https://www.ssa.gov/oact/STATS/table4c6.html says that the SSA expects a 67 year old to have a remaining life expectancy of 16.47 (male) or 18.86 (female) years. Obviously, this is for “average” levels of health, but “average” levels of health in the US are not all that good.
Agreed. Other than messing with the COLA index, allowing automatic SS benefits cuts to existing beneficiaries – or those close to retirement – is political suicide. But since we can’t talk politics on cc anymore, the only thing we can say is what will happen by law if Congress takes no actions by ~2035.
@bluebayou , thank you … that was exactly what I was getting confused!
“I honestly think USD 5M in cash without mortagage payment is a good target for retirement.” - That sounds very high for most Americans. But if you can get there, it sounds good 
As couples define “their target”, a lot will depend on their spending needs, And also SS, pension(s) etc… the higher these monthly annuity/“paychecks”, the less needed in investments.
At the rate we are going, the easiest scenario is for a combination of inflation and dollar weakness to eat away at the true value of SS as it would be political suicide to make reductions.
https://dqydj.com/net-worth-by-age-calculator-united-states/ says that $5 million not including primary home is 95th percentile (top 5%) of people age 60-64 and 96th percentile (top 4%) of people age 65-69.
That page lists average net worth (not including home) as $985,790.54 for age 60-64 and $871,948.49 for age 65-69. However, median net worth (not including home) is much lower at $105,875.74 for age 60-64 and $94,665.45 for age 65-69, since a small number of very wealthy people can skew the average up a lot compared to the median.
$5million … I would definitely have to work until the day I die, because that’s not happening unless I hit the Powerball (and since I don’t play it, it’s not happening). Fortunately, my wants & needs will be satisfied with a much smaller asset level. To each her own.
On that web site (a few posts up-thread), if you put in your current net worth and age bracket, you will see a curve of your age group and it will tell you what % you are on. I typed a few different numbers and came up with that our net worth is over 85% of people in our age category. Not too surprising because so many have so little saved for retirement.
We have done a good job educating our DDs on how to be financially sound; we also had them come out of college debt free. DD2 is struggling a bit with ‘delayed gratification’ and saving a bit more.
DD1/SIL are paying off his student debt (not as bad as many, but in marriage they had two kids back to back very early, so have those expenses too) but they are on a very strong budget plan and should have debt paid off perhaps in another year. SIL is not in career job now, but he is earning a steady salary; DD is the bigger wage earner, and it is her earnings paying down the debt. She is getting a bonus this month, and in the next paycheck or two will get her back pay from raises/promotion not keyed in yet. I think they will be able to pay off his highest student loan amount which also has the highest interest rate (interest rate 7.5%).
DD2 is finally getting the idea that although her BF is very sweet, her relationship with him may continue to be limited to being BF/GF only; there are a number of other things that may not make them a good match, but the financial one is glaring: he has a lot of student loans (and parent plus loans which he is personally responsible to also pay off - his single mom has to be paid back) - and in not a great industry right now and who knows if he will ever be able to make as much as DD2; due to Covid-19 - he is drawing unemployment; however he is willing to work and will have to work himself out of the financial hole. DD2 adopted a big dog (a childhood dream; she also has a guinea pig which is what we had for the kids growing up - I really love guinea pigs which also are inexpensive to maintain) which is also a fairly good expense - food/vet/boarding when traveling as well as taking up a lot of time; BF has a mild medium sized dog which is a fair expense considering his financial situation.
I received an inheritance that came to us at a very beneficial time for us (I had aggressive cancer and also was SAHM due to H business travel). DDs received some death benefit insurance money from my mother which went to the grandchildren; this money was invested in stocks when they were in HS; the investment helped them with college costs, and also they used some of the money for travel.
We are putting money into a stock account for the two grandkids - a little at a time. As we can afford to do more, will do more. Time value of money - will have the growth over time.
My goal is to have DDs inherit at least the amount I did.
Since we decided to stay in our current home for some years after retirement, we will revisit our wills and other documents.
This is an interesting read: “From Monk to Money Manager” by Doug Lynam (2019). He shares a lot of wisdom. Sometimes kids need to read the wisdom or hear it from someone else instead of listening to their parents who have successfully navigated the financial waters.
