what are you shooting for in your retirement plan?

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rai
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what are you shooting for in your retirement plan?

Post by rai » Fri Oct 15, 2010 9:07 am

I don't want to know your specific number. But in general

are you aiming for:

a 'magic number'?
a target age?
a specific event (paid off house, paid off kids college, kids out of the nest)?
specific pension/work event (such as getting in 25 or 30 years)?

what do you expect for Social Security?
--(do you plan on taking it late -higher payment or taking it at a younger age to get more (but smaller) payments?
--Does social security play a major role in retirement plans? Do you factor in extra funds to account for social security shortfall what is currently estimated?

Any other events in your plan that I did not mention above?
"Life is what happens to you while you're busy making other plans" - John Lennon. | | "You say that money, isn't everything | But I'd like to see you live without it." - Silverchair

rai
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Post by rai » Fri Oct 15, 2010 9:18 am

for my plan (I'm 45, hope to retire in 12-15 years)

- magic number (Firecalc tested 95% or better)
-house paid (almost there)
-Kids college paid (not saying I will pay full ride but I'd like to have the option)
-Social Security (I plan to take it late to raise the payments, I like social security for it's COLA since I don't have any other pension (in case I live super-long which I don't plan on).

At the same time, I do not think we will get our full estimated SS benifits so in my calculations, I am going with half of what is estimated currently and if I get more than that so much the better. Social secuirity will be ~20% of my retirement income (overall) but my plan would be to be able to retire without depending on it (tI hink of it as bonus income, bonus I am expecting but not depending on).
Last edited by rai on Fri Oct 15, 2010 9:25 am, edited 4 times in total.
"Life is what happens to you while you're busy making other plans" - John Lennon. | | "You say that money, isn't everything | But I'd like to see you live without it." - Silverchair

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Post by Shireman28 » Fri Oct 15, 2010 9:21 am

At age 31, I don't count on social security as I hope to have enough in retirement assets to be disqualified by some government flunky since previous generations have saddled me with government debt.

Otherwise, I'll just keeping maxing out what tax-advantaged accounts I can and pay off the house, and try to keep expectations low.

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NYCPete
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Post by NYCPete » Fri Oct 15, 2010 9:50 am

At 30 years of age, right now I am focused solely on trying to get savings equal to two times my annual income as fast as I can. I'm currently about 1 year away from getting savings equal to my annual income and am pretty excited about that.

Still being 30-40 years out from full retirement, I'd say that my "magic number" is to have 25x my annual income saved up when I want to retire.

Best,
Peter
To the extent that a fool knows his foolishness, | He may be deemed wise | A fool who considers himself wise | Is indeed a fool. | | Buddha

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Post by zaga21 » Fri Oct 15, 2010 10:14 am

I'm 30 and my husband is 42. I'd really like to be able to retire when he is 60. I don't know right now if that's what we'll do, but I want enough saved to have that option, we have a long way to go to reach that!

Things to have done by then:
25 times our expenses (padded a bit) at that time
All debt gone, we're well on our way, will start maxing out retirement accounts when this happens.
House in good repair, right now it's already paid for but needs a lot of work which we're doing some each year.

Re: Social Security, I'm doing all my calculations with the assumption that we will receive no Social Security. I truly believe that by the time we're eligible there will be rules in place that the "evil rich" folks who have planned and are secure will get little or nothing.

I had a retirement estimator done by a fee only advisor and we have close to a 95% chance of reaching these goals. They are very ambitious and I know things can change between now and then so working longer is also an option.
Zaga

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Re: what are you shooting for in your retirement plan?

Post by englishgirl » Fri Oct 15, 2010 11:00 am

For me, I'm shooting for a target age range, should I be lucky enough to get there healthily. I am eligible for Medicare at 65, my full retirement age for Social Security is 67, and maximum SS benefits are available at 70. So the age range I would hopefully retire at is somewhere between 65 and 70.

Social security does play a major role in my planning. I am not one of those people that thinks it will totally be gone, but more likely I think benefits will be reduced somewhat and taxes will rise somewhat. In my ideal scenario, SS benefits would cover half my regular monthly expenses, an annuity would cover the other half of my expenses, and whatever amount of my portfolio is left over after the purchase of the annuity would be for extras.

I could see myself going part-time at 67, buying an annuity at that point to cover half my expenses, then fully retiring at 70 and getting SS then.

