Retirement

[West_Coaster]

I'm getting close to retiring, lots of questions are popping up. How much money do I really need, what am I going to do, where am I gonna live? 

 

I figured you guys are pros and could maybe lend some advice, what to do, what not to do, what kinda stuff were you not expecting, etc.

 

Now that you have experience, what would you have done different?

 

I've been the sole provider for 25 years, so when I quit, so does the income. I am thinking of pulling the proverbial trigger when I'm either 58 or 59, so ill need to pay my own insurance until we can get Medicare. My house will be paid off when I'm 60. I'll take SS at 62, just because there is no guarantee of tomorrow.

 

Realistically, what % of your income pre retirement are you consuming in retirement?

 

Any advice is appreciated.

 

Thx!

[Hosstage]

The only other forum that I hang out on besides this one recommended the attached for retirement info, evidentially these guys are like the BMWST of retirement info. They are more than happy to help, and like this site, searches will yield much info.

 

https://www.early-retirement.org/

[Stir]

40 minutes ago, West_Coaster said:

I'm getting close to retiring, lots of questions are popping up. How much money do I really need, what am I going to do, where am I gonna live? 

 

I figured you guys are pros and could maybe lend some advice, what to do, what not to do, what kinda stuff were you not expecting, etc.

 

Now that you have experience, what would you have done different?

 

I've been the sole provider for 25 years, so when I quit, so does the income. I am thinking of pulling the proverbial trigger when I'm either 58 or 59, so ill need to pay my own insurance until we can get Medicare. My house will be paid off when I'm 60. I'll take SS at 62, just because there is no guarantee of tomorrow.

 

Realistically, what % of your income pre retirement are you consuming in retirement?

 

Any advice is appreciated.

 

Thx!

I would probably not retire until my house is paid in full.  It's only a year.  As to when you will take SS, make sure your wife is covered in the event of your early demise.  My dad retired with higher military retirement on the basis that my mom would not get it.  It's too bad as he died of cancer at 65.  To many unknowns to give you solid advice.  If you are thinking of taking a loan out to make a large purchase, do that before you retire.  You may not qualify for loans after you retire.

[AZgman]

Ditto on the comment to have your house paid for, in fact, having no debt at all would be ideal. Health insurance will be a big concern as will the costs. And, that will be subject to the whims of the president and congress so do not underestimate the financial impact of it! 

[realshelby]

You didn't mention how much you have saved in cash/investments ( which are only worth what you get when you cash them in ) and here isn't he place to mention that. Is there any pension money other than SS coming due?

 

Because $1,000,000 saved is nothing when trying to retire at 58. Figure around $40,000 per year income from that. Nothing guaranteed. And you cannot touch the principal or your income really goes down per year. 

 

I am 61 and my business allows some freedom. My wife is full time high stress Controller....but it looks like March 31st is her last day. She will be 59. We are going to take at least a year to see what it is like. I will take off 2-4 weeks at a time, which will be hard to manage my business but it is what it is. She may or may not want to work part time after a while. That money would be purely to spend on trips and non needed items.  

 

Which might be my suggestion. Consider part time. I would not stop all income until every debt is settled and a substantial fund it available to live off of. Including a fund for vacations and stuff like that. SS at 62, well that amount ( for the average person ) isn't very much. Not enough to live on. Waiting for a few years can almost double that, but that don't matter if you are horizontal full time.....You can go online and get the exact amount for you. 

 

Health insurance? Welcome to the real world. Price a policy before you retire........

[Rougarou]

11 minutes ago, realshelby said:

 

 

Because $1,000,000 saved is nothing when trying to retire at 58. Figure around $40,000 per year income from that. Nothing guaranteed. And you cannot touch the principal or your income really goes down per year.

 

How much you plan on spending during retirement?  And, depends on the area that you retire to as to the cost of living.  If'n no income from $1mil saved, that's 25 years spending at $40k a year with no interest/no income.  At 58 retirement age, that's 83, which is five years over the average U. S. life expectancy.  If'n all your major debt is paid off, that's easy living in my area. 

 

 

[Skywagon]

Retirement is one of the best decisions I’ve ever made.  We are financially able to do it without worry. That is really important. I checked out a few years early. I’ll share some thoughts. 
I was tired of the grind and pressure... virtually no life but work. Retirement has made me human again. I thought I would probably do some consulting and Board of Director appointments. I was offered both. I turned down 1 board, accepted one, and agreed to be an advisor to a tech start up. I regret doing those now and will end my board seat in Dec. Never again. I’m done with anything that smells like work. The roles above only consumed about 20 hours a month and were quite lucrative, but stress was still there

 

My advice..Stay as long as you have any doubts about finances, have zero debt, investment income is not dependable right now, private health care is expensive, and have some hobbies that will last

Just for your info healthcare for just wife and I close to $3000/mo with $10,000 deductible. If Social Security is necessary for your retirement I suspect you aren’t ready financially. There is a huge difference from 62 to 66 and 70. You can run quick models to see the break even point

 

goid luck with your decision. Just make sure you don’t wake up every morning wondering how you are going to make ends meet. You will likely never have this income level again. When you do retire it’s freaking awesome. It’s Like summer vacation as a kid that keeps on going

[LittleBriar]

No debt is very important. Make sure you understand your healthcare cost. I paid $30,000/year for my wife and I until I became eligible for medicare.

 

I too was tired of the grind and pressure. I cut the cord completely even though I had opportunities for consulting and other part time gigs. I never looked back.  I found volunteering work to be very satisfying. I also took up woodworking as a hobby and am still very passionate about it more than 15 years later.

[realshelby]

1 hour ago, Rougarou said:

 

How much you plan on spending during retirement?  And, depends on the area that you retire to as to the cost of living.  If'n no income from $1mil saved, that's 25 years spending at $40k a year with no interest/no income.  At 58 retirement age, that's 83, which is five years over the average U. S. life expectancy.  If'n all your major debt is paid off, that's easy living in my area. 

