Retirement dreams?


#102

Yep. That’s probably a majority of Fortune 500 IT jobs. That was me for a while and I got tired of constantly being reminded that IT is considered a cost center and that IT people are thought of as interchangeable chunks of poo. So I went contracting. It’s the same shit, but the pay is enough that I was able to start investing in things other than just the market that I hope will serve me better in the long run.

I also just wanted to comment on something said in a previous post. Not many people commented on the post above where someone else suggested annuities, but that advice is worth considering. People bad mouth annuities because the returns are lower than the market, which is often true, but that isn’t the correct perspective to take with annuities. An annuity isn’t an investment, it’s a transfer of risk, guaranteeing income and protecting you from some market risk. Just as the post above noted, it’s reverse life insurance (which is an interesting way of putting it, so thanks for the phrase, although calling it survival insurance is perhaps better). Is not meant to replace other investments but perhaps augment them. I’d never suggest someone use them as an exclusive strategy but just as a portion of your total portfolio (except for some very special circumstances). It can be an excellent complement to social security. One other benefit of the annuity is that when you die, the remaining value of your policy passes to your beneficiaries outside probate. This can be a significant unsung benefit if your probate is complicated and therefore lengthy, and/or if your beneficiaries are financially challenged and need the money asap. A reputable underwriter, once given the necessary documentation, can get funds out within a week, probably sooner.


#103

This is true of any investment that has a beneficiary option.


#104

True. Although some make it a little harder than others to fully claim it. Some of my parent’s funds were in an investment account. The holder initially only issued the funds out in an account you had to create on their site, essentially as if you were becoming an investor with them. You could later close the account and take the funds but it was an extra step.


#105

I don’t know the laws but that sounds kind of fishy. Maybe it’s in the original agreement your father signed.

I handled much of my fathers stuff when he died, and we were able to get most of his investments out without using a lawyer or going to thru any legal process other than a signature. You just had to prove he was dead and supply the legal paperwork to establish you (or others) were the beneficiary listed.


#106

Yes it was like that for some of the assets. But most of it was wrapped up in a combination of real estate and cash in a traditional bank account. Those were locked up until I had official, court recognized executor status. And then they had to wait for a claims period and for me to work out title transfers and stuff like that. Pain in the ass. And that was with a cooperative sibling. From what I hear that isn’t always the case and arguments over the estate can tear apart families and delay things more. So that chunk that came from the annuity in three days helped with the immediate costs of the funeral.

Anyway, didn’t mean to derail the thread. But in discussions of late stage income an annuity is just one of many strategies. You could put that same money into a business or the market instead but that’s looking toward a different set of benefits and risks.


#107

Yeah my suggestion of a life annuity was specifically to assuage the fear of outliving your money. There are options out there that will give you a monthly flow until you die (but there is no benefactor). They basically bet that you will die before a break even point and you are betting you will live passed the break even point.

It’s by no means a product that fits everyone, but it is something that fits SOME. There are a lot of vehicles one can use to prepare for retirement and it’s such an important topic that I suggest everyone at least talk to an advisor (even if it is just to waste his or her time for the betterment of your understanding). More senior advisors I know say that they leave a client in worse shape if they get educated but don’t buy. I don’t believe that, I think if I meet someone and they are fumbling in the dark, I have at least provided some service if they are fumbling in the light.


#108

Aside from my 401K, my plan includes buying a house to live in and get it paid off (currently May 2024). Then save up a bit more money, buy another house to rent and hopefully between my payments and the renter’s payments, get it paid off somewhat quick. If I have enough time left before retirement still, then get a third house and do the same thing. I am currently 49 years old, so I do have a little time left and nobody says I have to retire at 65.

I hope this is a solid game plan. I do not want to out live my savings.


#109

While on the surface this seems like a good idea (and I’m sure Portugal is a wonderful country, no offense here) but I think that moving to a foreign country would involve a large amount of culture shock. And for someone who is in their 60’s or 70’s – that would be doubly hard. Older people simply do not adapt well to a move across town… I’d think an international move would be much worse.


#110

Do folks have a target amount in mind to save up before retirement? This is something I’ve been thinking about more of and more lately. I believe the general rule of thumb is about 8x annual salary by 65 but not sure how seriously to take that advice.


#111

And yet many people do retire to foreign shores. It’s a thing. Portugal has a lot of British ex-pats so there are areas where it’s not hard for English-speaking people to find lots of other English speaking people. I found in Italy that in Rome and Florence most people at least knew a smattering of English and we could converse without much difficulty, and many were somewhat fluent in English. They get millions of English-speaking tourists every year in those places so the locals have adapted.

As to older people not adapting to a move across town, it’s also a thing for Americans to leave their native states and move to Florida, Arizona, etc. People pick and relocate for retirement all the time.

