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Message
Let's talk about long term retirement
Posted on 8/10/16 at 8:29 pm
Posted on 8/10/16 at 8:29 pm
So the wife and I are looking at how much we are going to need to retire. For reference we are 33/32 (attorney/structural engineer).
I have heard various schemes to how much is to be anticipated for social security. I, however, have serious doubts if we will get the same benefits as the generations before us. With that said, do you go by the 4% rule or saving 25x annual spending? In the event you plan on social security not going insolvent, what % do you plan on it supplementing your income(I have heard as much as 40% of retirement income for SSRI)? What is the MT's opinion if fixed annuities for retirement income?
Last and possibly biggest question- what is your target for retirement?
I have heard various schemes to how much is to be anticipated for social security. I, however, have serious doubts if we will get the same benefits as the generations before us. With that said, do you go by the 4% rule or saving 25x annual spending? In the event you plan on social security not going insolvent, what % do you plan on it supplementing your income(I have heard as much as 40% of retirement income for SSRI)? What is the MT's opinion if fixed annuities for retirement income?
Last and possibly biggest question- what is your target for retirement?
5
Posted on 8/10/16 at 8:52 pm to NYNolaguy1
What you need is a solid dividend growth portfolio of assets that have a history of boosting their dividend in excess of inflation. What I mean is, lets assume inflation is 3% annually. If you buy some of these solid names in our market, as long as their dividend is boosted exceeding inflation, whatever you buy today is safe from inflation. Take something like Coca Cola that boosts dividends by say 7% a year, thus the dividend you get today, maintains its buying power in the future. In the thread the other day I got run off because I mentioned starbucks as my favorite, they've averaged 25%/year growth of their dividend the last 4 years thus the income you got from SBUX 4 years ago increased by 25% a year, that sure as hell beat inflation in that timeframe.
Posted on 8/10/16 at 9:58 pm to NYNolaguy1
I'm about the same age, I don't plan on getting any social security. Anything I get will be simply icing as far as I'm concerned.
My plan is to be financially independent no later than 55, and to work for my self less than 30 hours a week from there. I don't see any reason to actual "retire" until I am 70 or older. I believe having something to wake up to do every week is a good thing to an extent, and with the internet it is incredibly easy to make money online especially if you are a professional like an attorney or engineer. I'm not a fan of simply working for someone else until you are 65 or whatever and then stopping work completely, seems goofy to me.
Anyway, if you have a career for 30 or so years its not that hard to figure out a way to make some easy supplemental income by consultant or whatever. Your wife could do some "parallegal" work for $50/ hour for 15 hours a week. If you can do that with basically no stress for 10 years it really takes a huge burden of how much you have to save. So that's my way of reducing my stress on how much I "have" to have saved.
I save 15% into a retirement fund and then I put an additional 5-10% into real estate. I'm hoping to have no mortgage by 45, then analyzing where I am around then. Its hard to plan how much we'll need right now but I think as long as you try to pay your mortgage off in your 50s and save 15-20% your whole life you'll be just fine.
My plan is to be financially independent no later than 55, and to work for my self less than 30 hours a week from there. I don't see any reason to actual "retire" until I am 70 or older. I believe having something to wake up to do every week is a good thing to an extent, and with the internet it is incredibly easy to make money online especially if you are a professional like an attorney or engineer. I'm not a fan of simply working for someone else until you are 65 or whatever and then stopping work completely, seems goofy to me.
Anyway, if you have a career for 30 or so years its not that hard to figure out a way to make some easy supplemental income by consultant or whatever. Your wife could do some "parallegal" work for $50/ hour for 15 hours a week. If you can do that with basically no stress for 10 years it really takes a huge burden of how much you have to save. So that's my way of reducing my stress on how much I "have" to have saved.
I save 15% into a retirement fund and then I put an additional 5-10% into real estate. I'm hoping to have no mortgage by 45, then analyzing where I am around then. Its hard to plan how much we'll need right now but I think as long as you try to pay your mortgage off in your 50s and save 15-20% your whole life you'll be just fine.
