For those in retirement age and who splurged or was over conservative in your youth....

[QueenIsabella]

Yeah, but if you had $10M invested and withdrew at 3%, that would be $300k a year without ever touching a penny of the original investment. Plus, hopefully you are not going to need the $100k nursing home every year for an extended period. And with $10M you could afford to dip into the original investment if you needed.

I am not being argumentative with you at all, it just seems she pulled this number out of thin air. This is the kind of stuff that just discourages people from saving at all. My mother is retired (and my single as my parents divorced and she never remarried). She has no where near $10M and is doing just fine. You would have to earn $100k a year for a 100 years to even accumulated $10M and that would not even include taxes. So yeah, that number is not realistic for the vast majority of folks.

What I bolded--not really, because your savings would compound and earn you money as well. You eventually reach a point where your savings just snowball. But, your overall point is well-taken--a number that high doesn't even seem close to possible for the vast majority of people. Even $1M sounds out of reach for most people, although it's do-able, especially if you start saving early.

I don't think Suze has a clue as to how normal people live (hint: we don't all have private islands). For most regular folks, they're not looking to live like "Lifestyles of the Rich and Famous"--it's good enough to live in a paid-off house, maybe take a couple trips a year to see the grandkids, eat out once in a while, drive a decent car, etc. Most of us won't be jetting to our villa in Tuscany, but we won't be eating cat food, either.

 

[kymom99]

It's funny to me that people talk about retiring "early" as I assume meaning before SS age. But some of those same people will say you shouldn't plan to collect SS. Then why is that the standard retirement age? Retirement age to me is really not an age but the point in time where you have enough resources to live on without going to work. That's going to differ widely from one person and circumstance to another.

 

[tvguy]

I expect to be in that position. My father-in-law went into the military at age 18, and he has already drawn a retirement check longer than he worked. It's not a common thing, but it's also not unheard of.

It is kind of odd. We are living longer remaining healthy to an older age, but it seems people are retiring younger. That tends to be just in the public sector now, but Lee Iaccoca touched on that in the auto industry in his book. When Chrysler was going bankrupt, they actually had more employees getting paid and medical benefits who were retired, than they had people still working. And if Chrysler had actually gone bankrupt, those people would have lost all their retirement benefits. It happened to my wife's Grandfather after he retired. His private employer went bankrupt, and his pension went away.

 

[TwoMisfits]

It is kind of odd. We are living longer remaining healthy to an older age, but it seems people are retiring younger. That tends to be just in the public sector now, but Lee Iaccoca touched on that in the auto industry in his book. When Chrysler was going bankrupt, they actually had more employees getting paid and medical benefits who were retired, than they had people still working. And if Chrysler had actually gone bankrupt, those people would have lost all their retirement benefits. It happened to my wife's Grandfather after he retired. His private employer went bankrupt, and his pension went away.

It's why my spouse and I are already planning for him to work til 70+. While we'd have enough to live on much sooner, we are not counting on SS or on inflation staying low once the full set of baby boomers retire, since the SS/Medicare bomb is already exploding (50%ish of the 2019 federal revenues) and will continue to worsen. The only probable way out of that bomb is to push some strong inflation (without recognizing that inflation in increases in the programs) or to become PAY-GO programs that literally just pay what they have each year, bringing down benefits, not increasing them and/or means testing (which would pretty much mean everyone is living on nothing from it, and as savers, we'd get nothing). We're probably 2 decades or so from that blow up, I think, which would be where we'd normally retire early...so knowing that, we'd rather stay employed if possible. My spouse selected a slightly lower paying job that allows telecommuting and is low impact, so his ability to keep the job, even through normal aging issues, is high.

So, when $10M is thrown around, it's not probably thrown around as $10M today...but as $10M in a high inflationary environment with little SS and Medicare to back you up...

 

[MrsPete]

It's funny to me that people talk about retiring "early" as I assume meaning before SS age. But some of those same people will say you shouldn't plan to collect SS. Then why is that the standard retirement age? Retirement age to me is really not an age but the point in time where you have enough resources to live on without going to work. That's going to differ widely from one person and circumstance to another.

