Exactly how much retirement money?

[Arcadia]

Like I mentioned in the other thread, it also depends on how many parents and grandparents you (general) would have to support.

 

For example, one of my maternal aunt has four kids and her husband has passed. All grandparents have long passed and had left decent inheritance. Two kids are single in their early 50s and holding well paying jobs, house paid up and zero debt. One is married with kids in college and well off. Her youngest has a school age child, he and his wife are holding stable decent paying jobs. So her child who is the most well off can easily pay for all her financial needs (medical, food, ...) and she is staying with his family.

Another maternal aunt's only child died of leukemia in his 20s. She has pension and they have retirement savings, no debt. If something catastrophic happen, my most well off cousin can and would offer free food and lodging to them.

 

My in-laws however has a parent (husband's paternal grandma) to pay medical expenses for. The grandma is staying with a single daughter but has dementia and is wheelchair bound. So she requires a home nursing aide. My in-laws has no debt but they also have little savings and no pension. A big medical bill is going to require the most affluent uncle-in-law (hubby's paternal aunt's husband) to bail them out.

 

Since my husband's side of the family tend to live much longer but also have less savings, it would mean my husband's generation bailing out parents and grandparents. My husband is the youngest and went to college on scholarship from bachelors to phd while his parents paid for his siblings. Financially it is hard to estimate how much is enough for retirement unless we take the very optimistic assumptions of my husband being able to stay employed until he is 60 and that his parents don't need any cash from us. We currently give a few thousand dollars once a year to in laws which they spend on vacations. They are in good health and have money for food and utilities (cellphone, ADSL Internet, public bus, landline, gas, electric) and property tax. My husband is rethinking that amount as we have to save for kids future college expenses being in the donut hole (full pay) category. It just annoy him somewhat that we are worried about future college costs and his parents call often to brag about their travels and then nagging him in the same phone call to get a higher paying job *exasperated*

Edited June 27, 2017 by Arcadia

[Night Elf]

I don't understand SS at all. If I'm understanding, if I can get half his amount as my support, that's more than what I'd get if I waited until my max age to withdraw my own. He's paid a whole heck of a lot more into SS than I have. He's been working since age 16 and he's now 60. He's planning on waiting until he's 70 so he can get the max benefits. I will be 59. If I understand correctly, I can start drawing at age 62. And I can get half of what he's getting at that point? Is that right?

 

I know we don't know if SS will even still be around then, but for the sake of fun, let's say it is and we can depend on that money as income.

[FaithManor]

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. 

Worse! We are 85 miles north of Detroit. While Quicken Loans and other companies have made a commitment to the revival of Detroit and things are slowly beginning to change there, we are getting nothing. Still have a high repossession rate, still have high unemployment. Aging in place means being tied down to a house with no equity. Let me put this in perspective. We have a half acre in a gorgeous area only 20 minutes from Lake Huron, 4000 sq ft, dual heating system (in floor heating with propane furnace but also exterior wood boiler), some solar panels,  hardwood floors, stained glass windows (former UM church building), five bedrooms two baths, numerous amenities. The house went from being valued at $275,000 to $42,000.00.

 

Yes you read that right. We are unlikely to be able to sell it. We also realize that in this medically under-served area, it is probably not best for us to age in place, so we will likely give the house away. 

 

We have planned for rent in our retirement which is another reason that once my earnings are not paying for college, they will be beefing up retirement to make sure that we can afford this for the long haul.

 

My mother's house - 1700 sq ft, three bedrooms, two baths, three acres, fireplaces in the bedrooms, alternative energy heating....current value, $12,000.00. A similar home across the street sold for $11,000.00. Repossessions are killing us. The local bank sells them on the courthouse steps for next to nothing, sues the former homeowners for the difference (and the county judges always side with the bank and bring judgment against people who have lost their jobs so they still have to figure out how to get housing AND make payments to the bank), and then if they can't collect, get a bailout from the FEDS, or ie... the taxpayers. Selling great houses for less than a decent used truck has bottomed out the property values, and we are told that they may never recover due to the jobs situation. Realtors buy these houses up, and then rent them out to the very people who lost them to begin with. So if you have the working capitol, speculating in rental properties can be very lucrative.

 

I think the key is diversification. Don't have all your eggs in one basket. So don't only bank on the equity in your house, or the 401K, or social security. Make sure you have money tucked away in more than one situation so if something bad happens, hopefully you won't lose it all.

 

Luuknam, check with your spouse's employer and see if you can make contributions to the 401K from a joint checking or savings account. Dh's employer allows both employee payroll deduction, and private contributions. They match at the same rate, kind of don't care where the money comes from LOL. It isn't a widespread option, but some companies do have it. The employer matching is the best part. 401K's in and of themselves are not necessarily big interest makers. It is the money from the employer that makes it a good investment. If you never earn a dime of interest, 4-8% put in by the employer makes it good.

[QueenCat]

I don't understand SS at all. If I'm understanding, if I can get half his amount as my support, that's more than what I'd get if I waited until my max age to withdraw my own. He's paid a whole heck of a lot more into SS than I have. He's been working since age 16 and he's now 60. He's planning on waiting until he's 70 so he can get the max benefits. I will be 59. If I understand correctly, I can start drawing at age 62. And I can get half of what he's getting at that point? Is that right?

 

I know we don't know if SS will even still be around then, but for the sake of fun, let's say it is and we can depend on that money as income.

 

No, at 62 you would get a reduced benefit. You would get half if you waited until your full retirement age.

 

https://www.thebalance.com/how-the-the-social-security-spouse-benefit-works-2388924

[Seasider]

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.

