Exactly how much retirement money?

[Lecka]

Separately -- there is a rule of 72 that assumes a constant rate of return with no losses.

 

You divide the rate of return into 12, and that is how long it takes to double your money.

 

Or something like this....

 

So assume 12% and double your money every 6 years, 8% and every 9 years, etc.

 

If you assume 12% and ---- let's be honest I believe last year was even better than this with the Trump bump (or whatever) ---- and people who are optimists see doublings and more doubling.

[Lecka]

I just googled and it looks at a glance like the Vanguard s and p 500 index fund, for a year (I think) ending on Aug 31, 2016 had a return of 13%.

 

So just divide 72 by 13 and double your money that many years.

 

If you assume 13% return going forward.

 

Or for that to be the average annualized return averaging in better and worse years over your personal investment period.

 

(Edit -- this is how you get comments about 1 mil to 9 mil happening so fast I think....)

 

Edit again: this is not my view bc I think it is simplistic and relies on cherry picking investment periods.

 

Long story -- I am "difficult child" to "individual stock picking parent."

Edited June 28, 2017 by Lecka

[Lecka]

Please don't take my word on previous posts. That is my vague understanding.

[Lecka]

Part of my issue with "the magic of compound interest* is 99% of my exposure to it comes from people who also have lots of ideas about playing the odds in gambling.

 

One plays blackjack.

 

One plays video poker.

 

They are interested in math this way.

 

And really I think there is real value in the stock market, and it is not the same, but the blackjack person used to say he didn't consider it gambling

because he played according to the law of averages.

 

This is why I sound petty, not bc of anyone in this thread.

[Lecka]

Part of my issue with "the magic of compound interest* is 99% of my exposure to it comes from people who also have lots of ideas about playing the odds in gambling.

 

One plays blackjack.

 

One plays video poker.

 

They are interested in math this way.

 

And really I think there is real value in the stock market, and it is not the same, but the blackjack person used to say he didn't consider it gambling

because he played according to the law of averages.

 

This is why I sound petty, not bc of anyone in this thread.

[MFG]

Getting back to the original question- the consensus seems to be somewhere in the range of 3M-9M USD.

*Goes to check the sofa cushions for loose change*

[regentrude]

Getting back to the original question- the consensus seems to be somewhere in the range of 3M-9M USD.

 

which seems completely unattainable even for families with solid middle class incomes

[Scarlett]

which seems completely unattainable even for families with solid middle class incomes

Exactly. It might come as a shock to some people, but people manage, even into their old age with much much less.

[2squared]

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.

It makes more sense to save outside of a 401k than to not save at all. The two of you can save $11k annually in iras which is not chump change compounded over decades.

 

I'm not sure what the 25% represents, but my company matches 3% of my annual salary which I believe is an average amount. My dh has never had a match.

[2squared]

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

Yes, this is true.

[2squared]

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.

Agreed. Not only will it limit career choices but family choices as well, and student loan debt is forever.

 

My dh is an attorney. We cash flowed his education. His classmates with debt this large are tied to stressful jobs for the salary. If his classmates have spouses with the same level of debt, they are really going to have life limitations.

[idnib]

Calculators are tricky because they're often tied to companies with a vested interest in selling investment vehicles.

 

Personally I like to use those calculators to plan, but I also soothe my soul by checking firecalc. Yes, the layout is horrible, and you do need to start on the right hand side where it says start here and then move to the tabs at the top, which are really important, esp the "not retired?" tab. It's a model for seeing how your savings would have fared if you had retired in each year going back to 1871. It's wordy but worth the time to read the explanation of how it works, what it means, and esp the limitations. But it does show me that despite my sleep-stealing fears and the constant reminders I receive from the investment companies, the track we are on would have served us well in the past.

[teachermom2834]

which seems completely unattainable even for families with solid middle class incomes

It also feels hopeless so people don't want to put their pennies in a 401K when no matter what they do they will never have close to enough.

 

If you have $200,000 saved by age 45 most calculators will tell you "not enough!" I can see how some opt not to save when it is so discouraging. Personally, I am choosing to believe we can live on less. We have raised kids and sent them to college and bought grocerices and gone to Disney World and just about everything for far less than the experts say we need. We are doing the best we can and I have to believe we will do retirement for less than the experts say.

