How much income do you need to retire?

[Fred W]

1) pay off house - done2) pay off credit cards - done

3) pay off all car payments - done

4) both of us contribute to retirement savings - done and still going

5) get dedicated financial advisor to run 401k at Fidelity - done (and doing quite well)

6) move to location where cost of living is one-third to one-half of prior location - done

7) three more years to retirement for her - working on it

8) four more years to retirement for me - working on it

We need to do #6, but not until after I don't need access to the cities and airports. Even in tax friendly New Hampshire (no income or sales taxes) there are good towns and bad towns, since all taxation happens on property here.

The Feds will nick you no matter where you go, but the difference a state or town makes can be significant.

Retirement?
WTF is that??

Sounds like a myth to me.

An urban legend.

Something that only happens to other people.

You know - like Canadians.

And Petey.

I know Andy. I felt the same way as recently as just a year or two ago. But I think if you keep a solid savings plan going, especially at your relatively young age, you'll see the light too.

3 years, 3 months and 13.5 days left. At 62, I'm signing up for Medicare and getting as much as I can as soon as I can. If you amoratize it the difference between 62 and 65 breaks even at 15 years. I'll take the money up front. If I live past 77 then I'll let the state take care of me. No pensions in health care, but have saved some in 401k and have a younger wife that has good health insurance. But will have no bills other than a small mortgage payment.
For you younger guys, I think Beemerdons hit the nail right on the head, rental properties. Real property that has real value and can provide income.

I think maybe the cost of divorce to obtain a younger wife with good health insurance may be financially a good idea, but I sort of like the old gal I have now, and I think I'll keep her.

Real estate is usually a great investment, if you can scrape up enough to make that investment. That is the thing that keeps most players out. But it also is not a "sure thing" these days any more than any other investment that has substantial returns does. It is always a risk v. rewards decision.

It can work out for you tremendously if you happen to luck out with a growing real estate market, but you can also get killed if you aren't. Personally I feel that is a little too volatile for anyone closing in on retirement in the next 10 years or so, unless they are willing to stretch their retirement target in the event of a failure.

Of course I'm not a financial adviser, and I didn't even stay at a Holiday Inn last night (I slept at home for free)

 

[Geezer]

Throat Warbler Mangrove,

This may not be the most reliable place to go for financial information, but it lists the rules for withdrawal from a 401k as I understand them. The third bullet indicates that at age 55 you can withdraw without penalty if you have terminated employment, I interpret that as including retirement. Works for me. The 'substantially equal periodic payments' part may also apply.

https://retireplan.about.com/od/401kplans/a/401K-Withdrawal.htm

With rare exceptions, all 401K withdrawals are taxable as ordinary income. An additional 10% early distribution penalty tax will be assessed if you have not reached at least age 59 ½ when you take your distribution. Several exceptions to this penalty include:

• You die and the account is paid to your beneficiary
• You become disabled
• You terminate employment and are at least 55 years old
• You withdraw an amount less than is allowable as a medical expense deduction
• You begin substantially equal periodic payments
• Your withdrawal is related to a qualified domestic relations order

 

[BigOgre]

I know this isn't exactly what you've asked about but it seems a good time to mention it. I'd suggest you look even further and include thinking about what will happen after you decide to quit this retirement thing. Sooner or later you're probably going to sign up and attend that great bike rally in the sky. As you're now looking at some major life changes and rearranging things, this would be the time to at least consider long-range estate planning. No doubt you're giving this a lot of careful thought and hopefully you'll set everything up so that you're secure throughout your lifetime but thought should also be given on how best to preserve those assets as they pass to your loved ones. Especially if you'll be consulting an adviser, conversations about real property and other investments should also include things like life estates, trusts and look-back periods, even if you're not ready or unsure how things will play out yet. And if for no other reason, setting everything up so that the surviving spouse or the kids don't have to deal with it is a nice gift to leave behind.

 

[Fred W]

Naw. I'm going with the Wheaton plan and just let the kids cover my missus.

Not! No I have fully considered what happens to Joann if I check out early. To be perfectly honest, I feel that is a more likely scenario than the one painted by averages, that I miraculously achieve age 82. I feel no need to leave any sort of an estate to my children. I think the best thing for them is if they were not burdened by inheritances and such, but my wife certainly deserves to live out her years in comfort. She's had to put up with me all these years after all.

 

[Pterodactyl]

Medicare starts at 65 not 62.

 

[juniorfjr]

1) pay off house - done2) pay off credit cards - done

3) pay off all car payments - done

4) both of us contribute to retirement savings - done and still going

5) get dedicated financial advisor to run 401k at Fidelity - done (and doing quite well)

6) move to location where cost of living is one-third to one-half of prior location - done

7) three more years to retirement for her - working on it

8) four more years to retirement for me - working on it

We need to do #6, but not until after I don't need access to the cities and airports. Even in tax friendly New Hampshire (no income or sales taxes) there are good towns and bad towns, since all taxation happens on property here.

