Mcat, how much you depends on how much you spend.
For those who are not sure whether you have enough with a pension, start a spreadsheet. That’s what I did. One tab I keep track of my expense for two years. The other tab I put down my estimate of pension and future SS. As I get closer I modify the spreadsheet for accuracy, it doesn’t have to be perfect. I think it can give you an idea of 90% of your situation. There is no magic multiplier. It’s much better than what Fidelity say you need.
@mcat2, I hope you’ll take these suggestions in the spirit in which I offer them but it feels a bit like deja vu. If I could only dig up my first long post to you, I would. 
(1) If you have not yet already done so, please go to the SS website and obtain the most current information about your and your spouse’s earnings record and projected SS benefits. You’ll need to register but it’s not a big deal. Ignore the reported amounts for the “average” benefit or the highest benefit–it has no bearing on your personal situation. I trust you have figured out your Full Retirement Age and the different amounts of benefits to which you will be entitled if you claim at 62, FRA, 70. Start planning with those numbers without regard to any political noise about what might happen to SS benefits.
(2) Figure out if your pension benefits (from any and all sources), if any. Every little bit of guaranteed income helps.
(3) You know your 401k and/or IRA balance. You’ve no doubt read (perhaps ad nauseum) about the so-called “safe” withdrawal rate of 4% or, even-more-safe withdrawal rate of 3%. You want to stay around those numbers. You can easily figure out what that amount comes to.
(4) You can sell your house. If that is a big chunk of your assets, then I would watch that like a hawk. It is not great to sell too early and leave money on the table, but it is far worse to wait too long and not be able to sell because the market and/or the economy has gone bad. Who knows what the next 5 years might bring. Also, IIRC, you have the residence that has been converted into a rental. Please use your analytical skills to figure out how to structure and time that transaction to your maximum benefit.
(5) Consider prioritizing your own retirement savings instead of subsidizing your son’s lifestyle and future finances. whether it be by paying his student loans or sending him extra money. He’s going to be a physician. So, he’ll be deprived for a few years–that is absolutely commonplace for medical students and residents. He’ll be fine. No doubt you made lifestyle sacrifices when you started out. Why should it be any different for him, especially after he has enjoyed a tuition-paid, debt-free Ivy-league education, again IIRC what I’ve read here.
(6) Does your son know the angst your retirement planning is causing you? Send us his email address and we’ll talk to him.
(7) Prioritize your retirement finances.
(8) Prioritize your retirement finances.
(9) Prioritize your retirement finances.
(10) And prioritize your retirement finances.
@1214mom There is a calculator (pdf) of sorts on Chrishogan360.com. He is a Dave Ramsey personality. The formula sheet asks how much you need a month to live in retirement. It doesn’t account for pension or SS but I suppose you could just subtract those numbers from your monthly need.
Buying books won’t really tell you how much YOU and partner are spending now and in the future either. Spreadsheets, examining your check register and CC statement and reviewing tax returns can help a bit.
It isn’t rocket science and there are many programs like Quicken, youneedabudget and others if you need help in tracking expenses.
Thanks to all of you here (IxnayBob, HIMom, DrGoogle, and AttorneyMom).
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Re: SS, I actually received a paper version of report from them just a few weeks ago. If I remember it correctly, I have had about 30 years of “credits” - but I think the pay was likely lower in my first 5 years. If only I could add 5 more years to make it 35 years in total!
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Re: Pensions I do have a small pensions, and have actually taken the distribution for many years, without penalty from IRS, when I left my previous company after 55 yo. It was not a good move but I had no choice back then (It was “scary” when you did not have an income when you still need to pay a lot of expenses – but luckily, we had almost paid all the college tuitions by that time.) I think the pensions could cover only 20% (or even less) of our living expenses after retirement. But it was a 100% joint annuity – means that my wife could continue to receive the same amount, if I leave the world before her.
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Re: traditional 401k and tIRA: If only I could have another 4 or 5 years, I think we should have “enough” (to our standard), considering the power saving mode we are in now.
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Re: our house and home equity: Our house is in a good district so we should not have any trouble in selling it. But its value is nowhere near the value of any house in the bay area. Much less. Also, we have not paid off this 15-year fixed rate mortgage due to refinance. (I think we have paid off about 2/3 of the value of the house.) We have a mixed feeling about selling it. But it is hard to pin-point the reason why we want to keep it in the next few years (Hmm…a fear of inflation maybe? It is the only assets we have that could do reasonably well in keeping its value over a decade.)
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Student loans: It is not our responsibility now and in the future (although we co-sign one kind of his loans offerred by his school (or alumni organization?) There is no interest while still a student and likely during PGY-1 and PGY-2. So it is too good to pass over this kind of loans, I think.
