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

My hubby and I retired the middle of last year. He is 58 and I am 54. We are lucky in that we inherited a ranch in Montana that has been in his family for over 100 years. It needs a LOT [U]of infrastructure still.

A couple of years ago we took out a mortgage on our house (that we had paid off) in a different state and used the money to put a modular on our ranch. Then last year we sold the house in the other state and cleared about $135,000 on it. We used some of this to build a garage on the ranch. So now we have a house and a garage and about $100,000 in a money market fund. We also have his 401K which we invested with a financial adviser (and it has lost money since then) and we have some Roth IRA's--a total of about $325,000 in retirement funds.

Our biggest hit is the insurance. We have COBRA from his work which costs us over $1000 a month. He has stents in his heart so he is uninsurable. I was thinking of working in town just for the insurance, but this winter has demonstrated that that won't work because we have been snowed in almost constantly. Once we have exhausted COBRA there are companies that have to insure people due to state mandate but it won't be any cheaper.

My new plan is to grow a market garden and sell produce this summer. There is a fantastic farmer's market in our town once a week and a booth only costs $10. There don't seem to be a lot of nasty rules about what you can and cannot sell there. There are people selling homemade pies and bread and all kinds of things. Anything that we don't sell will be frozen or dried or canned for our use.

I plan to get a LOT of chicks this spring.

That's our story and I'm sticking to it!!!!!

Flame away.

Mary

....................Good luck too you and DH , Mary , I enjoyed reading your post . I just sold my small place here in tx in dec'06 . I've got a travel trailer , used and paid for , a 1999 F250 diesel , paid for and a little money in savings and I'm plotting my course for my future . I'm 60 , in good health for my age so i just need to figureout which direction I want to go . This cold weather seems to affect me moreso than it use to , so it makes me wonder how our relatives were able to stay warm without electricity and propane , I shiver contemplating their winter existence , LOL . Hope you have a good year . fordy...

Those who are interested in withdrawing retirement funds early may want to check out www.retireearlyhomepage.com. Follow the link that says "Can I Withdraw Money From My IRA Before Age 59 1/2?" The IRS has a rule (called the 72(t) exemption) that allows you to take "substantially equal periodic payments" out of your traditional IRA without the usual 10 percent penalty. But you can't just decide to take, say, $4000 a month. Instead the amount of the withdrawal must meet IRS limits designed to keep you from using up your funds too early in life. There are calculators on the website (or formulas in the IRS code) that allow you to figure out how much you can take.

I'm no expert on this subject but find it interesting, since I'd like to retire early myself and would need to use my 401(k)/IRA savings to do so. I first ran across this early withdrawl exemption in the book "Your Money Or Your Life," which I think is a terrific book on the subject of early retirement.

Cindy in OR...don't forget that you can most likely get a higher SS based on your husbands SS. The only requirement is that he qualify (40 quarters) and that you were/are married 10 years.
I was divorced in 1976. I never asked for anything, nor ever thought about SS based on ex-s salary. But when filing earlier this month, they asked if I had been married 10 years, which I had to look up because I didn't remember exactly. It turns out (theoretically, because the paperwork isn't finished yet), that I do qualify under him. In my circumstances it will mean only an extra $10 a month, but every bit helps.
Yes, he has been remarried for most of the time since 1976, but I guess that doesn't matter.
Ann

My plan:

Lobby to bring back prohibition...Once passed, I open a still in my backyard...Get the behind me Al Capone!!

I plan on buying a RV and visiting each one of my kids ( I have 6 ) for some nice payback after raising them for all those years, all those ballgames I coached at, all the track meets I attended, all the school plays I went to. All the camping trips I took them on. I will winter in the southwest and spend the rest of time visiting the grandkids. I will head on to the next kids house when my gas tank gets filled and they give me a few bags of groceries for there dear old pops. I also own some property in Texas county Mo, so I will camp there a few months a year also.

I have saved some money (not too much) over the years and hopefully will get some SS. I also have a retirement from a company that will help. As far as insurance goes, I am not sure. I guess I will go the way of the old cowboys, and just die someday, but hey we are all going to die someday anyway. I am currently pretty healthy and hopefully will stay that way.

What I won't do is spend my golden years worrying about what if........
What if I get cancer....
What if I have a heart attack....
What if I go blind and drive off a cliff.....
Hey what if I just grow old and die......

You see the same thing will happen.......I will eventually die, everyone does. I will just enjoy every day I wake up and thank the Lord for one more day.

