2
0

Retirement - How much does one need - Truth and Lies


 invite response                
2024 Jun 7, 1:35pm   1,135 views  57 comments

by gabbar   ➕follow (1)   💰tip   ignore  

If you want to retire in comfort, investment firms and news headlines tell us, you may need
$1 million in the bank.
Or maybe not. One prominent economist says you can retire for a lot less: $50,000 to
$100,000 in total savings. He points to the experiences of actual retirees as evidence.
“You Don’t Need to Be a Millionaire to Retire,” says the headline of a column penned by
Andrew Biggs, a senior fellow at the American Enterprise Institute think tank, and published
in April in The Wall Street Journal.
Most Americans retire with nowhere near $1 million in savings. The notion that we need that
much money to fund a secure retirement arises from opinion polls, personal finance columns
and two or three rules of thumb that suffuse the financial planning business.
Financial advisers tell you to save 10 times your annual salary for retirement, enough cash
that you can live on 4% of the balance for a year. In one widely reported survey, Americans
said they would need $1.46 million in the bank to retire comfortably.
Biggs disagrees. To prove his point, the economist looked at responses to the federal Survey
of Household Economics and Decisionmaking between 2019 and 2022.
The survey asked retirement-age Americans, 65 to 74, how well they were managing
financially.
A majority, roughly 85%, said they were just fine: They were living comfortably, or at least
“doing OK.”
Only 15% said they were struggling.
The finding matters, Biggs says, because most retirees have much less than $1 million in the
bank. In the federal survey, the typical senior who reported a satisfactory retirement had
$50,000 to $100,000 in savings.
“It’s impossible to find any evidence that seniors need even a fraction of $1.46 million in
savings to be financially secure,” Biggs wrote.
2/4
By his argument, retirees don’t need nearly so much savings as financial planners say they
do.
The average couple that retired in 2022 reaped nearly $46,000 in annual Social Security
benefits, by Biggs’s calculations. While that sum is “hardly extravagant,” he wrote, “a typical
couple can expect an income more than twice the elderly poverty threshold before they touch
a penny of their own savings.”
Biggs says retirement planners overstate how much income retirees actually need, and how
much they will spend, essentially as a way to drum up business.
Reactions to Biggs’s column ranged from admiration to outrage. Some readers reposted the
piece on X with praise. One critic quipped, “You don’t need to be a millionaire to retire and do
NOTHING!!!”
Biggs is a noted conservative economist and something of a contrarian. Earlier this year, he
and a colleague sparked outrage with a paper that argued for eliminating the 401(k) plan.
His new assertion, that people don’t need a million dollars to retire in comfort, flies in the face
of common wisdom in the retirement planning industry.
“What about rising health care costs?” said Lili Vasileff, a certified financial planner in
Greenwich, Connecticut. “What about more older adult children living for free with older
parents? What about divorces in later life that halve all assets on the cusp of retirement?”
Perhaps the most provocative claim in Biggs’s analysis is that only a few retirees face
financial challenges.
Alicia Munnell, director of the Center for Retirement Research at Boston College (and a past
collaborator with Biggs), estimates that at least two-fifths of retirees are struggling financially.
In the 2022 edition of the federal Survey of Consumer Finances, when seniors were asked
how they would handle a financial emergency, only 58% said they could rely on savings. To
Munnell, that figure reflects the depth of financial insecurity among retirees.
Why, then, did only 15% of seniors in the other federal survey, cited by Biggs, say they were
struggling?
Munnell thinks many retirees are reluctant to discuss their financial problems in surveys.
“When people are asked about their well-being, I think there’s a certain pride,” she said. “You
don’t want to say, ‘I really screwed up.’”
Though Munnell disagrees with Biggs on the financial well-being of American retirees, she
applauds his stance that you don’t need a million dollars to retire.
3/4
“I don’t think it helps to hold out unrealistic savings goals and to exaggerate how much
money people need to fund a comfortable retirement,” she said.
The million-dollar retirement is a frustrating quest, Munnell said, because most of us do not
retire as millionaires.
The typical senior with a retirement account has about $200,000 saved, according to data for
households in the 65-74 age range from the 2022 Survey of Consumer Finances.
But only about half of those households report having retirement accounts at all.
On this point, Biggs and his colleagues disagree. He contends that many seniors have other
kinds of savings, not to mention pensions. Munnell believes that Biggs is overconfident in the
security of American retirees.
“I don’t know people, really, who have retirement savings who don’t have a retirement
account,” she said.
Retirement experts often say people will need about 80% of their preretirement income to
fund their retirement years.
Social Security covers only about half of that, according to the Social Security Administration.
And so, for a comfortable retirement, we are urged to save.
One rule dictates that we should try to save 10 times our annual salary to supplement our
Social Security income. For a typical American household, that comes to nearly $750,000, or
10 times the median household income of $74,580.
And then there is the 4% rule: Plan to withdraw 4% of your retirement savings to cover your
annual living expenses, adjusting the figure for inflation each year.
Some experts say 4% is too low; others contend it’s too high. Either way, the message is
clear: If you are going to live on a single-digit percentage of your retirement savings, you will
need a lot of it.
Biggs believes those rules exist largely so that investment houses can sell investment
products, and so personal-finance websites can attract pageviews.
He points to the 80% rule: Not many retirees, he reasons, will ever spend that much of their
working income in retirement.
“For a long time, 70% was the recommended mean for middle-income retirees,” he said in an
email to USA TODAY, “and it’s crept up without (to my mind) particularly strong evidence.”
4/4
The 4% rule is a little harder to critique, he said, “but one thing we now know is that retirees
reduce their spending pretty significantly as they age.” Older retirees travel less, eat less and
spend less on children, Biggs said. Medical costs rise, but insurance covers most of them.
Retirement experts say the guidelines are meant as aspirational goals for working people to
plan their retirement.
“Those rules of thumb are helpful for folks in their early career, their mid-career,” said
Douglas Ornstein, a director with TIAA Wealth Management, part of the financial services
nonprofit. “By the time you’re five years out from retirement, those rules are probably not so
helpful anymore.”
No two retirements are alike, financial advisers say. Some retirees are still making mortgage
payments or supporting grandchildren. Others have neither dependents nor debt.
“If you’re living in Manhattan, yeah, you probably need a million dollars, if not more,” said
Christopher Lyman, a certified financial planner in Newtown, Pennsylvania. “If you’re living
out near Lancaster, Pennsylvania, with the Amish, there’s not a lot going on down there. If
you’ve got $50,000, you’re probably OK.”

