Saving too much?

[Ima saver]

You are right disneysteve. I am so glad that I had to start working at age 12 and that nothing was ever handed to me. When I see all the little kids walking around with cell phones, I am totally shocked. What are we telling our kids?? If I wanted something, I had to pay for it with my own money.

[mrvirgo]

Retire into Poverty?
That's the last thing I wanted to do. So at 35 I started saving as much as I could per month and got a financial planner to help with the rest. Now at 66, I haven't a financial care in the world and I'm not getting SS. Save now, relax and enjoy your retirement later. I am sure I made the right choice.

[scfr]

Originally Posted by mrvirgo

Retire into Poverty?
That's the last thing I wanted to do. So at 35 I started saving as much as I could per month and got a financial planner to help with the rest. Now at 66, I haven't a financial care in the world and I'm not getting SS. Save now, relax and enjoy your retirement later. I am sure I made the right choice.

Way to go! Thank you for sharing your experience with us. It's nice to hear from someone who is already "there."

[BCHGRL]

Honestly, I think it is about finding balance. You can't neglect a future in retirement. Those of us who are lucky will be able to retire one day, and it should be the goal of every person to do so without being a burden to someone else.

On the other hand, I know a gentleman that goes home every night and goes to bed when it gets dark so he doesn't have to use electricity. He has money, but he puts away as much as possible. He never goes on vacation, never goes out, never does anything but stay home.

I hope we all make it to retirement, but some of us may not. I knew a man who died just a few months prior to his retirement. Does that mean that we shouldn't care about retirement? No, it means that we should find a healthy balance to enjoy today and plan for tomorrow.

[Broken Arrow]

Originally Posted by BCHGRL

On the other hand, I know a gentleman that goes home every night and goes to bed when it gets dark so he doesn't have to use electricity. He has money, but he puts away as much as possible. He never goes on vacation, never goes out, never does anything but stay home.

So you're the one that's been spying on me!

Seriously though, that's pretty hard-core. I don't think I can go that far. I thought I was already pushing it by keeping my heat low.

[PRICEPLUS]

I will never believe that one can save too much. I will continue to save as much as I can and spend as little as I can. I have been without and I don't card to go there again.

[jIM_Ohio]

the article mentioned "adequate consumption". What is adequate for you or from a 3rd party financial planner may not be what I have in mind.

saving for retirement is a race. It's a race in that others (you and me included) are comparing ourselves to others. Yet we have different finish lines. We have different metrics, different philosophies and different circumstances.

Several examples above are people aged 65 living for 20 years. That is unrealistic... if a person lived until age 65, at least 33-50% of people this age will live into their 90's. Any calculator needs to account for a person living into their 90's.

Granted ages 80-95 won't have much "consumption", other than groceries and gifts... people this age would not be as active as a retiree aged 65-80.

basic retirement calculations which "estimate" needed income are skewed. If it suggests 80% of income, people will fall (IMO) into one of two categories

1) People which approach saving 20% of their income. In this case that 80% estimate is un realistic. By retirement these people will have saved "more" than they need, have trained themselves to spend less, live well within their means and probably have a house which is paid off.

2) People which barely saved anything, in which case the 80% is used to "alarm them", "shock them" and suggest "they" needed to start saving two decades ago. People can play catch up, probably come close to succeeding. If they don't succeed they will just reduce spending to what SS provides (allows?).

[disneysteve]

Originally Posted by jIM_Ohio

if a person lived until age 65, at least 33-50% of people this age will live into their 90's. Any calculator needs to account for a person living into their 90's.

Granted ages 80-95 won't have much "consumption", other than groceries and gifts... people this age would not be as active as a retiree aged 65-80.

You're right about life expectancies being longer.

As for consumption rate, it does tend to decrease with age, but not as much as it used to. I know plenty of people in their 70's and 80's who still travel regularly. Have you been on a cruise lately? Lots of older people, including folks with walkers and wheelchairs. The elderly who are able and can afford to go are going and enjoying themselves. More and more travel companies are gearing trips to this demographic since it is growing rapidly.

Also, other areas of consumption tend to increase, like medical care, prescriptions, home health aides, senior daycare programs, etc. Those things can get quite expensive and more than make up for what isn't being spent on consumer purchases.

[Scanner]

I don't know, Steve.

I see your point but let's factor in SSI too. I know, we should use that as a wild card, b/c it may not be there, and I am but I went to a retirement calculator yesterday and considering I live to 80 (a few past my average as a male), it seemed to give a more mature prediction:

$845K was needed assuming an even drawdown each year.