Boyfriend worked a lot of years for cash so now that he collects SS it's only about $600/month. According to my SS statement, were I to never work another day now, I'd collect about twice his retirement when I qualify in eight years - if there is any SS by then. In the meantime, I'm saving every cent I can and begging for more hours at my part time job. We're also selling off all non essentials - excess machinery, cars, books, clothing, art, pottery, etc. We're planning to live on $600 a month - which can be done if you grow most of your own food, don't hook up to cable, electric, public sewer and water, etc. Check out Manytracks.com, where Sue Robishaw and her husband live on $600/month.

SIMPLIFY, SIMPLIFY is the key for us. I always keep in mind what my Dad told me long ago: "the easiest way to have more money is to spend less." He doesn't buy clothing, gadgets, books, magazines, music, videos, or anything extra. His meals are simple or shared with family members on Sundays, his clothes are gifts at Christmas and his birthday. He's rented the same tiny house for over 20 years and the rent has been raised once! True, most of us won't find that kind of landlord. We're buying land at under $1000/acre and putting a small 12x50-60 mobile on it that we've bought for under $2,000. We've collected building supplies, cabinets, windows, etc. at Habitat for Humanity and yard sales. They'll refurbish the home. We'll heat with wood, use a hand driven well and simple septic system we install ourselves.

Granted, lots of people would think we're living too close to the edge or are very deprived. On the other hand, we could be cooped up in a low income apartment in the city, eating baloney sandwiches and watching the boob tube.

For some people, a satisfying life takes very little money mixed with a good dose of prudent planning and ingenuity.

Unless you do a Section 72T distribution at age 50 or above.

The 10% penalty does not apply if you are no longer working. Been there, done that.

I'm not sure that people were ever intended to "retire". My dad retired from his "job" but built a career from his hobby of woodworking and remodeling. It'st the job he would have done but like others his age took a job that made an excellent living for his family. He spent his last 16 years working hard and loving it.

My husband doesn't really want to retire either, he will be qualified next year to teach at the college level. Alot of the community colleges will hire retired business people to teach business courses.

We have a pretty good IRA and add to it monthly but I just don't know if it will be enough.

I am 45 years old this year (later this year!). I am a finance person by profession - so I tend to think about these things more than the average joe. I have a 401k, a defined benefit pension program I fund into, and after tax savings and investments that we put money into regularly.

Our plan for retirement goes something like this. We are almost done with all non-mortgage debt (what is outstanding currently will be paid off by mid year 2008 - this is our current focus financially). We are paying extra on our mortgage which will be paid off in 10 more years at the rate we are currently paying on it. The basics for living (mortgage, food, utilities, gas for work commute etc) use less than 55% of our net earnings. The rest goes into a combination of debt reduction and/or savings. We live VERY frugally/simply - by choice. In ten years, I am planning to "retire" from my current place of employment and begin drawing on the pension. It will provide about 40% (after taxes) of what I presently earn. With the house paid for and no debt we could live on that alone EXCEPT we will have to then pay our own medical/healthcare needs and that is a HUGE expense. The plan is to move to a major medical program at that time - so that we have coverage for catastrophic illness/hospitalization etc... and to self fund all other healthcare costs such as pharmaceuticals, doctors visits, and dental etc. The extra money for this will either come from drawing down my savings (401k and other investments) OR (more likely) by working part time doing something far less demanding than what I currently do for a living. The pay will be next to nothing - but it will help cover those additional costs. We have our modest well cared for house and property (that will be paid for by then) which already provides a great deal of our food and "entertainment". I will do some light work as I am able to keep active and to help reduce the pressure on reducing my savings down too fast. By "retiring" at 55 I expect to be fit enough to be able to transition into a less demanding (mentally and time) job into a work environment that is more routine (low pay) and less hours. Easing into the retirement picture really and giving myself permission to knock the pace and expectations down significantly. Of course there will come a day when I am physically and mentally unable to keep working - that is what those savings and pension amounts are for.

I am totally NOT counting on social security or medicaid. If it is available, great - but not likely in my opinion. If the world quickly and drastically changes on me - then all bets are off and we are in another mode entirely - no financial planning/retirement planning will cover that. I do "prep" for that kind of scenario - but at that point work, insurance, etc are off the table for just about everyone - not just me.

So that's the plan. We have been working it for years and seem to still be on course. We made a move two years ago to a smaller home - better climate/location - but had to take a lower paying job to accomplish it. Set us back about five years in the picture from where we were on track to be - but oh well.