Part of my retirement planning also involves me going back to school (which I am currently doing) to enable me to have more enjoyable and less stressful work than I currently have. Hopefully I will still be enjoying my new line of work at 67 and working at that age will not be a burden.
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Post by 555 » Fri Oct 15, 2010 11:03 am

I don't have a target. I just don't think it's possible to predict that far. I save what I can (2/3 of salary) and roughly follow a AA glide path similar to TR funds.

Kids college: I'll see what I can afford, it's all one pool of money.

Social Security: I don't have it, nor a pension.

rai
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Post by rai » Fri Oct 15, 2010 11:14 am

social security will not go away. The gov taxes 12% of most payroll (6% from employee and 6% from employer), this will be raised in the future.

The gov will be collecting a ton of money earmarked for social security benifits.

Even of as boomers retire there there will still be two people working for every retiree.
"Life is what happens to you while you're busy making other plans" - John Lennon. | | "You say that money, isn't everything | But I'd like to see you live without it." - Silverchair

rai
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Post by rai » Fri Oct 15, 2010 11:18 am

I don't understand why people are saying save 25x of earnings. shouldn't it be 25x spending?

I mean if you earn $100K (for example) but save $40K of that, that $40K is not part of your living expenses, and when you retire you no longer have to save so that portion is moot.

I would aim for 25x spending (or so some higher number, but my current income does not effect how much I need when retired)
"Life is what happens to you while you're busy making other plans" - John Lennon. | | "You say that money, isn't everything | But I'd like to see you live without it." - Silverchair

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Re: what are you shooting for in your retirement plan?

Post by Sunny Sarkar » Fri Oct 15, 2010 11:21 am

rai wrote:a 'magic number'?
...inflation adjusted
"Cost matters". "Stay the course". "Press on, regardless". ― John C. Bogle

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Re: what are you shooting for in your retirement plan?

Post by MWCA » Fri Oct 15, 2010 11:30 am

rai wrote:I don't want to know your specific number. But in general

are you aiming for:

a 'magic number'?
a target age?
a specific event (paid off house, paid off kids college, kids out of the nest)?
specific pension/work event (such as getting in 25 or 30 years)?

what do you expect for Social Security?
--(do you plan on taking it late -higher payment or taking it at a younger age to get more (but smaller) payments?
--Does social security play a major role in retirement plans? Do you factor in extra funds to account for social security shortfall what is currently estimated?

Any other events in your plan that I did not mention above?
Well for my wife it is when she doesn't want to work anymore. I already made that mark. Well and obviously having enough money for retirement!
We are all worms. But I believe that I am a glow-worm.

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Post by conundrum » Fri Oct 15, 2010 11:47 am

Our goal was to have our yearly spending/withdrawals be 3% or less of our liquid portfolio (stocks, bonds and cash). We are planning to wait until 70 (or whatever the age is at that point) to get our maximum social security payments. Although I think social security will still be around, we do not include any benefits in our planning but consider any benefits to be a bonus.

Drum :lol:

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NYCPete
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Post by NYCPete » Fri Oct 15, 2010 11:52 am

rai wrote:I don't understand why people are saying save 25x of earnings. shouldn't it be 25x spending?

I mean if you earn $100K (for example) but save $40K of that, that $40K is not part of your living expenses, and when you retire you no longer have to save so that portion is moot.

I would aim for 25x spending (or so some higher number, but my current income does not effect how much I need when retired)
I think if you're close to retirement, then 25x spending might make more sense. But for myself personally, since I'm still 30 years out, measuring it by my spending is a bit impractical, because my lifestyle and spending priorities are going to be dramatically different in 30 years.

Regarding SS, I plan on exactly 70% of my benefits to be paid out, which is what the system is currently projecting for the year I would start to collect (~2045). I'll alter my expectations only when there is reason to do so. One can't forecast future government actions with any greater accuracy than short term stock market movements.

Best,
Peter
To the extent that a fool knows his foolishness, | He may be deemed wise | A fool who considers himself wise | Is indeed a fool. | | Buddha

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HomerJ
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Post by HomerJ » Fri Oct 15, 2010 12:19 pm

rai wrote:I don't understand why people are saying save 25x of earnings. shouldn't it be 25x spending?
This is exactly right...

This is why one can retire on a million dollars and live very well... People here say "That only generates $40k a year! No way I could live on $40k a year! I make $100k today!"

But take away a house payment, take away having to save 15% of your income, lower your taxes, and suddenly you realize $40k gives you the EXACT same life you enjoy today.

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HomerJ
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Post by HomerJ » Fri Oct 15, 2010 12:26 pm

For me, it's a magic number...

2 million and a paid off house...

That might happen at 50 (I'm 41) if we see some sustained annual 10% stock market returns (not likely), or it might happen at 55, or it might happen at 60...