 

 

Sounds good. Until you figure in health care costs. Or the cost of health problems over what your insurance paid...or what you have to pay in case you don't have insurance. What does transportation cost? Food, utilities? Taxes. What happens at 70 and you have run out of savings? Walmart? Retirement, if planned for, should be a good time at least until health limits what you can do. So why live in poverty? That is HARD to adjust to if you have not been around it. 

I suspect you and I could in fact live well on that. But could you support a wife/husband on $40K. We are not in an inflation period now, but what about double digit inflation ( lived through that...) and what it would do to your fixed income? Give me an acre and a decent mobile home in West Virginia and I can in fact live just fine. But I don't have to because we have worked hard and saved money. I may drop dead sooner than later...but Tammy will be well off and when she goes my Son will be too. Money does not buy happiness. It CAN buy security. 

Work on a budget. Only then do you see what it costs to live. Might take a month or two to complete, stuff keeps coming up.  When you can "live" on an amount you are fairly sure you can keep coming in or pull from, then you can consider retirement. Problem today is that there are virtually NO retirement benefits for any workers from employers. Good or bad, that means all the eggs you are going to get are already in your basket. SS helps but one needs to check on that to see exactly what you will get and when it pays off to wait to sign up. 

[West_Coaster]

I realize it's hard to give advice to someone where you know nothing about their financial status, so I appreciate the words of wisdom you did put out there.

 

Without showing all my cards, I will say that my current months bills are about $6500. That includes $2K in mortgage, and we have a LOT of fun. The $6.5K includes everything amortized over a year, vacations, dune buggy repairs, dining out, all household costs, car insurance, food, gas, utilities, everything. Seems like if I could maintain that amount of income through various investments and 401K I should be able to retire. Say $50K/yr from the pool, then when SS is available that drops by 1/2 as my wife and I would get $3K/mo per the SS website. I planned retirement through 92 years old, and with my plan I would croak with about $1M left over and a paid off house worth another $M. I am thinking I will sell my house sometime in the future as its already too big for us and I don't want to climb stairs when I'm feeble. That's a worry for the future, can't possibly plan things out that well from my current chair.

 

I'd rather spend the money when I'm able and die with very little money left. 

 

I have to say that what you guys are quoting for healthcare costs are more than I had planned. I figured around $2K max a month for the both of us. This is my #1 concern, healthcare costs.

 

In the last 5 years I put on a new roof, Solar and a new HVAC system. House is in good shape, and I have a very small electric bill now. Paid for cars and toys in cash so no payments there. Only real debt is my mortgage and property taxes. My mortgage is a 15 year at 2.5%, and as I'm towards the end of it, I'm not paying much interest. I think the amount of interest I'm paying on the mortgage is less than I'm making on the cash I'd use to pay it off. I was lucky I guess and locked in a good chunk of cash in a series of CD's at 3% a few years ago. That seemed like such a low rate, but then look at today's rates.

 

 

I guess what I was wondering is if you had advice on "unplanned" expenses crushing your budget, or if you had actually over planned and were coming in under your budget.

 

Any online tools that you used that turned out to be accurate? Every one I review is too linear, they don't take into consideration your costs will be lower as you get older. They seem to be unrealistic and too simple. One said to just take your last years salary and multiply by 10, that's what you need to retire.

 

I want out of the rat race.....

 

 

[Skywagon]

I’ll answer the insurances question you asked. $1600/no will get you cobra. That is basic medical. No dental, no vision, no drugs. The wife and I are healthy, no meds, no pre-existing, etc. 

 

There has been some unexpected expense.... sort of. Had our 12 year old house painted this year..$20k outside, $8k inside. Probably a roof soon as hurricane #3 starting to take its toll. Estimate $25k

 

I budgeted the exact same spend as when I worked. So far so good. The one thing that hurt is dividends. Many stocks were 7+, 3+, etc. Most are reduced and some suspended due to covid

[West_Coaster]

From a little more research, Fidelity stated that you should plan on about $250-275K on health care if your 65 and retire, living to 87M, 89W. So I would need probably $350K if I retired ~ 60ish.

 

Housing is another subject. What do you do with a paid off house, sitting on a $M+ that you can't touch. I'd love to not pay property taxes, which I can see will be going way up with our greedy governor. I contemplated selling the house and renting, however if you don't invest that money it will only last 20 years, you have capital gains, and if you do invest it who knows. Plus, where do you store all your stuff, and you have a landlord to deal with and rent issues. 

 

Probably move out of Cali at some point, spending tax money on things I don't agree with and running up a deficit that can only be payed down by increasing taxes. Eventually nobody will be able to afford to live here.

 

 

 

[realshelby]

Sounds like you are better off by far than average.

 

Few can retire early and have income to spend fairly freely. 

 

I will "caution" those that have worked and lived a lifestyle where you are constantly around other workers or clients. Solitude is actually very hard to bear for a while! It is NOT quite what you might expect, don't expect pure bliss. You miss people. Even those you would like to pinch off at the neck. Human interaction helps keep your mind off other things. So, beware of that and try to not go full tilt solitude!

[mickeym3]

Retired at age 58 and agree with Terry’s point about missing the interaction with others. Going from having employees and upper managers constantly asking technical questions or communicate expectations is a whole different ballgame from your wife asking where her car keys are. Acquaintances and friends cannot substitute for the sheer mass of interaction the workplace demands. Took me a few months to adapt even with pursuing some of the passions I never had time for before. Cars, bikes and such are my pursuits but volunteering and grandchildren are what really sustains me. Also keep in mind that travel (we’ve taken extensive RV travels every year except for this one) may very well increase and you may want to budget for that. 

[MikeB60]

3 hours ago, realshelby said:

Sounds good. Until you figure in health care costs.

Rougarou and I have a leg up here with our DoD retirements.  There are a couple of different programs but for myself and DyAnne I pay $600 a year for TRICARE Prime.  Tricare transitions to a Medicare supplement at 65 and there is no annual premium and I still have the option of care under the military healthcare system.    

