???, for those planning retirement.

Discussion in 'Homesteading and Retirement' started by Micheal, Nov 18, 2017.

  1. Nevada

    Nevada Voice of Reason Supporter

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    I would encourage anyone to invest in a 401K because employer matching funds are usually so attractive. But for retirement security nothing beats an annuity. Investments & savings should be managed separately from retirement.

    And don't think that Social Security isn't a big deal. If you retire at 62 with a SS benefit of $1000/mo, which is well below average, you will draw over $200,000 if you live to the average life expectancy age of 79.
     
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  2. Nevada

    Nevada Voice of Reason Supporter

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    401K is a great plan for saving. It's just not a substitute for a proper retirement plan.
     
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  3. Hitch

    Hitch Well-Known Member

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    I wish I had a better understanding of retirement. My wife and I primarily talk about where we'd like to live and do with ourselves but not how we'll pay for it.

    Last year we setup a 401k plan for our company with each of us contributing a $1,000 per month in a growth fund. I don't even know what the rate of return is on it. But hopefully by the time I retire it'll be a nice little chunk of change.

    As long as I'm healthy I'd like to work until I'm 70 so I can get the max on social security. That only gives me another 20 years to sock it away and my wife a few years after that. We are paying extra on our mortgage every month will a projected payoff in 20 years. So as long as we don't have the mortgages I think we'll be good by then.
     
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  4. Hiro

    Hiro Well-Known Member

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    There are a lot of reason why defined benefit retirement plans went by the wayside for the most part. My parents generation had people working for the same company for 25+ years. That is unusual these days. A defined benefit plan with guaranteed payouts doesn't work if your company or the employee doesn't want to stay in the same place that long. A 401k plan that you can move as you change jobs does.

    If someone saves in a 401k from the day he is eligible for 20 years or more in a rational fashion, it is fairly likely he will be better off than or at least as well as someone in a defined benefit program and definitely better off than someone that didn't. He also won't be at the mercy of his employer to stay until he becomes vested in their defined benefit program.

    The fees are a problem. I didn't really research it until I sold a business where one of the sticking points was everyone roll over their small business retirement into the 'newco' 401k plan. Then, after looking into it, if you bought a mutual fund on your own the annual fee may be 0.75% per year. But, the exact same fund (by name) in their 401k plan was 1.75% per year. I can only guess where that 1% differential went.......well, an educated guess.
     
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  5. ET1 SS

    ET1 SS zone 5 - riverfrontage Supporter

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    #1. certainly spent a lot less in retirement, beginning the first year of being retired.

    #2. Agreed

    #3. I do not see where or how you got this from.

    #4. Agreed.

    #5. hmm, I don't see that happening. I have excellent healthcare coverage, and the cost is very low.

    #6. Agreed.

    :)
     
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  6. anniew

    anniew keep it simple and honest Supporter

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    I retired at 66. Have social security, medicare and supplemental health insurance (about 200 a month). Have no co-pays due to the plan I picked.
    When I retired, after being somewhat frugal most of my life and getting individual IRAs most years, plus a little 403 from working less than 10 years where it was covered, and a little here and there, I added up my assets. Since my parents each lived until 93 years, I determined, if I lived that same amount of time, how much of my assets I could use each year to get me to 93, and that is basically how I determined my budget in retirement. Any interest that accumulates is not counted so that can extend my money past 93, along with any of the budget that I don't use each month.
    I haven't raised any children which probably has made my finances easier to budget. I also grow a lot of my own food, and pay attention to sales and buy when prices are good. Retirement for me has not been a hardship. I am comfortable but live a modest lifestyle in a below average home.
    Planning for retirement is a lifelong thing, not something you start when you are 10 years away from retiring. If you enjoy being more self-sufficient, then the lifestyle is also enjoyable and makes it easier to accumulate retirement savings.
     
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  7. Jolly

    Jolly Well-Known Member

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    Number 3 is called replacement income. Lots of articles on the web. As for five, that's an average number from a white paper done by the folks I used to work for...Some peg it just a bit lower, but we thought ours was a bit more accurate. What Money has to say:

    http://money.cnn.com/2016/08/16/retirement/retirement-health-care-costs/index.html
     
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  8. emdeengee

    emdeengee Well-Known Member

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    I wonder why so many think that retirement is the end of a productive and useful life. I am retired but my husband has 3 years to go. We can hardly wait. Working and saving for 35, 40 or 45 years and then being able to be free of the constraints of having to make money is a great gift. Of course you have to plan. We know many people who have retired and other than one who has a severe alcohol problem they are all happy, busy, useful and productive. Some, (including my father and will be my husband) will continue to do contract work that pleases them. And pays very well. I have found a whole new career, one that I would never have even thought about. Just the thought of doing something new and different is exciting.

