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Tiger MT's Carter

Retirement Savings?

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gunut
the only reason I was able to retire is because I have a decent pension....and it is only about 60/65% of what I was earning when working....but the kids are grown, the house is paid for, and I don't have to travel to be happy.... let me hunt and fish locally, and maintain the house well enough so it doesn't cave in b4 I die and Ill be happy...

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bigjohnsd

Fuess/benelli-banger:

When you advise clients WITH a defined benefit pension in addition to Social Security, how does that affect your advice to them on savings required for retirement?  

Say they had a combined defined benefit income of $45,000 plus SS, what would your savings amount be?

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bruski
I'm just planning on buying lottery tickets from about 5 years before I retire.

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Greg Hartman

Hmmm….. I bought into this theory that seems to universally touted by financial planners, brokers, etc, of needing multiple millions to safely retire.  I was probably a very easy sell because I grew up in rural poverty and did NOT want to repeat that experience in my retirement years.  I was lucky in that I didn’t hate my work as so many do, but there were other things I REALLY wanted to do (namely, travel the US for 6 months at a time in my motorhome from one hunting area to another).

As a result, instead of retiring at, say 55 or 60, I waited, worked, saved and invested until age 65.  Exactly 30 days before my retirement date, my wife had a stroke.  She became totally handicapped – could no longer do any of the “activities of daily living” for herself – like eating, bathroom, dressing, etc.  Her personality changed 180 degrees.  I became an 24/7 nursemaid who cannot leave the house except when there is a nurse to watch my wife and even then I can’t go very far or for more than a few hours at a time.  Because I bought into the theory that I needed vast retirement savings, I lost my retirement entirely – have not been able to do what I worked and saved my whole life to do.  Every day I spend as a nursemaid is a day of that precious time lost forever.  Soon, I’ll be too old to do the things I wanted so badly to do, without having gotten to do any of them.

Each time I look at my retirement investments, there is more money in the pile, even with paying substantial amounts each week for my wife’s care.  So, I guess all of my efforts will some day make my heirs wealthy.  Not what I had planned to say the least.  

Maybe my situation is different than others because I had PA Dutch frugality pounded into me as a child and I live very simply back in the woods, heating with wood I cut, etc.  I don’t spend money on fancy clothes or jewelry, dining out, country clubs, vacations in the south of France, etc.  But, I have everything I want or need; and, within reason, I can buy pretty much whatever I might want – lots of birds for the dogs, a new gun or camera or vehicle from time to time, for example.

A careful, REALISTIC assessment of your personal situation is needed, rather than blindly following the recommendations that you need millions to retire.  You certainly don’t want to be eating cat food in retirement wondering whether you should buy food OR medicine – that’s the very worst case scenario.  Neither do you want to be me – being so conservative regarding the size of the money pile needed until you have irrevocably lost everything you’ve worked for.  

I guess what I’m trying to say is that reason must rule when making these decisions and a lot of what one hers isn’t reasonable, IMO.

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WPG Gizmo
There is no mandatory retirement age working for the state

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max2
When we were kids wasn't there a poster that read something like this ...... Grouse dog's will get you through times of no money better then money will get you through times of no grouse dogs  ...... or something to that effect I am going to die a poor grouse bum :)

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SODAKer

Skip the mathematical models and sit down with pen and paper and honestly figure out your expenses. Go from there in determining what your projected needs may be. Don't forget house maintenance, etc..in retirement. 2x, 2.5x. 3x etc are ballpark numbers, fact is a lot of people retire with less, just depends on how you want to live. The real kicker will be health insurance cost.

On another note, I've had a few friends retire recently, none of them said they regret it; in fact they said they should have gone out earlier, in part b/c of seeing, experiencing or hearing about post retirement what Mr. Hartman has experienced.

In my case I'm starting to think a 50 year old working man can get in and out of a Porsche Cayman a lot easier than a retired 67 year old man; I just gotta convince my wife of that including how much fun she would have driving it as well :D . Any Cayman owners out there in UJ; I got a few questions.

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67diesel

A careful, REALISTIC assessment of your personal situation is needed, rather than blindly following the recommendations that you need millions to retire.  You certainly don’t want to be eating cat food in retirement wondering how you can buy for and medicine – that’s the very worst case scenario.  Neither do you want to be me – being so conservative regarding the size of the money pile needed until you have irrevocably lost everything you’ve worked for.  

Great advice Greg.  The wife and I are within 10 years of retirement and have saved for many years, but your post puts an important perspective on it.  Good luck to you and your wife.

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SODAKer
A tangential comment to those on the thread who are not married, I'd argue that it is more important in getting a good sized nest egg built up before getting married; keeping things in perspective of course. Put that chunk away and let it work for you along the ways.There are other factors that go into that, but from experience I can tell you that play can multiply itself over and over; setting you and wifey up pretty good for future retirement/expenses barring the black swan.

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Samuel Hoggson

Don't see how this could be framed better than Greg has done.  

My dad retired at 58 and moved my mother up to Guilford.  They ratcheted down, lived well on less than $25k/year.  Low property taxes, land in "tree growth" with periodic harvests.  Had a large garden, made no foolish purchases.  They had a great 25 year run that has pretty much ended since his stroke two years ago.  He has become a recluse, and inactive.  The dwindles are underway.  

