Retirement

I retired 7 years ago, at 58. I wasted the first few years of my retirement doing nothing ... or not as much as I would've like to. I had to spend part of it dealing with the estates of a deceased sibling and a deceased parent -- by myself. Now I try to force myself to travel and do more, but it's a challenge. Most days I stay at home watching TV or surfing the net. I just don't want to deal with the horrendous traffic where I live (Southern Calif.) And I thought I'd go to movies more often -- but I don't. It's the first time in my life I have plenty of time and money to do whatever I want, but I find it difficult to motivate myself to do it. I kind of wish I'd done more when I was younger.

I'm planning to retire next year but with all the shit the GOP wants to pass like cutting Medicare or even Social Security, I have to make sure I will have a financial cushion. I may end up working a little longer beyond the original date I planned.

You should have saved a lot more money starting long time ago

Not to mention the damage to the ACA. I had hoped to retire a few years early but I most likely can't do it unless the ACA is still around.

Well, personally, I have money, R3. Whether I have enough is an open question, as are the details of withdrawals from my 401k, riding out a downturn, etc.

I planned for our early retirement for 20 years before pulling the plug at age 56. My wife retired a year later. What surprised me was how much social contacts I developed. I joined a meetup group right after retiring and met a lot of nice people.

My wife and I travel about five months out of the year. We are spending 2+ months on the east coast of Australia this winter then will take a 40 day cruise back.

If we didn't travel we could live very cheaply. Most of what I like to do takes very little money, and my taxes have dropped a lot. Utilities cost more because we are home more.

The best part of retirement is being able to slow the fuck down. I enjoy doing errands now and I don't rush through the grocery store. I also have more time to be thoughtful and giving.

To those who are young, save and invest. Take some community college classes on personal finance, read some books and learn from online forums. Then setup auto paying into retirement and after tax accounts. Set it and forget it.

I've been retired for 5+ years. Financially, I'm secure, so I have no worries there. I joined the YMCA right after I retired and have lost 40 pounds (and kept most of it off). I still go 3 times a week and it has improved my overall health. I also do volunteer work a couple of days a month helping folks looking for employment. I started doing this while I was still working and have continued. I have traveled a lot since retiring, but not as much as I thought I would. I'm hoping to up the travel in 2018.

I joined a few volunteer groups but ultimately it didn't really work for me. Retirement is a time to do what YOU want to do day and night. Don't feel guilty about pleasing yourself and doing what strikes your fancy. Thoroughly ENJOY the golden years of your life. You've paid your dues and now it's ME time.

OP,

Take the gas pipe. You'll feel better.

I'm thinking of retiring to Puerto Villarta or to Lisbon. Anyone have favorable opinions/reviews on either of these places?

65, no savings, just a pension and SSA. Don't know what to do. Don't suggest suicide- tried it once.

r11 Find a 95-year old sugar daddy with a lot of life insurance.

Your biggest unknowns will always be (surprise!) out of pocket healthcare expenses, (surprise!) expensive disabilities, (surprise!) inflation, and taxes.

The most envious position to be in, wealthy and healthy enough to truly enjoy 30 years of doing exactly what you want and feeling good about it.

lucky you OP! i will never be able to retire!

R5, you do not draw from your 401K after you retire, you transfer it into a money market account and only withdraw what you need each month. In some ways, being retired is cheaper, in other ways more expensive. For instance, our utility bills have gone up considerably since we spend more time at home. This past month our electric and gas bill was almost $200.00 due to the frigid weather. On the other hand, it you have a car, you'll find that, on average, you will be buying gas much less often since you won't have a commute. I can go weeks without filling up. If course, we don't go as many places as we used to.

I went to a guy at Edward Jones that many people from my company had recommended and just showed all my "stuff" and asked if I had enough to retire. He was like "oh yeah, you are more than fine". But I live in Midwest with low expenses. I was 59 1/2 and gave 2 months notice at work. I literally went from receiving a paycheck every two weeks to receiving an automatic deposit from him each month. Seamless! And I am actually more well off than while working ,even at a conservative drawdown. I have just complete my first full year of retirement. It took about 6 months to adjust, but now I LOVE it, especially no more Monday morning blues. I get insurance thru my old company at $770/month until I am 65.

I'm 61, and retirement wouldn't be a problem financially. The thing is I still enjoy my job so I haven't felt the need to move on. R16, I've read that most people need 6 months to a year or more to decompress and adjust.

[quote] you do not draw from your 401K after you retire, you transfer it into a money market account and only withdraw what you need each month.

Why on earth would you do that? You'd have to pay taxes on the whole thing when you took it out!

R18 please talk to a financial advisor to get things straight in your mind. The 401K is just rolled over in the market account

You cannot roll a tax-deferred 401(k) into a taxable money market account. If you are talking about INVESTING your 401(k) in a money market account, that's a completely different story.

48 now. Likely wont. Retire until 70!

66. Thinking about retirement. Not sure how much money I'll need. I keep reading that you need a million dollars to retire, but then if that's true, most of America can never retire.

Or maybe I should stop reading things like Forbes and Business Insider and read journals for people from my income bracket.

R20 right , you can roll 401K into an IRA , not just any money market acount

R16, Your nice Edward Jones guy is ripping you off. You are probably paying about 2% in various. The safe withdrawal rate is 4% so you are give 50% of your income (plus you pay the taxes and take on all the risk.)

Do some reading. Do you have a Fidelity office near you? You can set up a portfolio with index funds at Fidelity, Vanguard or Schwab and save thousands.

Read through the link below.

Good luck to you!

*various fees

all the time in the world for sex and gym, glorious.....

Retirement is great if you realize that all those glorious dreams of travel, hobbies, etc, come down to costs and plan accordingly. Go nuts the first year, if you can afford it, then start watching the dashboard a little more carefully. I've been on my own the whole time (my partner died just before I retired) and I sometimes have to push myself to get out and do things and be around other people. I'm introverted, so . . . I've been retired, now for almost 10 years and was able to do it very young. I still pinch myself when I get up on a Monday morning and realize I don't have to lump myself to work that day. Or any day. Do develop some outside interests, so you're connecting with people, especially if you are introverted. I re-took up music, which had to be back-burnered when I worked full time, and an having a blast and playing better than I ever did because I can practice more. Pot and a couple of cute boyfriends are always nice, too.

R19, are you suggesting a retiree sell their stocks and bonds and put the proceeds into a money market account? That's a sure fire way to run out of money, don't do it.

Also, financial planners will rob you blind. Be careful out there.

The 'volunteer work' cliché is really old: Clique-ish, dreary, and more and more places expect volunteers to take on responsibilities that really should be paying jobs. Nope.

Enjoy your loneliness R29

Have some sort of plan for what you want to do with your time. That way you can avoid filling your time with drinking and eventually dying from advanced cirrhosis.

R30 No, he's right. As a former volunteer at a number of places I simply ended up being a servant, sometimes doing more work than some of the paid staff and some of them were quite haughty about it too. Often taken advantage of. Been there, no thanks.

R28 I think we are talking apples to oranges. In reference to 401K's , at retirement you can a), roll over to an IRA, b) keep it in the 401K, c) cash out. I chose "a" for my option. A financial advisor can describe pros and cons of each option

I envy all of you retirees, can’t wait not to get up in the morning anymore to face the daily commute.

R33, I agree in regards to apples and oranges. What did a money market have to do with any of this.

How are financial advisors paid? You need to know that before talking to any "financial planner".

What do early retirees do for health coverage if they can’t stay on their company’s plan? That’s the biggest thing holding me back right now.

Betty Friedan In “The Feminine Mystique” wrote that “Housework expands to fill the day.” The same could be said about drinking. Try to avoid both.

Ben Franklin wrote “If you want something done, ask a busy person.” You may find that things you used to accomplish after work or on weekends now, seemingly, consume the majority of your time.

Get a subscription to The NY Times.

There is one big drawback to rolling-over your money from an employer’s 401k into a traditional IRA. Money in a 401k is practically untouchable from an adversary if you are sued and lose in court and aren’t insured for your judgement. It’s protected by Federal ERISA law. Money in an IRA is not covered by ERISA. It falls under State law which vary considerably. It would be a shame to lose your life’s work just because some bozo steps in front of your car some day.

My employer’s 401k is very good so that means there’s not much benefit for me to do a roll-over. Plus, I have a litigious neighbor who like to threaten to sue people. I did a partial rollover in 2012, but my purpose was to slowly convert that money from a traditional IRA into a ROTH IRA. This allowed me convert the money is such small increments that the total income tax on it has been as low as 0%. I have made the money a little less protected, but I am hoping for the best.

[quote] R36: What do early retirees do for health coverage if they can’t stay on their company’s plan? That’s the biggest thing holding me back right now.

Firstly, bear in mind that you can always buy insurance in the private market. It’s just a question of how expensive it would be. In other words, you’ll get healthcare, as long as you have money. So, the question is really about “how can I get health insurance at a rate I can afford?”

Obamacare was an attempt to address this issue. It still exists and that is the answer to R36’s question. The problem is, Republicans have been trying to kill it, so I don’t think we can rely on it existing in the future. This means insurance prices may skyrocket, so if your funds are limited, you’re screwed.

I live in Massachusetts which had an Obamacare-like plan even before Obamacare existed, so I am hopeful that we’ll keep it, even if Republicans kill the national plan. (R36, you could always move to MA!)

R38 is right about the pros and cons of 401(k)s versus IRAs.

If your finances are complicated, a certified financial advisor can help, but make sure the fees - all in - aren’t more than 1% (and even that’s a lot). You’re going to need almost 5 percent of your nest egg (+SocSec) to live on every year and you want an advisor who’ll increase what you pull out by more than inflation every year without your going bankrupt in your declining years. Not easy to do if the “advisor’s” pocketing 2% of your assets.

If your finances aren’t complicated you might be able to do it yourself. Read the 2009 book, “Your Money Ratios”. It’s a bit dated, but the fundamental concepts are very wise. It’s an even better read if you’re younger.

Important, stick to a savings and investment plan. Hopscotching hurts . And for Christ’s sakes, please don’t try to time the market.

R38 it appears most state exempt traditional IRA's from creditors outside of bankruptcy. the Roth IRA's seem more vulnerable depending on the state. I have umbrella insurance for the guy walking in front of my car but he isn't getting at my retirement.

-R30- Hardly, you sour old piece of crap. There's a whole WORLD of stuff to do that doesn't involve being a patsy for organizations that don't want to pay people to do stuff. I'm not lonely in the least. Have fun trudging off to your boring, low-paying job, dear. If, indeed, you have one.

One good piece of advice I've heard about volunteer work is that you should try to find something that will leverage the skills and experience you have. So, if you're a retired accountant, don't take a volunteer position that will have you stuffing envelopes and answering phones, even if it's for an organization that you really want to help. Instead, look for something that will utilize your financial background.

For those of you who enjoy retirement, is it more because you like the time off, or because you don’t have to work? I’m far from retirement, but I like my job and I go stir crazy after two days off unless I’m out doing things, which gets expensive. I don’t think I want to retire, at least completely, until I physically or mentally can’t do the work. I wonder if that will change as I get older (I’m 44).

R44, the desire to retire does seem to increase with age. After a while the job takes up most of a person's energy. I used to try and get my coworkers to talk about retirement planning when they were in their 30s and 40s and heard, "I like my Job" a lot. By the time I retired most in their 50s and 60s were saying "I wish I was retiring."

Plan for retirement.

I'm now 65. I do a job I love and I plan to work until I can't anymore. I hope I can work into my 80s.

I enjoy being relevant. Making a difference in peoples lives. Giving something of myself, rather than just consuming.

I know retired old people....out to pasture. I don't want to be one.

R46 oh god you sound just like my mother. She's more active at 92 than I am at 61.

I am 63 and still work about 20 hours a week. A part time job and i don't mind doing it. I am hoping to delay social security until I am 66. That's the reason for the job.

I retired in my late 50's to take care of my parents. They're both gone now and my only sibling lives at the other end of the country. I wasted a lot of time "recovering" from my caregiving duties. I really was emotionally and physically exhausted. So I became a reclusive vegetable. It was easy. Caregiving can be a very isolating activity.

But now I have my second wind! I'm on a "permanent" lifestyle changing diet to not only lose weight which I must do, but to get healthier. I exercise at least four times a week, and I discovered lifelong learning classes at the local university which is about 10 miles from me. The classes are pretty inexpensive, and I'm exercising my brain and meeting people. Even if we don't become permanent friends these are real human beings I can interact with.

I go to the movies once a week and treat myself to either brunch or a late lunch. I'm a volunteer at the art museum, and I manage to find free concerts of chamber music or classical music at local churches in the winter, and I always love going to the free concerts in the park in the summer. I don't buy books anymore, unless it's something special, but I do use our local library where I can order online, read online and never worry about returning books. In this horrible weather it's a godsend.

Our library often has free lectures and visits from authors. I'm not well to do, so I like free stuff. And now that I've found the free stuff and I spend my money wisely, I've made it a habit. The one thing I'm saving for is small trips. Or maybe one big trip every other year. I've looked into it with a group called Roads Scholars. They have a lot of fun interesting things I'm considering.

I love being retired because of the freedom, but I have to say this: You have to really make an effort and work at having a healthy good retirement. Social interaction helps you mentally to not deteriorate. YOu have to have activities and please make the effort to exercise. My mother ended up in a nursing home and going there was horrible. I never want that to happen to me. So my motto is "Stay Mobile!"

I love retirement! I can do what I want when I want. My spouse and I leave for a 3.5 month trip overseas in 2 weeks.after that we will return to go hiking, backpacking and mushroom hunting with friends until we decide to leave again.

Is it worth it to join AARP? Who here has benefitted from it?

AARP has some of the best Mecicare Supplemental Insurance plans available (depending on your state of residence). You have to be a member to participate. Membership is minimal cost.

The also lobby vigorously against the rethugs attempts to gut Social Security, Medicare....etc.

AARP has great hotel discounts

For those of you who are of retirement age but still working , what is it that you do for a job? Isn’t being old a concern re getting laid off?

[quote] There's a whole WORLD of stuff to do that doesn't involve being a patsy for organizations that don't want to pay people to do stuff. I'm not lonely in the least

I'm 60, planning on retiring in 2-3 years and I'm constantly amazed by people in the office who are over 65 and whine 'I'd be so bored if I retired. I don't know what I'd doooooo all day'.

I look them squarely in the eye and say 'We live in new York, one of the most exciting and vibrant cities in the world. If you're bored in New York, you have nobody but yourself to blame', which usually shuts them up.

My father was the same way. He tied his whole identity to his job, retired at 66 and was bored to tears. He didn't know what to do so he puttered around the house and drove my mother crazy. She gave him an anniversary card that said 'I married you for better or worse, but not for lunch'. She'd call and beg me to take him off her hands so she could go shopping and have lunch with her friends.

Maybe as gay men we're more independent by nature. We've never fit into traditional roles set by society so we're less likely to falter when our assigned role (i.e. the breadwinner) is taken away from us.

R44 In my 40s I loved my job and thought I'd work until I dropped, but that company failed in 2008 and for the past 10 years I've worked at a soul-crushing, miserable company and I can't wait to get out and do some of the things I never got a chance to do because I've been chained to a desk for all these years.

my advice to you is don't or find something you need to go to at least part time

R44 I also liked my job at 44, I was peaking. But the last 10years were ,as one other said, soul crushing, not that the company was so bad , but my immediate supervisor was just wretched.

I like squirrels.

R56, are you retired?

Retire as early as you are practically able. Knowing that I never have to endure the heinous 45 mile commute from SF down the 101 to Silicon Valley again fills me with relief and gratitude. I awake when my body chooses to do so, and my days are my own -- there is simply no better feeling.

Just realize that EVERYTHING you want to do -- seeing a movie, going out to lunch, taking a road trip, etc -- costs money. I know, right?

I'm ready for it. I've been working on it for 31 years. I have muliti millions in savings/401/investments and have a 2nd home in desert. I can sell my 1st home now for 2mil but I have another 7 years to go. Where I live the schools are what drives the home prices and it isn't changing anything soon. The downturn was nothing where I live in So Cal.

[quote] R41: [R38] it appears most state exempt traditional IRA's from creditors outside of bankruptcy. the Roth IRA's seem more vulnerable depending on the state. I have umbrella insurance for the guy walking in front of my car but he isn't getting at my retirement.

In my State, an adversary can’t take your IRA unless you lose a criminal conviction, then lose a related civil case. But that can still happen.

I have an umbrella policy as well, and just ended a civil case. My insurance covered my attorney costs, but I had to pay my adversary’s legal fees after losing, and that was not covered by my policy. So, it pays to pay attention to the policy details.

[quote] What do early retirees do for health coverage if they can’t stay on their company’s plan? That’s the biggest thing holding me back right now.

In CA, you pay COBRA which can last up to 18 months if you want to keep the same plan. COBRA is a little expensive. Since I am in a Union, when I retire, I expect the sick leave I didn't use to go towards my premiums for the next 18 months. When I turn 65 in less than 2 years, my benefits will cover the premiums.

When I retired early, I had to buy healthcare for three years, before my retirement package kicked in and healthcare was part of my pension benefits. But since I took it early out of necessity I only drew down 75% of my pension. But I got great healthcare benefits when I really needed them, so I was OK with it.

Make a budget and track your spending. I wanted to retire comfortably, meaning I didn't want to worry about every cent I spent. I retired a few years ago at 50 and so far, so good. I'm not bored. Lots to do and read, interests outside the house, and getting involved in the local community. It's great. I don't miss 'the grind' at all. I stay in touch with the people I liked from work. I'm in shape and at a good weight.

And no, I don't look 30.

Another thing to keep in mind is that your money is not going to go as far as you get older. Ten years from now things will cost more. I'm talking about housing, utilities, healthcare, etc. So you need to save to cushion that eventuality. It's going to happen. If your monthly income is $5000 right now, and you are quite comfortable with that, you have to realize that in ten years if you still only have a monthly income of $5,000 it won't go as far. Get rid of as much debt as you can. If you have a mortgage try to pay it off. If you have credit card debt or other debt you really need to get rid of it and start saving something. At some point you will have to rely on your savings and give yourself a monthly annuity from them.

My mantra was always to work hard while I could, while I could. This meant, to keep my skills sharp. I worked in Software, so it was important to keep up with changes because they were happening quickly. I sensed there would be a time when I no longer had the option as to whether or not to retire. The decision to retire would be made for me by powers outside of my control, such as age and health. So, I encourage people to make money while they can!

Secondly, it is necessary to have “purpose” in life. There is nothing wrong with you if you enjoy your job and like going to work and getting a regular paycheck. Some of us don’t have family or traditional support, so work can provide a sense of purpose. If I had a choice, I would have worked another ten years. That would have all been bankable money, since I already had the necessities of life, as an elderGay, but life had other plans for me.

I was under the impression that when you retire, you can't keep your 401K with the company, you must do something with it. I just went to Fidelity and had it rolled into an IRA. I was NOT taxed on that money. I withdraw what I need each month...i.e., I have full control of it. I do, however, have to declare the money I take out each year as income and it is taxed.

I retired at 67, am now 76. I am loving my retirement. I lived and worked in NYC 43 years and now live in the country - my career was very active, going every minute, etc. but doing something I loved. My retirement is quiet and serene and I allow myself to do nothing if that is how I am feeling. My pleasures are simple and my main goal is to be comfortable. I wish I had put away more money but I have social security, pension and a reverse mortgage so I can make it through. When I go to NYC I find that I don't like it anymore so I am glad to be away from it.

R62, why do you have seven years to go if you have several million? Is that seven years left on a mortgage or seven years until you are eligible for retiree benefits or ?

[quote] If you have a mortgage try to pay it off.

Can you expand on this please?

I am maxing out my contributions to my 401(k), which earned an astonishing 17.95% in 2017. I realize that return is extraordinary, but every year since 2008, it's been well above 6%. My mortgage OTOH is 3.85% fixed. Why would I divert pre-tax money that could be going into my 401(k) and earning tax-deferred income into after-tax money just to pay off a low-rate mortgage?

I am already making bi-weekly payments, which equals 13 monthly payments, so I've turned my 30 year mortgage into a 26 year mortgage. I have no other debt.

What am I missing?

Because, R72, at some point the market is going to go down - possibly for a quite while.

In retirement you’re going to be living mostly on some percent of what your saved assets throw off. Say you’re lucky enough to have a million bucks when retired and you’re doing just fine on 6% (60,000). Paying your mortgage and living OK.

Now suppose the market and your assets drop by a third. They’ll eventually recover possibly within several years, but till they do you’re living on 6% of a lower amount (unless you want to eat lots of your your reduced principal - not a wise long term strategy ). So you’re now living on $40,000 (or less - eg 4%, $30,000) if you’re hoping to ride the market back up sooner.

If you’re still paying $1500 a month, primarily in principal on your mortgage in retirement ($18,000/year) that means you’ve only got between $12,000 and $22,000 to live on all year - minus utilities, taxes, etc, etc.

Some people can make that rapid downscaling adjustment.

Are you one of them?

Gamble.

Better to retire mortgage free.

R70 -- are you single?

Can't decide if I can move to the country as a single person, although I am tired of NYC. Just afraid that I will be too lonely out there....

I am thinking I may buy my retirement home now, thereby reducing exposure to the stock market when it is so high, and then maybe renting it out for a year or two until I'm ready to take the plunge.

[quote]Obamacare was an attempt to address this issue. It still exists and that is the answer to [R36]’s question. The problem is, Republicans have been trying to kill it, so I don’t think we can rely on it existing in the future. This means insurance prices may skyrocket, so if your funds are limited, you’re screwed.

