I agree with @1214mom. We are comfortable in retirement, with a decent amount in investments and retirement accounts. We have no pensions, no LTC insurance. Both DH and I have a parent who lived to 90+, so who knows what our life expectancy is.
I’d love to gift my kids significant amounts of money while we’re still living. We’ve opened 529s for our grandkids. But, in the back of my mind, I can’t help but wonder how much of our money we’ll need for ourselves over our lifetimes and that stops me from being more generous.
I had a very cheery call from my next youngest sister. She will be retiring December 31. She has a financial planner she has been working with for years. She had a certain goal in mind and has met that. Her planner says she should be able to live comfortably at least at the level she is at now for many many many many years. She won’t tap into social security for 7 more years at age 70.
She doesn’t have many millions in her portfolio. But she has a totally paid off house and really no big expenses. She lives in a nice but not lavish area, and really has a great place. She is so excited that she met the bar she hoped to meet.
I hope…hope we can have a nice retirement party for her.
We try to balance what our financial plan has us leaving with enjoying experiences with them now. My mom did that but living to 95 went kind of negative at the end. My dad had set up trusts for us that covered her necessary expenses for her lifetime. Our trusts have been spent down almost completely but we and our children have had the fun of enjoying it with her. A fine legacy actually.
Retiring January 31, 2022 at age 57. Debt free, mortgage free. Will start collecting pension and continue working my fulltime part time jobs. I’ll collect SS at age 67-70 depending. Mrs Bmac will retire when she no longer enjoys going to work.
So many on here mention pensions. I am curious - is there data somewhere that indicates what percentage of people are going to be in pension plans? And a breakdown among the different types of pensions plans?
I am the one who has worried that we could outlive our $. Fortunately it is pretty unlikely. We do have LTC insurance. The premiums are going to get $$, though its a cost I’d still like to cover. I cant recall if we purchased the “no more premium if you start to use the benefit” option like my parents had. We will have our SS and DH’s small pension in addition to our savings. I’ve been worried that me might need it later, but TBH gifting them $ (under the taxable limit) is not going to change our lifestyle.
@Hoggirl - I have not seen data, but in general far fewer people getting traditional pensions now. I worked for a big company, and I am on “new plan” (cash account, which I am taking as monthly annuity payments; also there was good 401K matching) - it’s helpful, but not as nice as the good old days.
I am under the impression that the main groups that still have traditional pensions (with medical care) are government workers and teachers. True?
* 40% SS only
* 15% no income from a pension, savings or Social Security
(I wonder if these numbers are misleading due to by couples with one main wage earner? Perhaps a better Googler can find more meaningful data)
The point of that discussion on lifestyle creep is that so much of it is unconscious, and an occasional reminder, even if you know all about it in theory can be useful. I have read the Millionaire Next Door and think some of the comparisons are interesting. I read Sex and the Single girl by Helen Gurley Brown, at age 15 or so, which had many similar lessons about thrift that I took to heart.
The old age card makes planning very hard. The women in my family have all lived well into their 90s.
We did the same as @doschicos many, many times. H took a while to be convinced.
Eventually, he determined that even under a worst case scenario (barring something equal to a world disaster) and assuming we both live to 100, we will not outlive our money even after netting out the amount we planned to give our kids.
We’re fortunate to have a pension that H began collecting after his involuntary retirement. He also had a nice performance bonus paid in his final year and had three years of deferred compensation owed him. Our 401K funds have done pretty well, too.
We can’t get LTC insurance due to multiple health problems, but have looked at the cost of in-home care for when the need arises. I think it’s likely that H could live into his late 90s unless he has some major accident. He will probably outlive me by 10 to 15 years. I anticipate we may need some in-home care for the last few years of my life and perhaps for the last five years of H’s life. We agree on what we’ll do regarding end of life choices.
It helps that we have frugal habits. We don’t feel as if we’re depriving ourselves of anything important in order to give to our kids now. We’re not worried about the pension thanks to the Pension Benefit Guaranty Corp. It’s possible we won’t get to collect all of the social security benefits which we’re due, but that won’t be devastating for us. We’re not likely to bounce the last check, but we probably won’t leave a great deal behind, either.
Our pensions are from the federal government, so I’m not worried they won’t be there. We are not the “old” federal retirement plan, so we don’t get a ton of money, but it will adjust with COLAs each year (called “diet” colas, bc we don’t get the total amount of inflation, for example). We will also get social security and have saved a lot.
