Retirement Targets

[qwerty]

Someone lives in them as most are full. I do think when most people get to one of those, it seems like maybe 6 months and they pass away.

I think most long term care policies only pay out for 3 years. Most are dead by then.

I read a couple of years ago, average male spends approx. 8 months in LTC before passing or moving. Average female spends 15 months in LTC. I believe their definition of LTC is nursing home or heavily assisted living. Not light duty assisted living/senior centers like some of these places. My mom was in both. Light duty center for 4 years and loved it. Nursing home for 5 months and hated it (or course that was at end of life at age 97 and not much of anything was fun by then).

 

[Bestaluckcy]

I am still 100 percent invested in stocks. However, I recognize that this strategy is not for everyone. Plus, I have a small pension that covers some living expenses, and happen to have an ironclad stomach when it comes to market fluctuations. If you can’t stomach or afford seeing you portfolio decline by several hundred thous dollars when bear markets occur, then I wouldn’t recommend this strategy. You will earn less with a 60/40 percent mix, but the ride will be much smoother and you will be much less likely to make poor decisions during the inevitable downturns. Plus, it won‘t hurt so much if you are making systematic withdrawals in a down market. Most advisors would recommend having 2-3 years of living expenses covered by cash-like instruments, 4-8 years covered by debt instruments, such as bonds, the the remainder in equities.

Thanks Jay. I am at 50%. Have known some as low as 20%. Some like to add annuities & or tips. It’s a curiosity of mine.

 

[qwerty]

I retired at 18 months ago at 56 years old. My savings were approximately 16 times my income when I retired. Using the 4 percent rule, my savings were sufficient to replace 75 percent of my pre-retirement income, which is all you need. That’s because you won’t be paying FICA tax or making 401K contributions when retired. Consequently, 15 times your salary would be a good retirement savings goal. Below are my recommendations based on what I learned over the past three decades:

1. Save 20 percent of your income. This includes any company match. Hence if your company matches 6 percent, you only have to put in 14 percent. I know that sounds like a lot, but find a way to do it if you can. That may include making sacrifices in other areas.
2. Invest in index funds instead of actively managed funds. Also, invest as much in equities as you can stomach (80-100 percent).
3. Invest in a Roth 401K instead of a tax deferred 401K if your employer offers this option. The future tax savings will be tremendous and you likely won’t miss todays tax savings from a traditional tax deferred 401K after a year or two.
4. Invest the maximum in a Roth IRA each year ($6,500 currently) for you and your spouse each year. This amount is included in the 20 percent goal that I mentioned above.

If you follow these steps, I promise you will have a very comfortable retirement and will be able to hang it up sooner than you thought. Retirement saving is not difficult, it just takes discipline.

I am not a financial planner, but am well-versed on the subject from lots of reading and years of experience. Anyone can PM me if they want some free advice as this is something that I am passionate about and love helping others achieve their goals.

I am there with you in everything you said (only a couple of years behind in retirement). We should DM to trade/compare notes and sources. I used to teach college night courses (Engineering) and have thought about putting together something on personal finance/retirement financing to do seminar type events after retirement.

 

[qwerty]

Speaking of finance and retirement. This little book is by far the best basic guide I have read on how to approach these matters in real life. Nothing ground breaking in it, but very good explanations and hammers home the necessary points. I bought a dozen and gave to my kids and younger co-workers.

https://www.amazon.com/gp/product/1736119605/ref=ppx_yo_dt_b_asin_title_o01_s00?ie=UTF8&psc=1

 

[ricochet]

I retired at 18 months ago at 56 years old. My savings were approximately 16 times my income when I retired. Using the 4 percent rule, my savings were sufficient to replace 75 percent of my pre-retirement income, which is all you need. That’s because you won’t be paying FICA tax or making 401K contributions when retired. Consequently, 15 times your salary would be a good retirement savings goal. Below are my recommendations based on what I learned over the past three decades:

1. Save 20 percent of your income. This includes any company match. Hence if your company matches 6 percent, you only have to put in 14 percent. I know that sounds like a lot, but find a way to do it if you can. That may include making sacrifices in other areas.
2. Invest in index funds instead of actively managed funds. Also, invest as much in equities as you can stomach (80-100 percent).
3. Invest in a Roth 401K instead of a tax deferred 401K if your employer offers this option. The future tax savings will be tremendous and you likely won’t miss todays tax savings from a traditional tax deferred 401K after a year or two.
4. Invest the maximum in a Roth IRA each year ($6,500 currently) for you and your spouse each year. This amount is included in the 20 percent goal that I mentioned above.