My wife is 8 years older than me, so that factors in as well... I could work until I was 62, but she'd be 70... I'd very much like to retire in my 50s, with her in the low 60s so we can enjoy our retirement together.

It will be tricky when I get close... There will be some serious doubts... Work one more year for a little more cushion? Quit early with only 1.8 million because life is short?

I'll cross that bridge when I get there... Still have a way to go (That first million is the hardest :))

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Post by HomerJ » Fri Oct 15, 2010 12:28 pm

Oh, I should point out for my wife, it's much easier... She's retiring in 4 years when our middle daughter graduates college.

She's made that pretty clear... :)

I might be able to get 1 extra year of work out of her... :)

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Post by JupiterJones » Fri Oct 15, 2010 12:39 pm

rrosenkoetter wrote: But take away a house payment, take away having to save 15% of your income, lower your taxes, and suddenly you realize $40k gives you the EXACT same life you enjoy today.
Very true. However I'm not planning for the exact same life I enjoy today.

For one, my out-of-pocket medical expenses will probably be more. Plus, I'm hoping for many more (and longer) vacations, better wine, more symphony and theater tickets, tennis lessons, golf, etc. In other words, I actually do plan to be the guy with the full head of white hair riding a bicycle along the beach that you see in the commercials. :P

All in all, I suspect that my expenses in retirement will grow to make up at least partially for the lack of house payment and retirement savings. I'm still a ways out though. We'll see...

JJ

rai
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Post by rai » Fri Oct 15, 2010 1:06 pm

good point about spending more (longer) vacations.

I only take one week vacation at a time. Some day I'd like drive around the US taking my time maybe weeks or longer and see things that today I just drive by because my vactaion time is limited.

I'd like to go to Europe and spend weeks also. One thing about being retired would be having more time to do stuff.

If I had a 'magic number' I am trying to get there and then save another 20% (or so). If 4% would last me 30+ years than I'd like to be able to live on 3% of my magic number and have some extra just in case.

if/when I end up with an amount over my magic number, I have a few toys I'd like to buy and/or expensive vacations which I think are too expensive currently since I like saving for the retirement.
"Life is what happens to you while you're busy making other plans" - John Lennon. | | "You say that money, isn't everything | But I'd like to see you live without it." - Silverchair

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Post by MWCA » Fri Oct 15, 2010 1:09 pm

rrosenkoetter wrote:Oh, I should point out for my wife, it's much easier... She's retiring in 4 years when our middle daughter graduates college.

She's made that pretty clear... :)

I might be able to get 1 extra year of work out of her... :)
I keep trying to get mine to retire. :lol:
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Post by HomerJ » Fri Oct 15, 2010 1:48 pm

JupiterJones wrote:Plus, I'm hoping for many more (and longer) vacations, better wine, more symphony and theater tickets, tennis lessons, golf, etc. In other words, I actually do plan to be the guy with the full head of white hair riding a bicycle along the beach that you see in the commercials. :P
This is where the dilemna comes in....

When I'm 55, I'll probably have enough to stop working and enjoy the exact same lifestyle (meaning 2-3 normal vacations a year, same old wine, etc.).

Now... life is short... I've known people who died of a heart-attack at 60... Healthy people who jogged every day...

So I expect that will be a tough decision for me.... Work an extra 5 years and get to enjoy more vacations, better wine, etc. or start my retirement right then...

Today was a beautiful fall day. As I drove to work, I wondered what I would do if I had 2 million in the bank... Work another 5 years to get to 3 million? Or enjoy the autumn right now?
Last edited by HomerJ on Fri Oct 15, 2010 1:51 pm, edited 1 time in total.

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Post by HomerJ » Fri Oct 15, 2010 1:50 pm

rai wrote:If I had a 'magic number' I am trying to get there and then save another 20% (or so). If 4% would last me 30+ years than I'd like to be able to live on 3% of my magic number and have some extra just in case.
Good idea, and I can see myself doing that too... Basically my "number" is rough... We'll evaluate when we get there.

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Post by neverknow » Fri Oct 15, 2010 2:00 pm

..
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Post by jeffyscott » Fri Oct 15, 2010 2:18 pm

a 'magic number'?

Sort of...want assets that are sufficient to provide minimum of ~$60K spendable based on very conservative estimates. Assumptions are no post-retirement increases to pension, 75% of SS, 1.3% real returns, 3% inflation.

a specific event (paid off house, paid off kids college, kids out of the nest)?

