Retirement Savings

[CMF]

A recent study concluded that folks should plan to replace 130% of their present income in retirement because folks are living longer and healthier . . . is anyone else considering moving to South or Central America to make their retirement money last ?

Charles

 

[Rose Pink]

No, I'm planning on being a burden to my children.

 

[riverdees05]

No, we moved to TN to be closer to our grandsons. One of my bosses was a Global Construction Manager for our company and traveled all over the world. He once told me, many a night he get in bed and thank God that he was borned and lived in the United States. Also, we are within driving distance of all of our children and grandchildren.

I agree that for us, we need more in the first few years of retirement than we made while working. This is because we take a lot of trips, etc. and enjoy the good life while we are young enough to enjoy it.

Also, moving out of the country, I would worry about about medical care, security, etc., more that I do in the USA.

 

[Passepartout]

[Inappropriate political/social comments removed. - DeniseM Moderator]

Actually, at one time I did consider relocating that direction. Not sure how seriously though. After looking at some real estate, and considering transportation expenses and medical care, other than the lower cost of employing domestic labor, I couldn't see a huge difference in cost of living. Of course we don't live in a high cost area here.

With the recent- and ongoing -reduction in the $ value of my retirement nest egg, I will be able to live as well here as anywhere- just not for as long.

Jim Ricks

 

[wilma]

[Inappropriate comments removed. - DeniseM Moderator]

Jim Ricks

Is this really necessary to the discussion?

 

[applegirl]

This is a recent issue I have become concerned with. I am only 36 but realize how behind we are in retirement savings. I've been reading lots of personal finance books lately and am realizing more and more how horrible Americans are with saving and delaying gratification. We are a hyper-consuming, debt driven society and it will come back to bite us all in the A** down the road.

I don't think depending on our children is realistic or very nice. Hopefully Rose Pink was only kidding.

EVERYONE should read books by David Bach such as "Automatic Millionaire" and "Smart Couples Finish Rich". These books have really been eye-openers.
The Smart Couples Finish Rich book is actually a great wedding present!
These books are a road map to wealth, especially when people start young.

Now that we are budgeting our money and spending more wisely, I am ashamed at how much money we use to just "waste". Ever since learning about my "latte factor", I look at evey dollar that goes out of my wallet in a different light. We also have practically stopped using credit cards (except for my husband's business which is a necessity).

WAKE UP AMERICA! You spend too much and save too little. This is not funny. It's also a terrific thread.

 

[Blondie]

Good for you- when my kids (in their late 20's) ask me what I want for Christmas this year I am telling them I want THEM to set up retirement accounts with our financial planner. Last year hubby and I did our living wills for my birthday. Call me madcap but it works!! I have a teaching pension and some other stuff but my biggest regret is I was not more aggressive and did not start sooner...

 

[silvib]

Did someone say savings??? We never really got into that as much as we should in case we were dead and buried by the time we "matured" and no kids to leave it to .. we've lived nicely as we've gone along. Still, with the big 60 looming on the horizon for me and DH has already seen it, maybe we should have put more to one side ... or maybe because we've always been self employed, some years you're up and others you're down!

 

[Kona Lovers]

Everyone should definitely plan for the future. However, if you follow some lines of thinking, timeshare ownership would not be advised at all. Like anything else, it all comes down to the individual and what works best for them.

Marty

 

[pwrshift]

I read today that 'annuities' are selling more than ever during this confusing economic situation and the insecurities of stock market investments. The insurance industry is cleaning up as a result.

Brian

 

[frenchieinme]

different retirement circumstances need to be...

Whenever retirement is discussed and assessed, one needs to kep in mind different retirement circumstances determine how retirement is to be assessed and approached. Regardless, all approaches require savings.

When one retiree has a pension and especially one indexed to inflation , the outcome tends to be significantly different to the roller-coaster type of individual retiremnts plans where the indivdual's retirement outcome rests in how the present investments will do over time .

Often times people in the latter catergory tend to not do as well as those in the former. Those with no defined pension plan/indexed to inflation annuity tend to make the news when discussions come up on retirement examples of failed retirement outcomes. Unfortunately the present generation of workers in their 30s to 50s do not have the luxury of working for employers who offer indexed retirement annuity for retirement plans.

In summary, one needs to look into which group retirees fall or will fall in order to properly assess how much $$$ will be needed upon retirement.

frenchieinme

 

[cvmar]

Health care costs are my biggest concern regarding retirement. If something isn't done to make it affordable there is no way I could save enough money to cover a major sickness. We self pay and it costs us over $800 a month and goes up every year and also has big cost increases as you age. We were hit with a huge increase when my husband turned 50. By the time we "retire" I can't even imagine what the cost will be. My biggest fear is any one of us getting sick or injured and losing everything we worked and saved for and then what would happen to us?