If you follow these steps, I promise you will have a very comfortable retirement and will be able to hang it up sooner than you thought. Retirement saving is not difficult, it just takes discipline.

I am not a financial planner, but am well-versed on the subject from lots of reading and years of experience. Anyone can PM me if they want some free advice as this is something that I am passionate about and love helping others achieve their goals.

I agree with 1, 2 and (mostly) 4, but I'll push back on 3 a little bit.

Roth accounts definitely have their place but if you are 100% Roth you are probably throwing away some money. Because of how the standard deduction and tax brackets work there is quite a bit of income that is not taxed or taxed well below your marginal tax rate. Social Security might fill some of those buckets though.

The "your money grows tax free" doesn't actually help at all because if the tax rate is the same you end up with exactly the same amount of money whether taxes come out up front or at the end. Betting tax rates will go up has been a losing bet for a long time but who knows about the future.

I think passing money to heirs and required minimum distributions are a couple places where Roth's can help a lot. Another area is getting health insurance discounts if you retire before being Medicare eligible.

The most important thing though is to save money. Don't let the pros and cons of traditional versus Roth and worries about tax laws decades in the future overwelm you so much you don't do anything. All Roth, all traditional, or any combination of the 2 is better than not saving any money at all.

 

[Lewey24]

I retired at 18 months ago at 56 years old. My savings were approximately 16 times my income when I retired. Using the 4 percent rule, my savings were sufficient to replace 75 percent of my pre-retirement income, which is all you need. That’s because you won’t be paying FICA tax or making 401K contributions when retired. Consequently, 15 times your salary would be a good retirement savings goal. Below are my recommendations based on what I learned over the past three decades:

1. Save 20 percent of your income. This includes any company match. Hence if your company matches 6 percent, you only have to put in 14 percent. I know that sounds like a lot, but find a way to do it if you can. That may include making sacrifices in other areas.
2. Invest in index funds instead of actively managed funds. Also, invest as much in equities as you can stomach (80-100 percent).
3. Invest in a Roth 401K instead of a tax deferred 401K if your employer offers this option. The future tax savings will be tremendous and you likely won’t miss todays tax savings from a traditional tax deferred 401K after a year or two.
4. Invest the maximum in a Roth IRA each year ($6,500 currently) for you and your spouse each year. This amount is included in the 20 percent goal that I mentioned above.

If you follow these steps, I promise you will have a very comfortable retirement and will be able to hang it up sooner than you thought. Retirement saving is not difficult, it just takes discipline.

I am not a financial planner, but am well-versed on the subject from lots of reading and years of experience. Anyone can PM me if they want some free advice as this is something that I am passionate about and love helping others achieve their goals.

As the son of a financial advisor, my father has stressed investing in broad market index funds. He always says not to treat the stock market like a casino and pick stocks.

 

[cyfanbr]

if I could only give someone one advice, then it would be to start early in their career. Not only do you have compounding on your side, but you also learn how to live on a smaller portion of your salary. You won’t miss the money that you never relied on for day to day expenses. Out of college most of us are already used to living on a budget, so stay that way. Easier than having to make sacrifices later and having to figure out how to cut on expenses in order to save.

 

[Jayshellberg]

I agree with 1, 2 and (mostly) 4, but I'll push back on 3 a little bit.

Roth accounts definitely have their place but if you are 100% Roth you are probably throwing away some money. Because of how the standard deduction and tax brackets work there is quite a bit of income that is not taxed or taxed well below your marginal tax rate. Social Security might fill some of those buckets though.

The "your money grows tax free" doesn't actually help at all because if the tax rate is the same you end up with exactly the same amount of money whether taxes come out up front or at the end. Betting tax rates will go up has been a losing bet for a long time but who knows about the future.

I think passing money to heirs and required minimum distributions are a couple places where Roth's can help a lot. Another area is getting health insurance discounts if you retire before being Medicare eligible.

The most important thing though is to save money. Don't let the pros and cons of traditional versus Roth and worries about tax laws decades in the future overwelm you so much you don't do anything. All Roth, all traditional, or any combination of the 2 is better than not saving any money at all.

