You retired with only 5x - 10x. Now what?

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etfan
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You retired with only 5x - 10x. Now what?

Post by etfan »

The standard recommendation is to retire with something like 25x in investments. I'm wondering what the recommended strategy is for someone who falls way short of that.

Perhaps one can start withdrawing from their portfolio in order to delay claiming Social Security benefits past age 62 (by however many years your portfolio can last you). Or you can start claiming your Social Security at 62 and keep the "accumulation" phase going on market growth alone (without contributing), but I'm not sure why one would do that.
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BigPrince
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Re: You retired with only 5x - 10x. Now what?

Post by BigPrince »

Go back to work.
Marseille07
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Re: You retired with only 5x - 10x. Now what?

Post by Marseille07 »

The above poster is correct I'm afraid. You didn't retire, you just went unemployed that's all.
sandramjet
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Re: You retired with only 5x - 10x. Now what?

Post by sandramjet »

Reduce your spending...
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Re: You retired with only 5x - 10x. Now what?

Post by Brianmcg321 »

"Welcome to Walmart"
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sailaway
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Re: You retired with only 5x - 10x. Now what?

Post by sailaway »

It depends on how much of expenses are covered by SS. If SS at 62 covers 100% of your expenses, then 5x is plentiful.

Remember, the recommendation is 25x net expenses, after other sources of income.
Last edited by sailaway on Sat Oct 09, 2021 5:21 pm, edited 1 time in total.
KlangFool
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Re: You retired with only 5x - 10x. Now what?

Post by KlangFool »

OP,

There are no magic bullets here.

A) Go back to work

And/or

B) Spend less

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Re: You retired with only 5x - 10x. Now what?

Post by Leif »

BigPrince wrote: Sat Oct 09, 2021 5:09 pm Go back to work.
Funny. Those are the exact words I told myself before click on this thread.
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Re: You retired with only 5x - 10x. Now what?

Post by Impatience »

Growing the numerator is one solution as everyone else has said. The other choice is to drastically reduce your expenses. Probably some combination of the two (part time work + living very, very frugally).
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Re: You retired with only 5x - 10x. Now what?

Post by willthrill81 »

sailaway wrote: Sat Oct 09, 2021 5:17 pm It depends on how much of expenses are covered by SS. If SS at 62 covers 100% of your expenses, then 5x is plentiful.

Remember, the recommendation is 25x net expenses, after other sources of income.
Precisely.

I know a couple who retired with far less than 25x, but SS benefits cover essentially all of their essential expenses, so their portfolio is mostly 'fun money'.

Also, the 25x number is usually based on an anticipated retirement period of 30 years. Those planning for shorter retirements can withdraw more and vice versa.
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Re: You retired with only 5x - 10x. Now what?

Post by Broken Man 1999 »

One might downsize home (if owned) to reduce expenses, rent a room to someone, take a reverse mortgage, relocate to a lower cost of living area.

However, as already mentioned, some can retire just on SS, and some retire with pensions + SS.

The burn rate is needed to make any judgment.

Sometimes because of health reasons, continuing/returning to work might not be possible. If able, a part-time job might top up the $$$ enough to help with retirement expenses.

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Re: You retired with only 5x - 10x. Now what?

Post by backpacker61 »

What you're describing is actually the situation that most older people encounter. Social Security is the dominant source of income for most Americans over 65 (and is over 90% of income for about 25% of the aged).

So it's particularly important for someone without a lot of savings to make the most effective use of it. Having wage income up to age 70 would be one strategy, that would both boost the benefit level by increasing AIME, and delaying filing for the benefit to increase the Delayed Retirement Credits.
Last edited by backpacker61 on Sat Oct 09, 2021 5:37 pm, edited 2 times in total.
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Re: You retired with only 5x - 10x. Now what?

Post by marcopolo »

Based on another thread, I thought everyone on this forum had 6 figures pensions, that combined with SS, covered all their expenses. Why does anyone even need 5x, unless they plan to retire early :beer
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JPH
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Re: You retired with only 5x - 10x. Now what?

Post by JPH »

Your idea to delay taking Social Security is not crazy. I retired at 70, and I could live on my Social Security. Not so sure if that would be the case had I started taking Social Security at 62. If you are married your surviving spouse might be affected as well.
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willthrill81
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Re: You retired with only 5x - 10x. Now what?

