Married couple, both 50 years old. Nothing saved for retirement, but house paid off. Husband gets a pension at 55 (not worth much until about 57), but at 60 it's about $2500 and a stipend for healthcare for the two of them until Medicare kicks in. So the two of them save $40,000 a years for 10 years. Retire, take the pension, then also spend $40,000a year for the next 10 years. Take Social Security at 70, which will be about $4000 a month ($2000 per person.) Assuming they can live comfortably on $70,000 a year, is this a terrible plan?
| by Anonymous | reply 46 | May 31, 2022 5:49 PM |
After doing the math, my advice is the train should arrive at Grand Central Station at 1.37pm with 87 passengers onboard.
| by Anonymous | reply 2 | May 30, 2022 5:36 PM |
This is extremely risky. Can the retireee work to accumulate some savings? The market ls down, so you may end up getting bigger returns on dollars invested now.
| by Anonymous | reply 3 | May 30, 2022 5:44 PM |
or they may die in an accident tomorrow.
| by Anonymous | reply 4 | May 30, 2022 5:47 PM |
You realistically think you can save $40,000 a year?
How much do you make (after taxes)?
[quote]stipend for healthcare for the two of them until Medicare kicks in
How much is the stipend? A plan for an older male on the exchanges could be in the low $800's ... each.
I think your plan is doable if you retire at 65 when Medicare kicks in (and the 5 extra years of savings).
| by Anonymous | reply 5 | May 30, 2022 5:48 PM |
My partner and I live in Orlando, which is not cheap. We live very comfortably on 70K a year with only a mortgage payment as the main bill. it is a frugal life, but we still save money for vacations and treats. However, with inflation, state of the world, etc., it all seems to be an endless crap game.
| by Anonymous | reply 6 | May 30, 2022 5:48 PM |
If you can do it at the current rate of inflation, go for it. Of course unexpected costs my eat away at it. Stay healthy, your good health is the most important thing you own. If you can, both should start a Roth IRA. Fill it to the maximum allowable or as close as you can.
Not putting anything away for retirement was a big mistake, but if you have 10 to 17 years of work ahead of you, you might be able to pull it off.
| by Anonymous | reply 8 | May 30, 2022 5:55 PM |
Agree with R7. There are many scenarios where reverse mortgages make sense.
| by Anonymous | reply 9 | May 30, 2022 6:25 PM |
Ugh, r5. The stipend is actually $800 a month. Do you get some sort of discount, or is there a "family" plan where you would be paying less because both men are essentially on one plan that includes both of them? I haven't even started to wade into the depths of the ACA yet.
| by Anonymous | reply 12 | May 30, 2022 6:43 PM |
OK, I concur that this plan is risky. How much would you want to have saved in retirement accounts to make this plan doable? Not a rousing success, but doable.
| by Anonymous | reply 13 | May 30, 2022 6:47 PM |
Work as long as you can to build up savings.
Retiring any time soon would be idiotic.
Why do you have no retirement savings?? You’ll live for another 30 years without any income at all
| by Anonymous | reply 14 | May 30, 2022 6:52 PM |
There’s always Chaturbate
| by Anonymous | reply 15 | May 30, 2022 6:53 PM |
You don’t mention in that plan what the assumption is for life expectancy. Do people in your families generally live to be in their 90s? Do they die in their 70s? What is your health? Do you have any history of disease in either family? Life expectancy is one of the biggest critical factors in putting together a retirement plan.
| by Anonymous | reply 16 | May 30, 2022 7:05 PM |
Yes, you must plan the date of your death exactly, else you will be refuse society.
| by Anonymous | reply 17 | May 30, 2022 7:16 PM |
[quote]How much would you want to have saved in retirement accounts to make this plan doable?
I had a million but the stock market clawed back part of it when I retired last November and I'm beginning to spend it down. I'm also spending more than expected because I'm bored. Went on a road trip to Florida stopping to do some hiking (Shenandoah National Park, Smoky Mountains, Amicalola Falls) and realized I was going over budget. Usually spend about $40,000 - $45,000 a year to live without any debt. I was looking to buy a tent for my next road trip.
Cobra is costing me $788 for one person. It was cheaper than ACA because the cost of ACA is based on your income. My income was in the 6 digits last year but part of it came from stock/option trading. Can't seem to make it work this year because of the volatility in the market.