 

Otherwise, it is just hopeless.

[Guest]

Calculators are tricky because they're often tied to companies with a vested interest in selling investment vehicles.

 

Personally I like to use those calculators to plan, but I also soothe my soul by checking firecalc. Yes, the layout is horrible, and you do need to start on the right hand side where it says start here and then move to the tabs at the top, which are really important, esp the "not retired?" tab. It's a model for seeing how your savings would have fared if you had retired in each year going back to 1871. It's wordy but worth the time to read the explanation of how it works, what it means, and esp the limitations. But it does show me that despite my sleep-stealing fears and the constant reminders I receive from the investment companies, the track we are on would have served us well in the past.

I love that calculator, but I also identify strongly with the FIRE crowd and that's what we base our numbers on. It's so much more encouraging and realistic for us, too.

[Frances]

Exactly. It might come as a shock to some people, but people manage, even into their old age with much much less.

Very true. But much of what currently enables that to happen in the US is under threat. Social security and many pensions are not fully funded. A smaller and smaller percentage of working people have pensions. Current proposals to drastically reduce Medicaid will greatly lessen the ability of the elderly to get nursing home care when their savings are gone. And funds to help the elderly stay in their homes are never enough to meet the needs. And it will likely only get worse as more and more baby boomers retire. Edited June 28, 2017 by Frances

[Bootsie]

It also feels hopeless so people don't want to put their pennies in a 401K when no matter what they do they will never have close to enough.

 

If you have $200,000 saved by age 45 most calculators will tell you "not enough!" I can see how some opt not to save when it is so discouraging. Personally, I am choosing to believe we can live on less. We have raised kids and sent them to college and bought grocerices and gone to Disney World and just about everything for far less than the experts say we need. We are doing the best we can and I have to believe we will do retirement for less than the experts say.

 

Otherwise, it is just hopeless.

Often these calculators are based upon unreasonable assumptions, like you will not have any other source of income or assets, and that you will only spend the interest and never spend the principal amount. 

 

If you save $100 each month for 45 (say ages 25-70) years and earn an annual return of 10%, you will have just over $1 million dollars ($1,048,250) in 45 years.  If you save $100 each month for 35 years (say ages 35-70) and earn an annual return of 10%, you will have only $379,664 in 35 years.  So, waiting 10 years to start saving for retirement makes a big difference on your ending value.  

 

The assumption that you make regarding your annual rate of return makes a big difference.  If you only earn an 8% return, you will have $527,454, after investing $100 each month for 45 years.  

[Scarlett]

Very true. But much of what currently enables that to happen in the US is under threat. Social security and many pensions are not fully funded. A smaller and smaller percentage of working people have pensions. Current proposals to drastically reduce Medicaid will greatly lessen the ability of the elderly to get nursing home care when their savings are gone. And funds to help the elderly stay in their homes is never enough to meet the needs. And it will likely only get worse as more and more baby boomers retire.

In which case many will be in the same boat. My friends and I 'joke' about our old age homes....a tiny home in a community of our peers and loved ones.....

 

Seriously I just don't worry about it. I am doing the best I can.

[Frances]

In which case many will be in the same boat. My friends and I 'joke' about our old age homes....a tiny home in a community of our peers and loved ones.....

 

Seriously I just don't worry about it. I am doing the best I can.

I think that's all anyone can do. I'm just seriously thankful that my parents retired 15 years ago and are not facing it 15 years from now. One ok pension from a blue collar job, SS for both, a paid off house, very modest savings, Medicare, and long term care insurance have been fine for them so far. I can't see that being the reality for those retiring in 15 years, but maybe I'm just too pessimistic.

[Murphy101]

I love that calculator, but I also identify strongly with the FIRE crowd and that's what we base our numbers on. It's so much more encouraging and realistic for us, too.

I just wasted an hour playing with that calculator.... idk why. I don't even have any money to put in a portfolio!

[Guest]

I just wasted an hour playing with that calculator.... idk why. I don't even have any money to put in a portfolio!

