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PBS Frontline : The Retirement Gamble, sorta Must See (1 Viewer)
- Thread starter Smack Tripper
- Start date
Binky The Doormat
Footballguy
It's reasonable, but looks like a stretch based on how much they are used to living on today and how much he makes.
Ex.) Has $150K - wants a million. 20 years of $2K/month savings at 4% compound interest gets you a little above $1 million.
That would mean saving at a 24% of gross income (if making $100K) ...and retiring on $40K/yr - without SS taken into consideration.
To wilked's point ...rascal may want to run his numbers again.
Sand
Footballguy
NO. There are cases where the payments are a much better deal and cases where they aren't. When you get tot he point when you have the choice comparing the payout to an immediate annuity is a good place to start (though maybe not the last as each plan may be different). Also, the financial security of the pension fund is a big consideration. If you're in Illinois, for example, take the lump sum.
Binky The Doormat
Footballguy
Sand
Footballguy
Dentist
***Official FBG Dentist***
ghostguy123
Footballguy
How do you do all those things when you are old with arthritis, a bad back, and have to limber up for 20 minutes every time you sit down for 2 minutes?Crazy to hear people say this and/or actually see it in real life. I know a guy that has retired 4 times just to come back to work every time because he is lost, all the time battling cancer too, just crazy. I have a bazillion hobbies that I never have enough time to do while I have a full time job. Just off the top of my head:
In the middle of restoring/remodeling a 76 Airstream, we'll use that to travel around and take trips in.
Have a 71 triumph bonneville that needs restoration.
Travel more, we haven't made it over to Europe and Asia yet.
Finish building my woodworking shop, make and possibly sell well built furniture, the type that's nearly impossible to find in stores now days.
Buy some land to farm.
Learn to play my guitars.
Fish more, learn to tie my own flies.
Jeep needs a new suspension.
Get caught up on my backlog of books I want to read.
Hell, since it's been so cold out the past couple of weeks I tried by hand and website building this weekend. Took up the whole weekend and I didn't get hardly anything accomplished.
Was 50, now more like 55.
ghostguy123
Footballguy
Depends where you live.
Where I live now? Guarantee me 50 grand a year and I retire right after typing this.
ghostguy123
Footballguy
My dad was a fireman, retired at age 47 when I was in 7th grade back in 1993. WTF!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! I want that.
His pension has been good enough to allow him to do basically whatever he wants. He doesn't blow a lot of unnecessary money, but he takes in enough to not have to worry about anything ever.
If I could somehow get my wife to go "full bore" on retirement planning I think we could legitimately do it before 50. Just don't see it though. Not when she forces me to do #### like buy a brand new van last year.
His pension has been good enough to allow him to do basically whatever he wants. He doesn't blow a lot of unnecessary money, but he takes in enough to not have to worry about anything ever.
If I could somehow get my wife to go "full bore" on retirement planning I think we could legitimately do it before 50. Just don't see it though. Not when she forces me to do #### like buy a brand new van last year.
pantherclub
Footballguy
Probably golf in the morning and then managing my $ while watching Fox Business or CNBC. That will be my new job.
wilked
Footballguy
If he/she has worked 12 years to date (at 36 this seems close), that means he/she has saved roughly $10K a year (assuming the same 4%). To get there then, the annual savings needs to move from $10K/yr to $24K/yr, if the 'number' is $1 million.
Big jump in savings
ghostguy123
Footballguy
I think a lot of people don't factor in the healthcare cost when they think they can 'retire' early' Everyone I have seen attempting to retire early has gone right back to work somewhere else.
Well except for one guy but he looks like he spends no $ on anything.
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NewlyRetired
Footballguy
That absolutely shocks me. Even if one does only the SMALLEST amount of research, every article, or forum post on early retirement will mention health care costs in one form or another. Would you consider these people generally clueless about finances?
Binky The Doormat
Footballguy
My premium is almost $11K/yr for $1K deductible - family of 4. $25 office co-pay and up to $50/mo prescriptions.
We typically spend $4 - $5K out of pocket in addition to our premiums.
This is all AFTER tax. When I was working ...the company paid half and my half was all pre-tax.
Plus - the premiums just keep on going up, and not just a little ...every year.
BIG HIT.
NewlyRetired
Footballguy
I think you misunderstood me. I am not questioning health care costs.Binky The Doormat said:
I am shocked that anyone could even contemplate early retirement and miss something so basic in their expense models as to no think about health care (no matter how clueless, people still must do some very rudimentary math to see if they can survive)
Binky The Doormat
Footballguy
Naw. Just wanted to give an example of the size of HC costs and how much people can expect them to rise AFTER they retire early.
