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When will you be able to retire?

SCNCY said:
How do people figure out their retirement numbers? I have used a couple of different online tools, but they provide me with vastly different answers.
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If you follow any of the FIRE (financial independence / retire early) posts or blogs, a simple place to start is to take your current annual household expenses and multiply by 25. Using that number, if you stick to a 4% withdraw annually you will never run out of money.

Example - if you spend $80,000 last year (house, groceries, car, etc...) multiply by 25.

80,000 X 25 = $2,000,000. You will never run out of money if you stick to a 4% withdrawal annually.

LOTS of caveats and assumptions but it gives a GENERIC starting point that's close to being in the ball-park.

Your results WILL vary.

Personally I've used numerous on-line models and have a financial planner because I don't want to get this one wrong.
 
I envision "retiring" as soon as financially possible. Being in HR though and working with folks through possible retirement scenarios, I will say that there is a reason I put retiring in quotes. To me retiring isn't the stereotypical event that it once was. It is definitely a transition, but I view it as more of a "getting to do things, but of my choosing, and on my terms", which literally means just about anything. To me, retirement is freedom. If I want to get up and go play a round of golf......done. If I want to focus on a hobby of mine.....go for it. If I want to work somewhere or volunteer on a part time basis to stay active / busy......my call, my choice. Perhaps, I want to sit on the front porch and watch the world go by......I can do it.

I am sure that I will want to do the usual, travel, visit kids / grand kids, spend time with the spouse, etc.,but I don't see myself quitting work cold turkey.

Now to make all of this happen will require a lot of bread. But the bread gives you options, choices, freedom, to make all this happen. Ideally, I would like to retire and not "take a pay cut", which with planning, is doable.

I have seen a pretty wide spectrum of retirements (part of the profession). I have sat across the desk from folks that are in the ideal state (will not take a pay cut in retiring). I have also sat across the desk from folks that were forced to retire due to injury / illness, etc. I have sat with folks that waited too long, as well as folks that went too early. I have also seen the "worst case scenario", where folks retired, had not saved nearly enough, and started getting beat down by the "waves of life" (loss of job, major medical bills, consumer debt, car issues, you name it). This scares the heck out of me and serves as the reminder of why I try to sock as much away as I do. Having some financial security will help weather the storms of life. Without it, you can drown in a hurry.

Typical ant and the grasshopper scenario. In order to have more tomorrow, you have to do with less (sacrifice) today. That is definitely not easy, but the things in life worth having aren't easy, or every one else would do it. I guess it is part of the burden of freedom.
 
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cyclone101 said:
I'll take a stab at it. Feathers will be further ruffled for some folks but it is what it is.

First of all, I think the best long term investment you can make is in your health. Eat decent and exercise in your 20s, 30s, and 40s and there is a good chance you just saved yourself thousands of dollars. And there's minimal costs with potentially massive returns. As an individual, you have that choice... to live a healthy lifestyle or not. That choice could potentially have a major impact on you financially down the road. It's your fault if you lived an unhealthy lifestyle and have to pay the price of that lifestyle in the future. It's your fault if you ballooned to 400 lbs and never did anything about it. It's your fault you can't walk up your staircase without being out of breath. It's your fault you cough and hack because you've smoked for 4 decades. That is your fault and no one else's.

Second of all, one of everyone's top reasons for saving should be so that your family (your children/grandchildren) doesn't have to pay for you when you get old. If your health drastically deteriorates in your older years and you've done your due diligence, hopefully you don't burden them with that expense. Unexpected things happen in life, save so you can hedge against them.

Now, I do agree that there is a very small portion of our society that is truly incapable of working (therefore incapable of building wealth). My original comment is not intended for those people. (We'll leave it at that, as this thread has already gotten more off topic than OP probably wanted)

If you're unhappy with your low paying job and can't make ends meet, then find a better paying job. That is on YOU.
If you had/fathered a child before you were financially able to support that child, that is on YOU.
If you didn't do the research to understand that your degree in Mongolian throat singing has no value on the job market and went into six figure student loan debt at some ritzy private school to get that degree, that is on YOU.
If you are making payments every month on a $1300 iphone while simultaneously complaining about having no money to put into savings, that is on YOU.