I get your point of not putting all your 401K contributions in a Roth. Having said that, I would put at least half in a Roth. Roth’s adds tax diversification. Plus, $700,000 in the Roth 401K is equivalent to about $1,000,000 in a traditional 401K.

The Roth 401K was not available until I was about 10 years out from retirement. Therefore, I got a late start. However, I am so happy that I started putting 100 percent of my 401K contributions in a Roth once it became available. One of the biggest benefits is that there are no Required Minimum Distributions (RMDs) for Roth’s so you won’t have to deal with with heavy taxes when have to make withdrawals. This will help with Medicare premiums because the higher your income, the higher your premiums.

Did I pay more in taxes when I was working because I choose to put my 401K contributions in a Roth? “Yes.” Would have I saved those tax savings or spent them if I choose the traditional 401K route? The answer is “I would have spent the tax savings instead of investing them.” I imagine most others would do the same.

This is a big reason that I recommend the Roth 401K. Any tax savings from a traditional 401K will likely be spent anyway. Therefore, when you retire, you would have the same amount in your 401K, whether you go the Roth or traditional route.

 

[Jayshellberg]

As the son of a financial advisor, my father has stressed investing in broad market index funds. He always says not to treat the stock market like a casino and pick stocks.

I agree with this concept. Studies have shown that indexing wins 90 percent of the time. You can try to beat the market by picking individual stocks or actively managed funds. However, there is only a 10 percent chance that you will succeed.

 

[Jayshellberg]

I am there with you in everything you said (only a couple of years behind in retirement). We should DM to trade/compare notes and sources. I used to teach college night courses (Engineering) and have thought about putting together something on personal finance/retirement financing to do seminar type events after retirement.

Would love to compare thoughts, ideas, notes, etc. Not sure about doing a seminar or other events as caring for my parents and fulfilling my bucket list keeps me pretty occupied. My wife says I am busier now than when I was working. That’s probably a little exaggerated. However, I have not had difficulty finding things to do with my free time.

 

[I@ST1]

Yes she does pay this out of pocket.

Good for her/your family that she’s able to cover that expense.

 

[danielyp29]

I retired at 18 months ago at 56 years old. My savings were approximately 16 times my income when I retired. Using the 4 percent rule, my savings were sufficient to replace 75 percent of my pre-retirement income, which is all you need. That’s because you won’t be paying FICA tax or making 401K contributions when retired. Consequently, 15 times your salary would be a good retirement savings goal. Below are my recommendations based on what I learned over the past three decades:

1. Save 20 percent of your income. This includes any company match. Hence if your company matches 6 percent, you only have to put in 14 percent. I know that sounds like a lot, but find a way to do it if you can. That may include making sacrifices in other areas.
2. Invest in index funds instead of actively managed funds. Also, invest as much in equities as you can stomach (80-100 percent).
3. Invest in a Roth 401K instead of a tax deferred 401K if your employer offers this option. The future tax savings will be tremendous and you likely won’t miss todays tax savings from a traditional tax deferred 401K after a year or two.
4. Invest the maximum in a Roth IRA each year ($6,500 currently) for you and your spouse each year. This amount is included in the 20 percent goal that I mentioned above.

If you follow these steps, I promise you will have a very comfortable retirement and will be able to hang it up sooner than you thought. Retirement saving is not difficult, it just takes discipline.

I am not a financial planner, but am well-versed on the subject from lots of reading and years of experience. Anyone can PM me if they want some free advice as this is something that I am passionate about and love helping others achieve their goals.

How much did you have to account for medical insurance for early retirement until you are eligible for Medicare? I would imagine this would take up a pretty significant amount when it's no longer through an employer.

 

[qwerty]

How much did you have to account for medical insurance for early retirement until you are eligible for Medicare? I would imagine this would take up a pretty significant amount when it's no longer through an employer.

You would be surprised. ACA kicks in about $1500/month or so for a 60 yr old couple with $60k/yr income bringing the premiums down to $150-$200/month. If you are relatively healthy, your estimated total out of pocket health care costs are only $3000/yr.