Definitely agree with this. I had planned to retire a few years early and with the ACA still around I can. If the Republicans manage to kill it, I can't. It's pretty much that simple, as every plan that Congressional Republicans proposed made things much, much worse for people like me.

Also, keep an eye on Medicare. If the Republicans manage to kill that, as well, changing it to a block grant, then retirement costs will rise every year.

r6, Serious question: What do you do about mail and bills?

As to the former, my Post Office won't hold mail anymore for more than 30 days (my husband and I used to go on 2-month trips in the 70s/80s, and then it was unlimited hold).

We are 67 and almost retired. We cleaned houses for 30+ years. We have to wait until 70 to collect SS so as to get the maximum amount when we will need it. However, our Ca.home is paid for and we have no debt. Reverse mortgage brings us enough to cover our monthly expenses and then some. The Medicare premium is our largest bill. We still work two days a week, but that won't last much longer. Most would consider us poor. No travel for us. We don't like traveling and we have many pets to take care of anyway.

I'm not R6 but I did two things to handle mail: I put a mail slot in my door so that mail could be delivered while I was away and I switched almost all of my bills to email. These days, the gas bill is the only one left that I'm still getting via snail mail.

For those of you who retired early, might I ask how much money you had put away, and whether you're finding it tough to support the lifestyle you intended? I'm 53 and thinking of retiring around 60. I should have my house paid for by then and have a nice sum in my 401k, but I'm worried whether it will be 'enough' that I'm not having to watch every penny.

I've worked in higher ed all my career. Every place I worked had mandatory contributions to TIAA/CREF which were matched. AT the beginning of my career I hated the contributions. Every month as I balanced my budget I'd look at that money and wish I could put my hands on it.

Now that I'm retired I'm so glad I couldn't.

R73 Thank you for the explanation. It certainly has given me topics to discuss with my financial adviser.

I did ask him if the makeup of my portfolio will change as I near retirement in order to protect me from any wild swings in the market and he said yes, he will move me into so-called 'widows and orphans' types of investments once I retire, but we did not get into specifics.

I am so jealous of you elder gays. Please buy me fentanyly

I've posted variations of this point on different threads, and it's one I still keep thinking about. Besides someone's personal set of circumstances such as already owning your own home, other debts, and so on (so many different variables), it's tough for me to figure out to what extent a different state has on one's assets and retirement. Of course, California and New York would be expensive (any other states comparable?), but how much less does one need who lives in Idaho, Arkansas, Michigan, Minnesota, South Carolina...than in California or New York? If one has a small pension, no debt of any kind, and has assets of $200K, $300K, $400K just as well off as that same person in California?

Before I took early retirement at 56, I was constantly seeking and plugging info into various online retirement calculators. Doing that, along with additional reading, was sometimes confusing because so many of them seemed to be what I call "hetero normative" in that the calculations and advice often included spouses, children and college costs, and so forth. $1M seemed to be a launching point in the assumptions. Of course, such calculations made me nervous and constantly calculating whether I had enough. I don't have $1M at all, but I do have a small pension, take out a little from my investments each month, have my health insurance (though costs increase yearly for the premiums which come out of my pension), and zero debt. I work just a little bit, seasonally, and will increase that soon. I'm constantly reading and rethinking my budget.

I think I can get it all to work nicely, even though I don't have $1M. I keep active, exercise as much as I can (though I should do more), socialize, do what I want most days, and feeling a lot better than the horrible Dilbert world I used to be in. There's actually a rumor that my company might offer retirees the chance to work short-term. If I'm called, I'll have a tough choice to make--could I gut it out for a few weeks or months, make some good bucks, and then walk away again, or do I tell them to pound sand because I love my current freedom.

I guess we should first strive to not be in the cookie cutter mode with our individual situations.

r77 Do everything paperless. Put your utilities on AutoPay. Get your neighbors to pick up any other mail, or rent a PO Box. I hardly ever get any "regular" mail anymore.

Oh-- and sign up for "Informed Delivery." You'll get an email every day advising you of what first-class letter-sized mail is being delivered that day.

I focused too much on retirement for my whole life. Now I have a net worth of $2 million, a paid for house and a rental property, a six-figure pension, health insurance, etc. But now that I'm retired, I don't feel like doing anything. I wish I'd done more traveling when I was younger.

I have a small pension from my years of service in the children's infantry.

R87, you're lucky - they could have made you get a kiddie 401k and worry about the market risk yourself

I figured I wanted enough cash to be able to:

1. Live reasonably comfortably and not have to stress about money.

2. Be able to ride out a downturn, even one as severe as 2007/2008.

3. Have enough on hand to be able to handle household repairs like a new roof, new furnace, new water heater, and such.

4. Leave something for my heirs.

5. Travel, not extensively but being able to travel throughout the U.S. a month or so every year, picking different states, regions, or cities to visit.

I had planned for $2 million in stocks, bonds, and cash, with a paid-for home and no debt.

I retired at 60. R80 With no mortgage you should be fine. Your medical is main consideration if retiring before 65. I had $900,000 in 401k(now converted to IRA) and only a $600 /mo. mortgage. Medical I get thru company as a retire benefit until 65 at $770/month. So I get $3900 month from IRA . Once I start drawing SS at age 66, that draw down on my IRA will be about half that amount. I should be OK until 90 yrs old but expect to die in my late 70's , maybe 80 at latest.

Thanks, R90. That's helpful.

If any of you are really as old as this thread seems, sheeeesh! But still I want to say, if you want to avoid the mess and delays of probate and you have someone you want to inherit, put their name on the title RIGHT NOW. So it reads, John Doe and Matthew Bitchface. That way if one of you dies the other automatically gets the house. Or the car, or WTF ever. Same with savings accounts. When it comes to an IRA or 401K, I think you can specify who gets it. My two sisters inherit 50/50. Now if you have any personal shit that's valuable like art work or WTF ever, just give it away while you're alive. Once you hit your 70's you don't need all that shit anyway.

R92, if you put someone's name on an asset now, they have rights currently. For example, if you put them on your bank account now, they could withdraw your money without your permission. (That may seem unlikely, but stranger things have happened.) Better to put them on only in the event of your death. For example, with a savings account, you can make it POD/TOD (Payable On Death/Transfer On Death) so they get the money when you die. IRAs/401ks are similar as you said - just set them up as beneficiary of the account. For a house, you can have a lawyer do a simple trust, so it passes to them on your death without going through probate .

R30,

R29 is correct.

I considered volunteer work at a hospital. But, they screen people like they may as well be employees. Part of that is due to laws. A hospital can get sued.

Fuck volunteering at hospitals and soup kitchens unless that's really your thing. I got involved with a concert choir. I volunteer at the art museum twice a month. That's it. other than that classes are good. Volunteer at the fucking library or get involved with a literacy program or a story telling program for little kids. They have them on Saturdays and they're fun. Do you have a film society? Volunteer for that. We have volunteers for the Symphony in my town and they get to see all the concerts free. Hospitals are dreary and cliqueish. Don't know why that's so, but other areas are more enjoyable and more welcoming.

R94, i hear you about the screening. I wanted to volunteer for a pet rescue organization here in Chicago. Their application wanted you to disclose ANY misdemeanor or felony conviction in the last seven years, no matter how minor or unrelated to the volunteer duties it was. I had a DUI a few years ago, but my volunteer duties would not involve cars at all. I didn't want to tell the world about it, so I didn't sign up to volunteer.

I agree that R29, R94 and R96 are correct. Volunteer orgs not only screen like an employer they interview you and go over your resume like you're a potential employee. They can be quite picky and they tell you they'll get back to you in a week with their decision.

Like actual employers, they want multiple references. I thought one of the reasons people volunteered was to build up their references!

And all this to do actual work for which other people receive pay. I know this sounds crazy but I swear I think some of them engage in age discrimination just like real employers.

The type of "volunteering" i want to do in retirement isn't so much the formal kind for an organization as just informally helping out my neighbors - driving an older person to get groceries, taking someone to the train, etc. In the small town where I have a weekend house, people help each other like that, and I think it would be wonderful to do a lot of that.

A question for retirees: What has surprised you the most? For example, did you have less free time to do things than you had anticipated? Were healthcare costs much more than what you had expected? Etc.

As for AARP, their travel deals can be beat with Priceline. I do a lot of online comparison shopping. : ) I usually end up using Trip Advisor bcz I trust them, or Priceline. AARP uses Expedia and it's OK, but not always.

R86 adopt me

R96 / R98 that's nice. I try do that, too in my little upstate town. There's a 'neighborliness' that I appreciate up here. People do kinda look out for each other, and it's heartwarming.

R99, what has surprised me the most is how fast the day goes, but when I look back I haven't always done a lot. However, I am much more relaxed and I sleep a lot better, I feel good. I do what I want when I want to.

I was also surprised at how much I do costs so little. I like to hike, backpack, mushroom hunt, walk around the city, go to the gym, have friends over, go to movies, go to lectures - none of which costs much. If it weren't for travel I would spend very little.

I was on the ACA for three years before my pension and healthcare started and was shocked at the cost. $500 per month plus a $6,500 deductible. That's not very affordable for most.

We stay the fuck away from doctors! Stay away from crowded places and children. They are disease and virus ridden. Take this test and that test. Probe and poke until they find something. Afterall how else can they bill Medicare? Fuck that! We are over 67 and never play the big medicine game. So far so good.

One of the biggest pleasures for me has been improving my cooking. I make my own soups and breads now in addition to dinners. Delicious and healthier and fun. Of course, I love to eat.

[quote] if you have a mortgage try to pay it off.

[quote] R72: Can you expand on this please? ...I am maxing out my contributions to my 401(k), which earned 18% in 2017. What am I missing?

R72, I’m with you, Sign me up with those who DON’T pay-off their mortgage, and for the same reason. My expected return on my investments, is greater than my mortgage rate of 4.375%.

The main benefit of paying off a mortgage is the savings in interest you'll pay otherwise. Of course, if you only have a few years left, then you're paying mostly principal anyway -- more interest is paid towards the beginning of the loan.

R72, some people aren’t “good with money”, and do certain things to passively manage their finances, such as:

Pay the mortgage down or in-full.

Use only one debit card. When it hits $0 balance, stop spending.

Use only a credit card that doesn’t allow you to carry a balance from month to month. Keep its credit line small.

I don’t do the above, but also don’t have a problem with money.

I wanted to pay off my mortgage because I wanted to free up the cash. My monthly income is greater without the mortgage and I have more freedom to travel or WTF ever. I set aside a little to pay the taxes and of course I have my home maintenance fund. I've seen several homes in my semi affluent neighborhood that are clearly owned by seniors who are "house poor."

Their property has deteriorated because they haven't done preventive maintenance to their homes and obviously can't even pay for lawn care. Some times the local senior center sends volunteers around to see if they will accept free help, but it rarely works out. I don't want to be in that position. I'm fairly yung (62 with a few health issues, but basically in good shape. I want to stay that way.

R103, my niece marvels at how well I'm doing on my income. Of course she makes around $300K a yr at a law firm, but my needs are simple. I enjoy a lot of free stuff. No health clubs for me. I found they're a waste of money. I walk. I have an exercise bike and a treadmill, a bowflex and some free weights in my finished basement too.

As I've gotten older I find I don't enjoy going to clubs very much, never did once I hit my 40's. I love going to plays or concerts, entertaining at home with friends, movies. etc. Sometimes I only fill my gas tank two or three times a month. I don't need a lot of new clothes and don't shop as much either. And my days of collecting stuff are over. I'm divesting, not collecting.

We may have to sell our house when we retire (hopefully in 15-20 years, if we haven't all been killed by Trump). The property taxes alone are $15,000 a year, so that could really hurt on a fixed income. Maybe it will be time to relocate to a sunny state with lower cost of living (we're in NY now).

Rich DL elder gays problem!

R77, would that change if you bought a post office box? I got the sense locally that if I had a post-office box, the PO would hold my mail as long as necessary.

R78, I'm 66, still work full time and started collecting Social Security when I turned 66, which is the full retirement age. If you work, you continue to pay into it and can end up with an increasing amount. I use the extra money to pay down my mortgage more quickly. I will also do some home repairs and replace my current car (almost 20 years old but still running like a top). Getting that stuff taken care of will more than replace the difference between 97% and 100% of Social Security, but I expect to collect 100% anyway because of my ongoing contributions.

R113, you also got pension or IRA? How much?

Re: getting rid of the mortgage. My house is paid for but I'm thinking about moving. Naturally I figured I'd just pay cash and avoid the mortgage-- but then I thought-- why do I want to die with a huge, paid-for asset like a house? I have no heirs. Wouldn't it be better to keep that money and spend it now?

R112 - there are professional mail forwarding services. They are pretty sophisticated. Of course the more you pay the more services you get.

There is lots of info online about extended travel with a motor home, trailer or just a tend and a car. Plenty of youtube videos on this subject.

I have only $80,000 left on my mortgage. I have enough saved to pay it off and then have money left--$600,000-- plus my pension and social security. Should I pay it off when I don't even like my house and the neighborhood and prefer to move some place nicer? I wouldn't be able to get something cheaper if I moved in the city, in fact, I'd pay a lot more and end up with a mortgage which I don't want. If I get something cheaper, I'd have to move far away from family and friends.

Any advice?

R117, I wouldn't pay off the mortgage right now. It's not that large, and in the current low interest environment, shouldn't have a huge payment. If you decide you find a perfect,affordable place in the city, or if you decide it's worth moving away from family and friends to have a cute, cheap place, you can always sell later. But given the nice-but-limited size of your investments, I wouldn't plunk down a large chunk of them to pay off that mortgage at the moment.

R117 How old are you? Why not consider renting instead of buying? Yes, you have the possibility of your rent increasing nominally each year, but you won't have your money tied up where you can't use or invest it.

My in-laws did that -- said to hell with maintaining a house and instead live in a beautiful apartment with amenities.

Question: what happens to assets when you die and have no heirs? I suppose I could leave it to my brothers kids, but we're not very close and I see no need to "reward" them with a nice financial windfall.

That makes better sense, R118. I would feel more comfortable having a larger nest egg to fall back on. My mortgage is pretty low.

I'm 63 years old -- damn, time flies!-- but plan on retiring this year. I would prefer not to rent especially in my area since I would end up paying 3 times my mortgage for a place a lot smaller than I have now. I have put a lot of improvements in my house to make it nicer to live in.

r120 give at least some of it to charity.

[quote] R120: Question: what happens to assets when you die and have no heirs?

On a related matter. Stocks, bonds, mutual funds, and real estate all have their “cost basis” “stepped-up” upon the owner’s death. This means that the estate and the heirs pay no income tax on any of the gains, up to the date of death of the owner.

For example, suppose you bought 1000 shares of Apple in 2004 and it cost $10,000 because the price of the stock was $10 per share. On the day you die, the Apple price is now $100 per share and the value is up tenfold, too, $100,000. This makes your profit to be $90,000. That isn’t taxable to anyone. Conversely, if you sell these assets before you die, you DO pay income tax on any profits.

This doesn’t apply to 401k accounts.

So, if you have heirs you want to enrich, and can afford it, you might want to hang on to these assets rather than sell them, since selling them produces profits you are required to pay income tax on.

[quote]This doesn’t apply to 401k accounts.

It doesn't apply to IRAs, either.

Okay.

Okey-Dokey!

Has anyone purchased Long Term Care Insurance? I’m researching it and plan to buy a policy very soon. 56 and hearing horror stories of old age lit a fire.

Yes, I have purchased Long-term care through my work. My mother had to be placed in a board and care because she needed to be watched 24 hours day due to Alzheimer's. Medicare doesn't cover this and I predict that they will cut Medicare anyway. We ended up paying almost $3000 a month and it will only get higher.

R128 Thank you, Alzheimer’s is a big fear, sorry about your Mom.

Tough situation R128.

My FA says the long care insurance providers are starting to panic that they sold prior policies too cheaply. Purchasers are living longer in care than they expected, so they are trying to cut benefits in new packages and subtly undermine promises to pay made in their old policies (surprise, surprise).

He recommends trying to save for my own care - on top of everything else.

Does raise a question as to who’s going to spend months or years fighting with the insurance company on your behalf if you’ve got Alzheimer’s and the company’s screwing you?

[quote] R127: Has anyone purchased Long Term Care Insurance? I’m researching it and plan to buy a policy very soon. 56 and hearing horror stories of old age lit a fire.

Yes. I got my policy more than 15 years ago at about age 40 through work. It costs me $1500 a year now. The premium can increase over time. I don’t know if that means they can raise the rates to something unaffordable when they simply want to get rid of you, some day, or not.

Every so often, they offer an “inflation adjustment”, meaning they increase the benefit, such as increasing their payout from $300 per day to $320 per day, for an increase in the premium. I have always taken the adjustment, because I figure that if I need the care, I’ll really need the care.

My experience with a variety of other insurance claims is that you never get what you hope to get, and it’s always better not to need to file a claim. Nobody gets rich by making a claim unless there’s fraud involved, I think.

Get a financial advisor, it’s all about asset allocation. You need income security so need a properly balanced portfolio where, when markets are not performing well, you have offsets.

I have long term care insurance. It’s important to have put go in with your eyes open. Most carriers exited the market because they were losing gobs of money on the policies. The remaining carriers are having to pay also increasingly frequent increases because people aren’t living longe and, during the low interest rate environment in recent years, their conservatively invested premiums aren’t earning anything,

I just got a letter, 2-3 years after the last increase. The carrier petitioned the state insurance commission for a 37% increase! The state only let them raise if by 15% and they made it clear that they’ll be going back to the state soon to ask for another increase. And if I walk away from my policy now, I would lose the $1900 per year I’ve been paying for a decade.

I have a real dilemma. My only living sibling, and we are close, has been diagnosed with a medical condition, Parkinsons, and she lives not too far from San Diego, I live outside Chicago. I'm going to be turning 60 soon and we always talked about me moving there at some future point but I'm not financially prepared at. all. She's an accountant and she works in a small firm, and I'm in sales. I know for a fact that I cannot afford California unless I hit the lottery. I spent a couple weeks with her over Thanksgiving, and I gotta say, these winters in Chicago are kicking my ass. A friend suggested I sell my house while I can still get a good price for it, and then move to either the Palm Springs area or even to Las Vegas since I would be closer to her even if I didn't actually live "across the street." I think our "good economy" is going to go down the toilet in about two or three years so maybe I should sell now and even though it was not part of the plan. I think I can probably get a job out west, but I doubt I can earn what I need to to live. Her place is too small and I have dogs.

R132, if you hire a financial advisor, make sure it is fee only where you pay by the hour or by the task. Otherwise you will be paying a commission and will be ripped off. Stay away from Edward Jones and Ameriprise.

An asset allocation is not difficult to figure out. Once you have that, for example 50% stocks and 50% bonds, then go with low cost index funds.

The safe withdrawal rate is 4%, some people are giving more than halt that away to financial salespeople.

R133, if your sister lives in San Diego, Las Vegas is way too far (about 5 hours or so) and Palm Springs would be about 3-4 hour drive. There are smaller towns outside of San Diego that are inexpensive. However, if you are looking for a gay community, I guess Palm Sprngs would be your best bet but you need a good car that won't break down.

I agree with [R32]. For years we worked with Merrill Lynch and felt they were also hawking the latest investment du jour in order to make yet another commission. We are now with a small investment firm that charges us a percentage of our assets: if our assets go up, so does their fee; if they go down, so does their fee. It feels like they at least have some skin in the game.

[quote] I have long term care insurance. It’s important to have put go in with your eyes open.

And sometimes it's better to just save up on your own because some of these insurance companies will either deny it because of some loophole they inserted and you failed to read or they may fold and bail out.

I don't want to work forever, I want to enjoy my life and the money I've saved but then the thought of having to pay long-term care is in the back of my mind. When I see these old people or people with crippling illnesses who are living the last years of their lives, bed-ridden and shells of their former selves, like vegetables, draining their resources as well as their families, I can see euthanasia becoming a popular option.

If you're young, better listen and start saving now.

R136, does the small investment firm put you in stocks or mutual funds?

[quote]We are now with a small investment firm that charges us a percentage of our assets: if our assets go up, so does their fee; if they go down, so does their fee.

That's okay for when you just don't want to worry about it but keep in mind that they have to beat the market by enough to warrant their fee. And most of these people can't. The general best advice is to put your money into low-cost index funds that track various aspects of the market. Diversify between large cap and small cap, foreign and domestic, stocks and bonds.

You can also opt for other things like real estate (through an REIT), utilities, infrastructure, gold, and so on, but I prefer to keep it simple and just go for stocks and bonds. I re-balance and review every three months but I usually only tweak around the edges. I have replaced a mutual fund that isn't performing with another that is but the basic half dozen index funds that I depend on remain unchanged.

If you're younger, put more of it in stocks, because you can afford to take risks, knowing that over a period of a few decades, you'll occasionally lose some, even lose big some years, but you'll gain more over time. If you're closer to retirement, you should still leave a good chunk of it in stocks but you would emphasize the safer investments so that you don't lose as much when there is a downturn.

Above all, don't panic. If you're 40 years old and you're seeing your retirement account shrink by 25% over a period of a year or two because the market's tanking, that's okay. It's just numbers in a spreadsheet. In a couple of years, you'll have gained it all back and then some. I rode out the 2000 tech stock crash, the 9/11 crash, the 2007/2008 massive crash, and I'm still doing just fine.

And remember, there will always be a downturn after you retire. Make sure that your expected return in good years is higher than you need and leave the extra money invested or in the bank. During the bad years, you can pull that money out and still leave the bulk of your principal untouched.