Source: https://www.yahoo.com/finance/news/really-1m-retirement-savings-not-091427748.html

« First        Comments 19 - 57 of 57        Search these comments

19   WookieMan   2024 Jun 10, 7:54pm  

Ceffer says

Problem is, you don't know during the cycles when you will need to withdraw funds.

If you're a dual income house max out 401k and live frugally. We have over $1M at 40 with 401k and Roths. 20 more years that will easily be $6M. That's $180k/yr on 3% roughly from dividends, interest and growth all day. Kids move out, so I pay some taxes. Whatever. I won't have a house payment. Assuming SS is still around that alone would cover our funny money like vacation. We wouldn't need to draw $180k/yr. Money keeps growing too most likely.

If you're worried what you need after 50, you're too late to the game most of the time. You need 30 years. So you're working to 80 AND still needing to save. You need to directly invest in RE or stocks to catch up at that point and that's risky. My plan has been doing exactly what I want it to and we can still spend money on fun stuff in our younger years.
20   GreaterNYCDude   2024 Jun 11, 5:39am  

For those projecting out 10+ years, Inflation will be the biggest wildcard, followed by medical costs.
21   clambo   2024 Jun 11, 5:49am  

My medical expenses out of pocket aren't significant. Your results may vary.
This is why you buy an HSA, you can use it for medical, dental, etc.
Medicare premiums for me were $4300 last year, it's deducted from my social security payment.
22   socal2   2024 Jun 11, 9:05am  

clambo says

My medical expenses out of pocket aren't significant. Your results may vary.


Alot of my friends and myself who are doing pretty well and nearing retirement (next 10ish years) are all being told we should have enough money to retire on comfortably (even in SoCal) but healthcare costs will kill us until we reach Medicare age.

We are maxing out our HSA and thankfully very healthy right now. Anything can happen, but still planning/hoping on being able to bug out in my very early 60's and covering healthcare costs out of pocket.
23   clambo   2024 Jun 11, 10:19am  

The problem with heath insurance is before age 65 you aren't on Medicare.
I paid $8000 per year for the cheapest Obamacare before I turned 65.
Obamacare costs vary; if you're 60 something but keep your income low, you're okay.
I still recommend having health insurance of some kind, especially in your sixties.
Living in Florida I saw numerous cases of people suddenly having a problem after age 60.
In my case I was in perfect health, then sore after climbing a sand dune with scuba gear on.
Boom; arthritis which required surgery.
Luckily I was on Medicare so my hips cost $150 and $250 respectively.
24   Ceffer   2024 Jun 11, 10:58am  

You can expect medical insurance costs of 14K to 18K per year in Cali for a couple for every year you are not on Medicare, not including out of pocket expenses if something does go wrong. It still will be thousands every year when Medicare kicks in at 65, though it is directly taken from SS. That has to be factored into 'early retirement'.

If you are a disability grifter, you still have to save money, because that turns to regular SS after age 65, whatever category you are in.

Just take the vax and all the boosters at 60 and DIE, FUCKING DIE, and the government and the banks will be very happy with you.

