Retirement

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Ideally I would be able to live on the income received from my investments during retirement without eating into the principle. I cannot do that yet. At some point, and I'm not there yet, it won't matter and can start spending some of the principle. I don't want to die broke, but it makes little sense to die rich either.

The big unknown here is inflation, which, frankly, is scary. It is. Not the published figures and CPI's which are worthless, but just take a look around you and see how much things cost these days. Next year minimum wage will be $30/hr and then the following year it will be $60/hr, and now your Big Mac costs $25 with the senior discount. That's what we will be faced with.
 
Sac Arrow said:
Ideally I would be able to live on the income received from my investments during retirement without eating into the principle. I cannot do that yet. At some point, and I'm not there yet, it won't matter and can start spending some of the principle. I don't want to die broke, but it makes little sense to die rich either.

The big unknown here is inflation, which, frankly, is scary. It is. Not the published figures and CPI's which are worthless, but just take a look around you and see how much things cost these days. Next year minimum wage will be $30/hr and then the following year it will be $60/hr, and now your Big Mac costs $25 with the senior discount. That's what we will be faced with.
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This is the underlying topic that triggered the question, How do you judge these changing times?
 
Tom-D said:
The question wasn't about me or my retirement. I have been retired since 07, pretty much doing what I like.
wouldn't retiring these times be different?
simply curious as to How you would figure it out.
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Same as anyone figures out a budget when working, the income-from-paycheck column just has a smaller number in it.

Know how many don't have a written budget? Or who can't tell you what their goals are this year, let alone five years from now?

Like Sac said, outside forces on the economy might completely destroy any plan made and adjustments will always need to be made. There are no investments that are going to keep up with inflation. Inflation is just a symptom of over-spending with no or little return by government.

All totally normal in the decline expected as the Boomers start dying off. Macro numbers. Big wave to absorb in lost productivity. The "answer" by most Boomer politicians has been massive loans. $20T+. That won't last. Gen X will go on a cost cutting spree of epic proportions in another couple political cycles, even if they were well taught to feel guilty about it.
 
Where you retire matters.
To whom you are married matters even more.
Don't marry a trophy wife.
You have to pay their (very expensive) medical after you retire until they are old enough for Medicare.
Also, they have better hearing and eyesight than you do and are liable to cold cock you when you type things like:
"Don't marry a trophy wife."
 
Sac Arrow said:
I

The big unknown here is inflation, which, frankly, is scary. It is. Not the published figures and CPI's which are worthless, but just take a look around you and see how much things cost these days. Next year minimum wage will be $30/hr and then the following year it will be $60/hr, and now your Big Mac costs $25 with the senior discount. That's what we will be faced with.
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Only if you choose to live a life where you ignore data.

The plural of anecdote is not data.

You absolutely need to use the CPI and other measures of inflation if you want to know inflation rates. That is kind of Econ-102 class material. And if you don't understand it, that could be an activity before you retire.

If you do see inflation, won't to benefit from it?

Do you think inflation is a negative thing?

I have lived thru Deflation, and I can assure you I saw a lot of people hurt because of deflation.


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Tom-D said:
This is the underlying topic that triggered the question, How do you judge these changing times?
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If you can sleep at night, do nothing. If you are losing sleep, spend less and do more repairs and inspections.

Other than back pain, can you sleep?


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I generally figure that if I had $5-10M today, I'd retire. Of course I'm also in my early 30s. That number could be lower as I get older, especially as I have a better idea of where other factors are, such as whether social security will still exist. I am doing my retirement planning around not having social security, so if I get it that's gravy.

Another question is how you define retirement. I generally figure that upon initial "retirement" we'd probably take a year or two to do a lot of traveling and figure out plans for the future. Ultimately I think we'd end up doing some sort of "fun job" rather than the day job.
 
I'm shooting to net about 70% of my current net earnings, while leaving my principal alone, at least until I have to take the minimum distributions at 70 1/2. I'll have two defined benefit pensions, and SS, which I'll delay until either 66 or 70, depending on whether the 70% target is reached. We're pretty much debt free, and no mortgage. Also, we will certainly re-locate from my very, very onerous tax state (Maryland). And we'll adapt to the reality, once committed, and live within our means.

I may work, but on short term projects, with ample time on the beach. I'm presuming I won't/won't be able to work though, based on inclination, health, state of he economy, or just no demand for my services.

But I'm a humble civil servant, middle of the middle class, living a comfortable, but modest, life style. If my net worth is barely north on $1M when I retire, that will serve us fine, if we leave it be and use the defined benefit and SS income.
 
My retirement trigger is 2 million American Airline miles so I'll be Platinum for life! I crack myself up.

