For those that don't or won't have 200k to 1mil for retirement, what's your plan?

I did retire last week and I will be 50 in June. Staying until my birthday would have given me all of $2k more in my lump sum and a few thousand more in my 401k. The lump sum would have been penalized at up to 15% just for choosing to take it instead of selecting the monthly annuity option. NOT WORTH IT! I have just under $250,000 and we do have some debt to repay. I should have around $150k to purchase land and build a house, post debt, tax and penality. In this area, if one can't build a house for $50k ... they're not trying and 5 acres 'll not be more than $20k. That leaves $80k invested. We have one new vehicle and are about to purchase another, cash. NO these want last the rest of my life, I hope, but if you looked at the mutual fund I PM'd you, you saw a fantastic rate of return. I hope this and a couple of others like it will continue to grow our nest egg. They've done well for us so far. I'm taxed at the earned income rate on what I take from our IRA and we will have some deductions to help out on the tax. SO ... will our money grow at a rate that'll allow us to remove $10k to $12k a year? Who knows????? But we're gonna try.

Will our retirement be one of European vacations and a new car every year? NO .... but can two people live on a small farm in Alabama without a Million dollars in the bank? OF COURSE! Some of the numbers quoted by a few of the folks here make me laugh, but then retirement means different things to each person.

I'm ALWAYS tickled when money managers say a person needs $40k or $50k a year just to "get by" when they retire .... Most people in America don't have that much when they're working and sure don't when they retire. (Money managers do like to play with big numbers though ... at a small fee based on those numbers )

Insurance is the ONLY concern. We can and will grow a garden. We can and will purchase what we can't grow at reduced prices. I'm no fool and I know we don't have "enough" money .... but just what IS enough money? I've watched too many friends die at 55 to 60 while working to get that million locked down, and in the field I was in a couple million wasn't uncommon for those who hired in early and worked until 55 .... I hired in late and supported Enron with my early investments.

Work on and dream on .... maybe whoever gets the cash when you die will appreciate it. It's just the two of us and we'd rather enjoy a little life in the country with fewer frills.

We hope to make some cash money by selling our soap and making some furniture. We will raise a few goats & chickens and maybe sell a few vegges at the local market and do whatever else we can ..... The point is, NO ONE can be assured of what tomorrow will bring. I do KNOW for a fact that the rules of retiring ARE changing. I do know that taxes and penalities are going up and the purchasing power of the dollar is going down. In my case, with a "lump sum" retirement, it was costing me money to stay at a job I hated while being exposed to such things as benzene each and every day. If I'd been in an office or behind a desk or maybe even allowed to work days or nights without switching every two shifts ... I might have stayed another couple of years; but NOT in the petro-chemical industry working for a British company that put Euros above American lives.

Maybe you'll do better.

Here are the current tax rates if you're interested ... as of my retirement date 1/31/07
If you take money out of your IRA at these rates ...
15k to 63k .... 15%
63k to 128k ... 25%
128k to 195k ...28%

__________________
I would rather be exposed to the inconveniences attending too much liberty than to those attending too small a degree of it."
Thomas Jefferson

A1cowmilker,
I'm sorry about your friend, but that has nothing to do with how I manage my life.

Again, you made assumptions. One was that I believe in a supreme being. I don't. Your theories that I owe him/her/it/god more days of a life without quality are meaningless in my reality.
Ann

Papaw,
I looked at the mutual fund you PM'd me, I've got some money in funds like that and it is giving a good rate of return now. Since you say you lost money with Enron you already know about risking money you will depend on to live off.
I wish you luck with your plan and hope you keep us informed how it works out. Insurance is one of the biggest if not the biggest reason most retain employment up to the age of 65. Do you have a pension you're not telling us about or a continued health insurance plan?

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"Education is the ability to listen to almost anything without losing your temper or your self confidence"
Robert Frost

*laugh* I kind of feel the same way: I paid into this thing, I should get my "fair share" back out of it. SS has been going on too long for it to be a temporary fix (even if that was what was originally intended).

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Icelandic Sheep and German Angora Rabbits

Self employed and will work till I get that Alzheimers diagnoses. Then the plan is for suicide because I won't live the life my Mother is living. It's not a life when you know no one and always want to go home, but where is it?