 

~~~~~~~~~~~~~~~~~~

ECHO!!!

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.

To the part above I "echo," I mean that with regard to an elder who had all the means and willfully neglected to plan for old age, who took tons of money and blew it frivolously with a "you can't take it with you and why shouldn't I have fun with it" attitude. It's a terrible legacy.

 

A paid off house is not an expense-free house. I understand the housing market in MI is not good, but one universal problem with the paid off house as a retirement investment strategy is that way down the road, years of putting off necessary repairs results in a property that may not realize any profit when it is time to sell. If the plan was to, when necessary, sell the home to use the funds for nursing home care, there may not be enough proceeds from the sale to pay for a nursing home.

 

I will be grateful for anything my children do for me as I age, but I certainly will not neglect to plan for them to have resources to work with as they are involved in my old age care.

[luuknam]

one universal problem with the paid off house as a retirement investment strategy is that way down the road, years of putting off necessary repairs results in a property that may not realize any profit when it is time to sell. If the plan was to, when necessary, sell the home to use the funds for nursing home care, there may not be enough proceeds from the sale to pay for a nursing home.

 

 

I thought the idea behind selling one's house was that it's paid off, so you're not necessarily concerned about profit. And if you have, say, a $500k home that's completely paid off, it doesn't matter if you sell it for $490k and make zero 'profit'... that's still almost half a million dollars (which may or may not be enough depending on whether it's supposed to cover 1 or 2 people and for how long... you'd basically fly through that amount in just a few years, but anyway... it's not nothing). But if home values crash, and that half a million dollar home can only be sold for $50k or whatever, then it doesn't matter that it was paid off and you stuck half a million dollars into it... you're not getting that. But that's not a universal problem... most people with paid off $500k homes can get roughly $500k back out of them - profit's nice, but not the only reason for having a paid off home. 

 

And I agree about diversification, and I'd strongly consider global diversification... you don't know how the US economy is going to be in 40 years compared to other countries. 

[Night Elf]

No, at 62 you would get a reduced benefit. You would get half if you waited until your full retirement age.

 

https://www.thebalance.com/how-the-the-social-security-spouse-benefit-works-2388924

 

Right. I said that wrong. The calculator I found on the SS website said I would draw something like 32.72 percent. That amount is still more than double my own amount I'd receive if I drew at age 67. That's crazy. I hope SS is still around then. We'll need it to live comfortably. I don't know how people are saving 9M dollars. We don't gamble with our 401K because we lost so much when the market went down however long ago. It's been slowly building back up. I don't have the balls to risk the money we have again. We're out of the loop.

[Seasider]

I thought the idea behind selling one's house was that it's paid off, so you're not necessarily concerned about profit. And if you have, say, a $500k home that's completely paid off, it doesn't matter if you sell it for $490k and make zero 'profit'... that's still almost half a million dollars (which may or may not be enough depending on whether it's supposed to cover 1 or 2 people and for how long... you'd basically fly through that amount in just a few years, but anyway... it's not nothing). But if home values crash, and that half a million dollar home can only be sold for $50k or whatever, then it doesn't matter that it was paid off and you stuck half a million dollars into it... you're not getting that. But that's not a universal problem... most people with paid off $500k homes can get roughly $500k back out of them - profit's nice, but not the only reason for having a paid off home.

 

And I agree about diversification, and I'd strongly consider global diversification... you don't know how the US economy is going to be in 40 years compared to other countries.

But if you have a $200K home that will cost a realtor fee to sell (-$14K), needs a new roof (-$20K), new flooring from years of "accidents" (aging isn't pretty), kitchen appliances that need replacing, electrical updating because the original wiring has aged out of code....

 

I guess my larger point is that you really need to look ahead and count costs as much as possible, especially if you're planning to take proceeds from a sale forward to meet end of life care needs.

[Sneezyone]

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.

 

You are singing my song. There is no way in hell we will do to our kids what was done to me.

[Guest]

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.

Quoted for truth. So much good stuff here.

 

As for us and affording the house, we are actually thinking of structuring a portion of our savings and investments into a trust for the house to pay the ongoing property taxes and maintenance. I'm trying to figure out the best way to go about it right now precisely because I worry about that cost in retirement when my income is fixed. I want to not be a burden to my kids and grandkids financially, even if I might require their time or help in other things. It's all a lot easier to swallow when you're not being sucked dry financially by older relatives who didn't save - I don't want that to be me :o

[Guest]

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

Vanguard funds - This one is a good one :)

https://personal.vanguard.com/us/funds/snapshot?FundIntExt=INT&FundId=0585

 

I thought about starting actual retirement accounts for them so they cannot easily draw early, we shall see if we have additional money for it.

Edited June 27, 2017 by Arctic Mama

[FaithManor]

Quoted for truth. So much good stuff here.

 

As for us and affording the house, we are actually thinking of structuring a portion of our savings and investments into a trust for the house to pay the ongoing property taxes and maintenance. I'm trying to figure out the best way to go about it right now precisely because I worry about that cost in retirement when my income is fixed. I want to not be a burden to my kids and grandkids financially, even if I might require their time or help in other things. It's all a lot easier to swallow when you're not being sucked dry financially by older relatives who didn't save - I don't want that to be me :o

I hear ya.

 

And while at 45 it is pretty easy to get a home improvement loan, it is about impossible at 65 once one is on fixed income. Banks just aren't amenable these days. So unexpected big ticket items are a killer for retirees.

[StephanieZ]

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

 

I'm not who you directed your query to . . .

 

. . . but, our "Kid Nest Eggs" are in Vanguard's LifeStrategy Growth Fund. It's a broad index fund approach of balanced stocks/bonds/domestic/international funds. It's goal is long term growth, so it's ideal for those with longer investment horizons (say 10+ years), but, I like it even for a shorter time horizon, so long as you won't freak out if it loses 10% one year, or whatever. I'm a invest-and-forget-and-never-sell investor, so I'm fine with the ups and downs. I'm just concerned about long term gains. 

 

