When can we stop saving for retirement? (But not retire)

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Topic Author
sksavers
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Joined: Fri Mar 07, 2008 9:16 pm

When can we stop saving for retirement? (But not retire)

Post by sksavers »

I'm in the process of pulling together a detailed investment post for review, but I thought I'd solicit more general advice first.

The situation is this: My husband, age 41, has been making very good money (~180k) for the past few years, but HATES his high-pressure job. So. He would love to quit his job and work part-time, maybe even change careers and train for something new. I've been in graduate school and will continue to be in training for the next few years, making relatively little money (45k-60k), and we'll be living in a very high cost of living area for my training. We have a baby and plan at least one more, probably 2, in the next 5 years. Once I finish my training my income will probably be around 70k (academia, so minor raises from then out).

We live on about 75k/year and have about 525k in IRAs/401ks, 250k in other investments, and 325k in cash. No debt other than 95k on an investment property. We may want to buy a house in the next couple of years (that's why so much cash).

The question is this: At what point can we afford to stop saving so aggressively...and thereby survive on much less income, but maintain our lifestyles now and through retirement (more or less, cutting some obvious luxuries)?

How do we think through how much we need to have saved and continue to bring in (ideally our reduced income=expenses)?

Thanks in advance for your thoughts.

ps...I know we are in a very fortunate position; we have been quite blessed with his income.
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BruceM
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Re: When can we stop saving for retirement? (But not retire)

Post by BruceM »

sksavers wrote:The question is this: At what point can we afford to stop saving so aggressively...and thereby survive on much less income, but maintain our lifestyles now and through retirement (more or less, cutting some obvious luxuries)?

How do we think through how much we need to have saved and continue to bring in (ideally our reduced income=expenses)?

Thanks in advance for your thoughts.

ps...I know we are in a very fortunate position; we have been quite blessed with his income.
This is a classic Time-Value-of-Money question, that a competent Fee-Only Advisor would be able to solve for you.

The approach to this problem should be as follows:
1. Determine your current net household income need if you were to retire today, reducing current income by current expenses you'd no longer have and increasing it by expenses you'd have because you retired.
2. Grow this amount by inflation to your projected first year of retirement, making reasonable assumptions on your first year of retirement and expected annual average wage growth
3. Determine the lump sum required to have at that point to pay out to you the income you'd need each year over your life expectancy, making reasonable assumptions on annual expected investment rate of return and annual average inflation rate
4. Discount that lump sum amount back to today using your expected average annual rate of invetment return.
5. Subtract from this your current retirement savings. The delta is what you'll need to save over the years ahead.
6. Finally, you'd calculate how much of your husband's income would have to be set aside for a set number of years (clearly, the shorter the saving years, the more would have to be saved each year). You could target, say, 85% of needed savings by his final work year, with you making the sufficient additional savings from your wages up to your first year of retirement.

BruceM
Erwin
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Re: When can we stop saving for retirement? (But not retire)

Post by Erwin »

sksavers wrote:I'm in the process of pulling together a detailed investment post for review, but I thought I'd solicit more general advice first.

The situation is this: My husband, age 41, has been making very good money (~180k) for the past few years, but HATES his high-pressure job. So. He would love to quit his job and work part-time, maybe even change careers and train for something new. I've been in graduate school and will continue to be in training for the next few years, making relatively little money (45k-60k), and we'll be living in a very high cost of living area for my training. We have a baby and plan at least one more, probably 2, in the next 5 years. Once I finish my training my income will probably be around 70k (academia, so minor raises from then out).

We live on about 75k/year and have about 525k in IRAs/401ks, 250k in other investments, and 325k in cash. No debt other than 95k on an investment property. We may want to buy a house in the next couple of years (that's why so much cash).

The question is this: At what point can we afford to stop saving so aggressively...and thereby survive on much less income, but maintain our lifestyles now and through retirement (more or less, cutting some obvious luxuries)?

How do we think through how much we need to have saved and continue to bring in (ideally our reduced income=expenses)?

Thanks in advance for your thoughts.

ps...I know we are in a very fortunate position; we have been quite blessed with his income.
The rule of thumb is that your savings should be a minimum of 25 times your initial annual expenses (after removing SS, pensions, etc) at retirement. This assumes retirement at 65 and an allocation that follows the Bogleheads investment portfolio strategy.
So, if your initial needs are $100,000 per year and you get, say $40,000 from pension/SS; you need to have no less than (100,000-40,000)*25= $1,500,000 saved! If you stop saving earlier, you will need to do some serious extrapolations on needs at retirement and the growthg rate of your savings between the time you stop saving until retirement.
Good luck.
Erwin
livesoft
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Post by livesoft »

The reality is that you will think, "Uh-oh, we have to save for our kids' college education."

So you will probably always be saving. You should always max out retirement account contributions. Whether you call that "saving so aggressively" is beside the point.

You may wish to use some retirement planner software tools listed in the wiki to model scenarios.
YDNAL
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Re: When can we stop saving for retirement? (But not retire)

Post by YDNAL »

sksavers wrote:We live on about 75k/year.....
sk,
  1. $75K x 25 = $1,875,000 to withdraw 4% and no other income.
  2. The income your husband may generate is an unknown. Your income is an unknown. So, every computation that you do will be based on unknowns.
    • He makes $30K, then you need $45K x 25 = $1,125,000.
    • Etc. etc.
Can you stop saving for retirement?... you tell me.
Landy | Be yourself, everyone else is already taken -- Oscar Wilde
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sksavers
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Post by sksavers »

I'm not sure I follow the responses (at least BruceM's very technical one). We don't want to start withdrawing the money that we've saved so far until we really retire. We just want to stop adding to that pile. If we have 30 years to retirement (me, age 33 now) or 20 years (him), the money we have saved now should grow (isn't that the miracle of compounding?).

I think what we need to figure out is:
1) How much will our retirement savings be worth in 20 years if we don't add or subtract from them. I assume that we'll continue to fully fund IRAs just because we're conditioned savers. Plus once I start my "real" job I should be getting employer contributions. So what we have now is the bare minimum.
2) Is that enough to retire on.

For #1, we need to estimate (guess?) a rate of return and allocate appropriately.

I've played with a couple of retirement calculators but they assume that 1) income keeps increasing and 2) we continue to save. I can't figure out how to trick the calculators or find an appropriate one.

Yes, we still have to save for college, which means we either have to reduce our spending significantly or make more than the 75k we currently spend.