There are times I feel like my whole life has been spent working my ass off to save for retirement. 49. In a miserable high stress job and saving every year but I feel like I will never have enough and I would rather take myself out at 70 then spend the next 10 years working a high stress job and being miserable just so I don’t die broke. Ugh - capitalism sucks.

R140, don't do it.

To [R138] Mostly funds but some individual stocks. Funds they select usually have very very low management fees and are purchased through Chas. Schwab. They have done a great job for us in the past several years and we trust their expertise. I guess you could invest on your own and purchase funds through Schwab but that's a lot of work (for us).

R140, remember that if you commit suicide, you won't be able to enter the kingdom of heaven.

Well as long as hell has cheap rent and a decent social security, I’m good. And I like warm weather- so that’s a plus.

[quote] I can see euthanasia becoming a popular option.

I'm with you.

I can't tell if R143 is sarcastic or not, but since I'm an atheist, I have no such concerns.

R144, don't go to hell! Listen, money doesn't buy happiness. It just buys off unhappiness.

I've got about five years to go. I have a pension, SS, a 401K, and I wond 700K in the lottery six years ago. Put 500K of that in an IRA. So I'm not worried.

R114, I have both. And both depend on how much longer I work. I'm not eligible for the pension for another year.

I have a bit ove $700K in savings and investments. That's nothing, for those of you in NY or CA, but it's plenty for where I live (Ohio). I was recently diagnosed with liver disease, and I'm in the process of figuring out what my options are. I'm still working., while I'm 59 years old. I sort of think I need to keep working until I qualify for Medicare: I think Individual medical coverage will have too many risks, and have too many gaps, and cost too much. I'd appreciate your help.

[quote] There are times I feel like my whole life has been spent working my ass off to save for retirement. 49. In a miserable high stress job and saving every year but I feel like I will never have enough and I would rather take myself out at 70 then spend the next 10 years working a high stress job and being miserable just so I don’t die broke. Ugh - capitalism sucks.

Sing it, sister! I'm right there with you. Same age. Been in high-stress profession for 24 years. Don't have nearly as much saved as I should but can't endure work much longer. Maybe I retire at 50 and bid adieu at 70.

My hubs and I are 55, have 750k in investments and 401s, and 900k in real estate we collect rents from. I’m semi retired doing just the property management. It’s hard work.

I've got about $500k saved, own my own home and have a freaking awesome retirement plan.

My best mate lives in Hobart Tasmania and I live in Sydney...two great locations.

Summer in Hobart, winter in Sydney, lots of travel.

Life is sweet

[quote] R147: ...Put 500K of that in an IRA. So I'm not worried.

How did you get around the yearly cap that limits how much you can put into an IRA? Maybe you should be worried?!

[quote] R149: I sort of think I need to keep working until I qualify for Medicare: I think Individual medical coverage will have too many risks, and have too many gaps, and cost too much. I'd appreciate your help.

I am on Medicare but also pay for a “Gap” plan. Medicare pays 80% of most bills, and the Gap plan usually pays the remaining 20%. I haven’t had any big bills yet, so I can’t say how this works in practice. Even 20% of a hospital bill could be huge. In any event, I understand that a Gap plan is the smart thing to do, if you can afford it.

Okay, I have a serious question that some of you will scoff at. Can you retire with, say, $1.5 million? I know that sounds like a lot to many people, but when I go online and google it, most of the advisors say that isn't enough if... if... you've been making $200K a year, as I've been. I have no other sources of income -- SS, but no pension, no real estate, no relatives with money, and I don't own a home. I live in Los Angeles where I rent. I'm 64.

The sites pretty much all say I'm screwed.

Clearly you can't live as if you were still making 200,000 per year, R155 but with that savings and and sith SS it seems you will be OK. The withdrawl rate is 4.5% of your savings. Combine that with your SS amount. So many online calculators to use,

Just found this article

R154, may I ask how much you pay for your Gap plan?

My dad told me when he retired he sat down and made a budget accounting for every single expense. And then the very next thing he did was see a doctor and go on Chantix to quit smoking because when he saw on paper how much $ he had been spending on cigarettes he knew it was killing him in more ways than one.

R149 This may not be the help you were asking for but in light of your health concerns learn how to Meditate.

I have seen people helped physically and sometimes even healed through meditation. There is a power that comes forth and helps you.

Tonight I was aches and pains and tired as hell but after meditating for a half an hour I felt energetic and fresh as a daisy.

Godspeed!

R160 Meditation.

[quote]Can you retire with, say, $1.5 million? I know that sounds like a lot to many people, but when I go online and google it, most of the advisors say that isn't enough if... if... you've been making $200K a year, as I've been.

That depends on a variety of factors. Where is your money going now and what is your annual budget? Would moving to a less expensive location be a viable option for you? You could use $250k to purchase a home in a smaller, less expensive community, and that would still leave you $1.25 million plus Social Security. Together, those would be in the neighborhood of $90k a year, which is very doable in most communities.

The reason that some advisors say it's not enough is that most people live to the limits of their income and so a prior rule of thumb (that many are now questioning) is that you need to have saved enough to live on 80% of your former annual income. Using that rule of thumb, you're coming up short, but there are a lot of reasons to question that ( see the link for one such analysis).

In my case, for example, I make in the same ballpark as you, but I'm maxing out my 401k, I'm paying on a 15-year mortgage (that will be paid off in a few years), and I'm setting aside over $30k a year in investments. All told, my actual living expenses, removing those items that I won't need to continue after I retire, is less than a third of my gross income. If something like that is the case for you, you should be fine.

I hate you people with pensions (lol-kinda). I work my ass of to make and save decent money on Wall St- but my siblings are teachers and have better retirement prospects than I do. I calculated that to match their guaranteed come and health benefits at retirement (at 62!) I would need to save $2.8 million in cash! How did you people without pensions save so much? Seems like everyone here has a ton of money.

Thank you R162

R99 asks,

[quote]A question for retirees: What has surprised you the most?

I am in agreement with what actress Susan Flannery, who retired from acting (in 2012 when she was on [italic]The Bold and the Beautiful[/italic]), told [italic]TV Guide[/italic]'s Michael Logan. Flannery said that she used to wonder what people who retired do with their time. Flannery said that, now that is retired, she can’t necessarily account for what she does. Flannery mentioned that, as a retiree, her days have a way of filling up. That is the truth.

R158, my Gap Plan is $123.00 a month.

[quote] OP: Can you retire with, say, $1.5 million? I know that sounds like a lot to many people, but when I go online and google it, most of the advisors say that isn't enough if... if... you've been making $200K a year, as I've been.

I retired in 2010 and have more money today than I ever had, so it is possible. There are too many factors that make a difference to answer based on what you’ve written. I am assuming that I’ll live to 100, since my family is long lived.

R167, you (and I) were very fortunate to retire into a bull market. Multiple down years when first retiring can cause one to run out of money in retirement.

R165 not retired here, but when i was unemployed for a year, I reached a point, too, where I couldn't account for what I did all day.

R133, my advice is to bring your sister to you. I realize that wasn't the plan, but overall I think you'll do better. If she is newly diagnosed, her symptoms may not progress for awhile so you have time to plan. You don't say how old she is and what her financial situation is, but if you are outside Chicago, she should be able to find an apartment or condo that meets her present and future needs. And you don't say what you do, but your chances of finding work at 60 in the California market probably aren't that great.

And I'm probably in the minority here, but I think weather is kind of a lesser consideration when it comes to where you live - Chicago winters can be tough, but California has earthquakes, droughts and fires. I say bring her to you someplace close in the suburbs, in a rental close by. If you really can't stand the winters, when you get ready to retire, move further south. I know I'm probably going to get gasps of horror here, but there are some very nice suburbs in both St Louis and Kansas City where housing stock is FAR cheaper and just as nice as anything in Palm Springs or (shudder) Vegas. And both cities, esp St Louis, have access to world class medical care, which should be a bigger concern for her as you guys move forward. You will be shocked by how much further your housing dollars and quality of life will go in a good Midwest suburb. They do exist. Check out Wildwood MO outside of St Louis, or Olathe or Overland Park outside of Kansas City (they're actually in KS). You sound like a good brother. Also, does she have a living revocable trust, and are you her power of attorney for health care and finances? Don't waste big chunks of your money on overpriced housing when you can reproduce the same quality of life or better in flyover land. Good luck to you both.

R133, if your concern is about not being able to sell your house later if the market crashes, but you still aren't financially ready to move to California, why not just sell your house now and rent in your current area? That would give you time to get better financially set for a move, rather than just rushing out there and not being able to find a good job at 60. Seems like a workable compromise.

(R170's suggestion of moving your sister to the midwest also works, but if she's lived out there for a long time, it might be impossible to get her to move from sunny California to the midwest winters.)

I'm saving about 30k a year, maxing out my 401k (have a about 300k in it) and my partner and I moved out of pricey Williamsburg where we were paying 4k a month in rent, to Ditmas Park, Brooklyn - where we now pay less than 1/2 that and the apartment is stabilized. It's a great place so we've decided we aren't going to buy anything.

On top of that, my mom gets about 5k a month from a family trust, which I stand to inherit. I'm 46 and have about 8 good earning years left in my current career (advertising). I'm planning on consulting after that.

Even though my partner will have a generous, 6-figure income in pensions when he retires, I still save and invest like I'm single. I mean, you just never know, right?

That would be my advice. Work, save and invest like you're single - even if you've been partnered since the last century,

R140 let’s go together!

R172, how old are you? It’s possible to put too much in a 401k. I have about $500,000 in my 401k at age 55. By the time I’m 70, and yearly distributions are required, the sum will have grown so large, that the minimum required yearly withdrawal will be so great, that it puts me into in a higher tax bracket. The other factor besides your age, is the percent return you might expect on your 401k.

So, I would suggest you contribute enough to get any employer matching funds. Then, if you’re 60 or younger, I wouldn’t put ore in to the 401k beyond that. Besides, long term capital gains are taxed at a max of 15%, which is pretty low.

"So, I would suggest you contribute enough to get any employer matching funds. Then, if you’re 60 or younger, I wouldn’t put ore in to the 401k beyond that. Besides, long term capital gains are taxed at a max of 15%, which is pretty low."

wow, I never would have thought of that. Thank you!

I'm 46 btw.

R175, running some numbers lately and I just realized I have the same issue. If I plan to withdraw about $80,000 to live on--in California, there's a pretty nasty tax bite. So I either have to planto take a lower amount or figure out another solution. One small solution, that helps, but doesn't eliminate the problem is to take SS at the earliest age. Yes, the difference from age 62 to 70 for SS total is huge, but CA doesn't tax SS. With SS, I no longer have to withdraw 80K but 65K and that lowers the tax burden a bit. Taking smaller a SS payout from 62-70 apparently (I have to do more analyses, but at first blush...) and not paying taxes on it is a better deal than getting nothing from SS for 8 years and paying a higher tax rate on 401K/IRA withdrawals.

The problem I see with not contributing as much towards the 401K is then you lose out the deduction benefits. So you're then also paying more taxes whilst still working. More taxes taken off the top--less you can save.

[quote] It’s possible to put too much in a 401k. I have about $500,000 in my 401k at age 55. By the time I’m 70, and yearly distributions are required, the sum will have grown so large, that the minimum required yearly withdrawal will be so great, that it puts me into in a higher tax bracket.

R174, please explain. Conventional wisdom is to max contributions to your 401k until retirement. Taking advantage of the pre-tax benefits of your contributions ($24,500 per year after age 50) AND the "free" money from employer matching (up to 50% in my case). What is a 'minimum required yearly withdrawal'? And why should it affect how much goes into my 401k? And if I don't put money in a 401k where should my retirement savings go?

R176, if you're concerned about the amount of income taxes you'll be paying your retirement, have you considered Roth IRAs?

Here's a link to the IRS FAQ on minimum required withdrawals. Basically, you can't keep all of your money in your IRA or 401k forever but you have to withdraw a certain amount every year.

And a link to a simpler explanation, along with an example of a potential calculation.

[quote] R177: [R174], please explain. Conventional wisdom is to max contributions to your 401k until retirement. Taking advantage of the pre-tax benefits of your contributions ($24,500 per year after age 50) AND the "free" money from employer matching (up to 50% in my case). What is a 'minimum required yearly withdrawal'? And why should it affect how much goes into my 401k? And if I don't put money in a 401k where should my retirement savings go?

I think the conventional wisdom is for the great majority of people who struggle to save anything in a 401k at all. It’s not for us squirrels.

You should always save enough in your 401k to get the matching funds. That is a solid investment.

As to saving more than that: when you reach 70-1/2 years old, the government will require you to take a minimum required yearly distribution. That distribution must be at least the balance of the account, divided by your life expectancy. In this way, the account gets drained slowly, until you die with a $0 balance, in theory, anyway.

Now, let’s exaggerate to illustrate. Assume you are 45 years old with $1,000,000 in a 401k. Your employer doesn’t match, so you stop contributing to the 401k. Your investments do well, earning you 7% above the rate of inflation. This means that your investment balance will double, about every 10 years. So, when you are 55, you’ll have $2M. At 65, you’ll have $4M. At 70, you’ll have maybe $6M. At age 70, let say your life expectancy is another 30 years. That means your RMD is $6M divided by 30, or $200,000 a year. You’ll also be getting Social Security. Maybe a pension, and maybe income from other investments. So, all that income will place you in a high tax bracket.

This is not anything most people need to be concerned with.

[quote] R177: [R174] ... And if I don't put money in a 401k where should my retirement savings go?

One way to diversify your investments is to have a variety of different types of accounts. I have a 401k, a brokerage account, a ROTH IRA, and a pretax IRA.

If you have more money looking for a place to invest, I suggest you get a brokerage account. Within a brokerage account, you can invest in mutual funds, or what have you. The principle will be taxed when you earn it. If you leave the money in a single investment for a year or longer, it’s profits would be taxed at 15% Federal and maybe 5% State. That’s pretty low, as these things go.

R178, I do invest in a Roth IRA, but the max annual limit of $5,500 isn't enough meet my retirement needs. Sure, when I withdraw funds from my Roth IRA in retirement, that bit will be tax-free but the bulk of my retirement money will still come from my 401K/IRA.

The reason why I anticipate taking out 80K is primarily for rent and healthcare. I'm life-long renter but I think I may have to buy and pay off a home just before retirement. That way, I won't have to withdraw as much to cover rent. That could knock the 80K down to 60 or 55K.

Thank you, r181/r182. This is more complicated than it seems. I read investment advice all the time but I'm always learning something I didn't know --and most investment advice is opinion. I never even considered tax consequences of "oversaving" in 401k. It will be hard to give up the employer match.

I am about to retire this year and all this financial stuff about retirement is so foreign to me. I need financial guidance but the financial planner these retired friends referred me to takes a fee out of their money each year.

R185, financial planners who charge by the hour/service are out there. You're going to have to do some research but I'm sure it will be worth the effort. I find the Dummies books really helpful as an intro to financial and retirement matters. They're solid gateway books. My mom just retired and the Dummies to Social Security was helpful as I help her out. I'm going to read the Medicare one soon.

[quote]It will be hard to give up the employer match.

Don't do that. Keep investing sufficient to get the employer match, at least; that's free money you're leaving behind and you should not do that. Look, for 99% of us, that 401k minimum disbursement is just not an issue. Most of us don't have $6 million in our 401k. Let's say that you're 75 and you have a million dollars in your 401k. Based on the IRS tables, the distribution factor is 22.9, meaning that you're required to withdraw 1,000,000 / 22.9 = $43,668. Even with Social Security, that's just not enough to throw you into a significantly higher tax bracket.

R187 is correct. I didn’t mean to suggest for anyone to completely stop contributing to a 401k. IF you can get an employer match, you should put in at least enough to get that match. Under any scenario I know of, the employer match is worthwhile.

When I was 30, I upped my 401k contribution to 10% of my salary. When I was 45, I realized that I had enough in my 401k, so I dialed my contribution down to 6%. This allowed me to keep getting the employer match.

The tricky thing about this required minimum yearly distribution is that it isn’t an issue until it is long past the point where you can do anything about it. Also, nobody cares if a wealthy person is stuck paying more in taxes.

AARP article that touches in the subject of over-saving in a 401k.

Here's Kiplinger on the subject of over-saving in a 401k.

How many DLers plan to defer their 401K withdrawals until their 70's though? I sock away at least 35% of my income and I plan to retire/withdraw funds as soon as I can without penalty. I am still concerned about the tax bite but RMD won't be an issue for me. If I understand it correctly--if you withdraw funds before 70 1/2, then RMD isn't a factor, right?

[quote]How many DLers plan to defer their 401K withdrawals until their 70's though?

I certainly do. I have a pension that's more than adequate for my needs, plus over $500K in cash, so why do I need to withdraw from my 401(k)? Unfortunately, I'll have to in five years (I'm 65 now.) And it will all be taxable.

R192, leave me ur money when u die 😘

R192, note the "many" in my post. Pension and 500K in cash? Yeah, I think you're the exception rather than the norm. I'm of the generation right behind you who will not be getting pensions.

A part of me wishes I had followed through my early career path and joined the Borg that is public education. I'm in private sector now and make a little bit more money but my public education friends have retired or will retire with pensions and lifetime healthcare.

Interesting about the overfunding of 401k's. But at a certain point, and I have seen a little bit of this in me, is to become so miserly, it's embarrassing, compared to so many other's struggles today. My partner and I don't intend to leave a legacy of any sort, so we don't mind cruising thru some of these savings, NOT believing that each of us will live to 90! I would recommend younger folks to open their own ROTH IRA and max it out if possible ,to avoid a lot of this.

I should be so lucky to overfund 401k

That's kind of my take on it, R196. And if I did overfund it, I probably could afford a thousand or two added taxes each year. This just isn't something I'm going to worry about until I really do start hitting well above the million dollar mark.

If a certain crypto-currency takes off (Not Bitcoin - another one) then I plan to be retired by 55. Most of my family got into their 80's and with medical technology like CRISPR Cas9 etc. my lifespan could go out past 125 years. Then if I have that kind of money I'll just start buying politicians. Maybe even give the Green Party in the U.S. a financial shot in the arm.

Until it all collapses again....

[quote] R191: How many DLers plan to defer their 401K withdrawals until their 70's though?... I am still concerned about the tax bite but RMD won't be an issue for me. If I understand it correctly--if you withdraw funds before 70 1/2, then RMD isn't a factor, right?

R191, I’m the “overfund of 401k” Troll. I am a few years before in 59-1/2 so I haven’t made a firm plan for future withdrawal from my 401k, yet. I suspect I will do so, so as to keep my future RMD small enough that it doesn’t put me in a higher tax bracket.

In 2012, I moved $130,000 from my 401k and put it into a Rollover IRA. Then, every year since then, I’ve been moving a small portion from that Rollover IRA into a ROTH IRA. This is called a “back door ROTH conversion”. When and only when the money is moved to the ROTH, it is taxable, but I do the conversion in such small increments that it doesn’t bump me into a higher bracket. It will take me 7 years to convert the whole sum. I’ve attached a link about the “backdoor ROTH conversion”, if anyone is interested.

I imagine I will continue to move money from my 401k when I can, so that, when I reach 70-1/2, the RMD won’t be too much. As it is, my 401k balance is too high. If I don’t touch it until age 70, my RMD will be high enough, coupled with social security and my other investment income, that I’ll be in a high tax bracket.

I don’t have enough info from you to answer your last question. It depends entirely on the balance in your 401k when you reach 70-1/2, and what your other income is.

One of the really cool things about a “back door ROTH conversion”, aside from sounding a bit risqué, is that it is the rare event where the IRS allows you a do-over. When you convert money from a pre-tax IRA into a ROTH IRA this year (2018), and you then do your taxes next year (2019); if you find that the conversion didn't work out the way you planned (maybe it pushed you into a higher tax bracket); the IRS allows you to “reverse” the conversion as if it never happened.

You can actually reverse it until Oct 15 in the year following the conversion (called a recharacterization). The IRS almost never gives people this flexibility. If you do a recharacterization, it makes filing your taxes a little more tedious, but it can be done.

[quote]This is called a “back door ROTH conversion”.

Is this anything like "surprise anal"?

It’s ROTH, not RUTH.

I am 36 and only have 85k in my 401k. Am I on the right track? I’m pretty hopeless with all the financial talk sadly.

R36 - You're doing fine. Your $85k investments should double every 10-15 years (over inflation) . So even if you never make another contribution and investment growth is slow you should have $170k by 51 and $340k by 66.

Thanks for the response!

Why do retirees travel? Is it all the rage?

Why do not they stay at home and do something useful instead of gawping at other people and their things. What's the point of it? To go home and tell your neighbors you saw the Statue of Liberty? They know what it looks like.

I'm a only a few years off retirement but one thing I'm planning to do is invest in things that will cut down my cost of living.

So a reliable fuel efficient car, solar panels and batteries, a rain water tank and a simple veggie and herb garden are on my shopping list.

I retire at the end of August when I turn 55. I've already started travelling-a tour of Holland and Belgium last September. Then I'm going to Greece at the end of April and to Switzerland a month after I retire in September. I've looked into a few lecture series at the local university and am a bit of a film buff so will probably restart my membership to the local film society. I'd love to drive cross-country as I've never seen the Prairies or the Rockies but I don't think you can take a rental out-of-province. Anyway, it's something else for me to look into.

Travel is wasted on the old.

[quote]I am 36 and only have 85k in my 401k. Am I on the right track? I’m pretty hopeless with all the financial talk sadly.

Most of us are, unfortunately. If I could only go back and talk to my younger self!