I am in agreement with you. If people are planning more than just a glance (I don't think most do ... just use an online retirement calculator, or less) they are throwing something in there for HC. I don't think they are putting enough in - besides it makes it look much yuckier, so they don't want to acknowledge it.
ghostguy123
Footballguy
Anyone not factoring in health care costs into retirement is very likely too clueless in life in general to be able to set themselves up for retirement.
Nope. Plenty of people are clueless. They think, 'I'm going to retire early' Wait I have to pay THAT much for health care'....back to work they go.
Binky The Doormat
Footballguy
Starting what year and what ages will you be? Do you plan on being a prior work insurance group?
Just curious.
kutta
Footballguy
I was talking to the guy who manages the healthcare for our company. He is the most knowledgable guy about healthcare that I've ever met. I asked him what the best options for retirement healthcare are and he suggested starting a company and hiring one employee (it can be ANY company and ANY employee - he suggested just hiring one of your kids and paying them a tiny salary). Doing this allows you to qualify for group health coverage rates which are much more competitive than individual rates.
Anyway, it was a brief conversation and I wasn't able to get much more info, but maybe there's someone in here who can expound upon that.
Anyway, it was a brief conversation and I wasn't able to get much more info, but maybe there's someone in here who can expound upon that.
Brony
Footballguy
pantherclub
Footballguy
Dude wtf?Binky The Doormat said:
NewlyRetired
Footballguy
$2k a month in today's $'s? That seems a bit high compared to plans we looked at before we realized we were covered by our state plan.
I think we were looking at around $14k-$15k a year for a family of 3. But I am sure every package varies based on location and how much coverage you are looking for.
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pantherclub
Footballguy
Wouldnt you want end to end total coverage if you are retiring "early"? Seems like one freak accident could come close to ruining you without the right coverage.
Healthcare planning is the wild card in my retirement planning. Seems if I ask 10 "experts" about it and how to plan for it I get 10 different answers. Nobody knows what is going on but they all agree that its going to be expensive no matter how you slice it or your age.
NewlyRetired
Footballguy
Everyone has to decide this for themselves. There are a great deal of choices that go beyond just how big a % they will cover for surgery that adds up. You can still get good coverage to protect against the doomsday scenario with out paying top dollar to cover prescriptions and other items.
Much like anything else we did for early retirement, we tried to match what we had pre retirement with my works insurance plan. We could not match up exactly but we came pretty close to the same level of coverage.
NewlyRetired
Footballguy
You get 10 different answers because there is no one right answer for any specific person. There is no rule of thumb here. The best you can do is turn over every rock you can and talk to every early retiree you can find in your state to see what options there are. And even with that, none of us can predict the future in terms of what type of health care might be available 10-20 years from now in case the government continues to get involved.
And also take some time to read and digest the suggestions from the good people at http://www.early-retirement.org/forums/ There is a wealth of knowledge there from people who have been through the process. You might not find anything specific to your own situation when the time comes but it may give you some ideas of how to handle this big, tricky question.
Sorry, that is 25%wilked said:
I used this: https://retirementplans.vanguard.com/VGApp/pe/pubeducation/calculators/RetirementIncomeCalc.jsf
Inputs: 36 old, 60 retirement
make 105K
save 13%
Have 200K saved
need 80% income at retirement
5% return
social security $2510/month (todays $)
pension is ~40% of high 3 average
$200K @ 5% return with 13% salary invested comes to $711K...so I have 28% to be exact
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NewlyRetired
Footballguy
nice work! Keep updating this as you see fit as the years go on. Here are some things worth considering (you may have already)
1) A great many people find that they actually spend more in retirement rather than the less they expected. It is worth running a few different models to cover different cases of retirement expenses.
2) Don't forget about taxes that will be generated if and when you withdraw from tax deferred accounts. Even your social security checks are considered income and are taxed.
Starting in 2021-2022. I'll be 47 and she'll be 51.
We checked about 6 months ago (our first look) on the exchange and a plan that seemed reasonable for coverage was $1400/month. Given how much we expect health care coverage/cost to change between now and when we stop working, we'll be able to revise our numbers for accuracy. Hopefully we really will be able to stop working.
wilked
Footballguy
Pension makes a world of difference!
what is not clear to me is how inflation is captured in your math. If you are assuming 5% real growth (vs nominal) I would advise that you are being too aggressive.
To replace $80k of today's dollars in 20 years you likely need $120k or so
just something to keep in mind. Calculators are great but I would encourage you to build a spreadsheet and scenario model.