My gut tells me that we have enough at this point but it would be nice to have the numbers to back me up.

edit: I just played with the FIRECalc...If I start with 1,000,000 and don't add anything, retire in 20 years, and stay retired for 30 years, we have a 100% success rate of having 100k yearly income adjusted for inflation. Or start with 650k (this leaves us current savings to buy a house/go to school/etc), have 91% rate of having 75k yearly income. (Assuming couch potato portfolio of 75% stock index, 25% bond index, which is not what we have right now.) This seems like pretty good argument to me that we're done. What am I missing??
Last edited by sksavers on Fri Apr 16, 2010 10:04 am, edited 1 time in total.
Harold
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Post by Harold »

sksavers wrote:My gut tells me that we have enough at this point but it would be nice to have the numbers to back me up.
This is the way most people approach financial situations. And this is dangerous.

If you're like most people, you'll find the numbers to back up the conclusion you want. But there's the very real chance that you don't have enough, and some reassuring calculations you made decades earlier won't help so much if that's the case.
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sksavers
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Post by sksavers »

Harold wrote:
If you're like most people, you'll find the numbers to back up the conclusion you want. But there's the very real chance that you don't have enough, and some reassuring calculations you made decades earlier won't help so much if that's the case.
Fair point. But does that mean we can't ever get off this hamster wheel? I mean, we have $1million! That seems like it should be enough to not be stressed out about money or in the case of my husband, stay at a toxic job because we feel like we need the income to save for retirement. If we're not at the point of not being able to live without worrying so much, then who is?
Ron
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Post by Ron »

Harold wrote:
sksavers wrote:My gut tells me that we have enough at this point but it would be nice to have the numbers to back me up.
This is the way most people approach financial situations. And this is dangerous.
Amen.

If you stop breathing, you're dead.

Same thing with saving/investing/planning for retirement, IMHO.

I can say that since I've "been there, done that" (yes, I'm retired).

Just ask yourself this simple question:

"Would I rather die with money, or live without it?" You need to answer this question first, before you can answer your own.

- Ron
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Post by Ron »

sksavers wrote:...we have $1million! That seems like it should be enough to not be stressed out about money or in the case of my husband, stay at a toxic job because we feel like we need the income to save for retirement.
Nope - not at your age, nor at your (expected) income level, IMHO.

Of course, you are free to disagree with me :lol: ...

But since you asked for opinions, please let me know where you are (financially) in about 30 years (I'll only be 92 :lol: ).

Being older than dirt, please listen to my "mantra" - "Sh*t happens"...

BTW, if you stop saving/investing for retirement, your current lifestyle will increase (extra money spent), which means you will have to save/invest more to be at the same expected lifestyle at retirement. Get it?

Taking the general guide of 4% withdrawls of your retirement portfolio, that $1M currently means $40k in current "income". Could you live on $40k today, at your current expense level?

While you can certainly forecast what you think your porfolio will be valued in the far future, you should have learned from the last few years how things can change very quickly.

Yes, I know that it isn't "fair", but that's just the way it is. In my words, "life sucks, then you die" :lol: ...

- Ron
Last edited by Ron on Fri Apr 16, 2010 10:36 am, edited 4 times in total.
chelhxi
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Post by chelhxi »

Sounds like you're not getting the answers you want.
I certainly have my own calculations regarding what you are thinking about. I don't see any reason why your husband can't start making less money at some point.

There's a forum I frequent that might give you better answers:

I can't post the link as I'm a new poster, but if you Google "early retirement forums" it should come up.

Also, check out the book "Your Money or Your Life". Has lots of info about decreasing expenses, reducing how much you need to work, etc.
ResNullius
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Post by ResNullius »

I don't mean for this to sound bad, but you'll never be able to stop saving if you have three kids. Chilren are enormoulsy expensive, but since it comes in drips and drabs, people don't seem to really notice until college time arrives, then weddings, then houses, then grandkids, and so on and so forth. Bottom line: You and your husband should plan on working your butts off until you are 60 to 65, at least. Good luck.
Harold
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Post by Harold »

chelhxi wrote:Sounds like you're not getting the answers you want.
That's precisely the psychological observation I was making. There are plenty of people who have made this work, and they'll have plenty of posts on early retirement forums etc. There are also plenty of people who have run into difficulties -- they're probably not posting so much. She can easily find answers she wants, whether they're helpful or not, who knows.

It's the OP's call what the most prudent course is for her. Certainly her husband doesn't need to stay in the high pressure job -- plenty of people live, save, and love life on much less than that. Whether that fits her lifestyle and future needs is again, her call. There are very many variables here.
fredmitcham
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Post by fredmitcham »

sksavers, your husband is 41, I'm assuming you're younger. You are probably in the top 5 percentile for your ages as far as net worth is concerned. You are so far ahead of the game. When you buy a house you will have a mortgage, your retirement saving will be funneled into mortgage payments, then you'll have college education to save for. You're always going to be saving one way or another.

The problem with this forum is that people -think- they need millions of dollars to retire when they don't. Most people on here will die with millions of dollars in their bank accounts, they are mostly frugal people who like to save their money who think that when they retire they'll suddenly going to turn into big spenders. It's not going to happen. When you're 65 your mortgage will be paid, you won't have kids to pay for, you won't have college to pay for, etc.. your cost of living will decrease dramatically. How much will your pensions be? When you're 70-75, odds are you won't be jetsetting around the world, and won't care if you're driving a BMW, or if you have fancy new clothes, or care about updating your kitchen and bathroom. You'll be lucky if you can even drive anymore, you'll be happy if you can tolerate a plane ride that lasts more than two hours, and as you get even older, when you have a fraction of the energy you have now, with all your aches and pains, you'll just be happy to be to walk comfortably, see and hear properly, and that your spouse is still alive. Playing cards, eating, watching tv, and seeing your grandkids will be the highlights of your days.

Peoples expectations of their lives in old age is unrealistic, spend some time with the elderly and see what life is like, I spend everyday with 70-90 year olds. Their lives are all extremely simple and it's never due to a lack of money. Even if I gave them all a million dollars they wouldn't change a thing in their lives, they'd just give it to their kids and grandkids. Every single one of them. Live your life now, do the things you want to do now, I can't tell you how many people I've seen retire and then die within a couple of years.
YDNAL
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Re: When can we stop saving for retirement? (But not retire)

Post by YDNAL »

sksavers wrote:edit: I just played with the FIRECalc...If I start with 1,000,000 and don't add anything, retire in 20 years, and stay retired for 30 years, we have a 100% success rate of having 100k yearly income adjusted for inflation. Or start with 650k (this leaves us current savings to buy a house/go to school/etc), have 91% rate of having 75k yearly income. (Assuming couch potato portfolio of 75% stock index, 25% bond index, which is not what we have right now.) This seems like pretty good argument to me that we're done. What am I missing??
See my previous response....
  1. $650K should support $26K (4%) and there's a gap to cover $75K needed for expenses.
  2. How do you intend to come up with the near $50K gap?
  3. Isn't your husband's future income (if he quits) unknown? Didn't you say part-time or perhaps changing careers?
  4. After all that is said, the answer to the original question to see if you can stop saving... remains NO.
A part-time or other employment that doesn't cover annual expenses must be supported with the portfolio.
Landy | Be yourself, everyone else is already taken -- Oscar Wilde
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sksavers
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Post by sksavers »

Thanks everyone. I think fredmitcham and chelxhi understand us the most.