[West_Coaster]

49 minutes ago, realshelby said:

Sounds like you are better off by far than average.

 

Few can retire early and have income to spend fairly freely. 

 

I will "caution" those that have worked and lived a lifestyle where you are constantly around other workers or clients. Solitude is actually very hard to bear for a while! It is NOT quite what you might expect, don't expect pure bliss. You miss people. Even those you would like to pinch off at the neck. Human interaction helps keep your mind off other things. So, beware of that and try to not go full tilt solitude!

 

Thanks for this, not something I really thought about. I am director of engineering at a fairly large public corporation, I interact with all kinds of people all day and I know I complain about having to make decisions all day to my wife, but I will undoubtedly miss the "rush" that comes with teamwork success and helping people progress. I'll have to settle for peanut butter or chocolate chip pancake type decisions.

 

 

 

 

[Rougarou]

4 hours ago, realshelby said:

Sounds good. Until you figure in health care costs. Or the cost of health problems over what your insurance paid...or what you have to pay in case you don't have insurance. What does transportation cost? Food, utilities? Taxes. What happens at 70 and you have run out of savings? Walmart? Retirement, if planned for, should be a good time at least until health limits what you can do. So why live in poverty? That is HARD to adjust to if you have not been around it. 

I suspect you and I could in fact live well on that. But could you support a wife/husband on $40K. We are not in an inflation period now, but what about double digit inflation ( lived through that...) and what it would do to your fixed income? Give me an acre and a decent mobile home in West Virginia and I can in fact live just fine. But I don't have to because we have worked hard and saved money. I may drop dead sooner than later...but Tammy will be well off and when she goes my Son will be too. Money does not buy happiness. It CAN buy security. 

Work on a budget. Only then do you see what it costs to live. Might take a month or two to complete, stuff keeps coming up.  When you can "live" on an amount you are fairly sure you can keep coming in or pull from, then you can consider retirement. Problem today is that there are virtually NO retirement benefits for any workers from employers. Good or bad, that means all the eggs you are going to get are already in your basket. SS helps but one needs to check on that to see exactly what you will get and when it pays off to wait to sign up. 

 

I dunno, I've been living off of 2009 pay.  Every raise gets funneled into the 401k.  My uncle sam retirement just goes into the rainy day and the "i want it now" fund.

 

To me, it boils down to what kind of lifestyle do you want to live in retirement.  Do you want to maintain the same level of living?, then you're gonna need a bigger boat.  For my wife and I, we continuously try to dwindle things down to a simpler way of living with minimal output and $40k per year can be enough to keep us happy. 

 

When I retire, the house will be paid, solar will be giving me my ROI, so utilities will be minimal, water is from the well.  Transportation, ......where do you need to go? 

 

It's not living in poverty, it's living without wanting. 

 

When we were discussing my retirement from active duty while living in Okinawa, we estimated my retire pay, an enlisted GySgt would get roughly $2k per month.  Prior to rotating back to the states in 2007, we searched and the house we purchased, that retirement pay would cover all household expenses, food, utilities, mortgage, as at that time, we had no other bills.  We planned it that way incase neither of us could find work, but bottom line was that we knew we would be covered with a roof and the necessities that come with it.  Vacations, toys, splurging would not be allowed, but we were prepared for that.  Fortunately, she landed a teaching gig and I work for a defense contractor.  We are, in our minds, set.

 

We all expect different things in retirement.  For us, we'll travel, but we won't be travelers, we kinda like being home bodies.  Solitude, she and I are best friends and actually enjoy each others company.  Physical human interaction is overrated.

 

And yes, Mike and I are in the same boat for being retired military, we have additional benefits that "nasty civilians" (a loving term) don't have.  Yet, in comparing healthcare costs with some of my co-workers, it's not out of reach "if" you budget for your necessities and not spend on luxuries......and that,......is what it boils down to......needs vs wants.

 

 

 

[West_Coaster]

Richard, you and your wife sound pretty similar to how my wife and I roll. 

 

My wife and I learned early not to live beyond our means. We got caught up in debt when we bought our first house and learned a lesson that has stuck with us to this day, never spend what you don't have. 

 

Since then, I have maxed out every financial benefit my company has offered, 401K + 55 year old catch up, stock plans you name it. Whatever is left over after the bills are paid for, that's what we play with. It's always been save for tomorrow, but also play today as tomorrow is not guaranteed.

We do like to travel, but we save for it and never have a residual bill when we get back. Need a new car, plan and save for it. Need a new TV, save for it. Trying to teach that to my kids, but I think it might be easier to teach my dog the alphabet.

 

We live comfortably within our means. We have picked friends carefully over the years knowing they will be our friends probably until the end and have fun with them most every weekend. That's what I call being rich. While money pays the bills, I cannot say I'm living better versus when I made $40K a year. 

 

 

 

[realshelby]

30 minutes ago, Rougarou said:

To me, it boils down to what kind of lifestyle do you want to live in retirement.  Do you want to maintain the same level of living?, then you're gonna need a bigger boat.  For my wife and I, we continuously try to dwindle things down to a simpler way of living with minimal output and $40k per year can be enough to keep us happy. 

 

When I retire, the house will be paid, solar will be giving me my ROI, so utilities will be minimal, water is from the well.  Transportation, ......where do you need to go? 

The key statement is "Do you want to maintain the same level of living?". Yes, until my health tells me different. So it goes retirement is different for everyone. If nothing else, I hope those in their 30's and 40's might read this and wonder WTF do they mean? And look into it. Money in the bank ( or mattress ) doesn't buy happiness. But it sure does provide security. You do NOT have to spend it, but even then you know you are secure for the most part.

 

The BIG difference or elephant in the room is Health Care. While many US citizens have worked for Federal, State, and local governments much of their life, they have no idea what health care costs are. And what they will have to pay to buy their own policy once off the government teat. For those that have insurance as a retirement package, you are truly rich in that way. 

