Da Guru
Fair & Balanced
Heard that as well. My thinking is when i am 75 to 80 if I live than long or older I won`t really care if I am getting 3000 or 3400 a month.
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How much do you need for a decent retirement? (1 Viewer)
- Thread starter JohnnyU
- Start date
Heard that as well. My thinking is when i am 75 to 80 if I live than long or older I won`t really care if I am getting 3000 or 3400 a month.
Da Guru
Fair & Balanced
That is something to think about and will come into play if her new husband does not have a good retirement fund.
JohnnyU
Footballguy
It depends on your other income streams and whether or not you need the SS contribution to live the way you want. It's all about pooling funding streams and figuring out how to maximize your benefits.
NutterButter
Footballguy
To do a true comparison, if you collect early, then you should invest those SS payouts until you're 70 and then at that point just start withdrawing from that investment enough to make up the difference of what you would've been getting starting then. Then it really depends on what investments you choose and how they perform to get a sense of the break even point.
I think I ran the numbers once and at 6% real return, it breaks even around 90.
I think I ran the numbers once and at 6% real return, it breaks even around 90.
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This is a total derail that probably belongs in politics- but keep an eye on the Vance / Mandel gop primary for the Oh senate seat. Vance, the populist fiscal liberal is within single digits of Mandel, the club for growth candidate.
wilked
Footballguy
Only like 1/4 of people wait til FRA....
https://www.gannett-cdn.com/media/2018/06/12/USATODAY/USATODAY/636643892727712218-061218-Claim-ONLINE.png
Nearly half (excluding disability) take it the first day it's offered
Each year you wait earns a guaranteed 8% return. There are those that believe they can exceed the 8% guaranteed in the market (see above), but for those that aren't so certain it's a heckuva deal. Then there are those that worry about leaving 'money on the table' - the beauty of this is you'll never know (well, unless you believe in spirits / being rebirthed / etc). The 90 year old that waited sure feels good about his decision though as it's all gravy past the expected death year.
I hope Cuba becomes an option in the near future. There's too much risk to buy anything in Cuba now. But it's proximity to the US and advanced health care would be an attraction. I knew people who drove their cars to Cuba in the 50s, via the Key West ferry.
Sand
Footballguy
Are you married? If you're single SS is actuarily neutral and the decision is pretty straightforward. If you're married the two player game is more complicated due to survivor benefits. In those cases if you don't have a good idea I'd pay for an SS analysis.
I'm planning on waiting until 70, not to maximize the check, but to provide longevity insurance for my wife, who is very, very likely to outlive me. I'm less concerned about my monthly check than making sure she has an income stream late in life.
There are some tools out there that I can dig up after work. In my case my benefits will be a good bit more than hers. She's younger, so the maximization analysis shows that the best method for us is for her to claim immediately and me wait until 70. I like the idea of me waiting anyway due to the above comments on longevity insurance - it's the best we have unless tontines make a big comeback.
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gruecd
Footballguy
I was reminded today of this commercial that ING made several years ago. Pretty accurately sums up 99% of people's approach to retirement planning:
"I just blindly throw money at it and hope something good happens."
"I just blindly throw money at it and hope something good happens."
Lehigh98
Footballguy
![[icon]](/data/avatars/m/5/5167.jpg?1660313464){kind=avatar}
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Insoxicated
This is the way.
~$500k will buy you a pretty stellar 3/2 overlooking the pacific in Costa Rica or Nicaragua. Many places will need some cash dumped in to update decor to North American standards, but that's not bad if the location and bones of the building are good.
Healthcare is quite good and a fraction of the costs here. Everything else is generally at a significant discount over anything but maybe the bottom half of flyover country.
It's not without its own set of warts and inconveniences... but if you like sun, sand, and seafood... You'd have to have at least double the nest egg to retire comparably along the coast in the states.
https://www.coldwellbankercostarica.com/property/14226
https://www.coldwellbankercostarica.com/property/14485
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gruecd
Footballguy
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Me too. Even a 5-6% return would get you a base of money with which you can make up the difference between age 62 and 70 with the benefit that you have that base, it’s yours. If you die, your kids inherit it. I can recall the exact numbers but my wife and I get the max which for 62 was about $5k a month. That means if I died at 70, my kids have $480k plus whatever those dollars earned over the 8 years, probably around $120k. If I die at 70 and wait to collect I have $0. If I collect, I’ve got $600k. At age 70, the yearly payout is about $100k. As long as I get 6-7% a year on that base, my income is the same as if I waited till 70, but again I own that $600k. If you earn less than 6% then there is a point at which waiting till 70 wins but it’s decades where again you might not ever live that long.
