Millennials want to retire by 61, but most have nothing saved

[Cheeseweasel 26438]

Your mileage may vary.

 

I can live comfortably on 60k per year. At that rate, I'll be fine retiring at 59 with my current 1.2M in savings plus however much it grows in the next 6 years. 

4% of 1.2M is 48K per year with SS making up the additional 12K. All of this without touching the principal. 

[bluto 4947]

Can't help but wonder how much better(?) it is to retire outside of Tx with a paid off mortgage, property taxes alone hit around $10k for a desirable/decent place to live by typical measures here

[Spankytoes 1747]

1 minute ago, Cheeseweasel said:

Your mileage may vary.

 

I can live comfortably on 60k per year. At that rate, I'll be fine retiring at 59 with my current 1.2M in savings plus however much it grows in the next 6 years. 

4% of 1.2M is 48K per year with SS making up the additional 12K. All of this without touching the principal. 

At the very least, we know that Social Security will not be around in its current form in 2040. At best it won't pay out 100% and at worst it will be non-existent because the fund have been exhausted. So yes, YMMV. SS doesn't even factor into anything I plan for in my personal life or have provided as an example. It would be gravy to being financially responsible for many years. As you will cross over into the realm past 2037, I don't think that strategy is viable past your 12 year period of usage. Also, I don't think you are taking inflation into account. $48,000 in today's dollars will be approx. $51,520 in 2037. So either your standard of living drops or the amount you have to withdraw will increase.

[Cheeseweasel 26438]

5 minutes ago, Spankytoes said:

At the very least, we know that Social Security will not be around in its current form in 2040. 

I'm betting it will. The People will always vote themselves money.

[Spankytoes 1747]

18 minutes ago, bluto said:

Can't help but wonder how much better(?) it is to retire outside of Tx with a paid off mortgage, property taxes alone hit around $10k for a desirable/decent place to live by typical measures here

I can tell you that my wife and I have zero intention on retiring in NY. The taxes are way too high for it to make sense. Unless we refinance again, our house in Long Island should be paid off when I turn 60. It will be kept as a vacation home. I can't speak to other states, but I'd imagine that you're better off staying in Texas if they decline to institute a State Tax. To give you an idea, we paid $24,000 in property and State taxes in 2018 for a house in Texas and a house in NY. Because of the new tax law, we are capped at $10,000. That would not have been an issue if we only had a house in Texas.

[Texas St. Armadillos 1381]

24 minutes ago, bluto said:

Can't help but wonder how much better(?) it is to retire outside of Tx with a paid off mortgage, property taxes alone hit around $10k for a desirable/decent place to live by typical measures here

Don't property taxes drop substantially at a certain age in Texas?

[52-80 19287]

The government should just grind up all of the working class people into Soylent green to feed the middle class.

 

2 birds, 1 stone.

[ztejas 43777]

The issue with "the rule of 4%" is that it isn't a rule, it's just an observed weighted average, albeit a very conservative one.

As Spankytoes pointed out, you need to consider inflation, as well as purchasing power (which is a much bigger elephant in the room - strong as the dollar may be right now).

Past that, as I believe Eddie pointed out on the previous page, you need to consider the possibility (and it's not really a "possibility", more of an acknowledgement that it WILL happen at somepoint) of a bad decade. Or a bad 12 year stretch. Or a bad 15 year stretch. 

The global economy is entering some very uncharted waters, and yet the DOW is the highest it's ever been. Over the long-run, sure, 4% still seems conservative, but if you entire retirement at the top of a roller-coaster the ride down is going to be interesting. 

If you REALLY want to hedge against risk the "rule" would be whatever the savings bond interest rate is. But that only covers inflation, really, and keeps your principal afloat. Purchasing power is a different animal. Especially for younger generations (bringing it back to the title of the thread).

[bluto 4947]

11 minutes ago, Texas St. Armadillos said:

Don't property taxes drop substantially at a certain age in Texas?

You can defer them plus interest. And you get an extra 10k exemption on the school district taxable value, as well as freezing your prop taxes at the age of 65 but that depends on the taxing entity. 

[SwanderedTalent 5761]

2 hours ago, ztejas said:

Assuming our ecosystem and global economy haven't collapsed by 2070 that doesn't sound terrible. 