In the past few years, we only paid the “parents’ contributions” as decided by the school. It was somewhat funny the school still thinks the parents should be on-the-hook when he is well past his college age. But we have no complaint here because there is always a need-based “free money” component of the financial aid and the student is only responsible for the so-called unit loans. (I think it is likely every student has the same deal for the loans portion of COA; the only difference is likely the parents’ contribution portion, depending on the financial means of the parents. This is somewhat like UG’s FA, except for student’s unit loans. For us, it was about 1/3 parents’ contributions, 1/3 student’s unit loans, and the rest is the need-based component which is taken care of by the school. But we got a really good deal in his first year because I did not have income during most of that base year.)
If DS’s relationship does last and they happen to be in the same city, they could barely survive financially in the next half a decade. If not, it would be tougher in terms of finance, for both him and us. This is because where he will likely end up with is, more often than not, a high COL area. (BTW, actually we seldom have a chance to talk to him. We jokingly said that we used to “helicopter” too much before his college and now we need to compensate by not helicoptering at all.)
" If DS’s relationship does last and they happen to be in the same city, they could barely survive financially in the next half a decade. If not, it would be tougher in terms of finance, for both him and us. This is because where he will likely end up with is, more often than not, a high COL area."
Even if you live in a high COL area, it is likely that you can find a place to commute from that is not too expensive. Or just share with other people, to keep the costs down. He should be able to find a way to support himself. You should be looking at your own retirement, not taking care of an adult child, in my opinion. That is, if he is able to take care of himself. If he’s not, that’s a different story.
I do not know how expensive it would be to live in a major city in NE, like NYC or Boston. Is $50’000 (before tax) a year enough to live on in that kind of expensive city, for one person?
My rent for 1-bedroom is over $2000 on the west coast. I would imagine it is likely about the same on the other coast.
I think he can take care of himself, considering that he has lived far away from us and lived by himself in the past (almost) a decade.
Thanks.
@mcat2, you have never posted anything that suggests your S has any inability to succeed and support himself. You and your wife need to look to your own current and future livelihood. There are many people living in high cost of living areas with very little money, but they manage. Your S sounds like s bright and very capable young man. Please don’t worry about him.
If you have tons of money and want to help him, that’s another story, but that’s not what you’ve been posting. Your prioity needs to be your and your W’s financial security for now and retirement.
I agree with HImom, mcat2. Maybe you didn’t mean to phrase it how you did or perhaps I misunderstood, but it doesn’t seem like you need to worry about him at all. This is definitely the time to just focus on your own future, in my opinion.
My nephew lives in a high cost area with intern salary about $48k when he started. I think he has been there 3-4 years. He borrowed money for medical school too. So it’s possible. His parents do not Fred as much because they can’t. They are relying on him to take care of himself.
When my daughter-in-law was a resident, she shared a 2BR in the upper east side of Manhattan. So yes, your son will make it even in a high COL area. And yes, she is still paying back her school loans.
Thanks for all the inputs.
I think DS will have his living expenses and his traveling cost covered by his student loans and there will be no tuitions to pay this year. He should be able to do fine without our support.
Glad to hear that even in the upper east side of Manhattan, people could still survive with about $50k a year.
I heard it often takes many years or even decades to pay back the hefty student loans.
"When my daughter-in-law was a resident, she shared a 2BR in the upper east side of Manhattan. "
-Mine excluded NYC and California when applying for residency. One reason was cost, another reason - too many people, too crowded. She risked a lot by not applying there because both have lots of residency spots in her specialty. She took a risk though. She does not have student loans.
Generally speaking, every day life in NYC is way too complicated for my personal taste. I know it pretty well as half of my family lives there and we visit every year.
In regard to $500k for retirement. It may be OK, if both spouses are close to $2.5k - $3k each in SS and if $500k is what is left after buying a second home in warmer place. $500k will not make me happy at all if total SS is about $3k and no second home . But we are asked about OUR personal preferences here, $500k is NOT MY personal preference.
My nephew is in the general area of Brooklyn.
My relative and her BF are living in SF, yes, a HCOL area. They are getting by on the little they make as residents/interns and are not getting support from relatives or anyone else. Folks CAN do it and do NOT need their parents to jeopardize their financial well-being to help them. Please, we do our kids NO favors by jeopardizing our financial health to “help” them. Everyone needs to figure out how to live within their means–whether that means sticking to lower COL areas or having room mates or other things to reduce living costs. It can definitely be done. It’s not fair to put ourselves at financial risk “helping” and then expect our relatives or loved ones to bail us out for unwise choices later when we don’t have enough resources and can no longer work.
