Saving Enough for Retirement??

[Rustic Eagle]

There are all sorts of retirement calculators, graphs, and charts out there telling us how much money we need to have when one retires, but the following formula I hadn't seen before:

"What You Should Save By 35, 45, and 55 To Be On Target"

Here are the guideposts:

•At age 35, you should have saved an amount equal to your annual salary.
•At age 45, you should have saved three times your annual salary.
•At 55, you should have five times your salary.
•When you retire at age 67, you should have eight times your annual pay.

I assume that the annual salary used at each age guide post is based on the salary at that time.

Link to article: http://moneyland.time.com/2012/09/21...get/?hpt=hp_t3

I keep searching for a retirement calculator that match's my savings..., haven't been to successful yet

Bob

[Crabman]

With the low yields on many investments today I`m not sure that would be nearly enough either, if you lived a long life.

[tinlizzie23]

To have accomplished that by now, nearing retirement, I would have never been able to pursue hobbies, own a camper, or even own a home. I figured a long time ago that the Government would be broke by the time I retired, so I'd better take care of my own retirement, by working as long as possible, and then selling off most of the goodies acquired over the years, and eventually letting the kids take care of me, just like the old days when families took care of their own. The 5er will probably be the last major item to go, as we can live in it after the house is gone. So we will be campers to the end !

[clubhouse]

I'm with Crabman, these numbers seem awfully low to me.

As a Gen X'er it has been clear to me and my generation that the days on defined benefit pensions are gone and that they baby boomers simply didn't have enough kids to support the system as it stands today's. I have been agressively saving for not only retirement, but the 3 kids I need to raise and get through college. It is a very daunting task and I never stop working on it.

[mcfarmall]

The only thing you will have for retirement is what you put away, and that will never be enough. I prefer to enjoy a portion of my earnings while I'm "young" and still able to get around. Seems like every year I'm worse off than the year before and I have no hope that our country will be restored to it's former glory. If things go like they are heading, in four more years we will be a solidly Socialist nation and I won't be able to travel freely, camp recreationally or retire. Enjoy today because you won't be able to enjoy tomorrow as much!!

[hausknwa]

Maybe I have my head buried in the sand, but I find that we can live on whatever we have. There have been times when we made large incomes and times when we were looking for next week’s grocery money. My philosophy is that I will be determined to be happy and enjoy life reguardless of my financial condition. We saved when we could and now we are retired we are spending it. I guess what I am trying to say is I could never fit those “What you need to retire formulas.” We had to retire before we planned due to DW health, didn’t have the funds we thought we needed, but you know it really does not matter life is good. It is a nice cool Fall morning, firewood is cut for the year, Florida is only 2 months away, & I am going for a walk.

[Rustic Eagle]

I guess like any retirement formula, it all depends on one's needs/expectations while in retirement. The "experts" say one should figure retiring on 80% of their annual working income in order to maintain the same life style.., so I would assume if one could live on 50% to 60% of their prior working income retirement may be doable based on some of these formulas.

The biggest unknown for many is medical costs while in retirement, and it's darn difficult for someone that is 35 or 45 years old to project what those costs may be!

I'm a firm believer that to make the best of any retirement nest egg, going into retirement "debt free" is a must.

Bob

[hausknwa]

Originally Posted by Rustic Eagle

I guess like any retirement formula, it all depends on one's needs/expectations while in retirement. The "experts" say one should figure retiring on 80% of their annual working income in order to maintain the same life style.., so I would assume if one could live on 50% to 60% of their prior working income retirement may be doable based on some of these formulas.

The biggest unknown for many is medical costs while in retirement, and it's darn difficult for someone that is 35 or 45 years old to project what those costs may be!

I'm a firm believer that to make the best of any retirement nest egg, going into retirement "debt free" is a must.

Bob

X2 From my own situation and watching friends, I would agree that being debt free is an absolute must.

[clubhouse]

X3 on debt free

But I struggle to understand how one lives 80% of pre-retirement income. Maybe some of you retired folks can help me understand why this is. I would assume cost during retirement to increase. I am thinking retirement brings higher medical expenses, more opportunity to travel, and when not traveling more timespent at home increasing utility bills. Where is the cost reduction coming from?