This post was edited on 8/10/16 at 10:03 pm
Posted on 8/10/16 at 10:08 pm to baldona
quote:
I save 15% into a retirement fund and then I put an additional 5-10% into real estate.
Are you talking about real estate that you own? i.e. your primary residence?
Posted on 8/10/16 at 10:28 pm to baldona
quote:
think as long as you try to pay your mortgage off in your 50s and save 15-20% your whole life you'll be just fine.
Goodness
If I can save 10-13% I feel like I'm doing fantastic
Posted on 8/11/16 at 9:02 am to baldona
I'm same age and have similar strategy to boldona.
here is the best summary i've found
Simple math behind retirement
here is the best summary i've found
Simple math behind retirement
Posted on 8/11/16 at 9:11 am to HailToTheChiz
quote:
If I can save 10-13% I feel like I'm doing fantastic
Its not easy at all, I'm still driving a beater given I have a 4x4 beater also for play. I had help getting into real estate and basically everything I make from there is reinvested or put into retirement.
Its important to remember that saving that 5% extra is only 5% of your income but 50% more retirement than 10%. I mean 50% more, that's hard to understate. It really helps the needle move after a couple of years.
Personally I can't understate how goofy the term "retirement" is. Its absurd just to work your butt off to then stop working completely. Financially independent should be much more important as early as possible. If you can plan to have the house paid off by the time your kids get to college, once you are done with kids in college then a huge portion of your income is now flexible.
This post was edited on 8/11/16 at 9:16 am
Posted on 8/11/16 at 1:34 pm to NYNolaguy1
First off, this forum isn't going to be the best place for this type of discussion. while you will find some people who believe in this concept, you will find the majority of posters will think you are delusional. Check out MMM, ERE or Bogglehead
I think the 4% rule is ok, but if you are planning on 30-40 year retirement, you might want to go 3.5%.
also, what kills most people in retirement are two things
1) lifestyle creep - its very easy to overspend when you are living the easy life. Keep a budget.
2) market cycles - if the first few years in retirement, you have a down cycle, you can be screwed. But if you retiring before 50, you can always re-join the work force.
I am financially independent. I am 2-3 years away from early retirement, and really we could retire now if we downsized our house.
We will be aiming to withdraw no more than 3.5% per year in the first 5 years and see where we stand.
We will keep some side hustles going on. Maybe some contract work for me. the wife's work will let her work part time or as she wants. This is to keep us busy, in addition to producing some luxury cash.
I think the 4% rule is ok, but if you are planning on 30-40 year retirement, you might want to go 3.5%.
also, what kills most people in retirement are two things
1) lifestyle creep - its very easy to overspend when you are living the easy life. Keep a budget.
2) market cycles - if the first few years in retirement, you have a down cycle, you can be screwed. But if you retiring before 50, you can always re-join the work force.
I am financially independent. I am 2-3 years away from early retirement, and really we could retire now if we downsized our house.
We will be aiming to withdraw no more than 3.5% per year in the first 5 years and see where we stand.
We will keep some side hustles going on. Maybe some contract work for me. the wife's work will let her work part time or as she wants. This is to keep us busy, in addition to producing some luxury cash.
Posted on 8/11/16 at 1:36 pm to baldona
quote:
Its absurd just to work your butt off to then stop working completely.
I completely agree with this. I doubt I will every have zero W2 or 1099 income....probably until I am 60 or even 70. But I would really like to get off the hamster wheel. I am so close I can taste it.
Posted on 8/11/16 at 8:13 pm to Hawkeye95
I haven't busted my arse this long to drAin everything then again the plan is to have plenty income from my RE and dividends and other business investments to where I can technically shut it down when I want. And when I say shut it down I mean comfortably.
Posted on 8/11/16 at 8:56 pm to Hawkeye95
Its absurd just to work your butt off to then stop working completely.
I'm lovin every minute of sitting at my lake house doing nuffin.
I'm lovin every minute of sitting at my lake house doing nuffin.
Posted on 8/11/16 at 8:59 pm to Fat Bastard
quote:
he plan is to have plenty income from my RE and dividends and other business investments to where I can technically shut it down when I want
That's my plan as well. In my mid-50's I'm hoping to have my market and business investments providing the equivalent of at least 75% of my yearly salary. At that point I can retire and/or look in to other business ventures.