Originally I was planning to retire at 50 but I got divorced at 45 so that got pushed to 55. Then at 48 I bought an RV for my birthday. I guess working to 60 isn't so bad. Worst thing about working is that my boss is total prick. I'm self employed.
 
Here is another twist on retirement, as it affects how people view it.

  • Do you want to die simultaneously with the exact moment you spend your last dime? (no estate, no inheritance).
  • Do you want to leave your kids/grandkids a small chunk of change? (Nothing that changes lifestyles, $10k or less)
  • Do you want to leave "generational wealth" that allows your Kids/Grandkids to live a better life than you did? (Much greater than $10k, enough for homes, to buy businesses, to own investments that allow them to not work...)
  • Do you think you should leave the world a better place? (Philanthropy, estate giving, Universities, Hospitals, etc..)
  • Do you want to die a Million in debt, and have the last laugh??

And, what is your view of the above, vs. your parent's view of the above? (And, what would your kids suggest???)
 
I'm incredibly lazy, so after being laid off twice in the span of 3 years I decided to take an early retirement at 53. I can't bring myself to say "retired," so I officially refer to myself as Man of Leisure. :)

A have a pretty simple lifestyle, paid-off house and no kids, so the goal is to live comfortably on roughly two-thirds of pre-retirement income. Impending sale of a rental property, and taking SS at 62 should more than bridge the gap between now and having to dip into the 401(k) when I'm a creaky old man of 70. I figure if things get tight I can always sell the house in my Geritol years and rent, or get a reverse mortgage...I'm not leaving the property to anyone so why not leverage the equity, even if the terms suck? Too bad we don't know exactly when we're going to cash our chips in, because then I could die with precisely zero! (Actually, money left over goes to ASPCA and St. Josephs Hospital.)

Best things about retirement:

1) Reduced stress. Not having to fight the cut-and-slash commuter traffic to work is a biggie.
2) Waking up when the sun streams through the window, not when the alarm goes off!
3) Flying mid-week. The airport (and skies) are less crowded, and I can drive out to the hangar on off-peak times.
4) Playing tennis! Recently rekindled this passion and am playing a couple times a week.

I do find I have a little too much time on my hands, and I'm getting a little fat eating all that Almond Roca my mom got me for Christmas...
 
mscard88 said:
I think Tom is retired from the Navy. If so, he has medical for life (Tricare) which functions as secondary when Medicare kicks in at 65, plus a military pension. Plus Social Security so just with these is a pretty good start.
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Its a great start. I'm retired Navy as well. But, its not as much as some people seem to think. Military retirement benefits and pension have been described as "entitlements" like welfare. But, I'm here to tell you, if that was all I had to rely on, I might as well be on welfare.

I think $2 million would be my base line "take-this-job-and-shove-it" amount.

Tom, if you want to play around with a little computer model for retirement planning, try this:

Market Watch Retirement Planning Tool
 
SoCal RV Flyer said:
...Impending sale of a rental property, and taking SS at 62 should more than bridge the gap between now and having to dip into the 401(k) when I'm a creaky old man of 70. ...
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Or, use some the 401k from 59.5 till 70, then social security. Even if you delay SS till full retirement age (66 for me), you can increase your SS benefit by a lot.
 
I retired at 56, wife at 57, everything paid for Current situation,$7000 a month in pensions plus SSS,75M in retirement accounts or savings. We doing OK but don't fly first class. Not having kids helped a bunch.
 
wanttaja said:
Like the best type of woman, or just about any sort of political issue, your obvious best source of information is random people on the Internet.

In other words, talk to a pro.

Did that a couple of years back. The guy looked at our current assets as well as the pension I'll be getting from work. I asked, "When will I be able to retire and maintain my current life style?"

He looked at me and said, "Now."

I kept working because I liked what I did...and it was great to work with a bunch of very intelligent people. But I completed the latest program that I was lead engineer on, was told there were two more programs in the wings, and decided I just didn't want to stand up another brand-new spacecraft system. Gave my notice a couple of months back, effective 1 March. The long notice gave management enough time to bring in a couple of eager young space cadets to lead the new programs.

Ron Wanttaja
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Folks asked me how do you know when to retire. I said when you don't like going to work anymore. I reached that a couple years before I pulled the plug. Never looked back.
 
wanttaja said:
...
In other words, talk to a pro....
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The "2 & 20" guys are overpaid, the rest are insurance salesmen who are paid on commission. If you're gonna "hire a professional" and you don't know who's getting the short end of the stick, you are!
 
I could tell a lot of people what I thought about them for a cool $1mil :D
 
abqtj said:
75mil is only doing "OK"?!?

I wanna be that OK if I ever grow up!
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I have learned that people all over use different abbreviations for different units of "10's". Some industries use K for 1,000's, some use "m". Sometimes people use "m" and other will use "M", which might mean a different unit by a factor/multiple of another 10x or 100x.