Not really, house is paid off. We have 3 semesters of tuition yet to pay, but have the money to cover that in cash now. Kids being out is not a factor, the extra cost is pretty minimal and we could require that they reimburse us.

specific pension/work event (such as getting in 25 or 30 years)?
a target age?

Yes, I need to be at least 55 w/ 30 years to collect pension and 2 additional years could be worth putting in...so plan to go between 55 and 57, depending on other factors

what do you expect for Social Security?

I use 75% of current projected benefits.

--(do you plan on taking it late -higher payment or taking it at a younger age to get more (but smaller) payments?

Undecided, will probably depend on other factors...such as how investments are doing and do we need to limit income to qualify for limits on insurance cost that are coming in 2014.

--Does social security play a major role in retirement plans? Do you factor in extra funds to account for social security shortfall what is currently estimated?

In my worst case analysis (which assumes 75% of current SS) SS accounts for about 1/3 of our total retirement spending. If I use more moderate assumptions, then our minimum spending goal can be met even if SS is 25% of current benefits and it would then only account for 11% of total spending.

I would call that potentially a major role, based on the 1/3 figure.

We are entering the home stretch, (hopefully) about 4-6 years to go...
press on, regardless - John C. Bogle

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Post by NateW » Fri Oct 15, 2010 2:28 pm

I know there are retirement calculators available, but I do not use them. All I know is I probably will come up short on funds so my wife and I are contributing the maximum to our 401ks and each of us contributes the max to a Roth IRA each year. Investments are per our overall asset allocation and we leave it at that and are hoping for the best. We started late in shoveling the cash into our retirement plans, so we have some catching up to do.

Why get depressed running a calcaluation that says you'll need 2 million dollars at retirement, when you presently have about $450,000 and ten more years to work?

--Nate

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Post by MWCA » Fri Oct 15, 2010 2:31 pm

rrosenkoetter wrote:
JupiterJones wrote:Plus, I'm hoping for many more (and longer) vacations, better wine, more symphony and theater tickets, tennis lessons, golf, etc. In other words, I actually do plan to be the guy with the full head of white hair riding a bicycle along the beach that you see in the commercials. :P
This is where the dilemna comes in....

When I'm 55, I'll probably have enough to stop working and enjoy the exact same lifestyle (meaning 2-3 normal vacations a year, same old wine, etc.).

Now... life is short... I've known people who died of a heart-attack at 60... Healthy people who jogged every day...

So I expect that will be a tough decision for me.... Work an extra 5 years and get to enjoy more vacations, better wine, etc. or start my retirement right then...

Today was a beautiful fall day. As I drove to work, I wondered what I would do if I had 2 million in the bank... Work another 5 years to get to 3 million? Or enjoy the autumn right now?
I would suggest to anyone. If they do not enjoy what they are doing and they are FI. Go ahead and retire :)
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Post by Fear and Loathing » Fri Oct 15, 2010 3:39 pm

So I don't have to each dry dog food and have enough ammunition to eat lead upon the first diagnosis of dementia.

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Post by Atilla » Fri Oct 15, 2010 4:02 pm

Magic Number? 2.5 Mil in my dreams. Could happen - who knows.

Specific event? Oh yeah. In 5.5 years the boy graduates high school and will be out the door. No more child support payments. If he wants to live at home he can do it at his mother's place. I am also planning for us to be able to pay off the mortgage at the same time. Sweet - 49 years old and no child support/no mortgage.

Once that happens, I plan to re-evaluate where we stand and where we're going.

I love my job and it pays very well, but I don't want to have to do it until I'm 65. By my mid-fifties I want options.

Social Security - that's a tough one. I'm morally opposed to the whole idea as nothing more than welfare. I know I've paid in, but the same can be said for food stamps and any other type of benefit payment. In my perfect world I take the monthly check and give it to my son with an apology for how bad the people before him screwed things up. It will be his money anyway. :lol:

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Post by FinanceGeek » Fri Oct 15, 2010 4:13 pm

Shireman28 wrote:At age 31, I don't count on social security as I hope to have enough in retirement assets to be disqualified by some government flunky since previous generations have saddled me with government debt.
I prefer a more optimistic perspective - "My ability to collect Social Security will be means tested, and with any luck I won't qualify".

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Post by rwwoods » Fri Oct 15, 2010 4:20 pm

I retired in 2003. Since I was age 40, my plan was to retire at age 59.5 at the same standard of living as when I was last working. The 2000 bear market delayed that goal by one yr. In order to meet my goal, I took SS at 62 and my wife took it at 65. We also moved from an area where the cost of living is 10% above the national average to where the cost is 10% below the average.
"I'm not so much concerned about the return on my money as the return of my money" - Will Rogers

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Post by sommerfeld » Fri Oct 15, 2010 4:21 pm

My plans assume I get nothing from SS. I can save enough, and am cheap enough that I don't think I'll need SS, and I'd rather be pleasantly surprised than the reverse.