I think people have lived and traveled in enough places to decide where they would like to live and trade off the costs to live in said place.
I do want to downsize our home, which will be quite a bit of work with updating it to get ready to sell. We have to decide if we want to buy another home here (likely) or in a couple of other more metro areas. Close enough geographically probably to where our kids will land, or can fly to see them.
Key for us will be how financially sound we can stay over the next six years until retirement at age 65.
Most everyone on this thread have properly prepared our kids to be responsible for themselves. Hopefully they will marry responsible people and raise responsible kids themselves.
My parents were financially in good shape - and unfortunately my dad died too early to enjoy many years of semi-retirement; mom lived well but didn’t burn through money and gifted out money several times, which was a help to our families giving extra activities to the grandkids. if we ever had an extreme emergency (who knows, a child that needs a medical procedure with limited insurance, etc) that always is a bit of a feeling of family security. I would like to think more about families being emotionally there for relatives going through tough times - not enabling behavior to delay adult responsibilities. Brother has done well in his business with his partners - he is the one out of everyone that has money to help others in the family if needed.
I believe in insurance, so we have some security with that - LTC ins, life insurance.
H, offspring and I are pretty healthy, and hope to stay that way. One area H has a problem with is having lots of fillings and crowns due to not great dentistry and also lots of carbs/sweets and not much brushing teeth as a kid (I just can’t imagine his parents not putting 2 and 2 together as they are having their kids with all these cavities). Just had another crown replaced - our cost after dental insurance, $555. Just before H’s company got dental insurance (a newer employee benefit in 1978) H had to spend a month’s gross salary on 9 fillings and two crowns (all to replace ‘experimental’ plastic fillings - where the cavity continued under the filling). Since then he has had numerous crowns. Another thing his family did then was also skip going to the dentist! Yikes! H just admitted to me last week about the not brushing his teeth as a kid…and we have been married over 36 years. In the early years (after getting dental insurance) H had to have his wisdom teeth removed (which was medical and dental) - he had 6 wisdom teeth (an extra set on uppers).
Our kids should be finishing UG debt free. They will figure out, just like H and I figured out how to live lean on the early years. We will let them take pride in their maturity as they navigate life.
I am amazed at some of the high salaries some kids are getting rather young - hope they spend and save responsibly.
I think my kids do see how others have the financial burden of college costs, and realize a bit about staying savvy with handling money.
I talked recently to some people we know kind of casually, who spent quite a bit of money on a motor home. They researched very heavily - bought a unit that has no slide outs (they wanted the stability of the unit if it ever rolled due to an accident). They even stay several nights in it rather than going to their home every night, paying $20/night camp fees. No buyer’s remorse for them. Sounds like they will be ready to sell their home when H retires.
I have to respectfully disagree. A vacation doesn’t tell you much about a potential home. I haven’t spent enough time researching Maine, North Carolina, Texas, Oregon, California, etc
Thanks everyone. I realize there is no magic number that’s right for everyone, but sometimes they do help reinforce what you already know or are thinking. I have been to a financial planner, and have some sense of what our retirement finances will look like, in the three most likely scenarios. But, I’m sure there were many people who’s retirement expectations shifted after the last stock market crash, for example. I am considering retiring fairly early (hopefully by 60, 62 at the latest), but once I give up my stable salary, it will likely be difficult to go back and get anything close to what I will be making at that time. I tend to be relatively risk averse, so I can see myself saying “just one more year… Just one more year.” I really want to retire while I’m young enough to enjoy active/high energy outdoor pursuits, and we are trying to get ourselves in a position to do that. We are already starting to take more vacations, at various expense levels. In our retirement “plan” I asked the person to assume we would spend 20K a year on travel, because that’s what we like to do. Of course that could be adjusted if necessary.
I’ve been reading and want to add a general postscript to the talk of the past couple of days about state estate taxes, which often start at lower thresholds than the Federal exemption ($5.43 million for one person and $10.86 million for a married couple if portability is elected):
Typically, assets are settled into a “marital credit shelter trust” to take advantage of the state exemption / credit. If these assets are settled into the trust during the settlor’s lifetime, then the appreciation of those assets is removed from the decedent’s estate and are not subject to estate tax. Normally this is a good tactic.
Assuming that the decedent is exempt from the Federal estate tax, which is 40% on the taxable estate, then a careful comparison needs to be made between the applicable STATE estate tax rate vs. the Federal LTCG tax rate because…
…assets have to be in the decedent’s estate to get the step-up basis when inherited by the beneficiary(ies).
If the assets have been settled in an irrevocable trust set up by the decedent prior to death, those assets are no longer in the estate at the time of death and will not get the step up in basis.
Double check but keep this in mind.