Alternately, I also like Vanguard's Total Stock Market Index Fund if you want 100% domestic stocks. I'd probably use that for college savings if I were investing college money now. (I actually used Vanguard's 500 Index Fund for ours, but those accounts were established before TSM came out. Now I use TSM when I just want domestic stocks/stocks/stocks in some portfolio.)

 

IMHO, either of those funds would be ideal for a long-term nest egg.

 

I love Vanguard, and I love Index Funds, and I love Target Date Retirement Funds and Vanguard's LifeStrategy funds for non-retirement purposes. I'm no expert, though, so take my advice with plenty of salt.

[Guest]

I'm not who you directed your query to . . .

 

. . . but, our "Kid Nest Eggs" are in Vanguard's LifeStrategy Growth Fund. It's a broad index fund approach of balanced stocks/bonds/domestic/international funds. It's goal is long term growth, so it's ideal for those with longer investment horizons (say 10+ years), but, I like it even for a shorter time horizon, so long as you won't freak out if it loses 10% one year, or whatever. I'm a invest-and-forget-and-never-sell investor, so I'm fine with the ups and downs. I'm just concerned about long term gains.

 

Alternately, I also like Vanguard's Total Stock Market Index Fund if you want 100% domestic stocks. I'd probably use that for college savings if I were investing college money now. (I actually used Vanguard's 500 Index Fund for ours, but those accounts were established before TSM came out. Now I use TSM when I just want domestic stocks/stocks/stocks in some portfolio.)

 

IMHO, either of those funds would be ideal for a long-term nest egg.

 

I love Vanguard, and I love Index Funds, and I love Target Date Retirement Funds and Vanguard's LifeStrategy funds for non-retirement purposes. I'm no expert, though, so take my advice with plenty of salt.

Yes yes yes! All of this.

[mommyoffive]

Love Vanguard too!

 

But are you ladies just buying the stock not in an roth IRA for them or a 529?   Just buying shares?  And you have it in the kiddo's name? 

[FaithManor]

Also remember that widows and widowers do not draw BOTH social security benefits. You only draw one. So once a spouse passes, your income takes a major hit. It sounds like it isn't a big deal, one person gone, half the expenses gone. But that isn't how it works out in real life. The shelter that provided for two tends to cost just as much for one. The only thing that goes down will be things like prescriptions if the other spouse had the greater costing scripts, groceries, co-pays, and maybe just maybe car insurance if both elders had been driving. The domicile tends to cost as much for heat/air and electric, homeowner's insurance, taxes, etc. for one as it does for two. So the hit hurts because the budget that had been maintained on two social security draws, now has to be maintained on one.

 

That is where the value in other retirement funds come into play because they don't automatically reduce just because one spouse passed away.

 

Another reality that my mom is living. My dad, who despite copious amounts of advice from numerous experts that he should be taking a healthy salary out of his business plus giving mom a salary for working in it and at a higher hourly wage than the other office help, refused always putting as much money as possible back into the business claiming that he would some day sell that business for a huge amount of money which EVERYONE knew was a pipe dream. Since social security is based on percentage of earnings, this means that despite 60-80 hours a week for him, and 40 hours a week for her for 40 years in that business, they only paid in on between $24,000-38,000 combined depending on the year! Of course the business isn't worth a dime in a community that is slowly turning into a ghost town - handwriting on the wall that everyone but him saw 20 years ago when it wasn't too late to do something about the situation - thus no money from that "investment". PSA: A small business venture is NOT a retirement investment. Don't make that mistake. 

 

Thus their combined social security total was $1796.00 a month. Not very much at all. Then he passed away. Now she can only draw the higher of the two. So only $1100.00 a month. She has a $4000.00 medical deductible on her medicare plus co-pays and prescriptions. Obviously she can't pay 1/3 of her income to medical deductibles every year - she is type 2 diabetic with high blood pressure and a lot of arthritis - and survive. So guess who ends up with the financial stress. My sister is a student in France, and my brother has almost $100,000 in medical bills despite his insurance from his stroke and heart attack. Then he lost his job. He is currently uninsured while he waits to see if his temp position becomes permanent. It is ALL on dh and I. Since I want dh to leave the full time rat race before his own health tanks - only one male on his side of the family going back five generations has lived past 70 and dh is 53 - that means I have to get back into the work force, get college paid for, find a way to shore up retirement savings, AND pay for my mom to live. Due to the intricacies of Michigan law pertaining to business owners, bankruptcy for business owners, etc., she is ineligible for medicaid and almost all other safety net programs. 

 

I am very sad for her, and very stressed for me. I try to never bring it up, but I think she senses the stress. She told one of her friends that some days she thinks she should stop her diabetes meds, not tell anyone, and wait for nature to take its course, or worse go to Oregon and try to convince a doctor to help her end it so she won't be a burden on us.

 

So I am serious when I say that it is incumbent on people to do everything they can to plan for their elder years when they can't work anymore. Medical technology is going to help everyone live a LOT longer while not being in good enough health to work. Money has to stretch. it isn't like in our current political climate we can count on anything being done about the safety net. That ship sailed. It would have had to have been fixed long before the bulk of the Baby Boomers retired, and no one wanted to tackle that elephant in the room.

 

To be honest, I do consider retirement savings to be more important than paying for college for kids if one has to choose between the two and not do both. Community College may not be their "dream" path, but it has worked for a lot of people, and if you will let them live at home while commuting to the four year, they can save a lot and keep their student loan burden low. The concern I have is for people living pay check to pay check while being frugal in which there is no hope of doing either thing. That means the young adults have no help getting launched, and the middle aged couple has nothing put away for retirement in a country that does not take care of its citizens very well. YIKES, that isn't a good set up for anybody. 

 

So whatever you plan for retirement, if it includes social security, plan on only drawing one. If you draw two, that's nice, but since it isn't likely that both spouses will pass at the exact same time and one may outlast the other by a good bit, you need to make the budget work for the reduced amount.

 

 

[StephanieZ]

Love Vanguard too!

 

But are you ladies just buying the stock not in an roth IRA for them or a 529?   Just buying shares?  And you have it in the kiddo's name? 

 

