In reply to Indy - Guy :
Yeah, more like what Indy stated.
My father-in-law retired from General Motors 34 years ago with a $20,000/year UAW pension along with full health insurance - 30 years working at Fisher Body.
In 1991 it was a fair amount to get by on and he had money saved but it's gotten tight. Of course he doesn't spend a lot of money these days.
Will I get in the same boat if I live to be almost 90 years old?
In reply to Datsun240ZGuy :
Sounds like that is kind of cutting the other way. Non inflation adjusted pension would hurt - doubly so as you aren't in control.
on the "saving/accumulating" side, every extra dollar you spend towards inflation directly adds to the amount of time you have to be working. Basically, every dollar you are spending now needs to be replaced in retirement, in the simplest terms.
here's the chart from Mr Money Mustache..
I'm going to add an anecdotal piece to this. My best friend's dad Sam taught high school. PA (and some other states) were offering a "30-and-out" plan to help spread out the turnover rate of boomers. The plan basically gave teachers 85% retirement after 30 years. Sam considered taking the 85% at 30 years, but he stuck it out for a full 35. The following year he had a massive heart attack and died while shopping at a Lowe's.
In Sam's case, it wasn't about the money, it was about A) he really loved his job, and B) he came from a generation where taking the easy path was "un-american" and he felt some moral obligation to do things the proper way.
I doubt I'll ever have a real retirement, but if I do, I would rather be a bit poorer and have more time.
Interesting and timely conversation. My wife and I are finally talking about retirement and our plans. I am 60 and she is four years younger. My initial plans are to keep doing what I am doing until I am 65 and then fully retire and get on her health insurance until she also retires. But she wants to retire earlier than 65, so that may change things. She will likely do consulting or volunteer in her retirement and I have been building my classic car hobby business, so that is my plan for retirement. I have been collecting the parts for each project car and will likely restore one car a year, until I am too old to do it anymore. Been using the business to build up the shop, tools, inventory of projects and all the special parts to make these fun retirement projects. As long as my health holds out, which is always the concern. We also decided we are staying here in MD at least until we are 70, as we still have our parents to take care of.
But definitely thinking about retirement, my current work is great and doing well financially, but the balance between not waiting too late to enjoy the things I want to do and having enough to retire on is always the game. You can't take it with you but you also want to be able to do the things you want to still do, especially after working 40+ years. Our financial advisers say we are in decent shape, so feeling good that this plan.
classicJackets (FS) said:In reply to Datsun240ZGuy :
here's the chart from Mr Money Mustache..
I would be very careful with his specific advice. It comes from a good place but is over simplified to the extreme. His cut his budget, at least the one he published, to the bone and paid dearly. Everyone situation is unique, I think the big thing that you can take from him and others is that early investing plus time with a lower cost of living will work but might not be as happy as you think. Without a direction/desire once you are out of the workforce you can quickly go adrift and not follow the path you have set and people get caught out.
FICalc.app and the original are good sites and can give you a decent understanding of where you are and with Monte Carlo sim. Set the range of what you should expect back in the 10-30 year forecast and find where you are comfortable. I like that one. The fact that any of us are even talking about this means we are on the right path. The median net worth including property in the US is like 418K. Average is 1.7 Million but that number is much higher due to the top 5% of net worth bring the number up and well you still need to live in your house. The bottom 20% is sub 40K so yeah that is going to suck but that is the numbers as they have been published.
So these are the output from mine if I were to stay till 65 given the normal bond stock, cash split on a MC distribution. At 65 this would pay out around average 66K a month plus another 14K in pension and then another 7k or so between my wife and I in SS. (If it still exists and is not means tested) We don't spend that monthly in year if you take out our taxes, zero reason to push that hard for sure. But again at 50 where the numbers make sense I am not sure what I would do short of starting another company or consulting to keep myself moving and I like watching the number go up. All these numbers are inflation adjusted.
