adulting/investing/retirement question

*Barbie* · January 2017

How do you judge if you're on track for retirement savings? Do you have some sort of magic number that you aim for (e.g. I think I need $XXX to retire), do you use a calculator on an investment site/provided by your bank? Do you work with a financial planner? Do you just max out your 401K contributions/have an IRA/stock/property/mattress full of cash and figure you'll be set?

I was looking into this a bit today and couldn't seem to find a consensus on how to set a good goal/target. I've been doing 401K contributions and increase the contribution whenever I get a raise or promotion until it's at max (and I have it in a higher risk mix of funds which do well overall - i'm only 33, so i can take more risk), and I have some stocks - but the calculator on my investment site is anticipating my needs to be significantly more than what I am looking to have. So I looked at a few more calculators, and have seen every response from "you're on track/ahead of the game" to "you'll be lucky to have a cardboard box to live in."

This also doesn't factor in my pension (provided I stay with current company, it's pretty good) or Social Security (assuming it still exists).

I figure that by the time I'm 60+ some costs may increase (healthcare, general COL due to inflation), but others should decrease (no mortgage, not supporting a kid) - so this will probably offset.

ETA: when I say "I" I'm also factoring DK, his income, age, and current retirement funds too. I also can't figure out how well the models work with 1 or 2 people.

ernursej · January 2017

I think the first place to start is with a fee for service planner. I like fee for service because they are not tied to any bank or financial products and are truly there to understand you and your needs. They cost a few hundred dollars for an hour or two with the person.

I would outline your goals and wishes for retirement and make sure that the planner has all your information regarding sources of income, savings and retirement plans/pensions. They can help figure out basic projections for how much money you might need and where you are sitting at the moment.

Generally, I see retirement income as 60-70% of pre retirement income provided that you have no debt. You will need more if you plan to live a more intense life than what you would currently live and less if you want more home-time/more simple life.

Try and stay away from banking affiliated financial planners as they always have their quotas to fill and will push their bank specific products even if there is another product that is similar but has reduced fees.

DrillSergeantCat · January 2017

My retirement at work is through Wells Fargo. According to their website, my retirement should be 80% of my income.

short+sassy · January 2017

I was recently reading an article that talked about the 4% rule with retirement savings. The 4% rule basically states that if don't take out more than 4% of your retirement savings per year, you have a 96-100% chance of it lasting for more than 30 years.

HOWEVER, an important consideration to keep in mind is that is 4% total. It needs to include income tax on what is being withdrawn, as well as any fees for the account.

There is also talk now that the Republicans are going to raise the SS age by two years. From 67 to 69 (for people currently 49 or under). I assume early SS will also be raised by two years. I forget what those ages are. Isn't it lovely, in my case, to already be working and putting into SS for almost 30 years and now they're changing the rules (sarcasm)?

Me personally, I want to retire much younger and don't bother with 401Ks and IRAs and all that stuff. My "retirement" is forming a monthly income stream with real estate investments. But I realize that is out of the norm. For most people, retirement vehicles like 401Ks are great.

GBCK · January 2017

we're public servants.
Work forever, die young.

charlotte989875 · January 2017

We did something similar as @ernursej in that we determined what total amount we would need at retirement age to live by a particular standard, then we worked with a planner to calculate how much we need to put away each year to get there. We both have student loan debt, bought a house, but have minimal to no credit card debt so it works. My new employer does a 14% match and immediate vesting, so we're maxing out those contributions while I'm employed here.

We didn't start saving seriously for retirement until we finished grad school, so we're a little behind where we'd like to be. I definitely recommend sitting down with a professional, one not tied to a particular service, unless you have to use set vendors for your employer (I have this) to get an idea of what is right for you to get where you want to be.

But also; I felt like I had no idea what I was doing for a long time, and I still don't know for sure we've got everything set up perfectly, but we're getting there.

short+sassy · January 2017

charlotte989875 said:

We did something similar as @ernursej in that we determined what total amount we would need at retirement age to live by a particular standard, then we worked with a planner to calculate how much we need to put away each year to get there. We both have student loan debt, bought a house, but have minimal to no credit card debt so it works. My new employer does a 14% match and immediate vesting, so we're maxing out those contributions while I'm employed here.

We didn't start saving seriously for retirement until we finished grad school, so we're a little behind where we'd like to be. I definitely recommend sitting down with a professional, one not tied to a particular service, unless you have to use set vendors for your employer (I have this) to get an idea of what is right for you to get where you want to be.