 

I figure actual costs for healthcare to be around $3000 per month. Yes the policy might be less, but then there is the deductible. If that can be cut by $1000, great. But don't bank on it. My property taxes are about $9000 a year....which means there will come a day where I will consider moving to a smaller house or another state. I am not complaining, just saying what we have learned. 

[West_Coaster]

6 minutes ago, realshelby said:

The key statement is "Do you want to maintain the same level of living?". Yes, until my health tells me different. So it goes retirement is different for everyone. If nothing else, I hope those in their 30's and 40's might read this and wonder WTF do they mean? And look into it. Money in the bank ( or mattress ) doesn't buy happiness. But it sure does provide security. You do NOT have to spend it, but even then you know you are secure for the most part.

 

The BIG difference or elephant in the room is Health Care. While many US citizens have worked for Federal, State, and local governments much of their life, they have no idea what health care costs are. And what they will have to pay to buy their own policy once off the government teat. For those that have insurance as a retirement package, you are truly rich in that way. 

 

I figure actual costs for healthcare to be around $3000 per month. Yes the policy might be less, but then there is the deductible. If that can be cut by $1000, great. But don't bank on it. My property taxes are about $9000 a year....which means there will come a day where I will consider moving to a smaller house or another state. I am not complaining, just saying what we have learned. 

 

 

So true. If I had healthcare paid for life, I'd retire now. 

 

With our politicians having a separate health care system, they can't really understand our level of problems, which means we are most likely stuck with declining benefits and increasing costs. If someone was able to change the system where politicians had the same retirement and healthcare as it's citizens, things would truly be different. Anyone with kids knows they are not interested in what will happen 40+ years into the future. Now reduce Netflix availability, cell phone bandwidth, and eliminate 2 day shipping from Amazon and you'll get their attention.

[Stir]

1000000 will currently buy you 36000 shares of AT&T.  That would be a yearly income of $75000 a year.  AT&T has been around since the last 1800s.  They own some of the most valuable real estate in North America.  There are other value stocks that can also pay a return so you don't have to eat into your principle.

[Antimatter]

7 minutes ago, Stir said:

1000000 will currently buy you 36000 shares of AT&T.  That would be a yearly income of $75000 a year.  AT&T has been around since the last 1800s.  They own some of the most valuable real estate in North America.  There are other value stocks that can also pay a return so you don't have to eat into your principle.

 

Yeah, but remember the saga of Montana Power and Light.  Agility and cold analytics are the way to go when using investments for living income.  Ditto if you're thinking of an annuity (read the fine print, please).

[Hosstage]

I was at a co-workers house the week his father retired, it had been about 3 days in. He walked to the front door, looked out for a while, walked to the back door, looked out for a while, walked to the front door. Pretty sure this had been going on for three days.

He walked into the kitchen, I heard some banging around, and his wife yells at him, "No, you are not making more bread, we have five fresh loaves already!"

I just chuckled and got out of there right quick.

[Stir]

1 hour ago, Antimatter said:

 

Yeah, but remember the saga of Montana Power and Light.  Agility and cold analytics are the way to go when using investments for living income.  Ditto if you're thinking of an annuity (read the fine print, please).

General Electric comes to mind as well.  I'm pointing out that 4% on a million $ might not be the best use of one's money.  It can be diversified into high paying portfolios.

 

[Paul De]

One thing you might want to look at is up your end of plan date (worm bate day) folks are living longer, so I pushed my horizon to 92 me and 94 for the wife.   Also, if you are using the Fidelity modeling tool be sure you set this tool for a market that performs worse than average throughout the plan.  At least you'll have a worst case scenario to see if you run out of gas too soon.

 

One thing I did because I am not great at meticulously detailed budgets was to go 100% credit card purchases, literally down to the little crap you buy at the gas station, and then break that out on line.  Interesting stuff popped out for future saving, but it also allowed me to pump enough detail into any modeling tool you might use to see if your current life style is able to be maintained w/o adjustment.   Savings come from loosing work expenses, but those are typically offset in doing other stuff because in retirement everyday is Saturday.

[John Ranalletta]

4 hours ago, Stir said:

1000000 will currently buy you 36000 shares of AT&T.  That would be a yearly income of $75000 a year.  AT&T has been around since the last 1800s.  They own some of the most valuable real estate in North America.  There are other value stocks that can also pay a return so you don't have to eat into your principle.

 

The dividend rate is an expression of the risk a buyer takes.  In a zero rate environment, AT&T has to pay nearly 7.5% - nearly 700% more than the rate paid by USTreasuries to entice investors.  It could work out, but I'd use stops and puts to hedge.

 

What we don't know about AT&T is how many customers who haven't made their rent and mortgage payments have also stopped paying their communications bills.  I'd sure like to see an aging of their accounts receivable.

[Skywagon]

Im already as long as I want to be in AT&T.  They pay 7.39...I have several stocks that range from 0 to a high of about 8....but the principle is moving up and down at a fairly rapid rate depending on what clown published the latest pish in the news.  if you purchased AT&T stock...as per the example above 1 year ago today, your principle would now be $720K.  It's down 28%  To come back to a year ago price it would take 40% growth....don't see that.  For me I'm not worried about the principle...I do care about the dividend.  Precarious times for sure.

[Hosstage]

No way I put everything into one stock that can't fail. Think MCI, Enron, et al.

[Joe Frickin' Friday]

 

 

18 hours ago, West_Coaster said:

I guess what I was wondering is if you had advice on "unplanned" expenses crushing your budget, or if you had actually over planned and were coming in under your budget.

 

 

Plan on some money for residing in an assisted-living or skilled-nursing facility.  Health insurance (including Medicare doesn't cover this; if you're broke, you can get covered under Medicaid, but from everything I've heard, you do not want the level of care that you get with Medicaid coverage.