We're thinking about a downshifted life, not a retired life for now. Your Money or Your Life - LOVE this book. The money we have saved now doesn't have to be enough to support us from now until death because we'll keep making enough money to live on, so responses asking us if 3% or 4% of our current savings is enough to live on aren't really relevant.

If my job pays $45k and we need 75k, then my husband has to earn 30k until we're ready to dip into our retirement savings. That's not unreasonable given his skill set, even working a very part-time schedule.

What is relevant is that kids do complicate matters financially. College savings are easy to estimate and build into our income plans, but the unknowns are harder....for example, summer camp costs in a few years?

As always, the discussion here is illuminating. Even the posters I don't agree with are helpful to read! Thanks to everyone, still welcoming others' thoughts so chime in please.[/i]
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Bob B
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Post by Bob B »

fredmitcham wrote:sksavers, your husband is 41, I'm assuming you're younger. You are probably in the top 5 percentile for your ages as far as net worth is concerned. You are so far ahead of the game. When you buy a house you will have a mortgage, your retirement saving will be funneled into mortgage payments, then you'll have college education to save for. You're always going to be saving one way or another.

The problem with this forum is that people -think- they need millions of dollars to retire when they don't. Most people on here will die with millions of dollars in their bank accounts, they are mostly frugal people who like to save their money who think that when they retire they'll suddenly going to turn into big spenders. It's not going to happen. When you're 65 your mortgage will be paid, you won't have kids to pay for, you won't have college to pay for, etc.. your cost of living will decrease dramatically. How much will your pensions be? When you're 70-75, odds are you won't be jetsetting around the world, and won't care if you're driving a BMW, or if you have fancy new clothes, or care about updating your kitchen and bathroom. You'll be lucky if you can even drive anymore, you'll be happy if you can tolerate a plane ride that lasts more than two hours, and as you get even older, when you have a fraction of the energy you have now, with all your aches and pains, you'll just be happy to be to walk comfortably, see and hear properly, and that your spouse is still alive. Playing cards, eating, watching tv, and seeing your grandkids will be the highlights of your days.

Peoples expectations of their lives in old age is unrealistic, spend some time with the elderly and see what life is like, I spend everyday with 70-90 year olds. Their lives are all extremely simple and it's never due to a lack of money. Even if I gave them all a million dollars they wouldn't change a thing in their lives, they'd just give it to their kids and grandkids. Every single one of them. Live your life now, do the things you want to do now, I can't tell you how many people I've seen retire and then die within a couple of years.
This post should be a 'sticky'.
Regards, | Bob | Wiki
fredmitcham
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Post by fredmitcham »

sksavers wrote:Thanks everyone. I think fredmitcham and chelxhi understand us the most.

We're thinking about a downshifted life, not a retired life for now. Your Money or Your Life - LOVE this book. The money we have saved now doesn't have to be enough to support us from now until death because we'll keep making enough money to live on, so responses asking us if 3% or 4% of our current savings is enough to live on aren't really relevant.

If my job pays $45k and we need 75k, then my husband has to earn 30k until we're ready to dip into our retirement savings. That's not unreasonable given his skill set, even working a very part-time schedule.

What is relevant is that kids do complicate matters financially. College savings are easy to estimate and build into our income plans, but the unknowns are harder....for example, summer camp costs in a few years?

As always, the discussion here is illuminating. Even the posters I don't agree with are helpful to read! Thanks to everyone, still welcoming others' thoughts so chime in please.[/i]
All you need to do is make enough money to raise your kids, live comfortably, pay your mortgage, and save up for your kids education. Use part of your 1 mil as a down payment on your house, keep an emergency fund, invest the rest and don't touch it, pretend it doesn't even exist. If I were you I would never save another penny for retirement. Just think about how much your current retirement savings will grow in the next 25 years until you actually retire? At 5% real return (after inflation) they'd be worth 3.4 million in todays dollars. Using the boglehead 4% withdrawl rate thats $136,000 a year. If you're living off 75K a year now, do you really think you'll need 136K when you're both old, retired, and your kids are grown up? Exactly. And that's not including your pensions, you sound like you're a teacher/professor, if so you will likely receive a very nice pension.
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englishgirl
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Post by englishgirl »

sksavers, I think thinking about a downshifted life is key, not about stopping adding to your retirement savings. You're probably OK to stop, but there's no real need to, and if you keep contributing SOMETHING, it'll increase your safety margin. I decided that I would change careers but I decided that I would continue to work part-time while going to college. All the time that I am working I am putting at least 10% away for retirement. I don't worry any more about maxing out my contributions, though.

Given that you and your husband are not talking about minimum wage jobs, if you think you can live on a part time salary, you can live on a part time salary minus 5-10%. You may have to compromise on the number of hours worked, or the type of job, but it is do-able. For me, the very act of going to college, and thus having an escape plan, helps me deal with my high pressure job (which, surprisingly, they allowed me to go part time at - I thought I'd have to work in Starbucks or somewhere but no, I am at the same place). Some days it is miserable. Some days it is not so bad. But at least I know it is temporary. Maybe your husband just doen't know what career change he would like and needs time to think about it, but if he really cares about getting out of the rat race, he'll find time somehow to figure out the next stage in his journey.

Once I graduate and am at my new (hopefully) lower stress job, I may stop contributing to retirement accounts if I really can't get by for the first few years, but hopefully the situation will stabilize soon and I will reasses. Whatever move you make financially doesn't have to be all-or-nothing.
Sarah
VanFran
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When to quit saving for retirement

Post by VanFran »

Hi,

Please see if you can use the following. This is a printout of a spreadsheet. For your own situation please put your numbers to the right of the example:

Worksheet: How Much to Save For Retirement?