Three reasons:
- 65 has been "the target age" for several generations, and it's become accepted as the average age.
- Most people don't save enough to live without a paycheck, so they assume they'll retire when they can begin collecting Social Security.
- Yes, some people say we'll never collect Social Security, but since it hasn't happened yet, people just keep on assuming it'll roll along like always. And it likely will: they may raise full retirement age, they may use means testing, or they may reduce benefits for everyone -- but it isn't likely to just "poof, disappear". Keep in mind that a whole bunch of people claim their retirement plan is "win the lottery". It's not sensible.

It is kind of odd. We are living longer remaining healthy to an older age, but it seems people are retiring younger. That tends to be just in the public sector now, but Lee Iaccoca touched on that in the auto industry in his book. When Chrysler was going bankrupt, they actually had more employees getting paid and medical benefits who were retired, than they had people still working. And if Chrysler had actually gone bankrupt, those people would have lost all their retirement benefits. It happened to my wife's Grandfather after he retired. His private employer went bankrupt, and his pension went away.

I read recently that the American life expectancy is decreasing. Sorry, I can't give any details -- it's been a while since I read it, but the general themes were: fast food and lack of exercise.

You're absolutely right that pensions can disappear. That's why it's so important that you don't put all your eggs in one basket; rather, you should have multiple streams of income for retirement.

It's why my spouse and I are already planning for him to work til 70+.

Respectfully, that's a horrible plan. Who wants to keep working 'til after 70? And why will he keep working while you don't? How's that fair? I know you say he's not likely to lose his job, but it does happen to LOTS of people. I really encourage you to reconsider this work-til-he-drops plan.

I'm barely 50, and most people my age are ready to pack it in; those of us who've been planning for retirement since we were young are pretty happy with our futures, but the people I know who are looking at another couple decades of work are rather glum.

 

[tvguy]

I read recently that the American life expectancy is decreasing. Sorry, I can't give any details -- it's been a while since I read it, but the general themes were: fast food and lack of exercise.
.

Substance abuse and despair are causing our life expectancy to drop according to this study.
http://fortune.com/2018/02/09/us-life-expectancy-dropped-again/

I saw some life expectancy expert talking about the double edged sword we face in the U.S. regarding food. We found away to provide cheap calories for survival, so we are living longer thanks to them, but ultimately those cheap calories are what kill us!

 

[QueenIsabella]

I read/heard about the life expectancy dropping, as well. I think it only dropped by a year--sorry, I don't remember the details.

There's nothing wrong with planning to continue to work until 70, but you need a contingency plan. You could get laid off, you could get sick or hurt. My DH found out last week that they'll be laying off engineers at his plant--he'll find out in the next month or so if he's on the list. The decision is being made off-site--nobody knows their criteria, so his good performance appraisals might not make a difference. On the good side, we have enough for him to retire. But...he's not ready. We had planned on him working until age 65, possibly longer. We have a Plan B. Plan C is for him to retire early and maybe do something part time. I think if he were home all day, he would make me crazy.

 

[tvguy]

It's why my spouse and I are already planning for him to work til 70+. While we'd have enough to live on much sooner, we are not counting on SS or on inflation staying low once the full set of baby boomers retire, since the SS/Medicare bomb is already exploding (50%ish of the 2019 federal revenues) and will continue to worsen. The only probable way out of that bomb is to push some strong inflation (without recognizing that inflation in increases in the programs) or to become PAY-GO programs that literally just pay what they have each year, bringing down benefits, not increasing them and/or means testing (which would pretty much mean everyone is living on nothing from it, and as savers, we'd get nothing). We're probably 2 decades or so from that blow up, I think, which would be where we'd normally retire early...so knowing that, we'd rather stay employed if possible. My spouse selected a slightly lower paying job that allows telecommuting and is low impact, so his ability to keep the job, even through normal aging issues, is high.

So, when $10M is thrown around, it's not probably thrown around as $10M today...but as $10M in a high inflationary environment with little SS and Medicare to back you up...

