<p>25 times spending? Yikes. I think one might spend a lot less when they are older, have the house paid off, don’t want to travel as much, have Medicare. But at initial retirement, spending could be much higher.</p>
<p>i have a hard time estimating continuing expenses. We’ll be moving to another state in 2016 so property taxes will change radically, my expense account runs through our checking account, and we incur other expenses now in commuting costs, etc, that we won’t in the other state. It’s hard to take all that into account. </p>
<p>And when you start adjusting your spending numbers for inflation, it gets alarming.</p>
<p>For some people, their final income may sometimes be significantly lower than their income five years before their retirement.</p>
<p>The complications in figuring out when you can retire, whether you’re saving enough, too much, or too little, what you can afford to spend after you no longer are getting a paycheck, etc., are why I (previously) relied on ESPlanner. My career was in software development, and I know how complicated the program was (is) to develop, so I don’t mind paying for it. </p>
<p>The free version is pretty darned good, and I believe the only restriction is that it does not do Monte Carlo simulations. I think if you have any concerns along the lines of what this thread is about, you should spend a few hours with the free version.</p>
<p>I still pay for annual updates, and run the software, even though I gave up thinking that it would convince my wife to retire :). I find the output interesting, reassuring, and liberating (in the sense that my wife and I, frugal by nature, can lighten up a bit, which we have). </p>
<p>H retired in 2013. He has been trying to convert some of our 401Ks and regular IRAs to ROTH. It is like pushing an elephant thru the needle, such a big mess especially with the recharacterization option. We only have 10 years left before getting hit with the minimum distribution withdrawal. </p>
<p>I meant the eye of a needle!</p>
<p>I think assets outside a house of 25 times spending is a reasonable estimate, if you are going to retire for 30 years. </p>
<p>This is spending that you are going to do in retirement…not necessarily what a person is spending now.</p>
<p>You need less if you are are going to have a pension. </p>
<p>If a pension is large enough, you may not need much in assets at all. Of course, this also depends on a secure pension.</p>
<p>My wife’s cousin said he can retire on SS and $1,000 a month withdrawals from his 401k.
He doesn’t spend all that much. He doesn’t want stuff. Where he lives home prices are around $300,000. I think he lives in an apartment. He is not concerned with providing an inheritance.</p>
<p>There is no one size fits all model. </p>
<p>The problem with a pension, is that it is hard to count on. You never know if the company will declare bankruptcy and ditch your pension, decades down the road. Plus, if it’s not adjusted for inflation, what seems like a decent number now can be a low number many years from now. Money eaten up by inflation can change the picture substantially. </p>
<p>That $1,000 a month for your cousin might not be a very good number several years from now. I’m thinking that there is no one size that fits even one person. Kind of like your skinny clothes and your fat clothes. You don’t ever throw them away because you just never know. I still have that size one pair of jeans sitting in my closet. Same with money. You just never know.</p>
<p>“The problem with a pension, is that it is hard to count on.” - True. But… for reliable pensions (if there is such a thing?) it does remove some of the planning guesswork on life expectancy. </p>
<p>Pensions that are not inflation-adjusted, and other than SS and some older union ones few are, are at risk. Even relatively low inflation of 5% can seriously damage the purchasing power of a pension. </p>
<p>Anyone know what percentage of pensions wind up with the PBGC?</p>
<p><a href=“Pension Benefit Guaranty Corporation - Wikipedia”>http://en.m.wikipedia.org/wiki/Pension_Benefit_Guaranty_Corporation</a></p>
<p>
So, (1.3)/(34+9.9)= 3% of non-public pensions have failed and are/will be covered by the PBGC. And the PBGC covers benefits up to $60K per year or so, which is probably higher than most pensions (although it is not immediately obvious how the benefit amount is calculated).</p>
<p>So overall, I would say private pensions are actually pretty safe, unless we are facing a huge wave of pension defaults in the future.</p>
<p>Probably as safe as SS, which will only be able to pay 70% of benefits or so once the “surplus” is gone, unless Congress gets its act together.</p>
<p>I have a small pension from a ginormous New York bank. I don’t have any qualms that it will evaporate. Lose purchasing power? Sure. But I believe it’s a real benefit that I’ll receive for the rest of my life. </p>
<p>I see our spending during retirement being very different from what it is now as we approach retirement. Since 2008 we’ve had two in college, and we won’t be done with the last college bill for several more years. While this huge expense will go away, I really don’t have a good handle on what new expenses will crop up. How significant will healthcare expenses be compared to now? What about assisted living and long term care? We’ve been delinquent in researching this and don’t have LTC insurance or something set aside for this. </p>
<p>What tools do you use to keep track of your income and expense transactions so that you can get a better handle of your spending patterns? I know sites like Mint, and free products offered by some financial institutions where you have an account do things like this, but putting all my passwords online at one site makes me leery. Do any of you have experience with the different Quicken products - do they have the ability to get data electronically from our on-line accounts and keep track of expense categories, asset allocation, etc, or is getting data in by hand?</p>
<p>I use Quicken. I track every expense, so I can see in “Easy Report” what my expenses have been for past years. I know what are fixed, an average of expected, e.g. car, home, medical expenses. I also know about every payment into account. I set up LTC insurance at age 60. I cannot recall the charge for Quicken, but I think it was less than $50.00.</p>
<p>@bookworm, does Quicken mine the data directly from the on-line accounts, or do you download and import, or do you have to manually enter the data in? As for the LTC, is yours a local or national insurance, and if it is the latter, which is it? Thanks.</p>
<p>A while back, I mentioned that I thought I overheard a financial adivisor’s suggestion as to how to reduce taxes on converting an ira or 401k to a roth. I went to the firm tonight. This is probably known by all the experts here but apparently there are 4 main ways of doing the conversion:</p>
<ol>
<li><p>Pay taxes from the current IRA (not a good idea)</p></li>
<li><p>Pay taxes from outside the current ira.</p></li>
<li><p>Pay the taxes by using life insurance proceeds.</p></li>
<li><p>Pay no taxes by using non-ira moneyto invest in special tax advantaged investment programs. This is the one that I had heard. It involves using funds from another account to invest in a tax advantaged oil and natural gas program (which is a deduction) and zeroing out your taxes from the conversion. When I discussed this with the financial advisor, we both agreed this wasn’t such a hot idea today with the way the energy sector seems to be heading.</p></li>
</ol>
<p>Thanks for the update, doct.</p>