But also; I felt like I had no idea what I was doing for a long time, and I still don't know for sure we've got everything set up perfectly, but we're getting there.

Wow! That's amazing!!! I've never heard of a match anywhere near that high and have never worked anywhere that had immediate vesting.

GBCK · January 2017

I got immediate vesting at my last job...
It was actually only with a certain plan Within 14 days of hiring, I had to decide between the state-run retirement plan-which vested after 4 years and had health insurance (but no promise of insurance in the future--it no longer has health insurance) for retirees and a few perks or the TIAA retirement plan, which vested immediately and had fewer perks.

And you could NEVER CHANGE.
IT wasn't like "oh, chane during open enrollment, it's like "as long as you work here, you can NEVER change between these plans. research and pick fast"

Apparently it's a public employee nonprofit thing?
(I did immediate vesting because I wasn't planning on being there 10 years--I was, but I wasn't planning on it)

charlotte989875 · January 2017

short+sassy said:

charlotte989875 said:

We did something similar as @ernursej in that we determined what total amount we would need at retirement age to live by a particular standard, then we worked with a planner to calculate how much we need to put away each year to get there. We both have student loan debt, bought a house, but have minimal to no credit card debt so it works. My new employer does a 14% match and immediate vesting, so we're maxing out those contributions while I'm employed here.

We didn't start saving seriously for retirement until we finished grad school, so we're a little behind where we'd like to be. I definitely recommend sitting down with a professional, one not tied to a particular service, unless you have to use set vendors for your employer (I have this) to get an idea of what is right for you to get where you want to be.

But also; I felt like I had no idea what I was doing for a long time, and I still don't know for sure we've got everything set up perfectly, but we're getting there.

Wow! That's amazing!!! I've never heard of a match anywhere near that high and have never worked anywhere that had immediate vesting.

It's great, and surprising, we weren't planning for it to be as high as it was when we were making out our budget, but in the long run it's great.

GBCK said:

I got immediate vesting at my last job...
It was actually only with a certain plan Within 14 days of hiring, I had to decide between the state-run retirement plan-which vested after 4 years and had health insurance (but no promise of insurance in the future--it no longer has health insurance) for retirees and a few perks or the TIAA retirement plan, which vested immediately and had fewer perks.

And you could NEVER CHANGE.
IT wasn't like "oh, chane during open enrollment, it's like "as long as you work here, you can NEVER change between these plans. research and pick fast"

Apparently it's a public employee nonprofit thing?
(I did immediate vesting because I wasn't planning on being there 10 years--I was, but I wasn't planning on it)

This is pretty similar to what we have. (I work at public university). You can stay in the state-run retirement plan, but it's not portable if you leave the state (so not an option for us), and if you opt into the Optional Retirement Plan you can't change back to the state-run plan. I can change my vendor at anytime during enrollment, which is great, but I don't think it's that common.

We do have immediate vesting and all the benefits are similar to the state-plan, but it's (I think) in part because we're unionized faculty and the benefits all came in under the new CBA.

OliveOilsMom · January 2017

I have a 401k at work. I'm not maxing my full contribution, but I'm maxing what my job matches. I also have a few 401k loans against my account. So I'm paying that back to myself. Each year my 401k contribution goes up 1% in October. My company uses Prudential and once or twice a year you can have a free private session with some of their advisors when they come into to talk about how the retirement fund has done for the year. According to my current investments, I will be bringing in enough for us/me per month when I retire. I am also currently investing at a moderately aggressive rate, which I will stick with until around 50 and then will move to a moderate/moderate investments.

My H is in the pension system and like short & sassy mentioned above, his retirement age was just increased and not grandfathered into the original age. He also was not grandfathered into the free medical benefits through retirement. Stupid Gov Christie changed it all within his first year in the system, so he wasn't allowed to be grandfathered in. I could really have a rant about Christie and the pension system that he promised to fund, but hasn't. However, I will spare you all that for another day!

H is eligible for a 403b contribution in addition to his pension. He has not yet signed up for it, but will shortly. He also has a Roth IRA that was funded with part of his portion from the court settlement from FILs death.

And while not retirement related, H has signed up for a student loan forgiveness program through the Feds. Since he works for a school district, he will be eligible for loan forgiveness after working for 10 years. He is halfway there now. Once his loans are forgiven, we will increase more funds for retirement and whatever funds we open for the baby.

bleve0821 · January 2017

I married into money.