The Feds will nick you no matter where you go, but the difference a state or town makes can be significant.

Retirement?
WTF is that??

Sounds like a myth to me.

An urban legend.

Something that only happens to other people.

You know - like Canadians.

And Petey.

I know Andy. I felt the same way as recently as just a year or two ago. But I think if you keep a solid savings plan going, especially at your relatively young age, you'll see the light too.

3 years, 3 months and 13.5 days left. At 62, I'm signing up for Medicare and getting as much as I can as soon as I can. If you amoratize it the difference between 62 and 65 breaks even at 15 years. I'll take the money up front. If I live past 77 then I'll let the state take care of me. No pensions in health care, but have saved some in 401k and have a younger wife that has good health insurance. But will have no bills other than a small mortgage payment.
For you younger guys, I think Beemerdons hit the nail right on the head, rental properties. Real property that has real value and can provide income.

I think maybe the cost of divorce to obtain a younger wife with good health insurance may be financially a good idea, but I sort of like the old gal I have now, and I think I'll keep her.

Real estate is usually a great investment, if you can scrape up enough to make that investment. That is the thing that keeps most players out. But it also is not a "sure thing" these days any more than any other investment that has substantial returns does. It is always a risk v. rewards decision.

It can work out for you tremendously if you happen to luck out with a growing real estate market, but you can also get killed if you aren't. Personally I feel that is a little too volatile for anyone closing in on retirement in the next 10 years or so, unless they are willing to stretch their retirement target in the event of a failure.

Of course I'm not a financial adviser, and I didn't even stay at a Holiday Inn last night (I slept at home for free)

7

I, like you are too close to invest in real estate. And divorce throws a monkey wrench into any retirement plans. Do not start over now, the grass may look greener but that's just the angle of the view.

 

[HotRodZilla]

I can retire in 3 years...Just before my 44th birthday.

20 years gives me 70% of my three highest grossing years.

22 years 10 months gives me 80%.

AND as of July first if last year:

25 years gives me 90%.

My problem is if I go at 20 years, my youngest will be 8 years old. If I said until I'm 25 she'll be 13. I HAVE to have medical insurance, so just stopping work is not an option. If I leave at 20, I can go for another 20 year retirement and have double retirements by 65...Or I can just go 25 and use a different option.

I'm shooting for the 25, because I can get promoted at least one more time and increase my retirement take home. My wife will be ready by then also. I have money tied up in Deferred Compensation plans and my wife has Mutual Funds and IRAs working for her. I will not be poor in my retirement, if I love that long.

FWIW, I have bitchen life insurance so if I go early, my wife and kids do not struggle. Basically I'm worth more dead than alive...Money wise! Haha...

 

[Old Guy]

So if you have 400 grand in a 401k and your tax bracket is 25% and you were to withdraw all of it you would net 300k.

It depends. I'm trying to stay out of mine until my wife and I are through earning. If the only income we have is social security and what we withdraw from the IRA, only that portion above the standard deduction and personal exemptions will be taxable. Then the next several thousand will be at the lowest tax rate. I think I can reduce the tax on our IRAs substantially by waiting. That's why I decided to finance a couple of vehicles this year. I went about $35,000 in debt at 3.5%. If I go the full term on the loans, interest will be around $3000 total over five years. Drawing that money out to pay cash this year would have cost me $7700 in taxes. The trick now will be to wait long enough to avoid the highest tax rate.

 

[RichDoyle]

In case you didn't know, if you start taking SS (other than disability) before your full retirement age (66 for me) and you're still making significant money your benefits can be reduced, all the way to zero, until you reach full retirement age. This is dependent on how much you are earning, but the reduction starts pretty darn low. Since I was grossing 180K+ a year right up until I'd had enough of the IT soul-suck routine, I waited until the year I turned 66 to start pulling SS. This allowed me to make a fair chunk of dough working part time last year and still pull full SS.

 

[Old Guy]

In case you didn't know, if you start taking SS (other than disability) before your full retirement age (66 for me) and you're still making significant money your benefits can be reduced, all the way to zero, until you reach full retirement age. This is dependent on how much you are earning, but the reduction starts pretty darn low. Since I was grossing 180K+ a year right up until I'd had enough of the IT soul-suck routine, I waited until the year I turned 66 to start pulling SS. This allowed me to make a fair chunk of dough working part time last year and still pull full SS.

There's an investment company here that gives free seminars on social security and the tricks that can be used. Obviously, they gave a sales pitch, but the seminar was very informative. Turns out there are all sorts of tricks that can be used to increase benefits.

I did what you're doing. I took off for 10 months and didn't do diddly. Then last month, I went back to work part time. At 66, I can draw full Social Security and earnings don't affect it.