Example
Your retirement income goals and benefits
Your current net income needs $ 80,000.00
Your retirement income goal (80% of line 1) $ 64,000.00
Social security benefits at age 67 $ 24,000.00
Pension $ 10,000.00
Annual shortfall $ 30,000.00
Current retirement savings $ 50,000.00

Assumptions:
Investment return 9%
Years until retirement 25
Retirement period (in years) 25
Inflation rate: pre-retirement 3%
Inflation rate: post-retirement (dictates 2%
income growth after retirement)

Your income needs:
Annual income goal at retirement
FV(3%, 25, 0, 64000, 0) $134,000.00
Annual income shortfall at retirement
FV(3%, 25, 0, 30000, 0) $62,800.00
Additional capital needed at retirement Estimation
$62800/.045 (assume withdrawal of 4.5% $1,395,556
of assets per year)
Note: the retirement simulator says that $875,000 capital with 2% inflation,
9% annual return gives a 90% success at $62,800 per year. If return is
lowered to 8% a capital of $965,000 will produce the same results.

Value of current savings at retirement:
Current savings at retirement at 9% return
FV(9%, 25, 0, 50000, 0) $431,154.00

Your retirement savings goal:
Net savings needed (965,000 - 431,154) $ 534,000.00
Current annual savings needed
FV(9%/12, 300 months, 475 monthly $533,000.00
contribution,0,0)
Percent of current annual income 7.1%

Note: The pension (line 4) could increase depending on the company compensation policies. In the interest
of being conservative only an inflation factor is assumed pertaining its growth. In reality its growth
should reflect merit revues which hopefully will exceed inflation. In other words, it could be worth more
at retirement time.
The above example uses a retirement simulator. A retirement simulator uses inputs such as required monthly income, expected return (percentage) on your assets, inflation assumption etc. to tell you the size of the principal required to meet those expectations employing Monte Carlo techniques (just make sure you read about the modes of operation: success, principal, and withdraw). One source for a retirement simulator is “efficientfrontier.com”. T.Rowe Price has a tool online called “Retirement Income Calculator”. The rule of thumb wisdom among financial planners is that 5% of your assets should be the maximum amount of money taken out of your assets to make your money last forever. The retirement simulator fine tunes that figure based on the inputs provided. The truth probably lies halfways between those figures. Please take the lower figure as the minimum capital requirements for your case.
YDNAL
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Re: When can we stop saving for retirement? (But not retire)

Post by YDNAL »

sksavers wrote:The situation is this: My husband, age 41, has been making very good money (~180k) for the past few years, but HATES his high-pressure job. So. He would love to quit his job and work part-time, maybe even change careers and train for something new. I've been in graduate school and will continue to be in training for the next few years, making relatively little money (45k-60k), and we'll be living in a very high cost of living area for my training. We have a baby and plan at least one more, probably 2, in the next 5 years. Once I finish my training my income will probably be around 70k (academia, so minor raises from then out).
SK,

I'm glad you feel that you can provide $45K (or whatever) to the household after having 3 kids (potentially).
sksavers wrote:The money we have saved now doesn't have to be enough to support us from now until death because we'll keep making enough money to live on, so responses asking us if 3% or 4% of our current savings is enough to live on aren't really relevant.

If my job pays $45k and we need 75k, then my husband has to earn 30k until we're ready to dip into our retirement savings. That's not unreasonable given his skill set, even working a very part-time schedule.]
You shouldn't casually consider "irrelevant" the potential of portfolio withdrawal when dealing with many unknowns.
fredmitcham wrote:If I were you I would never save another penny for retirement. Just think about how much your current retirement savings will grow in the next 25 years until you actually retire? At 5% real return (after inflation) they'd be worth 3.4 million in todays dollars.
I agree with most everything you have said. However, I find irresponsible a suggestion to a 40yo couple to stop saving and that $650K is sufficient based some projected return you casually mention.
Landy | Be yourself, everyone else is already taken -- Oscar Wilde
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PassiveAggressive
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Post by PassiveAggressive »

This is my first post here, so take my novice advice for what it is.

First, let me try to answer your initial question. You can run these same calculations with your own assumptions. Here are mine:
  • - You will retire in 25 years
    - You will need 75k p.a. in retirement (in today's dollars)
    - Inflation will average 2.5% p.a.
    - Your $800k portfolio will grow at 6% p.a.
    - You will not add to or subtract from your portfolio in the next 25 years
    - In retirement, you will live off 4% of your portfolio each year.
    - Social Security is ignored as it may or may not exist in its current form when we retire
Based on these assumptions, things look pretty good:
  • - You will need $3,475,000 when you retire - 75,000 / 0.04 x 1.025^25
    - You will have $3,430,000 when you retire - 800,000 x 1.06^25
Now my advice. It seems to me that you can afford to save less for retirement if you would like. However, these assumptions are just that and things can change. If I were you, I would re-run these caculations every year and make sure that your retirement is still on track. If not, your husband may need to go back to work full time. It would be best if he can maintain his earning potential in case cirumstances change. This may be possible if he is stays active in his current industry. If you are fairly confident that he can go back to earning 100k+ if need be, this would give you a lot of flexibilty.

I do think that you may need more income over the next 20 years than you are currently budgeting. You mentioned college and summer camps, I will add things like nursery school, piano lessons, travel soccer, gymnastics, family vacations, braces, etc. Having kids is much more expensive than my wife and I thought it would be. Accordingly, even if you stop saving for retirement now, you may need an extra 10-25k in income over the next few years for the children. I would also recommend that you at least take advantage of matching 401(k) plans if they are available.

Of course, you could work harder and save more, but it does not look like you need to in order to reach your financial goals. I see know reason why your husband should stay in a job that he hates. Good luck.
dharrythomas
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You can slow down

Post by dharrythomas »

While I wouldn't recommend that you stop saving, you are clearly in a position where you can slow down. Though there are risks.

Houses are expenses and as is clearly laid out in 'The Millionaire Next Door' series, alot of your ongoing expenses are tied to where you chose to live. If you cut back on income, you should consider downsizing your expectations on lifestyle. You'll have to manage the kids expectations also, alot of that is build on the neighborhood. And manage the kids expectations on college, if you're a professor, they should conditioned early to go where they can get a discounted education. (As an aside, most of my fights with my wife were about those issues--we survived)

I'd keep investing in any workplace retirement plans to at least capture the max and whatever pension plan offered by the school. But unless you've got to have a big house and a flow of new toys, your husband can cut back. If it doesn't lengthen his life, he'll at least have the opportunity to enjoy it and maybe spend some time with the kid(s).

With a reasonable control of expectations and an appropriate Asset Allocation, you should be fine. If you husband took a 2/3 paycut and you didn't bring in a dime, you'd be solidly in the top half of US wage families. It all depends on what you want.

