How will you retire? - Page 2

jmjj215 · #21 (**permalink**) 06-27-2005, 07:49 AM

Quote:

Iam 35 hubby 39 our we own 3 houses two we rent we do not have a huge retirement account hubby is self employed Iam a stay at home mom we have just paid off all bills except for some adoption expenses. We have no mortages. How much should we be putting into a retirement account at this time

Skipper, great question. Do you have 3-6 months' expenses saved for a rainy day? If you do, I'd suggest at least 15% of your gross toward retirement in various investments (See 34Saving's post above for an example). So if your husband's business has a net income of X, do at least 15% of that. Don't do 15% AFTER he has to pay that brutal 15% toward SS and Med.

34saving · #22 (**permalink**) 06-27-2005, 08:39 AM

Just saw this on Yahoo and thought it made sense. Basically, you spend less after you retire in every area BUT healthcare. So, you might not need as much as you think . . .

http://biz.yahoo.com/ap/050626/manag...etirement.html

baselle · #23 (**permalink**) 06-27-2005, 10:17 PM

34saving quote:
"Okay, so Baselle isn't buying my cop out Here's what we're doing . . . We max out my husband's 403b contributions and both of our Roths every year. (We maxed out my 403b when I was working, but now I'm home with the baby ) These contributions are mostly in the stock market (via mutual funds) but some are in fixed income assests and some are in real estate via Reits."

Wow, 34saving, you're more of an ant than I am! I'm intrigued with REITS because they have such a great dividend, got any more info?

Tree0164 · #24 (**permalink**) 06-28-2005, 05:32 AM

Thanks for sharing the article 34 savings. I would rather overestimate than underestimate.

Having my home paid off by the time we retirement is very important to me as well.

jmjj215 · #25 (**permalink**) 06-28-2005, 08:03 AM

One nice thing about retirement income that comes from rentals is that the income is indexed to inflation in a way. As long as you keep the units up and it's in a stable area. When prices go up, rent goes up, your "fixed" income goes up, and you maintain your purchasing power. That's one thing that attracts me to RE for retirement purposes.

34saving · #26 (**permalink**) 06-28-2005, 08:58 AM

Well, I think right now REITs are probably a bit overvalued, since it seems everything in real estate is, but they're also paying well . . . My Roth REIT money is in a fund called SSREX. It's a no load, no fee, low management cost, fund and it trades just like any other mutual fund. Every month they pay dividends that (in my case) purchase more shares through a DRIP. My 403b real estate money is somewhere, but I don't have that info. as convenient since the "professionals" manage those accounts.

If you're going after dividends and want to take a look at an interesting stock . . . check my blog link at the bottom of this post. On the right side is a link "Stock to watch". The 10% divy looks pretty secure at least for the next few years . . . and the stock is kind of beat up right now . . . Post a comment there if you want more info. or to tell me what you think . . .

CRFSaver · #27 (**permalink**) 06-28-2005, 12:58 PM

I currently fund my 401K at 15% of my income plus my company puts in another 9% a year. I haven't bought a house yet as I have been moving around alot the last few years. I am looking to head back west so will buy when I head that way. I am going to start a Roth in the next couple months. I haven't looked at what my income needs will be as I am single right now and only have me to support...

Fern · #28 (**permalink**) 06-30-2005, 11:05 AM

I'd like to retire from full time work in 10 years, when i'm 55. I've done those calculators, and yes, many variables, but as a very rough rule of thumb, i'd like to have at least 1 million, preferably 2 million to live ocmfortably.

jmjj215 · #29 (**permalink**) 06-30-2005, 05:01 PM

Quote:

Originally Posted by Fern

I'd like to retire from full time work in 10 years, when i'm 55. I've done those calculators, and yes, many variables, but as a very rough rule of thumb, i'd like to have at least 1 million, preferably 2 million to live ocmfortably.

Fern, what are you doing to reach your goal of retirement?

CRFSaver · #30 (**permalink**) 07-01-2005, 07:30 AM

Great Article from spending wisely. The two things in that article that really stuck out for me was 1) Work situation improving and 2) You will be less stressed out. The more money I have saved the less I worry about being fired, getting laid off or if my company gets bought. One of the nicest things in the world is being able to walk into target and not wondering, OK how much do I have in my account? What can I buy today. Big change from when I first started working and had to wonder that. Need new tires? Ok just do it. Car insurance bill comes? Pay it all at once. What a wonderful feeling.

jmjj215 · #31 (**permalink**) 07-01-2005, 07:50 AM

Good points CRF. Just being able to RELAX in that regard is huge!

retire@50 · #32 (**permalink**) 07-01-2005, 09:50 PM

I plan to retire at 50 about 4 1/2 years from now. I expect to have my house paid off by then and $600,000 in investments. I hope to live on $30,000 a year. I plan to withdrawl 5% of my assets a year in retirement. I expect to earn 7-8% each year on my investments.

I currently max out my 401K and Roth IRA every year and also add money to after tax funds as well. At the time I retire I expect to have 2 - 3 years living expenses in money market funds and short-term bond funds. 80% of my money will be in stocks with 20% in cash/bonds. I expect to change that by 5% more in cash/bonds every 10 years. If there is a bad year or two in the stock market I plan to use my cash to give my investments some time to recover.