 

[RichDoyle]

I'm sure there are scams that can be run against SS and whatnot. Lots of folks on "disability" are not disabled at all. I'm not trailer trash having to eke out what I'm not legitimately entitled to.

 

[Old Guy]

I'm sure there are scams that can be run against SS and whatnot. Lots of folks on "disability" are not disabled at all. I'm not trailer trash having to eke out what I'm not legitimately entitled to.

On the other hand, there are various ways to draw -- all completely legal and ethical. You can learn about them at https://www.socialsecurity.gov/. Some of them will net you more benefits than others.

 

[RichDoyle]

I'm sure there are scams that can be run against SS and whatnot. Lots of folks on "disability" are not disabled at all. I'm not trailer trash having to eke out what I'm not legitimately entitled to.

On the other hand, there are various ways to draw -- all completely legal and ethical. You can learn about them at https://www.socialsecurity.gov/. Some of them will net you more benefits than others.

Let's put it this way: I'm perfectly content with the $50K+ a year my wife and I are drawing from SS right now. Since she's still working (and I've been working part time the last year) we're grossing a goodly income and saving/investing all but my wife's salary. Since we've also got considerably over a million dollars in savings and investments and no debts at all I'm content with what we have. Even assuming that I could squeak a little bit more out of SS, I'm not interested in doing so.

 

[wheatonFJR]

If I had a Million $$$...I wouldn't be worried either.

 

[HotRodZilla]

No ****... If I win a million dollars, I'm gonna call my boss and tell him to get his car out of my driveway!

 

[escapefjrtist]

If I had a Million $$$...I wouldn't be worried either.

Too bad a million dollars isn't squat now...keep saving your pennies wheatie!

Health care costs during retirement is the elephant in the room.

--G

 

[Old Guy]

I'm sure there are scams that can be run against SS and whatnot. Lots of folks on "disability" are not disabled at all. I'm not trailer trash having to eke out what I'm not legitimately entitled to.

On the other hand, there are various ways to draw -- all completely legal and ethical. You can learn about them at https://www.socialsecurity.gov/. Some of them will net you more benefits than others.

Let's put it this way: I'm perfectly content with the $50K+ a year my wife and I are drawing from SS right now. Since she's still working (and I've been working part time the last year) we're grossing a goodly income and saving/investing all but my wife's salary. Since we've also got considerably over a million dollars in savings and investments and no debts at all I'm content with what we have. Even assuming that I could squeak a little bit more out of SS, I'm not interested in doing so.

Well, let me put it this way.

I've worked and paid into Social Security for 52 years and still am. I've never drawn a dime of unemployment, welfare, or any government handout. I haven't engaged in any of the "scams" you mentioned like faking injuries to draw disability. I also have enough money put back to last me, barring and serious catastrophe. And when it came time to consider retiring and drawing Social Security, you better bet I looked at the alternatives and chose the one that benefited me the most. My wife becomes eligible next year, and you can bet again that we'll look at the options and choose what benefits her the most.

 

[Fred W]

Quite honestly, I had figured many years ago that, considering the way things were going with Social Security, by the time I was of age to draw anything the fund would be insolvent. So my long term retirement planning never included being able to do that. Anything I am able to get back from SS will be gravy.

As has been said many times already, the whole healthcare coverage thing is the greatest unknown. It used to be that retirees (from the company I work for) took healthcare coverage as part of their package. Then as costs skyrocketed they decided to change the rules along the way. I love how they can do that.

You can make hedges against inflation and use strategies to avoid certain taxes, but you can't avoid paying for healthcare coverage until you are 65 unless you want to risk the whole bundle.

 

[Intech]

A lot of good advice here. This is a subject that is also very prominent in my thinking these days. My personal goal is to retire 2018 when I will be 60. However, If I am able to, I will do it before then. Selecting a good finacial advisor is probably the best recommendation I could make. Selecting one that does have "skin in the game", as you put it Fred, is also recommended. Meaning that, other than a minimul fee, the finacial advisor/company does not make any money unless you do. I am really happy with mine right now. My biggest challenge now is the house. Thanks to good finacial planning with my advisor the mortgage is my only debt. Right now I don't have the option of doing anything with the house as my mother-in-law lives with us. Janet and I have discussed selling the house (too big for just us) and getting a single level with less property. Hopefully when/if that happens it will be a cash transaction.

Then, of course, there is that health care thing......

 

[Geezer]

If I had a Million $$$...I wouldn't be worried either.

Too bad a million dollars isn't squat now...keep saving your pennies wheatie!

Health care costs during retirement is the elephant in the room.

--G

As Throat Warbler mentioned in the opening post, the actual dollar amounts needed to retire vary greatly by where you live and your lifestyle. Also, what seems like a lot today can easily become 'barely scraping by' in 10 or 20 years because of the effects of inflation.

That said, there are so many variables and risks that if you worry about everything then you'll never take the plunge.