 

My dad has been in an assisted-living place for almost four years now.  The cost is about $6,000 per month, which gets him his own small apartment with housekeeping/laundry, all meals, medication management, and various activities.  The facility itself is pretty nice, but the care that he gets is kind of disappointing.  Among other things, there have been some serious medication errors during his stay, and his laundry sometimes disappears or doesn't get put away.  He says the food is OK, but kind of institutional.  My sister lives ten minutes away from him, and before the pandemic, she was stopping by every couple of days to pick up the slack.  

 

The average stay in an assisted living facility is 2-3 years.  Some people die without needing it at all, and some folks need it for much longer.    Plan your budget for the final years of your live accordingly.  

 

Other advice:

 

Don't leave a mess behind.

 

Think about how the very end of your life might go down, and plan ahead.  Consider a living will that transfers authority over your medical care to a designated person in the event that you are no longer able to make such decisions for yourself, and also clearly informs them about what level of care you want under such circumstances.  Colorado (where my dad lives) has the MOST program,  which offers a simplified/standardized version of a living will that's been tailored for residents in long-term care facilities and lets people preselect categories of care that they would want or not want if they can't speak for themselves.  Other states may have something similar.

 

[realshelby]

The world is full of broke retirees that invested their savings in stocks that could not fail......

 

[Patallaire]

19 hours ago, West_Coaster said:

Any online tools that you used that turned out to be accurate? Every one I review is too linear, they don't take into consideration your costs will be lower as you get older.

Possible, but not guaranteed.  In NY State if one needs a Nursing home, the cost is $140,000 per year.  That is a lot higher than my cost of living or of many of my clients.  I compare it to buying a new Mercedes every year for cash! As to the retirement paradigm, finances are just one part of the equation.  The real issue to wrap your head around is your purpose.  What will be your purpose in retirement.  A life of extreme leisure sounds enticing until it happens.  Playing golf every day, riding a motorcycle, running, etc. is not a plan, they are hobbies, but it is not a purpose.  At work you get a sense of frustration, a sense of comradery , a sense of accomplishment and you have a purpose.  That goes away when you retire.  So before you pull the plug, please have a plan.  Try to envision what your day will look like and remember, you probably, without a calendar, wont even know what day it is as they all will blend together! 

Regarding your finances, it appears, from what you shared, you will be able to afford your lifestyle.  We encourage the highest bread winner, to wait until Full Retirement age (Either 66 or 67 before they trigger that benefit.  It doesn't mean that they can't  retire, just that that income stream is delayed.  The logic is two fold, the benefit compounds every year you wait, and if that person passed away first, the remaining person will receive the higher FRA benefit.  Remember, at that time of your life, you are not earning income, you are consuming assets or income.  So having maximum fixed income sources is a comfort.  Take into consideration that if your income streams come from a 401-k or IRA that you will lose a portion of that to income taxes, and there may be income taxes payable on your Social Security.  Which leads me to the last point I will make, financially, retirement is about income streams, not the pile of money you have, so try to design your portfolio to accommodate income streams. with little impact on principal. Know your risk tolerance, and stick closely to it, there are no prognostications that are remotely accurate over time.  You seem to have an awareness of your expenses, so design guaranteed income streams to cover no less than what your overhead plus a cushion for inflation and changes in tax codes, will be.  Be realistic, then enjoy the rest.  One of the issues we are seeing, and it is very different from my expectations of my clients, is that I am being asked to shut off income streams because they cant spend it all every month!  Great problem to have, different from what we planned 15 years before retirement.  I would contact a Financial Planner, while you believe you can do it yourself, some of the issues are not about rates of return.  

[Skywagon]

West Coaster....I'll leave you with my final thoughts...My cost of living in retirement is equal to or greater than when I worked except no mortgage.  We haven't had any other debt in 25+ years so really no difference.  I expect my cost of living to go up, not down.  Medical cost with rise, inflation will surely follow the times we are in now, insurance, taxes, food, gasoline, utilities, etc....will all go up.  When you run your models just put some thought into those monthly/annual items you pay for now will go up over time.  If you are still fortunate enough to have parents, they are a good source of real info on what they thought they would spend and what they are spending.

 

Sounds like you are ready to shed the corporate life.  Man I was too.  Even though we could comfortably retire, I didn't want to.  I just couldn't take it anymore.  I am so glad I did and any thoughts I had about future work are long gone.  My experience is I enjoy my life a lot more now than I did with 40+ years in the work force

 

By the way I lived/worked in your state for 20 years in a high tech firm.  When we bought our house I was staggered at the price.  When we sold it 18 years later at 4 times what we paid for it, I was quite surprised.  Don't forget you have taxes on the profit over $500k if I remember correctly.  I was surprised when we didn't stay in Ca the city I lived in took 1% value of the home as a leave the state penalty.  Beautiful state, but expensive.

 

Good luck

[John Ranalletta]

2 hours ago, Joe Frickin' Friday said:

The facility itself is pretty nice, but the care that he gets is kind of disappointing.

 

An Indiana senior care provider had 5,000 Certified Nurse Assistant in their network.  They experienced 140% annual turnover of these minimally-qualified employees.  Do the math.  The organization had to hire and train >7,000 replacements annually.  The results included huge costs and more important, their clients were care for by a constant stream of strangers who don't work long enough to understand their needs and patterns.  Any of us who've care for an aging parent understand the job is a tough one, best done by someone who has compassion and who cares.  While these CNA's may be good people, per se, the demands of the job can be beyond their capabilities.  

[9Mary7]

We are completing our ninth year of retirement. I concur regarding having a purpose, my wife has a second career after going back to school for her masters degree, she still can't do the hobbies and leisure thing full time......

The biggest thing for your situation that I see is the need to get out of California. We lowered our cost of living by over 33% by moving to eastern Wa. by the Idaho border. There are a lot of beautiful places in the US that are much more affordable than Ca.