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Post by norookie » Fri Oct 15, 2010 4:48 pm

rrosenkoetter wrote:Oh, I should point out for my wife, it's much easier... She's retiring in 4 years when our middle daughter graduates college.

She's made that pretty clear... :)

I might be able to get 1 extra year of work out of her... :)
KKWhischhhaaaaa ( :lol: Thats the whipped sound made in jest my friend, can i call you my friend? :lol:) Your right life has its unexpected turns. A good friend had a debilitating stroke @ 57, hes bedridden now. His X says he misses himself the most. :twisted: Geeeeezzzz.......some here not thinking that ALL the money they paid into the .gov annuity your forced to buy called SS is gone and there will be no recourse are quite passive investors. I hear France is nice. :wink:
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Post by MWCA » Fri Oct 15, 2010 4:58 pm

norookie wrote:
rrosenkoetter wrote:Oh, I should point out for my wife, it's much easier... She's retiring in 4 years when our middle daughter graduates college.

She's made that pretty clear... :)

I might be able to get 1 extra year of work out of her... :)
KKWhischhhaaaaa ( :lol: Thats the whipped sound made in jest my friend, can i call you my friend? :lol:) Your right life has its unexpected turns. A good friend had a debilitating stroke @ 57, hes bedridden now. His X says he misses himself the most. :twisted: Geeeeezzzz.......some here not thinking that ALL the money they paid into the .gov annuity your forced to buy called SS is gone and there will be no recourse are quite passive investors. I hear France is nice. :wink:
I don't even understand what you are saying :)
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Post by norookie » Fri Oct 15, 2010 5:07 pm

MWCA wrote:
norookie wrote:
rrosenkoetter wrote:Oh, I should point out for my wife, it's much easier... She's retiring in 4 years when our middle daughter graduates college.

She's made that pretty clear... :)

I might be able to get 1 extra year of work out of her... :)
KKWhischhhaaaaa ( :lol: Thats the whipped sound made in jest my friend, can i call you my friend? :lol:) Your right life has its unexpected turns. A good friend had a debilitating stroke @ 57, hes bedridden now. His X says he misses himself the most. :twisted: Geeeeezzzz.......some here not thinking that ALL the money they paid into the .gov annuity your forced to buy called SS is gone and there will be no recourse are quite passive investors. I hear France is nice. :wink:

I don't even understand what you are saying :)
I hit the boards one to many times, and kept getting up one might say using a hockey analogy. I do not post to well. Dont take this the wrong way,....but read it slowly, like MY cognitive abilites work. I'm not much on grammer or spelling either, but i'm sure that's apparent. As to the OP's(rai) inquiry, i'm semi-retired now. I get bye.~
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Post by jeffyscott » Fri Oct 15, 2010 5:13 pm

Shireman28 wrote:At age 31, I don't count on social security as I hope to have enough in retirement assets to be disqualified by some government flunky since previous generations have saddled me with government debt.
Previous generations, eh? Seems to me that a lot of that debt was built up in just the last 10 years and they are projecting to add $1 trillion+ per year for many years to come now.

Ah yes...just over 1/2 of the debt was added since 2000:

http://www.treasurydirect.gov/govt/repo ... histo5.htm
press on, regardless - John C. Bogle

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Post by rai » Fri Oct 15, 2010 5:31 pm

Atilla wrote:Social Security - that's a tough one. I'm morally opposed to the whole idea as nothing more than welfare. I know I've paid in, but the same can be said for food stamps and any other type of benefit payment. In my perfect world I take the monthly check and give it to my son with an apology for how bad the people before him screwed things up. It will be his money anyway. :lol:
not the same as food stamps or welfare at all.

it's more like a pension.

The US gov takes $10K every year from you (half from you, half from your employer) for 30 years it adds up to ~$300K (if you had compounded that over 30 years and compound that over the next 30 years of payments, you'd have more thna $1M). Government gives that back over the years 65-95 (ish). I am just giving an example when I say $10K per year, it could be the $4K/year (or whatever).

Food stamps or welfare is giving something to people who may (or may not ) have put anything into the system.

I don't see it as being your sons money, it's our money(my money and your money) we put into the system we get out of the system. You son would put his own money in and get his payments when he's 67+.