 

[Brett]

Health care costs are my biggest concern regarding retirement. If something isn't done to make it affordable there is no way I could save enough money to cover a major sickness. We self pay and it costs us over $800 a month and goes up every year and also has big cost increases as you age. We were hit with a huge increase when my husband turned 50. By the time we "retire" I can't even imagine what the cost will be. My biggest fear is any one of us getting sick or injured and losing everything we worked and saved for and then what would happen to us?

you're not the only one concerned with that
it's one thing to save for retirement but when health care costs go up exponentially as one ages it's a shocker, I'm healthy (now) but I hope someone comes up with a solution soon!

 

[silvib]

Being from Europe I can't express enough how much having universal health care coverage/socialized medicine gives peace of mind, especially as the years creep on. A lot of people here knock the idea because they haven't experienced it and have listened to the those that do, complain about their wait time for certain operations, but no-one should have to organize fund raisers to raise money for serious operations like I've seen here in FL or be worried what will happen if they fall sick. I know having a good health system in place comes with a cost as nothing is free but when the US has the facilities and the best professionals in the world, something needs to be done.
Before we came to live here full time, 9 years' ago, we had both our national health coverage as well as paying a separate premium for private coverage to give us speedier results with certain issues, but this was purely elective, not necessary and we paid at that that time, the equivalent of $50 each per month. At the moment, we're paying just over $800 for the 2 of us with BlueCrossBlueShield of FL with a high deductible.
Let's hope it gets sorted after November.

 

[Fern Modena]

We planned very well. In our late 20's both of us took jobs which had "defined benefit" retirements. Unlike many people we worked with, we knew "this was it" for us and we would be working there until we retired. We also had a 457 account, which is sort of like a 401K with a few exceptions. One was no matching funds, but another was the ability to start taking scheduled payments at any age. This turned out to be great for me because I retired early and was able to start collecting on my pension and my 457.

But without health care (which I pay a very reasonable premium for), I wouldn't have retired. If I had stayed in the area where I worked my health care would have been almost nil. Moving changed that; but even in our "worst year," when Jerry had close to a million dollars in medical expenses, we only paid our premium and maximum copay, about 5K. And our health care is good nationwide. Virtually every doctor in the valley accepts it too!

I'm one of those who decided to retire early. We retired on about 90% of our earnings, and it is more than enough for us. We have everything we need to go forward, and are able to satisfy our wants as well. But life's funny, you know. It seems we have less wants now than we did when we were younger.

 

[pwrshift]

Wow, Fern - a million dollars! I trust Jerry is OK now? What would someone do without health insurance in that case? I would love to move to the USA but most 'aging' Canadians feel they have to stay here for the universal healthcare benefits they've paid for in higher taxation.

Regarding pensions, in Canada most company pension plans are either 'defined benefit' or 'defined contribution'. Canada apparently has the highest pecent of population on DB plans than any other country, but it is slowly moving towards DC plans where the employee decides where to invest the pension money which means the company doesn't have to make up any shortfall as they do with a DB plan or worry about indexing.

DB plans are better for the emplloyee but they can be a huge cost load to the company .. ie. GM apparently pays more for DB retirement benefits than they do for steel, but their newer major competitors (Toyota, etc) have DC plans. Longer lifespans have put a huge financial strain on DB plans and the companies that have them.

Canada has RRSP plans, somewhat similar to the US 401K plans I think, which is a separate way to build, over time, a personal retirement plan in addition to any company plan..but I heard the other day that less than 30% use them and many who do start them way too late in life. The government's Canadian pension plan CPP - nets a fully paid retiree about $880 a month and Old Age Security another $400 or so .. certainly not enough to live on, even if they are indexed.

In the year 2030, one in four Canadians will be 65+. Trouble ahead. The news today says Canada's inflation this month was 3.1%, a jump mainly blamed on oil.

Brian

 

[caribbeansun]

Pwrshift, you might find this to be an interesting read. Basically it's the counter-argument to the financial institutions pushing RRSP's on all of us Canadians and the "you need $5 trillion to retire on safely" scare tactics of those same institutions as a way of selling more product.

It's not applicable to non-Canadians BTW.

 

[nydvc]

Rockerfella was once asked "How much was enough" and he responded "just a little bit more.