Multiple financial advisors have told us we have plenty to maintain our current spending and Will have a lot left over when we die. (But of course last performance does not guarantee future returns or whatever that saying is).
I’m more comfortable having our 401Ks and we are retirement planning assuming SS will not be there anymore (still 15 years out from retirement). If we do get SS it will be an added bonus even though we’ve been paying in since early high school years.
I’m a retired educator. I do have a pension. But I pay for my health insurance. It’s not not true that all retired teachers get free health care for life. It’s just not. Let’s not spread that. In some places there are folks who benefit from this, but not very many. The up side is in our state (CT) our teachers retirement board has a large group of retired teachers, and we can get our health insurance through that. The state pays a portion, but as an example…I pay about $250 per month for Medicare, and an additional $130 or so for the supplement. It’s an excellent plan so I’m not complaining. But that’s over $4000 a year for one person. My husband will be an additional $400 a month when he retires.
There are a lot of supplement plans out there…and the Medicare cost is the same for everyone.
I do agree that traditional pension plans are going the way of the dinosaur.
My husband has a pension. We also have a 401k. His employer also offers retiree health care benefits. They stopped the pension maybe 20 years ago so new hires will not have a pension but I do think that they have a different match than my husband does which is 3% if he contributes 6%.
The difference in our pension is that it can be taken as a lump sum. That’s something we will need to decide. If we do take the lump sum, we can invest that and leave any money leftover to our children. I have no idea what we will decide to do.
I have a small pension from when I was a professor. I have confidence in that, though I believe that I am not taking it as an annuity. For the most part, we have had to save for the money that we will live on as we slow down. As a business owner, I was lucky to be able to I had set up a Defined Benefit Plan. I was able to fund it until I hit the maximum such a plan was allowed to hold (though none of the professionals involved in setting it up every told me there was a maximum). At that point, I had to roll it into my 401k.
We have done Monte Carlo studies as well and they suggest our money is very highly likely to outlive us. We did a quick and dirty revision when we bought the new house, as we will have higher maintenance, snowplowing, gardening and insurance expenses and slightly higher taxes (as well as a major construction project). This may be offset somewhat by the fact that we will feel much less desire to travel (it feels like we live in the national wildlife refuge that is about 2 miles downriver) and to eat out. Plus, our energy bills will go down because a) it is much better insulated than our prior house; and b) we are installing solar and solar batteries (which should drive electricity costs to zero).
This year is interesting as at one level, we are forced by COVID to be in a slow-go year rather than a go-go year. No travel since February. No meals out since early March. No haircuts. Cleaning lady only in once every two weeks after a three or so month hiatus. So lots less money being spent. Perhaps a good simulation of what we will spend later on – except that we have been doing moving, construction and furnishing a new place. But, if we strip that out, maybe we have a good estimate of what we will be spending when we hit slow-go.
I am sort of shocked and surprised how many posts have indicated that because parents/family members have been fortunate to live long lives into 80’s and 90’s that people seem to be counting on the same for themselves. I mean, I’m hopeful - my mom turned 87 yesterday - but with disease as it is (cancer, heart issues, etc.) same genes or not, I don’t see that family history being a pretty good bet on longevity.
H is retired on his state pension and pays partial for his health insurance even as a law enforcement retiree. He cannot carry me on his plan unless I paid full fees. I am still employed and will also have state pension but will not reach maturity (30 years) - I’m reaching 20 years soon but no health insurance options through the state until I reach 65 - which would then just be state assisted Medicaid. I got screwed as this is a new rule.
I am not reading people here to say they expect to live to 90 or 100 based on family history. But if you are looking at the likelihood of running out of money before you die, I think you have to assume you will live a long time. In the running out of money analysis, dying earlier than you thought you might isn’t a problem. Its a problem for other reasons though (like not living as long as you would like).
My old firm had a pension plan for partners when I was first admitted. I remember though though that at my first partner retreat, our senior ERISA partner made a presentation showing the risks of maintaining the pension plan. We voted to terminate the plan with partial declining pension benefits to certain age groups (full benefits to retirees and partners on the cusp of retirement) and instituted a Keough plan. Prior to making partner, I had always contributed the max in an IRA. Subsequently after laving the firm, I have always max’d out on my 401k’s and an IRA for W. These plans demonstrate the power of time and investment averaging. I like the fact that this is our money and that we are not at the credit risk of another entity. The fact that we could borrow against the 401k’s also made them relatively liquid. When I helped D with her budgeting when she started working, the first rule was to max out her 401k contribution % and to work backwards from there.
