Retirement in 2040

**cooliemae** · 11-25-2008, 12:26 AM

You make some good points, but being a 2040 retiree as well, I'm going to stockpile as much as I can for the future...you never know!

**snafu** · 11-25-2008, 02:52 AM

Retirement is not a one trick pony and there are several aspects to look after. I think it's imparative for retirees to be free of debt, paid up car and mortgage for example...just the monthly expenses to cover . 2nd take care of your health to avoid all those unbelievably expensive meds and the need for assisted living. 'Work to live' rather than 'live to work' with the idea that you'll travel and live big as a retiree. Too many people have their dreams crushed captured by stuff they don't need and don't enjoy.

**zetta** · 11-25-2008, 04:17 AM

and the economy will eventually begin its increase again...but is there a chance deflation will get to the point that even when inflation begins again...1 million is once again a substantial amount of money like it was back in the 80's early 90's? And maybe us twenty somethings don't need to wonder how we are going to get a million or two for retirement?

Let's seriously hope not! If the country enters a deflationary spiral that is deep enough to make $1M equivalent to 1980 dollars, the country will be in big big trouble. You might not be able to find a job, much less save for retirement. We would be having a Great Depression all over again -- massive unemployment, massive home loss, even extreme poverty. Deflation is a very scary thing -- that's why you see the government and financial institutions throwing everything they can at the economy to try and avoid it.

**RetirementPlanner** · 11-25-2008, 04:32 AM

Retirement is a process as well, you wont have good one or you won't enjoy your retirement days if your not prepared for it. So better start preparing for it early as now there are a lot of ways to do, that take the experts advice.

**jIM_Ohio** · 11-25-2008, 04:58 AM

The amount needed will depend more on expenses than on some magical $2M or $3M number. Someone might be able to retire on $1M plus SS at age 75, another $2M with less SS at 65 and me with $3M at age 55.

If market stays low for 12 months, I will have 33% more shares going up as I did going down. If anything this market moved 2040 retirement to 2035- it did not delay anything.

**Broken Arrow** · 11-25-2008, 07:34 AM

Originally posted by jIM_Ohio View Post

If market stays low for 12 months, I will have 33% more shares going up as I did going down. If anything this market moved 2040 retirement to 2035- it did not delay anything.

With enough time for a correction to settle in, this is exactly the attitude we need to take. Buy low sell high. My passive investments keep buying in as I think it should.

**Merch** · 11-25-2008, 12:50 PM

I don't think we need to worry about deflation at this moment. True month over month, the CPI fell 1%. But in what? I think it helps to break down the information further; because when you take food and energy out, the CPI fell 0.1%.

Food and bev 0.3%
Housing 0.0%
Apparel -1.0%
Trans -5.4%
Medical 0.2%
Recreation 0.1%
Education 0.2%
Other 0.3%
Food 0.3%
Energy -8.6%
Food 0.3%

The CPI is up 3.7% year over year.

As you can see from the above, if you take out transportation which include gas and cars and you take out energy, most of the others had a slight tick up.

In June when the CPI jumped 1.1% month over month, we were all concerned about run away inflation. Now, we are all concerned about deflation.

Source: Consumer Price Index Summary

**Merch** · 11-25-2008, 12:56 PM

As for market corrections, we seem to have them a lot.

2008
2000
1990
1987
1972
1968

I think I hit the big ones over the last 40 years. I just hope we don't over regulate and get stagflation like the 70's.

**responduser** · 11-26-2008, 09:15 PM

Originally posted by snafu View Post

Retirement is not a one trick pony and there are several aspects to look after. I think it's imparative for retirees to be free of debt, paid up car and mortgage for example...just the monthly expenses to cover . 2nd take care of your health to avoid all those unbelievably expensive meds and the need for assisted living. 'Work to live' rather than 'live to work' with the idea that you'll travel and live big as a retiree. Too many people have their dreams crushed captured by stuff they don't need and don't enjoy.

This is most probably everyone's dream about life after retirement. We all want to be free from all debts, mortgages and everything and live our retirement life in our style. But it won't happen automatically. proper planning is needed. And again, making plans are not so difficult. Working towards it is difficult.

**TBH** · 12-06-2008, 05:39 PM

Retirement by the seat of my pants

I'm looking at 2040 too (give or take) and I still feel like it's way too far away for me to be able to make accurate plans about what kind of nest egg I'll need. I have NO idea where I'll be living (the eastern city with cheap housing where I live now, or the western city with crazy expensive housing where I grew up, or somewhere in between). My spouse is much older than I am, but he's extremely healthy and from a long-lived family, while my health isn't so good, so he could out-live me. I have no idea what kind of work I'll be doing for the next 30 plus years if I'm able to work that long. I am experiencing an unexpected career change in the past 2 years and I'm not sure where I'll end up with that. I like change, so I hope I get to live a lot of interesting places and work a lot of interesting jobs in my life. I have so far.

BUT I also want to be prepared for retirement. So how do I do that when I don't know what I'll be retiring from or how much money I'll need?