I wouldn't wait until 70 to collect Social Security. Parents died between 68 and 72 which gives me only 10 years to live.
Instead of trying to figure out what to save start by calculating what you spend and if any of those expenses change after you retire.
| by Anonymous | reply 18 | May 30, 2022 7:28 PM |
Can you tell us where you are planning on retiring? I am retired on much less than your figures but live in East Jesusville.
| by Anonymous | reply 19 | May 30, 2022 9:21 PM |
Agree with R9 as well. The closing costs/rates on reverse mortgages usually aren't great (and you can only get so much of the value of your home - 60-70%), but if you don't have kids (I'm assuming) to leave your money/property to, who gives a shit what the rate is?
| by Anonymous | reply 20 | May 30, 2022 9:31 PM |
r14, how do you figure? We'll have our salaries until 60, then savings and pension until 70, then social security and pension. Lots of people just live on social security alone (not ideal, but...)
| by Anonymous | reply 21 | May 30, 2022 10:13 PM |
I am waiting for all of DLs multimillionaires to chime in and tell us about all of their money. Are they all still sleeping?
| by Anonymous | reply 22 | May 30, 2022 10:31 PM |
OP, have you two carefully tracked your spending to know how much you are living on per year now? If not, you must start doing that.
If you delay SS, your payments will increase 8% per year from your FRA until age 70. That's a nice increase.
The linked website has been a tremendous help to me in planning for retirement. By the time I reached age 56 I was confident I had enough to retire on. Read through the forum and do some searches then post questions. Be polite and don't engage in politics on that forum. It's probably the most civil forum on the net and the posters are very knowledgeable. There are a lot of engineers on the site and they are great for number crunching.
Good luck!
Offsite Link| by Anonymous | reply 23 | May 30, 2022 10:36 PM |
It sounds like a decent plan. However, I'm not understanding how you were unable to save anything for retirement all these years, but suddenly you're going to be able to sock $40,000 away each year for the next ten years. What changed? Are your spending habits drastically changing (and even if you want to do that, it's difficult to actually do.)?
| by Anonymous | reply 24 | May 30, 2022 10:58 PM |
They do not R12.
They do offer subsidies if you make under a certain threshold however. They go by the previous years w2, so the first year at least you would probably be SOL. Following years ... I plugged in $40K a year in my state's marketplace website for a family of 2, and it came to $350 a month (per person) subsidy, so you'd still be paying $500ish per person a month.
| by Anonymous | reply 25 | May 30, 2022 11:04 PM |
How do you plan to put away $40k per year? That seems quite unrealistic.
| by Anonymous | reply 26 | May 30, 2022 11:05 PM |
r26, my husband inherited an IRA, and we are taking required minimum distributions. We could put this in the market, but our timeline is so small I'd rather not.
| by Anonymous | reply 27 | May 30, 2022 11:16 PM |
R27, what is the IRS invested in? Money markets? Your time horizon is long enough that you need to have some returns that beat inflation (both when the money is in the IRA and the distributions after you take them out), or it will be worth less in 10 years than it is now.
| by Anonymous | reply 28 | May 30, 2022 11:19 PM |
IRA (a normal IRA not Roth) distributions are taxable R28. So if you withdraw $40K a year, you won't be getting $40K to save. I hope you aren't getting frustrated with the Debbie Downers on the thread, but ....
| by Anonymous | reply 30 | May 30, 2022 11:24 PM |
R27, it's a hodge-podge of investments that probably made my father-in-law's Ameriprise advisor rich with fees. It seems to mimic the market, but it doesn't really matter, because the money needs to cleared out of the account over the next decade.
| by Anonymous | reply 31 | May 30, 2022 11:25 PM |
[quote]Went on a road trip to Florida stopping to do some hiking (Shenandoah National Park, Smoky Mountains, Amicalola Falls) and realized I was going over budget...I was looking to buy a tent for my next road trip.
How much over budget can you go on a road trip through national parks? How much can a fucking tent for your purposes cost?
Not every budget buster item or surprise purchase is really a budget buster.
| by Anonymous | reply 32 | May 31, 2022 12:30 AM |
OP, why don’t you engage the services of a fiduciary financial advisor to help you plan your retirement? Why are you asking Datalounge FFS??
| by Anonymous | reply 33 | May 31, 2022 4:56 AM |
OP, a fiduciary financial advisor can still rip you off with high fees. Find a financial advisor who will charge by the hour or a flat fee for a plan. Don't get into an AUM (assets under management) account. It will cost at a minimum 1% of your assets. The safe withdrawal rate is 4% so you will be giving up 25% or more of your gross investment earnings.