Good Luck :wink:

Harry
fredmitcham
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Re: When can we stop saving for retirement? (But not retire)

Post by fredmitcham »

YDNAL wrote:
sksavers wrote:The situation is this: My husband, age 41, has been making very good money (~180k) for the past few years, but HATES his high-pressure job. So. He would love to quit his job and work part-time, maybe even change careers and train for something new. I've been in graduate school and will continue to be in training for the next few years, making relatively little money (45k-60k), and we'll be living in a very high cost of living area for my training. We have a baby and plan at least one more, probably 2, in the next 5 years. Once I finish my training my income will probably be around 70k (academia, so minor raises from then out).
SK,

I'm glad you feel that you can provide $45K (or whatever) to the household after having 3 kids (potentially).
sksavers wrote:The money we have saved now doesn't have to be enough to support us from now until death because we'll keep making enough money to live on, so responses asking us if 3% or 4% of our current savings is enough to live on aren't really relevant.

If my job pays $45k and we need 75k, then my husband has to earn 30k until we're ready to dip into our retirement savings. That's not unreasonable given his skill set, even working a very part-time schedule.]
You shouldn't casually consider "irrelevant" the potential of portfolio withdrawal when dealing with many unknowns.
fredmitcham wrote:If I were you I would never save another penny for retirement. Just think about how much your current retirement savings will grow in the next 25 years until you actually retire? At 5% real return (after inflation) they'd be worth 3.4 million in todays dollars.
I agree with most everything you have said. However, I find irresponsible a suggestion to a 40yo couple to stop saving and that $650K is sufficient based some projected return you casually mention.
Over the last 140 years the S&P has earned an average inflation adjusted return of 8.39%, the last 70 years 8.20%, and the last 35 years 8.39%. So I'd say 5% is a pretty conservative assumption. So if they use 350K of their savings towards a down payment on their home and their emergency fund they will have 650K left. I'll humor you and lower the return to 4%, after 25 years that's 1.7 million. Plus a house paid off that's probably worth quite a bit if they're putting 300K down to buy it. Plus social security, plus whatever pensions they have. To think that someone retiring today with all that, that doesn't live a lavish lifestyle, would somehow not have 'enough' is quite simply ridiculous. Pay the mortgage, save for college, take the kids on trips, have fun, enjoy life, spend money, invest your retirement savings wisely and don't worry about it. If you have money left over, add it to the retirement nest egg, but don't deprive yourself of anything so you can add to your retirement savings.
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Post by stlrick »

It is important to stop doing work that you hate, and if you can be happy living with less, then do it. But do not underestimate the unknowns of having children. A child can be ill (and I mean seriously, for the long-term). When they are young adults, there may be circumstances that lead you to want to help them financially, whether it be graduate school, or a deposit on a home, or some issue with one of your grandchildren. Either one of you can get injured or ill. Do you have good disability insurance? You cannot know what the future will bring, and you cannot know how important $5,000 or $500,000 that you do not have might be at that time.

I do not question the decision to slow-down and step back. I question the idea that at your ages and your stage in life you can do it as part of life-time financial plan. The financial consequences are unknowable. This is a decision about what feels right now.

Rick
catchup
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Post by catchup »

I agree, it all depends on what you want.

If you have three kids at Harvard, your annual expenditures could be substantially higher than 75,000/ year for tuition alone.

If you buy a home and your investments all drop in value by 35% rather than go up by 6-8% annually, for example, then you might be looking at some different numbers.

Good luck, though, you are in a great situation. I'll be interested to see how you decide to work things out for yourselves.

Provided that you don't have to touch your savings for a while, and you can provide reliable income between the two of you, it sounds like you have a lot of options open to you, chances are you'll remain in great shape.
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Post by HomerJ »

Most of the responses here are NOT understanding the question...

They don't want to RETIRE, and generate 75k off their savings...

They want to CHANGE JOBS because the husband HATES HIS JOB and they want to know if they'll be okay when they do retire if he down-shifts his earnings to just cover the 75k they need...

She's asking if they don't save anymore, will the money they already have grow to be enough to retire on in 30 years...

I would say Yes, easily...

If they can live on 75k now, then he can down-shift to a different job that pays much less than 180k he is making now...

Let the money you already saved grow for 20 years, and it should be enough... You'll probably find when both of you are working that you can start saving again in a few years anyway...

If he truly hates his job, then you guys have done a great job saving so that he can now quit and do something he enjoys instead...
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Post by HomerJ »

Bob B wrote:
fredmitcham wrote:sksavers, your husband is 41, I'm assuming you're younger. You are probably in the top 5 percentile for your ages as far as net worth is concerned. You are so far ahead of the game. When you buy a house you will have a mortgage, your retirement saving will be funneled into mortgage payments, then you'll have college education to save for. You're always going to be saving one way or another.

The problem with this forum is that people -think- they need millions of dollars to retire when they don't. Most people on here will die with millions of dollars in their bank accounts, they are mostly frugal people who like to save their money who think that when they retire they'll suddenly going to turn into big spenders. It's not going to happen. When you're 65 your mortgage will be paid, you won't have kids to pay for, you won't have college to pay for, etc.. your cost of living will decrease dramatically. How much will your pensions be? When you're 70-75, odds are you won't be jetsetting around the world, and won't care if you're driving a BMW, or if you have fancy new clothes, or care about updating your kitchen and bathroom. You'll be lucky if you can even drive anymore, you'll be happy if you can tolerate a plane ride that lasts more than two hours, and as you get even older, when you have a fraction of the energy you have now, with all your aches and pains, you'll just be happy to be to walk comfortably, see and hear properly, and that your spouse is still alive. Playing cards, eating, watching tv, and seeing your grandkids will be the highlights of your days.

Peoples expectations of their lives in old age is unrealistic, spend some time with the elderly and see what life is like, I spend everyday with 70-90 year olds. Their lives are all extremely simple and it's never due to a lack of money. Even if I gave them all a million dollars they wouldn't change a thing in their lives, they'd just give it to their kids and grandkids. Every single one of them. Live your life now, do the things you want to do now, I can't tell you how many people I've seen retire and then die within a couple of years.
This post should be a 'sticky'.
I agree... this post needs to be set aside and made required reading for everyone who comes here...
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Post by ymarkley »

The hardest thing is getting off the proverbial treadmill as it runs at full speed, and also having a lot of self esteem built into the whole 'need to be the bread winner' thing.

Now as I stand at a major fork in the road it is a huge battle to figure out which way to go. Jump ship and get into some full time medical related program at a local university, or keep my nose to the grindstone.

