How much post retirement with pension

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cookienadal
Posts: 45
Joined: Tue Aug 16, 2022 3:13 pm

How much post retirement with pension

Post by cookienadal »

Can someone tell me a good way to take pension into consideration for future retirement income.

These are approximates.
If I plan to retire at 65 and get a 3500 month pension. I am used to spending about 5000 a month. Which I expect to be similar as I will spend less on some things but more on others. I also will have about 1500 month social security. That is 5000 but how much do I need saved up for long term care if I need it. I’d need something like an extra 5000 a month if that happened a nursing home?

I am currently 52. Live in GA.

I do currently have investments but just wondering how much extra I might need. Currently around 70/30. Stocks/bonds and 10% savings account. All taxable at Merrill w vanguard index funds.
Last edited by cookienadal on Wed Nov 23, 2022 7:37 am, edited 1 time in total.
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racy
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Re: How much post retirement with pension

Post by racy »

If you believe that 4% is a Safe Withdrawal Rate, then multiply your annual need by 25. ($5000 x 12 = $60,000. Times 25 =$1,500,000). Some think that the 4% SWR is too high. If you think 3% is better, then multiply by 33 instead of 25.
Topic Author
cookienadal
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Re: How much post retirement with pension

Post by cookienadal »

Wow that’s a lot. Good thing I’m already at 710,000.
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Sandtrap
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Re: How much post retirement with pension

Post by Sandtrap »

cookienadal wrote: Wed Nov 23, 2022 7:28 am Can someone tell me a good way to take pension into consideration for future retirement income.

These are approximates.
If I plan to retire at 65 and get a 3500 month pension. I am used to spending about 5000 a month. Which I expect to be similar as I will spend less on some things but more on others. I also will have about 1500 month social security. That is 5000 but how much do I need saved up for long term care if I need it. I’d need something like an extra 5000 a month if that happened a nursing home?

I am currently 52. Live in GA.

I do currently have investments but just wondering how much extra I might need. Currently around 70/30. Stocks/bonds and 10% savings account. All taxable at Merrill w vanguard index funds.
To OP:
Notes and questions and suggestions:
(you can edit your original post using the pencil icon to include this data and format for more comprehensive input in better context, like this:
Post Retirement question with Portfolio Review Request (some thing like this)
https://www.bogleheads.org/forum/viewt ... =1&t=6212

1
Does your pension have COLA? How much?
2
Spending is approx 5000/mo. Will this increase over time? How much?
3
How many years from present age until you think that "long term care" might come into play?
4
In Home 24/7 care now runs from 10-15k/month, and up (as one example of many). . how can you afford that if that happens?
5
What is the breakdown of the 5k/month expenses? (mortgage, rent, etc) can that be lowered or adjusted over time as needed? How?
6
You mention "nursing home". . . do you think that will come into play in your life? When? What type of care?
7
You mention: "how much extra you might need". . .where would that come from now and going forward? Income? What?
8
Suggested reading: "Ages of the Investor: Life Cycle Investing" by W. Bernstein (amazon softcover).

Note: there's not enough data given for comprehensive input and only generalized input so assumptions have to be made. More data would be helpful for you.

j :D
Wiki Bogleheads Wiki: Everything You Need to Know
Jack FFR1846
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Re: How much post retirement with pension

Post by Jack FFR1846 »

It's worthwhile to look at facilities near you and find out what they cost. Will they accept medicaid? For how long would you expect you'd be in a nursing home? Is it possible you'd be in a lower level facility like assisted living? What do they cost near you? Once you do figure these costs out, you really need to track them over time. My mom is looking at facilities that are an even lower level called independent living. Some of these do have the ability to step up care to assisted living levels. As an example, an independent living facility with 1 bedroom a year ago was $4800. We just revisited about a month ago and the same unit costs $6800. Stepping to assisted living which includes only about 1 hour of skilled care a day jumps up about $2k a month to $8800. Nursing homes are much more but we haven't seen costs since DW's aunt passed. Back then, it was $12k a month. I would expect in our locale, it's probably more like $16k a month.

Most facilities near me have agreements where after you pay full price privately, they will accept your monthly income, including social security, pension and annuity payments. But all places are different, so you really need to do research ahead of time. We found municipal, discounted facilities can have years long waits.

If we ignore these facilities, what I do to estimate what's needed is to take my retirement expense list and subtract social security, then subtract pensions. The number you end up with gets multiplied by what you feel is appropriate from 25 to 50.
Bogle: Smart Beta is stupid
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enad
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Re: How much post retirement with pension

Post by enad »

cookienadal wrote: Wed Nov 23, 2022 7:28 am Can someone tell me a good way to take pension into consideration for future retirement income.

