Folks that need assistance go through a process that establishes that they have no financial means. They are then placed on government assistance, their accommodations are at a base level-think “studio”. Here are two sources that speak to 70% of post 65 people will experience some sort of LTC: acl.gov & aspe.hhs.gov. These are both US Dept of Health & Human Services agencies.
Retirement Targets
- Thread starter yowza
- Start date
Nice in theory, but this year I got a 3% raise but inflation went up 9-11%. Pretty much lost income.
Did your house payment go up? Car payment go up? Did everything you spend money on go up 10%?
What makes you say that? The usual 4% rule people talk about is intended to last around 30 years with a 100% success rate (based on past data). It assumes certain ratios of equities and bond investments which I think is 50/50. Also, you don't take out 4% every year, you take out 4% the first year and then adjust for inflation every year after that. I suspect the 4% rule stretched out to 40 years probably still has a 75% chance or more to work but it adds risk. The usual "forever" withdrawal rate is 3% from what I've seen. All that said, there are plenty of people comfortable with a 5% rule and if you started that 20 years ago you might even have more money now than when you started, but who knows what 2050 will look like.
Just leave it in regular investments, screw bonds. If you can average 6-7% return, the 4% can be withdrawn with 2-3% for inflation (if it’s a Roth).
Without getting into my specific situation, short answer, yes.
Some things like home and car insurance went up 18%. Our heating bills went up 40%.
That’s why you don’t do ARMs or variable rate notes when the interest rates are as low as they are. Fix your house and vehicle payments and you have 30-45% of your expenses locked in.
Right, so my original point still stands. Majority of people will never be in a facility. I'm not saying it's not a good idea to have some money for one (particularly if you're in an at risk group/have hereditary history of needing one), but I don't think EVERYONE should sacrifice in other areas to plan for something they likely will never need.
Also, checked out the sites you linked and couldn't find that 70% number. Let me know if you have a specific link/story, otherwise guess I'll just take your word for it.
Curious why people want to have 100% of their Salary at Retirement (sure that sounds great).
But realistically do you even "need" that much.
Example: If you make $80K, I assume you are putting 25% to 401K/Roth and 25% to your Mortgage, and you are spending/Living off about 50%.
Now in retirement, you probably have your house paid off (-25%) and probably not contributing to 401K (-25%), and you are now getting Soc-Sec (+25%).
Heck, you could live the same as now for 25% of your salary(+SS)......
Now, you need to account for inflation, etc.
But, very Generrally thinking....
Heck, you could LIVE at an All Inclusive Resort in Mexico for 6 months a year for about $20K.
The people who want $200K a year during retirement (sounds Fun!), but what are you going to do with it?
House is paid off, not contributing to 401K/etc.
What are you spending $200K on?
Just food for thought...
But realistically do you even "need" that much.
Example: If you make $80K, I assume you are putting 25% to 401K/Roth and 25% to your Mortgage, and you are spending/Living off about 50%.
Now in retirement, you probably have your house paid off (-25%) and probably not contributing to 401K (-25%), and you are now getting Soc-Sec (+25%).
Heck, you could live the same as now for 25% of your salary(+SS)......
Now, you need to account for inflation, etc.
But, very Generrally thinking....
Heck, you could LIVE at an All Inclusive Resort in Mexico for 6 months a year for about $20K.
The people who want $200K a year during retirement (sounds Fun!), but what are you going to do with it?
House is paid off, not contributing to 401K/etc.
What are you spending $200K on?
Just food for thought...
It’s mostly just a rule of thumb to project what you need to save now, to feel secure in retirement.
I think most advisors would say to plan for 80% of current salary in retirement. Then assuming a 4% annual return, most people can easily do the math to determine what they need to save to get there.
Well.
$7500 - Cyclone Club
$4000 - Football Tickets
$2800 - Basketball Tickets
Add in gas and you’re at about 15k a year right there.. This is if prices don’t go up.
My mother is 93 and currently resides in a LTC facility. I consider the amenities adequate but nothing extravagant. Today we received notice that the cost will raise to $291 per day for her private room. Other options offered are private deluxe $336 per day and semi private room rate of $283 per day. These are in northeast Iowa in the small community of Fayette. fyi.
We have an aunt in a memory care facility. I'm told it's around $8000/mo
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.
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:
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.
- 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.
- Invest in index funds instead of actively managed funds. Also, invest as much in equities as you can stomach (80-100 percent).
- 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.
- 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.
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.
Did you change your investment strategy post retirement, or maintain your heavy stock market exposure?
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.
See post #717 (about 81%). So 1 out of 5 die before 65 (1 out of 4 males). The Fin industry never tells you those numbers . . . just save, save, save and plan to live to 100.