On one side I have my wife screaming at me to quit. I also read all the 'save at all cost' replies and it sends me right back into my shell. I keep thinking if I had X amount of money in the bank then I can do it. Sadly that X number keeps creeping up in my head.

So I would say give it a shot and keep us updated. Too bad I can't take my own advice..

I concur that this is a great thread!
Last edited by ymarkley on Tue Apr 26, 2011 11:38 am, edited 1 time in total.
letsgobobby
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Post by letsgobobby »

ymarkley wrote:It is scary how close this is to our situation. I am 42, 2 young kids, with similar numbers and a high pressure job (I run my own technology company) that has kept me from taking a real vacation in 15 years.

The hardest thing is getting off the proverbial treadmill as it runs at full speed, and also having a lot of self esteem built into the whole 'need to be the bread winner' thing.

For the past 3 years I have taken classes and actually managed to muddle through all the required pre-medical school courses. Taking all these heavy science course while working full time is not something I would recommend.

Now as I stand at a major fork in the road it is a huge battle to figure out which way to go. Jump ship and get into some full time medical related program at a local university, or keep my nose to the grindstone.

On one side I have my wife screaming at me to quit. I also read all the 'save at all cost' replies and it sends me right back into my shell. I keep thinking if I had X amount of money in the bank then I can do it. Sadly that X number keeps creeping up in my head.

So I would say give it a shot and keep us updated. Too bad I can't take my own advice..

I concur that this is a great thread!
I just hope you aren't serious when you say that going into a medical related program is going to lower your stress level significantly.
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Post by dorokhin »

There's a lot of complicated issues but my basic take is this:

To decide how long you need to stay at this higher savings rate we need to know two things. How soon do you want to absolutely retire (and thus begin drawing the 75k from investments) and how much do you think your savings rate would be on the reduced lifestyle if your husband changes jobs? At that point, you could do the math and figure out how many years of "high savings" you need before you could transition to the "low savings." Given that your spending goals are relatively modest, I think the answer may be "sooner than you think."

Here are the things that I did figure out based on the info you provided...

Assuming your cash is used to buy a house, it seems that you have $775k in true diversified "investments." I would apply a real growth rate to this, rather than a nominal one. I'm not sure what they're invested in, but let's assume 3% real growth for a balanced diversified portfolio. My "back of the envelope" calculation for your current situation assuming that you neither save nor draw money...775k * 1.03^30 = 1.88m. 4% withdrawal on that amount is ~$75k. Thus, if you saved no more money and your portfolio grows at 3% real for the next 30 years then at that point you'd be able to completely retire and still withdraw $75k/year in today's dollars. Now the question is how much you save between now and then to make this a reality in less than 30 years (see my 2 questions above).

EDIT: Obviously this type of analysis is sensitive to your projected growth rate. Someone in this thread mentioned 5% real, I think that's too high to "assume." You could lock in 2% real by buying a 30year TIP right now so I decided to go with 3% real in my analysis for a diversified portfolio.
Last edited by dorokhin on Fri Apr 16, 2010 4:32 pm, edited 2 times in total.
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Post by fsrph »

Bob B wrote:
fredmitcham wrote:sksavers, your husband is 41, I'm assuming you're younger. You are probably in the top 5 percentile for your ages as far as net worth is concerned. You are so far ahead of the game. When you buy a house you will have a mortgage, your retirement saving will be funneled into mortgage payments, then you'll have college education to save for. You're always going to be saving one way or another.

The problem with this forum is that people -think- they need millions of dollars to retire when they don't. Most people on here will die with millions of dollars in their bank accounts, they are mostly frugal people who like to save their money who think that when they retire they'll suddenly going to turn into big spenders. It's not going to happen. When you're 65 your mortgage will be paid, you won't have kids to pay for, you won't have college to pay for, etc.. your cost of living will decrease dramatically. How much will your pensions be? When you're 70-75, odds are you won't be jetsetting around the world, and won't care if you're driving a BMW, or if you have fancy new clothes, or care about updating your kitchen and bathroom. You'll be lucky if you can even drive anymore, you'll be happy if you can tolerate a plane ride that lasts more than two hours, and as you get even older, when you have a fraction of the energy you have now, with all your aches and pains, you'll just be happy to be to walk comfortably, see and hear properly, and that your spouse is still alive. Playing cards, eating, watching tv, and seeing your grandkids will be the highlights of your days.

Peoples expectations of their lives in old age is unrealistic, spend some time with the elderly and see what life is like, I spend everyday with 70-90 year olds. Their lives are all extremely simple and it's never due to a lack of money. Even if I gave them all a million dollars they wouldn't change a thing in their lives, they'd just give it to their kids and grandkids. Every single one of them. Live your life now, do the things you want to do now, I can't tell you how many people I've seen retire and then die within a couple of years.
This post should be a 'sticky'.
+1 .... That was an excellent post. It addressed the balance between saving and living I was looking for. I'll tell everyone a little story. My aunt passed away 18 months ago at age 83. She retired early (mid 50's) from a govt job and lived on her pension, savings and later SS. She lived a frugal lifestyle but never denied herself things that she liked. She left behind an estate of about 1.5M and spent very little of the money she accumulated. If she had another 2,3, or 5 million $$ it would have made no difference to her retirement...her lifestyle would not have changed at all. She did everything she wanted and was happy in her retirement days.

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Post by bob90245 »

I dare say that I don't find these anecdotes very persuasive. Does the experience and values of the prior generation apply to today's generation or the baby boomer generation? I'm skeptical.

I apologize for taking this thread off-topic from the opening poster.
Ignore the market noise. Keep to your rebalancing schedule whether that is semi-annual, annual or trigger bands.
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Re: When can we stop saving for retirement? (But not retire)

Post by YDNAL »

bob90245 wrote:I dare say that I don't find these anecdotes very persuasive. Does the experience and values of the prior generation apply to today's generation or the baby boomer generation? I'm skeptical.
++1
YDNAL wrote:
fredmitcham wrote:If I were you I would never save another penny for retirement. Just think about how much your current retirement savings will grow in the next 25 years until you actually retire? At 5% real return (after inflation) they'd be worth 3.4 million in todays dollars.
I agree with most everything you have said. However, I find irresponsible a suggestion to a 40yo couple to stop saving and that $650K is sufficient based some projected return you casually mention.
Landy | Be yourself, everyone else is already taken -- Oscar Wilde
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Post by livesoft »

The OP is my family about 10 years ago ... except they make more money.

Ten years later ...

We continued to save lots over the first 8 years, then I semi-retired 2 years ago and our saving rate dropped. That wasn't the only thing that dropped.