As to whether you're on the right track, the answer is it depends. If you assume a conservative 5% return on your investments, that would be $386k by the time you retire at age 67. Assuming 7.5%, which is closer to the historical average, that number increases to $800k. But those numbers are under the assumption that you've stopped contributing towards your retirement. If we add in, say, $6k in contributions each year, then those numbers become $810k and $1.47 million, respectively.

However, there is some information we don't know: 1) how much are you contributing to your retirement account every year, 2) how much do you currently make, 3) how much will you need to live on when you retire, 4) do you have any other sources of income (e.g., a pension) or is it just the 401k?

Obviously, if you're currently making and spending a million a year, then $800k at retirement just isn't going to cut it. If you're currently making and spending $75k a year, and you're contributing $6k a year towards your retirement, then you're in pretty good shape, and even better shape if you own your own home by that time.

[quote]Why do retirees travel?

The luxury of the time to do it, which all too many of us don't have while we're working. I'd love to spend a month each in various European countries, or even cities, but there's no possible way I can do it now. And I'd be doing it for me, not for my neighbors.

We just came off Ruby Princess Mexico/Sea of Cortez 10 day cruise to celebrate our dual retirements; we're getting ready to sell & move to Walla Walla, maybe get a winery--we love LA (we've been here 40 years) but the heat, (it's 87 in MALIBU today!) traffic, & general cost of living have gotten out of hand :( It's amazing how fast this time comes--save all you can & maintain your health. One of the best things is that we can spend time exploring in depth countries/cities we've visited previously. We will miss El Coyote :)

[R205] how are you retiring at 55? Public employee pension? God I would love that

I'm 55, have 6 paid off single family homes that rent for an average of 1300 a month and I get 3,000 a month from an annuity and I have 750000 in Investments. My 7th property is our residence. I plan on never working in a corporate environment again, but I save nothing. What say you?

R204, I had about $90,000 saved when I was 32. I was still able to retire at 50. So, if you have some luck, you’ll be fine. It helps if...

You have and keep a good job making good money.

You don’t have any significant health problems.

You get a sizable inheritance.

You earn a decent return on your investments.

My personal goal was to save $2 million and then retire. Simply because I knew I could earn 5%, or $100,000 each year, and that I could be comfortable earning that.

I'm not sure if your question is directed at me r214 as I'm r205 and am retiring at 55. Yes, I've got a public employee pension, 30 years at the public library. However municipal employee pensions are nothing to right home about up here in Canada, at least not in Ontario. The only reason I'm able to retire this year is because I was lucky enough to sell my late parents home in the west end of Toronto just before the prices took a nose dive and we got 150% of the asking price.

[quote] Why do retirees travel? Is it all the rage?

I'll echo R212's response.

If you love to travel (as I do), not having to be confined to a 'traditional' 2-week vacation is pure joy. Rather than racing around to see everything, I look forward to being able to get an Airbnb for a couple of weeks and really explore the city as a local. Sleep late, have breakfast in a charming cafe, stroll around, shop, visit museums when they're uncrowded, attend concerts, operas, and dance performances. Maybe an afternoon nap followed by cocktails and a leisurely dinner, with a nightcap in a little club where they have live music. All without having to worry about getting up early to get to the next stop on your tour.

After you've seen the big sights in any city there is always a wealth of other things to explore, but when you're on a short holiday, there never is enough time. Oh, and when you can settle in for a long visit, you can overcome your jet lag and feel like a real person instead of a walking zombie.

I was in airlines and travel as a career so as a retiree , that wanderlust is gone, thank god. I am more homebody now.

Fuck these rich elder gays woth cactus!

R215- how did you buy $1mm+ of real estate.? How did you manage it while working full time?

Not only will I get no inheritance, I have to pay to take care of my mother and keep her alive- using my money I’m making

I just can’t figure it out- I saved $20-30k/year on average for 30 years and I’m still 10 years away from having enough Worked my ass off and saved - tried to live frugally - and i have no hope of retiring from a job I hate.

I honestly feel like just killing myself to avoid this hell of working to save for a retirement of worrying about running out of money - a retirement which I may never have because I die of a heart attack or cancer at 62

I am shocked that someone making $200K annually, cannot figure out how much money he needs to live in retirement.

You are making that much money but have neither the intelligence, savvy, or judgement necessary to make such a determination that most people making far less can make pretty quickly.

[quote] I am 36 and only have 85k in my 401k. Am I on the right track? I’m pretty hopeless with all the financial talk sadly.

You're doing fine just keep at it. At 36 I had about 10k in a 401k. 12 years later I have more than $700k in my retirement accounts. If I had started saving at 26 I could be retired by 50.

at 40 I had $40,000 , but then I started working for an ESOP S Corp. and now have $1M at retirement(age 60). I lucked out on that as I would only have about $250,000 with just a 401k only.

[quote]most people making far less can make pretty quickly.

I think you're being a bit too harsh and that this point, in particular, is not accurate. We don't teach handling of finances anywhere and properly handling finances, particularly long-term finances, is something that doesn't come easy to most of us. I'm in the high tech world, which means that my compensation is on the high end, but my younger self from 20 years ago could have made a virtually identical post. My experience today has mostly come from some painful mistakes I've made over the years.

On a related note, what are some of the mistakes that all of you have made? My first big mistake happened at my first employer. They had switched from one financial provider to another and we were told that we either had to roll over our retirement account money or purchase an annuity. I had no one to advise me and was still very green, so I picked the annuity, for a payment of $244 a month on retirement.

Had I rolled they money over, I would now have sufficient principal to pay out more than that monthly payment and my heirs would still have the principal left on my death.

R225, I was just about to post critical mistakes I have made. I was going to respond to R204 that when I was 36, I had 99K and 9 years later, I now have about 550K. But it could have been so much more. I moved jobs in 2008 and at my new job, I selected my maxed-out 403B contributions to go to cash. I needed some time to research the funds offered. Due to inattentiveness and fear from the 2008 recession, I left my contributions in cash for over 4 years. What's the big deal? I missed out in buying shares at a cheap price after the 2008 crash. And we've since been on an incredible stock market run. I realized my mistake and moved the cash to the market in 2011/2012. But if I had been on the ball, I would have a lot more than 550K.

As it is, according to the retirement calculators, I should be fine to retire around age 62. But my goal was 55. Like R221, I've started to support my mom as she won't have enough to retire on. And I have also lived well, well below my means to sock away for retirement. And I'm going to end up retiring in my 60's anyway, like most everyone else and I will have to still mind the budget because I will be paying for my and partially, my mom's retirement.

Another mistake that I'm beginning to realize is my decision to rent forever. Part of the renting mentality is that I rent modestly in a fantastic walking downtown area--not buying a more extravagant place and paying as much for commuting/transportation. But now, I see that having a paid-off mortgage at retirement has clear-cut advantages. Nothing to stop me from buying (except the outrageous prices in SoCal), but I do feel like I have wasted 10-15 years of buying time and now will buy in my middle-age and when age discrimination at work is a reality.

Mommycare has found its way into this thread. That is a huge commitment, but what are ya going to do? My mother is self funded, so I at least don't have that worry. I just try to be helpful to her.

R222 -- and yet, despite your unwillingness to accept that some people make a lot of money by being creative rather than by learning about, say, finance....., you are more than willing to show your own stupidity by not knowing how to spell.

Mother / elder costs - Just emphasizes how the rich get richer and the US is becoming an aristocracy where the rich hand down wealth and privileges. Eliminate inheritance tax, make poor kids pay for poor parents, let the rich care for their own. Fuck capitalism. I’m willing to go with socialism now. I worked my ass off to get into a good school, and grad school - paid for all by me except for scholarship money- working in a shitty high stress finance job - and here I am at 49 with less than most of these people. I was told if I worked hard, saved, was diligent , I could be successful - or at least not worried about money. Bullshit. Marx was right- capitalism unshackled should lead to communism. Because this shit is so fucking unfair.

While I sympathize, R229, and I don't disagree with you, can we please keep politics out of this thread as much as possible? Once that starts, the thread will be effectively over and any chance of sharing useful tips will disappear.

R229, I hear ya, I've been anxious about my mom's housing situation (she either has to move from her building altogether OR move to a smaller unit within the building) and finally had to call my best friend to have a crying fit. My mom's housing needs is my biggest financial worry and wildcard in retirement planning. The best financial decision would be to live with her and combine household expenses. But as much as I love her and want to help her--I've lived too long on my own to go back and live with a parent. Maybe when she's much older and really can't live alone, I won't have a choice. But for now, I rather take the financial hit and support her whilst living on my own.

What can you do but carry on? Not that it helps all that much but I remind myself, in terms of wealth, I'm probably better off than 90% of the people in the world. My brother is in his mid-40's and only makes 40K annually and is up to his eyeballs in debt. It could be worse.

Someone upthread asked about mistakes. The biggest mistake I made was that I wasn't more aggressive with my 402k investments when I was in my 20s and 30s. I went with a very conservative stock/bond split of 60/40. I should have gone at least 80/20. Oh well.

^^ 401k and not 402k

[r231] thanks for the words of encouragement. Same thought here - I could live with her. But could never make money I do now there. And I feel like I’m totally sacrificing the life in NYC that I fought so hard to get all my life. Guess we just have to carry on and accept. And hope that the good karma gets returned some day. And agree, better off than most people in the world (but apparently much worse off than 90% of people in this thread-lol)

My dad died last summer, and not knowing how much money he and my mother had, I was concerned I might need to help support my mom. She asked me to help pull together their financial info and his insurance, as she had never put it together in one place. I started a list, and she kept adding to it - She'd say, "oh, there's also this other IRA with $200K in it...and this other with $50K". It ended up adding up to over $2 million total. My dad would have never believed he had that much (he mentioned one time that he had $400K, which he could barely believe was so high). I'm just glad to know I won't have to support her, even if she ends up spending it all on her own care and I don't see any of it when she's gone.

Good to hear that your mom will be okay, R235.

That does raise another topic, though: do we all have a will and do our heirs know where to find our financial information if we should happen to be hit by a bus tomorrow?

I have designated beneficiaries on the accounts at my primary financial institution. This overrides my will and it's easier to change. I also have a will and my primary heir knows where to find it and where to find a regularly updated letter that I'm leaving him to let him know where everything is, what accounts I have, what the current state of my financial information is, etc. I keep all of my financial information in a spreadsheet, so it's easy to track.

235 - please please please have your mother put that money into a trust. I know you say you'd be happy for her to spend it all on healthcare, but that isn't the way it should be. And you never know what might happen to her where you would actually blow through that money.

Talk to your mom. See a lawyer. It costs about 5k but will safeguard her assets after a set number of years.

R237 and R235 I friend of mine's mother inherited $500,000 from her mother and spent it all in 2.5 years on online shopping and church tithing. Now she is 64 and living on $800/mo. SS. a huge tragedy, so yes, get good financial and legal advice on this!

R201, the new tax bill killed the Roth re characterization. You can still convert from an IRA to a Roth, but you don't get the do over part. Best to wait until the end of the year to do a conversion going forward.

Also, look into IRMMA. The Roth conversions raise your income which could then raise your Medicare costs. Just something to consider.

Here is a better document for income and Medicare.

R235, you might also want to consider having your mom buy a house as her primary residence (if she doesn't already own one). To qualify for Medicaid and Supplemental Security Insurance, she would need to have very low income and assets, but her house would NOT be counted as an asset to determine her eligibility. $2 million might seem like a lot of money now, but healthcare costs can really add up quickly for someone with a long, debilitating illness. I very much hope your mom stays healthy throughout her life, but it's something to think about just in case.

There’s one elderGay financial matter that should be mentioned. Since about 1985 to present, the stock market has been on a tear. I think there were two periods that were really ugly within that period. There was the dot-com crash around 2001-2003. That was brutal for me. But I was diversified and the market recovered. Then there was the Great Recession. I lost about 60% of my investments then. But I recovered again and have more than ever now. Overall, It was just dumb luck that I was invested in the market when it was really hard to not do well.

So, those two bear markets ruined some people. But if you had diversified investments, you probably did very well. If we look to rather future, we should be cautious about assuming that future returns will be like past returns. It’s possible that the market could be flat for a decade or even two.

[quote] R232: The biggest mistake I made was that I wasn't more aggressive with my 401k investments when I was in my 20s and 30s. I went with a very conservative stock/bond split of 60/40. I should have gone at least 80/20.

Yes! There is this idea out there that you choose an stock/bond mix based on your age: A 20 year old should be 80% stock and 20% bonds. And a 70 year old should be 30% stock and 70% bonds. That kind of thing.

When I was a young pup, I thought, “why would I want to put 20% or 30% in bonds, when I should expect bonds to underperform stocks? Why lock in poor returns? So, I have been 100% in stocks for 30 years, and that’s worked well.

My biggest mistake in not being diversified enough. My mutual fund investments have done great. But when I’ve invested in individual stocks, I usually did poorly. I don’t really have the interest in properly researching individual stocks, and it showed in my returns.

One mistake I made was investing in a variable annuity. It was marketed to me as a tax deferred investment vehicle. After I put some money into it, I came to understand that the current rate for capital gains is only 0% to 15%, which Is historically low, and just plain low. So, I really don’t need to lock-up my money in a tax deferred account. I got out if it, and had to jump through some hoops to get the money out.

Any time someone gives me a time-limited offer, I run in the opposite direction. There’s nothing I need so much that I can’t take the time to “sleep on it”.

R239, wow, thanks for the heads-up about recharacterizations being eliminated! I had heard nothing about this!

If you know, suppose you do a conversion in Jan 2018. Does the new law mean that I can’t recharacterize in Dec 2018? I’m wondering if all recharacterizations are prohibited, or just the ones that occur across calendar years. It looks like all were cancelled.

Wow, this really makes a difference for my taxplanning!

r120, Ever hear of "the government"?

Adding to the "lessons learned" - When (not if) the current stock market takes a drastic downturn, if you own stocks or mutual funds - do nothing. Don't panic and sell everything when the stock price drops. The market goes in cycles and it will bounce back and be stronger than it was, unless you panic and sell at the bottom, which I did in 2008. I couldn't stand seeing my six-figure investment in a precious metals mutual fund go into a downward spiral and lose 50% of its value so I sold. Stupid Stupid Stupid. Had I just been patient and waited, in less than 3 years it bounced back and grew some more. Except I didn't get to enjoy that fund's comeback. Lesson learned and never repeated.

If you need advice, you can hire a financial planner (for a one-time fee) and they will work with you to create a simple investment / spending plan for you to follow. Unlike a financial advisor who actively manages your money and takes a cut, the planner turns the execution over to you.

I've been fortunate with index funds. I've never owned an individual stock. At 65, I am in the fortunate position of having over-invested in my 401k plan. So I now only invest up to the company match and I'm taking what I would normally invest pre-tax and investing it after-tax. In 5 years the RMD (required minimum distribution) and social security will put me into a higher tax bracket than I'm in now, so after tax investment makes sense in my circumstances. (I don't qualify for Roth's.) Plus I will have to pay a premium for Medicare due to my income in retirement. But it's a good problem to have and I am not complaining. (My ex, who was never good with money (credit cards and clothes were his downfall), had to declare bankruptcy years ago and I wouldn't wish that on anyone. Fortunately I'm able to help him cover his expenses.)

Thanks to the magic of compounding (so long as you always reinvest the dividends), it's never too late to begin investing. Just watch the ER (expense ratio) of all investments, avoid fees like the plague and don't move in and out of the market. Target dated mutual funds are easy investments - set it and forget it - and it's really hard to beat their returns by active trading. If I hadn't started investing at Vanguard 25 years ago, I would not be in the financial position I am now. Lot's of useful info on their website too.

There is a wealth of financial and investment advice available at the bogleheads forum. Google it. Bogle was the guy who founded Vanguard and has proven that over time, it's hard to beat index funds over the long haul. Every question you can think to ask about investments has been addressed, debated, practiced and analyzed.

Are annuities that bad? I have one, in addition to 401k and stocks/bonds. I used it for an inheritance that I didn’t need at the time. The annuity served me well during the 2008 crash but now don’t know what to do with it and have about 10 years until retirement.

R223, here. My first mistake was delaying saving for retirement until I was 35. My second mistake was rolling my 401k into a IRA in 2010 when I changed employers. The value my account lost 2007-2010 was lost forever. A rollover is essentially a cash-out. If I'd remained in those low cost equities and mutual fund investments, my 401k (with former employer) would be double the value of my current IRA.

[quote] R249: Are annuities that bad? ...

I’m R244. My mistake with annuities was a long time ago, so I forget the details, but IIRC, an annuity is a way to defer taxes on gains, but it locks-up the principle. The main point of deferring taxes on profits might be a great idea if the tax rate were 25% or 40% or such. But the federal income tax rate is only 15%. That’s a historic low. I eventually decided that the deferred taxes weren’t enough of an incentive to lock up the principal, and given the low tax rate.

[quote]A rollover is essentially a cash-out

It doesn't have to be. I rolled three ex-401k accounts into a Rollover IRA with Fidelity. I have access to just about any mutual fund I want, excluding the group/institutional funds that are only available for employer-based accounts, and I've been able to continue the investing I was doing before, but with more choices and with better returns. Can you give some more details as to why that didn't work out for you?

If your taxable income is low, below $38,701, then the tax rate on long term capital gains is 0%. The $38,791 is your income minus deductions. In 3 if the last 7 years, I’ve managed to owe $0 federal taxes, because I had a lot of deductions, and and my income was mostly long term capital gains.

One mistake I now avoid is to sell an investment with in a year of buying it. In doing so, any gains are taxed like income, perhaps at 25%. If the investment is held longer than a year, it is taxed at the long term capital gain rate, either 0% or 15%.

R252, I believe I was advised the funds in my former 401k were not available through the brokerage that handles my IRA. Unfortunately I did not fully understand. My old employer was going out of business, and I believe I just panicked because I thought their funds were proprietary. So I opted to rollover. In retrospect, it seems I was talked into investing in new funds because it benefited the brokerage with my IRA.

If I'd known more I would have just kept my old 401k. I'd be rolling it over into an IRA today with twice it's present value.

[quote]Are annuities that bad?

I'm not an expert but I think it really depends. It's a guaranteed benefit, which is nice, but you can usually do better by putting that same amount of money into an index fund and skipping the middle man.

Interesting, R254. I suspect that what your 401k account had access to was institutional funds that are only available to employers or large institutional investors. They tend to require large minimum investments but also offer lower management fees. Most of these aren't available to people like us.

That said, there are almost always equivalent private funds that offer returns that are as good, or better, and your basic index funds have management fees that should match or beat the management fees for most institutional funds. I think you got really bad advice from the brokerage, either intentionally or unintentionally on their part. Or you were persuaded to roll into an IRA that doesn't offer the kind of benefits that mine does. Either way, it's on the broker.

And that brings up another point: there just aren't a whole lot of brokers out there that I would trust. Far too many of them have only their own interests in mind, not yours.

R228, generally creative people doing creative work do not make $200K. And yet they still know how to make fairly simple financial calculations. Only dilettantes use that old, "I am a creative person so I cannot be expected to handle practical issues" dodge. Working in a creative field, I can tell you those types get weeded out pretty fast.

I am sorry about any spelling mistakes.

And this is not advanced calculus here. These are pretty straightforward calculations.

[quote] I am shocked that someone making $200K annually, cannot figure out how much money he needs to live in retirement.

I read a study that concluded that up until about $75,000 per year; more money does indeed mean more happiness. Above that level, more money does not increase happiness.

Personally, I found that above about $100,000 per year, it’s all gravy. I also found my coworkers to be more cut-throat above that level as well.

I’m the 36 year old guy upthread and just wanted to thank everyone for their financial wisdom. This thread has been a nice education. Why this isn’t pounded into us in high school, I’ll never know.

R259 I have read that as well. I think security makes a difference as well. Working in publishing and the arts was feast or famine, so any money saved would be swallowed up when work was scarce. So it was impossible to think about the future and any expense was filled with anxiety since it was impossible to know what lay down the road.

I eventually worked to organize a union in my company. My coworkers and I calculated the cost of paid holidays, vacation, and health insurance which was small next to the profits made by our division. That helped but we still had 6 month contracts. Even if you have worked for a company for over a decade, it does not feel secure when you have to get your contract renewed every six months.

Now I am a tenured professor and make less than I did in my best years. But it still feels better than that freelance life.

When I said that helped, I meant that our calculations and some other savvy choices got us the benefits we wanted.

[quote]There is a wealth of financial and investment advice available at the bogleheads forum. Google it. Bogle was the guy who founded Vanguard and has proven that over time, it's hard to beat index funds over the long haul. Every question you can think to ask about investments has been addressed, debated, practiced and analyzed.

I just wanted to call this out again because I've visited there a few times and I've heard nothing but good about this site from friends and colleagues.

R246, you can not re characterize a Roth conversion at all now.

Also, for anyone paying a financial adviser, you can no longer deduct the fees from your taxes.

Thanks all the advice, sharing and general respect for everyones circumstances and input. Haven't seen a thread so civil in a long time. Really a great read beginning to end.

Thanks, R264!

While I was confirming what I read here about recharacterizaions, I also read that the medical deduction was increased. Years ago, you could deduct expenses that exceeded 7:5% of your income. That change to 10% under Obama. It had something to do with the ACA. But the Republican plan passed last year dropped it back down to 7.5% again. I have high medical expenses and lower income now, so this saves me some money.

Incidentially, just FYI, if you see a massage therapist for a medical problem, it’s deductible. Also, the cost of medical insurance, and also the cost of your premium for long term care insurance. One deduction that is great is if you travel for medical care. Sometimes, people who are sober go to these retreats to hobnob with other sober people. If you do that, you get to deduct something like $50 per night for the hotel, the entire cost of airfare, all taxi fare, registration costs, maybe meal costs. I forget about meals.