Watching it weighs on me.  Or maybe it's a blessing they live so close.  Otherwise I might bury my head in work.

Am now blessed with a near-dream job.  Work 2-3 days/week, no call, no weekends.  Like it.  But the longer you stay, the longer you stay.  

When to say when?

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bennelli-banger

Of course there is no right or wrong approach to this...as long as your plan works for you!  The issue as I see it is that people are living longer, and, because of that and other reasons, health care costs are a lot more than a few generations back.  I will tell you this...as a boy, my dad and 10 buddies bought a duck camp in SW MN on a fabled lake that was a major waterfowl destination...I idolized these guys, flaws and all.  By the time I was 18 about half of them had died...mostly in their 50's.  That affected me BIG time!  These guys LOVED duck camp...frankly, I don't think anyone has ever loved anything as much as I loved that place and those people!  I have lived by a quote that was attributed to Reagan:"They say hard work won't kill you, but why risk it!".  

         I think about retiring at  some point, and I realize that if I get it wrong, I will have to work ALOT more at some part time gig than by doing what I do now at a bit of a reduced pace.  I have seen quite a few folks retire and find themselves back working within a few years...maybe they want to, maybe they have to?  I also saw lots of folks retire in the late '90's to early 2000's and then have to endure the 2002-2003 downturn...some held on and did ok, many panicked and sold out when the market was down a lot...these weren't clients of mine, but people I knew, or met, after the fact.  That is hard to recover from.  At that time one could at least earn 5-7% on safe, fixed-income investments.  Today it is very different, and those previously "safe" investments will drop by a lot when rates rise again...someday.  A very tenuous time right now for the investor!!!  For me, health insurance is the biggest variable...if I were given health insurance for a reasonable rate until age 65, I would probably  retire at 53 or 55...but that isn't the case.

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bennelli-banger
Fuess/benelli-banger:

When you advise clients WITH a defined benefit pension in addition to Social Security, how does that affect your advice to them on savings required for retirement?  

Say they had a combined defined benefit income of $45,000 plus SS, what would your savings amount be?

       It would be a function of what you tell me you spend in addition to the 45k...if you said you spend another 20k, I would advise dividing that by 4%, which equates to about 500k.  That is the conventional wisdom,  the "4% rule", which is about right IMO.  On the other hand, if you said that you HAVE to have the $ in cd's, which will yield no more than about 2% currently, your lump sum may need to be bigger, and vice-versa.  I think that a portfolio of blue chip stocks that pay decent dividends, say 3-4%, many of which you can sell call options against and make another 4-6% annually, is not a bad way to go...not with all of your $, but a good portion.  Bonds, preferred stocks, REIT's, utilities, etc, will get "repriced" when rates rise, so they are a bit vulnerable at the moment...but, maybe the rising rate scenario won't happen anytime soon...

the 4% rule would suggest that dividing the additional amount of income that you need above the 45k would tell you how much of a chunk of $ you need....if you said you spend an extra 20k, you'd need about 500k.  It can be done with less, but this rule of thumb has been backtested and seems to allow one to weather the inevitable downturns and keep the portfolio intact.  If you don't care about leaving $ to anyone, you can probably do it with less, especially if you have a plan B if something goes wrong...like downsizing, or, taking out a reverse mortgage, or selling other assets that you may have.  We all spend so differently...that is t he biggest factor, IMO...

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fuess
Fuess/benelli-banger:

When you advise clients WITH a defined benefit pension in addition to Social Security, how does that affect your advice to them on savings required for retirement?  

Say they had a combined defined benefit income of $45,000 plus SS, what would your savings amount be?

Most important with te DB plan IMO.

Pay close attention to the survivor benefit.  Usually DB plans are calculated on a straight life annuity, then significant reduction based on survivor benefit.  So you need to honestly assess the income assuming the annuitant dies first, leaving the spouse to live on the redcued income.

Once that number is calculated, solve for the delta between the survivor benfit, and the income available from the private savings.

Also, remeber there is the potential redcution of SSI oupon first death.

A DB plan is a wonderful benefit to have, as it takes the emotion out of the equation of managing a block of money.

I try to get clients to cover their fixed expenses on the fixed income, and live their "fun" life off their portfolio.

Lastly, its a "you" first world!  Dont cheat yourself for the benfit of kids and grandkids!

Hapy Memorial day!

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UplandHntr
Im 48 and am starting to remind myself more and more that wealth is not measured in $$$$$ only. I understand its necessary to some extent but I know I dont need to retire with $3mil in the bank.

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bennelli-banger
my folk's are divorced, my father-in-law is a widower.  They all own their home's outright.  One of the three has about 70k plus social security; one has about 450k plus social security and another $800/month of income; the other has about $2,000,000 plus social security and about another $2,500/month in income.  The richest of the 3 does the most as far as activities are concerned, but is no way the happiest.  The one with the least is probably the happiest, but I am not suggesting that that is the cause.  That one bakes, gardens, walks, etc.  Pretty simple.  Again, 3 very different financial scenarios, all about the same age, fairly healthy people.  The wealthiest of the 3 gives the least when it comes to birthdays, holidays, etc...the grandkids get a kick out of that!  I do too, quite frankly...to each his own!

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