There may or be means testing for high wealth individuals (likely to limit benifits not eliminate benifits). Highest earners get highest benifits, likely the SS administration will want to lower the highest payments not eliminate payments to those how put the absolutate maximum into the system.

The social security system will still be collecting hundreds of Billions(plus) per year. The projected shortfall is just if everything stays the same. The projected shortfall does not mean Social Security will cease to exist, it will just have to raise taxes (on workers) which is has done before and will do again. And some projected payments will be less than estimated (or lower COLA or something).

Social security will not cease to exist and there will (projected) always be more people paying into the system than who are collecting. It's not like the UAW pension where there were 10 retirees for every worker. There will always be more workers than retirees.

the latest estimates on social security..http://www.ssa.gov/OACT/TRSUM/index.html
tax income would be sufficient to pay about 75 percent of scheduled benefits through 2084
75% of the scheduled benifits until 2084, that's 74 years from now and that is if payroll taxes are not raised in the meantime.

Who wants to bet social security taxes will not be raised?
* Since 1950, various Congresses and Presidents have passed at least nine laws to increase Social Security tax rates above the 6% level specified in the original Social Security Act.

In 2007, Social Security taxes accounted for about 25% of all federal tax collections
http://www.justfacts.com/socialsecurity.asp
"Life is what happens to you while you're busy making other plans" - John Lennon. | | "You say that money, isn't everything | But I'd like to see you live without it." - Silverchair

MP173
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Post by MP173 » Fri Oct 15, 2010 9:33 pm

Very interesting topic.

Current age is 55 and married (wife 54) for one year. Both of us are employed and I love my job, she doesnt enjoy the office politics of her's.

Magic # - Generate about $50k per year in dividend income from portfolio.

Target age - I have great freedom and very good earning ability in my job. Hopefully my employer will remain a very good company to work for and we continue to reward each other for the loyalty and trust which has been beneficial to both parties. Retire? Probably in 10 years, although it would be nice to remain on the payroll and use my skills on a part time basis. If not, there will be something else to do.

Life event - My youngest son is 16. College will be paid for. The mortgage has 14 years (marriage last year came with a new house). It will be paid off in about 6 years if all goes well. After that...debt free and proud.

Pension/work event - not so lucky to have a pension. Very lucky to have 30 years of retirement savings plus very good returns from non retirement funding.

I have mentioned only "my" situation as we really havent integrated "our" finances as far as retirement is concerned. Right now we are both full throttle savings at our employers. Our marriage has enabled my wife to really reduce her expenses and save for retirement.

Social security - It will be there, but probably means tested or heavily taxed. I have thought long and hard about what and when...but will intensify that planning at about age 60. Right now, I have an opportunity to ROTH in both IRA and 401k and am dumping as much as possible into that vehicle for asset location purposes for future use in retirement.

Ed

sommerfeld
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Post by sommerfeld » Fri Oct 15, 2010 9:38 pm

rai wrote:"Hope for the best, but prepare for the worst"
That's exactly why my current plan assumes I'll get $0 from Social Security.

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Culture
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Post by Culture » Fri Oct 15, 2010 9:41 pm

My magic number is a withdrawal rate of 2.5% for our existing base expenses (we live a pretty frugal lifestyle) and a withdrawal rate of 3.5% for our predicted post-retirement expenses which we expect to be 40-50% great than out current expenses. We are pretty close to this point, and have set R-Day for January 1, 2014. Our child will be half way through college at this point.

1) House - Paid for, no mortgage. We expect to purchase a more expensive home after we retire (not larger, but in a nicer area where we want to live).
2) College - 50% of expected tuition and fees in 529 and UGMA accounts.
3) No corporate pension, I have started a solo pension.
4) Counting on no SS for planning purposes, expecting to actually get about 50% of what's been promised (after taxes).

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Peter Foley
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Post by Peter Foley » Fri Oct 15, 2010 10:01 pm

My financial plan is in order. When I devise a life plan, i.e., what I will do after I retire, I will retire.
Specific answers to your questions:
check
check
check
2 months short
SS @ full retirement age - it plays some role but not a major role.

kyounge1956
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Re: what are you shooting for in your retirement plan?