No, just kidding.

My dad has figured he needs about $100k/year to retire "comfortably," so I guess to some degree I am thinking along those lines, too (at least as a baseline pre-inflation estimate).

We max out our contributions to our 401(k)s, IRAs, etc., and we have about 6-months of my salary (I'm the primary breadwinner) set aside in an "oh shit" fund that also sees some growth. It isn't much growth, but if something happens, we have a buffer to prevent having to pull from our retirement funds. We try to sensibly invest as much as is left over after bills, mortgages etc. in stocks, mutual or index funds, etc. We also just started engaging with a financial advisor, so I am curious to see where/how that goes.

My company offers a kind of tiered retirement benefits program which is based on your highest salary and length of service with the company, so my long-term plan is to try to stay for 30 years and pool that with what we've saved from our personal investments. I don't think DH's company has any kind of retirement program.

@charlotte989875, my company only matches 5%

I'm jealous.

VarunaTT · January 2017

My plan is the young girlfriend.

No, just kidding. But realistically, I'm working until I physically can't and go on disability probably. I barely even bother with retirement planning b/c I simply don't make enough for it to matter.

baconsmom · January 2017

GBCK said:

we're public servants.
Work forever, die young.

Yeah, we've just assumed we'll never retire.

I mean, yes, we save, but honestly, it doesn't seem like an actual possibility at all.

kvruns · January 2017

short+sassy said:

I was recently reading an article that talked about the 4% rule with retirement savings. The 4% rule basically states that if don't take out more than 4% of your retirement savings per year, you have a 96-100% chance of it lasting for more than 30 years.
HOWEVER, an important consideration to keep in mind is that is 4% total. It needs to include income tax on what is being withdrawn, as well as any fees for the account.
There is also talk now that the Republicans are going to raise the SS age by two years. From 67 to 69 (for people currently 49 or under). I assume early SS will also be raised by two years. I forget what those ages are. Isn't it lovely, in my case, to already be working and putting into SS for almost 30 years and now they're changing the rules (sarcasm)?
Me personally, I want to retire much younger and don't bother with 401Ks and IRAs and all that stuff. My "retirement" is forming a monthly income stream with real estate investments. But I realize that is out of the norm. For most people, retirement vehicles like 401Ks are great.

I don't know the background but full retirement age has been climbing, is it a partisan thing or just a new norm? To be honest I've figured full retirement age would be 70 or later for myself by the time I'm ready to retire and really have no thoughts of SS being much help by the time I'm old enough

short+sassy · January 2017

kvruns said:

short+sassy said:

I was recently reading an article that talked about the 4% rule with retirement savings. The 4% rule basically states that if don't take out more than 4% of your retirement savings per year, you have a 96-100% chance of it lasting for more than 30 years.
HOWEVER, an important consideration to keep in mind is that is 4% total. It needs to include income tax on what is being withdrawn, as well as any fees for the account.
There is also talk now that the Republicans are going to raise the SS age by two years. From 67 to 69 (for people currently 49 or under). I assume early SS will also be raised by two years. I forget what those ages are. Isn't it lovely, in my case, to already be working and putting into SS for almost 30 years and now they're changing the rules (sarcasm)?
Me personally, I want to retire much younger and don't bother with 401Ks and IRAs and all that stuff. My "retirement" is forming a monthly income stream with real estate investments. But I realize that is out of the norm. For most people, retirement vehicles like 401Ks are great.

I don't know the background but full retirement age has been climbing, is it a partisan thing or just a new norm? To be honest I've figured full retirement age would be 70 or later for myself by the time I'm ready to retire and really have no thoughts of SS being much help by the time I'm old enough

Full retirement for SS has been 67 for decades. Though people can wait until they are 70 and get a larger monthly check. Haha...though I'm sure that will be bumped up by two more years also, if they move the full retirement to 69.

In general, life expectancy and medical improvements have been increasing over time. Nowadays, many people are healthy enough to work well past 65 if they want to. We have a friend of the family who retired from his main profession in his 50s. Started a second career in a job he loved and brought him joy. He didn't have to work. He wanted to. He worked there for almost 20 years and just recently retired from it at the age of 74.

