I have always been wary of calculations that tell me I do or don’t have enough to live on for the rest of my life. We worked with a fee-only financial planner and did a detailed plan including college and even grad school for kids and weddings. They did a thoughtful Monte Carlo analysis and believed at the time that if I continued partially from 65 to 72, it was easy. It is always hard in our case to do these calculations because my life is entwined with my work as a business owner (and occasional business co-founder) and hence medical and certain other expenses can legitimately be paid from tax-free dollars. But, more important, it is hard to predict how long we will live, how fast medical expenses will rise, and what we would actually do if we retired. The good news is that I made a lot more money over the last decade than was forecasted but probably spent somewhat more.
I also want to leave enough money to help my kids with a) down payments on houses if they need help; and b) help with grandkids education.
On budgeting, my companies use Quickbooks and my assistant handles my own bills using Quicken. Using Quicken, I can get a pretty clear breakdown of what we are spending. But, separating out what I would spend if I retired versus what I spend now is tricky. Health insurance premiums and copays and medical bills are expenses of my primary company. If I retired, this would come out of post-tax $$, no? Similarly, I get deductions for the business use of my car, subscriptions to the WSJ/NYT/Economist/FT, savings into a 412i/415i that is now going into a 401k, lots of meals, etc. And that fraction of my assistant who help with personal stuff. None of that currently shows up in my personal spending. How much of that would I still spend if I retired? The medical and a car and maybe some of the other expenses. So, I’ve found it hard to parse. On the other hand, I love what I do and don’t really have a desire to retire, so it may be a while before I have to solve that problem.
In retirement, we expected most expenses to be about the same (except no mortgage after-pays, plus a health insurance adder that is sadly more than that). I see people mention commuter expenses, but we had little of that. So far we are under projections, but that is because Covid prevented travel and minimized restaurants etc.
I have a sister-in-law who is not being good to herself physically – she needs to have spinal surgery but will eventually be unable to have it (spinal stenosis). She does not leave the house; brother says she has been a couch potato, but it is due to the pain. She doesn’t ever eat much so not getting overweight. Brother got healthy - he took retirement to start the succession of the owners to allow younger coworkers to take on more leadership/ownership. Brother quit smoking and lost weight - and is now at weight goal. He is not taking SS until 70 and says he will do good with that if he lives to 80 and beyond (I guess that is the break even point for him). He was a high earner so will be getting max amount in SS. That 8% gain is actually helping balance out his portfolio and ‘risk’.
For 2021, our financial planner funds are earning above our 401k/stock funds; he had 10.6% return while we were 8.06% YTD return. But our 401k has been ‘killing it’ (his words) in the last two years. We spin off money from 401k to balance our risk, and did so again a few weeks ago. Also realized we never changed our 2ndary beneficiary DD1’s name to her married name. In retirement will need to go through and change all the other accounts with this on the ones we have not done.
I have a coworker, RN, at age 70 is working because she has to financially. She hired in last year after moving from out of state. She is a smoker, and I told her she needs to quit so she can live to get to retirement and be healthy enough to enjoy life. Another coworker ‘vapes’ but she is ruining her lungs and is fooling herself to continue with that versus just quitting.
My mantra in retirement is ‘1200’ and gym/exercise. 1200 calories a day. Will get to swim again with membership again using ‘Silver Sneakers’ - Silver Sneakers comes with our health care supplement. My friend in another location in our state is able to use an excellent gym with Silver Sneakers. Only way I am going to lose the weight in an efficient and effective manner. Working 2nd shift and in a somewhat draining health care work situation, it has been tough on the weight gain because I would eat late and balance out some pleasure with eating. I have stopped gaining weight, but soon will be my ‘new job’ on personal self improvement.
What is great is we don’t have financial problems. We can help guide DDs in navigating to structure themselves in good financial stead. And love the grandkids who are so exciting to see.
I alluded upthread to recent conversations about retirement with friends and acquaintances. Greatest food for thought was thanks to a couple where the wife has had two bouts with breast cancer. Some people might look at that situation and want to keep working because of fear of further financial stress, but her dh basically said we’re not promised another day and is choosing to retire next year. He’s also responsible for his elderly parents, and the father likely doesn’t have more than a couple of years left. He wants to make sure his dad has a good quality of life in his remaining days. I admire that.
He made me realize that I was white-knuckling dh’s retirement last month. I am fiscally conservative, too much so usually. There is no amount of reassurance I could receive from my own facts and figures or our financial adviser that would 100% convince me that we will be OK. I would need to win a $20M lottery – not just $5M – to feel 100% confident with the decision, but I am going to have to be OK with the 90% level of confidence I have now. The FA thinks we can do it without touching my 401k, the bulk of our savings. I think she’s nuts, but, hey, if she thinks we can do it, then dipping into it occasionally will be fine. The problem is that the next seven years will be lean but doable. After that, I think we’re golden.