Again, this website is just what you need:
Offsite Link| by Anonymous | reply 34 | May 31, 2022 5:37 AM |
r34, I just feel like all those people are simps for Vanguard and the like. I mean, if we were going by the 4% rule, it would be like I have a $1.5 million, and if the pension holds and social security is still there, there will be no "down" years to consider.
| by Anonymous | reply 35 | May 31, 2022 1:21 PM |
Sheesh. Anyone who refuses to consult with an advisor and instead asks DL for financial advice for their retirement is just asking for trouble. A fiduciary charges a fee but makes no commission off any of your investment choices. Their only goal is to do what’s best for you. But best of luck to you, OP.
| by Anonymous | reply 36 | May 31, 2022 1:45 PM |
If the Early Retirement board is too conservative for you (even though it's more liberal than Bogleheads), you can see whether the "radical optimists" at Mr. Money Mustache like your plan. For anyone considering a very tight retirement, there's also the Early Retirement Extreme blog and forums.
| by Anonymous | reply 37 | May 31, 2022 1:55 PM |
R37, I will definitely check out the Early Retirement Extreme. R36, we have consulted with an advisor and ran various scenarios. It's not that we don't have money saved. The problem is, is that it is NEVER enough. I am just sick and tired of obsessing over retirement account balances. I don't want to spend the next ten years of my life maxing out 401ks and IRAs. Now that we are both 50, there is pressure not only to max them out, but to max out with the catch up contributions as well.
| by Anonymous | reply 38 | May 31, 2022 2:07 PM |
You need a million five in our bank each if you don't want to be living in a car at 90. Sincerely, the bank.
| by Anonymous | reply 39 | May 31, 2022 2:22 PM |
[quote] Cobra is costing me $788 for one person. It was cheaper than ACA because the cost of ACA is based on your income. My income was in the 6 digits last year but part of it came from stock/option trading
Just to get this straight--You're retired and your income is in the 6 digits? If that's what you made before retirement and you're retired now, ACA subsidies are based on expected income this year, not your previous year's income.
| by Anonymous | reply 40 | May 31, 2022 2:23 PM |
The general advice is, for your retirement funds to last 30 years, you should only spend about 4% of your funds per year, while most of the rest stays in the stock market, at least for the short term.
That means, for every $40K you need per year, you should have $1 million saved.
THIS is why America is completed f'd when it comes to retirement.
| by Anonymous | reply 41 | May 31, 2022 2:25 PM |
[quote]That means, for every $40K you need per year, you should have $1 million saved.
Bullshit.
| by Anonymous | reply 42 | May 31, 2022 2:33 PM |
R42, um, 4% of 1 millon is....$40K.
So no, not bullshit. Scary, but not bullshit.
| by Anonymous | reply 43 | May 31, 2022 4:03 PM |
Also try reddit financial independence. I see there is at least one other DLer here is a FIRE adherent.
Op, if you go to the Mr money mustache forum, there is the case study subforum. Follow the guide on how to present your case. Folks will happily dissect your case to very fine details. Just be prepared to hear some hard truths. But if you are serious about your original question, the MMM case study is exactly for you. The reddit forum has a similar case study weekly thread.
| by Anonymous | reply 44 | May 31, 2022 4:47 PM |
[quote]Just to get this straight--You're retired and your income is in the 6 digits? If that's what you made before retirement and you're retired now, ACA subsidies are based on expected income this year, not your previous year's income.
I retired last year in November. Tried to retire earlier but we had people on vacation/maternity leave and the company asked me to move the date out.
Just checked Access Health CT and the costs are still higher than what I'm paying now on Cobra. Didn't check the subsidized plans because it forces me to go through the application process. It goes back to 2020 for tax information.
| by Anonymous | reply 45 | May 31, 2022 5:46 PM |
[quote]How much over budget can you go on a road trip through national parks? How much can a fucking tent for your purposes cost?
It was a three week road to the national parks and Florida. I stayed in hotels.
| by Anonymous | reply 46 | May 31, 2022 5:49 PM |