Once again, $100 every month for 45 years in an index fund is 350k with a very conservative rate of return.

People gotta take responsibility. For most people, the choices they make will determine their fate.
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I can't argue with most of your input. It starts young. But you also have to realize genetics play a big part in many people's lives. Sometimes you can be healthy by working out and eating right but that won't matter because things like cancer can take over. My wife is in the nursing field. She said she has seen it all where some people eat organic, gluten free, etc and still end up with cancer. Yet, we also see people live until they're 85-90 years who have drank and smoked their entire life. Sometimes things are out of people's control, so I do say sometimes it's not always "your fault."
 
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4theCYcle said:
I can't argue with most of your input. It starts young. But you also have to realize genetics play a big part in many lives. Sometimes you can be healthy by working out and eating right but that won't matter because things like cancer can take over. My wife is in the nursing field. She said she has seen it all where some people eat organic, gluten free, etc and still end up with cancer. Yet, we also see people live until they're 85-90 years who have drank and smoked their entire life. Sometimes things are out of people's control, so I do say sometimes it's not always "your fault."
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I agree. That's why I specifically mentioned people that can't help it. All the more reason to prioritize saving now so you are in a better spot later.
 
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cyclone101 said:
I agree. That's why I specifically mentioned people that can't help it. All the more reason to prioritize saving now so you are in a better spot later.
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It's amazing what 3-5 years of "being in the real world" will teach a person. I seriously think there are certain scenarios that could be taught in the HS or college setting that would help so many people out with their financial acuity that it would save a lot of people from making life long mistakes. Simple common sense budgeting, CC's, mortgage process, retirement accounts, basic home ownership stuff that would go further than some of the classes being offered.

I learned a fair amount at a young age benefiting from a parent being a loan officer, but not everyone has that luxury. It's probably saved me a lot of heartache over the years and definitely thankful for setting up for what I have even dealt with personally.
 
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Doc said:
Do you drop the "that 500k is only going to be worth about 250k due to inflation" after that? :)
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That's true. I'm assuming her income and, therefore, contributions will increase over that time as well.
 
DurangoCy said:
Question - How did you lose your retirement? Did you have a pension, if so no other investments? S&P 500 and DOW are both roughly double their peak in 2007 and 4x their lows in 2009. I often hear this said and don't understand the logistics.
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1. My 401k match was company stock
2. Company went out of business
3. Out of work 6 months and took a 6 figure pay cut to get that
4. Divorce
5. Sold home at a big loss
6. Wife racked up debt before divorce
7. I think you get the picture

This wasn't a rare story during that era. I kept a roof over my head. Iowa was much more insulated from the 2008 garbage
 
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4theCYcle said:
It's amazing what 3-5 years of "being in the real world" will teach a person. I seriously think there are certain scenarios that could be taught in the HS or college setting that would help so many people out with their financial acuity that it would save a lot of people from making life long mistakes. Simple common sense budgeting, CC's, mortgage process, retirement accounts, basic home ownership stuff that would go further than some of the classes being offered.

I learned a fair amount at a young age benefiting from a parent being a loan officer, but not everyone has that luxury. It's probably saved me a lot of heartache over the years and definitely thankful for setting up for what I have even dealt with personally.
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Sure glad we spent an entire month my Junior year of HS on Romeo and Juliet though! Not.

Totally agree. I regret listening to the person that said "Just take the company match and that's good enough". I could've been so much more aggressive but I wasn't. I barely knew what compound interest was let alone what it could do for me.
 
KnappShack said:
1. My 401k match was company stock
2. Company went out of business
3. Out of work 6 months and took a 6 figure pay cut to get that
4. Divorce
5. Sold home at a big loss
6. Wife racked up debt before divorce
7. I think you get the picture

This wasn't a rare story during that era. I kept a roof over my head. Iowa was much more insulated from the 2008 garbage
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Enron?
 