I don't know if this is good enough, or if I should be more focused on a specific goal, but here's how I've been doing it. I save a consistent percentage of my income for retirement. (Used to be 10 percent, and I'm inching it upwards so now it's about 15 percent.) My income fluctuates a lot. But I figure as long as I'm always saving that percentage, and working to increase the percentage, I'll be okay. If I manage to live my whole life on a fluctuating income, it will average into something livable as long as I just save consistently, invest wisely, and keep my expenses low.

Does this seem like a crazy wing-it kind of approach? How can anyone know how much they'll really need? Isn't everybody just saving as much as they can and hoping it's enough?

**Goldy1** · 12-08-2008, 04:41 AM

I think the fact we are on here thinking about thsese things puts us way ahead of most people seriously.

There are so many variables. You never know when you will get laid off, or dislike a job enough to quit so your income takes a hit for a while.

My goal is to work part time as long as I can, but not sure exactly what age. Even a relatively low paying job part time can really add extra income without being too bad in terms of taking all your time.

**jIM_Ohio** · 12-08-2008, 04:58 AM

Originally posted by TBH View Post

BUT I also want to be prepared for retirement. So how do I do that when I don't know what I'll be retiring from or how much money I'll need?

I don't know if this is good enough, or if I should be more focused on a specific goal, but here's how I've been doing it. I save a consistent percentage of my income for retirement. (Used to be 10 percent, and I'm inching it upwards so now it's about 15 percent.) My income fluctuates a lot. But I figure as long as I'm always saving that percentage, and working to increase the percentage, I'll be okay. If I manage to live my whole life on a fluctuating income, it will average into something livable as long as I just save consistently, invest wisely, and keep my expenses low.

Does this seem like a crazy wing-it kind of approach? How can anyone know how much they'll really need? Isn't everybody just saving as much as they can and hoping it's enough?

This is the best you or I can do with the information we have at the moment. I have on my list of things to do to work on the flux capacitor so I can plan better, but even at 88 mph my flux capacitor is not working.

If you have income now, and want to retire later, you should ask yourself these questions (IMO):

1) Will SS replace 100% of my income?
If yes, saving is "optional"
If no, go on to #2
2) Can you set aside a specific % of your income now for retirement?
This variable is the single most important point for both retirement and financial success. An individual has control over this variable and this variable will be the single greatest factor to an individuals financial savings success.
3) Once you save the money, how much risk are you willing to take with it?
The return on the money set aside will factor into retirement timeline. However even the extreme cases (too much risk or not enough risk) might trump the best of plans. Too much risk you lose the money (like investing in lottery tickets, florida swamp land or football cards of gun holders). Too little risk (cash, CDs) you may never accumulate enough to officially retire.

The way I look at my retirement plan- I set aside 20% of gross into 401ks and Roths. Every 5 years I am savings 100% of my gross income. Every 4 years I am setting aside 100% of my expenses (If I save 20%, I am living on 80%, so 4*20=80). Because of this ratio, it becomes much easier to see when retirement is possible or probably.

If a person gets a huge raise late (which bumps up savings) that would be the variable which changes this plan the most.

Make 100k now, get a 50k raise for last 5-10 years. Did I spend all of the 50k? If so then I would either need to let the existing savings compound for another year or two, or reduce spending to pre-raise years in retirement. If savings rate was constant (20%), my savings would have gone from 20k per year to 30k per year (keeping the 20% constant). Reality is that SS took 6.2% of that raise, medicare another 1.45%, fed taxes another 28% and my savings another 20%. 55% of the raise is spoken for even before it hits bank account- spending will not increase by that much (IMO).

**TBH** · 12-08-2008, 05:56 AM

Originally posted by jIM_Ohio View Post

The way I look at my retirement plan- I set aside 20% of gross into 401ks and Roths. Every 5 years I am savings 100% of my gross income. Every 4 years I am setting aside 100% of my expenses (If I save 20%, I am living on 80%, so 4*20=80). Because of this ratio, it becomes much easier to see when retirement is possible or probably.

I've never thought of it this way. I like this perspective.

If I'm saving 15%, it takes me nearly 6 years to save one year's worth of expenses. I like your numbers better. I need to get up to 20%. I'm a big believer in using raises to bump up the percent, so my spending is never growing as fast as my income.

Thanks for validating my approach, Jim. I do worry sometimes because I don't have a clear number goal. But it just works better for me psychologically to focus on the percentage rather than an actual dollar figure that I want to have at the end. And I'm fairly happy with my asset allocation. I fit into a moderately aggressive profile in that regard, which I think is okay for my age (32 in a few weeks).

**red92s** · 12-09-2008, 05:02 AM

Originally posted by jIM_Ohio View Post

The way I look at my retirement plan- I set aside 20% of gross into 401ks and Roths. Every 5 years I am savings 100% of my gross income. Every 4 years I am setting aside 100% of my expenses (If I save 20%, I am living on 80%, so 4*20=80). Because of this ratio, it becomes much easier to see when retirement is possible or probably.

I like this mindset as well, but isn't saying that your "expenses" are whatever is left of gross pay minus retirement contributions incorrect? Wouldn't this lump other savings (EF, other long term savings goals) into expenses? Better safe than sorry I suppose . . .

Retirement in 2040