Because it's fascinating and addicting :lol:

[Sharpie]

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'm not very savy in this but how do you do that if your child isn't working?  I was under the assumption that you couldn't do an IRA unless they had earnings?  Then you could open an IRA in their name with up to the amount of their earnings? 

[Carrie12345]

My main issue is with deciding how confident (or not) to be in the future of SS.  Obviously the "safest" bet is to pretend it simply won't exist, but I just can't see that as feasible.

 

The differences are just too great.  While I won't pretend that there will be 100% payments in 30 years, if there were, we could now save 11% of our (net) income and have the same full income in retirement.

If we go by the 79% quoted in our statements, we could now save 9% and have about 78% of our current income.

 

With 0 SS, we would have to bump up to 26% saving in order to retire on half of our current income.  As a family that pays out the wazoo for health care, has 5 kids, and homeschools, that simply isn't a possibility.  And it would be mathematically impossible to catch up if I go to work when the kids are graduated.  Or even if I worked when the youngest two are on the tail end of homeschooling.

 

So, yeah, I go through periods where I'm convinced our simple little plan is more than fine.

And then I spend some weeks in complete panic mode.

[Pawz4me]

I think there is very little to no chance that everyone posting on this thread won't collect something from SS. At the rate people collect now? Maybe not. And I think it's very likely younger people--like those in mine and DH's age range (50's) have experienced--may see their full draw age increased even more. But I don't see it going away. The way it works simply doesn't support that. Now I do think stagnating wages are a concern, as is political will to keep it healthy (i.e., not sabotage it or privatize it, which is a whole 'nother big worry). There's also the possibility we'll eventually roll SS into some sort of minimum basic income for everyone. 

[solascriptura]

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.

I absolutely believe that one of the greatest gifts you can give to your children is that they don't have to worry about the finances of their retired elderly parents. So many of us are in the sandwich generation and struggle enough paying for the astronomical costs related to children and their education. How are we also to care for our parents that don't have enough money to pay for their own expenses? My best friend has had to do this for far too long and it makes me so sad to see her pouring all of her hard earned money into her sick parents care. So incredibly sad.

[ChocolateReignRemix]

I'm not very savy in this but how do you do that if your child isn't working? I was under the assumption that you couldn't do an IRA unless they had earnings? Then you could open an IRA in their name with up to the amount of their earnings?

You are correct. An IRA contribution from the parent can be a gift, but the child must have taxable income in that year and the contribution cannot exceed their taxable earnings.

[ChocolateReignRemix]

Well, for us our "farm" is considered a business. We have a bull and 5 cows and sell the calves. It gives us an ag exemption on the land. So we consider the boys helping to fix fence, feeding the cows, mowing and bushhogging the land as a job. Their pay is the full limit of a ROTH IRA. They have no idea they have this. It is a nest egg and a head start for them.

If the IRS ever takes a look at your justification for their pay/contributions, you may get an unpleasant surprise.

Edited June 28, 2017 by ChocolateReignRemix

[Guest]

OP,

 

If you bring in about $800/mo. for 10 years, that's $96,000.

 

If you took out 4% a year in retirement, that would be about $3800/yr., or $317/mo. 

 

If you divide $96,000 by $3800, it will take about 25 years to use it all up. That would put you at about 90 years old.

 

In retirement, you could use the money for home repairs, maid service, or yard care. You could use it for travel, too. For instance, maid service at 150/mo. x 12 = $1800; lawn mowing/snow removal at $100/mo x 12 = $1200. 

 

Of course, interest and taxes would factor in, but you get the idea.

 

 

Edited June 28, 2017 by Fifiruth

[Laura Corin]

Exactly. It might come as a shock to some people, but people manage, even into their old age with much much less.

 

Family help can make all the difference.  My mother who lives with us pays her share (the household expenses, including interest but not capital on the mortgage) but she doesn't need to keep a separate roof over her head, and can take advantage of younger people keeping track of, for example, the best deals in insurance.  She has savings set aside for when she needs more help, which might just carry her through.

 

I'm screwed though.  Atul Gawande states in Being Mortal that the best indicator of the likelihood of a comfortable old age (in the family or living separately) is having a daughter....