We could keep working until our mid-60s without saving any more money, but I don't think we would be here if we had given up 10 years ago. Furthermore, we now don't have to keeping working if we so choose.

I think if the OP gave up now, many paths of more security and safety will be closed to them. I'm not saying husband should not find a different job. I'm saying the family should continue to save and invest for retirement until they retire, pay for college maybe, and pay for weddings maybe. If they stay aggressive for the next 8 years, they will be much, much better off for sure.
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Post by Christine_NM »

To stop saving in an employer-matching 401k (or a 403b for you later on) is to throw money away.

Save at least the minimum required to get the matches, which are part of your compensation package.

Buying a house will count somewhat toward retirement savings since you will use the house or its successor to avoid rent.

So, consider moderation. Don't save so aggressively you feel seriously deprived and don't abandon it altogether. What you have is good but unless you have a large ironclad pension it won't be enough.

Even a simple life costs an surprising amount of money.
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Post by schnoodlemom »

This thread really strikes a chord. Thanks to the OP and all that responded. We struggle with the same central issues of what is enough, balancing living well but within our means today while saving for an uncertain future. (Also read and loved Your Money or Your Life, years ago.) I like the idea of downshifting to more acceptable employment, while continue to save in moderation and reassessing yearly, adjust as you go. The best of luck to you as you charter new waters with home-ownership and child-rearing! These can be costly, but much of the costs are within your control. You're doing great! Amanda
Last edited by schnoodlemom on Fri Apr 16, 2010 5:24 pm, edited 1 time in total.
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Post by fredmitcham »

bob90245 wrote:I dare say that I don't find these anecdotes very persuasive. Does the experience and values of the prior generation apply to today's generation or the baby boomer generation? I'm skeptical.
It depends on what type of person you are, most people on this board are the frugal/saver type and that isn't going to change in retirement. My grandfather was the opposite, he was a big spender his whole life. Got a new Cadillac every three years, lived in a huge house, wouldn't dare wear a watch that cost less than $5,000, was a member at the most exclusive country club in town, ate at the best restaurants. When he retired at 65 he and my grandmother traveled all over the world. He's 91 now so he's still going, except the last time he drove a car or sat on a plane was 16 years ago. He stopped playing golf sometime in his early 70's because of his arthritis. He had about ten good years of retirement, then about ten more decent years where he lived a simple life with my grandmother. They sold the giant house neither of them could clean, but mostly because it was very difficult for them to get up and down the stairs. They moved into an upscale seniors condo/residence. They were quite happy there, playing cards every night in the lounge, watching their tv shows, and we'd go visit and pick them up for family events.

My grandfather has had alzheimers for around six years now and doesn't know up from down, he's in a nursing home. He and my grandmother have lived on less than $36,000 a year for the last 16 years. And we're talking about someone who would spend $36,000 on a vacation without batting an eye. You are not superhuman, you will succumb to old age and a deteriorating body just like everyone else. All the things you spend money on today will cease to matter once you reach a certain age. It doesn't matter if you're a boomer, a gen x'er or whatever they're calling todays kids. There are some people who lead healthy active lives into their 80's, they are the exception to the rule and the rules are not changing.. not even for us.

As for the original poster, the only benefit to saving more for retirement at this point is it gives you the option of retiring earlier or gives you the option of living a lavish lifestyle in retirement if that's your natural inclination. And if you can save more while paying your mortgage, raising your kids comfortably, saving for college, and not working a job either of you hates, then absolutely go for it. Like others have mentioned, you should definitely contribute to any employer matched 401k, etc.. because it's essentially free money. Remember that you are entering the peak of your life. You're young, healthy, financially secure, everyone you know and love is still alive and well, and you're about to have a bunch of little kids running around. Savor it!
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Post by Grt2bOutdoors »

fredmitcham wrote:
bob90245 wrote:I dare say that I don't find these anecdotes very persuasive. Does the experience and values of the prior generation apply to today's generation or the baby boomer generation? I'm skeptical.
It depends on what type of person you are, most people on this board are the frugal/saver type and that isn't going to change in retirement. My grandfather was the opposite, he was a big spender his whole life. Got a new Cadillac every three years, lived in a huge house, wouldn't dare wear a watch that cost less than $5,000, was a member at the most exclusive country club in town, ate at the best restaurants. When he retired at 65 he and my grandmother traveled all over the world. He's 91 now so he's still going, except the last time he drove a car or sat on a plane was 16 years ago. He stopped playing golf sometime in his early 70's because of his arthritis. He had about ten good years of retirement, then about ten more decent years where he lived a simple life with my grandmother. They sold the giant house neither of them could clean, but mostly because it was very difficult for them to get up and down the stairs. They moved into an upscale seniors condo/residence. They were quite happy there, playing cards every night in the lounge, watching their tv shows, and we'd go visit and pick them up for family events.

My grandfather has had alzheimers for around six years now and doesn't know up from down, he's in a nursing home. He and my grandmother have lived on less than $36,000 a year for the last 16 years. And we're talking about someone who would spend $36,000 on a vacation without batting an eye. You are not superhuman, you will succumb to old age and a deteriorating body just like everyone else. All the things you spend money on today will cease to matter once you reach a certain age. It doesn't matter if you're a boomer, a gen x'er or whatever they're calling todays kids. There are some people who lead healthy active lives into their 80's, they are the exception to the rule and the rules are not changing.. not even for us.

As for the original poster, the only benefit to saving more for retirement at this point is it gives you the option of retiring earlier or gives you the option of living a lavish lifestyle in retirement if that's your natural inclination. And if you can save more while paying your mortgage, raising your kids comfortably, saving for college, and not working a job either of you hates, then absolutely go for it. Like others have mentioned, you should definitely contribute to any employer matched 401k, etc.. because it's essentially free money. Remember that you are entering the peak of your life. You're young, healthy, financially secure, everyone you know and love is still alive and well, and you're about to have a bunch of little kids running around. Savor it!
Great post and so true.
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Re: When can we stop saving for retirement? (But not retire)

Post by YDNAL »

sksavers (OP) wrote:When can we stop saving for retirement? (But not retire)
fredmitcham wrote:
bob90245 wrote:I dare say that I don't find these anecdotes very persuasive. Does the experience and values of the prior generation apply to today's generation or the baby boomer generation? I'm skeptical.
It depends on what type of person you are, most people on this board are the frugal/saver type and that isn't going to change in retirement. My grandfather was the opposite, he was a big spender his whole life......
Fred,

Life is a balancing act. I'm pretty sure most of us have stories (or read stories) as you described, the complete opposite, and somewhere in the middle.