[quote]Why this isn’t pounded into us in high school, I’ll never know.

Even if it were, do you think most high school-aged kids would pay attention?

R257 -- Seriously? You are not aware that although most people in creative fields don't make much money, there are a number, like myself, who do very well. And, of course, I have friends, mostly screenwriters, along with two successful novelists, who have made vast fortunes from their writing.

Just because it doesn't happen often doesn't mean it doesn't happen.

Not to mention that no, these things aren't easy, as witness the number of people who have trouble figuring out how to handle their finances, particularly with respect to their retirement. Hell, even the experts don't agree on just how much we should be saving for retirement and what percentage of our current income we should live on after retirement.

[quote]Thanks all the advice, sharing and general respect for everyones circumstances and input. Haven't seen a thread so civil in a long time. Really a great read beginning to end.

Agreed. This has been unusually civil and helpful and I'm grateful to everyone who has shared their expertise and their pain.

I think a high-school class would still be worthwhile, r267, even if only a few of the major concepts (like the power of compound interest) would stick in students' minds.

R171 has a point. I know the Kansas City area pretty well and I definitely would not move to Olathe. But, in terms of great medical care, St. Louis is very good. You might also look into Dallas for retirement. The medical care there is quite good and the winters are warmer than Kansas City or St. Louis. Also, the real estate is reasonably priced.

My HS economics class included a section on Home economics. How to write a check. How to assess an advertisement. I think it was just 2 weeks, but I thought it was the best part of the class.

I’m an economics major and MBA and work on Wall St - and I still lose money investing. Stocks are gambling- no matter how much you know, there is always something you don’t know and/or world events that will overwhelm the most diligently researched investment. Nothing is certain. Assume all stocks - and even some bonds- can lose value (and will in this market)

[quote]How to write a check.

Now THERE'S a useful skill for the 21st century!

R274, I still occasionally write checks. Just this month I paid a contractor for two jobs. My housekeeper takes checks, too.

R273, I guess it depends on how you define gambling. Not investing is probably a bigger gamble. Individual stocks are tricky, but investing can be easy.

The Bogleheads three fund portfolio model is an excellent way to invest. Total stock market index fund, total international stock market index fund and total bond market index fund. It's simple, low cost and your money is well diversified. Will the market go up and down, yes, that's what markets do. If they stayed flat know one would make any money.

R273, I hate to read the word “gambling” with reference to stocks. It’s not entirely a question of “chance”. All of life has an element of chance associated to it, but not entirely. Same with stocks.

Sometimes, people will comment on their perception of my financial situation, and volunteer how “lucky” I am. Well, I am lucky, but I also worked hard for decades. I spent below my means, and I invested. I took calculated risks and made a lot of mistakes. I’m not crazy about the idea of dismissing my efforts and calling it luck, as if I just bought a lottery ticket and won.

Well said, r277.

My FA says annuities are good for people who cant manage their own money and have no heirs. Basically you get a set amount each month for life. You can't keep chipping away at the principal as needed in large chunks . I kidded that my husband should be converted to an annuity after I die, as he is HORRIBLE with money.

SPIA annuities are good for some, but most are a huge rip off that only makes sense for the FA who gets a huge commission for selling them.

If you don't understand what you are buying, don't buy it.

r279, Yep, that's how I assess annuities too. They're not the best use of your assets but they provide some idiot-proofing--if you get a good one. I should set one up for my mom in case something happens to me. Leaving her with investment portfolio would bewilder her and turn into a disaster. A monthly check for the rest of her life would be more prudent, even if it's not the best financial investment in terms of pure value.

Allen Iverson made tens of millions playing in NBA and like many pro athletes, lost it all within a few years of retirement. His one saving grace is his manager or agent set up an annuity that was safe from bankruptcy. This is advice that should be taken up by 95% of the players in the NBA.

A problem about talking about annuities is that there are various kinds. Fixed and Variable are two types, and they are different.

Here’s a tip, if you’re single with no dependents, including parents, then you don’t need to spend money on life insurance. Unless you wanted a modest payout so as to fund a burial plot and headstone.

I am so glad you guys are writing here. I already did two small ROTH conversions with the expectation that I would be able to reverse (recharacterize) them, if I chose to, later. So, now I know I can’t, but that knowledge kept me from doing additional, larger, conversions that might have really been a problem if I couldn’t recharacterize them later. So, thanks, dudes!

Here are some tax changes in the new bill:

No more recharacterization of ROTH conversions.

Medical deduction threshold changes from 10% back to 7.5%.

Personal exemption was $4400, now is eliminated.

Margin interest is still deductible, subject to the same 2% rule.

Tax preparation fees are no longer deductible.

Mortgage interest is still deductible with some limitations.

State and local income and property taxes are deductible up to a combined $10,000.

Charity is still deductible.

[quote] State and local income and property taxes are deductible up to a combined $10,000.

I thought it was up to $10k for both (each) property taxes AND state and local taxes???!!!! Residents of NJ, CA and NY are going to burn down the White House this time next year.

I'm in CA; my combined state income and prop. taxes are right around $10K. But this will certainly dissuade me from buying another house.

I'm assuming property taxes on rental properties are still fully deductible as a business expense, no?

R286, no they are not.

R283, don't forget us...

[quote] Boston Globe, 12/21/18: To prepay or not to prepay is chiefly an issue for homeowners who deduct their property taxes, especially those who won’t itemize under the new plan, which boosts the standard deduction to $24,000 for a married couple, [bold]or whose property taxes and state income taxes, combined, will exceed the $10,000 cap for those deductions [/bold] that will take effect in 2018. For them, paying next year’s property taxes now could save hundreds, or thousands of dollars.

R285, it seems to be combined total of $10k. I did have to search around quite a bit, for a clearly written explanation, though.

Love the Lesbians, love love love!

Thank you, r283/290!

I think the blue, “donor” states need to put their foot down and demand a law that specifies that states get back 99% of what they pay in Federal taxes. Something like that. What makes it irksome is that I read somewhere recently that the red state morons think that [italic] they [/italic] pay more in Federal taxes than they receive in benefits. Of course, the blue states have long subsidized the red states. It’s one thing to be in a donor state, but completely unacceptable to be unacknowledged and unappreciated. Well, it will always be unappreciated, but it should be recognized. Damn, I hate those liars on Fox and similar.

R268, then I really am baffled. The writers I know....particularly the successful ones...have income from multiple sources, large and small, and are usually able to manage money quite well. So they can do basic math.

Yes, I know there have to be one or two dumb bunny authors out there, but I think your idea that overall creative people, and even more specifically authors, cannot do math is one of those stereotypes that the real world does not bear out.

Well, my experience is that most people, creative or not, are not good with math and not good with taxes in particular. By idiot brother in law can’t do his own taxes and thinks the stock market is as random as a lottery, and he claims to have been a CPA. I think he has an accounting undergrad degree, and the “CPA” part is a lie. I hate liars.

Who actually bothers to really understand how a flexible spending account really works? I did. I found out how to actually get more money out of a FSA than I put in. One year, I made $5,000 over my contribution. Likewise with medical deductions. I used to partially deduct vacations as medical expenses. But most people simply do not have an interest in such detail.

Here is how to get more money out of a Flexible Spending Account (FSA) than you put it. It does require that you know in advance that you are leaving your job, in the beginning of a new year. I know they have tightened-up the regulations since I did all this, so you have to research for yourselves if this is still possible and easy to do.

The FSA is not a kind of savings account, where you put money in, and then take that money out. It actually is a kind of insurance plan. If you have fire insurance, and make a single monthly insurance payment, and you have a fire, you are covered for the full value of your policy, not just for the amount of that one monthly premium payment. Likewise, in an FSA, once you make your first payment into it in January, you can be reimbursed for the full value of your entire yearly (planned) contribution. So here is the trick:

First, when you sign up for the FSA at the end of a year, for the following year, sign up for the max.

In the first of the year, you must have valid reimbursable expenses. One year I had my doctor write me a prescription for a temperpedic bed. One year, I went to Florida for an AA event, and submitted my airfare and cab fare for reimbursement as it is considered a medical conference.

So, suppose it is January and you’ve had these expenses. You submit them. You’ve only made 1/12 of your yearly FSA premium payments, but you have valid expenses that exceed your yearly premium limit. Then, you quit. You never make the next 11 payments, because you no longer work there. Because it is structured as an insurance plan, not a savings plan, this is all kosher. They reimburse you the full amount, far in excess of what you have contributed in monthly premiums. You must have generated the expense before you quit, though.

One year, I started as a contractor, left that company to become a regular employee where I was working, then quit that job. I was able to max-out my benefit in both FSA plans.

You may know that they emphasize that, when you specify a certain amount to put into an FSA, if you don’t have enough valid expenses that year, you lose the money you set aside that’s in excess of your expenses. That’s the flip side. They don’t tell you too much about how to do what I’m writing about, understandably. I know they’ve made it easier to get reimbursed in recent years, by stretching the time period or other means. But in any event, this is what I did years ago and I actually made quite a bundle in a regular basis, even in years where I did not quit my jobs.

This is perfectly legal and ethical. Businesses do not lose money in their administration of FSA plans.

r287 As far as I can tell, that's absolutely incorrect. Why would they NOT be deductible? So are you saying that they're not deductible for ANY kind of business?

As far as I can tell, the new limitations are only for PERSONAL (i.e., Schedule A) deductions, not business ones.

SAVE!

A few weeks after we start crowing about retirement accounts and the market dips precipitously. My retirement savings has lost $32000 in just a week. It's what I call Datalounge Karma.

I'm down over $200,000. I'm just going to ride this out and do nothing.

R299 not doubting you, but how the hell can you be down so much??!

Finally my pessimism is paying off. After reading this thread for past week and kicking myself for unloading everything last year, I can sit back and watch it plunge with a certain amount of schadenfreude for all these multimillionaires who seems to have earned 20% year forever

R300, we have/had quite a bit of money. :^)

I am close to retirement and my son told me to get out of stocks a couple of months ago so I did, although I have less than 30% in stocks. It didn't hit me as bad as 2008. Crossing fingers it doesn't get any lower.

At some point, we will hit a bear market, R303, and the stocks will go much lower. Whether this is the beginning of that bear market right now, nobody knows. That's part of planning for retirement. You need to make sure that you have planned for bad times as well as good. The ideal scenario is that you don't need to spend all of your dividends and gains in a good year, so that you can set aside some of that money to help you ride out a bad year.

Right now, my own estimate is that I have enough saved to do okay in good years. Now I just need to save another few years so that I have enough to ride out a bad year. Honestly, for me a bear market this year is not bad timing. I ride out the bear market for a year or so, then come rebounding back in the next few years, at which point I might be able to retire. I hope....

If you're closer to retirement age, my sympathies and crossing my fingers that it doesn't get bad enough to seriously affect your plans.

The dot-com bear market lasted a couple years. It was truly brutal.

Then the big crash was discombobulating. I remember thinking “I might lose everything”. I did not.

R248 here. I began my previous post by stating "When (not if) the current stock market takes a drastic downturn..." Here's my 2 cents on this week's stock market:

If you're in the market and you have at least a 5 - 10 year horizon, do nothing. Now is not the time to sell - unless you need some losses to offset gains.

If you're not in the market and have money to invest, now would be an OK time to begin investing in index funds, following a "dollar cost averaging" approach. Meaning small, measured purchases made systematically over a long period of time. That way you're not trying to "time the market" and your average costs over time will even out.

Personally I believe that overall the economy is healthy and the market will likely do alright through 2018. But then, what do I know!

[quote] R306: “long period of time.”

But how long is that?

(R307) In my case, a "long period of time" was more than ten years. I set it up to automatically invest a hundred dollars a month in Vanguard's Total Stock Market Index fund. Slow and steady, up markets and down. Over time, as I had more money to invest, I increased the monthly amount and eventually added the Total International index fund. I keep international stocks to around 15% of my stock portfolio.

You're doing it right, r308, but you already know that. Best of luck to you and enjoy your future retirement.

Thanks for the answer, R308. I also advocate dollar cost averaging. However, if you get a chunk o change, over how much time would you invest it? I get impatient. And I hate missing out on what is generally an up-trend. Suppose you get $200,000 or more. Over how long would you divide it up and invest it? I think 10 years is too long for this.

(R310) You right, ten years is too long. Personally I would automate the process by parking the funds in a money market fund, then setting it up so that every month $5,000-10,000 gets transferred to X, Y and Z index funds. (I would follow the Bogleheads 3 or 4 fund portfolio suggestions - which is basically total domestic stock index, total international stock index, and total bond index). If you did have the urge to tinker, you could always accelerate or pause those contributions. But "market timing" seldom works so taking a "set it / forget it" approach could serve you well. Be sure to read up about determining your "glide path" - how to adjust your stock to bond ratio as you get closer to retirement. The 5 years immediately before and immediately after retirement are when you need to take the least amount of risk.

R311, that’s about what I thought, $10,000 a month, just because it’s a round number, and seemed right, too.

I’ve recently read, and it rings true, that you should be more aggressive in retirement these days. Retirement can last much longer, even 40 years, so you want your money working for you over that l.o.n.g. period.

I need to hear this debated more before deciding. I’m almost 60, though, so I need to learn more, fast

(R312), you are correct that you need to keep your retirement funds growing during your retirement years. The old rule of thumb was your asset allocation should be primarily bonds by the time you retire. But that's when interest rates were higher and bonds produced steady income (or enough income to live off of when combined with Social Security). But back then people weren't expected to live full active lives into their 80's and 90's. Now you need enough income to support yourself through 30+ years of retirement.

You can find various "Monte Carlo" financial calculators online which will run 10,000 scenarios of your current or expected retirement assets, combined with anticipated withdraws, interest rates, inflation factors, etc. It will give you the odds of your investments lasting X number of years. (Typically if you keep the withdraws from your retirement portfolio to 4% or less your money will last through your lifetime. Historically the market has done better than 4% annually so the odds are in your favor by staying under that percentage.) Using this calculator, it's very enlightening to see how the end results change by plugging in various amounts.

Here is an excellent retirement calculator.

bad link, R314

Sorry for the bad link.

My retirement account is now down more than $50,000 in less than two weeks. I've lost over $50,000!!!!!

No way!

Me too R317. Actually, more... but... it's still way up from where it was last year.

And it will go up again.

Now down $75,000 since mid-January. That is more than 10% of total account value as of mid-January.

Unless you're within a couple of years of retirement, the losses, like the prior gains, are just numbers in a spreadsheet, not actual problems. I've ridden out half a dozen or more corrections over the past 20 years and I'm still doing just fine.

I've recently retired, drawing out small monthly amounts from my Merrill Lynch account, and am losing amounts I'm not comfortable losing. My broker does tend to do well by me, and I plan to work part-time soon along with an already frugal lifestyle. STILL, this is scary. My heart goes out to the above poster who is losing bundles. Mine isn't at that level, but...so very tough to stay the course. I'll do so, I guess, as that's what experts suggest.

Yeah, you're at the point where this really does matter, R322. I wish I had advice to give you but I haven't faced this yet.

R322, how much is Merrill Lynch charging you? How much are your mutual funds costing you? It's not uncommon to be paying 2% or more in total costs. The safe withdrawal rate is 4% so you need to keep this costs as low as possible no matter what the market is doing.

Vanguard offers a professionally managed service for .3% and they will put you in a simple but well diversified portfolio using low cost mutual funds. They don't have brick and mortars so it will be all phone support.

I'm charged 1.5% or rather 1-twelfth of the 1.5% a month. I'm in with a family friend as my advisor is a friend. Another broker friend of mine tells me that 1.5% is about as high as I should pay, while another friend at Fidelity pays 1%. I'm at that awkward stage because my ML broker DOES do well by me, and to move to another company seems as if that could open the door for rough feelings. (I did this to myself, I realize.)

So, stick it out, I guess.

Thx, R323 and R324.

I have posted this before. An excellent documentary. R325: watch it!

R325, are you in mutual funds? If so, post a couple of the names of them and I will look up the expense ratio.

You are paying a huge percentage of you gross income to this friend. You should figure out the total percentage you may be paying out more than half your annual income to your friend. Meanwhile, you are the one assuming all the risk since it is your money invested and you are responsible for the taxes. He may be making more off your money than you are.

As far as doing well, the overall market has been doing well. I'm quite sure with the drag on fees he is not beating the respective benchmarks.

If you contact Vanguard, they will move the assets for you. You should do the math then sit down with your friend and show him mathematically why you have to pull your money.

Go to the Bogleheads website and do a search on financial advisor. You could even post your information there to figure out how much this is costing you.

Good luck what ever you decide to do.

To everyone else, never hire family or friends to manage your money.

Thanks, R327. I'm not R325 but I just wanted to thank you for some terrific advice.

Here's a great little calculator to compare the impact expenses have on portfolios.

If someone is using Vanguards PAS services they would use .1 as the expense ratio. Then plug in the AUM plus the average expense ratios of the mutual funds in you actual account. So, if the AUM is 1.5 and they are using mutual funds I'd go with 2.2 or 2.5. Then plug in the rest of the information.

The difference even over ten years is amazing.

Vanguard is good, I understand. I just want to speak up for their competitor, Fidelity. I did work there as a cog in the wheel. They treated me well, in general, probably as well as any employer, though they did grind me into the ground, nonetheless, I’m ...

An old fella delivered my groceries today. It’s three flights up. I was surprised. I wanted to offer him a soda and a chair.

He was from Albania, spent time in Hungary. Worked for the grocery market for 6 years. He seemed smart. I was afraid he’d say he was a surgeon or history professor or such.

I think Fidelity is good for index funds and index ETFs. They were forced to offer these to compete with Vanguard.

Fidelity's website is far superior to Vanguard's and it is nice to have a local office. I would never let them manage my money though.

I have to second R327. If you're paying 1.5% to your money manager, along with any mutual fund fees, you are paying twice over. And they are almost certainly not beating an index fund with super-low fees. Your broker has to beat the performance of an index fund by at least 1.5%, and even more if he's got you in anything other than a low-cost fund. That's very hard to do and very few brokers can do it on a regular basis.

And it's even worse if your broker routinely makes trades to route your money into other funds, since he will make money on every trade.

Thanks for the link, R329. That's a great tool.

I like Fidelity's website and they do a pretty good job at getting your money to you promptly. Schwab absolutely sucks on both counts, in my experience: their website sucks and they drag out the process of getting you your money after a sale. Not by more than a few days, but still, every day counts when you need the money right now for a down payment or something like that.

Vanguard led the way on the low-cost funds and Fidelity has had to respond. They both have some great choices. I have a fair amount invested, for example, in the Fidelity Spartan Total Market Index fund (FSTVX), with an expense ratio of just 0.035. Add in no transaction fee for trades and it's a pretty good choice.

In my 401k, I've got a U.S. Large Blend Index fund, U.S. Mid Cap Blend, U.S. Small Blend, a Mid-Term Bond Index fund, etc. The most expensive fund is a Foreign Large Blend at 0.1, with everything else at 0.05 or less. I want my money to come to me, not to my broker.

Personally, I don’t care what the fees are, provided that I get good net returns.

Now, what we never hear about is the assumed risk. It’s a trade-off, or should be, of return vs. risk. A fund might fly high, and if the risk is low, that’s terrific! If the risk is high, you have to assess if it’s higher than it should be.

Presumably, an index fund will have risk that matches that to keep it in sync with the index, no more or less. The recent market slides ought to end a good check on those funds.

R335: apply for food stamps and section 8 housing now.

The recent market slide affected more than just index funds, r335, and you really should care about the fees. Take a look at the calculator that R329 linked to and run the numbers for a fund with a management fee of 1% vs. a management fee of .04%. Over a ten, twenty, or even thirty year period, the difference can be measured in tens of thousands of dollars.

Index funds will definitely be hurt by any correction or downturn but so, too, will those managed funds. Actually, this is a great test of the managed funds. Anyone can look good during a near-record bull market run but how good do they look when things fall apart?

One online wealth management site, which claimed that they could handle all of my financial affairs for me, recommended a slate of about a dozen funds for me to invest in. Every single one of those funds had been founded after 2008. I declined to give that site access to my money.

WATCH THE FRONTLINE VIDEO!!!

[quote] I don’t care what the fees are, provided that I get good net returns.

Did you all miss the part about “provided that I get good net returns“?

R336, when you’re worth more than $2 million, come back with your rude comments.

It’s like throwing diamonds at the Darfur Orphan, around here.

[quote]Did you all miss the part about “provided that I get good net returns“?

No, we didn't, since that doesn't change the point we're making. I get "good net returns" from the index funds that I invest in and I suspect those "good net returns" are as good as yours and at less than one-tenth the price. The managed mutual funds have to beat the overall market by enough to justify their high management fees. Something like 80% of them can't even match the performance of your typical index fund, much less beat it.

The point is that you may have had good net returns but that you would likely have done even better by skipping those funds that charge the high fees.

From one article:

[quote]A year-end study by S&P Dow Jones Indices found that "over the 10-year investment horizon, 82.14 percent of large-cap managers, 87.61 percent of mid-cap managers, and 88.42 percent of small-cap managers failed to outperform (their index benchmarks) on a relative basis."

And from the linked article:

[quote]If they aren’t buying and selling their stocks at the wrong time, many people are staying put — in costly mutual funds that aren’t doing any better than the stock market overall. In fact, research shows that the number of active mutual funds outperforming the market on a consistent basis isn’t just low, it’s zero.