I'm not counting on SS, but I do have an annuity that my job pays for that's in play. If I work for them until my late 50's, assuming a continual growth in salary, that annuity would be close to $50k per year. I'm not sure if I'll stay here my whole career, and I'm planning retirement as if I don't receive that annuity, but a guaranteed $50k/year in retirement on top of my investment income would make life a whole lot easier.
This post was edited on 8/11/16 at 9:01 pm
Posted on 8/11/16 at 9:20 pm to Maniac979
quote:
I'm lovin every minute of sitting at my lake house doing nuffin.
Almost six years since my last real job, the idea that I would have to get up and use my time to respond to the demands of someone else just seems abnormal now.
Posted on 8/12/16 at 10:02 am to NYNolaguy1
I too earned a BS in Civil Engineering (made A's in structural analysis, concrete design, and steel design), but I view retirement a bit different than everyone else. Going through school, getting a license, and gaining experiance is a life long process in this field. I am planning on "retiring" from the corperate scene in my early 50's, then contracting as a PE until I die. Hopefully that includes moving around in my RV, and working from a laptop.
Posted on 8/12/16 at 10:19 am to TheChosenOne
quote:
That's my plan as well. In my mid-50's I'm hoping to have my market and business investments providing the equivalent of at least 75% of my yearly salary. At that point I can retire and/or look in to other business ventures.
I'm not counting on SS, but I do have an annuity that my job pays for that's in play. If I work for them until my late 50's, assuming a continual growth in salary, that annuity would be close to $50k per year. I'm not sure if I'll stay here my whole career, and I'm planning retirement as if I don't receive that annuity, but a guaranteed $50k/year in retirement on top of my investment income would make life a whole lot easier
Same boat I am in. Love having the guaranteed annuity until Social Security kicks in. The way it's written now, if Social Security was to go away you will still get the supplemental until it comes back online. However, if Social Security ever does go away I would imagine this caveat would be removed in short order.
I would love to be out the door and retired at 50 but looks like I'll be closer to 55. I'll live comfortably but still on a budget.
This post was edited on 8/12/16 at 10:20 am
Posted on 8/12/16 at 11:14 am to EA6B
quote:
quote:
I'm lovin every minute of sitting at my lake house doing nuffin.
Almost six years since my last real job, the idea that I would have to get up and use my time to respond to the demands of someone else just seems abnormal now.
I am not saying retirement is bad at all, that's great. My point is simply that I think its better to plan FIRST for financial independence as that is easier than straight up retirement. I just think with the internet and computers, its fairly easy to start thinking about working for yourself or doing something you thoroughly enjoy in your 50s rather then work a job you don't enjoy until you are 65 and then stop working completely from there.
It certainly helps take some stress off having an "absolute" amount in your retirement account for me.
This post was edited on 8/12/16 at 11:15 am
Posted on 8/12/16 at 11:29 am to baldona
Plan for between a 3-4% distribution rate. Throw out SS from the calc, icing on the cake and cost of living adjustments.
Love the dividend strategy for retirees. Buy a portfolio of cos with a long commitment to dividends and a portfolio yield at your distribution target. Then you have essentially built your own annuity (but still keep the principle) and do not need to worry about what market fluctuations do to your account value.
Most dividend payers increase their dividend=inflation adjustments to your income and over long periods of time(10-20 years)your market value will grow significantly even after distributions.
Love the dividend strategy for retirees. Buy a portfolio of cos with a long commitment to dividends and a portfolio yield at your distribution target. Then you have essentially built your own annuity (but still keep the principle) and do not need to worry about what market fluctuations do to your account value.
Most dividend payers increase their dividend=inflation adjustments to your income and over long periods of time(10-20 years)your market value will grow significantly even after distributions.
Posted on 8/12/16 at 2:47 pm to AUCE05
quote:
too earned a BS in Civil Engineering (made A's in structural analysis, concrete design, and steel design), but I view retirement a bit different than everyone else. Going through school, getting a license, and gaining experiance is a life long process in this field. I am planning on "retiring" from the corperate scene in my early 50's, then contracting as a PE until I die. Hopefully that includes moving around in my RV, and working from a laptop.