I’m spending the weekend helping my mom go through some of the my dad’s stuff. He died last year. She is sweating so much of this. She doesn’t need the money. I can understand not wanting to leave money on the table as some of this stuff cost good money when it was bought – 50 years ago! I just don’t think the juice is worth the squeeze for some of this. But I do see from where I get my parsimonious ways!
@ucbalumnus for the generation who grew up with the hazard warnings on cigarettes in mid-60’s – my brother preached to my dad about the ills of smoking and then in 7th grade he became one of the cool kids to smoke (good thing he didn’t inherit the genes on my dad’s side of the family with small cell lung cancer which killed my dad in 1995 at the age of 64 – dad had quit smoking 20 years earlier). The tobacco industry sponsored the medical association events of NC/SC into the 1990’s. Very smart MDs from there smoked; my boss (whose dad was a MD) smoking was acceptable behavior in his household - he graduated UG from Duke U - he quit smoking after he was board certified in his specialty in another southern state.
My still smoking sister in law didn’t start smoking until age 20 after medical assistant training; members of her family smoked and she grew up with both parents as smokers. I think she has it in her mind for many years that she ‘can’t’ quit. She saw the terrible vascular problems her mom had with her legs and multiple vein surgeries - always with the risk of needing an amputation. Her dad died younger than he should have from smoking.
I lead a very active and healthy lifestyle but I am also aware that nothing is guaranteed. I posted on another thread that I have lost 6 HS classmates (Class of '74) in the last 2 months. I wasn’t close to any of them so I do not know what lifestyles they lived except that one man was an avid runner. He apparently started after a less healthy way of living led him to heart problems years ago.
My mom complained to me once that despite my Dad’s very active, healthy habits he still died before her. I pointed out that he did live longer than the average man in his generation (he was almost 85) and that except for his last few months, he was very active and remained happy and upbeat until the end. I believe quality of life is important and my Dad did too.
And no matter how much time I have, I will try my hardest to make it good.
Regarding budgeting and lower food costs, don’t forget the costs of feeding your adult kids if they are local or come around much. We end up with lovely family meals which negate a lot of the savings, though that is adding the costs of sons in law, not moving hungry teen boys out
Regarding retirement investments, as you countdown to 1-5-10 years left, how are you choosing your allocations between equity-bond/cash-real estate?
We must be “related”!! Everything you said is exactly how I feel! Like I will never have enough $. Which is probably ridiculous. From as young as I can remember my father said I was a miser. I went through a divorce and fortunately was able to keep the house and while I wasn’t thrilled with how things worked out financially etc in the long run I knew 10k of even 50k wasn’t going to make a difference in my life. It would just cause more in legal fees. I’m also not sure where my fear of running out of money came from because I didn’t have it pre divorce although my current husband walked out of his divorce with next than nothing and I ultimately saw how he dealt with finances. Being a tax lawyer with an specialty in asset protection when it came time to doing any of his own planning he did nothing and ascribed to the policy of spend now don’t worry about later. Ugh ugh ugh! So, he never took advantage of his firm’s 401k plans (as a partner there were no matches but he could’ve at least reduced his taxes on the deferral of his contributions) and he only had a nominal IRA which went to his wife. She was a shopaholic and he was a guy who didn’t say no and himself could be a spendthrift because he grew up with nothing yada yada. So I think perhaps once he came into my life I became an even bigger right wad. He’s 10 years older than me but he basically started from zero when his divorce was finally over. The ex was like the energizer bunny. And more than 120k later in legal fees and debt etc what was the point of it all? Exactly why I avoided that mess. So…now I worry how to undo being such a tightwad and how to predict what is enough.
Every month I think is a good month we wind up spending more than I expected. Kids being gone will save a lot I realize but also eventually there will be boyfriends and girlfriends and expenses in taking them out to eat or meals or trips with us so to me that is cause for even more expense.
Separately I wanted to know for anyone who is retired or has older retired parents if you notice that your parents complain how expensive everything is at restaurants yet maybe 5 years ago they wouldn’t think twice about spending $ on a restaurant like that. I ask because my parents seem to not only want to go to the same restaurants, always want to go to places like Denny’s and my parents have never been cheap about a meal out and don’t need to be cheap but as they age it is like god forbid if a meal is $100 as if they’re running out of money. And they’re definitely not going to run out of money nor do they need to change anything about their lifestyle. I just wonder if that’s common? It’s become a big joke about Denny’s because no one else in my family would step into Denny’s. Also there are so many other places to go.