We are both native Ca. people and find it tragic the way the State government has allowed urban decay, high taxes and high density to destroy the standard of living. It has only gotten worse and will certainly continue. (Aren't they talking about an exit tax now?)

Numerous  sources have done extensive research on the cost of living in different states PLUS you have this forum of folks to voice their opinions on where they live.

 

Enjoy the research! 

[John Ranalletta]

2 hours ago, Joe Frickin' Friday said:

 

 

 

Plan on some money for residing in an assisted-living or skilled-nursing facility.  Health insurance (including Medicare doesn't cover this; if you're broke, you can get covered under Medicaid, but from everything I've heard, you do not want the level of care that you get with Medicaid coverage.

 

My dad has been in an assisted-living place for almost four years now.  The cost is about $6,000 per month, which gets him his own small apartment with housekeeping/laundry, all meals, medication management, and various activities.  The facility itself is pretty nice, but the care that he gets is kind of disappointing.  Among other things, there have been some serious medication errors during his stay, and his laundry sometimes disappears or doesn't get put away.  He says the food is OK, but kind of institutional.  My sister lives ten minutes away from him, and before the pandemic, she was stopping by every couple of days to pick up the slack.  

 

The average stay in an assisted living facility is 2-3 years.  Some people die without needing it at all, and some folks need it for much longer.    Plan your budget for the final years of your live accordingly.  

 

Other advice:

 

Don't leave a mess behind.

 

Think about how the very end of your life might go down, and plan ahead.  Consider a living will that transfers authority over your medical care to a designated person in the event that you are no longer able to make such decisions for yourself, and also clearly informs them about what level of care you want under such circumstances.  Colorado (where my dad lives) has the MOST program,  which offers a simplified/standardized version of a living will that's been tailored for residents in long-term care facilities and lets people preselect categories of care that they would want or not want if they can't speak for themselves.  Other states may have something similar.

 

 

A wise financial planner is a good investment if one cannot muster the discipline, energy and knowledge to do one's own planning.  I have an advisor and use MaxiFi.  The advisory firm has a good planning tool and I use both to spot potential disparities.  The challenge with most brokerage tools is access.  Typically, the tools the investor can access are limited and the only the broker has full access

 

I'll put in another plug for MaxiFi.  LTC insurance is out of the question for us due to pre-existing issues and age.  In MaxiFi, I have reserved a group of liquid assets equal to 3 year's LTC for each of us.  "Reserve" means it remains a part of our net worth but is ignored when calculating the amount of money available for fixed and discretionary spending.    

 

As conditions change, e.g. loss of wages, unexpected expense, windfall gain, purchase/sale of house, etc., the user modifies the inputs and assumptions (RoR, COL, etc.) to calculate how much $ is available for fixed and discretionary spending.

 

It is subject to "GIGO".  The output is only as good as the input.

 

 

[Joe Frickin' Friday]

36 minutes ago, John Ranalletta said:

An Indiana senior care provider had 5,000 Certified Nurse Assistant in their network.  They experienced 140% annual turnover of these minimally-qualified employees.  Do the math.

 

Yes, turnover is huge at my dad's place.  Part of it may be due to less-than-stellar treatment of the employees.  A couple of years ago one employee got approved for a vacation, made commitments (e.g. non-refundable tickets), and then had her vacation approval revoked.  She complained, management wouldn't budge...so she quit, took her vacation, and then got rehired afterward because the place was desperate for staff.  Nuts.

[Patallaire]

41 minutes ago, John Ranalletta said:

if you're broke, you can get covered under Medicaid, but from everything I've heard, you do not want the level of care that you get with Medicaid coverage.

Actually you get the same level of care, getting into a facility is where the challenge is, they only have to take a certain % of their occupation as Medicaid patients, so it is likely that you will go on a waiting list.  Lately I have read that if you ae giving them a hard time{Dementia and acting out as an example} they can move you out to a Hospital, then not have a bed available for your return.  Solutions are risk transfer to a LTC policy, or allocate a certain portion of your portfolio to be earmarked for LTC.  Keeping in mind that its inflation number is higher than medical care so you need to account for that.  Trusts and asset transfers work, but you are giving up control of your assets and than you still need to buy your way into a facility, Medicaid will get you on the waiting list. It all comes down to planning.  As we explain to clients, we can guess within a range, when you are going to retire and project based on your savings discipline if that will work.  We can also calculate an income plan, but we need to plan for your living to age 95+, unless you signed an affidavit telling us the day you are going to die, than we can plan to the dime.  Just don't miss! 

[John Ranalletta]

11 minutes ago, Patallaire said:

Lately I have read that if you ae giving them a hard time{Dementia and acting out as an example} they can move you out to a Hospital, then not have a bed available for your return.  

 

Same with COPD and other respiratory illnesses - anything that requires more care and attention and drives up costs.

 

There's a care facility in Indy run by Little Sisters of the Poor and volunteers - people who see caring for low income seniors is a vocation, not just a minimum wage job.  The only problem is you can't buy your way in.  It's only for those who cannot otherwise afford care or have no one else to provide it.

[Patallaire]

6 minutes ago, John Ranalletta said:

The only problem is you can't buy your way in.  It's only for those who cannot otherwise afford care or have no one else to provide it.

That is truly a calling.  .  Adopting the philosophy, while you are working, that life is a journey and planning and living below or within your means  is impeditive  would prevent people from qualifying for this facility.  That is unfortunate, as I am sure that the people who work there are truly dedicated, its not just a paycheck, but a life choice and mission. We work and save for a lifetime to have a standard of living similar in retirement to what we enjoy now, no one plans to be poor, they just don't plan.  Knowing someplace like this is available if they didn't achieve their goals or ignored them is great information.  Wish they were everywhere.  

[lawnchairboy]

 

"The average stay in an assisted living facility is 2-3 years.  Some people die without needing it at all, and some folks need it for much longer.    Plan your budget for the final years of your live accordingly."   