Vary inflation (between 1 and 4 is a good range http://www.usinflationcalculator.com/inflation/historical-inflation-rates/ )
vary nominal return (between 2 and 6 is a good range)
and consider varying your savings as a percentage (13% is on the low side for early retirement)
NewlyRetired
Footballguy
I assume every one reading this thread likely knows this but just in case:
For all of you hoping to retire early (say 50 or earlier), don't forget you may have to make some investment changes in your taxable accounts.
Unless you are starting off early retirement with a large cash infusion, you are going to need a way to generate income. If you don't have real estate kicking off revenue, you may need to look into converting some of your non taxable holding into bonds (or similar income generating investments) so that you can create an income stream to live off of.
For all of you hoping to retire early (say 50 or earlier), don't forget you may have to make some investment changes in your taxable accounts.
Unless you are starting off early retirement with a large cash infusion, you are going to need a way to generate income. If you don't have real estate kicking off revenue, you may need to look into converting some of your non taxable holding into bonds (or similar income generating investments) so that you can create an income stream to live off of.
I just started putting my 401(k) contributions towards a 401(k). Before it was traditional.
Good points.
Hmmm...Didn't think about inflation.
Yes, the pension is one of the big reasons for staying with my current employer...And job security.
Oh, and I get to keep my health insurance...$$$$
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kutta
Footballguy
Wow! That's not a lot of money at all. Do you plan to travel? Do you have a plan for health care?
Binky The Doormat
Footballguy
Doctor Detroit
Please remove your headgear
I think like me KC can take his health care with him at very reasonable premiums.
If I had no mortgages I could live well on $50k a year in Northern Michigan. No way I'm planning on living there in the winter but if I had to, then I guess I would.
NewlyRetired
Footballguy
Doctor Detroit
Please remove your headgear
On the economic front the recent rise of the stock market that has been credited to Trump is based more on fundamentals like GDP growth, unemployment, net manufacturing output, and really a stale market for the past two years.
I think Ric Edelman had a good point recently when he was talking about the plight of bonds. In most of our lifetimes bonds have always been a good/safe investment. Interest rates have plummeted since the 70s when they were off the charts and when interest rates move lower, bond prices rise. Well we have pretty much reached our interest rate floor and they are only going up now and the negative corelation is going to make longer term bonds a dicey investment choice near-term, and possibly for quite a while. Short-term bonds should still be a safe place but not an income producer like they once were, beware.
Still love equities over the next 15-25 years even if there is likely a lot of volatility in the short-term. I'm using short-term gov securities offered exclusively to government employees as a cash balance to look for buying opportunities. I have been strongly weighted in small cap stocks the past two years but am now shifting some funds to the international stock markets because that is where a lot of the value is right now. I'm still weighted most heavily in the S&P 500 and plan to keep it that way, but I am shifting a little more to government treasuries looking for a buying opportunity. I don't want another 2008 but a down market where I can buy at a discount is going to help me compound, and in your 40s and 50s...you need to compound.
For me the 401k is not survival money, it's living well money. I'm getting a pension which along with social security is the base in retirement, I can live off that. The 401k money is to live better, and I also have some pretty valuable real estate. I'm one of those that technically lives pay check to pay check, but not in the traditional American way. I always save a lot, max 401k, max Roth since I was in my 20s, and have separate savings accounts for my properties in Michigan and Italy. But I just get by and I wouldn't have it any other way, it's always been that way and I wouldn't know how to live any other way. I take good vacations, spend on sports and concert tickets, and have the finest lotions and creams.
Once I no longer have to pay child support and I get rid of the Michigan mortgage (Both 6 years away), then I'm rolling.
I think Ric Edelman had a good point recently when he was talking about the plight of bonds. In most of our lifetimes bonds have always been a good/safe investment. Interest rates have plummeted since the 70s when they were off the charts and when interest rates move lower, bond prices rise. Well we have pretty much reached our interest rate floor and they are only going up now and the negative corelation is going to make longer term bonds a dicey investment choice near-term, and possibly for quite a while. Short-term bonds should still be a safe place but not an income producer like they once were, beware.
Still love equities over the next 15-25 years even if there is likely a lot of volatility in the short-term. I'm using short-term gov securities offered exclusively to government employees as a cash balance to look for buying opportunities. I have been strongly weighted in small cap stocks the past two years but am now shifting some funds to the international stock markets because that is where a lot of the value is right now. I'm still weighted most heavily in the S&P 500 and plan to keep it that way, but I am shifting a little more to government treasuries looking for a buying opportunity. I don't want another 2008 but a down market where I can buy at a discount is going to help me compound, and in your 40s and 50s...you need to compound.
