Retirement

Also, when you talk return, you need to talk about geometric return. Difference.

You put $100 into the stock market and gain 50% one year and lose 50% the next.

-Normal, "% average return" formulas say that you are at 0% return.

-Geometric return says that you lost 25%. $100 +50%=$150 for the first year. Lose 50% year two and you are at $75. Much more accurate tell of the story.

My research shows that we can expect something like 4-5% geometric real (add inflation for total return) return for the next couple decades, not the 7%+ that we saw over the last century. Numbers vary, but here are the economists and their rough predictions that I could find:

Geometric Real Return Data -Diamond (nobel winner): 6.0-6.5 -Campbell: 5-5.5 -Welch, Ivo: 6.4 -Arnott/Bernstein: 2.4 -Ibbotson/Peng Chen: 6.09 -Dimson/Marsh/Staunton: 5.0 -Niederhoffer/Castaldo: 6.3

Some of these papers were written in the early oughts, so they may be conservative- one in particular says "without at least a decade of slow or negative growth correction, we will not see returns like we saw in the 20th century" or something to that effect. I'm hoping the last decade counts for that, but I'm not planning on it.

Grtechguy wrote: I was just reading on fb, that a high school friends father just retired after 43 and a half years at the same company.

factory where I worked .... a woman I went to HS with ... graduated in June of '66... started working there in July of '66 ... still there .. when I retired she said she'd probably work 'til her 70's ... already 47 yrs

For all the young guys planning your retirement, don't forget about inflation. While 500K sounds like a lot of money right now, in 30-40 years it won't be that much.

Personally, I don't see myself ever stopping to work, but rather slow down and focus on only the things I like.

fanfoy wrote: For all the young guys planning your retirement, don't forget about inflation. While 500K sounds like a lot of money right now, in 30-40 years it won't be that much. Personally, I don't see myself ever stopping to work, but rather slow down and focus on only the things I like.

This and the geometric rate of return above are the truth. I'm 32 and have been focusing more and more on saving, but I don't expect to ever fully retire. No SS, and average rates of returns combined with inflation make the reality of stock/mutual fund investing much less attractive than the pie-in-the-sky 10-12% calculations.

Our goal is having some income-generating properties/investments and paring down my work to only the things I enjoy is the plan.

Side note: My wife's grandfather is in his mid-80s. He still ranches his own land, takes car of 100 head of sheep and is always busy with chores. He's up before dawn (and before any of us) and he stays up late playing cards. He will outlive most of us nitwits that work like hell for 30-40 years and then just completely stop. The brain needs constant stimulation, as does the body.

I'm convinced that the "ideal" model of school/work/retire/die takes years off your life.

Note to the above: All that said, my Mom made a good income and saved hew whole life and retired last year in great health. She can pretty much do what she wants. So it can work.

must... not.... make.... sheep.... joke......

My mom is the best "retiree" I've ever seen. She's busier now than when she was a teacher, except now it's exercise daily, walks, coffee with friends, helping out with grandkids... etc etc etc. All on teacher retirement, which after 30 years is about $20k/year plus her separate savings.

My mom is in the same boat. She has money in the bank, but it just sits because she does fine on her Canada pension, about $1500/month. She's 70, and busier than most of the people I know.

I turn 31 in 5 days.

Thinking about retirement is part of why we have decided to keep put. The wife would also like to eventually own the salon she works in versus paying booth rent to someone else.

Once we refinance we will have our house paid off around the time I turn ~40. And this is while still saving ~30% of my income and taking 1-2 big vacations, or a few road trips a year.

I also know there will know be no SS, so I'm hoping by 60 I'll be able to retire.

Zomby Woof wrote: My mom is in the same boat. She has money in the bank, but it just sits because she does fine on her Canada pension, about $1500/month. She's 70, and busier than most of the people I know.

I thought the maximum CPP was ~800/month? If it's $1500, that's pretty decent.

I also know there will know be no SS

Good for you. I'm 34 and have been saying the same thing for the last 10+ years. On the odd chance it is still around, it'll be used to make payments on the 911.

z31maniac wrote: I turn 31 in 5 days. Thinking about retirement is part of why we have decided to keep put. The wife would also like to eventually own the salon she works in versus paying booth rent to someone else. Once we refinance we will have our house paid off around the time I turn ~40. And this is while still saving ~30% of my income and taking 1-2 big vacations, or a few road trips a year. I also know there will know be no SS, so I'm hoping by 60 I'll be able to retire.

That is a winning formula. Keep up the good work!

Nathan JansenvanDoorn wrote: I thought the maximum CPP was ~800/month? If it's $1500, that's pretty decent.

Max CPP is just over a grand. Old age security is about $550, and the guaranteed income supplement is $740.

Hmm. Down here, my SS would be about $1800/mo US. The amount varies depending on what someone paid in over the years; there's someone I know whose monthly check would be ~$700.00.

Rather than talking in absolute figures (you need $500k or $1.0m) I think the conversation needs to be in % of income. For some people $50k a year in todays money would be a great retirement, for others it would be in the poor house. We have people on here in all income brackets, from what I can infer, it seems we have people earning $20k to over $200k a year.

So, that being said, allowing for realistic rates of return, and allowing for the possibility of another 'great recession' in our future, people have different ideas. I've seen suggestions of savings ranging from 10 to 20 time final income with zero debt as a safe point to retire. If your at the upper end, your life expectancy doesn't matter as you wont dip into the principle.

I'm about to turn 44, we just closed on a new 15 year mortgage which I want paid off in 10-12, the youngest is 11, so another 11-12 years of supporting her, then we should be looking good to retire in my early 60's. The biggest inhibitor to savings is private school, and my wife's ex who took us to court over and over and over again, or I wouldn't have a mortgage today and/or a much healthier retirement.

My biggest issue is, that unless I come into a lot of money, I plan on working until I can get medicare, the health care system is so screwed up and expensive, I figure you have to work just to keep insurance.

I finally reached the point where I couldn't take the plant/management anymore ... had originally planned to retire at 62 ... but the '08 crash put a crimp in that, then I realized that I couldn't get ANY ins ( at least anything for less than $1000 - $1500/month ) so decided that I had to stick it out 'til I reached 63 1/2 so that COBRA would get me to medicare ... ( it's only $600/mo)