4theCYcle said:
I can't argue with most of your input. It starts young. But you also have to realize genetics play a big part in many people's lives. Sometimes you can be healthy by working out and eating right but that won't matter because things like cancer can take over. My wife is in the nursing field. She said she has seen it all where some people eat organic, gluten free, etc and still end up with cancer. Yet, we also see people live until they're 85-90 years who have drank and smoked their entire life. Sometimes things are out of people's control, so I do say sometimes it's not always "your fault."
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And sometimes things just happen. People can still develop cancers without a family history, for example.

That being said, without going down the health insurance rabbit hole, it's extremely important to be proactive with your health. Always follow up with your doctor if something doesn't look or feel right. Nobody knows you better than yourself.
 
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ruxCYtable said:
20k for daycare? Where do you send your kids, Neverland Ranch?
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Well, it was the most expensive one we looked at. It is right by where my wife's mom works. There was one we looked at the was about 10 to 15 a week cheaper but we didn't get in, and another that was a wats out of the way the was not nearly as nice. Some have rules about number of hours the kid can be there, so we didn't even look at them. 10 hours a day limit seems like a lot, but I work 8 hours, have an hour lunch, and still need to actually drive to and from work. Sure it would have been okay most days, but do I really want cps called because I stayed 5 minutes late and then hit a train?

There was also one certified in home daycare in our town, and it happens to be our neighbors. Didn't want to make things awkward if it didn't work out, and we can't have fences so I thought it might be confusing for the kids as to why they have to stay in our yard some of the time, and out of it some of the time.
 
KnappShack said:
Thankfully no

Lots of businesses went belly up in 2008

I'm curious. How many folks in banking/finance have a pension? I always associate those with government and blue collar jobs.

I've never had one.
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I'm in a utility and we have (had) one. Was phased out for new hires starting 4-5 years ago but mine is still intact and fully funded. But I'm taking a lump sum so couldn't care less how well-funded it is after I get my oversized cartoon check.
 
KnappShack said:
1. My 401k match was company stock
2. Company went out of business
3. Out of work 6 months and took a 6 figure pay cut to get that
4. Divorce
5. Sold home at a big loss
6. Wife racked up debt before divorce
7. I think you get the picture

This wasn't a rare story during that era. I kept a roof over my head. Iowa was much more insulated from the 2008 garbage
Click to expand...

Sweet Jesus, rough patch is probably an understatment. Bummer. :(

I'm in a position where the owner of my company is trying to sell and retire. I'm one of those in a position to buy it, however, I keep thinking that the chances of personal bankruptcy go from roughly zero right now, to something significantly more than zero. Your scenario is kind of my nightmare (1 thru 3 anyway) and I just can't justify putting all of my eggs in one basket.

I assume you never thought twice about the company stock risk in your 401k? After a period, most allow you to sell it and diversify, correct?
 
Knownothing said:
Can you ride out the next 4 years and still have that option in the future to take a new job or do you plan to retire in 4 years and just be done working. I think that is a big deal. Like a lot of my military friends retire from the military and then go get a Civy job.
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OP here, I plan to be finished with teaching and retired after 4 more years, but that could change depending on health, satisfaction with the job ect. In four years I will be 62 and plan on starting to draw SS or at least have that option. From that point on its basically a year to year decision.

So I called and spoke to a very well informed gal at IPERS today, I told her what I was thinking about doing, and she found my file. She is going to run the numbers and send them out tomorrow by snail mail or I will be able to see them on the web site tomorrow.

Basically the numbers that I stated were correct, $2,830 a month for life, then it could be lower if I chose a different plan. Right now I am at 30.5 years and 57 which only equals 87.5, so I would be forced to pay a 6% loss if I started collecting at the end of the school year. Not going to do that no matter what. If I get the Missouri job, I can start drawing IPERS in November, the month of my birthday, 30.5 + 58 = 88.5 in service. Every year after that I can get a 1% increase up to a total of 5% more. if I continue to teach in Iowa. She will also be sending me that figure.
I did ask if she sees a lot of educators doing this, and she replied that "yes", this is common for people that live right on the border and can bounce over to another state.

When I asked my principle today about taking the day off, her first words out of her mouth was, "tell me you are not leaving!" It told her "maybe". She said she would give me a good recommendation.

So now, its up to the interview, and if they offer the job, making a decision after running the numbers. Thanks to everyone that offered advice, it was very helpful, no matter what option I chose to take.
 
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