Health insurance plans & prices | HealthCare.gov

Get health plans and price quotes for your area. See Obamacare health insurance coverage options to save on premiums.

www.healthcare.gov

 

[cyfan21]

I retired at 18 months ago at 56 years old. My savings were approximately 16 times my income when I retired. Using the 4 percent rule, my savings were sufficient to replace 75 percent of my pre-retirement income, which is all you need. That’s because you won’t be paying FICA tax or making 401K contributions when retired. Consequently, 15 times your salary would be a good retirement savings goal. Below are my recommendations based on what I learned over the past three decades:

1. Save 20 percent of your income. This includes any company match. Hence if your company matches 6 percent, you only have to put in 14 percent. I know that sounds like a lot, but find a way to do it if you can. That may include making sacrifices in other areas.
2. Invest in index funds instead of actively managed funds. Also, invest as much in equities as you can stomach (80-100 percent).
3. Invest in a Roth 401K instead of a tax deferred 401K if your employer offers this option. The future tax savings will be tremendous and you likely won’t miss todays tax savings from a traditional tax deferred 401K after a year or two.
4. Invest the maximum in a Roth IRA each year ($6,500 currently) for you and your spouse each year. This amount is included in the 20 percent goal that I mentioned above.

If you follow these steps, I promise you will have a very comfortable retirement and will be able to hang it up sooner than you thought. Retirement saving is not difficult, it just takes discipline.

I am not a financial planner, but am well-versed on the subject from lots of reading and years of experience. Anyone can PM me if they want some free advice as this is something that I am passionate about and love helping others achieve their goals.

Do you also have an HSA?

 

[ClonerJams]

Honestly, in retirement I plan on having a second home in a warmer climate, another vehicle in that location, probably a few flights a year to it, and hopefully the ability to pay for kids/grandkids to come and visit. And then also pay for fun things to do.

As my financial advisor told me, he's never heard of anyone that saved too much for retirement.

 

[cycloner29]

Makes one wonder all the people you see that don’t have any type of 401k, Roth, retirement type of financial package.

My wife has a case load of 70 people that don’t. It’s sad that these people live the life they do and their kids just live off of them. Just seems a lot of people live for the moment and don’t even think about down the road. I started paying into social security when I was 15 and started a 401k at 21.

 

[Tailg8er]

As my financial advisor told me, he's never heard of anyone that saved too much for retirement.

Well yeah, of course a financial advisor would say that, they're monetarily motivated to...

Plenty of people who have died before age 70 who had "saved too much" for their retirement.

 

[BCClone]

Makes one wonder all the people you see that don’t have any type of 401k, Roth, retirement type of financial package.

My wife has a case load of 70 people that don’t. It’s sad that these people live the life they do and their kids just live off of them. Just seems a lot of people live for the moment and don’t even think about down the road. I started paying into social security when I was 15 and started a 401k at 21.

I had people who were 50 years old at my last place of work and they would not put anything into 401k. They said they needed the extra money. I asked why they didn't put something in there, because end of the year we would do a profit share and guarantee that you got at least 10% (which happens to be the amount the penalty is for early withdrawal). Also had no kids at home and they would not work a second job or work any available overtime offered. It was hand to mouth.

Another employee and I estimated what a minimum weekly expense would be, figured rent, utilities, basic groceries, fuel, and whatever the bare minimum would be. We divided that by what the take home would be on a per hour basis and wouldn't you know, it was almost identical to what they put in on a weekly basis. The hourly people had the ability to just call in before the shift started and say they couldn't make it and nothing was held against them. It was a bearcat to factor in what would and wouldn't get done that week.

 

[BCClone]

Well yeah, of course a financial advisor would say that, they're monetarily motivated to...

Plenty of people who have died before age 70 who had "saved too much" for their retirement.

My dad passed away one month after retirement. He was dirt cheap so he had more than enough to take him through retirement. I had a grandma that was in a care center for close to 20 years. She paid that bill on her own. She was sitting pretty good still when she passed. She had quite a few kids so while it was a decent inheritance each, the splitting so many ways made it a lot less than what a normal sized family would have been.

 

[KnappShack]

Saw this the other day. Interesting and says something about the Social Security conversation. If they raise the age I'll be broken down before I could enjoy any of that benefit.

Americans who are healthy at age 50 can expect to have roughly 23 more years free of disability, plus about eight years living with disability. That would suggest people’s maximum working life expectancy, on average, is age 73.

What Is the Ideal Retirement Age for Your Health? (Published 2023)

Average life expectancy has risen by 16 years since the national retirement age was set at 65. We asked health experts when they think people should stop working now.

www.nytimes.com