Retirement Income - Making it Last

[LuxLiving]

Making your income last a lifetime - nice report from Fidelity to help us understand the issues at stake.

Link

What is scary about this report is the part where the person is making about 75,000.00 a year in income and then collects ss of about 15,800 a year. Someone is in for a big shock if they think they can easily adjust to that big of a gap w/o a LOT of personal investments on the side!!

America needs to wake up.

My husband talks with those he works with and he says that about 95% of them have no retirement plans in place and withdrew ALL of their 401-K money when their plant shut down and they were laid off, before it was bought out by another company out of bancruptcy! They spent it to live on. In other words they zeroed out and cancelled their future contributions and are NOW doing nothing to replace it even if they could make up for their time out of the market.

I fear we are in for a big systemic economic shocker when this age group begins to hit retirement. The gaps in the haves and have nots is going to erupt into a mighty chasm!

PLEASE start socking it back America!!

[Ima saver]

Good point, Lux! That is what we are trying to do. We have never had a 401 or retirement plan offered at any job we have ever had.
Ira's have been around for about 30 years, but until recently, you could only put in $2000 a year and nothing if you did not work.
I have not worked for about 10 years, so I only have about $85,000 in my IRA and my husband has less. Not much money to retire on.
I will draw $6000 a year in social security. I am hoping to save enough money to be able to live on it. I am saving every penny I can.

[greedy4chips]

Clickable link for the PDF Article

Lux,

Unfortunately you are right about not enough people are doing enough saving. My previous company would tell you if it wasn't for 2-3 of us who were basically pounding the information into coworkers heads that they needed to start their 401k immediately, they would be sorry in the end. I think every single employee (32 at our location) is contributing to their 401k.

For me SS is a bonus and if I happen to collect it then great, but I think anyone my age or younger could be in for a big suprise if they are counting on it!

[Elgin526]

My DH just found out his union pension is projected to run out of funds just about the same time we'd be retireing! I've been saving in my 401k for 7 years so we do have retirement savings already, but now we'll have to start an IRA for DH, too. We're young, though, so we've got time on our side (I'm 30 and DH is 34). If we max out my 401k contributions at work and max out an IRA for DH, we should be just fine. But some of DH's co-workers are in their 50's and were counting solely on that pension, I don't know what they'll do! They'll have to work very hard to play catch up at this point in their lives.

[PRICEPLUS]

I save every penny I can. SS may not be there and you can't depend on anyone but yourself to best look out for your money! Pension plans are failing every day and a great many are underfunded while the government allows others to walk away from pension plans!

[tinapbeana]

pension? what's a pension? *smirk*

SS? no offense to the boomers here, but after ya'll get done w/ SS i won't have a snowball's chance of getting a dime (it's a sheer numbers thing, not a 'boomers are greedy' thing).

worst case strategy for my retirement is to have a house & car that are paid for and a garden that is productive, so my cash *needs* will only be for utilities and consumables, plus enough to stash to maintain the car as needed. as a worst case, this still sounds like a pretty good life as long as the public library is still around!

best case: all of the above plus fun stuff like travel.

[Ima saver]

No offense taken. I have never counted on social security, but it is almost impossible to live on $6000 a year. I will take every penny that I get from social security and save it in my mutual fund so it can grow.

[Squantum]

Nonworking spouses have been able to contribute to IRAs for decades. My parents have been doing that for my mom since the IRA first came out.

[Ima saver]

You are right, they can. I did not think you always could. If you can, I did miss out on some years. I think we should all be prepared to support ourselves in our older years.

[JBinKC]

My first day of full scale retirement will be next week and I am 43. Actually, I am not that concerned about it running out. I currently set up a living arrangement on a rural lakefront setting where $10000 per annum should be plenty sufficient for me to live off of.

[disneysteve]

Originally Posted by JBinKC

My first day of full scale retirement will be next week and I am 43. Actually, I am not that concerned about it running out. I currently set up a living arrangement on a rural lakefront setting where $10000 per annum should be plenty sufficient for me to live off of.