[quote]A study by S&P Dow Jones Indices looked at 2,862 actively managed, domestic stock mutual funds and pulled out the ones that were top performers in the 12 months starting March 2009, when the market bottomed out and the bull market began.

[quote]It then looked at which of those funds stayed in the top 25 percent for four years, through March 2014. Jeff Sommer explained the results in the New York Times this weekend:

[quote]Just two funds — the Hodges Small Cap fund and the AMG SouthernSun Small Cap fund — managed to hold on to their berths in the top quarter every year for five years running. And for the 2,862 funds as a whole, that record is even a little worse than you would have expected from random chance alone.

[quote]In other words, if all of the managers of the 2,862 funds hadn’t bothered to try to pick stocks at all — if they had merely flipped coins — they would, as a group, probably have produced better numbers.

[quote]By the end of this month, which would mark another year since the study was last updated, the list of persistently top performers is expected to shrink from two to zero, Sommer wrote.

R335, index funds aren't just for equities. There are bond index funds too. What you need to think about is your asset allocation.

Nice post, r341

[quote] R341: I get "good net returns" from the index funds that I invest in and I suspect those "good net returns" are as good as yours and at less than one-tenth the price.

You’re overlooking the word “net”, meaning “after-fee”. If you make 10% and pay a 0.05% fee; and I make 20% (net) and pay a 5% fee, well, I have paid 100 times more in fees, but I’ve still made double what you have made. I don’t care what the fee is if my net return is high enough, subject to a “risk” assessment. I think the risk assessment is the important part.

[quote] If you make 10% and pay a 0.05% fee; and I make 20% (net) and pay a 5% fee, well, I have paid 100 times more in fees, but I’ve still made double what you have made.

And you're still overlooking the point that virtually no managed mutual fund, over the long haul, can do that. Over the longer period of time, the index funds always win.

Risk assessments always apply, of course, but it sounds like what you're talking about is so high risk that it doesn't even really belong in a discussion of retirement funding. If you really an expert enough investor, and you have the time and the expertise to properly carry out such assessments, and you have sufficient capital to be able to handle the scenario where the risk doesn't pay off, that's wonderful. Welcome to the 1%. And you're right that you will likely do better than we will.

To the rest of us, though, with only the kind of expertise that comes from reading a few websites or from all-too-painful experience from our mistakes, the kind of investing that I think you're talking about is simply not practical. Being in the market at all is all the risk we can handle. What we do with diversified investments in various index funds is reduce the cost and risk such that saving for retirement becomes a much more reasonable proposition. And a necessary one, given the rate of return on other, safer, investments.

[quote] It’s like throwing diamonds at the Darfur Orphan, around here.

You can't EAT a diamond, lousy bitch!

Exactly, R345. Totally unappreciated!

Wow, r326, that Frontline program nails it!

Everyone should watch it. The first 20 minutes takes us from pensions to where we are now. Then it dives into the retirement industry and shows us how we are swimming with sharks. It interviews Jack Bogle who is a rarity in the financial industry in that he is on our side, which requires a lot of ethics and integrity (he founded Vanguard). Contrast him to the squirming leach who they interviewed from J.P. Morgan. They interwove a lovely gay couple through out this as icing on the wedding cake.

I am going to cross post this to another DL thread. Thank you so much for sharing, r326.

* leech

i'm lucky to have a pension. I now have to decide to take a monthly annuity vs a lump sum. What would DL do?

R349 We need a LOT more information.

R349, consider a diversification of your kinds of funds. If you already have a nest egg, that would suggest you might want an annuity. If you have another monthly pension, that might suggest you take a lump sum.

Next, how would you manage a lump sum? Might you lose it all? Then what?

Is the annuity “for life”? Is there a minimum or maximum payout? Do you expect to be long lived? Do you have any dependents?

After thinking about all that, you MUST GET PROFESSIONAL HELP, even though it costs money. Don’t do what my idiot brother in law did. As soon as he reached 62, he applied for social security. He’s married, and it might be different for a married person, but for a single person, especially if long lived, as my sister will be, it’s better to wait until 70, if possible, to collect. So, because he’s too stupid to ask for and pay for help with something he doesn’t understand, he’s going to force my sister to suffer financially. She’s already supported him most of their lives.

R349, I have a Federal pension which is probably the safest pension out there. My spouse has one from the State. Combined they are about $44k per year. Between that and SS, we can easily live on them so we don't have to worry about our investments. That's a huge peace of mind when the stock market is tanking.

I can't answer any further myself, but this question was recently asked on the Bogleheads forum. That is an excellent forum for investment advice. There are some real experts there.

Read this then perhaps post your own question there.

Good luck with your decision.

R325 here again.

Thank you to the poster who provided the Frontline link. I just watched it.

I've been a wreck about this potential change.

Thanks to everyone for a most enlightening thread.

R347: thank you, thank you. Nice to be acknowledged. I have this here 3 or 4 times because I thought it was so good. Glad you enjoyed it.

R343, what we are saying is that higher fees will kill your returns. Index funds almost always (85% of the time) beat out actively managed funds - mostly due to the high fees. It's hard enough to match the market over the long haul, let alone to do so with a 2% fee attached.

There is a calculator and an excellent Frontline episode posted above to illustrate what some of us are trying to explain to you. I think you just don't want to admit you are wrong.

FOCPX has a five year return of 23% per year. The 10-year return is skewed by the crash. I don’t know how reliable that number is.

I do understand the point, R355, it’s not a complicated one. R344 makes a good point that it’s a fine idea for someone who doesn’t want, or can’t, spend the time and effort to learn more about the subject and do better. But it is a receipt for mediocrity.

R356 is exactly what contradicts the whole “you always make money in the market” mantra. No -or depends when you put it in. Did it in 1998: 2000: 2007: 2010 - you are not guaranteed a return. So everyone sitting back thinking they are rich right now- it’s an illusion. You made money you will lose money. Don’t whine when market drops 15%- you should never have considered that your money, it’s temporary gambling winnings.

That's not really true, R358. Over the long haul, if you have a careful strategy, you will make money in the market, even with massive downturns like those of 2000 and 2008. That's not really gambling. Now if you start this year and you're counting on making 30% this year, then you're right.

And your point is well taken for those who are closer to retirement or who are already retired, that they need to be much more aware of the market's rise and fall and do more to protect their income.

Slight change in topic, for those retired or about to retire, one bit of advice above is to consider moving to a cheaper location. Any advice on this? The reason I ask is that I live in a city where home prices have increased pretty dramatically and with an influx in high-tech workers it's likely to continue. That's causing overall prices to rise, not to mention what it does to property taxes.

If you did move somewhere else, where did you move, when did you start planning the move, and did it work out as you expected?

R360, I have not moved; however, I live in Massachusetts where the state income tax is 5.1%. My home is 1200 sq. Ft and worth $1.2 million.

I could move to FL, TX, or AZ, and live in a palace for less than half my housing costs. Then, I could save on the income taxes from my 401k and brokerage account profits. Another thought is Costa Rica or Panama, but I haven't researched that. Puerto Rico had been a thought, but they will need a decade, maybe two, to recover from Trump hostile-neglect.

I’m not ready to leave New England just yet, though.

I’m afraid to move. I’m terrified i’ll feel like I lost my connection to life if I leave the city. I feel like the city gives you a connection to all of life’s energy when you are older and provides the ideal retirement community/elderly support system (no car, delivery, no stairs, good medical care) With that said, I am considering Philly from NYC - much cheaper, walkable, good medical care. Just feel like I’ll still miss the energy of NYC and regret ever leaving.

r260, I heartily concur.

I once told my mother that she taught me how to save money (coupons and savings bonds, e.g.), but nobody ever taught me how to MAKE money.

And for sure no-one ever told me that life insurance isn't taxable. Will forever be kicking myself for not over-ruling my now-late husband.

Just to be clear, the issue I have, in R356, is with the statistic for FOCPX “ten year earnings” being misleading because of the way the crash falls within that period. The stat would represent your results if you invested exactly ten years ago and held it to today; however, if you originally invested exactly 11 or 9 years ago instead, then your return might be vastly different. If so, that the statistic doesn’t really give a good idea of the overall return for the average person and is therefore not a good benchmark to use to evaluate anything.

It is true that some people had very bad luck and bad planning and so forth. There’s no guarantee with any investment. Likewise, if you just hold cash, you risk that it loses value due to inflation, not to mention theft or accident. My idiot brother in law left the weeks store receipts in cash in his car overnight, and he lost it to some unknown neighborhood punks.

r362, Two words: Lehigh Valley. Can't swing the proverbial dead cat without hitting a health-care entity---hospital, urgent care, medical consortium, etc.---of some sort. Suburbia and small cities. Eight colleges or universities. Museums, festivals, theatre, historic areas, golf courses, Sands casino, and food delivery from Wegmans. Etc., etc. Plus, retirement enclaves with all kinds of dwellings, medical components, dining plans, and so on.

Also, two bus lines for the 90-minute ride to NYC. :-)

Here’s something that ?I think is interesting:

Suppose someone has a huge gain in primary home real estate value. If they sell it, the first $250,000 in profit (double that for a married couple) is (generally) tax free. You also get to tack on to that whatever you spent on capital improvements, like a new kitchen, or new deck, or new light fixtures. That’s plenty for most people.

On the other hand, if you die owning the property, the value of it is “stepped-up”, meaning that the government pretends that the property was purchased for the value of the property at the time of death. So, if I paid $150,000 20 years ago, and my place is now worth $1,500,000 and I died, my heirs would get to sell my place and keep the entire sum, and pay no taxes in the gain. If I had sold it, I would pay taxes on about $1 million in profits. That’s maybe $300,000 in taxes.

The moral of the story is, for some people, it’s worth it to hang on to an old home so as to die owning it, rather than selling it.

Incidentially, stocks, mutual funds, and some other similar investments held in brokerage accounts are similar. This does not apply to assets held in 401ks, and IRAs.

Lastly, saving taxes on your investments is fun, but don’t go overboard if it skews your investment plans too much. My brother in law has lost a lot of money in a foolish quest to cheat the tax man.

R366 problem with your scenario is many gays aren't interested in leaving a legacy or only have incidental heirs. I told my advisor to front load our retirement as we have no heirs and are not in the best health. He has, however, talked me out of drawing early SS. But if this market trend continues, I will reconsider it.

I get that, R366, but it’s cool info for those who care.

When my Dad died, his business-property was valued at, say, $300,000. A huge profit for something he bought decades before for maybe $30,000. There was no tax on the gain. THEN - the property dropped in assessed value using the crash. We sold it for maybe $200,000, a loss of $100,000 in value. The amazing thing was we got to write-off the loss on our taxes!

Essentially, the hypothetical gain was tax free, but the hypothetical loss was tax deductible. It was exactly like conjuring money out of thin air.

Bump for more retirement stories

I'm biting the bullet and buying a retirement home an hour north of town, a few years before I think I'll be able to retire. Does that count?

Yes, r370, that sounds fantastic.

Count as what, R370?

Count as a retirement story I assume.

I know, but I like to count.

So, the details on the retirement home thing.... Housing prices and property taxes are skyrocketing in my city, with my home now worth 33% more than it was worth at the peak of the housing bubble in 2008, and with new property tax levies adding even more. I'm fine for now but I'm worried about costs continuing to climb when I'm on a fixed income. And I'm worried about having so much of my net worth tied up in a single asset, particularly an asset like a home. It's not like I can carve off 10% of my home and sell it to get additional income. (Yes, I know about reverse mortgages but I also know that many of them are scams and I don't think that even a good one would be a particularly good deal in my case.)

So I went looking for a retirement home and found one an hour north of town, on a riverbank (high bank, so not in the flood plain). It's a good neighborhood, a well-maintained home, definitely not a fixer-upper, although I will have to install a new roof, about 40% of the cost of my current home, and with lower property and sales taxes in that community. It's still close enough to town to take advantage of the opportunities in a big city, but far enough away that I have the peace and quiet of a small town.

I'll use it as a weekend getaway and vacation home for the next few years and at some point I'll pull the plug, sell my primary home, and move to the retirement home permanently, paying off the mortgage on the retirement home at that time.

The only question I had was whether I should sell the primary home or rent it out. In running the numbers, I don't think that renting it makes a lot of sense. By the time you consider upkeep costs, homeowner's insurance, property taxes, paying a rental agent, etc., the amount I would pull in annually is less than half what I would expect from selling the house and investing that money in various mutual funds.

R375: I think you're right about selling it especially when you factor in the amount of time you'd have to put into managing the rental in addition to the other costs.

My partner and I did a similar thing years ago - bought a weekend house with the idea that it might become our retirement house someday. But after 15 years, we got somewhat tired of dividing our time between two homes, and we also decided we didn't see ourselves retiring where the weekend house was. So we sold the house and pocketed all the equity money we had built up. NOw we are starting to look at where we really want to retire when that time finally comes (maybe 7 or 10 years down the road.)

I will never "retire." What does that even MEAN? Retire from a "job" that you hated so you can do...what? What if you love what you do? And can keep doing it for as long as you can?

I think all that "I will now travel and paint on the banks of the Seine and enjoy the fruits of my labor" would get old real quick. A long vacation now and then is soul-enriching. But a lifetime of that? No thanks. If one is just taking up space on the planet, what is the fun in that? A life of service and productivity are where its at, at least for me. I have found that most people who said they were "retired" were about as interesting as a bag of hair. To each his own, of course. I intend to "shift courses" for my third act (some years away) and continue to challenge myself, to re-invent myself. To LIVE. As long as I am healthy, that is.

Inspiring, R377. Well stated and makes sense. Good for you.

R377, with all due respect, that's great for you and I'm delighted that you're taking an approach that works for you and gives you great satisfaction. That said, can you see that not everyone feels the same way and that their choices are equally valid? I don't hate my job but I am ready for a change, whether that be travel, volunteering, taking on some part-time work, or just sitting by the banks of a river and fishing all day. And if that makes me "as interesting as a bag of hair," then so be it.

Old people are boring no matter what they do. Who would you rather get drunk with, Henry Kissinger or Colto?

R377, many of us won't have that option. Workplaces are not hospitable to seniors. We will be forced out and reinvention is difficult at 65+

There are also people whose profession is more physically demanding, where continuing to work in that profession isn't really an option.

And I would argue that most people don’t like their job and would choose to spend their time doing something else if they could - which may be productive but doesn’t require the misery and dehumanization of your average corporate job.

I will have NO problem doing absolutely nothing when I retire! 19 years to go!

16 years to go - They can’t go fast enough. Of course, assuming I live that long. But the hope of not working this horrible job some day is what gets me through the day. Just trying to save as much as possible so I can one day be free to actually enjoy life and wake up looking forward to the day not dreading it.

I just I will be let go from my job before then. I'm 48 and the company I work for is very young (my direct boss is only 30, the CEO is 34. Ugh). When I was hired they put me through a very elaborate screening process involving personality and IQ testing. I was told they invest a lot of time and money in their employees so they want to be sure they'll stick around long term (the tests alone were a couple thousand $). So that gave me hope but honestly I can't imagine them wanting to keep a 60 year old on when they're in their 40s.

^^I just hope I don't get let go I meant

Yeah - I think I’m transitioning to the “I’m just grateful to have a job” mentality. I have no faith in any employer to commit to any long-term stability. Anything could happen to the company - which has nothing to do with a persons job performance - and it’s gone in a flash. Always planning for it - which is why I try to live below my means as much as possible.

I retired at 62.5, after 40 years as an RN. My last job was as a case manager for a hideous, corrupt insurance company that rhymes with "met ya" which was unbearably stressful and challenged every legal and ethical standard I had known. And for the final two years I worked from home! Friends kept telling me how lucky I was to have a home based job; what they didn't know was that this hideous outfit had monitoring systems that outdid 1984's Big Brother: you had to be logged into the system promptly at 8 am (they checked!), had ridiculous quotas you had to meet, which completely hampered your relationships with patients on your caseload. I had a patient with terminal lung cancer who I had built up a real rapport with, and was constantly having to cut him off to attend some stupid mandatory cyber meeting or one of the 5 or 6 mandatory "classes" we had to take every month. It was GHASTLY. They also could (and did!) eavesdrop on every phone call you made; the day our "manager" who was twenty years my junior, called me and played back an audio screen shot of a call I had made to a patient, with "suggestions" for what I could have said "better", I knew I was DONE.

The only thing that was holding me back was my mortgage; I had a payoff balance of only $20K. I ran some numbers and quickly decided that it wouldn't kill me to withdraw the cash and pay off the house, which I did. I do not have NEAR the amount of money, far less than the hundreds of thousands and millions that some in this thread describe. However, I am single, my car is paid off, I had about $10K in liquid savings which I never touch, and I have ZERO credit card debt. Now, five and a half years down the line, I have never looked back. My rollover IRA and Roth have a few more years to grow before I will be forced to tap into them. I do not live austerely by any means: I have a house full of books, music, movies, a piano, and all kinds of things I love that make up my little house.

Looking back, the biggest hurdle I had to overcome was psychological: for a time I had this feeling that I "should be doing something", like volunteering at food bank or an animal shelter. These are things I did not do prior to retirement, but it was hard to shed the guilty feeling I had at first. I finally came to realize that there was nothing wrong with the fact that every day was a clean slate, with nothing on it, except whatever I might want feel like doing. And I also realized that, after forty years of nursing, this period of my life is meant to be a period of rest and self care. So I think the secret, if there is one, of happy retirement, is to do exactly what you want on any given day. I read 300 books a year (thank you local library!), see past and current films (again, thank you library and nearby university film series!), see friends occasionally for lunch, do a little acting in community theater (although I appear to be aging out pretty rapidly), play much love show tunes on my piano, buy myself plants and flowers, do a modicum of housework, dick around on the computer, stay up late, take naps, send cards and generous checks to my niece and nephew in Florida, vote. I have never felt like there are lots of empty hours to fill. I do not feel guilty about watching too many episodes of Dr Phil or old episodes of THE FUGITIVE on MeTV. When I wake up and before going to sleep every single day I try to practice gratitude for everything I have, especially how that I am beginning to hear about friends and classmates that are diagnosed and/or struggling with serious illnesses or conditions. I try to actively remember as many details of my past life as I can, especially with regard to the many dear friends I lost to AIDS in the early 80s. If I wanted to take a Viking River Cruise down the Danube or whatever, I could afford to; however I am perfectly happy watching the commercial that comes on before the next episode of VICTORIA. I have time to think and am as happy as I will ever be.

The biggest adjustment

Thank you r389 for a thoughtful post. That is the goal - to choose every day what will make you happy. One thing I wonder is how to get past fear of unknown expenses wiping me out. I’m 10+ years away and doing some saving - but I fear I will never have “enough “ to stave off the worry of running out of money. I guess SS is a guaranteed income that will pay for rent and basic food. Hopefully Medicare can cover most health care.

I'm horrible with money. When my mom passed and I inherited her modest estate ($200k liquid), I blew through it in two years. And I didn't do anything illicit with it like drugs, gambling or rentboys. I should have put a nice down payment on a house, but didn't . I didn't even buy a car. I honestly can't account for what I did with the money other than start a failed business. Thank God my husband handles our financial affairs now, I'd probably be living under a bridge somewhere.

... you know what kind of RICH they call that R391?

Yes and I'm not

R389 I like you descriptions of your days. I am wrapping up my 1st year of retirement. it took a while but I am getting more comfortable with less purpose driven life, at least as regards to gauging oneself to the world of work. Reading is new to me since college and not nearly 300/yr but maybe 100-150 /year. Its my insomnia medicine and I look forward to nighttime crawling into bed with my latest book. It used to be the TV that would lull me to sleep. I have not had it turned on since the Super Bowl. Our money account is substantial enough to safely net a reasonable yearly income. I thought travel would be a bigger part of the picture, but am much less inclined to deal with the hassles of such travel these days.

Thank you, R389, for that lovely post. And congratulations to you for having found at least one road to happiness.

The one thing holding me back from an early retirement right now is health care. I'm overweight and I have a couple of preexisting conditions (nothing serious but, let's face it, I'm a lousy risk that no insurance company wants). If the ACA survives, I can probably retire in a year or two. If it doesn't, I'm working until Medicare kicks in.

It's only a difference of 4 or 5 years but I'm finding that as it's getting closer I'm getting a bit antsier, a bit less willing to put up with the bullshit in my life, a bit more willing to say fuck it all and retire.

R389 here - thanks for the nice words, everyone.

I should have made the point that I turned 63 just a few weeks after I retired. I benefitted ENORMOUSLY from Obamacare at that time; since my only income was Social Security, I was eligible for the federal supplement. People don't believe me, but I swear this is true: My first year on Obamacare, I signed up for a "silver" program with Coventry with monthly premiums of $32/month. It was as good a policy as I had had through work. The next year the premiums increased to $37/month. The third year they were going to zoom to $122/month, however I turned 65 in August and became eligible for Medicare. I now have Medicare and a Medicare "advantage" plan, the AARP plan through United Health Care. It's been great. I take two meds, a BP pill and a statin, both of which are zero copay through their mail order provider. It also allows an annual physical with routine lab work for zero copay.

And FWIW, I'm overweight too, but that's necessarily always a bad thing. My A1C and cholesterol are good and BP is in normal range. I was never a smoker, so I'm lucky there. More to be grateful for.

one more thing R389, so they don't look at your IRA or Roth contributions in determining your supplement qualifications on Obamacare?

They did not. All they asked for was income, which I reported honestly. Once I quit work I was not making any contributions to the IRA or Roth, and my sole income was from Social Security. They didn't even ask for personal savings. Maybe it has changed since then, but I don't think so.

[quote] R382: There are also people whose profession is more physically demanding, where continuing to work in that profession isn't really an option.