Maybe to boost SSI, we should be having more babies. I'll try to talk the wife into a little romp tonight. . .for patriotic reasons, I'll tell her.

I still think financial advisors have a vested interest in getting you to "oversave" to the point of hoarding. They are usually paid on the amount of assets they manage, excepting fee based CFP's.

What then happens is the average hapless sap hears, "Oh, you need 2.8 million dollars to retire" and says, "Ahhhh, forget it - what's the use?"

It's too big of leap.

I think the point is to not get trapped into a "retirement lifestyle." I can imagine liking a cruise - once in awhile but is a life of leisure really for me?

For you?

C'mon now - we're docs - we help people, we teach (that's what the word doctor means) - I can't picture myself cruising around the world having people wait on me. I can see myself immersed in community involvement, perhaps the grandkids. . .I can't see myself traveling a hell of a lot.

In fact, I plan to do it while I'm young and when I"m old, show up at your office 1x/month at 6:30 a.m. with my 14 overmedications and tell you about my bowels.

[disneysteve]

Originally Posted by Scanner

considering I live to 80 (a few past my average as a male), it seemed to give a more mature prediction:

$845K was needed assuming an even drawdown each year.

Let's say you draw 5%/year from your portfolio. That would give you $42,250 in year one, which would get adjusted annually based on inflation and investment performance. Add in SS and that might be plenty for you. But you also based that on living to 80. What happens if you live to 85 or 90 or more? My oldest patient will be 103 in August and I have several in their 90s still living at home and managing their own affairs. Your consumer spending may decrease but other needs, mainly medical, may increase.

I think the point is to not get trapped into a "retirement lifestyle." I can imagine liking a cruise - once in awhile but is a life of leisure really for me?

For you?

I can't picture myself cruising around the world having people wait on me. I can't see myself traveling a hell of a lot.

This is why there is no one size fits all solution. Yes, I can absolutely picture myself cruising around the world. I drive my wife nuts every time the Holland America brochure comes (one came last week) and I read about their Grand World Voyage - 114 day circumnavigation cruise. I think it stops in 39 ports on 6 continents. That is #1 on my retirement things to do list. It's probably about $25,000 per person now. Who knows how much it will be 20 years from now.

I certainly know retirees who are quite content to putter in the garden or participate in other sedate, relatively inexpensive activities and hobbies. I just don't plan to be one of them. Heck, my mother who was 75 last year joined us on a Caribbean cruise including a hike through the rainforest and cave tubing in Belize. That's what I want my retirement to look like.

[jIM_Ohio]

Originally Posted by disneysteve

Let's say you draw 5%/year from your portfolio. That would give you $42,250 in year one, which would get adjusted annually based on inflation and investment performance. Add in SS and that might be plenty for you. But you also based that on living to 80. What happens if you live to 85 or 90 or more? My oldest patient will be 103 in August and I have several in their 90s still living at home and managing their own affairs. Your consumer spending may decrease but other needs, mainly medical, may increase.


This is why there is no one size fits all solution. Yes, I can absolutely picture myself cruising around the world. I drive my wife nuts every time the Holland America brochure comes (one came last week) and I read about their Grand World Voyage - 114 day circumnavigation cruise. I think it stops in 39 ports on 6 continents. That is #1 on my retirement things to do list. It's probably about $25,000 per person now. Who knows how much it will be 20 years from now.

I certainly know retirees who are quite content to putter in the garden or participate in other sedate, relatively inexpensive activities and hobbies. I just don't plan to be one of them. Heck, my mother who was 75 last year joined us on a Caribbean cruise including a hike through the rainforest and cave tubing in Belize. That's what I want my retirement to look like.

Of all the calculators I have seen, anything more than a 4% initial withdraw is playing roulette.

I use 4% as my starting point, knowing that that is 95% success (according to past performance, yadda yadda). 3% initial withdraw is much more conservative for good planning.

Take current income, divide by .03. If you have that already saved, you can retire now.

[disneysteve]

Originally Posted by jIM_Ohio

Of all the calculators I have seen, anything more than a 4% initial withdraw is playing roulette.

I agree. I purposely used 5% because Scanner thinks folks are being urged to save more than necessary so I ran the numbers with a more generous withdrawal rate.

[LivingAlmostLarge]

I plan on living to 100. Unfortunately my family the woman live long, my great grandmother is 98. Grandmother is 78, my dad's mom lived to be 96, my dad is 76. I think I'm running on the higher end of living. So I'd better plan for my money to run out by 100.