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how much money *really* needed in retirement?

Last post Mon, Aug 26 2013 7:41 AM by haverwench. 25 replies.
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  • Thu, Jan 17 2013 9:44 AM

    • MamaJ
    • Top 100 Contributor
    • Joined on Thu, Nov 5 2009
    • Posts 963

    how much money *really* needed in retirement?

    For those of you who are there -- or for those of you who are planning to get there -- what do you think of the "experts" who say you need $1 million to retire? Or that you need to replace 100% of your salary at retirement? I figure I'm frugal now, I'll still be frugal when I retire -- I'm not going to suddenly develop an appetite for caviar and start driving a Cadillac. 

    If I'm currently saving 20% of my income for retirement, I'm obviously able to live on 80% of my income. I understand that some costs, mainly medical costs, will rise, but I'm sure that other costs will decline. (Will only need one car, won't have the expenses of a child living at home.)

    So for those who are retired -- what costs have you seen increase? Do you feel like you've saved enough? What would you do over?

    (If it helps anyone give me advice, I'm 38 years old, married, my son is currently 12 years old. All in good health. Tentatively planning to retire at age 55 and not opposed to doing some "fun" hobby-related part-time work when retired.)

     

  • Thu, Jan 17 2013 10:40 AM In reply to

    • rolo
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      Female
    • Joined on Wed, Apr 4 2007
    • Michigan
    • Posts 1,932

    Re: how much money *really* needed in retirement?

     Retiring at 55?   Will you have medical coverage and a pension?  Can you draw Social Security then?  Just wondering. 

    The biggest budget buster, b far, for retirees, is out of pocket medical, dental, vision and in-home care and long term care.  

    Are you planning on purchasing LTC insurance? Long term care insurance? 

    We will retire in 2022--husbandd will be 70--he needs to work that long at this newer position in order to receive our retiree health benefits.  Our plan is to be 100% debt free by then, including the mortgage.

    Retirees that I know are struggling...but they are still in debt, and aren't frugal by nature.  

    Lorrie

    "People take different roads seeking fulfillment and happiness. Just because they're not on your road doesn't mean they've gotten lost." ~~ Dalai Lama XIV -

  • Thu, Jan 17 2013 10:53 AM In reply to

    • MamaJ
    • Top 100 Contributor
    • Joined on Thu, Nov 5 2009
    • Posts 963

    Re: how much money *really* needed in retirement?

    rolo:

     Retiring at 55?   Will you have medical coverage and a pension?  Can you draw Social Security then?  Just wondering. 

    The biggest budget buster, b far, for retirees, is out of pocket medical, dental, vision and in-home care and long term care.  

    Are you planning on purchasing LTC insurance? Long term care insurance? 

    We will retire in 2022--husbandd will be 70--he needs to work that long at this newer position in order to receive our retiree health benefits.  Our plan is to be 100% debt free by then, including the mortgage.

    Retirees that I know are struggling...but they are still in debt, and aren't frugal by nature.  

     

    Thanks for weighing in, rolo.

    We wouldn't have medical coverage at retirement, so would need to fund that ourselves until we reach Medicare age, so I'm very interested in what my state's health care exchanges will be offering. Obviously this is still 17 years away so things may change drastically by then, both politically and with my family's health, that would change our decision to fund our own health insurance and possibly end up with us working longer. We plan to purchase long-term care insurance when we reach 60 years old.

    Currently the youngest age to begin collecting social security is 62. Our planning has taken that seven-year gap into consideration.

     

     

  • Thu, Jan 17 2013 1:16 PM In reply to

    • Walt34
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    • Joined on Mon, Dec 17 2007
    • WV eastern panhandle
    • Posts 1,406

    Re: how much money *really* needed in retirement?

    Two biggies are health care and LTC. I'm retired from a public service position and have a defined benefit pension with COLA's and medical coverage. But they stopped offering that plan in the early 1980's, and many other states, counties, cities have also or soon will. Alas, I did not have the foresight to buy LTC insurance when it was affordable and it is out of reach now if I could get it at all.

    Part of the reason I have a job now is the discovery that the old saw about needing 70 to 80 per cent of your income after retirement was at least in my case completely false. I needed, well, wanted, 130% so I got off my butt and earned it, saving the rest.

    LTC is another issue recently brought to the forefront of awareness after the recent experience with DW's father. Health issues brought him from independent living in his house last year to needing nursing home care now. He's by himself now, his wife passed 14 years ago and most if not all of his financial resources will be consumed by medical care, and that's fine, since he's by himself. If he still had a wife she would essentially be destitute.