I have a hard time spending cash due to my upbringing (% of my income) stuff like this shows that I can travel if I want, I can splurge on cars, I can get my wife nice things in the rare chance she wants anything. It also shows that I do not need to focus on every single penny getting into just the perfect account to maximize my return, even though I find that aspect really fun. FYI this is if I never put another dollar into my 401K as well and well I max that every year on both sides that does not move the needle for me very much but its nice to avoid the taxes in the now but I may get screwed on required disbursements and I would have to find a way to transfer to a ROTH to really minimize the hit.
In reply to TravisTheHuman :
Yep. We worked for da man and saved 10% as soon as we could. As our expenses went down, we worked our way up to 25%. Nearly all of that went into 401ks of various flavors.
DW's employer had a pension program but they discontinued that maybe halfway through her career in favor of 401ks. So that's maybe $25k per year.
Never invested in real estate because I have zero interest in being a landlord.
Over the various years we did inherit a modest sum from my parents, but not a truly significant amount. Most of it we just did the old fashioned, butt simple way of putting it directly away before we could think of it as spendable.
Mine was through odd circumstances. I did what many people do, worked hard and saved a lot of money into 401k. Then I got divorced and remarried (my ex didn't touch my 401). My current wife built a nest egg very similar to mine. Combine them and we're in good shape. My expenses are going down as my kids get older.
For us, it all came down to wanting to live while we can. As they say, YOLO. So while we're making sure we have enough to be senior citizens and then some, we're taking adventures now. As far as filling time, it's actually been the opposite problem for me. I've found so many jobs and activities I've always wanted to do that I'm stretching myself too thin and have to start easing up some. I don't make anywhere near as much money as I used to, but I don't "work" a single day. Everything I do to get paid for is fun and at my discretion.
In reply to wearymicrobe :
Love to see it, that's fantastic!
agreed on taking MmM with a grain of salt.
We do try to live well, and I think we do - but I like the background structure of the % of income saved.
In reply to classicJackets (FS) :
That seems like a remarkably aggressive schedule.
DW and I probably averaged 15% over 20-25 years of saving and we built a nest egg that will allow us to live better than we are now until we're 90 with money left over to leave the kids.
That MMM chart says we should have needed 44 years of working while saving at 15%.
Neither of us was working for minimum wage but we were not raking it in, either. Upper half of the 5-figure range most of that time. We bought a house and put 2 kids through college, too.
The MMM table is a good instructional table. It assumes average S&P return, and it also assumes that if you save X, you spend 100-X and will continue to spend that in retirement.
In many cases later your spend drops a ton (for example kids are out of school or similar). Also in many recent cases, the market has greatly outperformed the average.
IMO it's a great way to show someone who is saving very little how far that's going to get them. They will either need to work forever, or greatly reduce their spend in retirement.
Indy - Guy said:In reply to alfadriver :
Datsun240ZGuy was referring to those who are still in the earning/saving for retirement phase, to them, inflation is a killer to the family budget.
That would cause lifestyle deflation, then. Or at least cap it. One should not be inflating their lifestyle when economic times are tough....
My point is that good retirement set ups can keep your lifestyle pretty even for inflation.
I'm consistently amazed at how relevant GRM discussions are.
The wife and I are in the same boat as Duke & Wearymicrobe, firmly in coastFIRE and questioning if "disgusting money at 70" is what we really want.
Most of the men on my father's side dropped dead in their 50's, which is why we will likely be "retiring" to a LCOL country next year. Forecasts show our nest egg will grow more slowly and end up smaller, but in return we'll be able to jump off the work treadmill in our 40's.
Like many of you, I'm not the type to sit still for long periods of time. I suspect acclimating to a new culture and language will take up much of that time for the first few years...I'm maybe leaning towards learning woodworking afterwards. Any advice from folks that have taken up new hobbies in retirement?
One thing to remember, too, is to not do what frenchy claimed he did- which was panic during a downturn and sell things off. That's really the opposite of what you want to do with your retirement account, especially if you are a really long way away from retirement. It's actually the best time to buy in- so as long as you have a good, solid, job, keep paying the account in full when the market is down. And supplement it if you can.