Our college savings were done in the 90s/early 00s when we were still eligible (they had income limits for the contributor) to contribute to what were then called Educational IRAs (renamed Coverdell accounts). They can be re-assigned to other kids, even grandkids, etc if not used by the named beneficiaries. We (parents/owners) control the accounts. Withdrawals (for eligible educational expenses) are tax free. (The money was taxed before contributing.)

 

Our kids' nest eggs are in trust accounts --- they came from my mom's estate. 

 

I wouldn't put my kids' nest egg money in a ROTH or 529, because the purpose of their "nest egg" accounts is post-undergrad . . . whatever they want/need. (DH and I are funding undergrad . . .) They might need help with grad school or they might need a car or they might want a year off traveling the world. Or they might want a down payment or seed money for a business or they might let it sit and grow and be their life-long emergency fund. Whatever they want, the money is theirs once they hit 25. 

 

Retirement accounts are in SIMPLE IRAs, which are similar to 401ks but are used by tiny businesses (as ours is). 

 

If I were eligible for a ROTH IRA personally, I'd use it once I'd maxed out the pre-tax vehicles I had access to (401k, SIMPLE, whatever your employer has . . . or a Traditional IRA if eligible for pre-tax contributions. If I were low enough income to not pay much income tax to start with, then, for sure, go with ROTH IRA. If your income tax bracket is high, then the pre-tax vehicles are generally better, so I'd use those first, and then do a ROTH if I had more to invest and was eligible.

[Guest]

529's are quite a boondoggle, in my opinion. I am still setting up things for the kids as we had previously been buying CDs with what we had in savings accounts for them. But I am considering doing a split between an IRA and some more liquid capital for them in a plain old stock portfolio in their names. The penalty for withdrawal on the IRA is my hesitation in stacking that too hard, because I don't want them to not be able to invest in their businesses or homes if they want to. But if we can essentially fully fund their retirement while they're children, all they have to do is not mess with it, that frees up their take home pay for other ventures too.

 

I'm still going back and forth on a lot of this in terms of percentages. But the fact remains my kids are better off taking out student loans than me saving for their college, given the long term benefits of keeping the money invested compared with the interest rates on most of those loans. Or is paying for part of undergrad and just eating it to prevent them from spending their savings on it (which is what DH's parents did).

[FaithManor]

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.

I know many people never plan to retire. But most will not simply work until they drop dead because their health will become poor enough to negatively impact their work. While legally employers are not supposed to engage in age discrimination, the reality they will absolutely get away with letting older workers go because they can't meet the quota, can't get the work done because they take too much time off work for health reasons, have memories that wane, make more mistakes, etc. Most people who bank on working until they drop will end up losing their jobs before they actually do drop. That's NOT good if the sole plan was always work then die. There will be this not so great stage in between.

 

And Murphy, I am FOR a single payer healthcare system NOT based on employer provided insurance, something akin to France, Germany, or Sweden's system. This business of people dying in poverty due to health care costs is just STUPID and immoral for a developed nation. I hate our current system. Hate it with the fire of a thousand suns!

 

I am sad for my mother in law. She loved nursing. Adored nursing. She didn't want to retire. She couldn't do the work physically anymore, and then lost hearing on one side, a rare condition that cannot be improved by hearing aids or implants, and well, no one wants a hard of hearing nurse working on them. She retired sooner than she wanted. Thankfully, she had been a nursing professor and paid into Florida's state retirement since she taught at a state school. That retirement in addition to her social security is what is keeping her fairly comfy in her elder years.

[FaithManor]

529's are quite a boondoggle, in my opinion. I am still setting up things for the kids as we had previously been buying CDs with what we had in savings accounts for them. But I am considering doing a split between an IRA and some more liquid capital for them in a plain old stock portfolio in their names. The penalty for withdrawal on the IRA is my hesitation in stacking that too hard, because I don't want them to not be able to invest in their businesses or homes if they want to. But if we can essentially fully fund their retirement while they're children, all they have to do is not mess with it, that frees up their take home pay for other ventures too.

 

I'm still going back and forth on a lot of this in terms of percentages. But the fact remains my kids are better off taking out student loans than me saving for their college, given the long term benefits of keeping the money invested compared with the interest rates on most of those loans. Or is paying for part of undergrad and just eating it to prevent them from spending their savings on it (which is what DH's parents did).

This is true only if they take out the federal student loans and that caps out for undergraduate degrees at about $27,000.00 or in terms of Michigan, one year of tuition/room/board at our two flagship state schools.

 

Private student loans run the gamut of 6-14% interest and compound much like a credit card/revolving credit so the compound is extra especially NOT in their favor.

 

So if you do choose to keep it invested, make sure they can get enough merit aid to cover their costs. At your household income level, they are not going to get a dime of financial aid except federally unsubsidized loans (meaning that the interest compounds during school and the federal program does not pay the interest so the principle is growing). Therefore, their college plan needs to be either community college that they can pay for with those loans, and then two years at a four year college assuming that their credits transfer equally, and they are not out of sync with pre-requisites which is no easy feat, and then live at home and drive so that summer jobs and federal student loans are enough to pay in-state tuition and books. Ask us how we know!!!!! Says the mother of two boys in college and another to enter in 2018.

 

You aren't likely to have any kind of reliable investment making better than 14% interest, and at that rate, your kids' student loan burden will be rather large by the time they graduate. Many people are under the illusion that the only student loans out there are federal, and the rest are parent loans. Nope. Sally Mae and company offer gobs of money to unsuspecting college students at high interest rates heavily pressuring by college financial departments to sign, and some financial aid officers actually have been caught - and when I say some, I mean a startling number - lying to the students by telling them they need to come and sign for their scholarship money, and then disguising the paperwork. Art and culinary institutes are NOTORIOUS for this as are for-profit colleges. If you leave the money invested and tell them to take out loans, please be really good to your young adults and help them go over all the paperwork before it is signed, talk turkey to them about college costs so they go into this with their eyes wide open and a doable plan in place. If at all possible, allow them to live at home into young adulthood in order to lower their costs.