Edited June 28, 2017 by Laura Corin

[Sharpie]

Well, for us our "farm" is considered a business.  We have a bull and 5 cows and sell the calves.  It gives us an ag exemption on the land.  So we consider the boys helping to fix fence, feeding the cows, mowing and bushhogging the land as a job.  Their pay is the full limit of a ROTH IRA.  They have no idea they have this.  It is a nest egg and a head start for them. 

 

Interesting as we looked into doing this last tax season but our accountant told us we couldn't do this because we had to have workers comp protection which creates a whole new problem and far offsets any advantage.  They have to be of a certain age to get on workers comp and they need a W2 subject to FICA & withholding, etc.  Maybe it's because of the state we live in? 

[maize]

Family help can make all the difference. My mother who lives with us pays her share (the household expenses, including interest but not capital on the mortgage) but she doesn't need to keep a separate roof over her head, and can take advantage of younger people keeping track of, for example, the best deals in insurance. She has savings set aside for when she needs more help, which might just carry her through.

 

I'm screwed though. Atul Gawande states in Being Mortal that the best indicator of the likelihood of a comfortable old age (in the family or living separately) is having a daughter....

I think I've read research indicating that a DiL is almost as good.

[mommyoffive]

I'm not very savy in this but how do you do that if your child isn't working?  I was under the assumption that you couldn't do an IRA unless they had earnings?  Then you could open an IRA in their name with up to the amount of their earnings? 

 

I saved this post about setting up a ROTH IRA for a 3 year old

 

http://natalimorris.com/blog/2015/9/29/why-my-3-year-old-has-a-roth-ira-and-why-yours-should-too/

[Seasider]

Well, for us our "farm" is considered a business. We have a bull and 5 cows and sell the calves. It gives us an ag exemption on the land. So we consider the boys helping to fix fence, feeding the cows, mowing and bushhogging the land as a job. Their pay is the full limit of a ROTH IRA. They have no idea they have this. It is a nest egg and a head start for them.

That is a really nice gift. I like it even better that they don't know about it!

[Sneezyone]

A child would have to have TAXABLE income, no? Meaning more than $6300 or so, and file their own taxes, in order to have an IRA. How do 3/4/5 year olds earn that much?

[ChocolateReignRemix]

A child would have to have TAXABLE income, no? Meaning more than $6300 or so, and file their own taxes, in order to have an IRA. How do 3/4/5 year olds earn that much?

Taxable just means earned income in that context.

[ChocolateReignRemix]

Our accountant is the one that advised this.

Something may be lost in the translation, but the rules on this issue state that if the pay is coming from the parents it must be "reasonable" for the work performed.

[Seasider]

Re Being Mortal (which I thoroughly enjoyed and recommend, thanks for the rec a while back, Laura)... I have had to take the perspective that the role of the daughter/DIL has to be akin to the Good Samaritan, making arrangements for the other person's needs to be met. especially in the case of a relationship that was not particularly close until a need-based intervention is required. Culturally, the dd/DIL has more schedule flexibility to be a caregiver. But just taking care of an elderly person's business needs and chauffeuring is more than a part time job. Providing all physical care on top of that is a true gift, a sacrificial lifestyle.

[Sneezyone]

Something may be lost in the translation, but the rules on this issue state that if the pay is coming from the parents it must be "reasonable" for the work performed.

 

So how could a 3/4/5 year old in the example have any legitimately earned income?

[Sharpie]

I saved this post about setting up a ROTH IRA for a 3 year old

 

http://natalimorris.com/blog/2015/9/29/why-my-3-year-old-has-a-roth-ira-and-why-yours-should-too/

 

Thanks. I'm wondering if it differs depending on what type of business you have and  how you have it set up?  With our farm, we'd have to have workers comp before we could do IRA for the kids.  You can't get a workers comp policy on someone that little. 

 

[mommyoffive]

Well, for us our "farm" is considered a business.  We have a bull and 5 cows and sell the calves.  It gives us an ag exemption on the land.  So we consider the boys helping to fix fence, feeding the cows, mowing and bushhogging the land as a job.  Their pay is the full limit of a ROTH IRA.  They have no idea they have this.  It is a nest egg and a head start for them. 