    Officially Recognized Stretchpert in Money Management
  • Fri, Jan 18 2013 7:40 PM In reply to

    Re: how much money *really* needed in retirement?

    My mom lives in a elderly apartment complex. Her costs monthly are: Rent- $750, Medicare costs- $200, pharmacy plan- $400, supplemental health insurance- $250, gas- $30, food- $150, utilities- $50, car insurance- $100, dining/clothing/laundry- $100 ....TOTAL= $2030 Now, if her car breaks down or she wants to spend more, that would be additional.....

    Mom gets social security and a pension.She is on Medicare. She has many medical issues but her pharmacy plan is expensive so she picks up her meds without further costs. Her hospitalizations/surgeries were paid 100% by Medicare. Overall, she is in good financial health and her medical issues are managaeable compared to her age (82).

    I'm not sure what retirement will cost me 25 years from now but I bet I won't be able to stop working.Right now is a huge burden for us with our situation.. 

    I work with Europeans and one gal said,"You know, when you work in America, you have to work until you die!" Maybe so, but  that's why we have"extended families" and parents living with their children.

     

     

  • Fri, Jan 18 2013 8:00 PM In reply to

    • ocd dad
    • Top 500 Contributor
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    • Joined on Mon, Dec 24 2012
    • south carolina
    • Posts 125

    Re: how much money *really* needed in retirement?

    you wont be the average retiring at fifty five so you cant plan the average...... you'll be in retirement longer thus more susceptible to the unexpected which is everything from health, auto, home, and...........government.

    the easy part will be to figure out how much you'll need to sustain yourself and your chosen lifestyle. dont forget to add 6-8% annually for cost of living increases.

    the part that will take some serious thought is how you plan to manage healthcare and long term care.....as stated above.....

    whatever you do - please try to be debt free - mortgage free - and max retirement contributions until then.

    i would not be comfortable with that amount........you may live forty years past retirement........thats a long time for things to happen.......

    work at home unmarried dad

    emphasis on -- dad......the rest isnt important
  • Fri, Jan 18 2013 8:11 PM In reply to

    • ocd dad
    • Top 500 Contributor
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    • Joined on Mon, Dec 24 2012
    • south carolina
    • Posts 125

    Re: how much money *really* needed in retirement?

    i was going to edit my last post but i ended up here with a new one -

    donald trump - who is not necessarily favored by many people - said one thing that has stuck with me my entire adult life......

    "consider the down side, the up side will always take care of itself"

    so you have to consider the worse case situation always......be more than prepared for something to go wrong - it isnt being pessimistic, its being prepared......and still you probably wont be prepared for everything or as much as you'd like........but consider the down side of everything you plan for.........the up side will take care of itself......

    work at home unmarried dad

    emphasis on -- dad......the rest isnt important
  • Fri, Jan 18 2013 8:21 PM In reply to

    Re: how much money *really* needed in retirement?

     Me retired since I 37 or at 38 forced retired me save up Im only allowed 2000.00 dollars and then that has to be spent in 90 days so me have a retirement no mine has been long gone on medical stuff.

    Cindy ---
  • Sat, Jan 19 2013 5:18 PM In reply to

    Re: how much money *really* needed in retirement?

    MamaJ:

     Currently the youngest age to begin collecting social security is 62. Our planning has taken that seven-year gap into consideration.

    You might want to extend that a bit. With all the wrangling in DC, I wouldn't be surprised if retirement ages are pushed back at some point. As you said, things could change drastically in your time frame ... certainly makes it hard to plan.

    www.dodgeandweave.blogspot.com
  • Sat, Jan 19 2013 6:42 PM In reply to

    • MamaJ
    • Top 100 Contributor
    • Joined on Thu, Nov 5 2009
    • Posts 963

    Re: how much money *really* needed in retirement?

    ocd dad:
    i was going to edit my last post but i ended up here with a new one -

    donald trump - who is not necessarily favored by many people - said one thing that has stuck with me my entire adult life......

    "consider the down side, the up side will always take care of itself"

    so you have to consider the worse case situation always......be more than prepared for something to go wrong - it isnt being pessimistic, its being prepared......and still you probably wont be prepared for everything or as much as you'd like........but consider the down side of everything you plan for.........the up side will take care of itself......

    ocd dad, thanks for your posts. I'm not a Donald Trump fan but that's a great philosophy. We're debt free, have paid the mortgage. Maxing out Roth IRAs and getting the full match on 401(k). I don't think either of us will be broken-hearted if we end up working past 55. 

    LwolfT -- you make a good point as well. Some of the numbers we've run completely disregard social security. (I guess that goes back to considering the downside!)

     

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