[Seann45]

Most peoples retirement plans involve buying Mega lotto tickets... I'm changing my name to Clyde and looking for a GF named Bonnie.... ROTFLOL

[Rustic Eagle]

Originally Posted by clubhouse

snip.......But I struggle to understand how one lives 80% of pre-retirement income. Maybe some of you retired folks can help me understand why this is......snip

Good question, and probably a wide range of good answers out there.

In my case I always lived below my modest means prior to retirement, and went into retirement debt free. I have found that while in retirement I focus on the necessities, and not as impulsive spending on other things (up-dating home/furniture, trips, entertainment, etc.) as I did when I was in the work force. I do travel more in retirement with my travel trailer which is less expensive than other forms of travel. This approach allows me to live below the target 80%, thus maintaining a "little" financial cushion for the unknowns that our wonderful economy keeps throwing my way.

Also, some of the financial advisers I've spoken to over the years assumed that many folks have lowered their cost of living expenses prior to retirement (empty nest, peak income, etc.), and were debt free at least 5 years prior to departing the work force.

In reality I believe that if one truly expects (or requires) to retire at 80% of their pre-retirement income, don't rule out a part time job once in a while during retirement to help soften the impact on one's nest egg.

Bob

[Terry]

Originally Posted by clubhouse

X3 on debt free

But I struggle to understand how one lives 80% of pre-retirement income. Maybe some of you retired folks can help me understand why this is. I would assume cost during retirement to increase. I am thinking retirement brings higher medical expenses, more opportunity to travel, and when not traveling more timespent at home increasing utility bills. Where is the cost reduction coming from?

Well I see it being a little cheaper in retirement, but you have to really think it out. If you plan to have your house paid off when you retire, will not have as much gas, will not go out for lunch as much....then yeah 80% prob works.

It is very important IMHO to understand your monthly expenses, not just your income. It also depends on what kind or retirement - roth, 401k, Ira, etc so you can plan taxes accordingly. Is that complicated enough? Lol

And for those of you that are concerned about this county and it's path - 2 things....#1 remember that no matter who is running the govt - we are still the greatest nation in the world....#2 Rely on yourself and not the govt....the self reliance of Americans has made us a great and prosperous country.

[tinlizzie23]

Something that was recently explained to me by someone I trust - No matter which politician tells you he will "balance the budget", he/she is either ignorant of the facts, or not telling the truth. Balancing the Federal budget is impossible under the current system, period. The reason ? The current total federal expenditures for just the so-called entitlements (Social Sec, Medicare, Railroad Retirement, etc.) are approx 1.3 TRILLION dollars per year more than the total federal revenues. These costs are fixed, and cannot be changed unless Congress acts. So - translated, that means that even if Congress were to totally eliminate all discretionary spending, and effectively shut down the Federal Govt, we would still have to borrow 1.3 trillion dollars from somewhere, just to pay our fixed obligations. There is no way on earth to balance the budget under those conditions.

Said all that to say this: At some point in the future, other countries may stop buying our debt when they figure out that we can never repay them under current conditions. If and when that happens, Congress will be forced to make enough cuts to balance the income with the outgo, as there will be no more money to borrow. At that point, the only place to make cuts will be the entitlements, and it will be very painful to all of us.

Bottom line - everyone needs to provide for their own retirement, leave the government out of it, especially paper money and other paper assets. JMHO

[cekkk]

I looked at formulas for years before retiring at 56. I don't think anything I ever saw can be said to be more than a very general guideline. There are just too many variables. Your situation is one of them.

First of all, this 80% of pre-retirement income might be the weakest guide I've found. If you earned quite a bit in the '80s and '90s, and had high expenses for cars and boats and private grade and high schools for children, not to mention college, but were careful to pay yourself first, maxing on the IRAs or whatever ws available to you, today your major expenses might be things as simple as fuel, groceries, clothes and entertainment. Or an RV Consequently, you could likely get by quite nicely on about 30% of what you brought in decades ago, say a couple SS checks and a retirement check or partial income from savings or a bit more for major purchases. A new TV probably!