 

 

What point will you tell them about it?  

 

When they fill out a FASFA does that info have to go on there?   

[ChocolateReignRemix]

So how could a 3/4/5 year old in the example have any legitimately earned income?

Most often via acting or modeling.

 

Generally IRAs are set up for teens.

[StephanieZ]

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).

 

FYI, you can only put in EARNED income into IRAs. So, you can't put money into IRAs for your kids unless they have earned income. What you CAN do is, if they, say, earn $2000 from a summer job, you can gift them $2000 to put into an IRA (presumably a Roth, which is actually fairly liquid). 

 

FWIW, I do NOT advise taking student loans while having investments sitting around, unless there would be some huge tax penalty. Please consult a financial planner and/or do more research before you do that. (And, do NOT rely on advice from someone making money off of your investments!) Student loans are NOT CHEAP any more. Nope, not at all. Most grads are looking at 7% or so interest rates. Good luck finding any investments with 7% (after tax!) guaranteed returns. We can hope for those level of returns long term, but it's not guaranteed, for sure (especially considering taxes!). 

[regentrude]

When they fill out a FASFA does that info have to go on there?   

 

No. IRAs, whether owned by parent OR student, do not count for the FAFSA.

They do, however, count if it is a college that requires the CSS profile.

[J-rap]

Threads like this make me really want to change things around.  I love the idea of communal living.  I envision something where people of a variety of ages (family or close friends) live on a shared property with some independence per family, but with a common living/cooking area, a place to garden, and people looking out for each other and even taking care of each other when necessary.  Older people helping to  care for younger people and younger people helping to care for older people.  I've thought for years that I'd be really, really satisfied living like that at some point.

 

I know it's really helpful for parents to grow old not needing to depend on their children financially, but part of me feels that that's kind of a sad approach too.  I mean, it's one thing when parents are careless and reckless with their finances and then just assume their children will fill in all the gaps when necessary.  Many parents do the best they can though and really put everything into helping their children create a good life for themselves, but life happens to the parents as they get older, including sickness and financial collapse and a lot of unexpected things. 

 

I really envy some cultures that are so much better at doing this than ours.  My SIL's family in Central America does it pretty well I think.  His mother and a couple siblings all share a little cottage and right next to that little cottage is an older married sibling's cottage, and next to that is an uncle and wife's cottage, etc.  They can literally all open up their front doors and wave at each other because each cottage is about 2 feet away from the next.  The grandfather lives in another cottage with a single aunt and even though he is elderly and pretty much completely disabled, they all help him and cook for him, and the burden is not on one person at all.  The older retired people help care for the young children when the parents are at work, etc.  Of course they live in a country where their health care is mostly covered, mostly don't have or need cars, and live very simply.  

 

That kind of a life is sounding more and more appealing to me these days.

 

 

 

 

[MFG]

Most often via acting or modeling.

 

Generally IRAs are set up for teens.

But wouldn't the minor have to file taxes to qualify, even if no money was due?

[Joker]

I have no problem taking care of my mom or my in laws. It's what my parents did for theirs and we were far from wealthy. I really don't get how anyone saves enough for assisted living / nursing homes. We've had two family friends this year enter and one pays $4500/mo while the other pays $6500/mo. Even after selling their homes the family knows they can only cover around 18 months of care. Then what? My in laws are 80 and recently looked into it and decided they can't afford it so they will stay in their home until they can't. Then we will care for them.

 

Dh and I only have his 401 and he has a small pension from a previous job. We're counting on his SS. I haven't worked since I was 20 so I have nothing. We don't want me to go back to work yet as oldest will be starting college next year. I've already played around with all the financial aid calculators and know what they expect us to contribute is too much. So, me going back to work now will only penalize us. Maybe I can work again after both have graduated from college ( so in about 7 years).

 

We didn't have an option to start college or retirement funds until just a few years ago. We had enough to get by before then but absolutely nothing to save. Now, ds' medical costs are pinching us pretty good. We know every year we will hit his deductible (6500) by the summer. Then we're still out 20%. It adds us pretty quick.