My financial planner pointed out that some of his clients "retire" and then going back to work doing something you really want to do. My wife worked in a Movie Theater in High School and college and has said it might be fun to do that again, knowing that you don't need the money, and if it isn't fun, you can quit.
At my last job I worked with a guy who was a retired Officer in the Marine Corp who hired on as a "handy man" for something to do. He'd clean out the rain gutters on the building, fix broken office furniture, sort the mail, fix leaky toilets, run errands. No task was beneath him. Best part is, since he didn't NEED the job, he could be honest with all the managers about everything. The big boss said Bob never beat around the bush, and he never lied, so the big boss always followed Bob's recommendations. Corporate ordered his position cut when he was 78. His last day, they called him and gave him his last check and said he could go home. He refused, telling it was going to take him all day just to put together a list of all the things he did, and recommendations of what companies to hire to do them. Big boss said they spent more in the year after Bob was let go on hiring someone to replace light bulbs than they paid Bob.

 

[TwoMisfits]

Three reasons:
- 65 has been "the target age" for several generations, and it's become accepted as the average age.
- Most people don't save enough to live without a paycheck, so they assume they'll retire when they can begin collecting Social Security.
- Yes, some people say we'll never collect Social Security, but since it hasn't happened yet, people just keep on assuming it'll roll along like always. And it likely will: they may raise full retirement age, they may use means testing, or they may reduce benefits for everyone -- but it isn't likely to just "poof, disappear". Keep in mind that a whole bunch of people claim their retirement plan is "win the lottery". It's not sensible.

I read recently that the American life expectancy is decreasing. Sorry, I can't give any details -- it's been a while since I read it, but the general themes were: fast food and lack of exercise.

You're absolutely right that pensions can disappear. That's why it's so important that you don't put all your eggs in one basket; rather, you should have multiple streams of income for retirement.

Respectfully, that's a horrible plan. Who wants to keep working 'til after 70? And why will he keep working while you don't? How's that fair? I know you say he's not likely to lose his job, but it does happen to LOTS of people. I really encourage you to reconsider this work-til-he-drops plan.

I'm barely 50, and most people my age are ready to pack it in; those of us who've been planning for retirement since we were young are pretty happy with our futures, but the people I know who are looking at another couple decades of work are rather glum.

No, the horrible plan is to decide in your 30's/40s that you'll be done working no matter what at "x" age...and then realize when you hit that age that you'll still need to continue working...that's a path for depression in later life...

By 60, we'll have more than most have who chosen to retire that early...and by then, we may actually retire early...but that will not be our plan...that will be a happy bonus...or a step we'll need to take if something goes awry...plan for the worst and hope for the best is the way to actually make the best long-term choices...

As for the commentary on our marriage...I guess it's sad that the instant board response is a "score-keeping" one on jobs. If X has to do something, why shouldn't Y too? is not the way any decision has ever been approached by us...nor one that seems healthy to the joint nature of a marriage. At least for us, over almost 2 decades, we are and have always been a team.

 

[MrsPete]

Substance abuse and despair are causing our life expectancy to drop according to this study.
http://fortune.com/2018/02/09/us-life-expectancy-dropped-again/

That was a sad article, but it rings true.

No, the horrible plan is to decide in your 30's/40s that you'll be done working no matter what at "x" age...and then realize when you hit that age that you'll still need to continue working...that's a path for depression in later life...

Eh, my husband and I set a retirement goal in our 20s -- and we put together a plan. We're on track; in fact, we have saved more than we expected -- and that's good because (like so many guys in tech-y jobs), he was laid off before the time came. He's not been able to get back into a similar job; age-ism is quite real.

As for the commentary on our marriage...I guess it's sad that the instant board response is a "score-keeping" one on jobs. If X has to do something, why shouldn't Y too? is not the way any decision has ever been approached by us...nor one that seems healthy to the joint nature of a marriage. At least for us, over almost 2 decades, we are and have always been a team.

Clearly you took offense, and I did not mean to imply that anything's wrong with your marriage from one comment. I am sorry that you found that offensive.

