Retirement Savings in US
- Thread starter lynx78
- Start date
Myquest55
Member
- Location
- Happily in MAINE
My experience led me to finally start a spreadsheet (or get out the graph paper) and add up our expenses. Then, add up the values of our savings, investments, projected monthly annunity payments and IRAs plus Soc. Security (less Medicare) and THEN - make sure your "income" is MORE than your expenses. We've been retired for 7 years, moved north to Maine and haven't had to activate any of our annunities so far. We have only withdrawn from our savings once for $20K for a new roof and exterior painting. Otherwise we've been living our best life and are planning a move to a nearby Retirement Community!
Best of luck!!
Best of luck!!
Brookswood
Senior Member
Where do you want to live? What do you want to do in retirement?
The cost of living varies greatly just in the USA. Even more when you add in the rest of the world. A small town in Nebraska probably has inexpensive housing. In San Francisco, the value of the Nebraska house would not even make for a descent down payment. If you are happy staying home, tending the vegetable garden, and seeing your friends at church and the local coffee shop that is relatively cheap. If you want to visit Paris for the fashion show season, that will be expensive.
mathjak107
Well-known Member
- Location
- bayside ,queens , ny
how long is a rope ?
there is no answer as a one size fits all.
what i consider a minimum income i would want here in ny is a fraction of what others may want in cheaper areas .
there is so much involvef in that answer and certainly here no one can say what you need
Lethe200
Senior Member
- Location
- San Francisco Bay Area
What I need to live comfortably in the San Francisco Bay Area is quite different than what I'd need if I moved to, say, Alabama or rural South Dakota.
Essentially, one needs to cover one's monthly overhead costs, and allow for inflation and emergencies. Even so, a goodly amount of "wiggle room" helps, as the pandemic and climate disasters have shown.
I've noticed folks who were not careful to stress-test their retirement budgets and/or do basic financial planning, seem to have the most trouble as they continue to age and costs rise faster than expected.
Essentially, one needs to cover one's monthly overhead costs, and allow for inflation and emergencies. Even so, a goodly amount of "wiggle room" helps, as the pandemic and climate disasters have shown.
I've noticed folks who were not careful to stress-test their retirement budgets and/or do basic financial planning, seem to have the most trouble as they continue to age and costs rise faster than expected.
OneEyedDiva
SF VIP
- Location
- New Jersey
I agree with @C50 and @mathjak107. There is no one set answer for everyone. Each person's unique set of circumstances will be the determining factor. These are some of the things to consider:
~How much do you (or will you) pay for housing? Do you intend to move, downsize or stay put?
~How much will your insurance cover (if you retire before Medicare). And even what Medicare plan you choose could make a difference.
~How is your overall health? How much will you have to pay out of pocket for any prescriptions?
~Will you maintain a car or two? I've read that people can save up to $9,000 a year by ditching car ownership. But of course, that's not feasible if you don't live near public transportation.
~Will you still have debts or be debt free?
~How much income (Divs and Caps) will your investments provide? Will you have to dip into the principle?
~Will you be getting a pension or do you have a 401K to draw from?
~Will you be able to reduce your spending to accommodate your new income? For some people, this is very hard to do, especially for spenders.
~At what age do you plan to retire?
~At what age will you take Social Security and how much do you expect to get?'
~How much do you (or will you) pay for housing? Do you intend to move, downsize or stay put?
~How much will your insurance cover (if you retire before Medicare). And even what Medicare plan you choose could make a difference.
~How is your overall health? How much will you have to pay out of pocket for any prescriptions?
~Will you maintain a car or two? I've read that people can save up to $9,000 a year by ditching car ownership. But of course, that's not feasible if you don't live near public transportation.
~Will you still have debts or be debt free?
~How much income (Divs and Caps) will your investments provide? Will you have to dip into the principle?
~Will you be getting a pension or do you have a 401K to draw from?
~Will you be able to reduce your spending to accommodate your new income? For some people, this is very hard to do, especially for spenders.
~At what age do you plan to retire?
~At what age will you take Social Security and how much do you expect to get?'
When I first started working after college my employer had a retirement plan that the company funded. As the years went by those company perks started to disappear and were replaced by 401(k), SEP's, Roth, and etc. So you were encouraged to participate in a plan and save for retirement. Many didn't, because they had not been educated on the benefit of saving. Some even thought that Social Security was all they would need. Some of those same individuals were living far beyond their means and will or are paying the price as they leave the work force or continue working because they must.
VintageBetter
Senior Member
I also think many younger people, I mean those in their 40s and 50s, don't follow how much Medicare has changed and improved in the past 10-20 years. Most recent example is lower drug costs which help out many Seniors substantially.