My big concern with moving to Europe, even on a six-month or year basis, is healthcare. Other than that, it’s leaving family behind, but we plan on gifting airline tickets to the kids to come visit and we will probably rent something with two bedrooms, so I would think our kids would love free air and a free place to stay for a visit to Europe. We’d love to have them come.


#112

2 mil + debt free / own the house.


#113

Work until I die. When you are dead, you don’t need money. Or so I’m told; movies like Beetlejuice imply a bureaucratic afterlife that I’m sure will also put me to work.


#114

@Ex-S_Woo there is a lot of discussion in the places I linked upstream about how to determine your personal withdrawal rate. It’s a challenging topic, especially given the big unknowns relating to healthcare (specifically relating to long term care issues, because once you get to 65, I think your monthly healthcare costs are fairly well-known, assuming you’re on Medicare).

Also, I saw this article a few days ago and thought of this thread:

https://money.usnews.com/investing/news/articles/2018-05-02/the-myth-of-outliving-your-retirement-savings

The bottom line of the article is that while it’s possible to outlive your retirement savings, most people adapt their lifestyle and spending to make sure they don’t (granted, this may lead to you adopting a lifestyle you don’t necessarily like, but I do think the “living off catfood” lifestyle that’s been thrown out is a bit of hyperbole).


#115

For me it would be dog food, sir, and dry dog food at that!

Seriously, I mostly agree with you. If you can get the house and a reliable car paid off that would be huge. Like Mark says, healthcare is one of the big X factors, and at a certain point Medicare kicks in, but like Social Security I have no idea what that will look like 15 years from now.

Agree too that going expat for retirement could be a culture shock some would find distasteful but I kinda liked the easy going pace of the area of Costa Rica I visited, and the people there told me that they charge foreigners for medical but it’s much more affordable than the care cost in “advanced” nations.


#116

There is a lot of information about this. Generally speaking, one good rule of thumb is that, absent social security or other income, you should have 25 (riskier) to 33 (pretty safe) times your total annual expenses saved.

This allows you to withdraw 3-4% per year, while adjusting for inflation. 4% withdrawals per year for up to 30 years has worked with 95% success over any span of time for roughly the last 150 years. 3% would let you withdraw that indefinitely with 100% success over any span of time for the last 150 years.

This assumes you are properly invested.


#117

@SlyFrog is right about the studies on 25x and 33x spending being basically set although, as I understand it, the studies assume that expenses will only go up with inflation (I have no idea what measure of inflation they used when examining the data). In other words there is some risk if you use the studies to retire early and specific costs (medical care? college costs?) go up much faster than the normal historical cost of living increases.

In my case I was aiming for 1.5 million plus a paid off house and no other debts. As I move into that territory I have started to experience more friction with my wife over money. She understands the math but is more risk intolerant and would prefer a bigger nest egg.


#118

The idea of saving that much money is nice, the reality of it is that few of us will have the ability to do that. I am 62, about to close the business I have worked at for almost 40 years and trying to find enough work to get me to medicare. Yup, that’s the big goal at this time. Get to medicare and get away from that damn monster health insurance bill I am going to have when the business closes.

My plan, work a seasonal job for 5-6 months a year and collect unemployment the other months. maybe get a another job but to be honest, what I do, manage on office for a small company, is probably not terribly marketable at my age.

I have a decent IRA set up, I will get SS, and the house payment is under $450 a month. But for the next 2 1/2 years the month to month stuff is going to be interesting.


#119

There is the risk that particular expenses exceed inflation - the 3-4% safe withdrawal rate does have inflation protection though. The actual withdrawal is as follows.

Let’s say you’re using 3% to be safe, and you have $2,000,000. Year 1, you can withdraw $60,000. Let’s say, for sake of argument, that inflation in Year 1 was 2%. In Year 2, you can withdraw 61,200. Let’s say inflation in Year 2 is 2.2%. In Year 3, you can withdraw $62,546. That’s how it is infaltion protected.

But yeah, if your healthcare costs go up 15%, you have to figure out how to offset that.

I understand your wife’s concern. Retirement is basically a balance of not retiring too early and accidentally running out of money against not continuing to work a job you don’t like to build up excess money you’ll never actually need. There is no perfect answer.


#120

I’m not trying to sell people on retiring to Portugal, just mentioning that if you’re looking at a less than ideal retirement there are places in the world that are cheaper while still decent.


#121

@Scuzz, if you retire prior to 65 and have the “right” amount of income (I don’t know exactly what the requirements are, but it’s something like being between 100% and 400% of the poverty level) you qualify for Obamacare subsidies, so healthcare costs won’t be too outrageous (the monthly costs anyway - the policies may very well have high deductibles).