[Murphy101]

I know many people never plan to retire. But most will not simply work until they drop dead because their health will become poor enough to negatively impact their work. While legally employers are not supposed to engage in age discrimination, the reality they will absolutely get away with letting older workers go because they can't meet the quota, can't get the work done because they take too much time off work for health reasons, have memories that wane, make more mistakes, etc. Most people who bank on working until they drop will end up losing their jobs before they actually do drop. That's NOT good if the sole plan was always work then die. There will be this not so great stage in between.

 

And Murphy, I am FOR a single payer healthcare system NOT based on employer provided insurance, something akin to France, Germany, or Sweden's system. This business of people dying in poverty due to health care costs is just STUPID and immoral for a developed nation. I hate our current system. Hate it with the fire of a thousand suns!

 

I am sad for my mother in law. She loved nursing. Adored nursing. She didn't want to retire. She couldn't do the work physically anymore, and then lost hearing on one side, a rare condition that cannot be improved by hearing aids or implants, and well, no one wants a hard of hearing nurse working on them. She retired sooner than she wanted. Thankfully, she had been a nursing professor and paid into Florida's state retirement since she taught at a state school. That retirement in addition to her social security is what is keeping her fairly comfy in her elder years.

It's not like I am happy with knowing there will never be retirement for us. I'm not. I'm not happy that healthcare is crap either. But neither are within my realm of control to change.

 

We manage what finances we have as best we can. We hope in the face of obvious unlikelihood.

 

We work, we pay bills. Anything left goes to help my kids get through higher education in hopes of them being better off than we are.

 

By all means if the opportunity to change any of our employment/financial/healthcare for the better happens, we will take it.

 

But for now, it is what it is.

[Guest]

Yes, our plan was to have them live at home and pursue as much of their undergrad degrees locally as possible and then transfer, to save money. We'd also foot the difference in cost for their BA if they're staying local-ish and working, or agree to obtain as many credits as possible before 18. Both hubby and I did something similar and agree it's a better use of time unless they have a particular path chosen that is drastically different.

 

The downsides of a 529 are many, not the least of which their lack of growth. I'd rather liquidate stocks to pay for college, and if one of our kids chooses to start a business or trade that money really can't be used for that purpose. Last I checked (it's been a few years, correct me if I'm wrong!) there are very stringent usage requirements and investment capital for a startup wasn't on the list.

 

This is why I'm thinking throwing it all in a retirement account isn't the best strategy. DH feels more strongly than me about helping with their college, but if we can set money aside for them in a more flexible account that gives us more freedom than a 529 to support their plans. And if they end up with 60k or 150k in loans but have otherwise low living expenses in a well paying career I'm not that worried.

 

You're right that we are hosed on financial aid. Per person in the household we don't even make that much, even by Ohio standards. But among our assets it's too much for most public schools to assist with. So it's merit or cash.

 

We cannot foot the bill for all of them to go through college AND fund out retirement, so we have to figure out a way to help without putting our own financial futures in jeopardy. They have a lot more earning years to deal with education debt than we do, especially by the time the youngest hits school, so we will help but ultimately I don't feel too guilty about having them pay for anything beyond an AA or BA/BS, depending on how many cheap credits they accumulate early.

Edited June 27, 2017 by Arctic Mama

[regentrude]

To be honest, I do consider retirement savings to be more important than paying for college for kids if one has to choose between the two and not do both. Community College may not be their "dream" path, but it has worked for a lot of people, and if you will let them live at home while commuting to the four year, they can save a lot and keep their student loan burden lo

 

The bolded cannot be emphasized enough.

There are student loans, but you won't be able to obtain a loan to pay for cost of living as a retiree.

[Guest]

The bolded cannot be emphasized enough.

There are student loans, but you won't be able to obtain a loan to pay for cost of living as a retiree.

That's what we are struggling with too, especially on a single income (and I cant really ever make much money). It really isn't that we want the our kids to bootstrap for the heck of it, but given the choice between paying off the mortgage, funding our own retirement, and setting aside long term retirements accounts for them or paying out of pocket for college, I think the longer term fiscal spends make the most sense. But I know loans can go crazy too, so we are mulling over the best balance with the (quite limited) pool of funds we have.

 

Honestly the only reason we can afford to even build a substantial house and not hold a ridiculous mortgage is because we have been saving a long time in tight quarters, have a lot of equity, and are moving to a place with 40% cheaper housing from where we are now.

 

We can only manage this once, I think :lol: So I'm trying to make the most of it in terms of wealth allocation.

Edited June 27, 2017 by Arctic Mama

[FaithManor]

It's not like I am happy with knowing there will never be retirement for us. I'm not. I'm not happy that healthcare is crap either. But neither are within my realm of control to change.

 

We manage what finances we have as best we can. We hope in the face of obvious unlikelihood.

 

We work, we pay bills. Anything left goes to help my kids get through higher education in hopes of them being better off than we are.

 

By all means if the opportunity to change any of our employment/financial/healthcare for the better happens, we will take it.

 

But for now, it is what it is.

I am very sorry Murphy. Situations like yours infuriate me because we should have a much better system in this country. What we have is inhumane!

[maize]

529's are quite a boondoggle, in my opinion. I am still setting up things for the kids as we had previously been buying CDs with what we had in savings accounts for them. But I am considering doing a split between an IRA and some more liquid capital for them in a plain old stock portfolio in their names. The penalty for withdrawal on the IRA is my hesitation in stacking that too hard, because I don't want them to not be able to invest in their businesses or homes if they want to. But if we can essentially fully fund their retirement while they're children, all they have to do is not mess with it, that frees up their take home pay for other ventures too.

 