What I don't understand is how one spouse can be retired if the other is still tied to a job. The retired spouse can't fully appreciate the benefits -- for example, can't take off on a last-minute vacation when the prices are low -- because the other is still working. I could see both spouses working part-time, but I don't really see how one spouse being retired without the other can be a team mentality.

 

[Southernmiss]

One spouse retired the other not is certainly plausible. .What works in one family is not the rule for all.

I know several ladies who continued to work after their spouse retired. Some of it was that he was older and she wasn't eligible for retirement benefits yet, another loved her job and wasn't ready to let it go and when she did leave the office she felt pushed out, even though she initiated the departure, another worked because they had 'too much' togetherness and she wanted a break from his being home all the time.

There are several military families in my area where the wife got used to his being away for months and she found her own things to do. It's a big adjustment when he's home again.

Dh works full time and several nights/weekends a month as a soccer referee to supplement our kid's activity fees and college expenses. There are times when he's home that I think isn't there somewhere you have to be. Not that I'm not glad to have him home, but you get used to making decisions and entertaining yourself without the other.

 

[kymom99]

That was a sad article, but it rings true.

Eh, my husband and I set a retirement goal in our 20s -- and we put together a plan. We're on track; in fact, we have saved more than we expected -- and that's good because (like so many guys in tech-y jobs), he was laid off before the time came. He's not been able to get back into a similar job; age-ism is quite real.

Clearly you took offense, and I did not mean to imply that anything's wrong with your marriage from one comment. I am sorry that you found that offensive.

What I don't understand is how one spouse can be retired if the other is still tied to a job. The retired spouse can't fully appreciate the benefits -- for example, can't take off on a last-minute vacation when the prices are low -- because the other is still working. I could see both spouses working part-time, but I don't really see how one spouse being retired without the other can be a team mentality.

I retired at 51 because my career choice allowed it. I travel with my friends. I also work part time.

 

[pooh2001]

We will never retire
My DH lost his real job - company went bust - now looking for another job
He has a temp job making $30K
I once had a real job $63K, but was downsized and now earn $24K a year.
I would earn more from social security, when I retire at 66 and 8 months.
Our money is tight and we still have a mortgage.
Our plan is to fix up the house (paint colors in rooms which make your house worth more money)...... powder blue bathroom, almost white ( BEHR swiss coffee) walls in hallways, kitchen blue-gray, bedroom blue, dining room slate gray, living room light beige, per The Color of Money
Live in the house till we are 65 and then sell it - hopefully make some profit and buy something smaller to live in.

 

[kandb]

I regret nothing. My goal is to die with $0. I can't stand when my dad talks about inheritance. I keep telling him it is his money. Spend it. Go to Vegas and throw it all down on red. It is nobody's business but his. He hoards his money. I don't get what is the point of having money if you aren't willing to spend it.

I feel totally the opposite of this. We have three children and I want to leave them as much as possible. Financial security is important and who knows where this country will be in the future.

 

[robinb]

I read/heard about the life expectancy dropping, as well. I think it only dropped by a year--sorry, I don't remember the details.

There's nothing wrong with planning to continue to work until 70, but you need a contingency plan. You could get laid off, you could get sick or hurt. My DH found out last week that they'll be laying off engineers at his plant--he'll find out in the next month or so if he's on the list. The decision is being made off-site--nobody knows their criteria, so his good performance appraisals might not make a difference. On the good side, we have enough for him to retire. But...he's not ready. We had planned on him working until age 65, possibly longer. We have a Plan B. Plan C is for him to retire early and maybe do something part time. I think if he were home all day, he would make me crazy.

Good luck to your DH! A lot of times the decision to let people go are not based on how much they do for the company but how much they cost. The bean counters reduce people to a number that does not reflect their true worth.

