^Couldn’t find the link. Whatever Nifty Fifty was, Apple and Google are more like Ford and GM in the 50’s. They are still here.
I didn’t find the statement obnoxious. I found it true to the fact that most everyone feels uncertain about the future. I think we are personally in a good spot, but I still worry it isn’t, “enough.” Enough for what, I am not sure. To me, “rich,” means you feel bullet-proof financially. That you could never spend down all you had and wind up in the poor house.
And the concept of “poor house” is also very relative. If you retire with $5 million and truly end up in the poor house (objectively not in the CC sense of sacrificing to pay for college by leasing 5 Series rather than 7 Series for 5 or so years and only taking one luxury vacation a year rather than 3 or 4), you did something big time wrong.
I’m not sure a couple couldn’t spend through $4-$5 million on medical care, AL facilities, skilled nursing, etc.
Why do we not feel rich?
Well, I’ll bite. We have more than enough for retirement, college and even private school, a great house, multiple cars and no debt. Quite a bit more than I ever expected to own. Still we feel nervous. Why? No one ever expected a pandemic, election and protests all in the same timeframe. People I know who have second passports are talking about a Plan B ( two couples). That is, where they will move should things go further South. People are worried about 401K’s with high balances being targeted for “taxes” etc. There’s a lot on the table that was never ever present in the US financial cycle before.
I’m nervous, so what about the person who is still saving for retirement and has lost their job? Or the people who still need to pay for college for their children.
Having enough is relative. People who haven’t saved enough for retirement are worried about reaching their goal. Those who have reached it are worried about other factors like taxes targeting the wealthy or new taxes on earnings/real estate/business and all the rest.
This can’t be rare. Our FA is holding specialized online zoom calls regarding these very topics. That means, they are getting calls from people nervous about keeping their money ( they have to have a certain amount to be customers).
So bullet proof as someone mentioned in terms of retirement is elusive for all but the .01% and that’s not the top 1-5%.
0.01% have their own woes, believe me. It is an attitude not money imo. I feel rich. I have friends who are at least 10 times and neighbors 100 times richer than I am but I still feel rich. I have what I need. I can splurge on what interests me without checking my book. I don’t have everything and still check my prices. But I have far more than I need.
Around where I live, skilled nursing, AL facilities cost about 100K/year. It will take 40-50 years to burn through 4-5M or between a couple 20-25 years. Do AL patients live that long? Besides, the poster has a guaranteed 100K/yr income in addition to 4-5M. Not many people in the country has that kind of income guaranteed in retirement.
We perhaps appear “rich” on paper, but a large part of our retirement income will come from rental properties.
With the current pandemic environment of eviction moratoriums and legislators proposing crazy things like having to give tenants 10% of the equity, free rent forever, etc, what seemed to be a pretty solid retirement plan is now looking a little shaky. Property values are driven by rents, and if they go away we lose both income and value.
So far these crazy ideas have not come close to passing, but it makes DW nervous enough that she doesn’t want me to retire yet.
We have much that has been deferred, so will be taxed when we take it out. $100k doesn’t really equal $100k. And, we also have assets (stocks) that will be subject to capital gains tax. So, whatever amount one has, one doesn’t “really” have. There has been lots of discussion on this thread about the differences between “wealth” that will be subject to additional taxation as opposed to that that won’t be.
The historical idea has always been that one would be in a lower tax bracket when one was older and was no longer working and bringing in a salary. Thus, deferring and being taxed later was the advice. I think we personally erred in buying into that. Not sure that is going to be the case now. I’m glad dh came out of retirement and took another job.
Re:Annuities, even Bogleheads are good with a SPIA in certain situations, it’s essentially insurance against outliving your assets. As more and more people have no pensions from work and are responsible for investing their own 401K assets, it’s a small safety net. I personally would like to take a portion of my "cash’ position and have it in an annuity, But having lived through the decade of double digit mortgage rates, I sure wouldn’t lock in a life annuity when current interest rates are so low.
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MODERATOR’S NOTE: Iglooo has been given a one-week timeout, not a permanent ban. Remember that moderation may not be discussed on the public forums.
So what are you saying? We need 5M for AL and another 5M for non-AL retirement fund?
Oh boy!
What did she/he do?
one thing to consider is the stepped-up basis on the death of a spouse. If in a community property state, nearly all equities in taxable accounts get a new basis. (I’ve held BRK for a long time and expect to pass it along to the heirs, tax-free – assuming that tax law is not changed.)
Good points ago. Long ago we realized that our 401K w/d would be taxed, and DH started a spreadsheet (which grew quite elaborate over the years) to to account for that. We talk about “after tax income” when comparing to estimated expenditures.
No, no, no. I’m just saying that I am not so sure that $4m for a couple would go as far as they might think. Especially, if much of that was in deferred accounts/pre-tax that would be taxed as drawn down and given some of the other uncertainties going forward others have mentioned.
That’s fine as long as you don’t need to sell to support yourself. And, if the stock is owned jointly, doesn’t only half get the stepped up basis at the death of one spouse? I can’t remember. I agree that could help, but dh and I have, “yours, mine, and ours” stocks.
What I mean by the poor house is dependent on the government for care. I agree it’s relative. $4-$5 is not insubstantial AT ALL! But, I can see where it might feel inadequate based on some of the points discussed above.
We listened to the same idea ( we’d make less in retirement). I think we’ll owe a whole lot in taxes. There seem to be a lot of rules for when to take $ and how to take it. We’ll see. A lot can change in 10+ years.
@notrichenough That happened to one of my SILs. Has three rental houses which are taxed to the max in NJ. What would have been 10-15Kmonthly is barely bringing in a portion of that. So her retirement is very much off from what was originally planned.
@MaineLonghorn I have no idea what moderation means. Can you please clarify? Especially since it’s not allowed. Thanks.
Until the last tax bill, we were caught in AMT hell for years and years, where we were in the 35% deduction phaseout bracket, plus 5% state.
Saving 40% vs. a Roth was a no brainier, and it’s highly unlikely we will see an incremental rate that high in retirement.
@Happytimes2001, it means not discussing or criticizing actions taken by moderators.
Here is the TOS statement: “Out of respect for both moderators and policies, discussion of moderator actions and forum policies is welcomed via private message or e-mail; these issues are off-topic for the forums.”