I'm still going back and forth on a lot of this in terms of percentages. But the fact remains my kids are better off taking out student loans than me saving for their college, given the long term benefits of keeping the money invested compared with the interest rates on most of those loans. Or is paying for part of undergrad and just eating it to prevent them from spending their savings on it (which is what DH's parents did).

I thought children could only contribute to an IRA if they have earnings of their own?

[FaithManor]

That's what we are struggling with too, especially on a single income (and I cant really ever make much money). It really isn't that we want the our kids to bootstrap for the heck of it, but given the choice between paying off the mortgage, funding our own retirement, and setting aside long term retirements accounts for them or paying out of pocket for college, I think the longer term fiscal spends make the most sense. But I know loans can go crazy too, so we are mulling over the best balance with the (quite limited) pool of funds we have.

 

Honestly the only reason we can afford to even build a substantial house and not hold a ridiculous mortgage is because we have been saving a long time in tight quarters, have a lot of equity, and are moving to a place with 40% cheaper housing from where we are now.

 

We can only manage this once, I think :lol: So I'm trying to make the most of it in terms of wealth allocation.

I am just so excited that you are headed to Dayton! I think you are really going to like it. I hope so.

[regentrude]

That's what we are struggling with too, especially on a single income (and I cant really ever make much money). It really isn't that we want the our kids to bootstrap for the heck of it, but given the choice between paying off the mortgage, funding our own retirement, and setting aside long term retirements accounts for them or paying out of pocket for college, I think the longer term fiscal spends make the most sense. But I know loans can go crazy too, so we are mulling over the best balance with the (quite limited) pool of funds we have.

 

I see your point about the long term fiscal big picture. However, I also envision a young person trying to start life with your above mentioned 60-150k in loans - knowing that the parents set up a retirement account for them is little comfort when they are starting out their career, start a family, and have pay off the loans. Retirement will seem an awful long way off for a 25 y/o. And having the loans hanging over them will limit their career choices.

Edited June 27, 2017 by regentrude

[madteaparty]

We won't be able to stay in our home based on property tax alone-- it could be in absolute mint condition with zero upkeep and we'd still not be able to justify the five figure property tax). I'm prioritizing living now and educating children (which opportunity cost is huge as we forego 99% of my salary). I don't think we will be able to retire in the US anyway.

Edited June 27, 2017 by madteaparty

[Murphy101]

I don't know if we will pay off our house. We might. But I have a 2 story house and a sunken living room too. That's just not practical for an elderly me I suspect. Every elderly person I know with such a home reaches a point where they close up the upstairs and never use it again for safety purposes. I trip over that blasted living room step at least once a week now. That kind of thing will land a 60 or 70 yr old me in the hospital and nursing home.

 

I'd like a 3-4 bedroom single story with a very open for large family gatherings living areas floor plan when I'm older. Less to maintain. Less mobility hazzards. Hopefully less cost and maybe paid off.

 

I don't care how long my kids live here. As long as they are contributing to family and society, working/going to school and generally aren't jerks - I feel no rush to push them from the nest and likely into debt if I can help them avoid it. And likewise, when I'm old, I hope that I will be welcome in their homes too. And I hope I can also not be a jerk and be of some help to them.

 

But I'm really struggling even thinking that far ahead. We are being bombarded with expenses in the now that take priority.

 

My idea of dreaming big these days is just getting to take a real one week vacation in a year or two. And it's probably a pipe dream.

[FaithManor]

Murphy brings up a good point. Stairs. My brother has an old farm house with those kinds of insanely steep stairwells that building codes no longer allow because everyone breaks their necks on them.

 

Not good for aging in place if one must access the upstairs. My nephew's house is a brownstone in a major city. It only had one bathroom, on the second story. My mom would love to visit them, and they really want to have her. But with her permanently damaged ankle now affected by arthritis causing bad limping, she can't.

 

My sister's apartment is up four flights of stairs in an old building with no elevator, so mom can't visit her there either.

Definitely something to consider.

[Guest]

I see your point about the long term fiscal big picture. However, I also envision a young person trying to start life with your above mentioned 60-150k in loans - knowing that the parents set up a retirement account for them is little comfort when they are starting out their career, start a family, and have pay off the loans. Retirement will seem an awful long way off for a 25 y/o. And having the loans hanging over them will limit their career choices.

Eh, I think if we sell it to them as having over a million dollars by 65 for just having been born they'll get over their disappointment. I don't know that loans will limit their career choices? The loans are commensurate *with* the career choice. And having to take out loans to pay for your fourth year of college or a masters doesn't seem very violin-worthy.

 

But like I said, we want to do the best we can with the limited pool of funds. Using savings to pay for college isn't as wise long term, and we want to try and encourage them to save beyond that by trying to help out if we can. But not with a 529.

 

I'm so grateful my husband's parents saved all his PFDs for him and helped him not spend them. That nest egg is part of what we are rolling into our home now and has benfitted us many times over compared to if they'd paid for his degrees.

 

But maybe we will get lucky and be able to afford both. One can dream :D

[Scarlett]

It's not like I am happy with knowing there will never be retirement for us. I'm not. I'm not happy that healthcare is crap either. But neither are within my realm of control to change.

 

We manage what finances we have as best we can. We hope in the face of obvious unlikelihood.

 

We work, we pay bills. Anything left goes to help my kids get through higher education in hopes of them being better off than we are.

 

By all means if the opportunity to change any of our employment/financial/healthcare for the better happens, we will take it.

 

But for now, it is what it is.

 

 

Exactly.  I won't be 'doing something horrible' to my son because he will be an adult who can help his mother if she needs it or not.  It is what family is suppose to do, so I hope if I need help in my old age he will be there for me.   I haven't ran through my inheritance (which doesn't exist) living high on the hog with no regard for the future.  Divorce, sickness, surgeries, custody battles....all these thing have altered the trajectory of my life.  

 