This part of the Forum (Investing - Help with Personal Investments) has a clear objective in the title, and that includes "saving" to afford making those investments. The fact remains that a 40yo couple looking for change in direction (employment, family, life) should not - by default - be suggested to stop saving.... isn't that what this thread is about, and what you have already suggested?
fredmitcham wrote:If I were you I would never save another penny for retirement. Just think about how much your current retirement savings will grow in the next 25 years until you actually retire? At 5% real return (after inflation) they'd be worth 3.4 million in todays dollars.
Landy | Be yourself, everyone else is already taken -- Oscar Wilde
KlangFool
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Post by KlangFool »

Folks,

If a family is spending 75K per year, won't a family need to earn a lot more than 75K in order to spend 75K due to taxes??

At the low level of expenses (20K to 30K) per year, the level of income generated may be so low that the tax is negligible. But, I do not think that works for 75K per year.

Please educate me...

KlangFool
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Re: When can we stop saving for retirement? (But not retire)

Post by YDNAL »

KlangFool wrote:Folks,

If a family is spending 75K per year, won't a family need to earn a lot more than 75K in order to spend 75K due to taxes??
KF,

Of course they do. Just looking at Federal taxes - not counting Medicare, State, etc.
Married Filing Jointly or Qualifying Widow(er) Filing Status
[Tax Rate Schedule Y-1, Internal Revenue Code section 1(a)]

•10% on the income between $0 and $16,750
•15% on the income between $16,750 and $68,000; plus $1,675
•25% on the income between $68,000 and $137,300; plus $9,362.50 <- likely middle of this bracket
•28% on the income between $137,300 and $209,250; plus $26,687.50
•33% on the income between $209,250 and $373,650; plus $46,833.50
•35% on the income over $373,650; plus $101,085.50
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livesoft
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Post by livesoft »

During working (W2) years, yes, they will need a lot more than $75K.

But when they are not working, their taxes may be as low as $0 (or even less) if they have kids at home and the child tax credit is still around.

If they get most of their income from return of capital (no taxes) and long-term cap gains, then they might also pay $0. I know folks who have 6-figure incomes and pay less than $7K or so in income taxes.
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Re: When can we stop saving for retirement? (But not retire)

Post by KlangFool »

sksavers wrote:I'm in the process of pulling together a detailed investment post for review, but I thought I'd solicit more general advice first.

The situation is this: My husband, age 41, has been making very good money (~180k) for the past few years, but HATES his high-pressure job. So. He would love to quit his job and work part-time, maybe even change careers and train for something new. I've been in graduate school and will continue to be in training for the next few years, making relatively little money (45k-60k), and we'll be living in a very high cost of living area for my training. We have a baby and plan at least one more, probably 2, in the next 5 years. Once I finish my training my income will probably be around 70k (academia, so minor raises from then out).

We live on about 75k/year and have about 525k in IRAs/401ks, 250k in other investments, and 325k in cash. No debt other than 95k on an investment property. We may want to buy a house in the next couple of years (that's why so much cash).

The question is this: At what point can we afford to stop saving so aggressively...and thereby survive on much less income, but maintain our lifestyles now and through retirement (more or less, cutting some obvious luxuries)?

How do we think through how much we need to have saved and continue to bring in (ideally our reduced income=expenses)?

Thanks in advance for your thoughts.

ps...I know we are in a very fortunate position; we have been quite blessed with his income.
sksavers,

Other people have been giving you good advices.

Let me give you another angle.

1) Due to taxes, the income level may need to be as high as 100K per year for 75K of expense per year.

2) On the other hand, due to taxes, the income of 180K is bringing home a lot less than 180K. So, down shifting by your husband may have a lot of less impact on take home income than your first look.

--political comment deleted-- the tax on family with income above 250K is going up a lot higher. So, it may not be worthwhile to earn that much anyhow.

KlangFool
Sidney
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Post by Sidney »

the tax on family with income above 250K is going up a lot higher
Can you elaborate on that. Is there anything other than the 3.8% tax on investment income that has been legislated since January, 2009?
I always wanted to be a procrastinator.
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HomerJ
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Re: When can we stop saving for retirement? (But not retire)

Post by HomerJ »

KlangFool wrote:--political comment deleted--
LOL... I'm pretty sure those of us above $250k would rather stay here and pay extra taxes than drop back to $150k just to spite the government.

:)
Sidney
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Re: When can we stop saving for retirement? (But not retire)

Post by Sidney »

rrosenkoetter wrote:
KlangFool wrote:3--political comment deleted-- So, it may not be worthwhile to earn that much anyhow.
LOL... I'm pretty sure those of us above $250k would rather stay here and pay extra taxes than drop back to $150k just to spite the government.

:)
:wink:
I always wanted to be a procrastinator.
KlangFool
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Post by KlangFool »

Sidney wrote:
the tax on family with income above 250K is going up a lot higher
Can you elaborate on that. Is there anything other than the 3.8% tax on investment income that has been legislated since January, 2009?
http://info.ricedelman.com/lgf/fpr64.aspx

Sidney,

Ric Edelman's report give a better breakdown than what I can do.

KlangFool
KlangFool
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Re: When can we stop saving for retirement? (But not retire)

Post by KlangFool »

rrosenkoetter wrote:
KlangFool wrote: --political comment deleted--[/color] So, it may not be worthwhile to earn that much anyhow.
LOL... I'm pretty sure those of us above $250k would rather stay here and pay extra taxes than drop back to $150k just to spite the government.

:)
rrosenkoetter,

<< I'm pretty sure those of us above $250k would rather stay here and pay extra taxes than drop back to $150k just to spite the government.>>

Speak for yourself and no one else. People in my age group, 40 to 50 are the sandwich generation. We have older parent and young children to take care of. So, up to certain point, it is NOT worthwhile for us to earn that much money. We would rather spent that time with our family.

No, it has NOTHING to do with spiting the government. It has to do with BASIC ROI of our time.

Up to certain point, I would probably start taking unpaid leave since it is not worthwhile for me to earn that much money and get only a small amount back.

KlangFool
Last edited by KlangFool on Sat Apr 17, 2010 11:47 am, edited 1 time in total.
KlangFool
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Post by KlangFool »

Folks,

When a baby is bornt, the clock start ticking. At most, parents has only 18 years to spend time with the children. After 18 years, the children will be going to college and no time with the family. So, there is a limited time window with your children. It may or may not matter to you. For those people that matters, more time that spent working and away from family means less time with the children. There is a trade off. And, once the time is passed, it never come back. You do not get a second chance.

KlangFool
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