Post by kyounge1956 » Sat Oct 16, 2010 1:27 am

rai wrote:I don't want to know your specific number. But in general

are you aiming for:

a 'magic number'?
a target age?
a specific event (paid off house, paid off kids college, kids out of the nest)?
specific pension/work event (such as getting in 25 or 30 years)?
Maybe not really any of the above. I think what I'm aiming at is more of a feeling, that I have enough retirement resources to be safe from outliving my money. I am in the process of creating an Investment Policy Statement, and that may redefine my target as a more specific number. (Yeah, I know, this is "ready, fire, aim", but I never heard of IPSs until a little while ago.) Up until now my unwritten IPS has been "figure out when I can retire and then do it". Based on numbers alone, I could, in a pinch, probably afford to retire on my next birthday, but I plan to keep working a couple more years after that, because I don't really want to retire in a pinch! However, I work for my local city government and there are big budget shortfalls and looming layoffs next year and in 2012, and maybe more after that if the economy doesn't improve. I've got nearly 26 years of service so I would be unlikely to be laid off myself, but if I could save a co-worker's job by retiring a little earlier than I planned I would think very seriously about doing it. I was un- & under-employed myself for more than two years in the early 1980's, and it was the most miserable experience I've ever gone through. If I can deflect that from someone else, maybe I should. Anyway, to return to the IPS, the target I am thinking of adopting is that I want my portfolio to (1) produce enough income to fill the shortfall between pension + SS and living expenses while (2) growing principal so that the income generated keeps up with inflation and (3) would, in combination with my other assets such as my house, enable me to buy into a continuing care arrangement if that's what I decide to do at an advanced age. Numbers 1 & 2 are well within reach, but I have no idea yet how much (3) would cost. Maybe another two years of saving and investing will be enough. Number 3 isn't set in concrete yet. I don't think I'd be willing to delay my retirement more than a year or two later than I've planned on in order to meet that target. That would also depend on whether I can continue my LTCI at the same rates after retirement as while employed, or if the price will go up like a moon rocket.
what do you expect for Social Security?
--(do you plan on taking it late -higher payment or taking it at a younger age to get more (but smaller) payments?
--Does social security play a major role in retirement plans? Do you factor in extra funds to account for social security shortfall what is currently estimated?
SS has a major role in my retirement plans. If it were to vanish, finances would be very tight for me. I might be able to get by OK on pension and savings alone, but without SS I'd have to watch every penny. I have counted Social Security at half what the website says I will be eligible for if I take benefits at full retirement age, which is what I plan to do. I figure that at least one of these things is likely to happen: reduction of SS benefits, increased taxation of SS benefits (especially for retirees with other sources of income), or I realize that I've underestimated how much I will need to live on. The other half of SS is the safety cushion to absorb such shocks to my finances. And if none of them happen, I'll just have so much money I won't know what to do with it all! :wink:
Any other events in your plan that I did not mention above?
I didn't mention inheritances. Maybe I'll inherit some money from my parents or other relatives, and maybe I won't. I hope they all live so long that they need every penny they have!

Wannaretireearly
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Post by Wannaretireearly » Sat Oct 16, 2010 2:41 am

like this thread...

got to do 2 things:
1. kids thru college (or at least started ;))
2. Paid up house.

Thats *only* 20 odd years away! That would put me at mid 50's. From that point onwards its my time fingers crossed.

Any of you early retirees found a fun *job* (low $, but something to keep you occupied for a few hours a day. Added bonus would be health insurance) which also allowed you to take 2-3 long vacations (2-4 weeks) a year?

Care to share what this fun & flexible *job* is?

rai
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Re: what are you shooting for in your retirement plan?

Post by rai » Sat Oct 16, 2010 6:52 am

kyounge1956 wrote:SS has a major role in my retirement plans. If it were to vanish, finances would be very tight for me. I have counted Social Security at half what the website says I will be eligible for
the point I want to make about social security, is that it collects something like $500B per year. That's a significant amount of money, most of the time they have been collecting a surplus (which is save or owed to the social security administration). But Social Security will always be collecting a ton of money and the social security tax is easlily raised and the benifits have never been slashed that I know of. So it's more likely that the benifits will be somewhere near or in the 70-80% range of what is promised.

social security benifits are not means tested. I think means testing will be very hard to pass.

Much easier to raise tax rate (and raise the earning cut-off limit which is raised all the time).
"Life is what happens to you while you're busy making other plans" - John Lennon. | | "You say that money, isn't everything | But I'd like to see you live without it." - Silverchair

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jeffyscott
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Re: what are you shooting for in your retirement plan?

Post by jeffyscott » Sat Oct 16, 2010 7:30 am

rai wrote:the point I want to make about social security, is that it collects something like $500B per year.

