Retirement questions....What are you doing to prepare?

[Cheetahwoman7]

Hi MonkeyMama,

I have a couple of Suzi's books too. Been way too long since I read them (or did I read them? maybe just skimmed?). Time to take them out and have another looksie. I'm like you in regards to trying to look at my investments are REALLY find out how I can make them work for me.

In recent years so many things have happened in my life that make me realize I need to get EVERYTHING in my life squared away...not just the finances. Having watched my mom die in a very slow, bit by bit way over a two year period and then having to deal with all of her stuff after her death, it kind of woke me up out of my slumber through life. I'm already trying to downsize the things that I have. It's taking some time because I have to decide piece by piece. Like DisneySteve was saying about his mom, there's a lot of emotional attatchment that you have to work through, whether it's a house or "stuff" you're deciding to get rid of.

All in all, it's a long, difficult process for me. I don't have a husband or significant other to support me in all of this. I guess y'all are my cheerleaders, helping me take a step each day towards my goals. I'll get there and having the support makes all the difference.

Anyway, thanks to all,
CJ

[Ima saver]

I have planned to sell my house and use some of the money for retirement. I want a smaller house on a wooded lot with little maintenance. I bought some of my mutual funds about 18 years ago. I still have a few of them, but I am leaning towards going more into index funds! I have all my IRA's in Index funds, but no non-retirement funds are in Index's. I think i will open another Index fund and start making non retirement investments into that.

[MonkeyMama]

I just remembered when our parents decided not to move away - when they had grandchildren. The time seems to coincide - LOL. They looked forward their whole life to move back home, and decided they had lived so long without their parents, better to stay with their grandkids I guess. Just thought it was cute when I put 2 and 2 together. Though no telling where we will end up.

[disneysteve]

Originally Posted by MonkeyMama

I just remembered when our parents decided not to move away - when they had grandchildren. The time seems to coincide - LOL. They looked forward their whole life to move back home, and decided they had lived so long without their parents, better to stay with their grandkids I guess.

This is pretty common, actually. I know a few people that this happened to. Retirement plans can change, even once you are in retirement. That's why it is so important to save adequately. Money doesn't buy happiness but it most certainly buys options and opportunities.

[amberbamber]

[quote=Cheetahwoman7]

What about everyone else?

I think about retirement ALOT!

What is the minimum income amount you think you'll need monthly to retire comfortably or in the manner to which you're accustomed?

Right now I would say around $1800, but probably more like $2000-$2500

What are your specific retirement goals/plans?

I haven't thought about specifics yet. We plan to retire when my DH is 55. So 25 more years.

Do you have your money in various types of saving programs? If so, which and why those particular programs?

My DH has a 401(k) and we both have IRA's and I have a roth IRA. DH's company matches his contribution 3%. We were putting $50 a month into each IRA but stopped about 6 months ago to get our debt paid off. Probably not the smartest thing, but right now we need the debt paid off.

What are some of your concerns when it comes to retiring?

Healthcare and Social Security being around. (not that we plan on living on it)

What things will need to happen for you to get there?

Saving, saving, saving!

Will you downsize your home?

We have already. Hopefully we'll be able to UPSIZE in 5 years or so.

Move to a different location?

Not sure, we'll move wherever our kids are

[Broken Arrow]

Originally Posted by disneysteve

Money doesn't buy happiness but it most certainly buys options and opportunities.

Well said!

[Cheetahwoman7]

DisneySteve,

You said that you wanted to save between $2-3 million dollars for retirement. What type of monthly income would that give you? What would you have to be earning (percent wise) on those millions to get the type of income you want?

I'm just trying to get some perspecitve.

Thanks,
CJ

[disneysteve]

Originally Posted by Cheetahwoman7

You said that you wanted to save between $2-3 million dollars for retirement. What type of monthly income would that give you? What would you have to be earning (percent wise) on those millions to get the type of income you want?

I'm just trying to get some perspecitve.

The rule of thumb most planners use is that you should withdraw 4-5% of your nest egg in year one of retirement. Drawing more than 5% greatly increases your risk of outliving your money.

So a 4% draw on a $2.5 million dollar portfolio would be $100,000 or $8,333/month. That would roughly be 80% of our current income.

I use a 7% return when doing retirement projections.

Note that this does not include Social Security. I don't include that in my retirement planning as I don't know what benefits will be. I don't think current estimates that we get sent each year will be accurate 20 years from now. So we may need to save less to meet our goals if SS is still in decent shape, but I'm not counting on it.

[safari]

Originally Posted by disneysteve

The rule of thumb most planners use is that you should withdraw 4-5% of your nest egg in year one of retirement. Drawing more than 5% greatly increases your risk of outliving your money.

So a 4% draw on a $2.5 million dollar portfolio would be $100,000 or $8,333/month. That would roughly be 80% of our current income.

I use a 7% return when doing retirement projections.

Note that this does not include Social Security. I don't include that in my retirement planning as I don't know what benefits will be. I don't think current estimates that we get sent each year will be accurate 20 years from now. So we may need to save less to meet our goals if SS is still in decent shape, but I'm not counting on it.

As long as you're not withdrawing more than the interest that you earn, your savings will never reduce in size. In your example, you will be able to withdraw 7% every year, and your savings will remain at $2.5 mil.

[disneysteve]

Originally Posted by safari

As long as you're not withdrawing more than the interest that you earn, your savings will never reduce in size. In your example, you will be able to withdraw 7% every year, and your savings will remain at $2.5 mil.

That would be true ONLY IF the portfolio never lost value. We all know that stocks fluctuate in value. One year the portfolio could be up 10%, but the next year it might be down 5%. If I withdrew all the earnings the first year, I'd have to dip into principal the second year. Use that method and you'll run out of money.

The 4% figure factors in fluctuations in the value of the portfolio. That 4% also gets adjusted annually for inflation. So if inflation in year 1 was 3%, in year 2 I would draw 4.12%.

[Ima saver]

By the time you retire, would you keep most of your money in high paying certificates of deposit so you would be taking no risk?

[safari]

Originally Posted by Ima saver

By the time you retire, would you keep most of your money in high paying certificates of deposit so you would be taking no risk?

I'd probably keep 1/3 of my money in stocks and mutual funds and the other 2/3 in bonds and CDs. Depending on how much money I'll save by the time I retire, I may decide to invest more money in stocks and mutual funds.

[disneysteve]

Originally Posted by Ima saver

By the time you retire, would you keep most of your money in high paying certificates of deposit so you would be taking no risk?

First, putting your money in CDs does not equal "taking no risk." Instead of investment risk, you would be taking interest-rate risk, the risk that your return won't keep up with inflation.

But to answer your question, yes, by the time I retire, I'd expect to have a good chunk of my portfolio in fixed-income instruments (probably not CDs, more likely tax-free bonds). But I'd still keep 40% or so in stocks early on. Let's say I retire at 62. I'd be doing my planning based on living to 90, so I'd still have nearly 30 years to fund. You need a good exposure to stocks to do that.

[KandiB47]

I *think* I'm doing a good job saving for retirement. My husband and I are in the WRS (Wisconsin Retirement System) so our employers contribute 10% of our earnings without any match from us. We have about twenty thousand invested. We are both under 30 so I haven't put a lot of thought into the actual retirement part of it. That's a long way away. Unfortunately, because my job is changing, I'm leaving the WRS. I am starting to put $200 a month into a Roth IRA which I know isn't enough but that is all I can afford right now. My husband will stay in the WRS so that's a bonus.