There are no guarantees.  We all just have to do the best we can.  

[Guest]

I don't know if we will pay off our house. We might. But I have a 2 story house and a sunken living room too. That's just not practical for an elderly me I suspect. Every elderly person I know with such a home reaches a point where they close up the upstairs and never use it again for safety purposes. I trip over that blasted living room step at least once a week now. That kind of thing will land a 60 or 70 yr old me in the hospital and nursing home.

 

I'd like a 3-4 bedroom single story with a very open for large family gatherings living areas floor plan when I'm older. Less to maintain. Less mobility hazzards. Hopefully less cost and maybe paid off.

 

I don't care how long my kids live here. As long as they are contributing to family and society, working/going to school and generally aren't jerks - I feel no rush to push them from the nest and likely into debt if I can help them avoid it. And likewise, when I'm old, I hope that I will be welcome in their homes too. And I hope I can also not be a jerk and be of some help to them.

 

But I'm really struggling even thinking that far ahead. We are being bombarded with expenses in the now that take priority.

 

My idea of dreaming big these days is just getting to take a real one week vacation in a year or two. And it's probably a pipe dream.

Hugs :(

 

I know the stair fix for us is putting in an elevator or lift but that's so difficult if it isn't new construction. And I think you're wise to be thinking about a single story home for mobility purposes and eventual downsizing.

[Murphy101]

Murphy brings up a good point. Stairs. My brother has an old farm house with those kinds of insanely steep stairwells that building codes no longer allow because everyone breaks their necks on them.

 

Not good for aging in place if one must access the upstairs. My nephew's house is a brownstone in a major city. It only had one bathroom, on the second story. My mom would love to visit them, and they really want to have her. But with her permanently damaged ankle now affected by arthritis causing bad limping, she can't.

 

My sister's apartment is up four flights of stairs in an old building with no elevator, so mom can't visit her there either.

Definitely something to consider.

It's a huge common problem. Often before finance becomes an issue, people can't keep their home because they literally can't live in it. They can't get their walkers through the doorways. They can't take the steps to the curb to check their mail.

 

Also.

 

Medical facilities. Growing and raising a family in the country or the burbs sounds wonderful, but if you have to seek dr appts every week. If you have to live knowing that should you call 911, it might take the ambulance from the county over 30 minutes to reach you. That the nearest specialists or major hospital is 40 minutes away. In the house we lived in before here, we were outside the city in a town that literally had two cops and one ambulance that it shared with a neighboring town. One summer an elderly man died in our neighborhood because even though he called 911 for his heart pains, it took them 40 minutes to arrive and of course, there's still the trip to get him to help.

 

With dh's diabetes, which can lead to all kinds of major medical issues as he ages, I'd be terrified to live further thana few minutes from major medical care options when we are elderly.

 

And another consideration in homes... people presume they will be able to drive to the end, but many can't. In my city, that leaves elderly people as shut ins if they don't have a network of people able and willing to drive them about. The public transit is useless. This is another major reason people move into nursing homes or assisted living places. Many of these places offer bus service a couple times a week.

[Guest]

One thing I can offer that hasn't already been said:  do some work now finding out what resources you have to draw from.  My dad retired suddenly and my mom put together a decent retirement with not as much money as you might think by going back through every job they had ever had and finding if there was any pension or retirement fund due them.  I think she gets checks from about 12 places each month..one for as little as $40, but by golly, she gets it.  And you know, for someone her age, that is a nice dinner out.  

 

She also found a really good financial advisor, someone who makes more for her percentage-wise each year than our fancy advisor does for us.  

 

I have also seen that with my parents and in-laws, who lived well into their 80s or going strong in their 90s that with the exception of medical, most expenses go way down.  You wouldn't believe what my MIL lives on, and she is perfectly happy.  

 

Planning for retirement isn't the same thing as projecting the life you live today into the future ad infinitum.  Some expenses go up (medical, and if you are able to enjoy it, travel can be expensive...but that is a preference, not a necessity) but most go down.  For most people, life gets simpler.  I'm already to the point with the traffic being what it is that I would rather just stay home most days.  Unless I'm going somewhere for fun.  

 

If we were to need cash right this minute to retire, we would sell this house in a high COL area and move to a low COL area.  The difference in the house price (cash paid) alone would be a better retirement fund than my mother has.  :0)

 

 

[FaithManor]

Murphy, so true about medical. Another reason we will be moving. Right now mom and MIL still drive. But more and more they struggle with doing more than local. Mom's specialists are all 55-95 minutes away. When she goes to Beaumont next week to see her ankle surgeon, it will be an 85 miles drive each way, dense traffic, and unable to manage that, I will end up killing four hours for that appointment, more if he isn't running on time.

 

I cannot do this for two elderly ladies and hold down a job. So once I go back to work, I will have to hire someone to driver her. Mil has money right now to pay for rides - a recently retired teacher from her knitting club - but not my living on nothing mom. But paying someone who wants to earn some extra dollars will be a lot better than losing my job for too many absences. I do worry though that when she gets to the place that she really needs me to be there to ask questions and advocate for her, I won't be able to because her financial woes will keep me in the workforce at the time she needs me most. Without siblings who are in a position to help, this weighs on me so much.

[historically accurate]

Well, now I'm depressed.

 

We live on next to nothing, which leaves a little tiny percentage of next to nothing to pay for retirement. The thought of 40 years at the current income is enough to make me want to sob, and according to those calculators posted above, we may not even make 70% of current income in retirement. 

 

My plan is to go back to work when youngest goes to college in order to pay for old age - I don't know if we'll ever be able to actually retire or if we'll keel over at work or if we'll be medically retired trying to make ends meet.

Edited June 27, 2017 by beckyjo

[Guest]

Well, now I'm depressed.

 

We live on next to nothing, which leaves a little tiny percentage of next to nothing to pay for retirement. The thought of 40 years at the current income is enough to make me want to sob, and according to those calculators posted above, we may not even make 70% of current income in retirement.

 