Post by willthrill81 »

marcopolo wrote: Sat Oct 09, 2021 5:33 pm Based on another thread, I thought everyone on this forum had 6 figures pensions, that combined with SS, covered all their expenses. Why does anyone even need 5x, unless they plan to retire early :beer
That's the conclusion that I came to not long ago, and I hope that the result will be my at least semi-retirement in about five years. :D

I suspect that even though comparatively few admit it, many here only treat their SS benefits as 'gravy'.
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Re: You retired with only 5x - 10x. Now what?

Post by wolf359 »

willthrill81 wrote: Sat Oct 09, 2021 5:37 pm
marcopolo wrote: Sat Oct 09, 2021 5:33 pm Based on another thread, I thought everyone on this forum had 6 figures pensions, that combined with SS, covered all their expenses. Why does anyone even need 5x, unless they plan to retire early :beer
That's the conclusion that I came to not long ago, and I hope that the result will be my at least semi-retirement in about five years. :D

I suspect that even though comparatively few admit it, many here only treat their SS benefits as 'gravy'.
My preferred term is "longevity insurance."

It is the cheapest inflation adjusted annuity that you can "buy."

The fact that I can afford to wait until 70 to claim implies that I do not need it prior to age 70, and that it is "extra."

On the other hand, if the worst happens and I run out of money before I run out of life, I'll be happy I have it.
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Re: You retired with only 5x - 10x. Now what?

Post by stan1 »

This might be a foreign concept to some on this board, but millions of Americans do just this. They live on Social Security, maybe a few odd jobs if possible, maybe live in a mobile home, and maybe near family with some assistance (financial or other). Quite a few of us are very out of touch.
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Re: You retired with only 5x - 10x. Now what?

Post by Candor »

Well, that is probably much more representative of the average retirement than what we see on this forum. Isn't that what most people end up with or even less? I suppose they adapt and have modest expectations and make it work. I'm sure it turns out ugly for some but I would guess for most it works out ok.
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Re: You retired with only 5x - 10x. Now what?

Post by rob »

This is a tough and WEALTHY (generally and very wealthy in most cases) crowd.... It's all about expense management... Lots of real people get by on 10x and far less.... sometime with some side jobs here and there.... sometimes with help from family.... sometimes with government support.... sometimes with charity.... sometimes with all of the above.... but it can certainly be done.
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JoMoney
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Re: You retired with only 5x - 10x. Now what?

Post by JoMoney »

You do the same thing as people who don't even have 1x their living expenses do... you get to work trying to figure out how to feed yourself... or don't, and hope someone else takes care of you :? :wink:
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Re: You retired with only 5x - 10x. Now what?

Post by David Jay »

I retired @ 13x - 14x expenses. Social Security will cover 100% of expenses at age 69. I really only need enough nest egg to replace the spousal benefit when the first spouse passes.
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Re: You retired with only 5x - 10x. Now what?

Post by phxjcc »

etfan wrote: Sat Oct 09, 2021 5:03 pm The standard recommendation is to retire with something like 25x in investments. I'm wondering what the recommended strategy is for someone who falls way short of that.

Perhaps one can start withdrawing from their portfolio in order to delay claiming Social Security benefits past age 62 (by however many years your portfolio can last you). Or you can start claiming your Social Security at 62 and keep the "accumulation" phase going on market growth alone (without contributing), but I'm not sure why one would do that.
I have several family members that retired with ~ $100,000 and lived just fine; in fact that $100,000 was their "number".

Answer: you live below your means, and SAVE...and they all took SS at 62.

Owned their own house, no cable, no cell phone, no Blue Apron/Stitch Fix/etc., no: Pilates/Gym Membership/Gardner/house cleaner/auto detailer/diving trips in Cancun/Whole foods thanksgiving dinners/etc.

Steak/Pot Roast/Chicken/Fish/Potatoes/Rice/Salad a/o vegetables.
No: fast food junk, coffee drinks, sodas, Costco memberships, bar food & drinks.

I am constantly amazed at the "needs" that some people express here.

Everyone should try to live a minimalist lifestyle late in life just to prove to themselves that they can ""make it" with a lot less expenses--"just in case".

It is an eye opener.

/#out
mortfree
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Re: You retired with only 5x - 10x. Now what?

Post by mortfree »

5x to 10x. What is x here - expenses or income?