I will spare you all my soapbox and rants about SS. But, unless a person is within 10 or so years of collecting it, it is wise to not include it in retirement calculations. Who knows what kind of s**tshow/amount it will be 20+ years from now? If I live long enough to collect SS, I'll just chalk whatever that SS monthly check is to "bonus money".

ILoveBeachMusic · January 2017

short+sassy said:

kvruns said:

short+sassy said:

I was recently reading an article that talked about the 4% rule with retirement savings. The 4% rule basically states that if don't take out more than 4% of your retirement savings per year, you have a 96-100% chance of it lasting for more than 30 years.
HOWEVER, an important consideration to keep in mind is that is 4% total. It needs to include income tax on what is being withdrawn, as well as any fees for the account.
There is also talk now that the Republicans are going to raise the SS age by two years. From 67 to 69 (for people currently 49 or under). I assume early SS will also be raised by two years. I forget what those ages are. Isn't it lovely, in my case, to already be working and putting into SS for almost 30 years and now they're changing the rules (sarcasm)?
Me personally, I want to retire much younger and don't bother with 401Ks and IRAs and all that stuff. My "retirement" is forming a monthly income stream with real estate investments. But I realize that is out of the norm. For most people, retirement vehicles like 401Ks are great.

I don't know the background but full retirement age has been climbing, is it a partisan thing or just a new norm? To be honest I've figured full retirement age would be 70 or later for myself by the time I'm ready to retire and really have no thoughts of SS being much help by the time I'm old enough

Full retirement for SS has been 67 for decades. Though people can wait until they are 70 and get a larger monthly check. Haha...though I'm sure that will be bumped up by two more years also, if they move the full retirement to 69.
In general, life expectancy and medical improvements have been increasing over time. Nowadays, many people are healthy enough to work well past 65 if they want to. We have a friend of the family who retired from his main profession in his 50s. Started a second career in a job he loved and brought him joy. He didn't have to work. He wanted to. He worked there for almost 20 years and just recently retired from it at the age of 74.
I will spare you all my soapbox and rants about SS. But, unless a person is within 10 or so years of collecting it, it is wise to not include it in retirement calculations. Who knows what kind of s**tshow/amount it will be 20+ years from now? If I live long enough to collect SS, I'll just chalk whatever that SS monthly check is to "bonus money".

It hasn't been 67 for decades - maybe a decade if you were born after a certain year (can't remember which year exactly). H is 6 years older than me. He can retire at 65. If I was still working, I couldn't retire until I reach 67 (plus some months). H was born in 1955. I was born in 1961. There has been talk for years that the age will increase for younger people.

My Dad (a WW2 vet) retired a couple of times. He was career military retiring at 47, then had another job until he was 65 then two other jobs before really retiring in his late 70s. This is what I see H doing.

Heffalump · January 2017

ILoveBeachMusic said:

short+sassy said:

kvruns said:

short+sassy said:

I was recently reading an article that talked about the 4% rule with retirement savings. The 4% rule basically states that if don't take out more than 4% of your retirement savings per year, you have a 96-100% chance of it lasting for more than 30 years.
HOWEVER, an important consideration to keep in mind is that is 4% total. It needs to include income tax on what is being withdrawn, as well as any fees for the account.
There is also talk now that the Republicans are going to raise the SS age by two years. From 67 to 69 (for people currently 49 or under). I assume early SS will also be raised by two years. I forget what those ages are. Isn't it lovely, in my case, to already be working and putting into SS for almost 30 years and now they're changing the rules (sarcasm)?
Me personally, I want to retire much younger and don't bother with 401Ks and IRAs and all that stuff. My "retirement" is forming a monthly income stream with real estate investments. But I realize that is out of the norm. For most people, retirement vehicles like 401Ks are great.

I don't know the background but full retirement age has been climbing, is it a partisan thing or just a new norm? To be honest I've figured full retirement age would be 70 or later for myself by the time I'm ready to retire and really have no thoughts of SS being much help by the time I'm old enough

Full retirement for SS has been 67 for decades. Though people can wait until they are 70 and get a larger monthly check. Haha...though I'm sure that will be bumped up by two more years also, if they move the full retirement to 69.
In general, life expectancy and medical improvements have been increasing over time. Nowadays, many people are healthy enough to work well past 65 if they want to. We have a friend of the family who retired from his main profession in his 50s. Started a second career in a job he loved and brought him joy. He didn't have to work. He wanted to. He worked there for almost 20 years and just recently retired from it at the age of 74.
I will spare you all my soapbox and rants about SS. But, unless a person is within 10 or so years of collecting it, it is wise to not include it in retirement calculations. Who knows what kind of s**tshow/amount it will be 20+ years from now? If I live long enough to collect SS, I'll just chalk whatever that SS monthly check is to "bonus money".