I guess I can go to the cloak room if I want to have this discussion past this point, though. 

the ecosystem has been in the last ten years before catastrophe since before I was born, I wouldn't make any investments based on the assumption that anything's going to change radically

as they used to say, "the Russians might nuke us tonight, but... your homework's still due tomorrow so you'd probably better do it"

[tucker 238]

16 minutes ago, Texas St. Armadillos said:

Don't property taxes drop substantially at a certain age in Texas?

They stop increasing at 65?

[ztejas 43777]

1 minute ago, SwanderedTalent said:

the ecosystem has been in the last ten years before catastrophe since before I was born, I wouldn't make any investments based on the assumption that anything's going to change radically

This is precisely the line of thinking that's got us into this fucking mess. 

You should research a little bit more if you think things haven't already "changed radically". 

[SwanderedTalent 5761]

3 minutes ago, ztejas said:

This is precisely the line of thinking that's got us into this fucking mess. 

You should research a little bit more if you think things haven't already "changed radically". 

No, it's not, and no, I shouldn't. You are making at least two really large assumptions on the second point.

edit-- and on the first, if you want to make retirement investments based on what you think the planet will be like 40 years from now, that is your prerogative. 

Edited February 12, 2019 by SwanderedTalent

[Cheeseweasel 26438]

7 minutes ago, ztejas said:

This is precisely the line of thinking that's got us into this fucking mess. 

You should research a little bit more if you think things haven't already "changed radically". 

CR is that way ---------------->

[SuingToGetAMessageBoard? 3861]

What if I have a 401k through work but the wife has an old IRA.  We max mine.  Can I fund hers too?  Is that the $6,000 number?

[Johnny Sack 8397]

Read the Millionaire Next Door.   It has very sound principles.  

[EuroHorn 3277]

28 minutes ago, SuingToGetAMessageBoard? said:

What if I have a 401k through work but the wife has an old IRA.  We max mine.  Can I fund hers too?  Is that the $6,000 number?

Even if you have a work 401k, you can fund an IRA for yourself and your wife.  I max out my work 401k and max out an IRA.  I just can't deduct my IRA for tax purposes.  Both you and your wife can each have an IRA

Edited February 12, 2019 by EuroHorn

[52-80 19287]

7 minutes ago, Johnny Sack said:

Read the Millionaire Next Door.   It has very sound principles.  

Yup.  Biggest takeaway for secure retirement: write best-selling book

[EuroHorn 3277]

Actually, read this link.  It has some additional clarifications on your wife's ability to fund an IRA if she doesn't work,. 

https://investor.vanguard.com/ira/spousal-ira

The rules vary depending on whether your wife work and also if you file jointly

 

Edited February 12, 2019 by EuroHorn

[Sbbruin 21938]

I just surround myself with keen financial advisors.

[Telegraph_it 3374]

I’m relying on cotton royalties for retirement. 

Edited February 12, 2019 by Telegraph_it
Cant spell.

[Llano Estacado 1257]

Read the Millionaire Next Door.   It has very sound principles.  

Fidelity used to include in their mailer this stupid chart plotting age vs 1x 2x 4xSalary, etc that drove me nuts as a young man. Start work at 23 or 24. Save 10% and you’re already behind having 1x your salary at 30. That doesn’t account for what will likely be the fastest wage/salary increases later in your career.

That being said 10%, maxed employer contribution, should be the minimum LOE. If you’re like most Americans and don’t have at least 1x your salary saved by the time your in your mid 30s you’re living beyond your means. It doesn’t get any easier when you have kids, a house, etc.

[Anastasis 23517]

31 minutes ago, Llano Estacado said:

That being said 10%, maxed employer contribution, should be the minimum LOE. If you’re like most Americans and don’t have at least 1x your salary saved by the time your in your mid 30s you’re living beyond your means. It doesn’t get any easier when you have kids, a house, etc.

Percentage of Americans with a smartphone that can stream porn anywhere in the world >>>>>> percentage of Americans with 1x salary in savings. 

[Dahobbs 17826]

6 minutes ago, Anastasis said:

Percentage of Americans with a smartphone that can stream porn anywhere in the world >>>>>> percentage of Americans with 1x salary in savings. 

I'm concerned for those that have smartphones that can't stream porn. Where did they buy those phones? And why? 

[Johnny Sack 8397]

25 minutes ago, Anastasis said:

Percentage of Americans with a smartphone that can stream porn anywhere in the world >>>>>> percentage of Americans with 1x salary in savings. 