Asking for a friend.
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David Jay
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Re: You retired with only 5x - 10x. Now what?

Post by David Jay »

mortfree wrote: Sat Oct 09, 2021 6:43 pm 5x to 10x. What is x here - expenses or income?

Asking for a friend.
Annual living expense in retirement.
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Re: You retired with only 5x - 10x. Now what?

Post by Mike Scott »

That's probably the high end of the average American retirement and it would seem pretty luxurious to a lot of people I know who don't have that much. One of the lessons to learn here is to live with what you have. It's what most people do.
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Re: You retired with only 5x - 10x. Now what?

Post by DB2 »

Mike Scott wrote: Sat Oct 09, 2021 6:54 pm That's probably the high end of the average American retirement and it would seem pretty luxurious to a lot of people I know who don't have that much. One of the lessons to learn here is to live with what you have. It's what most people do.
Completely agree. Threads like this get comical and out of touch. I know of A LOT of people who don't have anywhere near 25 years of living expenses saved and are living very comfortably in retirement and well up there in age. In some cases, they are now deceased and didn't end up on the streets because they didn't have 25 years of savings. lol Biggest keys: no major debt. Don't think you have to work your life away and spend remaining best years away in a crappy job (unless you enjoy that job and it keeps you going) to get to "25X".
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Beensabu
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Re: You retired with only 5x - 10x. Now what?

Post by Beensabu »

etfan wrote: Sat Oct 09, 2021 5:03 pm The standard recommendation is to retire with something like 25x in investments. I'm wondering what the recommended strategy is for someone who falls way short of that.

Perhaps one can start withdrawing from their portfolio in order to delay claiming Social Security benefits past age 62 (by however many years your portfolio can last you). Or you can start claiming your Social Security at 62 and keep the "accumulation" phase going on market growth alone (without contributing), but I'm not sure why one would do that.
Or you can claim at 62, and work part-time up to the point where you don't reduce benefits. Maybe make an effort to pick up some more recent cashier experience before you actually need to show you have it.

It's easy(ish), as long as you have the work credits and SS sticks around. You just don't spend money on things you don't absolutely need to spend it on. It's a lot easier if you have a paid off home of some kind. It's harder if you don't, and you have to accept "substandard" living conditions in "less than desirable" communities.

I have often internally (occasionally externally, when inebriated) bemoaned that I could support my own single existence just fine with no worry or stress at all until the day I die. And I could. I personally have very little need for much of anything at all. A safe place to sleep, food/water, and the means to get to/from work. I'll sit there and stare at the sky as happy as a clam. Tobacco is my main luxury, and I could get by with a pack a week. I can tolerate pretty much any living conditions and surrounding environment, because it doesn't matter. I mostly get along with just about everyone in person, as I'm not all that vocal face-to-face and am extremely non-confrontational. And if I don't get along with someone, I just don't engage with them. It would be lonely as hell, though. I wasn't willing to be lonely.

Anyway, if you have at least $15k/yr coming in from SS, there are a lot of places in this country that you can afford to live with a roof over your head and food to eat. With $10k, your options are more limited. But you have Medicare. You get long-term care in an institution once you lose your faculties, if you're still breathing. People do it. There are seniors and older folks on disability living on $800/mo all around me in a HCOL area. They have been doing it. It's do-able. But lonely. Because there's a level of poverty at which you can't afford trust, or only a very low level of it for only a few people. That's the hard part.
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Re: You retired with only 5x - 10x. Now what?

Post by AllMostThere »

I believe those that retire with 5x-10x would be "Professional Strategic Frugality Extremists"! I guess it could be doable when combined with SS, Pension, and some hobby paying side gigs and/or other governmental programs.

Not my lifestyle, but this guy did it after 5 years of saving: https://earlyretirementextreme.com/how- ... art-i.html
Last edited by AllMostThere on Sat Oct 09, 2021 8:32 pm, edited 1 time in total.
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Re: You retired with only 5x - 10x. Now what?

Post by adestefan »

phxjcc wrote: Sat Oct 09, 2021 6:25 pm
etfan wrote: Sat Oct 09, 2021 5:03 pm The standard recommendation is to retire with something like 25x in investments. I'm wondering what the recommended strategy is for someone who falls way short of that.