Of course, that changes as you approach the time to take money out. But even then, it's not a sell off- historically, the value will come back eventually, and you should be taking out relatively small amounts to live off of. So it will generally recover within a year or two. It always bothers me when there's a market crash and the claim is always "retirements are lost" when it's the value that went down and will probably go back up.
Not yet retired at 55.5 years old, but recently separated from employment. Savings wise I am OK and could retire, but the thing that concerned me was covering health insurance until Medicare (prior and after separation).
Currently on Cobra via my employers plan, while limited time frame, it makes you aware of the costs that will be incurred moving forward.
Currently $800 a month for mediocre plan with a $4000 dollar detectable, and another 27 bucks/mo for Dental. Dropped Vision as just had an exam.
That's just shy of $10K a year for the premium and adding in the deductable up to $14,000 a year before real benefits kick in. (I think the Max OOP is $7500). All that said, I am looking at having to spend between $100,000 (never seeing a DR) and $175,000 for health insurance for the next 10 years. That's a lofty sum in my book, and as such I am on the hunt for a new job for another couple years.
Jan 1, I am moving to a ACA plan, less money but less coverage. ACA plans with similar coverage (in my state) to my former employers plan are no more affordable.
I have not read through all this thread, will be doing a deep dive to see what you all have to say. Hoping to find some good tips.
Happy New Year all !
SKJSS (formerly Klayfish) said:I don't make anywhere near as much money as I used to, but I don't "work" a single day. Everything I do to get paid for is fun and at my discretion.
This sums up my retirement plans exactly..... I'll be busy each day, but never "work" and if I get paid by either selling one of my project cars or doing work for a customer,it will be fun and at my discretion. If it ever becomes work and a burden, I'll stop and go do something else with my free time. Right now, I have my full time real job and my fun classic car business and work all the time but the car business is not work at all. We will see how that holds up in retirement in a few years!
Putting this back together for a guy in his 70's, he has had it for 30+ years, never got around to finishing it, so I will make his dream come true, this is not work!
Duke said:
Yep. We worked for da man and saved 10% as soon as we could. As our expenses went down, we worked our way up to 25%. Nearly all of that went into 401ks of various flavors.
DW's employer had a pension program but they discontinued that maybe halfway through her career in favor of 401ks. So that's maybe $25k per year.
Never invested in real estate because I have zero interest in being a landlord.
Over the various years we did inherit a modest sum from my parents, but not a truly significant amount. Most of it we just did the old fashioned, butt simple way of putting it directly away before we could think of it as spendable.
It's remarkable how similar our stories are.
We had no plan to, but I did have an interest in being a landlord. I inherited a strong entrepreneurial spirit from my Dad's side of the family, and when the opportunity was presented, I became a landlord. I also said I'd never do it again, but I think I would, I would just do it differently, as the income was pretty good.
In any successful endeavour there's always some luck involved, but to some degree you can create your own.
On our first house, when rates dropped after a few years we renegotiated, paid a small penalty, and kept the payment the same. Every six months I bumped the payment up by what I could afford, sometimes only $20. Ten years in, and in really good shape our 82 yr old neighbour approached us, said he could no longer maintain it, and wanted us to buy his farm. He liked us and thought we would look after it. It was a lot of money and a huge decision. I asked my smartest friend for advice. If you can borrow against your place for the down payment, and keep both, it's a no brainer. In hindsight it was a no brainer anyway, but we didn't realize it at the time. It wasn't easy, but we pulled it off, rented one out for ten years, and when we sold it took that money and put it on the farm mortgage.
Being in that situation was pure luck, but some good decisions made early on put us in a position to take advantage of it.
calteg said:
Like many of you, I'm not the type to sit still for long periods of time. I suspect acclimating to a new culture and language will take up much of that time for the first few years...I'm maybe leaning towards learning woodworking afterwards. Any advice from folks that have taken up new hobbies in retirement?