But things change. if rates stay low, yields from bonds and bond funds, already decreasing, may reduce your options.

For our case, past experience convinces me that we will continue to age! We had excellent medical and prescription coverage for less than $200 thanks to the state we lived in, and even now, with Medicare, our monthly outlay is still under 400. Of course, if the Affordable Care Act stays in tact, that number will soon double. But little matter. I figure if we can stay healthy for another ten years or so, we'll be approaching my 94-year-old father's situation. He and his wife, 90, can't even spend my inheritance! Taxes aside, I doubt if they spend a thousand a month.

On the other hand, had I been divorced, making 40 or 50k or so and paying child support in my middle working years, I'd probably have a heck of a time getting by on 80%, unless I had a golden federl government or California retirement check!

No doubt little of this applies to someone younger than, say, 55, particularly if November's election, well...

[clutch]

X4 on the debt free comment. We retired at 59 and are living better than when we worked. A lot of people fear the unknown and hesitate to take the step.

[dougfir1]

There is a lot of wisdom on this website. I can only speak for ourselves but we were able to retire on social security and a modest defined benefit pension and make 67% of what I made working and that includes tithing to our church. We arranged to be totally debt-free and critically looked at our income and outgo and have for the most part lived within our income which includes a part time job I thoroughly enjoy. We live in Central Washington with large amounts of National Forests with in short drives so we can camp anytime. We have a Golden Age pass that lets us camp in USFS and NPS campgrounds at 1/2 price. Jayco Trailer camping is like the best fun ever and is so affordable.

We try to use our nest egg only for well thought out purchases such as replacing recently our 22 year old camping trailer with a 2011 Jayco Jayflight G-2 23 FB. We look for small pleasures...a beautiful sunrise or sunset is surprisingly affordable.

[Rustic Eagle]

Originally Posted by dougfir1

snip.......We have a Golden Age pass that lets us camp in USFS and NPS campgrounds at 1/2 price....snip

Received my Golden Age Pass recently on the day I turned 62, and used it the following day! Every senior discount helps, even the senior discount on coffee at McDonald's!

Senior discounts: http://message.snopes.com/showthread.php?t=80899

Bob

[owenssailor]

Originally Posted by Rustic Eagle

Received my Golden Age Pass recently on the day I turned 62, and used it the following day! Every senior discount helps, even the senior discount on coffee at McDonald's!

Senior discounts: http://message.snopes.com/showthread.php?t=80899

Bob

Medical coverage is a recurring theme in this thread. I can tell you that I am very glad to live in Canada where there is a Universal Health Care program. Everyone is covered with no exclusions regardless of income. Everyone from Billionaires to retired folk to working families to people with disabilites. In my mind that is the fair way to treat everyone. It sure is a relief in retirement.

[cekkk]

Originally Posted by Rustic Eagle

Received my Golden Age Pass recently on the day I turned 62, and used it the following day! Every senior discount helps, even the senior discount on coffee at McDonald's! Bob

I've got that list stored in My Documents and have added a couple minor things. Wendy's also will give seniors a sample shake, size varies. And our local AutoZone gives me a discount on most things, not oil, when I ask.

After running across that list a while back I started asking for a discount in lots of places and often get one. That's how I learned about AutoZone.

But I got turned down at Sonic Drive In, plus they charge half price for drink refills. I still like their food though.

[Crabman]

It appears full retirement for many of the self employed such as myself will be difficult, mainly because of the huge health insurance costs. My premiums this year alone increased 17%, with no increase in profits or wages. My DW works for the county and her premiums were dramatically increased, with benefits reduced with no increase in salary. Not sustainable. The health insurance costs only get more unbearable the closer you get to retirement age, until medicare kicks in at 65 (US). That figure will most likely be raised in the future to 67 0r 70 due to the previously mentioned budget issues. So even being debt free with a $1500 a month health premium, or more even much more, would make retiring more difficult to prepare for,or accomplish. But I hope to at least partially retire (semi retire?) someday.