Perhaps one can start withdrawing from their portfolio in order to delay claiming Social Security benefits past age 62 (by however many years your portfolio can last you). Or you can start claiming your Social Security at 62 and keep the "accumulation" phase going on market growth alone (without contributing), but I'm not sure why one would do that.
I have several family members that retired with ~ $100,000 and lived just fine; in fact that $100,000 was their "number".

Answer: you live below your means, and SAVE...and they all took SS at 62.

Owned their own house, no cable, no cell phone, no Blue Apron/Stitch Fix/etc., no: Pilates/Gym Membership/Gardner/house cleaner/auto detailer/diving trips in Cancun/Whole foods thanksgiving dinners/etc.

Steak/Pot Roast/Chicken/Fish/Potatoes/Rice/Salad a/o vegetables.
No: fast food junk, coffee drinks, sodas, Costco memberships, bar food & drinks.

I am constantly amazed at the "needs" that some people express here.

Everyone should try to live a minimalist lifestyle late in life just to prove to themselves that they can ""make it" with a lot less expenses--"just in case".

It is an eye opener.

/#out
That’s basically my mother’s plan. She has a car that is paid off and she puts on maybe 1500 milea in a year. Her house is paid off but has plans to sell it and move in with my brother an SIL in the next 5-7 years. And she lives in a VLCOL area. One of the things I learned from my parents is to NOT do the same as them when it came to finances.
Last edited by adestefan on Sat Oct 09, 2021 7:11 pm, edited 2 times in total.
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etfan
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Re: You retired with only 5x - 10x. Now what?

Post by etfan »

Seems like the answers can be summarized as:

1- You're screwed. Downsize and cancel your Netflix.
2- "Go back to work". OK, but let's assume that if such a person didn't have to retire, they wouldn't have retired. I'm wondering about forced retirement for health reasons or professional reasons, etc.
3- Go to Walmart. This won't really make a dent, will it?

What do you think about the idea to completely use up your saved money in order to delay claiming SS as much as you can, versus claiming your SS in order to preserve your saved money (or as much of it as you can) for as long as you can?

The question is fundamentally about what someone in this situation should do with their portfolio.
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etfan
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Re: You retired with only 5x - 10x. Now what?

Post by etfan »

DB2 wrote: Sat Oct 09, 2021 7:01 pm
Mike Scott wrote: Sat Oct 09, 2021 6:54 pm That's probably the high end of the average American retirement and it would seem pretty luxurious to a lot of people I know who don't have that much. One of the lessons to learn here is to live with what you have. It's what most people do.
Completely agree. Threads like this get comical and out of touch. I know of A LOT of people who don't have anywhere near 25 years of living expenses saved and are living very comfortably in retirement and well up there in age. In some cases, they are now deceased and didn't end up on the streets because they didn't have 25 years of savings. lol Biggest keys: no major debt. Don't think you have to work your life away and spend remaining best years away in a crappy job (unless you enjoy that job and it keeps you going) to get to "25X".
This is not really a life-or-death debate. People who saved nothing for retirement don't necessarily starve. The 25x (with the arbitrary x) is not about survival for many people, but rather about raising the comfort level / lifestyle during retirement.
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etfan
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Re: You retired with only 5x - 10x. Now what?

Post by etfan »

phxjcc wrote: Sat Oct 09, 2021 6:25 pm I have several family members that retired with ~ $100,000 and lived just fine; in fact that $100,000 was their "number".
Why was $100,000 their number? What was the goal of saving that much, and how did they use it after?
Owned their own house, no cable, no cell phone, no Blue Apron/Stitch Fix/etc., no: Pilates/Gym Membership/Gardner/house cleaner/auto detailer/diving trips in Cancun/Whole foods thanksgiving dinners/etc.

Steak/Pot Roast/Chicken/Fish/Potatoes/Rice/Salad a/o vegetables.
No: fast food junk, coffee drinks, sodas, Costco memberships, bar food & drinks.

I am constantly amazed at the "needs" that some people express here.
Not to sound spoiled, but "surviving to survive" doesn't sound great. Sure people will do what they have to do to stay alive, but I'm not sure it's "amazing" for someone to express the "need" to rise above that, if at all possible.
Last edited by etfan on Sat Oct 09, 2021 7:18 pm, edited 1 time in total.
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Re: You retired with only 5x - 10x. Now what?

Post by reader79 »

The median retirement savings balance is about $172,000. The median U.S. income is a little over $60k. If retirement savings is meant to replace 80% of income, then the median American retires with 2.8x expenses (172,000/48,000).