My plan is to go back to work when youngest goes to college in order to pay for old age - I don't know if we'll ever be able to actually retire or if we'll keel over at work or if we'll be medically retired trying to make ends meet.

Don't get discouraged! If you can bank what you make going back to work wiubjust payroll taxes taken out and keep living on what your husband can make for awhile it WILL help. Every little bit does.

 

I make it sound like we make tons of money. But we really don't. We just try to live frugally to set aside so things are more comfortable down the road. It means penny pinching more now because, unlike some on here, we cannot live well now AND afford later, so choices must be made. But you just do the best you can. Everyone's situation is different and comparing isn't super useful if you don't know what sandbox they're playing in financially ;)

[maize]

You would be surprised. Once your portfolio hits a million is grows exponentially.

Not everyone has a surgeon's income off of which to build that first million...

[Bootsie]

You would be surprised. Once your portfolio hits a million is grows exponentially.

If you have $1 million earning 10% each year, compounded (and you do not add any money or make any withdrawals), it will take over 23 years for the account to reach $9 million.  At a 10% rate, the initial amount will approximately double every 7 years.

[teachermom2834]

Are we really hearing the argument that once you have a million it grows quickly?

 

As though we all just could tighten the belts a bit to get that first million socked away? LOL

 

I guess I will give up my daily Starbucks and meals out like the financial gurus tell us... then I'll have that first million and be home free.

[Guest]

Well, now I'm depressed.

 

We live on next to nothing, which leaves a little tiny percentage of next to nothing to pay for retirement. The thought of 40 years at the current income is enough to make me want to sob, and according to those calculators posted above, we may not even make 70% of current income in retirement. 

 

My plan is to go back to work when youngest goes to college in order to pay for old age - I don't know if we'll ever be able to actually retire or if we'll keel over at work or if we'll be medically retired trying to make ends meet.

 

It was interesting when my mom went back to work at age I dunno, 58 or something?  they saved almost every penny she made and didn't cut into their savings, and it added up pretty fast.  My parents had been very disciplined all their lives re: money and what they "neeeeeeded" so it wasn't like they suddenly had to just cut loose and have All the Things.  Mom is still careful, but she's not impoverished, has good healthcare, and was able to give my sister a down payment on a house (which they share) without having to eat beans and rice for the rest of her days.  

 

Things change.  But it is good to think about this stuff because you are right...I don't WANT to have to cut my standard of living ...   Choice makes things easier. 

[Murphy101]

Not everyone has a surgeon's income off of which to build that first million...

LOLOL I know, right?

 

If my Dh didn't pay any taxes or spend a single dime of his income, it would still take 20 years to reach a million.

[2squared]

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.

Exactly. I was referring to file and suspend. Spousal SS is definitely still an option, but not the double dipping (his for now, yours for later).

[Arcadia]

My condo complex has many healthy retirees. Most of the floor plans are double jogger, wheelchairs and walkers friendly. It is easy to retrofit the master bathroom to be elderly friendly. The light rail a short walk away is dependable if you are not in a hurry. Library, pharmacy, dentist, optician, supermarket are all a short walk down the road. We only lack a family practitioner within walking distance.

 

My in-laws' and my parents' homes have no stairs and are located very near to efficient public transport. None of them are driving. My parents have not driven since they were in their 30s preferring to take cabs if needed. My FIL stopped driving in his 70s when they couldn't afford to maintain a car (upkeep, gasoline, license) while my MIL never had a driving license.

[Guest]

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.

Bolded this because I am in exactly the opposite boat, and I wanted to say that I am *thankful* that my parents were careful and sensible.  It has made things so much easier for them and for me in the long run.  I'm sorry you are in the boat you are in, and I am not posting to rub it in (I hope we know each other better than that) but to point out that what one does NOW *does* have an impact on how your children will feel about you in the future.  

 

And the house thing--oy.  Yes.  My parents ALSO were very responsible on this front.  I hope to be as responsible.  We need to get into a one-level house, I think, but they are all so small here (land is expensive, so the only way to get a relatively big house is to go UP) that it means either getting completely RUTHLESS with our stuff (I have done more of this than DH has) or moving to another area, which I am loathe to do because I love my friends and church.  

 

And yes, the reason we live in a house that is big enough in reality but too small because we lived in a bigger house for 15 years, AND had a beach house, is because the property taxes went from $4000 to $13,000 in the time we lived there.  When you are living on a "fixed" income, that is enormous.  And yes, it needed maintenance.  Keeping the yard up was $10,000 a year.  So just to have a yard to sit a house on I had to pay $23,000 a year.  That 's real money and it means a big difference in retirement planning.  :0)

[Caroline]

You would be surprised. Once your portfolio hits a million is grows exponentially.

??

[Lecka]

Really how much money is a more-straightforward to me than what investment return rate to guess at.

 

My husband and I are so different and we get upset with each other.... he is forever assuming constant 8% rates of return and calling that conservative.

 

I find it so unrealistic so I am always arguing why we shouldn't count on future investment returns OR on not losing money.

 

With our age -- we missed the stock market crash of the early 2000s.

 

But I am 3 years older than my husband, and I grew up with a parent who tracked the stock market and followed the markets.

 

My husband's parents didn't and he never really heard of it before I encouraged to start taking advantage of a retirement account through his job.

 

But like -- last year the stock market had some gains.

 

I don't trust it, I wait for the bottom to fall out.

 

My husband is just a more optimistic person.

 

So I am more curious about rates of return.

 

It is the difference between me picturing modestness and my husband cavalierly quadrupling sums of money because they will double and then double again, in his thoughts.

[madteaparty]

Are we really hearing the argument that once you have a million it grows quickly?

 

As though we all just could tighten the belts a bit to get that first million socked away? LOL

 

I guess I will give up my daily Starbucks and meals out like the financial gurus tell us... then I'll have that first million and be home free.

Or one could just eat cake.