 

[barkley]

The bean counters reduce people to a number that does not reflect their true worth.

agreed-and in some industries the powers that be let alone the bean counters don't know the true worth of an employee as it pertains to their skill set and historical knowledge base within a company or organization. the loss of that can be devastating to their ongoing business.

i have a family member who was livid when her dh's employer decided it was more cost effective to eliminate her dh and a few other senior level systems guy's positions b/c the number crunchers figured they could hire several young college grads for a fraction of the cost of each of the decades long guy's salaries. within about 6 months the company realized that their current systems were SO specialized and based in obscure tech that wasn't even taught anymore that when a problem came up the new staff couldn't figure out what was going on let alone how to address it so the company put feelers out to see if any of their eliminated senior staff was interested in rehiring. my family member did-but only after his wife had set up a business that SHE hired him on to so SHE could contract with the former employer to have access to her dh as an independent contractor-at QUADRUPLE the salary.

 

[QueenIsabella]

Good luck to your DH! A lot of times the decision to let people go are not based on how much they do for the company but how much they cost. The bean counters reduce people to a number that does not reflect their true worth.

Thanks! We think he'll land fine if he does get laid off. He's a nuclear engineer with 30 years of experience--he already has feelers out to do contract work. He could earn $100/hr plus benefits. On the good side, he could work 4 months out of the year. The down side is, he'd likely be away from home for 3 of those 4 months. But, we could make it work, for sure.

That said, I know we're lucky--engineers are one of the few groups where experience/age doesn't count against you so much. When DH took his current job 3 years ago, he was north of 50, and had companies fighting over him. Plus, we have a cushion if we need it. Others aren't so fortunate.

 

[MrsPete]

I feel totally the opposite of this. We have three children and I want to leave them as much as possible. Financial security is important and who knows where this country will be in the future.

I'm somewhere in between:

- We have paid for 100% of their college educations and sent them out into the world with no debt, a good car, and a good work wardrobe. We helped our oldest a bit as she transitioned into her first apartment, and we will do the same for our youngest child. Our oldest is doing great; she's on a path to be debt-free (even her mortgage!) by age 27. Our youngest is still in school, and the choices she's making are different; her goal is to buy a few rental houses to serve as passive income. Essentially we've chosen to help them on the "front end" instead of the "back end".
- We intend to help our (future) grandchildren with their college costs too, our thought being that a degree (earned in their youth and available for their whole lives is superior to an inheritance received in middle age).
- We have money saved, and we plan to use the 4% plan; that is, spend the interest - never touch the principle. If we earn 4% every year, that'll be a decent retirement ... plus we'll have my pension and our Social Security checks and a small passive income stream, all of which will bring us up to more than we're making now while working.
- Ideally we'd never touch the principle, and likely we won't while both of us are still living. My husband is older than I am, and I am in better health; the likelihood is that I'll take care of him in his elderly years ... but it's possible that I'll need to dip into the principle when I reach my last years. Still, it's unlikely that we'd ever use ALL the principle.
- The children will inherit whatever's left of the principle, our house, and some additional property ... but we aren't going to scrimp in our retirement years so they can inherit more money after our deaths.

Good luck to your DH! A lot of times the decision to let people go are not based on how much they do for the company but how much they cost. The bean counters reduce people to a number that does not reflect their true worth.

Yes, that's what's at the root of the age-ism problem. You've got a guy who's been in a professional job for 25 years, and his salary is $100,000 (plus 5 weeks of vacation and other benefits). Yeah, he has experience and has proven himself reliable, but the company can let him go and bring in two new college grads for $35,000 each (with only one week of vacation and lesser benefits). Two people for $70,000 or one guy for $100,000. It stinks, but it's not personal.

Thanks! We think he'll land fine if he does get laid off. He's a nuclear engineer with 30 years of experience--he already has feelers out to do contract work. He could earn $100/hr plus benefits. On the good side, he could work 4 months out of the year. The down side is, he'd likely be away from home for 3 of those 4 months. But, we could make it work, for sure.

That said, I know we're lucky--engineers are one of the few groups where experience/age doesn't count against you so much. When DH took his current job 3 years ago, he was north of 50, and had companies fighting over him. Plus, we have a cushion if we need it. Others aren't so fortunate.