So it's more likely that the benifits will be somewhere near or in the 70-80% range of what is promised.
Under current law that is exactly what will happen when they run short. If the tax collected is enough to pay only 70%, then they have to cut benefits by 30% across the board. The standard young person's answer that they expect to get nothing, would logically mean that the tax would have to be abolished before they start collecting their benefits. But, of course, it is not a logical answer that they are giving, it is an emotional answer, so an end to the tax is not at all what young people are really thinking when they say that.

The more significant question may be: "What do you expect from Medicare?"
press on, regardless - John C. Bogle

KlangFool
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Post by KlangFool » Sat Oct 16, 2010 7:47 am

Folks,

My answer is when I can no longer find a worthwhile (in term of time spend versus pay) job in my industry. I work in a dying industry. Unfortunately, the answer may be as close as next few years....

KlangFool

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Post by fcirullo » Sat Oct 16, 2010 8:04 am

sommerfeld wrote:My plans assume I get nothing from SS. I can save enough, and am cheap enough that I don't think I'll need SS, and I'd rather be pleasantly surprised than the reverse.
Great attitude! What I have learned about savers is that they are happy people who have accumulated a lot more money than the people who know them could ever have imagined. And some of these savers who have more than enough money to live on during their retirement have only invested in a home and FDIC Insured Certificates of Deposit.

Savers buy quality products at a BIG discount, and it's as hard for them to spend money as it is for a spender to save money!
Frank R. Cirullo | | "It isn't what we don't know that gives us trouble, it's what we know that ain't so." -- | Will Rogers

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Tyrobi
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Post by Tyrobi » Sat Oct 16, 2010 8:05 am

I have three criteria for my retirement plan:
  • - House paid off
    - Kids off to college
    - Reach my magic number
Age might be another criteria, but I’m flexible on that target.
Three-fund portfolio | "Simplicity is the master key to financial success." John C. Bogle

sommerfeld
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Re: what are you shooting for in your retirement plan?

Post by sommerfeld » Sat Oct 16, 2010 8:18 am

rai wrote:social security benifits are not means tested. I think means testing will be very hard to pass.
They are already partly means-tested -- if you have other income, including otherwise tax-exempt interest, 50% to 85% of your social security benefits become subject to income tax.

See http://www.ssa.gov/history/taxationofbenefits.html

That formula has been adjusted once and it can be adjusted again. I won't speculate about what form possible future adjustments may take (off topic for this forum).

Increased taxation of benefits based on other income or assets is equivalent to a means-tested benefit reduction.

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Post by allsop » Sat Oct 16, 2010 8:27 am

Shireman28 wrote:At age 31, I don't count on social security as I hope to have enough in retirement assets to be disqualified by some government flunky since previous generations have saddled me with government debt.

Otherwise, I'll just keeping maxing out what tax-advantaged accounts I can and pay off the house, and try to keep expectations low.
I'm curious as to why you think you think you can not count on SS in the future while tax-advantaged investing will still be tax-advantaged when you retire in 30 years?

sommerfeld
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Post by sommerfeld » Sat Oct 16, 2010 8:35 am

allsop wrote:
Shireman28 wrote:At age 31, I don't count on social security as I hope to have enough in retirement assets to be disqualified by some government flunky since previous generations have saddled me with government debt.

Otherwise, I'll just keeping maxing out what tax-advantaged accounts I can and pay off the house, and try to keep expectations low.
I'm curious as to why you think you think you can not count on SS in the future while tax-advantaged investing will still be tax-advantaged when you retire in 30 years?
Your statement does not follow from what he wrote. He didn't say anything about expecting tax-advantaged accounts to remain tax-advantaged.

I'm putting money into tax-advantaged accounts because it's what we have now and because it reduces my taxes now. I don't assume the tax laws won't change going forward.

allsop
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Post by allsop » Sat Oct 16, 2010 8:48 am

sommerfeld wrote:
allsop wrote:
Shireman28 wrote:At age 31, I don't count on social security as I hope to have enough in retirement assets to be disqualified by some government flunky since previous generations have saddled me with government debt.

Otherwise, I'll just keeping maxing out what tax-advantaged accounts I can and pay off the house, and try to keep expectations low.
I'm curious as to why you think you think you can not count on SS in the future while tax-advantaged investing will still be tax-advantaged when you retire in 30 years?
Your statement does not follow from what he wrote. He didn't say anything about expecting tax-advantaged accounts to remain tax-advantaged.

I'm putting money into tax-advantaged accounts because it's what we have now and because it reduces my taxes now. I don't assume the tax laws won't change going forward.
I suppose I'm guilty of putting words into his mouth.

On the other hand it is not often I read that those that does not count on SS in the future also write that they do not count on the tax laws to remain unchanged.

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