These are approximates.
If I plan to retire at 65 and get a 3500 month pension. I am used to spending about 5000 a month. Which I expect to be similar as I will spend less on some things but more on others. I also will have about 1500 month social security. That is 5000 but how much do I need saved up for long term care if I need it. I’d need something like an extra 5000 a month if that happened a nursing home?

I am currently 52. Live in GA.

I do currently have investments but just wondering how much extra I might need. Currently around 70/30. Stocks/bonds and 10% savings account. All taxable at Merrill w vanguard index funds.
If you have a spouse, you may want to look at the different options that you can get with your pensions. Single Life Annuity will generally be the highest amount, but if you die 1 month later, your spouse gets nothing. There are others, like 10-year and certain where the amount is reduced but the spouse gets something, and yet others like contingent which pay out even less but give your spouse from 25 to 50 percent of the amount you'd get. An alternative is a lump-sum (if it's offered) in which you'd invest the money and then when you need it or by age 72 take the required minimum distributions so you can pay taxes so Uncle Sam can get his cut. You can also look into Medicare plans which may cover your nursing home
What Goes Up Must come down -- David Clayton-Thomas (1968), BST
Nowizard
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Re: How much post retirement with pension

Post by Nowizard »

When considering the total you need, be certain you add in your SS and pension totals over those 25 years.

Tim
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22twain
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Re: How much post retirement with pension

Post by 22twain »

Jack FFR1846 wrote: Wed Nov 23, 2022 7:51 amMy mom is looking at facilities that are an even lower level called independent living. Some of these do have the ability to step up care to assisted living levels. As an example, an independent living facility with 1 bedroom a year ago was $4800. We just revisited about a month ago and the same unit costs $6800. Stepping to assisted living which includes only about 1 hour of skilled care a day jumps up about $2k a month to $8800. Nursing homes are much more but we haven't seen costs since DW's aunt passed. Back then, it was $12k a month. I would expect in our locale, it's probably more like $16k a month.
You're in Massachusetts, right? The OP is in Georgia. Things are probably a bit cheaper there. :wink:
It's "IRMAA" (Income Related Monthly Adjustment Amount), not "IIRMA" or "IRRMA" or "IRMMA".
MJS
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Re: How much post retirement with pension

Post by MJS »

This tool gives you some ideas of the variables. You can edit it to better fit your situation.
https://engaging-data.com/will-money-la ... &mort=best
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marcopolo
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Re: How much post retirement with pension

Post by marcopolo »

racy wrote: Wed Nov 23, 2022 7:36 am If you believe that 4% is a Safe Withdrawal Rate, then multiply your annual need by 25. ($5000 x 12 = $60,000. Times 25 =$1,500,000). Some think that the 4% SWR is too high. If you think 3% is better, then multiply by 33 instead of 25.
It seems unlikely the OP will require LTC for 30 years. So not sure the 4% SWR "rule" is applicable here.
Once in a while you get shown the light, in the strangest of places if you look at it right.
stan1
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Re: How much post retirement with pension

Post by stan1 »

racy wrote: Wed Nov 23, 2022 7:36 am If you believe that 4% is a Safe Withdrawal Rate, then multiply your annual need by 25. ($5000 x 12 = $60,000. Times 25 =$1,500,000). Some think that the 4% SWR is too high. If you think 3% is better, then multiply by 33 instead of 25.
Use expenses minus income to determine how much needs to be withdrawn. In todays dollars, OPs spending is $5000 per month funded with $3500 per month in pension and $1500 in social security so expenses are fully funded with expected income and all investments are for long term care and leaving to heirs. OP didn't tell us if the pension is inflation adjusted or not.

OP also doesn't mention if married or single, but if single that $5000 per month of income would contribute to paying for long term care, leaving about $3,000 to $5,000 needed out of investments. Five years of that would be up to $300,000. If OP goes into a nursing home and is single a house could possibly be sold that would also help pay for care.

However, OP is "only" 52 so lots can change before turning 65 or 70 or hopefully not needing long term care until in 90s. Any type of modeling requires making assumptions that will likely prove to be false because we can't predict the future. For simplicity I'm using current dollars and not taking rates of return, inflation, or other factors that need to be estimated for a more complete model. However, all those are driven by assumptions and what really becomes actionable is how much OP can save while working or how much expenses can be reduced.
Topic Author
cookienadal
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Joined: Tue Aug 16, 2022 3:13 pm

Re: How much post retirement with pension

Post by cookienadal »

I am married. Forgot his SS around 3000. The long term could be him too. Imagine him maybe needing at 70 me 80 or later.
Our house is only about 220000
Thanks everyone.
This gives me some suggestions.
I am making good progress but need more it looks like.
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