Americans will choose consumption of unnecessary luxuries over savings.  Our low income people included.  New cars.  Smart phones with unlimited data.  

[ztejas 43777]

13 minutes ago, Johnny Sack said:

Americans will choose consumption of unnecessary luxuries over savings.  Our low income people included.  New cars.  Smart phones with unlimited data.  

A smart phone is an unnecessary luxury? Not sure about that.

Hasn't the UN already classified internet access as a basic human right? 

[Okie State 3868]

What do people use smartphones for? Fucking off on social media mostly. I'd say that's a luxury.

[Llano Estacado 1257]

“Oh no my cellphone bricked, now I won’t have access to my budgeting app or my financial institutions’ app where I enjoyed comparing expense ratios on various bogglehead ETFs” said maybe 3 in 300MM Americans ever.

[Johnny Sack 8397]

1 hour ago, ztejas said:

A smart phone is an unnecessary luxury? Not sure about that.

Hasn't the UN already classified internet access as a basic human right? 

The UN says a lot of stupid shit.  

[ztejas 43777]

@Okie State @Llano Estacado @Johnny Sack

All 3 of you tell me you don't own a smartphone and I'll take you more seriously.

[Johnny Sack 8397]

18 minutes ago, ztejas said:

@Okie State @Llano Estacado @Johnny Sack

All 3 of you tell me you don't own a smartphone and I'll take you more seriously.

I own one.  But it isn’t a material part of my budget.  If my household income was $50k a year I’d roll with a cheap flip phone.  

[Okie State 3868]

[mention=577]Okie State[/mention] [mention=111]Llano Estacado[/mention] [mention=115]Johnny Sack[/mention]
All 3 of you tell me you don't own a smartphone and I'll take you more seriously.

I do have one...and I consider it a luxury. A basic cellphone may be necessary these days, but a smartphone is not.

A computer at home with internet access could also be considered a necessity these days. An iPad is not.

[ztejas 43777]

2 minutes ago, Okie State said:

A computer at home with internet access could also be considered a necessity these days.

This is probably the take we were looking for. 

I would say for some people though a smart phone might be considered a necessity. Maybe not across the board. But I still wouldn't label it as a dispensable luxury.

[Llano Estacado 1257]

I own a smartphone. I make more than the median income. I’m saving at a rate more conservative than the 4% rule. I put away more than 10% of my salary towards retirement +”savings” +kids college. I had more than 1x my salary in retirement at 30, not including general savings or an emergency fund.

Without googling the latest information I’d wager I have more in my 401k and Roth than the median American twice my age. I’m not the problem...

I’m not saying don’t own a smartphone, but if you can’t make ends meet, maybe don’t make fucking phone payments @ $25/month for the rest of your life to AT&T or Apple. Rock an iPhone 7 for a few years and use that extra cash for some bonds or simple ETFs. At 70 years old no one is going to care that you had face tracking bitmojis before your neighbor.

Most Americans have “lifetime savings” that are multiples of their weekly take home pay not their AGIs, that’s scary as fuck to me, and I’m the prepared one.

[Celery Man 21036]

cheap ipad or iphone is a better buy than a cheap pc for a broke person checking off basic necessities like internet

[Covri 6273]

18 minutes ago, Okie State said:

I do have one...and I consider it a luxury. A basic cellphone may be necessary these days, but a smartphone is not.

A computer at home with internet access could also be considered a necessity these days. An iPad is not.

A lower tier smart phone with internet access is actually what many poor people have as their only phone and access to the internet. If you’re poor you can’t afford a computer and home internet access and a cheap flip phone and/or even internet home phone. Paying cricket $50 a month for all of that phone and internet access is really all that low income people can afford anymore.

 

 

[Archer 474]

2 hours ago, Anastasis said:

Percentage of Americans with a smartphone that can stream porn anywhere in the world >>>>>> percentage of Americans with 1x salary in savings. 

 

And which one do we think is happier?

[Okie State 3868]

A lower tier smart phone with internet access is actually what many poor people have as their only phone and access to the internet. If you’re poor you can’t afford a computer and home internet access and a cheap flip phone and/or even internet home phone. Paying cricket $50 a month for all of that phone and internet access is really all that low income people can afford anymore.
 
 

Fair enough.

[Spankytoes 1747]

Smart phones aren’t a luxury if your job is elevated past being a cashier at Walmart. Any white collar job will require access to email on the go. 