That return is based on the government’s money. People always seem to forget that in the take early situation that you own the money that’s making income with which you break even.
That said, most people are taking at 62 because they have to do so. If you are able to invest the money, you are already in the top tier of people.
GoBirds
Footballguy
Isn’t the political unrest in Nicaragua extremely dangerous? I had a family member buy an amazing property on the water then it got to a point where they couldn’t go and now they don’t even talk about it years later so I worry it’s a lost investment. Has that improved?
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Insoxicated
Yep! Very much so. It's still not a stable democracy but it's stabilizing. Did they dump the property?
GoBirds
Footballguy
Honestly I’ve been afraid to ask. Went from a couple years of amazing pics on FB to a topic I won’t bring up.
KGB
Footballguy
Im kinda surprised I havnt seen the 4% rule being talked about...
https://www.investopedia.com/terms/f/four-percent-rule.asp
If you want to live on 100K/year, you need 4MM.
https://www.investopedia.com/terms/f/four-percent-rule.asp
If you want to live on 100K/year, you need 4MM.
Desert_Power
Footballguy
GreenNGold
Footballguy
The 25x rule is the same as the 4% rule.
KGB
Footballguy
GreenNGold
Footballguy
Judge Smails
Footballguy
I’d have to go back and see what my financial planner has for the assumptions. It sure wasn’t an extra $2 million. Closer to the $200K for 10 years - but planning for both of us just in case.
Judge Smails
Footballguy
ex-ghost
Footballguy
I've got dementia/alzheimers in the family. Assisted suicide is tough with these diseases, but I am going to do my damndest to not saddle my family with my sorry old forgetting piss my pants ###.
BigJim®
Footballguy
Just curious, are these sorts of formulas assuming you are getting zero return on your savings?
Terminalxylem
Footballguy
Agree, for all the reasons you mention. Plus, a significant subset of people in LTC will be demented, and may not really care one way or the other if they’re in a great facility.
Insurance or not, very few people can afford an extended stay in a nursing home. Medicaid beds will surely need to be increased to accommodate our aging population.
There’s a lot more math behind it but it can be a large nugget so it’s worth thinking about. I’m not a CFA but I like math and I don’t see myself being one of those 100+ people. For people who won’t save it, you may want to push the date to force savings but if you have kids there’s a big risk of not having that large nest egg in your hands early. Also, as someone mentioned above, I want to start drawing SS ASAP just in case they start thinking about changing things. I don’t think they’d mess with people already pulling it as much as future folks who have time to plan.
wilked
Footballguy
I’m no mathematician, but aren’t those close to the same?
anyway after a little research the $200k prob high (should be closer to $100k) and the 10 years prob high as well (very very few would be in a hone for 10 years). So $500k maybe a better number
Plaid Boxer
Footballguy
steelerfan1
Footballguy
Ive entertained this seriously at 1 point looking at Panama. The 1 downside for me that rules it out is my brain just can’t retain the Spanish language. Total bummer as CR and Panama look incredible to me.
massraider
Footballguy
I always understood it as yes, your investments will still be providing returns but they will be in a less risky portfolio (think more bonds and less stocks), which in turn, leads to a lower overall return percentage. Basically, you are sacrificing return for less risk and less volatility.
This is an excellent discussion. Like many on this board, I'm married, my wife makes much less than me, and I've capped out on FICA for the past 20+ years.
I always assumed that it'd be best for me to wait until 70 to take SS, but the reality of actually getting cash in hand vs having to live long enough to get it is intriguing. But then using the higher SS as a means of funding LTC is also interesting.
10 years to figure this all out.
I always assumed that it'd be best for me to wait until 70 to take SS, but the reality of actually getting cash in hand vs having to live long enough to get it is intriguing. But then using the higher SS as a means of funding LTC is also interesting.
10 years to figure this all out.
It is too politically damaging to cut social security. As they kick the issue down the road, the solutions become more difficult. I believe they will ultimately shore up Social Security by giving it money from the general budget. There will be some other tweaks such as raising the amount of income that is subject to FICA taxes.
I have been looking at retirement planning a lot the past couple of years. Here are some general thoughts.
There are two really big issues that are really basic to retirement planning:
1. What will your expenses be. The best approach is to figure out your current expenses, and then adjust up or down based on how you see your lifestyle being in retirement. But getting a good handle on your current expenses is a very good place to start.