It hasn't been 67 for decades - maybe a decade if you were born after a certain year (can't remember which year exactly). H is 6 years older than me. He can retire at 65. If I was still working, I couldn't retire until I reach 67 (plus some months). H was born in 1955. I was born in 1961. There has been talk for years that the age will increase for younger people.

My Dad (a WW2 vet) retired a couple of times. He was career military retiring at 47, then had another job until he was 65 then two other jobs before really retiring in his late 70s. This is what I see H doing.

It's been 67 for me for as long as I can remember. But older people still get 65--it was raised for younger people, but they left the older ones at 65.

Re: the original question, DH works for a big bank, so we have access to a lot of planning resources through them. I always have to tweak the calculators, though, because they typically plan for 20-25 years of retirement, and longevity runs in my family. My grandma has been retired for 35 years and is still hanging in there.

short+sassy · January 2017

ILoveBeachMusic said:

short+sassy said:

kvruns said:

short+sassy said:

I was recently reading an article that talked about the 4% rule with retirement savings. The 4% rule basically states that if don't take out more than 4% of your retirement savings per year, you have a 96-100% chance of it lasting for more than 30 years.
HOWEVER, an important consideration to keep in mind is that is 4% total. It needs to include income tax on what is being withdrawn, as well as any fees for the account.
There is also talk now that the Republicans are going to raise the SS age by two years. From 67 to 69 (for people currently 49 or under). I assume early SS will also be raised by two years. I forget what those ages are. Isn't it lovely, in my case, to already be working and putting into SS for almost 30 years and now they're changing the rules (sarcasm)?
Me personally, I want to retire much younger and don't bother with 401Ks and IRAs and all that stuff. My "retirement" is forming a monthly income stream with real estate investments. But I realize that is out of the norm. For most people, retirement vehicles like 401Ks are great.

I don't know the background but full retirement age has been climbing, is it a partisan thing or just a new norm? To be honest I've figured full retirement age would be 70 or later for myself by the time I'm ready to retire and really have no thoughts of SS being much help by the time I'm old enough

Full retirement for SS has been 67 for decades. Though people can wait until they are 70 and get a larger monthly check. Haha...though I'm sure that will be bumped up by two more years also, if they move the full retirement to 69.
In general, life expectancy and medical improvements have been increasing over time. Nowadays, many people are healthy enough to work well past 65 if they want to. We have a friend of the family who retired from his main profession in his 50s. Started a second career in a job he loved and brought him joy. He didn't have to work. He wanted to. He worked there for almost 20 years and just recently retired from it at the age of 74.
I will spare you all my soapbox and rants about SS. But, unless a person is within 10 or so years of collecting it, it is wise to not include it in retirement calculations. Who knows what kind of s**tshow/amount it will be 20+ years from now? If I live long enough to collect SS, I'll just chalk whatever that SS monthly check is to "bonus money".

It hasn't been 67 for decades - maybe a decade if you were born after a certain year (can't remember which year exactly). H is 6 years older than me. He can retire at 65. If I was still working, I couldn't retire until I reach 67 (plus some months). H was born in 1955. I was born in 1961. There has been talk for years that the age will increase for younger people.

My Dad (a WW2 vet) retired a couple of times. He was career military retiring at 47, then had another job until he was 65 then two other jobs before really retiring in his late 70s. This is what I see H doing.

Thanks for the correction, I was thinking of the chart from this link:

https://www.ssa.gov/planners/retire/agereduction.html

It's 67 for anyone born after 1960, BUT it doesn't have the history of when that changed from 65 or 66.

MesmrEwe · January 2017

An easy way to think about it - look at the current cost per month for a nursing home - plan that the cost is going to go up, and you could be there 10 years or more depending on what condition you end up there with (the better ones don't necessarily cap it at long-term care insurance levels for cost so there is some OOP). Then, add up what it costs you to live right now. Be real. Remember that being retired you'll be responsible for all meals/food and any trips and medications. Now, multiply that by how many years you plan to live after retirement, add that all up, and you'll need at least a million or more in the bank for investments to live a simple comfortable retirement.

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