Framed differently, how do Bogleheads worry about having enough for retirement when they retire with almost 10x more saved than the median American?
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etfan
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Re: You retired with only 5x - 10x. Now what?

Post by etfan »

reader79 wrote: Sat Oct 09, 2021 7:16 pm Framed differently, how do Bogleheads worry about having enough for retirement when they retire with almost 10x more saved than the median American?
Bogleheads who saw the light too late. They found the way, but the key ingredient of the method (time) is not a renewable resource.
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Re: You retired with only 5x - 10x. Now what?

Post by Da5id »

Just to be totally clear, is this valuing SS as nothing? Is this 5x-10x above that? Does it include home equity? What is their current age? And the 5x-10x is that of core expenses or lifestyle to which they've become accustomed?
Last edited by Da5id on Sat Oct 09, 2021 7:32 pm, edited 2 times in total.
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Re: You retired with only 5x - 10x. Now what?

Post by happysteward »

wolf359 wrote: Sat Oct 09, 2021 5:47 pm
It is the cheapest inflation adjusted annuity that you can "buy."
Sometimes I wonder, all those years of paying in….
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Re: You retired with only 5x - 10x. Now what?

Post by marcopolo »

phxjcc wrote: Sat Oct 09, 2021 6:25 pm
etfan wrote: Sat Oct 09, 2021 5:03 pm The standard recommendation is to retire with something like 25x in investments. I'm wondering what the recommended strategy is for someone who falls way short of that.

Perhaps one can start withdrawing from their portfolio in order to delay claiming Social Security benefits past age 62 (by however many years your portfolio can last you). Or you can start claiming your Social Security at 62 and keep the "accumulation" phase going on market growth alone (without contributing), but I'm not sure why one would do that.
I have several family members that retired with ~ $100,000 and lived just fine; in fact that $100,000 was their "number".

Answer: you live below your means, and SAVE...and they all took SS at 62.

Owned their own house, no cable, no cell phone, no Blue Apron/Stitch Fix/etc., no: Pilates/Gym Membership/Gardner/house cleaner/auto detailer/diving trips in Cancun/Whole foods thanksgiving dinners/etc.

Steak/Pot Roast/Chicken/Fish/Potatoes/Rice/Salad a/o vegetables.
No: fast food junk, coffee drinks, sodas, Costco memberships, bar food & drinks.

I am constantly amazed at the "needs" that some people express here.

Everyone should try to live a minimalist lifestyle late in life just to prove to themselves that they can ""make it" with a lot less expenses--"just in case".

It is an eye opener.

/#out
One of these do not belong.
A Costco membership is something that can facilitate lowering your expenses, rather than being viewed as a luxury waste of money.
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Re: You retired with only 5x - 10x. Now what?

Post by White Coat Investor »

KlangFool wrote: Sat Oct 09, 2021 5:17 pm OP,

There are no magic bullets here.

A) Go back to work

And/or

B) Spend less

KlangFool
There's another. You can take more risk/put in more work.

For example, it's routine for a leverage real estate property or fund to pay out 5-8% in income plus appreciation. If you are careful and can cut back if something happens to that income, it can allow you to spend more than 4%.

Even with a standard portfolio, a 5-6% withdrawal rate still works most of the time.

Plus lots of people don't live 30 years.
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Re: You retired with only 5x - 10x. Now what?

Post by sailaway »

etfan wrote: Sat Oct 09, 2021 7:08 pm Seems like the answers can be summarized as:

1- You're screwed. Downsize and cancel your Netflix.
2- "Go back to work". OK, but let's assume that if such a person didn't have to retire, they wouldn't have retired. I'm wondering about forced retirement for health reasons or professional reasons, etc.
3- Go to Walmart. This won't really make a dent, will it?

What do you think about the idea to completely use up your saved money in order to delay claiming SS as much as you can, versus claiming your SS in order to preserve your saved money (or as much of it as you can) for as long as you can?

The question is fundamentally about what someone in this situation should do with their portfolio.
Funny how you ignored all the responses that actually addressed SS in your summary. Your set up is missing key details.
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Re: You retired with only 5x - 10x. Now what?

Post by Beensabu »

etfan wrote: Sat Oct 09, 2021 7:08 pm Seems like the answers can be summarized as:

1- You're screwed. Downsize and cancel your Netflix.