Per the question about older parents… no matter how much money you have, I think it is stressful for them to see prices that are very steep compared to “the old days” (pre-inflation, when they may have only earned $5k per year).
Yep. H and I have become “them.” In my 20s, when we were living with hyperinflation, I used to get annoyed by comments about prices in the old days. Then we went through a medical and financial crisis about 15 years ago and became very budget focused. Even now that we’re comfortably retired, there are some meals I cannot enjoy eating at a restaurant (or could not, pre-pandemic.) We can’t bring ourselves to spend money on steak dinners when H can prepare a very similar meal at home for a small fraction of the cost. Even less expensive meals aren’t very enjoyable if they’re something one of us could cook. Plus, with H being hearing impaired it’s not as pleasant to eat out with all of the background noise. If we just want an easy meal, we’re more likely to get take out than to go to a nice restaurant.
When H retired he became obsessed with living on a reduced amount. He was out of touch with prices on nearly everything and they came as a shock. H has finally become convinced that we’ll be fine.
We’re still sometimes surprised by the difference in prices compared to decades ago and will comment, but try not to annoy our kids. Changes have been both good and bad.
@Silpat we have a very nice steak place that has reasonable prices at lunch, so we will take family there (it is not a chain place). We did go to a high end (for our area) steak place with DD2, and they overcooked DH’s med-rare steak. There were a couple of other things that were a turn off there, so I did call the place the next day and talked to a manager – and gave all the feedback. He refunded me for DH’s steak, which I did appreciate. The waiter told us the prime rib had been cooked too long but I took a chance and it was delicious. Crazy.
DD2 and I went to another high end steakhouse place which has local owners and is only open for dinner (DD2 had eaten there with a friend and had two free appetizers there with next meal by a certain date, so for my C-mas present she took me - when she was in town and DH was not). They had steamed mussels appetizer that I would go back to eat as a meal along with their house salad. They had a reasonably priced drink. I had the lamb and it was delicious. With my 1200 calorie diet in retirement, I may need to have DH take me there before I retire!
We take DD1/family to the lunch steak place where they all have something they like to eat there and we have a reasonably priced bill.
When we go to DD1/Family’s place, I typically bring all the food. Once when his parents were also there, I got catered meat and some sides and also brought additional sides. I haven’t been ‘brave enough’ to make prime rib at home.
We recently went to a high end steak places serving the most pricy cut out there. A5. I wish I could tell you it wasn’t worth the astronomical price.(like OMG $$$$$$) But it was. And the entire meal was amazing. We will go back. Not all the time. Lol. But at least 2 times a year.
Haha, I wish it was all that, but they have just become so cheap about some things. Many things have also not gone up in prices over the past few years, but they just complain about it, lol. My father also still goes to work 3 days/week. He would go more if he could, but he isn’t able to drive any longer and can only find a driver 3x/week. When covid hit he couldn’t stand sitting still at home and the minute they were vaccinated all he wanted to do was go out to eat. Unfortunately with the gradual loss of his eyesight he lost any joy in doing much of anything, stopped going to sporting events, playing golf, vactioning, etc except eating out!
@Colorado_mom That comment about 5k a year made me laugh. I will never forget my mother telling me just before my brother was first born (he’s in his mid 50’s now) that she made more as a teacher than he did as a lawyer and that was $3,600/year she made - in the mid 60’s! I would love to have just one month that I didn’t spend $3,600!
Local Denny’s style restaurant had $5 half chicken dinner on Tuesdays, you must go early. If we were in town on a Tuesday we were expected to go and to order chicken
Yeah so it’s all relative but teachers where I live just starting out make a lot more than that and attorneys where we live also make way more than teachers so today it’s better to be a teacher or lawyer than back then lol. I better not tell my parents that! They did pretty well back then. The problem today is the income gap among other jobs and people and that someone who makes $30k a year today depending where they live of course can have a hard time ever getting ahead. My husband has a daughter who is 31 and makes in the mid 30’s maybe lower 40’s and can’t get ahead in her career or saving and she at least had the opportunity to get an education. Worse for those who aren’t so lucky. Obviously there are some outliers as my own kid didn’t go to college and has his own business but he is an anomaly.
I am sure that this has been covered upthread but I can’t find it. I am hoping those of you already using Medicare and Medigap can help me out.
DH and I are working on our retirement plan/budget. We’ve got the pre-medicare estimates down, but I am unsure what to include for estimated healthcare related expenses once we go on Medicare. What does the average Medicare supplemental plan cost? What won’t be covered between the two? Copays? Is there any kind of out of pocket max like there is in “regular” insurance? What should we budget for medical/healthcare expenses. (We are currently both healthy–0 medical conditions and no prescriptions)