If you have $75million, and save money by riding on planes in Coach, then you aren't doing something right. Ain't no way I am riding with the unwashed masses with $75m in the bank....
 
JoseCuervo said:
I have learned that people all over use different abbreviations for different units of "10's". Some industries use K for 1,000's, some use "m". Sometimes people use "m" and other will use "M", which might mean a different unit by a factor/multiple of another 10x or 100x.

If you have $75million, and save money by riding on planes in Coach, then you aren't doing something right. Ain't no way I am riding with the unwashed masses with $75m in the bank....
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Nope didn't read what I typed, 750 thousand not 75 million
 
Sac Arrow said:
The big unknown here is inflation, which, frankly, is scary. It is.
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There are financial tools to mitigate the effects of unexpected inflation. Like all financial products, they come with a cost. If one has a reasonably well diversified investment portfolio, mild inflation should pose no problems. It's not as if you live in a vacuum. If you experience inflation, so will everyone else. A flood tide raises all boats the same. If your portfolio is not well diversified, then inflation can be catastrophic.

I think the biggest obstacles to retirement investing are emotions and temperament: aka the man in the mirror.
 
wilkersk said:
Or, use some the 401k from 59.5 till 70, then social security. Even if you delay SS till full retirement age (66 for me), you can increase your SS benefit by a lot.
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That's a possibility. There are so many ways to slice this particular loaf of bread. I guess I'm a little wary of future SS cuts so I'd rather get less earlier (but over a longer term) and perhaps invest that money. Decisions, decisions...

Now I need all my close friends, who are on average about five years older than I am, to retire so I can can have more "partners in crime" to do stuff with mid week.
 
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JoseCuervo said:
Only if you choose to live a life where you ignore data.

The plural of anecdote is not data.

You absolutely need to use the CPI and other measures of inflation if you want to know inflation rates. That is kind of Econ-102 class material. And if you don't understand it, that could be an activity before you retire.

If you do see inflation, won't to benefit from it?

Do you think inflation is a negative thing?

I have lived thru Deflation, and I can assure you I saw a lot of people hurt because of deflation.


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I think we as so far apart on this issue I can't possibly begin to explain my position to you.
 
wilkersk said:
If you're gonna "hire a professional" and you don't know who's getting the short end of the stick, you are!
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The way I understand it, your planner needs to have a fiduciary agreement with you. In that case, they are required to work to your benefit.

Ron Wanttaja
 
wanttaja said:
My company is offering me $1.2M to retire. That's in lieu of my pension, of course.

Ron Wanttaja
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Nice! I guess it comes down to the tax ramifications, or whether you want to buy an expensive toy in the near future. :D
 
Sac Arrow said:
I think we as so far apart on this issue I can't possibly begin to explain my position to you.
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Yeah, would likely require you to understand data and economics. If you really worry about $60/hour minimum wages, you also don't understand much else about economics.

You also, likely don't understand Deflation.
 
wanttaja said:
The way I understand it, your planner needs to have a fiduciary agreement with you. In that case, they are required to work to your benefit.

Ron Wanttaja
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Also assumes they are smart enough to benefit you, and that can be a big challenge. It doesn't take much to hang a shingle out front and call your self a "Financial Planning Professional", and even toss some random letters after your name.

A good financial planner is worth their weight in gold, a bad one will have you eating cat food for the rest of your life.

A fiduciary agreement won't eliminate that worry.

Usually, is what you want are fee-based guys, you pay them $xxx per hour, they give you advice, hopefully good advice.
 
Tom-D said:
how much equity or money would it require you to say "I quit- I'm outa here. cya"
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If you are looking at equities, the general rule of thumb is 4%.

here's how to think about this

1. take your monthly needs, including to pay taxes (let's say you decide you need $6,000 per month "take home" for money, including occasional needs like a new car, vacation, fix the house, etc.)
to take home $6k, you need to get $8k (to account for taxes)

2. OK, to come up with 8k per month first
deduct SS and pensions (let's say $2k)
now you need 6K more

3. to get 6k per month (72k per year) you should (using the 4% rule) you need 1.8M in stocks/bonds/etc so that you can take 4% of that out (72K) pretty much forever (to calculate this, take the amount you need (72,000 and divide by 0.04)

don't forget to protect your spouse... so I'd run step 2 as if she only got her SS and pensions and not mine and see if the final answer still leaves her enough

YMMV, this isn't professional advice, yadda yadda
 
^ Which is pretty much what I said earlier in post #23.

Highly doubtful that your tax rate will be 25% in retirement.
 
My numbers are 4 million and I'd walk tomorrow. 7 Million and she can go as well.
 
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