Netflix doesn't cost that much. Cancel your internet.

2- "Go back to work". OK, but let's assume that if such a person didn't have to retire, they wouldn't have retired. I'm wondering about forced retirement for health reasons or professional reasons, etc.

Forced retirement for professional reasons means find lower paying work not in your field. Forced retirement for health reasons means find lower paying work not in your field that has accommodations or live on disability.

3- Go to Walmart. This won't really make a dent, will it?

It depends on what x is, doesn't it? That's $12/hr. If you retired at a median $60k income, then 20 hrs/wk replaces 20% of your prior income. That slows the pace of withdrawals on savings until you take SS. Regardless, you cannot maintain the same level of spending as when working full-time.

What do you think about the idea to completely use up your saved money in order to delay claiming SS as much as you can, versus claiming your SS in order to preserve your saved money (or as much of it as you can) for as long as you can?

The question is fundamentally about what someone in this situation should do with their portfolio.
Most people who are unable to work prior to the age of 62 get on disability (if they have medical reasons supported by documentation and are capable of navigating the process) and/or are supported by relatives and/or become homeless. If they have savings, they spend those savings on the way.

In this situation, you claim the benefits you are eligible for when you are eligible for them. You spend the savings you need to spend to survive.
etfan wrote: Sat Oct 09, 2021 7:15 pm Not to sound spoiled, but "surviving to survive" doesn't sound great. Sure people will do what they have to do to stay alive, but I'm not sure it's "amazing" for someone to express the "need" to rise above that, if at all possible.
The situation of being unable to work with insufficient savings to support one's life is a situation of surviving to survive. That is what it is. If you do not understand that, then it is not your situation.
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Blue456
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Re: You retired with only 5x - 10x. Now what?

Post by Blue456 »

etfan wrote: Sat Oct 09, 2021 5:03 pm The standard recommendation is to retire with something like 25x in investments. I'm wondering what the recommended strategy is for someone who falls way short of that.

Perhaps one can start withdrawing from their portfolio in order to delay claiming Social Security benefits past age 62 (by however many years your portfolio can last you). Or you can start claiming your Social Security at 62 and keep the "accumulation" phase going on market growth alone (without contributing), but I'm not sure why one would do that.
Reduce your biggest expenses, food and rent. You can find pretty cheap rent in midwest and learn to cook yourself. You can get luxury apartments single bedroom for $900 a month. You can most likely find rent as low as $600 in older apartments. Assuming that social security is claimed at 62 it leaves an income of $1,264. Hopefully the 5x expenses are enough to cover the rest. If not then you got to work.
SouthernInvestor
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Re: You retired with only 5x - 10x. Now what?

Post by SouthernInvestor »

You need to work, or make a plan to get by on SS.

I have some friends who live pretty well in latin america on SS. I'd said they're pretty damn happy to be honest, but that does take a certain personality type.
bhsince87
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Re: You retired with only 5x - 10x. Now what?

Post by bhsince87 »

It all comes down to required expenses. Many people would be just fine in such a situation. Especially if they own their home outright.

Personally, I'd take Social Security early, and keep the rest invested for emergencies and such. Just pretend it doesn't exist, and live off SS only. My wife and I could live on our Social Security only at age 62. It would be a very low expense lifestyle for sure, but doable.

But first, why can't they work? If they can't that implies some sort of disability, I'd think. There might be Social Security help for that.

If they own their home, a reverse mortgage could be a good option. They got a bad rap years ago (deservedly), but laws have changed to address some of those issues.
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Katietsu
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Re: You retired with only 5x - 10x. Now what?

Post by Katietsu »

Da5id wrote: Sat Oct 09, 2021 7:27 pm Just to be totally clear, is this valuing SS as nothing? Is this 5x-10x above that? Does it include home equity? What is their current age? And the 5x-10x is that of core expenses or lifestyle to which they've become accustomed?
I think this seems to have been lost in the discussion. Assume you need $25k a year for expenses and retire with $250k. If you are not eligible for social security ever, then, after a few years, you will end up in public housing on SSI if you can not go back to work. If you are eligible for social security of $15k, then you are in good shape because you actually have 25X. X is only $10k for this person, IMO. It is also why Fidelity recommends saving 10 times salary before retirement.