I would love to do something similar, except that healthcare for independent PE's is absurdly expensive ~$13k+/yr/person. It almost makes sense to keep working unless you can count on an additional $26k+/yr plus your former salary to justify retiring to your own consultancy.
In short my concern is that even if you "retire" at 50 something and can swing it financially, health insurance is going to severely eat into your retirement funds.
Posted on 8/12/16 at 3:19 pm to NYNolaguy1
quote:
In short my concern is that even if you "retire" at 50 something and can swing it financially, health insurance is going to severely eat into your retirement funds.
Health insurance costs will most likely be very expensive by the time we are 65 no matter what. Many people still pay for additional health insurance beyond Medicaid such as long term disability insurance.
It is very easy for other costs in retirement to drop drastically. For one, you may no longer be putting money into "retirement" which could be 20% of your income. Get your house paid off thats a huge chunk. No longer having to commute to work is a pretty large expense for two people over the course of a year.
My worst case scenario right now is to work at a local fishing store/ bait shop for 20 hours a week at the age of 55. If I start playing golf more maybe at the club house as a starter or something. I figure I can make at least $8,000/ year doing that, easily more depending on how much I want to "work". Its not a ton of money by any means, but do that for 10-15 years and it really helps you not eat into your "retirement". That kind of thing is a joke of a job as a 55 year old, and gets you reduced rates or your hobbies. I don't need 40 extra hours in a week right now, I'd be very happy with an extra 20 to fish 10 more hours and golf 2-3 rounds a week while I'm in my 50s.
I just think there can be a life between having a "career" and "retirement" that helps you to bridge the gap financially.
Posted on 8/12/16 at 6:59 pm to NYNolaguy1
I have always heard that you will need 70-75% of your pre-retirement income to maintain your present standard of living. But think it can go lower than that if you spend wisely.
Think of another huge factor, you & your wife will most likely live well into your 80s, maybe into your 90s. You surely don't want to 'outlive' your money. I have always heard, 'spend your money wisely'
In my case, we decided that we didn't need a huge house in the most expensive neighborhood in town. House is paid for & we are just about finishing renovations. I cannot tell how much less stressful life is without having to pay a monthly house note. We have been saving most of what used to be our monthly note and have been putting it in retirement funds.
Kids are going to a very good public school. We are not shelling mega bucks for a private school. We pay enough in taxes as it is.
I have told them that college is mostly going to be on them, if they so chose to go. I will help them but they are going to have to work for scholarships and such.
I would like to 'work' till around 63ish, which is still a ways off BUT it is getting closer and closer as the years slip on by.
Drive your vehicles till the wheels fall off. Stay away from the big fancy rides and get a good reliable car/truck. The saving can be tremendous.
As far as investment advice, there are others here that are very knowledgeable, much more than me.
Look into Roth IRAs, Roth 401ks
I would go to a site like bogleheads and start studying like crazy.
Anywho, good luck.
Think of another huge factor, you & your wife will most likely live well into your 80s, maybe into your 90s. You surely don't want to 'outlive' your money. I have always heard, 'spend your money wisely'
In my case, we decided that we didn't need a huge house in the most expensive neighborhood in town. House is paid for & we are just about finishing renovations. I cannot tell how much less stressful life is without having to pay a monthly house note. We have been saving most of what used to be our monthly note and have been putting it in retirement funds.
Kids are going to a very good public school. We are not shelling mega bucks for a private school. We pay enough in taxes as it is.
I have told them that college is mostly going to be on them, if they so chose to go. I will help them but they are going to have to work for scholarships and such.
I would like to 'work' till around 63ish, which is still a ways off BUT it is getting closer and closer as the years slip on by.
Drive your vehicles till the wheels fall off. Stay away from the big fancy rides and get a good reliable car/truck. The saving can be tremendous.
As far as investment advice, there are others here that are very knowledgeable, much more than me.
Look into Roth IRAs, Roth 401ks
I would go to a site like bogleheads and start studying like crazy.
Anywho, good luck.
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