Retirement dreams?


#122

I have actually looked at that option and I would probably save 50%. I have been told that one problem with the ACA coverage is finding a doctor who will take you, so I will have to look into that. For me it really doesn’t matter, but my wife’s meds are rather costly and she wants to keep her current doctors. So that may be a problem.

My wife will qualify for medicare next February though so we could easily end up with separate insurance coverage after that.


#123

I’m in the exact same situation. My wife is on two medicines that monthly cost around $1k. And I’m planning on retiring before 65, so we wouldn’t be eligible for Medicare. So my worst-case planning is that I will be on COBRA for 18 months until switching to Medicare. However I am hopeful there will be an Obamacare provider who can come in under that cost.


#124

We do have an option of Blue Shield/Blue Cross plans here in the ACA marketplace. And yes, the deductibles are really high, but then so are standard non-ACA plans now a days.

I think the income limit here was somewhere in the $60k range, which sounds really high but isn’t really if you have some investments and do some part time or seasonal work as we plan on doing.

$1k for drugs, geez, I think my wife’s are closer to $400.


#125

So, fair warning to everyone. The Obama era rules that would have made Advisors fiduciaries aren’t going through. Which means, once again, the advisors could push you to some high cost funds.

Now, this is a good news, bad news situation. The good news is that most advisors, in preparation for the rules most 401(k) and 403(B) platforms have levelized their compensation (so the commissions on all the funds pay about the same percentage to the FA) and aren’t likely going to change it again.

The other piece of good news is that the SEC might require the exact same rules going forward, so even though you won’t be covered by the DOL, the SEC might do it instead.

Anyway, since I work in the industry, I thought I might let you all know.


#126

As I said, work until I die is my plan. I literally cannot see a way to retire.


#127

Well, there are a lot of ideas coming down the line. One of the most interesting is requiring statements to show a breakdown of what your 401(k) might pay out monthly if you reach retirement age.

They do that currently for government retirement plans, and the end result was an increase in how much employees deferred. Many in the industry are hoping this will push more people to put more into their retirement plan.


#128

My TIAA-CREF setup (403(b) I think) has those statements of presumed monthly payouts. My problem isn’t knowledge, it’s, um, income. Knowing how much to set aside is one thing; actually having it is another. :)


#129

Yeah, that is always a problem.

I guess I hope this will push employees to pressure employers to either increase wages or increase benefits. If that is possible.


#130

Our benefits are pretty decent, really. It’s medical stuff that eats up a lot of money. The first half of the year until deductibles are met can get hairy; after that, it lightens up. And of course credit card debt is my fault, though there are a lot of reasons why it is there which don’t involve spending sprees or MTG cards.

My biggest concern about retirement (I’m 56 now) is medical care, particularly prescriptions. That scares the crap out of me. Luckily, my job, as a college professor, is one that barring unfortunate circumstances I can do until I literally drop dead.


#131

Wow all these years on QT3 and I never saw this thread.

I retired in 1999 at 39 and moved to Hawaii. Hawaii housing prices are actually lower than Bay Area, although other stuff isn’t. I’ll be be the first to admit that my early retirement was due to primarily to luck (Intel stock options). But I’m confident that I would have been able to pull the plug by 50 even without stock options, just a good salary from Silicon Valley tech companies.

I spent much of my first years retirement researching the heck out of retirement finance and living. I’ve probably looked at dozen retirement forums over the years. I can highly recommend two.

For those of you over 40. www.early-retirement.org Although the focus is on early retirement there plenty of folks who retired at regular age 65 or are planning on it.

The most beneficial thing about the forum is that you can go on there and post.
Hey I’m Joe I’m 40, my wife and I make $125K, we have 300K in 401K, in the following mutual funds.
Our house is worth X with $2200/month mortgage, we have a ten year old, who I’m sure will go to college. I’d like to retire between 55-65.

The first question you’ll get is how much to do you expect to spend in retirement. I can’t stress how important it is to figure that out. The correct answer isn’t a number it is a range.

Then a number of people on the forum will spend a fair amount of time (at I’ve times I’ve spent an entire afternoon analyzing internet strangers finances) running retirement calculators and looking at Morningstar X-ray portfolio tools to give you an assessment on how realistic your retirement goals are. A surprising amount of time for folks in the 50s the answer is you could retire now.

While most of the folks on the forum are professionals like here who make good money. There are also people who retired in their 40s, in the SF Bay Area and never made more the 30K a year. I’m personally friends with a couple of teachers from Las Vegas who retired at 35, and currently traveling the world with their now two year-old girl.