2. How much will I have. You can start with what you have, plus your SS and pensions. But if parts of retirement funds are invested in the stock market (and mine are), the outcomes can be highly variable. So you cannot assume an average 7% return even though that is less than the market's historical average.
Most of my assets are with Fidelity. They have a retirement calculator that provides data based on an average market (market will exceed 50% of the time), below average market (75%) and significantly below average (90%). It's a pretty good tool. I am sure other brokerage firms have a similar tool.
I am also realizing how much of my retirement is dependent on the performance of the stock market.
There are two really big issues that are really basic to retirement planning:
1. What will your expenses be. The best approach is to figure out your current expenses, and then adjust up or down based on how you see your lifestyle being in retirement. But getting a good handle on your current expenses is a very good place to start.
2. How much will I have. You can start with what you have, plus your SS and pensions. But if parts of retirement funds are invested in the stock market (and mine are), the outcomes can be highly variable. So you cannot assume an average 7% return even though that is less than the market's historical average.
Most of my assets are with Fidelity. They have a retirement calculator that provides data based on an average market (market will exceed 50% of the time), below average market (75%) and significantly below average (90%). It's a pretty good tool. I am sure other brokerage firms have a similar tool.
I am also realizing how much of my retirement is dependent on the performance of the stock market.
I also realized this a few years ago. I had most of our retirement in Target Date funds at the time. I moved out of those funds and into Index and other low cost funds with very little in bonds. They have been performing at least a couple of % better every year which has definitely helped my retirement balances.
very good thread! Learning quite a bit - thanks! 
dgreen
Footballguy
If you withdraw at 4% with 0% returns, your money will obviously last 25 years.
If you withdraw at 4% while earning 2%, the money will last about 34 years.
Earning 3% is about 44 years.
I talked to a Financial Planner at Fidelity. He said the breakeven for Social Security is around 81. So if you think you will live past 81, you get more by waiting until 70.
One other note: when talking to a financial planner, the ideal situation is to get your guaranteed income streams to cover your expenses. This would provide a zero risk retirement plan. Social Security provides a guaranteed income stream if you assume they don't cut benefits for people near retirement. And it is indexed to inflation. The unique characteristics of Social Security make it a very desirable income source for retirement.
skol asylum
Footballguy
I looked at delaying SS a long time ago. I don't remember a doubling of income but I need to relook at it. I also recall seeing that it takes quite a few years to "payback" that delay for that 7ish years of lost income.
Plaid Boxer
Footballguy
I thought of it as 4% of current balance, I guess that is where I was off. Minus healthcare, you would expect to be doing less as the years go on so the draw amount would go down. Learn something new, feel even better about my place now.
BigJim®
Footballguy
Thanks. Reason I asked was my dad worried about pretty decent savings (but not $2.5M) until his dying day and ended up living well in retirement & dying with more money than he retired with. I get the math of these formulas, and I get that his 2008-2017 window was unusual. However, if earning a meager 3% return stretches retirement funds out 44 years, it's not a logical target - JMHO.
skol asylum
Footballguy
I've long thought I'd feel alot more comfortable about retirement if we would shift money out of social security and into Medicare. Give me 100% covered healthcare with no out of pocket costs. I'll take care of my other income needs via retirement funds.Its the healthcare expenses which are the great unknown bogeyman to me. A lower baseline SS benefit that pays for a few groceries to make sure I don't starve and complete health coverage seems more desirable. Of course the math probably doesn't work.
Social Security is really complex. Here are a few items that apply to my situation. Please note: I am not a financial planner. Please chime in if you think my information is incorrect.
1. If a couple has a large difference in social security benefits, the lower earning person can get half of the higher earner's benefits instead of their own benefits, up to the amount when the higher earner hits full retirement age (67 for us). But the lower earner cannot collect this before the higher earner starts collecting.
2. But the lower earner can start collecting at age 62 and then convert to half the higher earner's benefit when he starts collecting.
3. Survivor benefits are on your social security statement. The amount is at full retirement age. I think the surviving spouse can collect earlier at a discount.
1. If a couple has a large difference in social security benefits, the lower earning person can get half of the higher earner's benefits instead of their own benefits, up to the amount when the higher earner hits full retirement age (67 for us). But the lower earner cannot collect this before the higher earner starts collecting.
2. But the lower earner can start collecting at age 62 and then convert to half the higher earner's benefit when he starts collecting.
3. Survivor benefits are on your social security statement. The amount is at full retirement age. I think the surviving spouse can collect earlier at a discount.
