How will you retire?

[jmjj215]

I am very curious to ask the forum members this question:

Obviously, if you're on this board, you think about money - probably have it as a pretty high priority. My question:

How will you retire?

How much income (in today's dollars) will you need? How will that income be generated? What are you doing now (or will soon be doing, once your financial house is in order) to reach your retirement goal? What assumptions have you made in your planning? What will you have invested in? What will you invest in while in retirement?

Hopefully this will provide some food for thought for everyone, and a great discussion.

[jmjj215]

I suppose I should start!

Income, and the assets that produce it
I would like to have a minimum retirement income of $120,000. It will be generated from stock dividends, bond interest payments, money market income, rental property (commercial and/or residential) income, and private business investments.

What I'm currently doing to make this happen
Right now I am working on finishing school so I can get my CPA, which will hopefully open doors for a career with at least semi-decent earnings potential. I am also saving brutally for a house down payment. Once I start my job (in 15 months), I will begin contributing a set percentage to the firm's 401k plan, and to Roths for me and my wife. Anything extra above the % towards those two destinations will be put toward paying off the house. Once the house is paid off I will save up a down payment and buy a new house and keep the old as rental, or buy a rental - rinse, repeat. I am also trying to educate myself about investments and business in general, so that I can start and/or participate in successful businesses, and make wise investment decisions. I do this by reading, and asking questions.

[DivaJen]

Dh and I both have 403b's established from our teaching days. In addition, we are now contributing to DH's 401k at work, and we're maxed out in terms of what his company will match. If/when DH gets raises we'll up our contributions. Edited to add we both have money sitting in STRS as well, from our teaching days.

Our home will be paid off in less than 18 years, and we plan on retiring here, so our cost of living will drop nicely at that point.

We've got college funds established for DD, and I have good earning potential once she doesn't need me at home.

We try to keep our goals in mind and educate ourselves as far as investing goes.

[rob62521]

We currently put money in Roth IRAs and I have a 403b (I'm a teacher). When my husband received money from his mom's estate, we used it to pay off our house and currently try to bank what the payment would have been into savings. When we get a decent amount, we have been putting it in cds until we get enough to invest which won't be for awhile.

[mjrube94]

I'm 34, and those retirement calculators are way to overwhelming for me...there are just too many variables for me to come up with a realistic number for 20-30 years away. So my plan is to save as much as I possibly can. Hubby and I are fortunate to both have pensions with our companies, and we both max out our 401(k)s. We are not expecting a dime from social security, so if there is anything in that fund by the time we retire, it would be gravy! Our house will be paid off in 12.5 years, and we're actively saving for our kids' college fund, so they can get good jobs and support us when they grow up! (Just kidding - well maybe not)...

[Snoopy2645]

Well right now I am paying off my house that is my goal for this year & then next year I will go back to saving. I work just pt now but I plan to go back to work FT in another year when my 2nd dd starts school. By that time I will be looking at turning 30 so I figure if I start saving again at that point I will be ok. My dh does now have 401k I hope to have that too again when I go to work FT

[Tree0164]

I am 34 and hubby is 36. He works full-time and is contributing 10% to his 401k. I have my self-employeed and try to contribute $2000 to a Roth IRA annually. I also have a decent size rollover IRA from my previous employer. DH has a rollover IRA as well. We will have our house paid off by the time hubby is 60. Hopefully he would be able to retire then, but we will see. No counting on SS here either.

[cicy33]

I do a simple IRA at work that I put in 3% and my boss matches, so I am getting 6% on that. I do believe that Social Security will be there when I retire I am 37. But it is not my plan to relax on it! and won't be there when my kids do! Otherwise I am focusing on saving where I can and paying off what I can. Like others too far away and not able to save enough to do a realistic projection yet.

[jmjj215]

Does anyone have any concrete goals on how much retirement income they would like to have (in today's dollars)?

[cicy33]

I think that I would like to see some ideas to actually achieve a goal for retirement. The amount we would need overwhelms me. Since we average around $40,000 + a year, I am thinking that we would need at least $1,000,000 when we reach 60 to help hold us till the end. That is allowing for approximately 20 years at our current rate. Is this a good goal?