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Nina's Grammy

Don't you also have to pay a 10% penalty for withdrawing from a retirement account before a certain age (I don't know what that is - 59 maybe?)

For example, if I got laid off and took my 401K money out as a lump sump instead of rolling it over into my IRA or another 401K, not only would I pay tax on it as regular income, there would also be a 10% since I would be taking it out before the government says I can. That age keeps getting pushed out, so maybe the best bet is to say the heck with it. Since the governement keeps changing the rules, maybe people are better off having complete control over their own money instead of having it held hostage in an IRA or 401K.

A friend of mine went bankrupt when he was about 60. Nobody hires 60 year olds. So he hung on doing this and that till he was able to do early retirement and collect Social Security. He moved to Thailand where living expenses are cheap, and thanks to the internet and cell phone/skype and bank machines, he lives quite well. The culture suits him, though the language is tough for him.

Hubby kept on about wanting to retire early. I printed out our health care and health insurance expenses for last year. Over $24,000 for the two categories. He's had a kidney transplant, and I have migraines. Our med bill would choke a goat.

He's stopped talking about early retirement.

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Alice
* * *
"No great thing is created suddenly." ~Epictitus

I've been thinking seriously about this subject all day long. I guess it's about time, I'm almost 60 years old.

My husband is on 100% disability from the VA and gets SS. That's all of our income and it is good. Our place is paid for and we live in Oklahoma--cheap. Everything from groceries to land to gas etc. is affordable here. We took 3 trips this year.

We own our vehicle and have no credit card debt. I am saving about $1000./month because up until my husband got hurt we never saved a dime.

If my husband dies before me my income will go down to about 1/3 of what it is. He's 8 years older. I have good health insurance, but I never have needed it.

We are both in excellent health (except for the broken neck deal) and don't skimp on nutritious foods and good vitamins. I splurge on Weight Watchers meetings and Yoga lessons right now--but I feel like it's better than spending money on medicine and hospitalization.

Oklahoma passed a law a couple of years ago where disabled veterans don't have to pay taxes of any kind--no property taxes and no sales taxes. This saves us a whole lot of money. I've not heard of other states doing this, but they should.

I will have a small inheritance from my father. But in the end, if all else fails, I know I can rely on my children to help me somewhat. We've talked about it many times as they were growing up. They both are in reasonably good financial positions now.

I sure wish I would have bought a couple of rental houses about 10 years ago. My husband raised quarter horses instead....a whole lot of fun, but not profitable at all. Oh well, I guess there's something to be said for enjoying life.

I believe the age you referred to is 59 1/2 unless the money is used for college or medical bills, I think.

I use a Roth IRA so the taxes are paid on the money and the earnings are tax free if I wait until 59 1/2.

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"Education is the ability to listen to almost anything without losing your temper or your self confidence"
Robert Frost

YES, you DO have to pay a penality of 10% on ANY early withdrawal.(59 1/2 or 55 depending)

The changing RULES is the biggest factor in our deciding to go ahead and make our move. Last year, it became legal for a company to charge you an additional penality on the choice of "lump sum". This was done in order to assist large companies from meeting their obligations to their retirees. IF you decide to take the BIG chunk all at once, you MIGHT be penalized up to %25 of your lump sum. The taxes on any money you get are going UP. The buying power of any money you have is going DOWN.

ALL of the financial people that I talked to said one thing in common .... EVERY PERSONS IDEA OF RETIREMENT IS DIFFERENT ..... One person might need a couple million to retire while another might need 500k and another might just need to be OUT OF DEBT. Each person must take a look at his or her needs and make their own choice.

For us, being out of debt, having a house with some land paid for and having a little invested was enough to step out and try a new lifestyle .... others might not see it that way.

We will HAVE to get some kind of health insurance ... BUT I will not spend the rest of my life feeding the pockets of Insurance companies.

I know many here feel that for the "government" to offer health care for every CITIZEN is LIBERAL ... I don't and in fact, I believe with the amount of tax that I've paid .... it's an obligation of government.