I think your question is whether to spend from savings in order to delay social security claiming. I do not think there is a one size fits all answer. My personal inclination would be to delay social security as long as I could but not so long that I used all my savings. I would want the inflation protected guaranteed benefit of social security in case I lived a very long life, call it longevity insurance. But I would want the security of still have some nest egg left, maybe a minimum of $30k?
Last edited by Katietsu on Sat Oct 09, 2021 8:32 pm, edited 1 time in total.
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MikeWillRetire
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Re: You retired with only 5x - 10x. Now what?

Post by MikeWillRetire »

Remember the TV show Golden Girls?
Kevin K
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Re: You retired with only 5x - 10x. Now what?

Post by Kevin K »

The timing of when you take SS is critical in that not-at-all-uncommon situation (i.e. of retiring with very modest savings). Run the numbers on the opensocialsecurity.com website that pertain to your particular situation. Most often waiting until at least full retirement age if not 70 is best.

I'm thankfully not in the 5-10x group but am quite sure I have a far smaller nest egg than most who post here. One doesn't always have a choice about how and when one retires - and of course recent changes wrought by the pandemic are clearly causing many to retire before they'd planned.

What's worked for me is to focus on controlling key essential expenses. Lived in Mexico for 5 years pre-ACA which saved me a fortune in health care and insurance costs. I have 40K tied up in a very comfortable late-model mobile home in a 55+ park with a nice clubhouse, workout room and year-round saltwater pool and my rent including some utilities is $500 a month. Property taxes are $100 a year, utilities even in the height of summer (in Tucson) almost never over $200 a month. I drive a paid-for 8 year old Mazda and have biking and hiking trails galore out my door. I could easily live on SS alone if I had to but instead take 1-2% from investments so I can get away to the mountains in Colorado or New Mexico for 3-4 months during our hot summers.

It ain't lifestyles of the rich and famous but it can be done. AND if I had it to do over I'd have found some way to stick it out until I had a far larger pile before pulling the trigger on retirement.
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Portfolio7
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Re: You retired with only 5x - 10x. Now what?

Post by Portfolio7 »

Hmm. We have about 10x expenses, though I think I could cut expenses by 15-20%. I could be forced out of Megacorp at any time. The 10x I think that would be sufficient for a barebones retirement, but we wouldn't be traveling much. I suspect I'd be looking for job that at least paid half of what I make now, but lower stress, and DW would continue to work another decade. If her business went under, then I suspect we'd look at a change in location that freed up the cash in our house, and also eliminated the need for a mortgage (and monthly payments) entirely.

I think we need 16x to really retire like we want. In the mix is the fact that DW is younger and healthier, and likely to work 5-10 years longer than I do, but even without that I think we can make it work. The hard part is avoiding too much spending while waiting for Medicare and SS to kick in, but still enjoying ourselves. Plus making sure we have enough for Medicare, I've gotten estimates of the likely cost and that's no walk in the park.

We also have probable inheritances and her business might garner a modest price, so we have some wildcards in our retirement deck that I think is not part of your original scenario.

If we hit 20x it's a foregone conclusion that I'm retiring, and she will follow when she wants to (but I can see her working part-time for a long time, up to her.) Ostensibly we should be close to that in 7 years, but I'm thinking 2 to 5 years, so we'll see. I believe I will be quite happy to retire.
Last edited by Portfolio7 on Sat Oct 09, 2021 8:24 pm, edited 1 time in total.
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sharukh
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Re: You retired with only 5x - 10x. Now what?

Post by sharukh »

Geo-arbitrage .

Move to low cost of living places like Thailand or India. $1500 a month is a lot of money, you can get lower end of upper class lifestyle
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zaboomafoozarg
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Re: You retired with only 5x - 10x. Now what?

Post by zaboomafoozarg »

Many people spend less than Social Security. So regardless of the size of their portfolios, they retired with ∞ x.

I doubt anyone in my family has ever retired with more than 3x or 4x. Social Security covers all normal expenses, and savings/retirement funds are used for special intermittent purchases like vehicles, appliances, etc.
Last edited by zaboomafoozarg on Sat Oct 09, 2021 8:29 pm, edited 1 time in total.
Ferdinand2014
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Re: You retired with only 5x - 10x. Now what?

Post by Ferdinand2014 »

My in laws live off a modest pension and social security. They have 2 x in savings. They make do. They have a good life. They feel they have ‘enough’.
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