Retirement thoughts/plans/dreams

[summilux]

- Do not spend your capital (assume it will be needed for rainy days, medical emergencies, grand-kids, leaving money to others, etc)
- You have no idea how long you and your significant other are going to live so plan for the worst (that you may live to 100 and beyond)

Based on this, a person would need $1,000,000 in capital/investments to produce $50,000 of income per year before taxes (remember you still need to pay taxes on those IRA and 401k plans that have been growing interest free for all these years)

Not spending any of your capital is a very conservative retirement strategy. More "liberal" ones allow some capital withdrawal. You could potentially outlive your capital of course. Someone once told me that the perfect retirement plan was to live well enough so that your estate's check to the undertaker bounces.

[rec head]

I'm a massage therapist for the past 30 years. It was a side gig during the years I had a day job and now it's part of me working because I love it. See this from my perspective. This is something I totally dig and it pays the bills....for instance.

"Done is done" really? We might be wired differently. I really enjoy earning, just not all consuming.

That is cool. Doing something you love is much different than just doing a job. I love my job now but the fact is that it is probably pretty bad for my health (sleepless nights, toxic exposures.) I want to get out young-ish and healthy-ish. What happens after I retire? Who knows but there will probably be something. I'll need social interaction if nothing else. I've actually thought of getting certified as a massage therapist.

[NYCfixie]

Not spending any of your capital is a very conservative retirement strategy. More "liberal" ones allow some capital withdrawal. You could potentially outlive your capital of course. Someone once told me that the perfect retirement plan was to live well enough so that your estate's check to the undertaker bounces.

My wife wants me to live until 102 because she plans to spontaneously combust on her 100th birthday and take me out with her. If I retire early and live to 102, I need some serious reserves.

[dgaddis]

Man, I can't disagree more. For me personally I finally got to the place where I only need one job and I only do one job. I know plenty of people that are always hustlin'. I respect it but that ain't me.

I see both sides of this coin.

1 job is way less stressful. But it's also way less secure, generally.

My folks both worked white collar jobs for Rockwell for about a decade, their office/plant got purchased by Boeing, a few years later Boeing shut their plant down and moved production elsewhere. The next several years they bounced around from job to job - my dad had a string of bad luck where he took a job with a company and a few months later they got purchased and the new owners shut them down. That happened like four times in three years or something crazy like that.

In my own work as an engineer, in 10yrs I've changed jobs 5 times. One of those because we moved, once because I hated the job and got a way better offer elsewhere for a lot more $$$. The others because I was going to be laid off when work slowed down or we were coming to the end of a project (I always saw the writing on the wall and found something else before I was asked to leave), and I did get laid off when the company decided to shut down our office.

It's that whole putting all your eggs in one basket thing.

Having my wheel business on the side has been really helpful. We've had a little extra money to spend, helped pay some tuition for wife's grad school, and made me slightly less dependent on someone else in an office far away that might decide to lay me off for whatever reason. When our office got shut down, it wasn't because we were losing money - our office was small, but we were always in the black, AND we sent some really big jobs to our larger home office. In fact, when they shut us down, the only two big jobs they were doing were both in our town that they got because of the relationships we had with the local clients. We got shut down because another division of the company had lost tens of millions of dollars on two huge projects (one in NY, one in Australia) and the banks asked the company to do some restructuring, part of which was closing smaller offices.

Anyhow. I don't like relying too much on other people. At the end of the day, The Man doesn't give a damn about me or my family.

[Too Tall]

News Paper Boy
Snow / Lawn service (have mower will travel)
House Painter
Landscaping
School Bus Driver
(Fake) Civil Engineer...don't ask but you should not ride the elevators in building 51 @ NIH
Camp Counselor
Carpenter
Coal Miner
Massage Therapist
Sports Coach
Camps for derranged cyclists
Failed attempt at Cosmetic Formulary...altho I did sell one formula and have an awesome anti-fungal formula the delivers via trans-dermal absorption (big molecule)
NFS

Alls I'm sayin' I get bored and move laterally. It's in my DNA.

VSalon for sale ;)

[summilux]

(Fake) Civil Engineer...don't ask but you should not ride the elevators in building 51 @ NIH

I have pals in Bethesda. I'll pass this along.

[monadnocky]

(Fake) Civil Engineer...don't ask but you should not ride the elevators in building 51 @ NIH

Um. This got my attention... Building 51 on the main campus or at the top-double-secret facility in Poolesville?

[davids]

This is a very, very, very conservative financial view I have heard from a few different people assuming you will retire and never work again:

- Do not count on social security. Except for the boomers and maybe the next generation, who knows how long it will be around.
- Pay off your house before you retire.
- Most people spend as much, if not more, in retirement because you travel more and eat out more (even when you consider what you save on business clothes and commuting costs that you no longer need)
- When you transfer your investments to a safer choice as you near retirement, you can hope for 5% dividend income a year at best (some years more, some years less, so save in the good years to cover the bad years)
- Do not spend your capital (assume it will be needed for rainy days, medical emergencies, grand-kids, leaving money to others, etc)
- You have no idea how long you and your significant other are going to live so plan for the worst (that you may live to 100 and beyond)

Based on this, a person would need $1,000,000 in capital/investments to produce $50,000 of income per year before taxes (remember you still need to pay taxes on those IRA and 401k plans that have been growing interest free for all these years)

So, when you look at it this way....when can you retire?

Those are general guidelines and, as you said, very conservative. I could list all the ways my personal plan deviates from them.

My take-away would be different:

• Understand your own unique situation.
• Set personal/family goals, financial and otherwise.
• Create a plan that addresses your specifics.

Like TT said, get a fee-based/fiduciary financial planner, someone who is working for you (and paid by you) not by fees they get for selling you financial products. Yeah, it will cost you some money but it will be worth it.

