth thinking about what kind of hit your adult children will take if you choose to stay in a house you can't afford to maintain, and have no savings to help you get out and into something you can afford.

 

If possible, strive for a happy medium where you have some things to look forward to now, but also live frugally enough on a day to day basis to put money away every month or look at the long term prognosis for your house, and whether or not you should stay in it, sell it and downsize, or use the proceeds of the sale to pay rent for a little place somewhere so you aren't responsible for maintenance, home owner's insurance, and taxes. 

 

Home ownership when one is likely to outlive a lot of the repairs and maintenance done in middle age can be very problematic, and yet for my parent's generation aging in place with a paid off place was considered the "best plan" despite for many, quite a bit of evidence to the contrary. So i think if that is your plan, you should look at the logistics and see what you need to do now with your money in order to not put that burden on your kids.

  • Like 18
Link to comment
Share on other sites

I believe that was changed last year. My mom retired last year planning to draw my dad's 1/2 social security and transition to hers when she was older, but they eliminated that option the year she retired.

 

No, this isn't correct. Spousal SS is still very much alive and well. I'm counting on it, lol, and our CPA has validated/confirmed my expectations (per current law, of course). 

 

They recently ended the "file and suspend" option that spouses could use to draw their spousal SS early . . . so I'd guess that is what your mother ran into. (Google file and suspend spousal ss and you'll see what I am talking about.) 

 

Here is some official .gov info on spousal SS.

 

https://www.ssa.gov/planners/retire/applying6.html 

 

Do the math/calculators for YOUR situation, as large age differences between spouses can complicate things.

  • Like 3
Link to comment
Share on other sites

I do not mean to be offensive, but as someone who living through this mess right now and may end up on blood pressure meds and something to help me sleep at night due to it, I have to say I do resent my parents for their irresponsible monetary decisions. They had so many opportunities to not leave us in this position, and blew every single one of them on the "live for now" mentality. It worth thinking about what kind of hit your adult children will take if you choose to stay in a house you can't afford to maintain, and have no savings to help you get out and into something you can afford.

 

If possible, strive for a happy medium where you have some things to look forward to now, but also live frugally enough on a day to day basis to put money away every month or look at the long term prognosis for your house, and whether or not you should stay in it, sell it and downsize, or use the proceeds of the sale to pay rent for a little place somewhere so you aren't responsible for maintenance, home owner's insurance, and taxes. 

 

Home ownership when one is likely to outlive a lot of the repairs and maintenance done in middle age can be very problematic, and yet for my parent's generation aging in place with a paid off place was considered the "best plan" despite for many, quite a bit of evidence to the contrary. So i think if that is your plan, you should look at the logistics and see what you need to do now with your money in order to not put that burden on your kids.

 

We actually take a balanced approach......... not everything is about the future, we live & do in the present but we also do save & plan for retirement. Our hope is to do what my parents did.... Sell off the paid for house around the age of 70, use proceeds to move into a smaller, newer home so that we aren't dealing with major maintenance issues.

  • Like 3
Link to comment
Share on other sites

DH and I can't save that much either, our fixed and kid related expenses are too high. So what we do is let compounding interest work for us. We invest what we can in total market index funds and leave it alone for a few decades. I am doing this for my kids too, so they have a nest egg for a house downpayment or seed money for their own retirement. Our portfolios have almost doubled over the course of our marriage (eleven years, woohoo!) but we have contributed only some of that directly and the rest is market gains from time and interest. That's the beauty of investing, because even people like us who are smack in the middle of our household income band for our area, with many more than average people, can still watch our money grow over the course of our lifetimes.

 

Even with down market times, those are essentially a sale on everything from an investment purchasing perspective. And the market is built with an inherently upward bias, as low performers drop off the index and are replaced but high performers retain and gain value. So long term it's a win, but not generally in anything shorter than 1.5-2 decades.

 

But even my mom, who is entering her sixth decade of life, still could have 20-40 years of growth in invested assets, even if she had nothing invested today. There are some really great series online about this and I can try to scrounge up the links, but even older families who have been squeezed by college and low pay aren't necessarily hosed forever. There is definitely a benefit to retirement investing and savings when young, but time is time and even an older investor can still get some good compounding if they keep their withdrawal rate low and up their savings rate for a few years to gain a bit of a chunk to move forward with.

 

I chatted with DH about this last night and he told me he'd feel better if we had closer to 75-80% of our current income in monthly withdrawals in retirement, and thinks it will take longer because of the cost of college kids compared to littles. He's probably right and I'm just an optimist 🤣

 

What vehicle are you using for your nest egg for the kids?

  • Like 2
Link to comment
Share on other sites

We actually take a balanced approach......... not everything is about the future, we live & do in the present but we also do save & plan for retirement. Our hope is to do what my parents did.... Sell off the paid for house around the age of 70, use proceeds to move into a smaller, newer home so that we aren't dealing with major maintenance issues.

 

 

The thing about the future is, it's so unpredictable... IIRC, FaithManor is in Michigan, with family near Detroit or something? Home values have completely collapsed. 

 

Quick question... if person A has a job, and their spouse doesn't, and person A for whatever reason isn't putting money in their employer matched 401k (only 25% matched, so pretty crappy, but still), is there anything the spouse can do other than nag/cajole?