 

excellent, among many other comments about the potential of requiring some LTC in your retired life.  I just hope to protect my sons from their parents (financially) by preparing for this potential eventuality.  I think we have.  There are many flexible insurance options now, some better than others, some that allow you maximal flexibility to the cash value of the policy and some that only pay "billed charges".  read carefully, get advice.  The younger the better usually.  

[West_Coaster]

I'm really glad I started this thread, my eyes are opening to the necessary planning needed to properly retire. I do have a living trust and will with all of my assets planned, and I made my other family members do the same some number of years ago.

My mother in law has a policy that provides some $$$ value to assisted living care when she needs it, I'll have to review it to see what it pays and what it costed. 

 

Seems that everywhere you look, there is something else requiring a large portion of your savings. Now I know what people mean when they say a million or 2 is nothing to retire on. 

 

Have to say I'm a little depressed at the moment, I'm seeing I'm not as prepared as I thought, but then again things could be worse. I'm one of those who like to be extremely prepared for anything and enjoy researching things and making plans. I'm definitely going to check out the MaxiFi link, thanks for that.

 

When I was younger, my retirement plans were to smoke a big joint in my car while listening to the Stones, with a bottle of Co2 in the back seat slowly leaking. Funny how that has lost it's appeal!

[Hosstage]

It still has a bit of appeal to me at times....

[John Ranalletta]

21 minutes ago, West_Coaster said:

I'm really glad I started this thread, my eyes are opening to the necessary planning needed to properly retire. I do have a living trust and will with all of my assets planned, and I made my other family members do the same some number of years ago.

My mother in law has a policy that provides some $$$ value to assisted living care when she needs it, I'll have to review it to see what it pays and what it costed. 

 

Seems that everywhere you look, there is something else requiring a large portion of your savings. Now I know what people mean when they say a million or 2 is nothing to retire on. 

 

Have to say I'm a little depressed at the moment, I'm seeing I'm not as prepared as I thought, but then again things could be worse. I'm one of those who like to be extremely prepared for anything and enjoy researching things and making plans. I'm definitely going to check out the MaxiFi link, thanks for that.

 

When I was younger, my retirement plans were to smoke a big joint in my car while listening to the Stones, with a bottle of Co2 in the back seat slowly leaking. Funny how that has lost it's appeal!

 

I've seen estimates from $250-360k as the cost of healthcare for the average retiree over remaining years of life. 

[MikeRC]

 

 

On 10/12/2020 at 7:59 PM, West_Coaster said:

I'm getting close to retiring, lots of questions are popping up. How much money do I really need, what am I going to do, where am I gonna live? 

 

I figured you guys are pros and could maybe lend some advice, what to do, what not to do, what kinda stuff were you not expecting, etc.

 

Now that you have experience, what would you have done different?

 

I've been the sole provider for 25 years, so when I quit, so does the income. I am thinking of pulling the proverbial trigger when I'm either 58 or 59, so ill need to pay my own insurance until we can get Medicare. My house will be paid off when I'm 60. I'll take SS at 62, just because there is no guarantee of tomorrow.

 

Realistically, what % of your income pre retirement are you consuming in retirement?

 

Any advice is appreciated.

 

Thx!

 

 

Some great advice so far.  All the Financial Planners and programs will concentrate on your budget.  It starts with a detailed analysis of what you actually spend now and what you can eliminate or what you need to add.   Do that exercise before you visit a Financial Planner.  

Do you need this year's newest smartphone?  Can you reduce to a family plan and a 2-3 yr old model?  Is your clothing budget going to go up or down?  Netflix? Cable? Alcohol? There are so many day-to-day expenses to examine/reexamine that add up.     

 

How long will you be able/motivated to travel?  I remember picking up my dad from a trip to Ireland at age 79.  The first thing he said when he got in the car: "I've had enough of travelling for 8 hrs in an aluminum cigar, landing tired, staying in cramped rooms where I keep tripping when I get up to go to the bathroom."  And sure enough, his travel days (other then going a few times to visit grandchildren) were done.  

How long do you think you will enjoy your hobbies?  I know I have a planned "end date" for the motorcycle.    

The best estimate of how long you will live is your family (father, mother, aunts, uncles, siblings).  Given some inherited health risks, I am unlikely to live past my mid-80s.  Budgeting to age 100 in my case would only benefit the taxman and my heirs.  There are also very few people that spend much on "discretionary items" past their mid-80s.  I dumped one financial planner that kept budgeting for totally unnecessary expenses in my later years.    

 

Consider all your insurance needs.  Do you need any critical illness coverage or term insurance?  Doubtful given your current financial status, but giving your spouse/heirs access to an immediate cash pool on your death may be important.   

 

On 10/13/2020 at 11:52 AM, West_Coaster said:

 

Housing is another subject. What do you do with a paid off house, sitting on a $M+ that you can't touch. I'd love to not pay property taxes, which I can see will be going way up with our greedy governor. I contemplated selling the house and renting, however if you don't invest that money it will only last 20 years, you have capital gains, and if you do invest it who knows. Plus, where do you store all your stuff, and you have a landlord to deal with and rent issues. 

 

Probably move out of Cali at some point, spending tax money on things I don't agree with and running up a deficit that can only be payed down by increasing taxes. Eventually nobody will be able to afford to live here.

 

 

Many people keep their primary residence to fund the unexpected.  In particular the assisted living costs near end-of-life.   But, annual/biannual evaluation of maintenance/tax/utility costs of your residence(s) may tip you off to the point when it is time to sell and move.  

 

But one warning about moving away.  Many of my parent's friends/relatives moved away on retirement to change their lifestyle (more rural or weather change) or reduce costs.  But in their later years they moved back to their familiar surroundings to be closer to their remaining friends and family (children/grandchildren/siblings).  Not sure whether any of that may apply to you.  

 

Good luck! 