[Archer 474]

6 minutes ago, Spankytoes said:

Smart phones aren’t a luxury if your job is elevated past being a cashier at Walmart. Any white collar job will require access to email on the go. 

Maybe it’s the career I’m in or that jobs have been fairly plentiful the past 15 years but if my company wants me to have 24 hour email access they will either provide the phone or pay my bill. With the legalities regarding work data on personal phones during a lawsuit finding I’m not offering my phone even with a stipend  

Of course this will not apply to self employed white collar jobs. 

[Nice Guy Eddie 13567]

6 hours ago, Spankytoes said:

I'm not sure how that math works. Conventional wisdom says that you should rely on at least 70% of your end game salary to maintain the same standard of living. If we assume a 2% wage increase annually from the age of 30, your household income at 67 would be $223,200 per year. That means you will need to withdraw $156,240 per year to maintain the same standard of living as a base. You're simply reallocating funds. Instead of paying for gas and increased car maintenance to travel to a job, you have to invest more into life insurance policies and medical needs since they aren't subsidized by an employer. Inflation is figured at a 2% per year rate as well. So $156,240 in 2040 would be like $90,620 in today's dollars. At a stagnant rate, you will burn through $1.7m in 11 years. If you become more frugal in your old age, which defeats the purpose of being frugal in your peak earning years, you could maybe stretch things to 14 years if you remain in relatively good health. If you retire at 67 in 2040, you had better hope that you don't live past 82 when the money runs out. That's why so many retired people take other jobs to help subsidize their wages. 

Any thing less than $2.5m for a married couple is anxiety inducing. (Assuming you retire in 2040) 

I thought the scenario was someone earning and living off 90k when they retired.  But you’re right that someone requiring 150k in expenses in retirement has a completely different need.  They obviously have to put away more than 10k/year for 40 years.  

 

[Anastasis 23517]

58 minutes ago, Archer said:

 

And which one do we think is happier?

 

[workswithseed 2142]

My company matches 8% for 401k and will pay 90% for college if I go back. Should I stay? 

Really though, as a mellinial welder, this almost seems too good to be true. If only I was back in Texas then it would be perfect.

[Nice Guy Eddie 13567]

1 hour ago, workswithseed said:

My company matches 8% for 401k and will pay 90% for college if I go back. Should I stay? 

Really though, as a mellinial welder, this almost seems too good to be true. If only I was back in Texas then it would be perfect.

No idea but make sure you understand the terms of accepting reimbursement for education.  Companies usually require you to stay for a certain amount of time or you have to return the money.  

[Fudge Nuggets 19292]

7 hours ago, Spankytoes said:

Any white collar job will require access to email on the go. 

 

[workswithseed 2142]

1 hour ago, Nice Guy Eddie said:

No idea but make sure you understand the terms of accepting reimbursement for education.  Companies usually require you to stay for a certain amount of time or you have to return the money.  

Yeah, I'm figuring not to fuck off like I did in community college, still paying for that. 

I'm either thinking programming or go the harder route and become an engineer.

[Nice Guy Eddie 13567]

8 minutes ago, workswithseed said:

Yeah, I'm figuring not to fuck off like I did in community college, still paying for that. 

I'm either thinking programming or go the harder route and become an engineer.

Can’t companies require that your college work be somewhat related to your job or future job with them?  Meaning when they foot the bill.

 

[Okie State 3868]

Can’t companies require that your college work be somewhat related to your job or future job with them?  Meaning when they foot the bill.

 

At mine, yes. In my area they'll cover some, most, or all of an MBA, but only for a select few candidates. There are rules on how long you stay at the company afterwards. It's an investment for them and they want to see a return. I assume they have similar programs in the technical fields as well.

[workswithseed 2142]

26 minutes ago, Nice Guy Eddie said:

Can’t companies require that your college work be somewhat related to your job or future job with them?  Meaning when they foot the bill.

 

Thats exactly what they do. Lots of robots and very few programmers, and fewer engineers. I could also go into the buisness and sells side, but I'd like to take my happy ass to Texas probably after 15 or so years with this place if it's viable and that doesn't seem as transferable as the first two. 

Edited February 13, 2019 by workswithseed

[Cheeseweasel 26438]

12 hours ago, ztejas said:

A smart phone is an unnecessary luxury? Not sure about that.

Hasn't the UN already classified internet access as a basic human right?