Ironic! My husband is a nuclear engineer who was laid off after 30 years of work. In his experience, age definitely counts against engineers. The engineers in this area seem to have an "expiration date", and it seems to be 50-55. He's seen it happen to the older guys, and now it's happened to him.

 

[tvguy]

I feel totally the opposite of this. We have three children and I want to leave them as much as possible. Financial security is important and who knows where this country will be in the future.

My mom left me a house, a little cash and set up her IRA so I can continue to received the same check she received for 20 years. The house was worth 5 times what the cash left behind was, and the IRA check is nice, it pays for my Long Term Care insurance.
DW and I don't know how long we are going to live, so there likely WILL be cash left but the HOUSE is the biggest asset we will likely be leaving our kids. Not sure though, because there could be unexpected large expenses in our retirement that eat up cash, and on the flip side, our Social Security will darn close to our take home pay, and I anticipate lower living costs in retirement with no commute and work costs, so we may not touch our IRAs and 401K'S. We plan to retire 3 years before full social security age, and not touch our SS until full retirement age, and live off regular savings until then.

 

[QueenIsabella]

I'm somewhere in between:

- We have paid for 100% of their college educations and sent them out into the world with no debt, a good car, and a good work wardrobe. We helped our oldest a bit as she transitioned into her first apartment, and we will do the same for our youngest child. Our oldest is doing great; she's on a path to be debt-free (even her mortgage!) by age 27. Our youngest is still in school, and the choices she's making are different; her goal is to buy a few rental houses to serve as passive income. Essentially we've chosen to help them on the "front end" instead of the "back end".
- We intend to help our (future) grandchildren with their college costs too, our thought being that a degree (earned in their youth and available for their whole lives is superior to an inheritance received in middle age).
- We have money saved, and we plan to use the 4% plan; that is, spend the interest - never touch the principle. If we earn 4% every year, that'll be a decent retirement ... plus we'll have my pension and our Social Security checks and a small passive income stream, all of which will bring us up to more than we're making now while working.
- Ideally we'd never touch the principle, and likely we won't while both of us are still living. My husband is older than I am, and I am in better health; the likelihood is that I'll take care of him in his elderly years ... but it's possible that I'll need to dip into the principle when I reach my last years. Still, it's unlikely that we'd ever use ALL the principle.
- The children will inherit whatever's left of the principle, our house, and some additional property ... but we aren't going to scrimp in our retirement years so they can inherit more money after our deaths.

Yes, that's what's at the root of the age-ism problem. You've got a guy who's been in a professional job for 25 years, and his salary is $100,000 (plus 5 weeks of vacation and other benefits). Yeah, he has experience and has proven himself reliable, but the company can let him go and bring in two new college grads for $35,000 each (with only one week of vacation and lesser benefits). Two people for $70,000 or one guy for $100,000. It stinks, but it's not personal.

Ironic! My husband is a nuclear engineer who was laid off after 30 years of work. In his experience, age definitely counts against engineers. The engineers in this area seem to have an "expiration date", and it seems to be 50-55. He's seen it happen to the older guys, and now it's happened to him.

One quote that really stuck with me is, "You can give with a warm hand, or give with a cold hand." I'd prefer to give with a warm hand--share family experiences and help our kids out, while we're alive. By "helping out", I mean mostly paying for their college education--not providing ongoing support, which I think cripples, rather than helps. Our retirement plans include having money earmarked for a "million dollar disease", i.e., expensive medical/long-term care down the road. If we need this, fine--if not, the kids can inherit it. We also hope to start UTMA accounts for future grandchildren.

Interesting that your husband found that age counted against him. My DH got his current job when he was 53. I know he specifically DIDN'T list his graduation year on his resume (maybe his MSME year? That was 13 years later...). When he was job-hunting in 2014/15, the biggest issue wasn't finding a job, it was finding an area that could support our kids' specific needs. If he does get laid off and goes the contract route, we won't have to move--there are a number of plants near enough that he could work outages and come home now and then.

On a different note, Mrs. Pete--do you have a Moustache? I noticed someone there with the same user name. I'm more of a Boglehead myself, but enjoy reading both sites.