It is also a good source of nuts and bolts information everything from how to maximize your ACA subsidy in retirement to the psychological what do I do all day. While folks in P&R were debating ACA, several folks on that forum (lawyers and doctors) were actually reading thousands pages of the law and trying understand what it meant.

For those of you who are younger. I’d suggest looking at https://www.mrmoneymustache.com/

This is run by couple who retired at 30 (although still making money from the website). The focus on this site is more cutting spending, but also a good source for how much and where to invest.

Some of my favorite saying from a Hawaiian tourist T-Shirt.

Two ways to be rich, earn more or desire less.
The best things in life aren’t things.

Mr MoneyMustache really drives home this point, too extreme at times for my taste. But as is typical, it is the site forums which are really valuable.


#132

Man, a couple more years like 2017 and I’d be there, too. And I like “things”, and living in major western cities.


#133

Your currently salary is almost irrelevant to how much you need to retire. It is all about the spending.

Your current salary is almost irrelevant to how much you need to retire. It is all about the spending.
The 3-4% safe withdrawal rate (SWR) or 25x-33x times is a very good rule thumb. I’d generally say 25x if you are 65 and 33x if you are 55. This assumes a 30 year retirement, which is just about average if your 55 but at 65 your life expectancy is 20 years (19 men, 21 woman). So if all your money does is keep up with inflation you could spend ~5%/year and not run out until you have 50% chance of dying. But as long as you have modest amount (>40% of your money) in stocks historically your money will grow faster than inflation. Over the last 150 year stocks have averaged 6-7% above inflation in the US. (Important caveat not so great in much of the rest of the world).

There are bunch of retirement calculators but this is my favorite.
https://www.firecalc.com/ and CFIRESim which @charlatan posted earlier.

The only thing that your salary is relevant with respect to retirement is that if you find it difficult to save much on your current salary, then assuming that you’ll be able to make a major cut in expense after retirement is probably wishful thinking.

That said your expenses in retirement really should go down (especially after the first years when you’ve got the travel bug, buying the boat, and house remodel etc out of your system.)


#134

Again, Mr. MoneyMustache also makes $400,000 a year from his blog.


#135

I mostly agree it is bit of the stretch to claim he is retired. But I treat MrMoneyMustache the same way I view QT3. Sure Tom and others interesting things on the front page. But the most valuable information on QT3 is what is collectively generated by all of us. Same thing apply to MMM, it is the forum.


#136

Considering how little people get paid in the US, people rarely put enough in their 401(k) to retire anytime soon.

And most plan have a 1 year wait just to enter, so if you switch jobs often, you rarely get an opportunity to put money in the 401(k) plans. Now their is plan put forth by a Democrat in Congress to make to bring the maximum wait time from 1 year to 3 months, which will help.


#137

Absolutely. I lived on ~$20k/year (not counting various loan payments) for years before I retired. Which looks low, I know, but being single, no kids, living in low-cost West Michigan, and generally living simply goes a long way.

So I knew that was a reasonable amount to aim for in retirement, once I’d paid down all the debts. Add in some hedging for medical via HSA, and then it’s just math to determine what you need to have invested to maintain your income.


#138

This is a good point. I do see a lot of folks looking at early retirement saying my plan B is if I start to run out of money go back to work. It is was my plan B, if my assets drop below X. I’ll get a job. Well in Dec 2008, they dropped below the magic number, and the stock market continued to go down in Jan, Feb, all the way until March of 2009.

It was in Jan 2009 that I realized that my Plan B, had a fatal flaw. It had been 7 years since I had paying job, and even though high tech marketing skills don’t go obsolete as quickly as say programming, calling my skills rusty would be very generous. But far more importantly, markets crashes and recessions are highly correlated and even if my skills were up to date, I was just one of millions of unemployed dudes looking for a job. I would have been lucky to get a job at Best Buy selling electronic in 2009. Fortunately, the market recovered quickly and I didn’t have to go back to work.


#139

That is low, but I do know I guy retired and living on 25K in the Bay Area which I think is harder. Plus it is important to keep some perspective there are a lot of people in both place earning <$20/year. Because of the expenses associated with working, payroll taxes, transportation, generally eating lunch or morning coffee, sometime clothes, having a job is often expensive.

One big advantage now days is the internet. Between streaming services, and computer games, and I’d say 80% of my entertainment expense are satisfied for ~$100/month.


#140

Thanks for the links and grats btw!

Alas I am not willing to make the kind of adjustments to my lifestyle to get my burn rate down to some of the levels listed on that site. It is helpful to know how other folks approached the problem though!


#141

Early retirement is a cool thing but work isn’t a bad thing. It’s too bad we can’t simply reduce our workload but still keep our jobs. I’d happily take a 20% reduction in pay if I could work 4 days instead of 5.