    As for leaving the world less productive - lots of very hard working, intelligent, well educated and well trained young people out there just waiting to get their foot in the door and lots of middle aged workers more than capable to step forward into vacated positions. Do they know as much as us old ones - maybe yes and maybe no but then again I didn't know at 30, 40, or 50 what I know now and they will learn and even surpass us. I know that I did and my husband certainly did as well.
     
  9. lmrose

    lmrose Well-Known Member

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    What fantastic advice ! Taking responsibility for yourself and your future is how we try to live too. Have a nice day.
     
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  10. Jolly

    Jolly Well-Known Member

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    Just an interesting statistic....If a married couple both make the age of 65, the chances of one of them living to 90 is one in two...
     
  11. Fishindude

    Fishindude Well-Known Member Supporter

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    I don't think this is a sound strategy. You can't time the market and predict anything very accurately.
    Better to just take draws as needed to live on out of your 401K, then keep the rest working in investments withing the plan.
    "Cashing out" will also mean you get hit with all of the taxes at once.
     
  12. susieneddy

    susieneddy Well-Known Member

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    Sounds like they are in Gods waiting room
     
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  13. ET1 SS

    ET1 SS zone 5 - riverfrontage Supporter

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    I retired in 2001, so I am in my 17th year of retirement.

    I have found that in retirement I 'need' about 1/3 of the income I made when I was working.

    My fulltime working income peaked at around $75k/year. My pension this last year paid me $17,760/year.



    End of life care is expensive. Healthcare, as we age, gets expensive.
     
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  14. haypoint

    haypoint Unpaid, Volunteer Devil's Advocate Supporter

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    Easy to give advice that has worked out for you. Just set up a regular savings plan, invest wisely, stay healthy and retirement is sweet.
    Except just as many don't get that blessing. The job goes away and you eat up your savings while looking for a job or training for a new one. The market takes a dump. Your health fails.
    I had a job with a good pension. I invested my savings in a safe place, land. But an unexpected divorce cut my pension in half. The housing bust caused land in this area to crash. So, I worked another decade. Saved another $200,000. But it is in stocks, so I may lose that, too.

    Some in this discussion mentioned "cashing out". That sounds like when you are ready to leave the slot machines and go home. A reasonable plan would be to move your savings/investments into some safe, low growth investment and drain off 6 or 7% of the total, annually. If you are being real with yourself, you'll draw off your 401K fast enough to run it dry by the time you hit 80. By then most of us will be dead or watching Gunsmoke or Bonanza between naps. You won't need money to buy a snow board or chain oil for your Harley.
     
  15. mnn2501

    mnn2501 Dallas

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    Great that you can sock away $1K a month, but you really should know what its been paying historically.
     
  16. Danaus29

    Danaus29 Well-Known Member Supporter

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    You have to start withdrawing money by the age of 70 or pay extra taxes on it. Pitiful because I know people well into their 80's that are in good health and still very active. They sure could use that scant bit of interest a 401 earns.

    I'm already napping between Gunsmoke and Bonanza! But I had major surgery recently and am still recovering. I hope to be doing as well as my grandmothers were when they were 80+.
     
  17. haypoint

    haypoint Unpaid, Volunteer Devil's Advocate Supporter

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    For people that have been saving money their whole life, spending their savings comes hard for them.
    The harsh reality is that if your nest egg is large enough to produce income, with today's low return on savings, that must be a big nest egg. If you are in your 80s, what do you think you are saving it for? You don't have any reason to draw it all off, but if you are counting on the scant interest the savings provides, start cutting into the principal.
    If your plan is to give your live savings to family, do it tax free in 10 or 20,000 yearly gifts.
    You are allowed to hold on to your savings, scrimp through the final days of your life and let the courts, government and long lost relatives fight over what's left.
    There are things I can do at 70, if I had the money, that I won't be as able to do at 90. What good is the money then?
     
  18. Danaus29

    Danaus29 Well-Known Member Supporter

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    I didn't say interest on savings. You can pick up more money off the sidewalk in a month than a huge savings account would earn all year. Some 401s, managed properly, do earn a decent bit of interest. If you have a savings account, passing on the money is simple. Payable on death accounts don't go through the courts and are exempt from disputes over wills or trusts.