My brother and I have sedentary jobs - at a desk mostly at different companies. Once we reached 50, they didn’t want us, either. Plus, my attitude has become “nobody is going to die if this takes a little longer”, and companies really don’t care for that.

[quote] R386: I'm 48 and the company I work for is very young (my direct boss is only 30, the CEO is 34. Ugh).

I interviewed with a company once, and spoke to two guys. Both were at least 400 lbs. I quickly declined. I couldn't imagine going out to lunch with those guys.

R389, sounds like you opted for SS at 62 which would mean a smaller amount? I'm guessing you calculated it was advantageous to take the smaller SS amount at an earlier age so you could leave your IRA/401K to grow a few more years? I'm curious, because I'm considering the same route and one retirement calculator gives me better odds (of my retirement stash to not run out) if I go this way. It was a surprise because I had always thought waiting as long as possible to receive the maximum SS amount was a no-brainer.

I am doing the opposite of R389 , drawing on IRA and waiting until 67 to draw SS. but could change if market begins to tank. I am 61. I almost think its a wash as I don't plan to live past 80, but my spouse needs considerations as well

That's an interesting question and there is no single correct answer. I ran the numbers for Social Security at age 62, 67, and 70. What I found was that age 78 was the break-even point between 62 and 67. If I lived past 78, then retiring at age 67 gave me more money, overall. And 82 was the break-even point between 67 and 70. If I lived past that, then retiring at age 70 gave me more money, overall.

I still haven't made up my mind on that.

R389 here; I realized it was against every principle of Suze Orman to take SS at 62 (actually it was closer to 63) but it was worth it to me. That job was killing me and I literally would not have lasted. Once the house was paid off, I found I could manage pretty comfortably on SS alone, which I continue to do to this day. This is where no credit card debt and a paid off car come in as well. Since 2013, I have only had to dip into my liquid savings once or twice, and I replace it as soon as I can. I realize this is not the norm but it worked for me; I live in the the Midwest, property taxes are reasonable enough and my SS was above average. At 65 they start deducting for Medicare so it was even more prior to that. I keep $8-10K in liquid savings for emergencies and am very fortunate that I haven't had to dip into it much (new tires for the car, redid the backyard patio). I don't live lavishly - like one of the posters above said, travel holds no charm for me. I traveled enough in my younger days and agree that the hassle and risk now isn't worth it. But I don't have to scrimp to get by either - I see plays, films, have lunches/dinners out, that kind of thing. I did have a big time amazon habit during my working years, which is how I accumulated so many books, CDs and DVDs, but I have found that my local public library is really fast getting current requests filled. Overall, I've been lucky. I really feel that the two most important factors for successful retirement are zero credit card debt and a paid off mortgage. I bought my house when I was 53, back in 2003 - quickly refinanced from a 30 to a 15 yr, and then aggressively made as close to double payments while I could. I realize everyone's situation is different, but this has worked for me and I do not regret leaving the work force for one second.

R404: Again, good points. I am younger than you are, 57, work a seasonal job, but ready to work part-time. THE biggest challenge for me is even though I'm fine now and have done the prudent hard work, will it be enough? I have a lot in common with your circumstances, and when you mention travel, that, too, is a huge issue for me. Travel is a pleasure/luxury, but it is also an expense and a hassle. I suspect I'll still travel a little within the country because I'm not 110, but the planning, airports, sardine-like seats, expenses, time zones...all of it makes this eldergay pause.

R389, how does a RN "work from home"?

As a case manager for an insurance company, R406; at least that's what he said in his post.

That's exactly right, R407. I had a caseload of about 40-50 insured patients and it was my job to contact them on a regular basis to make sure they were compliant with treatment, using the benefits they were entitled to correctly, and most importantly, (at least from my perspective) was to answer questions, educate, and provide moral support in (often) very challenging situations - patients facing complex and difficult courses of treatment as well as several terminal/end of life type situations.

Throughout my career I considered myself a very good RN and a good communicator. I had no trouble talking to anyone about anything, and tried to be the kind of down to earth, no bullshit nurse who would give patients the straight story , but in a measured and empathic manner. Patients and family members always responded positively to me. However I learned quickly and to my utter dismay that empathy was not a priority on "met ya's" list. I was often required to go through scripted "algorithm" type questions that I could not deviate from, some of which I found awkward, overly intrusive and even offensive. As I said upthread, the constant online "meetings" and mandatory online "classes" ate up a lot of time and robbed us of any type of flexibility, independence and judgment. We were also required to enter all kinds of data that primarily had to do with billing. I could write a book about how horrible it was. It was the worst job I ever had, bar none. Shortly after I resigned, there was a mass layoff of RNs in my department.

[quote] R408: ...and tried to be the kind of down to earth, no bullshit nurse who would give patients the straight story , but in a measured and empathic manner.

R408 = Nurse Jackie, minus the drug problem

R408, reading your posts made me so sad -- and so disgusted at "met ya" -- because you seem like just the kind of case manager that your patients needed. I know that if I were dealing with a large insurance company, I would want someone like you on the other end of the phone.

So, R408, I"m surprised that working in the health field, your company didn't give you a pension or medical coverage after retirement?

I also work as a Case Manager for a huge HMO but I have a pension and there will be Medical coverage when I turn 65. I plan to retire this year, but I'll probably pay COBRA--which is $670 a month-- until I turn 65 next year..

I still have $80,000 left to pay on my mortgage. I am still debating whether I should pay it off. I honestly don't want to live in this house forever but I can't find a house in the same neighborhood for lower, everything has gone up exponentially. That would mean I need to work longer which I don't want to. Or I could take a lump sum of my pension instead of a monthly annuity and use part of it to pay it off. I can't decide what to do. I need to speak with a financial counselor but its' hard to find an honest and good one who doesn't want to sell you something.

No pension - the HMO I had the longest tenure with got sold - to Coventry - and basically went belly up. The large hospital systems I worked for in the 80s and 90s had 401K plans but no pensions. Like most nurses, I entered the corporate world when I was in my mid 40s - couldn't run those halls any more - and I do collect a very small pension from AON, which sold the work comp company I worked for in the early 2000s. You're lucky to have it, and in my experience you are the exception to the rule in the health care field. (just a guess: are you in CA?)

I'm no financial genius, but I would offer you two pieces of advice: 1. talk to an insurance broker and see if you can't do better than $670/month, which seems inordinately high to me. 2. If you really do not want to live in your house forever, sell it now, esp if everything has "gone up exponentially" - but it's a little confusing, since you seem to want to stay in the same neighborhood? Maybe take a second look at the house you have and pay it off over the next two years - take $40K out this year and slap into onto your principal and do the same in 2019. Or do it in three equal increments, which really reduces your tax burden.

Everyone's situation is different - all I know is that is paid off mortgage is an enormous relief and advantage, even if you eventually decide to sell your house. When talking to a financial adviser, I would let them know that paying off your mortgage is a high priority and then gauge their reaction. It sounds like you will have assets that can continue to grow until you have to tap into them at 70 1/2. Best of luck, whatever you decide -

thanks for the advice, R389 and yes, I live in California.

R411, can’t you sell your existing place to fund the purchase of a new place? Or are other places that much more?

R412, when I went to work for Coventry Healthcare and heard they were self-insured, I though I’d be getting the gold standard in healthcare.

Just the opposite. They were the worst. Every employee who had a spouse with healthcare got their insurance through their spouse. I often heard my twice-over manager yelling into the phone with the insurace people to get coverage for his cancer treatment. I had to quit to get coverage for a illness I had. They’re awful people and the very reason we need Obamacare. I would never hire them for anything.

Bump. This was a good topic.

Re-Bump. hello??

They are all talked out, epecially R389. His writings were long and un-edited for brevity and readability!

I'll turn 60 later this year and I could potentially retire any time. There are three things I'm waiting for, though:

1. The minimum age for claiming Social Security, age 62. It's not that I expect to start claiming Social Security at that time but that I'd like to have it as an option, a back-up plan, should I need it.

2. Seeing if the ACA survives. I'm overweight, with a bum knee, and I have a pre-existing condition (a predisposition to colon cancer, which requires more frequent monitoring). There isn't an insurance company out there that would be interested in me. If the ACA survives, I'll be okay, as it's got a pretty strong marketplace in my state. If it doesn't, I'm screwed and I'd have to keep working until Medicare kicks in.

3. Waiting for the coming market correction. If it turns into another 2007/2008, I'd rather be working while that's going on. If it's just a more normal 10-20% correction, I'll be fine.

On the subject of the coming market correction, is anyone retired or close to retirement doing anything to prepare for that or is it business as usual because you cannot predict markets with any degree of accuracy?

I am 51 and on track to retire at 67. Most of my money is in real estate assets and my 401K. I think I will sell my primary residence in NY and buy a condo in VT and one on the beach in FL, and will have a significant amount of money leftover from the NY sale. I will live in FL from September - March, thereby qualifying as a full-time FL resident and not have to pay income taxes, and rent it out as a vacation rental from April - August. I will spend that time in VT, and rent out the VT place during the ski season. I won't count on the rentals as guaranteed income, but it should cover the taxes and maintenance.

Oh, please. Joe Biden is the old uncle you look forward to seeing at the Wake for grandpa, because he tells the best stories, he comforts, he empathies, and he makes people feel better. He's already run for President three times. He is mistaking his popularity for endorsements to higher office. Joe reached the top level of his competencies when he was VP. He's an old style, deal making hack. In the worst sense of the words.

Russian troll @ R422, you appear to be on the wrong thread.

R422, what's going on??!!

R420, I sold off more today. The market will go bonkers when Trump is removed from office. Then, at some point, as long as Pence isn’t touched by the removal, the market will realize that they get Pence, and it will shoot higher still.

I think Trump will fight to the last drop of blood of the fools around him. The time between the inevitability of his removal, and when he is gone for good, matters. The longer the time duration, the worse it will be for stocks.

So, I was invested very aggressively, but now am less so.

I almost re-balanced my entire portfolio out of stocks and into something severely conservative around the Trump election because I thought the market would tank. Then it went up almost 20%.

R422 is, indeed, a Russian troll. Nice to see that they've come to Datalounge. Wonder how they found us? Probably all the gay Russians looking for rich American boyfriends.

Me, too, R426, I was surprise the market didn’t collapse then. Live and learn, I guess. I write in R425 based on this:

Trump is a short timer. That’s not a difficult prediction to make. For a million reasons, take your pick, but never let your political feelings influence what you think will happen. I make this prediction based on how I see Mueller progressing and on Trump’s character. Trump is dirty, and stupid. Mueller will find it. After the midterms, if Trump lasts that long, things will go down faster than heretofore.

I have sold recently because the market is at records. I was invested extremely aggressively. I have enough, barely, to live well as it is. “More” is always nice, but I don’t really need to make more; while I really don’t want to lose a large sum, so it makes sense for me to switch to more conservative investments.

But what are conservative investments when bonds are already falling too? Is it a matter of investing in things that will go down less (i.e, bonds )when the market starts tanking? Unfortunately the 401k only has mutual funds so I can’t like ladder CDs. Also is it better to invest in Roth 401k ( my work offers both the Roth 401k and the traditional pretax 401k)? I’ve got money in both 401k Roth, 401k traditional a Roth IRA and some taxable stuff in a mutual. Just been saving forever but not sure what to do now hat I’m thinking of retirement. I just turned 55 and will also have a small pension $50k if I leave next year but more if I stay longer...

R429, the Evening Punctuationist would slap you viciously if he sees your post!

But to your question about a Roth 401k vs. a traditional 401k. Bear in mind I should know more about your situation before giving advice; so just generally, I think that taxes are at record lows right now, and will be higher later. That means it might not be the best idea to defer taxes with be traditional 401k, when the ROTH 401k is available.

Secondly, I personally think it a good idea to use both the traditional pre-tax 401k and the ROTH 401k. It’s a kind of “tax diversification”. So, you might want to deposit into whichever has the lower balance.

Thirdly, it depends on your taxable income now, vs. anticipated taxable income in retirement.

If you want the short answer, I’d just take the ROTH 401k.

[quote]But what are conservative investments when bonds are already falling too? Is it a matter of investing in things that will go down less (i.e, bonds )when the market starts tanking?

I think so, unless someone has a better idea. You can also invest in a money market fund, which is about as low-risk as you can get, but also very low return.

If you don't need to withdraw your money anytime soon, then the usual advice of staying the course holds true. It's only people already retired or soon to be retired who will potentially have some painful choices to make.

Assume you retire in your 60's and no longer have an income except social security. If you only have modest investments, it is unlikely that money will last you 25-30 years without taking some stock market risk. Putting everything in bonds and money markets cannot support steady withdraws and inflation over an extended period.

There are Monte Carlo simulators which you can use to show what various investment strategies will provide steady income. You can run simulations on various combinations of stocks, bonds, money markets, etc. I've linked to a good one. You don't need to even enter specific stocks and bonds - just use broad asset categories.

As bleak as the market looks now, you have to remind yourself that everything goes in cycles. If you have 3 to 5 years, it is reasonable to assume there will be a strong market rebound after a major correction.

It looks like the bulk of my retirement funding will come from my home. Seattle prices right now are insane. My home is worth over three times what I paid for it, 30% more now than its value at the peak of the housing bubble in 2007.

A colleague of mine recently put in an offer on a home north of Seattle, far enough away that the prices were a bit more reasonable, or so he assumed. The asking price was $650k. He knew that there were multiple offers, so he offered $715k. The winning bid was $815k. He's now reassessing whether he wants to purchase a home.

Of course, anything can happen: if this is a bubble and it pops, if there is a recession, etc., then the housing prices could come down as quickly as they went up.

R433, can you explain what you mean that the bulk of your retirement income will come from your home? I know some people have built up a lot of equity in their homes but have little or no savings or investments. Is the idea that you do a reverse mortgage while you still live in the house? (Not sure I totally understand reverse mortgages.) Or do you plan to sell your high value home, take whatever profits there are after paying off mortgages, closing costs, debt, moving expenses, etc., then relocate to a less expensive part of the country?

Thanks. Just trying to understand what options there are out there.

R434

I'm not R433 but reverse mortgages are often less than optimal. You're locked into the place, you still have to pay for upkeep and repairs and insurance and taxes and even if it's not a direct financial hit, what do you do if the neighborhood goes to hell quite apart from when the economy goes to hell? If you're living somewhere where prices are never going down (much...) like the Upper East Side or Atherton or Hawaii Kai, chances are you're not looking at a reverse mortgage anyway. But if you were living in Detroit in the 80's or '90's in YOUR 70's or 80's with a reverse mortgage or in Houston or on Florida's Gulf Coast last Fall, you'd be stuck there. You might be underwater literally, not just figuratively or financially.

The alternative, to sell the place and use the proceeds to buy something else, might or might not work. We'd be hard-pressed to leave where we live now, even though it's one of the four of five most expensive metros in the US. It's home and most everyone we know is here. Even if you downsize to something smaller in the same area, you have to go a long way down in terms of size, location, or amenities to save much money in the Northeast. I'm not gonna start flipping houses or buy a fixer-upper when I'm looking at retirement. Move somewhere cheaper? There's a reason it's cheaper: people aren't able or willing to pay as much to live there. I look at all the listicles showing the cheapest places to live in retirement and think, do I really want to live in Arizona or Arkansas or Alabama? The cheaper places tend - not always, but tend - to be the less enlightened places, too. Not all the costs are financial.

The sad truth is that you have to start saving early and learn how to enjoy your life in less expensive ways. Go without a latte every day and at the end of a year you have a thousand dollars. Bring your lunch to work instead of buying it every day and you'll save two thousand. That's a fairly painless way to save $3,000 annually. If you spend it on a nice vacation you'll have some great memories. If it goes in your 401K every year and makes 5-6% interest tax free for thirty or forty years, you'll have some great options.

I'm curious, for those who have retired, how they reached their decision. Did you reach a savings goal? Was it "forced" (I.e. Lost your job)? Was it on the advice on a Financial Advisor? There are so many unknowns in this equation that I wonder how people finally reach their decision.

Turned 50 this year. I have about $750k saved, but also own a small biz that could probably sell for $250k. Have paid off my mortgage, but I'd be looking to relocate to a different state for retirement. I'm not *quite* ready to call it a day, but turning 50 has really made me start to think about enjoying more of life. I just find the question of "when" to be a little overwhelming.

R436, I retired when I hit age 56 and had 20 years of service in the federal government. My pension is small but I have good health care and my spouse and I saved a lot of money while working to be able to retire early. The key for me was following the retire early and bogleheads website to learn how to invest and to be comfortable with withdraw strategies. Read, study and learn. You won't get ripped off by financial planners that way.

Thanks R437. I'm pretty comfortable that I'm on a good path financially, I'm set up with my financial advisor for a number of years now, I maxed contributions to my 401k when I had that option, etc. But I was curious to hear more about the mindset of retirement, and what triggered the act for people. The discussion on this thread has steered more in the direction of financials (which is informative, I'm not complaining), but I'm hoping to learn more about people's experiences or expectations in general. How they knew they were ready for it.

(And maybe for most of you, it's been a purely financial decision... and that's fine. I'm just trying to understand what everyone's drivers have been.)

I keep believing that where you live and how frugal you're willing to be are two of the components of one's decision. Personal savings is the component that's a wildcard

At 55, I had an acceptable amount--given that I'm not in an expensive state. My company was and is in the process of a Draconian mindset, so I escaped just before 56. I'm 57 and wished I could have held out a little longer, but my sanity was at stake. I am on balance happier and don't consider it a hardship to shop at Aldi, wear a sweatshirt in the house to keep warm in order to save on heat, etc., but it does suck to feel beholden to the stock market or to question myself if I really need to eat out here, or buy a new pair of running shoes there. I'm working a seasonal job now, and am positioning myself to work part-time somewhere. That will be the fix, I hope.

Whenever these sorts of threads pop up, I often lament the mostly mainstream financial/retirement/lifestyle articles that always seem to be cookie cutters for couples or wealthy large city dwellers. It's how many of the online calculators work too. I think we need to focus on our own circumstances mostly, and if we can get outside helpful advice here and there, then use that also.

I finished my taxes the other day and my accountant told me that all I'll have to live on when I retire in a few years (at 65) is $100K a year and he doubted I could do that.

Obviously most people do. But when he went over the numbers he showed me that I'd have to change my lifestyle, a lot, to get there. I guess I'll have no choice, since that's all the money I'll have -- I own nothing, so I'll have to keep paying rent, plus taxes on that 100K, and since I live in NYC, it actually is going to mean a lot of changes.

[quote]R433, can you explain what you mean that the bulk of your retirement income will come from your home?

About 40% of my current net worth comes from the equity in my home. Given the insane prices and property taxes in Seattle, my current plan is to sell my home and move away from the city to a lower cost neighborhood. I'm not a big fan of reverse mortgages. I know they can work for some scenarios but I'd rather just sell my home and move someplace cheaper.

I've done some pretty major work on my home so I should be able to keep about 2/3 of the sale proceeds untaxed. The mortgage is down to about $100k, and will be even less in a few years when I carry out this action, so I should net a pretty big payoff, more than enough to buy another home and still have $200k to $300k left to invest for a more stable retirement.

Ouch, R440. Yeah, I can see that would be an issue. A lot of people do have to change their lifestyles pretty dramatically when they retire. It's a matter of deciding what's important to you and figuring out what tradeoffs you have to make.

[quote]The alternative, to sell the place and use the proceeds to buy something else, might or might not work.

It really depends on the individual. I have no doubt it will work in my case because I've lived in over a dozen different cities and I'm not wedded to the one in which I currently reside (Seattle). I'm very much a homebody and I don't go out all that much, anyway, so the stereotypical "home in the country" will suit me just fine.

In my case, I'm aiming for about an hour away from downtown, close enough to do the things I want to do but far enough away that the prices will be less than half what I'd pay for the in-city option, as well as offering lower property tax rates, lower utility rates, and a generally lower cost of living.

Since Washington has no income tax, the taxation on my retirement income will be lower and so I don't need to move to the [italic]really[/italic] low-cost options in, shall we say, less desirable states. All in all, I'm happy with my options and my choices right now. We'll see how it goes after I retire.

R440 , you can’t live on $100,000 a year or is $100,000 is all you’ll have to live on after you retire?

How can you not live on $100,000 a year? Most people don’t live on that when they’re working.

He said he lives in NYC, r444; I can easily see why $100k (before taxes, so it's really less than that) would be problematic in the city.

He should move to God’s waiting room down in FL, no state income tax and live like a king!

Well, that goes to the point that several people have made on this thread: if you're settled into your current home/city, if you have friends and family there, if you love the entertainment opportunities, love the city, love your apartment/condo/home, love the nightlife, etc., then picking up and leaving that all behind is almost unthinkable, even if it would be much more affordable.

R440, let me help, if I can.

If you have no salary or wages, you will not pay 6.75% in SS & Medicare tax on your income.

If your income is from investments and you hold each of them for over a year, the Fed tax is only 15%. If you have stock holdings, it becomes easy with some experience on juggling them around so you don’t have to sell a lot in less than a year.

If you can keep your income, after deductions, to less than about $36,000; you pay no Fed tax on capital gains at all. I paid no Fed tax at all for 2017.

You, ostensibly, need not save for retirement, that’s another 10% or whatever in savings.

There are other, new expenses. I used to get various discounts through my employer for things like car insurance and such. I pay about $300 a month for health insurance.

Is that any help? If it is, then you should find another accountant. He should have told you this.

r440, what's your rent in NY?

Thank you R448 -- yes, helpful. I'm not used to the idea of having to slim down like this -- but since I'll have no choice, I will. And maybe, indeed, I should find another accountant....