American CITIZENS should be cared for before we make war or make loans to ANY other country. I'm still HOPING the American voter will focus on important issues and choose leaders that will look after the needs of Americans first .....

We're out of debt as of today!

__________________
I would rather be exposed to the inconveniences attending too much liberty than to those attending too small a degree of it."
Thomas Jefferson

Just an FYI for anyone who has money and wants to retire early, I found out this year that you CAN deduction from your retirement money WITHOUT a penalty at any age. You must follow the guidelines which are something like this:

You determine the amount you need (say $4k a month). You must withdraw that $4k each and every month WITHOUT failure or change to the amount until you reach your true retirement age.

Meaning you can't take more, you can't take less and you can't stop the process before actual retirement age or you will be penalized on the full amount withdrawn. My boss's financial planner told him about it (he has 5 years to retirement) so we checked it out and found out it's true. Now why doesn't the government let you know about it as blatantly as they do the penalties?

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"I've learned that you shouldn't go through life with a catcher's mitt on both hands; you need to be able to throw some things back..." Maya Angelou

About the only thing I can say is . . . . . WOW! The range seems to go from doing whatever a person can do to live to suicide.

Social Security was NEVER meant to be the only income a person lived on - it was meant to be a supplement. As for those of you saying "but I paid in, I want my fair share" (and yes, I am one of them), how many people got social security when they never paid a dime in? Perhaps we should go back and find out who all these people were and now ask their relatives to "pony up" some money because Great Great Grandpa Ted got social security money he never paid into.

The ultimate problem with the social security structure was if the money coming in would have been invested, we would be alot better off now. But as usual, the government saw all that money coming in and not much going out and thought "Hmmmmm, we can use that money now and pay it back when it's needed." Of course, government keeps getting bigger and bigger, the public demands better and better things, so the government keeps spending the money it was going to use to "pay back" the system.

I would hate to be in someone's shoes who's total income being relied on is social security. It might be all right in the beginning of retirement, but 15 years down the road when inflation has raised everything except for your social security check, you will too soon find yourself that the SS check doesn't go as far as what it used to.

As for those people thinking that suicide is the answer, could I at least ask that you let your family know ahead of time what your plans are so they don't punish themselves for years after your demise wondering "Why did they do that? Why didn't I see the signs? I should have done something."

I don't have any answers, as I am soon to be turn 40 and am trying my best to stash money away for retirement. Will SS be there once my retirement age of 67 1/2 comes up in the year 2034 or 2035? I don't know! All that I know is that I am doing what I can now - putting money in my 401(k) and ROTH IRA so I do have money in retirement.

It scares me that so many people out there didn't or couldn't set money aside for retirement. But even with what I have set aside, I wonder if it will even be there for me. The United States has lived high on the hog for years and has been "leader of the world" for a long time. I'm afraid our time of "leader" is soon going to be replaced with "follower" or even worse "do what I say" by some other leading nation.

Each generation has been spoiled with each passing generation and we have now become a nation of "I want and I deserve". History has shown us that empires rise and then fall (collapse) and my opinion is the U.S. has reached it's height and is heading on the downhill slope to the other side.

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Michael W. Smith in North-West Pennsylvania

"Everything happens for a reason."

when you turn 65 i thought they raised it to 69 and in 10 more years they may raise it to 72 or 75

my hope it to build up enough land for the kids to live on and in exchange for them getting the taxes and up keep i will help them build houses
i am also trying to think of a bussness i can start that i can get the kids involved in that will keep them from running to the corners of the country looking for work. i see family unity as the solution if we can live together it will help all of us.

the idea that each generation starts up with nothing is just a recipe for failure in my mind it means each generation just getts bigger morgages
if each generation can leave somthing for the next then the families wealth grows

but it is important to have the kind of family politics or maybe the lack there of that can kinder this and allow multiple generations to live together and next door to each other.

Yesterday while I was out working in my yard a neighbor from down the road came by to ask if I would watcher her place while she is gone on vacation.
She just recieved a check for $23,000 from SS and she will draw $900 each month. She is looking forward to the money. She has never paid in a single cent in SS tax.

Ann;

I am sorry, you are right, I did assume a lot. Please forgive me. I will not speak of it again.