I can't help you with the foreign country part, I'm content here in the US. As far as things to do, that's a list so long that I have to put things off. I'm an instructor for exotic cars driving experience, still do contract work for the insurance company I retired from, instructor for HPDE if time allows. In January I'm working for Mecum. Working on putting together a podcast. Working on starting my own small business just for fun. Off on the horizon is volunteering or working for a dog rescue, disaster relief such as The Red Cross, on and on... I'm busier now than I ever was when I was working.
In reply to TravisTheHuman :
Very true, which is why my wife and I do talk about moving out of the Denver area sometimes. Ironically Cape Cod, which is where we met, is quite a bit less expensive than Denver. I'd be down to moving back there but wouldn't want to spend the winters there. Way too cold and skiing stinks. I'll have to assess where I am in another ~2-3 years, I think I'll be able to punch out then and if I can, I will.
classicJackets (FS) said:In reply to TravisTheHuman :
"Build the life you want and then save for it"
This is how we're trying to target our early retirement.
for those on this board who have gone through it I am curious what got you there
- working for the man and saving
- real estate /landlord?
- Start or buy a small business
- Something else?
Hoping for "optional" by mid 40s over here, still a ways to go both time wise and financially. Fun to read this thread and be inspired!
We lived fairly frugally (for this area and my salary).
I always contributed to my 401k to get the full match from my employer.
I always made the max contribution to my company's stock purchase plan.
I believed in my company's future so much that I invested 1/2 of my nest egg into our stock when I started there 15 years ago. Our stock exploded but I resisted the temptation to sell it for that entire time even when it went against all of the mainstream investing advice. At one point I had 96% of my retirement savings in company stock. It was a huge gamble and could have easily ended poorly.
I started a hobby business in my garage and used the proceeds to pay for my hobbies, some home improvements and some of our vacations.
CAinCA said:
I started a hobby business in my garage and used the proceeds to pay for my hobbies, some home improvements and some of our vacations.
I did this 4 years ago, should have done it 10 years ago! Paid for my shop, project cars, tools, been amazing and gives me a "job" for my retirement!
calteg said:I'm consistently amazed at how relevant GRM discussions are.
The wife and I are in the same boat as Duke & Wearymicrobe, firmly in coastFIRE and questioning if "disgusting money at 70" is what we really want.
GRM really is the only place I would ever even talk about this because we are all in different places but respectful. Wide life experiences here which is why the advice is so helpful, adds perspective.
I don't think a single person in my work orbit have any honest clue. I try very hard not to push my personal friends to go do fun things that are expensive. Or I lie through my teeth and say that someone dropped out and now they get to do things for free beaceuse we had free spaces.
What is coastFIRE?
SKJSS (formerly Klayfish) said:What is coastFIRE?
It's the point where you no longer shove money into your retirement accounts. The engine has sufficient fuel - it just needs time. So you can coast (and make less money or have more fun with the money you earn) because you no longer have to concentrate on fueling the engine. Rely on the compounding interest to take care of the rest over time. Hopefully.
In reply to OHSCrifle :
How do you determine that number?
OHSCrifle said:SKJSS (formerly Klayfish) said:What is coastFIRE?
It's the point where you no longer shove money into your retirement accounts. The engine has sufficient fuel - it just needs time. So you can coast (and make less money or have more fun with the money you earn) because you no longer have to concentrate on fueling the engine. Rely on the compounding interest to take care of the rest over time. Hopefully.
Yep, my home brew financial tracking system has been pretty much the same since 2012 and one of the metrics I track is the "organic to inorganic growth ratio".
Essentially, organic = return on existing investments and inorganic = new contributions I'm making.
The compounding of existing investments has just kept shooting wildly further and further out in front of new contributions over time.
I've always made the maximum 401K contribution permitted including the catch up once I was eligible...on a typical year with the S&P 500 gaining 10.5%, only 9.0% of my portfolio increase comes from present me investing my money leaving 91.0% coming from past me having invested my money rather than pi$$ing it away.
This year, the S&P 500 is up 24% so it's 4.0% present me and 96.0% past me.
When is it time to retire...when past you has rendered present you irrelevant. 
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