[rob62521]

Although I haven't sat down and actually figured out what I will need when I retire, I estimate it will at least 25% more than what we have now. I will not receive social security because I'm a teacher, but it frightens me when I look at teachers who retired years ago and now live in poverty because they expected their pension to handle it all.

[34saving]

I guess this may be a cop out, but I've found trying to hit an actual number to be basically impossible. There's one huge mega variable I don't have a clue how to account for -- health care. I'm 31. If health care costs do anything close to what they have been doing for the last 20 years or so I think there's going to have to be major government intervention. (Socialized medicine even???) My goals are basically to save/invest as much as I can, avoid debt if at all possible and wait until I have a better idea what's going on.

[Bluezy]

I won't retire. I will contribute to a trust, 401k and personal investments, but I won't retire. Working will keep me busy, keep my mind working and provide a means of living.

My little boy will be grown by the time I am of retirement age so he will be well on his way, and will always be the beneficiary on all my policies, so there will be nothing that he will contend with in probate.

[Tree0164]

No Jesse, actual number but we are hoping (and that a strong word hope) for atleast 750k by the time we retirement.

[baselle]

Jesse -
A bit of an intimate question!??

I plan on having a net yearly income of approximately $40K, which would translate into 1M (assuming a 4% drawdown) savings, assuming a token social security check. I put in: 12% into my 403B, and my employer matches 3%, put in 120$ month to invest in DRPs, put in 500$ month in savings bonds (cash is king currently, and while stocks are fun, I like seeing something that always makes money), and put in 100 - 150$ month in ING/ general savings. These numbers and proportions will change as I reach my savings goals for each of the investment buckets or I see what I think is a good investment opportunity.

Supposedly I will get a little inheritance, but I'm not holding my breath.

Most of the calculators I put these numbers in give me a good shot at my goals, but plenty can derail me - near constant employment, 403 B fees, health, the general macro economy. I'm also assuming that I can stay full-time in the workforce until 70. I enjoy my work and its not brutally physical.

It means that I'm the proverbial ant. Gotta have a plan, guys, even if you can't predict the future. No one can ever predict the future; using that excuse is perfect rationalization - you'll never do anything! A plan means that you can change it as your situation changes.

[jmjj215]

Gotta have a plan, guys, even if you can't predict the future. No one can ever predict the future; using that excuse is perfect rationalization - you'll never do anything! A plan means that you can change it as your situation changes.

Great line.

Intimate questions? I think so. But it was worth it, b/c I think getting people to write down and publicly share their goals helps them move toward them.

There are so many factors that go into retirement that are out of our control completely, but we all need to make sure that we do control the ones that we can!

[baselle]

For those on this forum who are freaking out by the shear total amount of money that you need to retire on, here is a great article by Holly Ordway. I won't spoil the surprise, just read and see if you don't cheer up a bit.

http://www.spendingwisely.com/articles/0502/000071.html

[skipper]

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

[34saving]

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. We paid off our first house and are now renting it out. We've accelerated our payment on our second house (the one we live in), so that it will be paid off in 11 years unless we sell the first house in which case it will be paid off at the moment of sale. (Unless interest rates rise a lot in which case it might be beneficial to hang on to the low interest debt and do something else with the money.) The only debt we have is the one mortgage previously mentioned. We also save everything we can in an ING rainy day fund (usually a couple of hundred a month.) I doubt that we would completely quit working in retirement since we both make a little bit of hobby income. I could also see us buying/fixing/and renting houses if the tax advantages don't change and the real estate market is such that the plan is feasable. Excluding health care, we should be able to retire at 45ish, but add on another $1000 a month in health care/heath insurance expenses and things will change a lot . . .having more kids would impact things too BTW, in case you're wondering . . .my husband and I are both in academia and neither of our incomes has ever hit $50,000.

[Tree0164]

The article that Baselle posted is good advice but most people do not live below their means. We are right now living at our means and saving some. Also you have to take into consideration that there is inflation as well.