Edited June 28, 2017 by Joker

[FaithManor]

So how could a 3/4/5 year old in the example have any legitimately earned income?

Molding, acting, toy testing, and for the handful of prodigies whose IQ's run north of 175 or so - participating in studies on prodigies or on gifted education issues/Neuro research.

 

That is what comes to mind off the top of my head.

 

In terms of 9 years and up, kids who raise meat and show worthy livestock for 4H, often earn $200 a meat pen for rabbits and chickens up to $1000.00 for steers. If they are in the top three with steers and pigs, that number can jump to $3500 especially for breeding stock. One girl in our county patented her own grain blend with nutritional supplements, contracted with a local company to mix and bag it, and averaged $15,000 a year in high school selling it, then financed college by selling her formula to big AG firm for a number in the low six figures.

 

To be honest, when it comes to agriculture, I do see a lot of 4H kids making serious money from a young age. In general, financing college is not an issue for them. They have earned a ton, tend to head to MSU or U of MI on major merit aid because of their accomplishments, and they tend to win all the 4H local scholarships even if they have less than stellar accomplishments. The locals favor AG. Our rocket team who has the highest level of accomplishment plus volunteerism in the state gets nothing from 4H or MSU. Thankfully they get scholarships through their competitions us the college scouts who come to the competitions in addition to merit aid based on their hard work at non AG universities.

 

But ya, I have personally known a baby who had several thousand by the time she was a year old for modeling, a music prodigy that was paid for small performances and interviews at age five, and numerous kids earning hundreds a year at age nine and up through agriculture particularly livestock.

[Carrie12345]

Threads like this make me really want to change things around.  I love the idea of communal living.  I envision something where people of a variety of ages (family or close friends) live on a shared property with some independence per family, but with a common living/cooking area, a place to garden, and people looking out for each other and even taking care of each other when necessary.  Older people helping to  care for younger people and younger people helping to care for older people.  I've thought for years that I'd be really, really satisfied living like that at some point.

 

 

 

This is one of the reasons we dream about getting more property with fewer regulations.  It is also partly why I work really, really, really hard on healthy boundaries with my kids, lol.  (My in-laws once wanted a similar set up, and I'm so glad we were unable to follow through years ago. Because I guarantee felonies would have been committed by now!)

 

I wish it were appealing to my family of origin.  They moved 800 miles away, and I see how my mom struggles to try to help with her mother long-distance.  At that point, the most obvious resource becomes cash, but it definitely doesn't grow on trees!  My mom just turned 64 and has some minor health issues.  It's fair to assume she might be needing help before I get the last two kids launched. But all my siblings, including those who live near her, will still have even younger kids.

[Carrie12345]

I think there is very little to no chance that everyone posting on this thread won't collect something from SS. At the rate people collect now? Maybe not. And I think it's very likely younger people--like those in mine and DH's age range (50's) have experienced--may see their full draw age increased even more. But I don't see it going away. The way it works simply doesn't support that. Now I do think stagnating wages are a concern, as is political will to keep it healthy (i.e., not sabotage it or privatize it, which is a whole 'nother big worry). There's also the possibility we'll eventually roll SS into some sort of minimum basic income for everyone. 

 

It isn't just the low probability of 0, though.  The differences between full, 79%, 0, and all the other possibilities in between are so enormous that it truly is a lot closer to Vegas gambling than I care to think about.

[Janeway]

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.

I think you should get yours before 70. This is because he is likely to die before you, and then you will have to pick whether you wish to collect his or yours, but not both. So you might as well collect your lower amount from a younger age so you have both incomes.

[Scarlett]

Family help can make all the difference.  My mother who lives with us pays her share (the household expenses, including interest but not capital on the mortgage) but she doesn't need to keep a separate roof over her head, and can take advantage of younger people keeping track of, for example, the best deals in insurance.  She has savings set aside for when she needs more help, which might just carry her through.

 

I'm screwed though.  Atul Gawande states in Being Mortal that the best indicator of the likelihood of a comfortable old age (in the family or living separately) is having a daughter....

 

 

Yes, in which case I am screwed too.  ;)  I am very nice to all the young girls in my son's life.  I hope he picks a good one.