Young adults do need to ‘feel’ how it is to manage their money - income and expenses. We do little things - little luxuries or little extras which doesn’t fit in their budgets. H and I lived through the lean years.
Covid 19 situation would have been a big financial setback for DD1/SIL w/o my help, as their two kids’ daycare was closed mid March until June 1. Although SIL worked from home, he was not able to watch the kids and work. I was able to be live in nanny/babysitter during that time - and they were able to pay down more of SIL’s student loans w/o the daycare costs during that period.
@kelsmom We are right there with you that to achieve $5 million we would have to work until the day we die. Fortunately we have worked hard and save well and with the advice of a great financial planner we should be able to retire and do the things we like to do as well as remain in our small home near the beach in Southern California with our projected income streams when we stop working.
^I agree. It is shocking how people here throw around a big money number without batting an eye.
Is that surprising on a forum of the self-described “middle class” who make too much money for their kids to get college financial aid anywhere?
Since this stuff is all greek to me, is this suggesting that we might be better off going ahead and starting to collect (I am 67) to get locked in and not subject to some potential change in calculation?
We are fortunate to not “need” my SS payment, but as I am retiring in the next few weeks, it will feel weird to not have any of my own income after all these years. DH currently plans to work a few more years, until he is 65. Once he can switch to Medicare, he’ll retire.
DH will also have a small pension from his previous employer. We just called to get a summary of the package of what it would currently pay out if he elected to start taking it vs what it would pay out if he waits a few more years until he is 67 when it is considered FRA for that company. So… if I started to collect my SS now (its more than half of DHs so that’s the only option we are considering), he then starts to collect his pension at 67 in a few more years, and then collects his SS at 70, we’ll have a reasonable continuous cashflow (which means he can play with it in other investment areas he likes). Does that make sense?
jym:
run your different scenarios in OpenSocialSecurity (click tab at top for additional input) and compare the NPVs to see how much difference it might make when you change claiming dates.
https://opensocialsecurity.com
Can’t really advise whether folks should claim early just to beat any cutback in ~2035; that’s an individual decision/guess.
Personally, my health is still good so I’m waiting to 70 for the longevity insurance. Assuming da’ wife outlives me, she’ll get more money when I join cc in the sky.
yeah, it does feel strange at first to be spending down assets for longevity insurance. But since I’m a finance guy, and I believe in the model’s assumptions, my family’s NPV is maximized if I wait until 70 – even after spending down assets today. Plus, delaying until 70 allows us more time to do more Roth conversions.
Thanks to all your reply. I have an appointment to see a FA next month. We’ll see where we at. I think we’re ok even without counting social security and house (and rental property). Maybe more than ok. Is there such thing as over saving for retirement?
@2018dad, I would say “yes, you can over save for retirement,” but it’s a nice problem to have.
BUT, when you get to the RMD stage (currently 72 1/2?) you could wind up paying a hefty tax bill if you have mostly pre-tax retirement accounts (so you have to pay the taxes when you pull it out).
Not for your heirs! :lol:
I’d certainly rather err towards over-saving than under-saving. Being broke sucks. Being very old and broke really sucks. I’d rather not find out how much.
There were 2 years in a row several years back where they 1st allowed the Roth conversions. We did a chunk both years and took a huge tax hit. Not sure if DH plans to do any more.
He will continue to work for 2.5 more years. He doesn’t plan to touch his SS until he is 70. We will let his grow. If we have any real worries about the 2035 date, I could start drawIng mine now.
I know this has been asked before but I cannot recall the responses: when you calculate your savings/net worth do you count value of your house (assuming no mortgage)? DH would like to include it but I say no, as you have to live somewhere and it costs $.
@jym626 We do not include our house (no mortgage) because we plan to stay in the same area and anything we’d move to would likely be a similar cost.
There’s the “what’s the value of everything I own” number, which with include your house equity, and the “these are the assets I have available to spend on retirement retirement” number, which might not.
They serve different purposes, but both are useful.
The number called “net worth” would include all assets, including your primary residence, investments, cars, personal possessions, etc.