The rent is $5K a month. Obviously I am going to have to move to a smaller, cheaper place in a different neighborhood. Can't afford to buy anymore.

It is hard to believe for some, but R450 is right. New York City residents have Federal (25% on taxable incomes between $38,000 and $92,000), state (4% to almost 9%, and city (3% to 4% approximately) income taxes to pay. When 60% and more (utilities, insurance) of that $100K goes towards the roof over your head, there's not a lot left after taxes and rent to spend on anything else. Not much at all, in fact.

If you can make it there, you'll make it anywhere. But it'll cost you.

Another question for you retirees: how have you estimated the number of years to save for? Say I'm planning to retire at 65, how long should my retirement savings last? Do you actually do life expectancy calculators, or are you just benchmarking based on a general number of years (15 or 20 for instance)?

Use the "worst" case scenario- that you'll live a long time! Do what-ifs based on various ages of death to see what you would need to save for each death age, and then evaluate the likelihood that you will live to those ages based on life expectancy tables and your own bio-family ages of death.

R453

So right. The financial planners/investment vehicle salespeople blather on about the likelihood you'll live to be 95 when for most of us (and maybe more of us here) that's a fairly remote possibility. Aim high, sure, but what's the point of beggaring yourself now for years you're not all that likely to see?

I plan on living to age 100, because I don’t want to become impoverished at age 95 and live another 5 years. Medical advances are chugging along. Who knows how long I’ll live? They’re working on all the wrong stuff. Focusing on length, instead of quality.

Popa lived to 90 and his sisters were a little older, and miserable about it, at the end. I’m thinking of maybe 80 for me.

I created a spreadsheet to figure it out for myself. The big thing were these guesses:

Future tax rate

Inflation rate

Income return

Life years to live

Mega disaster

Black swan. Will my neighbor sue me and take everything? Will I become paralyzed in a mountain bike accident, etc.?

I should add, I retired 7 years ago, and so far, so good. I have a feeling... that soon... le deluge.

I think I have enough money unevenly divided between Roth IRA,Roth 401k, traditional 401k and taxable accounts to retire. I’d like to know how to start drawing when I actually do retire. Any suggestions on a book that might deal with this? I’d rather not pay a financial planner if I don’t have to.

Check the forums at bogleheads.org. Some of the best investing advice around and they talk about everything.

Before you choose when and how to start withdrawing from Social Security, I suggest paying a financial planner for advice. The decision is momentous, and once made, cannot be changed for life. A wrong decision can cost you thousands.

Honestly, when I calculate my retirement savings, I don't even include Social Security. If it's still there in 15 or 20 years when I start to collect, it's just a bonus.

Retirement = the end of chronic fatigue.

[quote]Another question for you retirees: how have you estimated the number of years to save for?

I look at three things:

1. My ancestors. If all of my ancestors lived to be over 100, I'd better plan for longer rather than shorter.

2. My general health and physical condition. If I've been overweight all of my life and I have a family history of susceptibility to Parkinson's or colon cancer, to give two possibilities in my own family history, I doubt I need to plan to live to 100.

3. How much do I think I'll need to pull out of my principal every year? If I have sufficient principal that I can live off of my dividends and increased value every year, such that my principal remains the same, I'm in much better shape than if I have to withdraw 10% of my principal every year.

I mostly agree with r462.

I am planning on 100 as a worst case scenario. I do not want to become impoverished at 95.

I see my modern-era family lived from 85 - 90. Since I’m single, I should expect a somewhat lower expectancy. Alternately, there will be medical advances over the next 30 years that might extend my life. Who knows.

Most of my life, I have lived frugally and have modest tastes. I’m a smart consumer and hate over-paying for something, on principle. As an eldergay, I find I pay more for services now, that the younger-me would have simply done myself. I then saved whatever I had left over. That’s how I live. I’m not one to spend everything I have available. I have no dependants (you never have enough money once you have dependants, because there is alwYs someone to give it to.)

So, in retirement, I’m just going to live the same way. It looks like my savings can support that. I’ll review along the way, and revise my spending, if I have to, as time goes by. I do enjoy myself, though. I’m going to London next month, but I’m not going first class.

Agree it’s all about age expectation. I don’t want to work one day more than I need to. Dad and his 4 siblings died before 65 of cancer. I have spent my whole adult life trying to prevent dying before I retire. I’m almost willing to take the risk of running out of money by 78- rather than work until 62 and die within 2-3 years.

My sister is desperate to retire. I’m sad to tell her she could live to 96, easily. She’s the youngest of 7 so I hope she doesn’t get lonely. She has a son. I hope he has lots of kids to keep her company.

R462

1: "Yes" and "No" which isn't much help. Or, of course, you can get hit by a bus. Unexpected stuff does happen. Northwestern Life has a good life expectancy calculator that takes family medical history and your own health/lifestyle into account. Your ancestors who lived to be 100 (if they did) probably weren't exposed to a lot of the carcinogens or toxins or lead in gasoline or water or the nuclear snow we've been eating and breathing and drinking as the ozone layer thins out. On the other hand, people back then did die of things like cholera and typhus, TB, and bacterial infections that have been eliminated by better public health or which can now be treated so there's a tradeoff. And medical expenses go up as we age. More than 28% of all Medicare expenditures are spent during the last six months of patient's lives.

2: Read, as everyone else says, the Bogleheads site to determine both how much you'll need to save and strategies to maximize returns and minimize taxation.

3: Assuming your principal is in an IRA you'll need to withdraw what's called a Minimum Required Distribution every year starting the year you reach age 70 and 6 months because Uncle wants his taxes and you haven't been paying him on it all these years. You can't assume every year after 65/66/67 is going to be a good year in terms of investment returns, either. Like this year, maybe.

My father worked his ass off running his company until he was 68. He had good docs and a good outlook and he died six months after he sold it and retired, leaving my mother two homes, a new Fleetwood Caddy and a restored Studebaker Avanti, a 40 foot Chris-Craft and a lot of money; none of which he got to enjoy like he would have in retirement. What killed him won't likely kill me as quickly because I have a kind of pacemaker/defibrillator that didn't exist back then. But I still have a pacemaker in my chest that needs a new battery every 5 or 6 years meaning I'll be in the hospital for that if nothing else, so I'm at higher risk for infections let alone the progression of the cardiac problems. Better diet, better exercise, and better medical care have staved off the Type 2 diabetes both my parents were diagnosed with in their 50's (and had to treat with insulin injections) for a lot longer - I'm 68, take better care of myself, and I'm keeping it at bay - but chances are I'll still develop it at some point. My maternal grandmother lived to be 96. My mother died of hepatitis at 73: I've seen that there are no givens. Technology can extend our lives but there's a point of diminishing returns - do you really want to live to be 95 with all that money so you can call the Haitian lady in the nursing home "Mama" while she's changing your diaper? Not me.

That doesn't mean you shouldn't plan to accumulate as much as you can in the time you've got, and hang on to as much as you can for as long as you can, but as of 2010 (last census figures) there were 309 million people in the United States and 54,000 people alive age 100 or older. That's 0.0173% of the population and more of them were women (80%) than men (20%.) More people lived to be 95, sure, and died before they reached 100, but those are still pretty long odds. How much do you deny yourself today for a tomorrow you haven't much chance of seeing?

R466, I do indeed have to withdraw a minimum amount every year from my retirement accounts. That does not mean that I have to spend it. I can plow much of it right back into my brokerage account and any subsequent taxes would only be on the capital gains.

[quote]You can't assume every year after 65/66/67 is going to be a good year in terms of investment returns, either.

The strategy for that is to average. I have some pretty good data on a quarter century of investing. I know when it was down, and by how much, and when it was up, and by how much. So average it out; in the bad years, I will likely have to draw down the principal. In the good years, I put money back in.

R467, please note that all withdrawals from tax deferred plans; like 401Ks, 403bs, and pre-tax IRAs, are taxable at regular income tax rates (except rare exceptions). This includes required minimum distributions. Some people will have so much money saved, that their RMDs will be so large, that they will be pushed into a high tax bracket.

You have to figure out your own plan for that, if any. I’ve been drawing-down my 401k with small conversions to a Roth IRA on a yearly basis. I’ve been paying tax on it as I go, but some years, the Fed income tax is low or even 0%, as it was last year due to offsetting deductions.

So, R467, you do indeed need not spend your RMD, but it is subject to income tax. Some people flee to TX, FL, or AZ for the weather but also to save 5% or so on State income tax from higher tax northern states.

That's why I live in Washington. No income tax and lower property taxes than some of those other states (New Hampshire comes to mind).

One other thing to call out: let's say that you live in New York and you've calculated that you need $100k to live your current lifestyle. You need to factor in inflation or you'll find yourself falling behind every year. You can get by with $100k the first year but the second year you'll need $102k, assuming 2% inflation. Twenty years later, that's up to $146k and you'll have had to draw down your principal by a few hundred thousand dollars.

Question: Aside from normal inflation, what are the health expenses that one needs to be concerned about. Once I hit 65, I'll have Medicare (in whatever form it will be in), SS ditto), a small pension, decent (I think ) savings and supplemental health insurance provided by my former employer. I'm in good health and exercise and plan to continue these practices. Still, many articles I read and some older friends ominously threaten that the costs are going to skyrocket for me, and I'd better beware. OK, duly noted, but aside from higher co-pays, for example, what ARE some of these costs that I (and others in similar situations) need to get our heads out of the sand?

I am still in college, but I invested in crypto (Ripple, Neo, cardano) early on and have 750,000 in my portfolio. Waiting for Ripple to be 10 bucks a pop. I have a million of those alone.

R470, my retirement date is 67. I’m born in 1960. Are you sure you can retire at 65?

R471, the only one that I'm aware of, assuming that Republicans don't manage to kill Medicare as they've been trying to do for years, is long-term care.

[quote]my retirement date is 67. I’m born in 1960. Are you sure you can retire at 65?

Pretty sure, yes, R473. At this point, health care is the big unknown that's holding me back from retiring early. If Republicans manage to kill off the ACA, I'll have to hold on until Medicare kicks in at age 75.

[quote]I am still in college, but I invested in crypto (Ripple, Neo, cardano) early on and have 750,000 in my portfolio. Waiting for Ripple to be 10 bucks a pop. I have a million of those alone.

Congratulations on your luck. I hope you're pulling a lot of that money out of crypto and have diversified that portfolio. If so, if you do nothing else for retirement but leave that money alone, you'll be sitting on $3 million in your retirement account in 20 years, assuming an average return of 7.5%.

Doh ... typo in r475: Medicare kicks in at age 65, of course, not 75.

R471, you should have a $2 million umbrella insurance policy, too.

Any investments should be diversified.

[quote] R476: Congratulations on your luck. I hope you're pulling a lot of that money out of crypto and have diversified that portfolio...

I agree on diversification. I would still put a portion in an aggressive mutual fund. I like FOCPX, or FNORX from Fidelity, but decide for yourself. You might do better than 7%, but I think there will be a bear market when Trump leaves office early, so I’m conflicted. I’ve personally sold off some aggressive funds, but I’m an eldergay and can afford to do so.

R325, the Boglehead lez, you are the gem of this thread. Consider signing off your posts in this thread and all financial advice you dispense on DL. I like Boglehead/Vanguard Lez, but call yourself what you fancy.

I'm a Bogleheader too but the forum is cunty and snooty. Your wisdom keeps me going with my vtsax buying.

[quote] Of course, anything can happen: if this is a bubble and it pops, if there is a recession, etc., then the housing prices could come down as quickly as they went up.

2019 and 2020 will be interesting years for residential real estate in high-cost markets. Apart from a possible bubble, the tax reform restriction on SALT and mortgage interest deductions will eliminate the tax benefits of home ownership in those markets.

[quote] The rent is $5K a month. Obviously I am going to have to move to a smaller, cheaper place in a different neighborhood. Can't afford to buy anymore.

$5000 is my entire monthly budget -- mortgage, bills, food, entertainment, etc. -- and I am still working. NYC is just not all that. You really will have to look for a new home. Come to the West Coast.

Question for anyone already retired re: costs for health insurance. I'm retiring soon and my employer does not offer retiree health care benefits. I will be totally relying on Medicare and the supplemental plans. I know I have to pay for Part B but wondering about your experience with Part D (supplement to B) and Part F (for prescriptions). Any advice?

[quote] what surprised you about retirement

The way it keeps getting further away. Under the original rules I'd have been fully retired for years now. If I'm lucky, and Trump and Paul Ryan don't completely gut Social Security, I'll get to retire at 70, maybe.

R483, sit down with an agent and have him explain the difference between a Medicare advantage plan and a supplemental plan. I have AARP Medicare Complete, a zero premium plan. I take 2 meds, lisinopril and a statin, which I get delivered in the mail, cost $0. $10 office co pay, however this plan waives the co pay once a year for a routine annual physical. I've had it since 2013 and have been very satisfied.

R485, why are you taking a statin? Do you have heart disease or is it your numbers?

This should be a separate thread.

[quote]Question for anyone already retired re: costs for health insurance. I'm retiring soon and my employer does not offer retiree health care benefits. I will be totally relying on Medicare and the supplemental plans. I know I have to pay for Part B but wondering about your experience with Part D (supplement to B) and Part F (for prescriptions). Any advice?

Used to work with Medicare, and your question confused me. It's been a few years since I've been in that world, but I don't think my knowledge is outdated.

There is no "Part F", and I'm wondering if you are referring to "Plan F"? There are four Parts to Medicare: Part A (hospital costs), Part B (doctor costs), Part C (Medicare Advantage), and Part D (pharmacy costs).

There are Medigap plans, which are referred to as Plans A through N. Medigap coverage is sold by private insurers to fill in the gaps in the core Medicare coverage (Parts A and B). Each plan design (A, B, C, etc.) reflects a certain set of filed benefits. There were some Medigap plans that covered pharmacy costs, but I believe they stopped offering those plans for new enrollees, once Medicare Part D was introduced.

So to get prescription costs covered you would have to purchase a Medicare Advantage Plan with Part D, or Part D on its own.

So at a high level, the basic options are: (1) enroll in Part A only, (2) enroll in Part A and purchase Parts B and D, (3) enroll in Part A, purchase B, D, and a Medigap Plan, or (4) purchase a Medicare Advantage plan (aka Part C).

Thx R476 Congratulations on your luck. I hope you're pulling a lot of that money out of crypto and have diversified that portfolio. If so, if you do nothing else for retirement but leave that money alone, you'll be sitting on $3 million in your retirement account in 20 years, assuming an average return of 7.5%.

I am keeping a good chunk in. I sold enough to keep me happy. No, it stays in crypto. Blockchain is the future. XRP has already signed w many banks- who are indeed using blockchain. The transfer of money is nano second speed in comparison to banks now. XRP will grow, as will BTC. It is going to be our new currency in a few years- already beginning, really. I buy a lot of stuff using btc from whole foods and other places. It is immediate exchange. In any case, I appreciate your advice. I would never have had the money I have now if I went the old fashioned way. Wall street has already moved toward crypto. They are purposefully oppressing the price right now.

Oh my gosh, r488, how are you getting an average return of 7.5%?

The first paragraph of R488 was quoting the reply from R476. An average return of 7.5% is normal for a balanced portfolio in the stock market.

The rest of r488's reply is, I think, misguided and it is my personal opinion that he is likely to regret his decision to go all in on crypto. We've already seen just how highly volatile that market is, something that I think is unlikely to change anytime soon. He got lucky and rather than accepting that he got lucky and pulling out and diversifying while he's way ahead, he's doubling down. It's a gamble, and a sizable one.

Maybe I'm wrong and his bet will pay off but I think it unlikely, not in the long term. That said, since he says he's still in college, he's got plenty of time to earn his retirement money the old fashioned way if his bet doesn't pay off.

R485 here. I'm 67, never smoked (at least not cigarettes, :) and am mildly overweight. I had never even had a cholesterol check until about 10 years ago, hadn't been to an MD for any reason other than the occasional "once over" employment physicals from time to time. After my parents died, I decided to finally get a decent physical and some lab work. My total came back at 244, although surprisingly my triglycerides were OK at 136 and my HDL was OK too at 51. But the LDL (the so called "bad" cholesterol) was 166 (should be less than 130). So I started on pravastatin, which my doc at the time told me was the most well tolerated statin. I never had any bad side effects, and it lowered my HDL a tad, and brought the total down to 202. But for some reason I could never crack that 200 mark. I had to change MDs when I retired, and she switched me to atorvastatin, which is generic Lipitor. Bingo - my total went down to 163, with everything else well within range. Current thinking seems to be that high triglycerides are the real killer as opposed to HDL. But who the fuck knows? I am not diabetic and have no family history of diabetes, but now they harp on the A1C - mine was 5.7 and I heard her say "pre diabetic." Fuck that shit. My fasting blood sugar was only 110. Lab results are just numbers that fluctuate all the time and can really drive you nuts if you fixate on them. I'm OK with taking the statin, as I have never had any adverse side effects. I also take lisinopril for blood pressure with no problems either. I consider these maintenance type drugs for someone my age (68 next month) and I get them by mail for $0.

Not to prattle on too long, but I think the REAL favor I have done myself is to take a single daily adult aspirin. Many years ago when I was a young nurse, I read about the famous Massachusetts nurse study which touted the benefits of low dose aspirin. I started taking one a day at about age 25 and continue to this day. Aspirin is the gold standard anti inflammatory, and current thinking is that cancers and other conditions begin as inflammatory processes. I have never had the flu in my life, and I can't remember the last time I had a cold. So who the fuck knows?

You're right, though; I guess we should have a thread called "what meds do you take and why?" :) I suspect we have plenty of eldergays around here with plenty of opinions. But I SWEAR by my daily aspirin!!

R491, have you done much research on cholesterol and statins? Are your LDL particles large or small (my doctor wanted me on statins without ordering the test). Did your doctor talk about your ratios and what they mean?

Is it possible your doctor put you on a statin based on you LDL number alone? Half of all people with fatal heart attacks have LDL numbers in the normal range, therefore there is no benefit to taking a statin If the only flag is a high LDL. The only cases where the death rate from heart attacks is lowered by statins is in persons who have heart disease.

Statins do have side effects and the symptoms don't always show up right away.

My doctor admitted she was pushing statins on me to cover her ass in case I had a heart problem later in life. Meanwhile she couldn't be sued if I suffered permanent damage from a statin.

I did some research and decided I would not go on a statin unless I developed heart disease.

Best of luck to you.

Resurrecting this old thread to see how people are handling the increasingly volatile stock market?

All I can say is the delusional people who think a 7.5% return is normal are in for a rude awakening. The same messages were being spread pre-2008. Amazing how people see their portfolio grow and think “this is normal and will continue in perpetuity”. I may have missed some prior gains, but having been on the sidelines all year has been validation of a conservative strategy. I’ve seen too many cycles to not expect a downturn - and soon. As rates go up, the hedge funds, CEOs and investors using free money to prop up their companies are going to be exposed as “emperors without clothes”. And as always, the average Joe investor will get left with the fallout.

On the good news front, conservative investors like myself can finally find decent yields.

I'm not on the verge of retirement, so it's not like I'm looking at my portfolio every day. I have a sense of where things stand. But changes in the market aren't changing my current strategy.

Your question does make me curious though about what indicators people use to make the decision to retire. Is it solely on age? Amount saved? Medicare eligibility? Some other life event (like loss of job)? Personally, I'm a small business owner, so retirement will likely necessitate the sale of my business, so my indicators are (a) getting a qualified purchaser and purchase price for my business; and (2) reaching an approximate number in my portfolio. Also, I'd like to own the business a few more years so I'm comfortable it's viewed as a successful venture (right now I've been at it less than five years).

But no doubt I do look forward to kissing my 60 - 70 hour work weeks goodbye.

I wish some of these cholesterol laden posters would simply go vegan. Their levels will drop within a few weeks. No pills. But nothing is going to keep them from their friend chicken steaks and deep fried twinkies (and twinks).

[quote] Resurrecting this old thread to see how people are handling the increasingly volatile stock market?o

Republican tax reform and deregulation have had none of the advertised positive effect on the economy. A surprise to no one with a brain. Trump has no grasp of economics and everything he has said and done has only hurt. With new Democratic leadership, we will begin to see a correction and a slow move away from market volatility. As long as a madman is at the helm businesses will retrench and save, not reinvest and the economy will not grow.

And all of us will have to work a year or two longer than we'd like.

[quote]All I can say is the delusional people who think a 7.5% return is normal are in for a rude awakening.

I've been investing for over 25 years. The return on my investments over this period has been about 7.5%. What "rude awakening" am I in for?

I've been retired for 5.5 years. We diversified our investments into stocks, bond funds and I-bonds. We also have two smallish pensions.

I'm waiting for a market crash so I can sell out holdings in individual stocks and move the money into stock index funds, so I am fine with the market downturn.

[quote]Your question does make me curious though about what indicators people use to make the decision to retire. Is it solely on age? Amount saved? Medicare eligibility?

I think I've got sufficient resources that I could retire today (at age 60). Personally, I'm waiting for three things:

1. The economic downturn that we're overdue for. I want to see just how badly this will hit me. I'd rather be working when this happens; I'll reexamine my situation when the worst is over.

2. The fate of the ACA. I have a couple of preexisting conditions and I'm overweight. There isn't an insurance company in the world that would be interested in me. If the ACA is killed off, I have to wait for Medicare eligibility.

3. The first year that I'm eligible for Social Security withdrawal. I don't intend to withdraw that early but it's nice to know that it would be available.

So, in two years, I should know more about all three of those and that's when I'll make the decision.