In my case I get both peace of mind that we've made good decisions, and also someone to check with before, say, taking some cash.

[davids]

Not a great comparison. Assuming a 6% (yes, that is six percent and not .006 which is less than 1 percent) increase which is what we made in the last 30 days on our entire portfolio, that is not sustainable no matter what the bobble heads on cable TV say. But, you probably already know that.

I can't count on 100% annual returns from the stock market? No?

The point I was trying to make is that it feels very strange & new to be spending my savings rather than saving my income, even when the numbers work.

So sorry I was not sufficiently clear.

[NYCfixie]

Those are general guidelines and, as you said, very conservative. I could list all the ways my personal plan deviates from them.

My take-away would be different:

• Understand your own unique situation.
• Set personal/family goals, financial and otherwise.
• Create a plan that addresses your specifics.

Like TT said, get a fee-based/fiduciary financial planner, someone who is working for you (and paid by you) not by fees they get for selling you financial products. Yeah, it will cost you some money but it will be worth it.

In my case I get both peace of mind that we've made good decisions, and also someone to check with before, say, taking some cash.

Yes, most advice is general and must be tailored for each person's unique situation.

We were lucky and had a relative who was a private wealth manager so we had a "free" financial planner. I would agree that a "fee-based" planner will be better aligned with your personal interests than one who works on commissions from selling you stuff. I would also add to get a really good accountant.

I can't count on 100% annual returns from the stock market? No?

The point I was trying to make is that it feels very strange & new to be spending my savings rather than saving my income, even when the numbers work.

So sorry I was not sufficiently clear.

I get it.

Think of it as transferring assets into another form because it's not like you used the money to fund a vacation or to buy that sports car you may have always wanted.

When my wife wanted to by a home, I sold all of my DRIP stocks mentioned earlier. It was painful, but like you it was just moving one asset into another asset.

[davids]

I get it.

Think of it as transferring assets into another form because it's not like you used the money to fund a vacation or to buy that sports car you may have always wanted.

Not quite. That little list I provided, justifying the decision, was me making fun of myself seeking some sound financial rationale. Here's what it is:

It is buying something valuable to us.
It's both "stuff" (a beautiful outdoor space) and "experience" (years of time in our beautiful outdoor space, with family, friends and our own selves.)
Read the napkin.

[gggross]

Great thread. At 56, I think about this all the time.

I quit a high stress, high profile job after 31 years with a large company 18 months ago. Then I bought into a small business and am the managing partner. Traded one set of stresses for another.

I am fortunate that we have lived a frugal life and saved and invested like crazy. I know we have enough to stop working now but I just can’t get my head around not doing something. At some point, I’ll do something low stress.

Lots of good advice already given so I can’t add more. It gets down to personal needs and decisions.

[ides1056]

I read a very interesting book entitled, Retirement on the Line, about a needle company in Needham, MA. The youngest employee was in their teens, the oldest in their nineties. I plan to keep doing something.

[Bewheels]

A lot has been covered in this thread. Rather than repeat things, just thought I would add a couple of different items... Neither my wife nor I are financial planners nor play one on TV.

1---
My wife and don't go by the "don't pay off your mortgage and invest that $ instead". We have always found a way to pay off the house (or at least come close to it).
- When you play around with the numbers, all the conditions have to be just right for investing rather than paying off your mortgage to actually be a positive. And these numbers do not line up as well as many people think. Amount of interest you are paying over the life of the loan vs the amount of return you could get in the market/investments, amount your can deduct on your taxes, etc. These number generally point toward paying off the mortgage for us common people. This can/does work when you are talking about big dollars and if you are talking about that level of dollars then you aren't worried about retirement.
- The #1 reason for us to pay off mortgages is so that we do not have the debt. When you are free of the debt you have a lot of flexibility.
- Yes - there is balanced between not spending every cent on clearing debt and clearing the debt.


2---
We do not go by the philosophy of reaching our death beds with $0 in the accounts. Our goal is to be able to pass something forward. It is part of our responsibility to give back to either family and/or someone/something else. We have a son and we hope that there will be something to help him. We have told him that he needs to do the same, etc, etc.
I am not suggesting that we do not live our lives, but we don't look at it as a game to get to zero. This is not a knock on anyone else's philosophy. Just sharing ours.

[SteveP]

A lot has been covered in this thread. Rather than repeat things, just thought I would add a couple of different items... Neither my wife nor I are financial planners nor play one on TV.

1---
My wife and don't go by the "don't pay off your mortgage and invest that $ instead". We have always found a way to pay off the house (or at least come close to it).
- When you play around with the numbers, all the conditions have to be just right for investing rather than paying off your mortgage to actually be a positive. And these numbers do not line up as well as many people think. Amount of interest you are paying over the life of the loan vs the amount of return you could get in the market/investments, amount your can deduct on your taxes, etc. These number generally point toward paying off the mortgage for us common people. This can/does work when you are talking about big dollars and if you are talking about that level of dollars then you aren't worried about retirement.
- The #1 reason for us to pay off mortgages is so that we do not have the debt. When you are free of the debt you have a lot of flexibility.
- Yes - there is balanced between not spending every cent on clearing debt and clearing the debt.


2---
We do not go by the philosophy of reaching our death beds with $0 in the accounts. Our goal is to be able to pass something forward. It is part of our responsibility to give back to either family and/or someone/something else. We have a son and we hope that there will be something to help him. We have told him that he needs to do the same, etc, etc.
I am not suggesting that we do not live our lives, but we don't look at it as a game to get to zero. This is not a knock on anyone else's philosophy. Just sharing ours.

I'm w this.
There is mental value in having little or no debt in addition to practical value.