 

Mike C 

[Rougarou]

The guy I replaced retired at 59, I saw his 401k, $450k.  He's also not the healthiest of clowns in the circus.  I speak with him about every six months, and he says he's doing fine.  I know that he has no debt as we discussed that several times before he retired, straight up civilian guy, so whatever he's doing for medical, must be working.

[West_Coaster]

21 minutes ago, Rougarou said:

The guy I replaced retired at 59, I saw his 401k, $450k.  He's also not the healthiest of clowns in the circus.  I speak with him about every six months, and he says he's doing fine.  I know that he has no debt as we discussed that several times before he retired, straight up civilian guy, so whatever he's doing for medical, must be working.

 

 

Maybe he means he just hasn't run out of money yet. 

 

I know a couple that retired in their mid 50's and are doing OK, but when I talk to them and we catch up I am usually telling myself to end it all before I live a life as boring as theirs. 

 

As far as moving away, I am not thinking too much about that at he moment. I need to wait and see what my "herd" is going to do, we are all pretty close and have been planning on turning our livers into small black dots in our retirement together. 

 

Question on financial planning. Is it really worth spending the money to talk to a planner? My experience has been that they only want to sink their teeth into your piggy bank, manage it and then make excuses when they do a shit job at it. My friends son is a fund manager and told me that unless you have 10's of millions, your money is noise level to them and they can care less about your well being. Hard for me to think I would trust my life's savings to a stranger. 

 

 

[MikeRC]

1 hour ago, West_Coaster said:

 

Question on financial planning. Is it really worth spending the money to talk to a planner? My experience has been that they only want to sink their teeth into your piggy bank, manage it and then make excuses when they do a shit job at it. My friends son is a fund manager and told me that unless you have 10's of millions, your money is noise level to them and they can care less about your well being. Hard for me to think I would trust my life's savings to a stranger. 

 

 

 

 Try a fee-based financial planner.  Many of them will limit their consult to your specific questions.  They do not have to handle your portfolio.  Most don't actually do any trading at all, don't represent any bank/fund/financial institution and aren't licensed to sell insurance products.  

Book an hour, go in with specific questions and see if you like the interaction. 

Fee-Only Financial Planners in California

 

Mike C

[John Ranalletta]

I’m not recommending RIA in Houston because I don’t work with them but I watch Lance Roberts every AM on YouTube or Livestream.  Lots of common sense advice.  Real Investment Advice website and YouTube channel. 
 

 

[Patallaire]

14 hours ago, West_Coaster said:

Question on financial planning. Is it really worth spending the money to talk to a planner? My experience has been that they only want to sink their teeth into your piggy bank, manage it and then make excuses when they do a shit job at it.

Lets look at this logically, you posted a question on an open forum on how and what to look at in Retirement. You realized, in hindsight, that perhaps you were not seeing the entire picture and that you need to reevaluate this decision.  No one got your entire picture and yet partial advice was given, some good, some marginal, but it was free. I would also guess that you do not know most of us on a personal level, and yet advice was asked and given, similar to sitting in a bar and asking the person next to you what stock to own.  I would suggest that if you pick the right planner, a professional, and either pay him/her for advice, or utilize him to get your house in order, share everything, your hopes, expectations, your philosophy about money, your wifes' viewpoints, {Surprisingly most times they are very different, especially around the risk question!}  and allow a relationship to develop, it would be money well spent, then decide if you want  keep him/her as your advisor. {Mind you I have a professional dog in that fight} There are two schools in Financial Planning, the "Do it Yourselfers," and those who "Hire Professionals." The "Do It Yourselfers," generally believe, by definition, they can do it all, and that because of that make a variety of decisions that are close, but not all encompassing, as you experienced in posting the question seeking advise on this forum.   Most often they are male and because of anatomy, they know more than we do, who do this 12 hours + a day. A little known secret, and do it yourselfers take umbrage with this, we are in the Behavioral Finance business as much if not more than the portfolio management business! Our calling requires us to guide behavior as much as portfolio design, which admittedly, is 51% luck.  So, if you are to hire a person like myself, discuss your expectations clearly, encourage interaction with no chip on your shoulder that he/she is trying to get into your financial pants, engage on all levels, share everything, nothing is more frustrating to us then laying out a life plan and then getting the "Oh, by the way," statement, follow your gut on whether the fit is right, because if it is right this should be a very long term relationship {I have clients who have been with me for over 30 years!} This person will guide you toward retirement and through it, they may watch your grandchildren grow, manage the investments in the trusts you set up, guide your family through the death process, help your family make the nursing home decision, should meet with your other professionals, {Unless you are drafting your own wills and trusts and health care and powers of attorney and DNR's yourself,} to ensure they are working as a team and are all on the same page or at least professionally understand why they may not be, etc.  If you hire them for a transaction you will get transaction advise, if you hire someone who is committed to you and to their craft, you will have the best of all worlds.  Your input, their input and the teams input.  

[realshelby]

14 hours ago, West_Coaster said:

 

Question on financial planning. Is it really worth spending the money to talk to a planner? My experience has been that they only want to sink their teeth into your piggy bank, manage it and then make excuses when they do a shit job at it. My friends son is a fund manager and told me that unless you have 10's of millions, your money is noise level to them and they can care less about your well being. Hard for me to think I would trust my life's savings to a stranger. 

 

Yes, I think it is worth what they take in fees, commisions to have one working for YOU. Which means only work with a Fiduciary manager. 

Yes, they all like to hear themselves talk. They are sales people. Just like sales people, there are some that know what they are talking about. Some even seem to care. 

$500,000 will get the attention of about any of them. 

Just like underwear, don't be afraid of changing them. They need to LISTEN TO YOU!!! Then work with what they hear. Others simply want to give you their plan first. 

We "fired" our Financial Planner about two years ago. We are with Scott Mann in Houston now. One big reason is that He/his company has access to about any investment directly. He seems glad to take time to talk, in person and actually insists on it. Some things we didn't want to go with, and he would tell us options and explain each one. Of course he is interested in getting more to invest from us, and probably will after the 401K's can be moved.