Definitely plan and save as much as you can, VERY inportant. but I am not sure no matter how much you have, you will always feel like you should have saved more, etc. I believe we did well, started right after school. but we will still buy honda's and not mercedes.

and if we could buy mercedes, we probable want roles.

 

[CMF]

Life Expectancy Calculator

The finance guru girlie that was talking on the subject on the Today Show yesterday used a life expectancy age of 95 to run some numbers. I don't know whether it's a good or bad thing that this Life Expectancy Calculator says I won't live that long - it says I have only 30 more years to worry about

Charles

 

[pwrshift]

Pwrshift, you might find this to be an interesting read. Basically it's the counter-argument to the financial institutions pushing RRSP's on all of us Canadians and the "you need $5 trillion to retire on safely" scare tactics of those same institutions as a way of selling more product.

It's not applicable to non-Canadians BTW.

Thanks ... ordered it.

Brian

 

[MelBay]

Wow, what a timely topic. I work for an employee benefits consulting firm, in the Retirement benefits department. I run their website, so I view a steady stream of "how much is enough" articles and how defined benefit plans are going away.

Next, hubby is an engineer for GM, and he may be getting an early retirement package next month. He's only 55, so it's a bit scary but I'm thinking he'd better take what he can get from them before they go belly-up. We'll see....

Finally, my mother is 92 and has Alzheimer's and is in a nursing home. I'm an only child, and my dad died in November. He was a frugal, conservative person, and if you asked him, he'd have told you they were rich. They were by standards of someone who was raised during the depression. However, when he went from monthly expenses of groceries & utilities only to $7000+ a month for the nursing home, he was in over his head. He could see their savings balance declining rapidly and the stress was too much. I'm convinved the stroke was brought on by the worry. He has 8 homes on which he holds promissory notes, and these are all folks who couldn't get a conventional loan. Some months I collect everything due, but most I don't. It's a constant battle, and my greatest fear is my mother who is paralyzed from a stroke, wears a diaper and can't even remember my father's name will live another 10+ years. She has no quality of life. But I guess my point is, you save and do what's right all your life, and it all gets spent to keep you in diapers, while the person in the bed next to you spent like a wild person all their life and Medicaid pays for the exact same care. It just doesn't seem fair.

Makes me think I want to start smoking again, each chicken fried steak every single day never exercise and go when I'm 70 so I don't end up like my mom.

I told my husband that I NEVER want my name and the word DIAPER used in the same sentence. If it that happens, it's time to do a Thelma & Louise.

I would not wish a nursing home plus Alzheimer's and a long life on my worst enemy.

 

[frenchieinme]

The good thing about Alzeimer's is...

The good thing about Alzeimer's is the fact one has no idea what is going on around them. Thank God for little favors...

frenchieinme

 

[nydvc]

The good thing about Alzeimer's is the fact one has no idea what is going on around them. Thank God for little favors...

frenchieinme

That is so true, my father had it and it was way more of a worry and concern for my Mom (CARE GIVER) then dad. At least during the end stages.

Overall a horible disease.

 

[caribbeansun]

Have you considered a reverse mortgage or out right sale of their primary residence if you can realize on the promissory notes?

But I guess my point is, you save and do what's right all your life, and it all gets spent to keep you in diapers, while the person in the bed next to you spent like a wild person all their life and Medicaid pays for the exact same care. It just doesn't seem fair.

 

[Rose Pink]

With so many ways to crunch the numbers and so many things to factor in, such as inflation, interest, life events (illness, etc), it is impossible to know how much is enough. Is the promised pension going to be there? Is the government going to be able to fulfill its promised medicare? Where is my 401k going? (I keep putting in money every payday but I have less and less.) BTW, I've never gotten the overall % returns on the 401k that the "experts" use in their calculations. Maybe I am just too chicken (too conservative) to invest more aggresively to get those higher returns--they don't seem to be doing well at this point and with the world in its current state, don't seem to have a very good future outlook, either.

If one were to assume 40 years of work and 20 years of retirement, one would have to put aside more than 50% of income each year to have the 100% of the last year's income during each year of retirement. (assuming one's income increases over time and not factoring in interest, inflation, etc--just using simple numbers to make a simple point). Most people cannot live on less than 50% of their annual income. We haven't even discussed after-tax income.

With the rise in healthcare costs exceeding the rise in income, we don't stand a chance. I've decided that if I contract something serious such as cancer, I will most likely just have to say my goodbyes and hope to see you on the other side when your time comes.

DH is one year away from being able to claim his pension--although it would be very little if he retires so early. However, the company has told him that they are actively trying to find a buyer for the company and when they do, he may not have a job at all. So much for 29 years of loyalty.