I invest in a variety of assets that hopefully will allow my total networth to increase each year. I plan to rollover my 401K into an IRA when I retire and then make early withdrawls allowed by the IRS from my IRAs.

I have a small pension that will kick in when I am 55, enough to cover the inflation for my first 5 - 10 years and then I plan to start collecting Social Security at 62 which will provide about 30-35% of my needed income.

I came up with these numbers by figuring out what I spend now each year. It's stayed the same for several years now. I kept the mortgage in the amount figuring that would be a good fudge factor and also give my more leeway for retirement spending. Then I figured out what the taxes would be on that net amount. That was the total income I needed in a year. I knew I could probably use a 5% withdrawl rate from my assets so I took my anticipated yearly income and divided it by .05 (30,000 / .05 = $600,000). Making $600,000 and a paid off house my minimum goal before retiring.

Tree0164 · #33 (**permalink**) 07-03-2005, 04:27 AM

Retire!! Wow I am very impressed. I know a lot people would like to be in the situation that you are.

Fern · #34 (**permalink**) 07-05-2005, 07:44 AM

Quite impressed with retire@50s answer, and in answer to to jmjj's question, what am i doing to reach my goal:

Since retire@50 has been so frank in sharing their financial circumstances, it has encouraged me, in the wonderful spirit of anonymity, to do the same and invite others here to critique where I am and what else I could be doing to accelerate my meeting my objectives.

I will soon be 46 and am single. Have a house with a market value of between $400 and $425K, I'd say, and an outstanding mortgage of about $90K. My liquid savings include about $210K retirement money and about $110K in taxable savings. I plan to sell the house (getting tired of the maintenance) and buy a less expensive condo within the next 3 years or so. By doing so I'd cut my property taxes in half. Either that or marry my new boyfriend.

I fully fund my IRA every April. I contribute 5% to 401k, enough to get the company match. I pay an extra $100 each month toward mortgage. I put an extra $50 (nominal, i know) toward taxable savings with auto deduction into my mutual fund money market. Always pay credit cards in full every month and have no debt other than my mortgage.

Have a 75 year old house, so after repairs/maintenance, and all other expenses, not a lot left over.

if i do have extra $$, does anyone have advice re: putting it toward taxable savings vs. increasing the 401k contribution vs. paying off the mortage or something else?

Retire@50 sounds like he/she really has things all figured out, and i hope it does. One thing i worry about is how to continue health insurance if i do retire early. I have a chronic (lifetime, but stable) health condition that requires rather expensive medication.

Any comments/suggestions are welcome.

retire@50 · #35 (**permalink**) 07-05-2005, 08:16 AM

Health care is one of my main concerns regarding retirement also. It's the big unknown. I have researched health care costs in my area and used those figures for my anticipated retirement budget, but I also have diabetes and high-blood pressure so expect health care to be difficult to get and expensive.

What I'm really hoping for is that the government will get their act together and come up with an affordable solution to the health care issue sometime in the next 5 - 6 years.

Fern · #36 (**permalink**) 07-05-2005, 10:46 AM

I'm sorry that i don't share your optimism that the govt will do something to straigten out health insurance in the next 5 or 6 years. Hilary Clinton tried to do it and failed.

part of the problem, i think, is that health care in this coutnry is tied to employment, and i've always disliked that. Makes it hard to be self-employed. the rules protecting consumers are not the same for self-employeds as they are for those working for a company.

jmjj215 · #37 (**permalink**) 07-05-2005, 02:24 PM

Fern,
If you qualify, and are still below the limt, I'd invest in tax-advantaged ways, such as in the comp. 401(k) or a traditional IRA. Deferring tax is always more valuable than paying it now

Healthcare scares me too.

retire@50 · #38 (**permalink**) 07-05-2005, 08:54 PM

Fern,

If you have 6 months savings that are accessable in after tax investments I would invest in before tax investments otherwise invest in after tax investments until you get that 6 month cushion.

I have mixed feelings about paying off the mortgage. I want to have it paid off before I retire but my interest rate is only 4.5% right now, so I know I can do better than that by investing elsewhere. Also, if I need that money for some reason it is more accessible outside the mortgage. My current plan is to put money that I would use to pre-pay the mortgage in after tax investments and then in 5 - 6 years when I'm ready to retire use that money to pay off the house. It should grow much more than if I pre-paid now. At least that's the plan

Tree0164 · #39 (**permalink**) 07-06-2005, 04:05 AM

Fern,
It sounds like you are doing great as well.

I think for most of us health care costs are going to be the downfall of many in retirement. I don't think the government will be doing anything.

Fern · #40 (**permalink**) 07-06-2005, 08:31 AM

Yes, Theresa, I'm afraid you're right about the health care costs being the fly in the ointment of retirement. Guess that's why we should all be eating our vegetables and getting our daily exercise, cus if we have the bad luck to come down with chronic or serious helath problems, it could spell the difference between a comfortable retirement and a rough one.

Jesse, are you sure it's true that paying taxes later rather than now is always advantageous? I think if you're in a lower tax bracket now, say 28%, it's plausible that your situation could improve enough to bump you into higher bracket later in life.