I read alot of you folks were planning to live with your children..that's a good plan in theory but what if the kids hit hard times (job loss/illness/sick children/etc.) or what if the kids just want to be left alone?

I figure I could live with my children if I wanted to, but would I really want to do that? Is it not my responsibility to be sure that I have enough saved to take care of myself or to live on in a reasonable fashion? Just some food for thought, though my son and both daughters have told me I could live with them, I rather doubt I would do that. The daughters already have children to raise, one is trying to go back to school and one is in school (see job loss above) and the son will be in college and likely to be living somewhere I may not want to live.

I'm not saying that your children would not want you to live with them, but if they are struggling to make ends meet, how would they be able to support you as well? With the job situation the way it is and more jobs going overseas, many children are having to move back home with their parents, at least for a period of time until they get more training or recover enough financially to get a home.

My mom is still living - she wouldn't want to live with me as long as she could get around - she likes that independence (and orneriness - lol)..but I would take her in in a minute if she needed me too. I doubt she would ever need to live with me for financial reasons though - she was a saver all her life and has rental properties which I manage for her that bring in good income for her and gets my dad's military retirement and SS. I think I'd rather follow along in her footsteps and be financially independent. If I got to the point I couldn't take care of myself, then I'd do some sort of assisted living thing either in home or in a community situation.

Just thinking out loud - don't anyone get their blowtorches out - but it is something to consider. (in light of all the threads about our kids being worse off than we are that are posted on HT).

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Be yourself - no one can tell you that you're doing it wrong!

You are correct. BUT to get totally out of debt and set up another house ... that didn't work for me. The 10% penality is only on the amount withdrawn from my IRA and I should make enough to cover that in the next couple of weeks. That penality scares many folks, but in the big picture, it's not that bad. My withdrawal will be taxed as "earned income" ...so, if I don't work anymore this year ... the income tax (with exemptions), isn't that bad either.

We will get more from our dollars today than waiting 9 more years to avoid the penality. 10% today will be like 40% or more in another few years.

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

They told me it would apply IF I took ANY money out of the IRA.

PLEASE explain why or how it doesn't apply if you're younger than 59 1/2 or 55 ....... and NOT working.

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

You've got to have some big cojones to have the majority of your money invested in high risk investments as you approach or when you retire. It would sure be hard to lose a lot of the principle at that stage and have to return to working for the money.

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

I am looking a three things. Work until I die, die young, play the lottory every week. I sunk everything I had into moving to tennessee. Shouldn't have done that.

I withdrew some from my thrift savings plan, which is, in effect, a 401K. If I had been working at the time, the code they entered on my tax form would have been "1", and I would have had to pay the 10% penalty. But, since I had retired, the code was "2", and I was exempt from the penalty. Perhaps IRAs are different? I was 57 at the time and the penalty applied until 59 and !/2 without the exemption.

Thanks, I think an IRA is different. Had I known this a few weeks ago, it might've saved me some mooula ...OH WELL! That's the retirement game...they make rules too fast to keep up with everything. LOL

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

That's for sure. Few people know how to interpret the rules. I had 2 different bank employees in the IRA deaprtment tell me I had to pay the penalty. I thought before I did, I would call by wife's niece who is a CPA in Tenn. I'm glad I did. I don't know why government can't write simple rules.

My husband is disabled and living on SS disability. Not much to live on, but we make do. I worked till a couple of years ago and finally had to quit to care for John. I will be 62 this fall and will take early retirement from SS. Our combined income is sufficient to live frugally. We have no debts and own a 7 acre lot which we will be building on. Luckily there is about 150K equity on the land otherwise we have little saved. When we build, I will be eligible for a reverse mortgage and will use the funds to pay off our existing mortgage. We will then be living virtually rent free. We will not be rich, but we will have enough to meet our needs. We plan on growing a lot of our own food and and chickens for eggs and meat, rabbits for meat and a couple of goats for milk. As long as our health holds out we will be fine. Fortunately, our children are very close and are more than willing to help. My siblings and I took care of our parent when they were not able to take care of themselves and our children will do what they can for us. Meanwhile we will take care of ourselves. The last thing we want is to be at the mercy of their tender care. My oldest daughter worries more about us than she does about herself. As much as we love her, we do not want her to be our "MOMMA" LOL

We also plan on selling surplus produce at the local coop and flea markets. It will not bring in much, but it will be a way to meet new people and keep us socially active.

If either of us had to go to a nursing home, we would rather be dead.