For me the 401k is not survival money, it's living well money. I'm getting a pension which along with social security is the base in retirement, I can live off that. The 401k money is to live better, and I also have some pretty valuable real estate. I'm one of those that technically lives pay check to pay check, but not in the traditional American way. I always save a lot, max 401k, max Roth since I was in my 20s, and have separate savings accounts for my properties in Michigan and Italy. But I just get by and I wouldn't have it any other way, it's always been that way and I wouldn't know how to live any other way. I take good vacations, spend on sports and concert tickets, and have the finest lotions and creams.
Once I no longer have to pay child support and I get rid of the Michigan mortgage (Both 6 years away), then I'm rolling. 
Basic Silver plan for me this year will cost $800 a month with a $5000 deductible (50 yo). That's $9600 in premiums for one person. When I marry, it will be $19200 a year assuming rates don't increase and a $10000 deductible. I expect that to double in ten years, so $40,000 a year plus deductible. In other words, I'll be working until the gov't dole kicks in.
NewlyRetired
Footballguy
When we were shopping we found some plans for married couples were not double the cost for an individual. Are the plans you see for married and family just pure multiples of the individual costs?
In this state they are, but we only have one carrier left. They've also jacked the rates to subsidize to low income people to entice them to stay in the market. For example, someone earning $25k a year might have to pay $150 and get a $650 subsidy. Rather than risk having them not sign up and not get the $650, They lowered the cost of the plan to $650. I don't know it to be a fact, but based on a fixed profit allowance I'm pretty sure that $150 got spread into the premiums of the people paying full freight. With no completion left int he market, they can basically charge whatever they want to whoever they want as long as they don't make more that 15-18% profit.
James Daulton
Footballguy
Don't you think at some point in time the substantial pension and healthcare buying of government employees will have to begin to model what's available to the rest of society? I'd bet that when these perks were established most private workers still received pensions and healthcare cost were no where near as huge an issue. The disparity in salary between the public and private sector was such that the public benefits made the careers more equal. Now I think that the salary gap is not as large between applicable types of jobs, and the benefits are worth so much that soon everyone will seek employment from the government. This does not seem ideal to me.On the economic front the recent rise of the stock market that has been credited to Trump is based more on fundamentals like GDP growth, unemployment, net manufacturing output, and really a stale market for the past two years.
I think Ric Edelman had a good point recently when he was talking about the plight of bonds. In most of our lifetimes bonds have always been a good/safe investment. Interest rates have plummeted since the 70s when they were off the charts and when interest rates move lower, bond prices rise. Well we have pretty much reached our interest rate floor and they are only going up now and the negative corelation is going to make longer term bonds a dicey investment choice near-term, and possibly for quite a while. Short-term bonds should still be a safe place but not an income producer like they once were, beware.
Still love equities over the next 15-25 years even if there is likely a lot of volatility in the short-term. I'm using short-term gov securities offered exclusively to government employees as a cash balance to look for buying opportunities. I have been strongly weighted in small cap stocks the past two years but am now shifting some funds to the international stock markets because that is where a lot of the value is right now. I'm still weighted most heavily in the S&P 500 and plan to keep it that way, but I am shifting a little more to government treasuries looking for a buying opportunity. I don't want another 2008 but a down market where I can buy at a discount is going to help me compound, and in your 40s and 50s...you need to compound.
For me the 401k is not survival money, it's living well money. I'm getting a pension which along with social security is the base in retirement, I can live off that. The 401k money is to live better, and I also have some pretty valuable real estate. I'm one of those that technically lives pay check to pay check, but not in the traditional American way. I always save a lot, max 401k, max Roth since I was in my 20s, and have separate savings accounts for my properties in Michigan and Italy. But I just get by and I wouldn't have it any other way, it's always been that way and I wouldn't know how to live any other way. I take good vacations, spend on sports and concert tickets, and have the finest lotions and creams.
KCitons
Footballguy
As DD mentions we are able to take my wife's health care plan from the Post Office. She had to go on disability retirement this year and there was a small bump for non-employee (not sure the exact amount), but we are paying roughly $500 a month for our family of five.
We travel some now, but nothing lavish. I don't see that changing in retirement. We may take one or two trips in the $5-$10k in retirment. But, it's not like that would break the bank. Our monthly expenses would be covered by her pension. I expect one of us to draw social security and wait on the other. If I can pull 3-4% from $1 million of 401k/private investment, I think I will be able to splurge once a year on a trip, or a new car every decade.
pantherclub
Footballguy
DocHolliday
Footballguy
I got married late and had my daughter after I was 40. I'm going to work until she is done with college which should be around 64.