Wow! Retired at 43. That's great. If we could live on 10K/year, I could retire now too (I'm 42), but there's no way we could make it on that little.

[JBinKC]

I just had it at work and sick of the greedy bastards running the company where I work and how many other ways they can devise to make you work more and what benefit they can hack away while they make 8 figures per year in compensation.


I probably won't fully retire I still will be active in real estate like acquiring tax liens.

First of all it is just me, no debt and live in a self sufficient setting. 10K will go a long way. Fortunately property taxes are a whopping $250 a year down at my Lake of the Ozarks lakefront home. So life is manageable.



And its not like I will be doing anything I plan on seasteading in a cruising sailboat on the Lake of the Ozarks for a few months during the summer.

[disneysteve]

Originally Posted by JBinKC

First of all it is just me, no debt and live in a self sufficient setting. 10K will go a long way. Fortunately property taxes are a whopping $250 a year down at my Lake of the Ozarks lakefront home. So life is manageable.

10K would barely cover my property taxes and auto insurance. I guess I have to keep plugging along for another 20 years.

[LuxLiving]

JBinKC, you're going to be living my retirement dream! ENJOY it for me some will ya??

[ren]

Another problem -- some who save don't save agressively enough.

For example, most people in my company are participating in the 401k program because we auto-enroll. However, that auto-enrollment goes into a 1% a year fund. So people tend to feel real secure, because 10% of their annual salary is being saved (6% deduction, 4% match), but there won't be anywhere near enough growth.

Put it this way -- if 1% is good enough to keep up with inflation and I've been driving for 11 years with gas having run about $1.10/gal when I started driving, well, I just want to know where my $1.23/gal gas is now? Because I could really go for that.

I'm not saying people should be buying ultra-high-risk penny stocks, but people are living longer and longer. That takes a lot of money; a lot more than 1% annual growth will get you.

And now I shall step down from my soap box. Sorry about that, I just worry that some folks have a false sense of security and are going to be caught flat-footed on down the road.

[disneysteve]

Originally Posted by ren

For example, most people in my company are participating in the 401k program because we auto-enroll. However, that auto-enrollment goes into a 1% a year fund.

That's a disgrace! Your company should be chastized for even having a 1% fund in today's rate environment. Even if you don't personally invest in that fund, I think you should contact the plan administrator and complain about that. There's no excuse for not paying a bare minimum of 4%, and as we all know, 5% and more is readily available.

[Ima saver]

JBinkc, I am jealous. where is Lake of the Ozarks and how can you live there so cheaply?If I could live on $10,000 I could retire (dh) too.

[ren]

Originally Posted by disneysteve

That's a disgrace! Your company should be chastized for even having a 1% fund in today's rate environment. Even if you don't personally invest in that fund, I think you should contact the plan administrator and complain about that. There's no excuse for not paying a bare minimum of 4%, and as we all know, 5% and more is readily available.

I actually have asked our HR manager why it's set up that way and she told me that our company doesn't want to be held liable for putting people into the market if the market goes down. It really does annoy me, since we have the option of those really nifty targeted retirement funds and it wouldn't be hard to set up putting someone into the appropriate fund for their age group (i.e. put a 55-year-old into the 2015 fund, put a 25-year-old into the 2045 fund, etc.), but she said the company has no intention of changing the policy.

For the record, I did just check the administrator's site and it's guaranteed at least 1%, but is on target for a 3% return for this year. So it's not atually as bad as I made it sound, but it's still not enough growth to keep up with inflation. Hell, it's not enough to keep up with my savings account.

[Ima saver]

No it's not. I can get 5.25 % at my local bank.

[creditcardfree]

Originally Posted by Ima saver

JBinkc, I am jealous. where is Lake of the Ozarks and how can you live there so cheaply?If I could live on $10,000 I could retire (dh) too.

Ima, it is in Missouri. Very large lake community, also a bit touristy in some areas. Not from there, so I don't know the particulars on the taxes, ect. I'd also love to live somewhere for $10,000 a year.