 

ETA: I mean, obviously you could save money in a variety of ways... but it wouldn't make a heck of a lot of sense to save some other way when you can get 25% for free. 

Edited by luuknam
Link to comment
Share on other sites

One thing to consider is if you will be able to afford your "paid off" house. I am seeing a lot of retirees forced into low income housing because they based their savings on not having a house payment, but didn't stop to consider that the roof they put on when they were 40 will have to be replaced when they are 70, the appliances will wear out, the property tax will increase, the sump pump gives out, the foundation leaks, etc. House maintenance and repair is very costly, and while many couples did the physical work when they were young, 75 and arthritic means not being able to do it. Labor is costly. Home owner insurance goes up.

 

My mom is in this boat. The roof has sprung multiple leaks as the 30 year shingle only lasted 20, and contrary to popular belief on the subject it is nigh unto impossible to get "warranty" from the manufacturer. They always, always, always claim incorrect installation and refuse to pay. Due to many of the "guaranteed" shingles being crap, the local contractors will not guarantee their installation once they drive the last nail and leave the property. She has a basement leak. She has two windows that need to be replaced. She has a ceiling that needs to be replaced because of the leaks.

 

She can't afford any of it. If we don't pay it, she really can't keep the house and will need to sell as is for not much money at all. She kind of can't afford rent either. We have two kids in college and a third entering in 2018 so paying thousands of dollars to maintain her house is not going to happen either. It looks like it will be us paying rent at the low income senior center apartments which is cheaper than the insurance, repairs, and property taxes.

 

I know people feel they shouldn't have to go back to work to save for retirement, or cut corners now, or whatever. But when we don't make an effort - my parents never did - the burden falls to our kids. There really isn't a safety net in America. Social Security is generally for most people if they did not earn a handsome salary over the long haul, not enough to live on, and the societal and familial pressure to provide for mom and dad is HUGE. And frankly, whenever I've talked to people who didn't save but could have, they feel very strongly that their still working middle aged children should provide for them. Unfortunately, we are the not just sandwiched but steam rolled generation who saw company pensions go the way of the do do, higher ages instituted at which we can draw our own social security, insanely rising health care costs, insanely rising college and trade school costs, and Baby Boomer parents who out live their money by a LONG margin leaving us with gargantuan stress. I actually think life expectancy for my age group will go down, way down because we'll die of the stress and having to work long past our own health holding out in order to provide for our elders.

 

I do not mean to be offensive, but as someone who living through this mess right now and may end up on blood pressure meds and something to help me sleep at night due to it, I have to say I do resent my parents for their irresponsible monetary decisions. They had so many opportunities to not leave us in this position, and blew every single one of them on the "live for now" mentality. It worth thinking about what kind of hit your adult children will take if you choose to stay in a house you can't afford to maintain, and have no savings to help you get out and into something you can afford.

 

If possible, strive for a happy medium where you have some things to look forward to now, but also live frugally enough on a day to day basis to put money away every month or look at the long term prognosis for your house, and whether or not you should stay in it, sell it and downsize, or use the proceeds of the sale to pay rent for a little place somewhere so you aren't responsible for maintenance, home owner's insurance, and taxes. 

 

Home ownership when one is likely to outlive a lot of the repairs and maintenance done in middle age can be very problematic, and yet for my parent's generation aging in place with a paid off place was considered the "best plan" despite for many, quite a bit of evidence to the contrary. So i think if that is your plan, you should look at the logistics and see what you need to do now with your money in order to not put that burden on your kids.

 

A lot of great advice in there.  Thank you.  I really like the thoughts about the $ it will take to still pay for your house when you might not think of that. 

I am sorry you are going through what you are right now.   Sending some zen vibes. 

 

Thank you for being so open about it.  I understand your feelings.  I know that lots of people think that the kids should support the parents in old age, but I don't.  I do not want to be a burden to my kids that way.  I hope to be in a nice retirement community and they can visit when they want to. 

 

We live for the now, but we save too.  We probably over save.  

  • Like 4
Link to comment
Share on other sites

The thing about the future is, it's so unpredictable... IIRC, FaithManor is in Michigan, with family near Detroit or something? Home values have completely collapsed. 

 

Quick question... if person A has a job, and their spouse doesn't, and person A for whatever reason isn't putting money in their employer matched 401k (only 25% matched, so pretty crappy, but still), is there anything the spouse can do other than nag/cajole?

 

ETA: I mean, obviously you could save money in a variety of ways... but it wouldn't make a heck of a lot of sense to save some other way when you can get 25% for free. 

 

The future is unpredictable. Which is why I won't do everything for the future but do some now. I've watched way too many couples plan financially well for the future, putting it all into the future, and then have one of them get very sick and/or die early in retirement, never getting to do those special things, like travel. We don't do all of our wishful traveling now but we do some of it..... because we don't know what will happen tomorrow.

 

As to the 401k, that sounds like a marital issue. I'd have major issues if dh was putting the max in his 401k. He's the primary  breadwinner so he needs to do that..........

  • Like 3
Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

 Share

×
×
  • Create New...