What I knew of Medicare I only really knew from seeing my mother go through her old age. I think she had Medigap, and I don't even know if a Medicare Advantage plan was an option for her back then, but she always worried about a huge bill every time she had surgery and those bills never arrived with her Medigap Coverage. So I learned from that how Medicare had become superior to policies for younger people over the years, probably because Congress has been made up of many older people for so long, and because AARP has been loud as a lobbyist for so many years.
That was the Big Terror preached by advisers in the Old Days - that you have a 20% co-pay, always, with Medicare so you need cash on hand to cover that for up to 30 years. Those big surgeries ain't cheap.
What I knew of Medicare I only really knew from seeing my mother go through her old age. I think she had Medigap, and I don't even know if a Medicare Advantage plan was an option for her back then, but she always worried about a huge bill every time she had surgery and those bills never arrived with her Medigap Coverage. So I learned from that how Medicare had become superior to policies for younger people over the years, probably because Congress has been made up of many older people for so long, and because AARP has been loud as a lobbyist for so many years.
That was the Big Terror preached by advisers in the Old Days - that you have a 20% co-pay, always, with Medicare so you need cash on hand to cover that for up to 30 years. Those big surgeries ain't cheap.
Contentment in retirement is less about being comfortable and more about not reducing your lifestyle. Such as, it might be comfortable to order a burger at a restaurant, but if you are used to ordering the best steak, then that burger feels unsatisfying.
But, a person needs less money in retirement to maintain the same lifestyle (this percentage varies a lot by person, rough average is 70%), so multiplying their pre-retirement annual income by .7, and then subtracting what they expect to receive in Social Security/Pensions/Annuities annually, gives the amount (in current dollars) they will need from their savings each year in retirement.
Then, assuming a 30 year retirement period, a normal Asset Allocation between stocks and bonds, and using the 4% rule of William Bengen, dividing the amount needed from savings for 1 year in retirement by .04 gives the total savings needed to feel confident about retiring.
Personally I tried to cheat by changing my lifestyle down to my anticipated retirement income a few years before retirement. It was doable and made retiring less scary, but thank goodness after I retired I downsized (sold house, bought little condo) which plumped up the savings so now I can live at almost my old lifestyle level (and even tho it is a little lower lifestyle, after having lived on the super-low budget for a few years, the current one feels like taking in a giant breath and relaxing).
mathjak107
Well-known Member
- Location
- bayside ,queens , ny
many retirees find life cost way more being retired and free to do and go as they please then when they were working and committed to be some place .
our retirement budget exceeds what we spent while working.
we are out daily doing our photography hobby , or with the grandkids going somewhere or we take little over night trips and money just flows out like water
many retirees will tell you they spend more in retirement , not less
Teacher Terry
Well-known Member
Everyone I know is spending less in retirement. They are not tired from working and have the time to cook, clean and look for deals to travel, etc.
Teacher Terry
Well-known Member
I spent a lot of time with my grandparents and very little involved spending money. They played games, cards and anything I wanted to play. They took me for walks and cooked my favorite meals. All the attention was on me and it was great.
My parents were wonderful grandparents to my kids. Some things they did involved spending money like taking them to a stage show and out for dinner. But most things they did were free and my kids have tons of great memories.
My parents were wonderful grandparents to my kids. Some things they did involved spending money like taking them to a stage show and out for dinner. But most things they did were free and my kids have tons of great memories.
Knight
Well-known Member
Maybe you could give an example of what you think would be comfortable for you.
There are way to many variables to pin point what would work for everyone.
Gark
New Member
- Location
- SW Michigan
If your retirement incomes (social security, pensions, rental incomes, e-bay sales, etc) are well above
your existing working income, you only need $100.
IOW, what *Knight above said.
Aunt Bea
SF VIP
- Location
- Near Mount Pilot
I like @HoneyNut ‘s idea of testing your assumptions before you retire. The worst that will happen is that you end up with a bit more in savings.
The other thing that I would say is that you still need to save in retirement for all sorts of things but most importantly for inflation.
“Do what you can, with what you have, where you are.” - Theodore Roosevelt
The other thing that I would say is that you still need to save in retirement for all sorts of things but most importantly for inflation.
“Do what you can, with what you have, where you are.” - Theodore Roosevelt
Don M.
SF VIP
- Location
- central Missouri
Very True! The First thing a person needs to do in preparation for retirement is to be debt free.....house, cars, credit cards, etc., All paid off. When the only living costs are groceries, utilities, insurance, property taxes, and some gas money etc., they can Then plan on retiring. The cost of living varies quit a bit due to "location", but if a person begins to plan while still working, retirement can be quite nice. The last time we paid any "Interest" was way back in the late '80's when we made our last house payment. Now, any bills we receive are paid in full within a few days.
Ditto...7 days before due date..