A1

Since I am self-employed and have a retail type store for over 20 years, my measly income from SS would be down in the $200 a month range. My husband logged for many years, so his SS is up there in the higher range, and he has a pension from one of the companies he worked many years for. And he has an IRA with a decent amount in it.
We also have a house/20 acres with a monthly payment of $400 and low utility bills. And we recently bought a house in town to run my business out of. That house has appreciated $100,000 in just a few short months because it was rezoned from residential to commercial. I am waiting for a developer to come along and buy our whole block. It could be 1 year - 5 years or more - when they come, I will sell. That is my retirement money and then we'll invest it. I can take the business I run out of that house and move it home, restructure it and then do that job for many years to come at whatever level I want to. Both our kids have college educations and good jobs in fields that pay very well, so they know if push comes to shove, we're living with them

I'm not worried too much about how much we'll have to retire on. However, what will get us, and we know it, but don't yet have an answer to this problem, is medical issues and medical coverage. At this time, we are both still working, but owe about $20,000 in medical bills due to my husbands health issues (this is after his insurance paid their part). Started in 2005 with a work related injury that he was denied workers' comp for (they blamed the injury on his diabetes and it is now in final review after being denied twice); then he had a heart attack last January and had his appendix out also. He is diabetic and has vision problems, no feelings in his feet, and constantly has sores on his toes that get infected. He works on his feet all day as a diesel mechanic, which just beats him up. But - he has health insurance and he is one who can't be without it. I only have major medical insurance. The payment for me to be on his policy was over $300 a month, so I got an HSA for myself. Even that is $255 a month now, with no medial issues for me.
We are checking on vocational rehabilitation for him, but there is still the insurance issue. We're not up on disability for SS, but one of my clients who was a lawyer for SS issues said not to even apply without going through an attorney. It is too convoluted for the average person.

Have others here applied for disability and received it? Is it difficult? Do you then qualify for Medicare or Medicaid? We're in our low 50's, so don't know much about that type of stuff yet. Our parents (we have one left each) are very healthy, so they don't discuss health related issues at all.

One thing we are doing is setting up a trust instead of relying on a will. I had no idea of the cost of probate and taxing on an estate. Our kids would have nothing left after that. If you haven't looked in to a revokable trust, do it. You will be shocked at the cost of dying.

This has been the most interesting thread I've ever read. I agree that there should be a thread for this topic that needs to keep going. Perhaps together we can figure out this getting old stuff and retire in a bit of comfort that doesn't require the words 'cat food' or 'cat & dog' as food stuffs.
I thought the Holiday Inn suggestion was very innovative for those who are still active. The bus or train is pretty inexpensive still, so you could travel the country as the weather changes - south for winter and then north for summer.

Cindy in Oregon

I don't ever expect to get SS. My SS is my kids. I spent 25 years so far feeding, clothing, sheltering, driving to school, kissing boo boos, ect for 5 kids. The least they can do is make sure I have a roof over my head and decent food to eat during the last few years of my life!

My Parents know that when the time comes that we will be there for them.
When my time comes, my kids will be there for me. Thats how families are supposed to work. I also have 3 sisters. We stick together like glue! One sis cant have kids. We are her back up plan and I'm glad to be there for her.

Right now we are working on paying off the land and building the house. I'm 42, hubbys 44. Hopefully we have time to get some money saved. Hubby works. I'm already retired from paid work but still have 7 kids at home. (4 kids, son in law and 2 grandkids)

My plan is to have the farm paid off.
NO debt.
Grow most of my food.
Be frugal.
Buy as much land as possible over the years.
Worst case - move in with kids.

And then there are those living on a cruise ship full time. I wouldn't want to do this but if you are one facing the $200 per day for a retirement home then this might be a viable alternative:

http://www.truthorfiction.com/rumors/c/cruiseretire.htm

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A government big enough to give you everything you want, is strong enough to take everything you have.
--Thomas Jefferson

I agree - families should help each other. We've already let both our parents know that our home is open to them when the time comes. And we've already let our kids know we expect to have a key to their home when our time comes I think they think we're joking about this, but little do they know - we're not!

Cindy in Oregon