Retirement is a survival mine field. You'll have to dance faster than they can starve or kill you, while they try to profit from your death and disablement.
25   HeadSet   2024 Jun 11, 12:08pm  

clambo says

Luckily I was on Medicare

Yep, luckily. It is difficult around here to find a practice that will take new Medicare patients, as many folks turning 65 are finding out.
26   clambo   2024 Jun 11, 4:43pm  

I was also in Santa Cruz on Medicare and it wasn't a problem, but I didn't get treatment there either.
27   Booger   2024 Jun 11, 6:16pm  

What's the point in retiring unless you can do it in Caligulan splendor?
28   Ceffer   2024 Jun 11, 7:19pm  

I saw Caligula Dempsey diving in Santa Cruz. Apparently, it's OK for him as long as the weather is nice.
29   Patrick   2024 Jun 11, 7:34pm  

Booger says

What's the point in retiring unless you can do it in Caligulan splendor?


Being able to post whatever memes I want without any fear of getting fired.
30   HeadSet   2024 Jun 11, 7:40pm  

Patrick says

Being able to post whatever memes I want without any fear of getting fired.

FBI: "Challange accepted!"
31   B.A.C.A.H.   2024 Jun 12, 6:00am  

Booger says

What's the point in retiring unless you can do it in Caligulan splendor?

I think compared to most people in the world, a modest retirement life in the US is splendor.

For Caligulan Splendor we can relocate to the Philippines, as some retirees there whom I am acquainted with have done.
32   zzyzzx   2024 Jun 12, 6:34am  

Patrick says

Booger says


What's the point in retiring unless you can do it in Caligulan splendor?


Being able to post whatever memes I want without any fear of getting fired.

You can have enough money to retire, still be working, and not give a shit if you get fired for posting a meme just the same.
33   FortwayeAsFuckJoeBiden   2024 Jun 12, 6:49am  

B.A.C.A.H. says

Booger says


What's the point in retiring unless you can do it in Caligulan splendor?

I think compared to most people in the world, a modest retirement life in the US is splendor.

For Caligulan Splendor we can relocate to the Philippines, as some retirees there whom I am acquainted with have done.


if you compare to shitholes in africa then yes, otherwise it’s modest.
34   Ceffer   2024 Jun 12, 9:42am  

Patrick says


Being able to post whatever memes I want without any fear of getting fired.

You can post differently with financial independence and no employer, or hope for a new employer.

Fact is, I want a reasonable facsimile of truth and just don't give a shit any more, as long as the Goths aren't pounding on the front door, although that's still a possibility.

Even around here we have the incursions of the bots, hall monitors and crypto glowies attempting suasion, disinformation and dominance.
35   EBGuy   2024 Jun 12, 7:24pm  

B.A.C.A.H. says

I think compared to most people in the world, a modest retirement life in the US is splendor.

How much in BONDZ make for a modest retirement, BACAH? Fifty-fifty?
36   casandra   2024 Jun 12, 7:36pm  

Didn't anyone mention here having good traditional retirement plans or is that assumed in all the calculations being written here. And don't say they no longer exist. That may be true for the nowadays, but how many millennials and Gen x & z ers are on this board.
37   Blue   2024 Jun 13, 12:33am  

Retirement Calculator: Free Estimate of How Much You Need
https://www.nerdwallet.com/calculator/retirement-calculator
38   zzyzzx   2024 Jun 13, 4:41am  

casandra says

Didn't anyone mention here having good traditional retirement plans or is that assumed in all the calculations being written here. And don't say they no longer exist. That may be true for the nowadays, but how many millennials and Gen x & z ers are on this board.


I would assume that almost nobody here has a defined benefit pension plan. Gen X here, no defined benefit pension.
39   clambo   2024 Jun 13, 6:40am  

I'm replying to things here and there above.
To clarify; if you retire before 65 (Medicare), you are retiring a bit early, but it's still a good thing to do if possible.
From age 60 to 65, you can expect to be buying Obamacare insurance, which is either cheap or expensive depending on your income.
Maybe you can refrain from spending retirement accounts to keep your income down a little.
If you are healthy, you can still expect to have some procedures, herewith some of them:
Colonoscopy, cataract surgery (LENSAR is state of the art), Mohs surgery for skin cancer, and later arthritis (50% probability).
You might dodge the bullet for arthritis.
My experience was after 65 most medical things out of pocket were inexpensive; by contrast I've spent more on dental work even with Delta Dental insurance.
An odd experience for me has been the doubling of my net worth since I started Medicare; now my only concern is my health.
40   B.A.C.A.H.   2024 Jun 13, 7:39am  

zzyzzx says

almost nobody here has a defined benefit pension plan

What is a "defined benefit plan"?
41   B.A.C.A.H.   2024 Jun 13, 7:56am  

EBGuy says

How much in BONDZ make for a modest retirement, BACAH?

I don't know. Long before I retired (just quit working after getting laid off) I had a cynical view of bonds because of the fed forcing the rates down by "buying" them.

After then-candidate Trump said in 2016 his remedy for the National Debt was haircuts, I didn't want to touch those. The cat is now out of the bag, a US President suggested default as a remedy. Before he did that, such a suggestion would have been like a character in Harry Potter saying "Voldemort".

You can shoot holes in my reasoning all you want, I don't care, - but I reckon we might have some headway of a couple of years to see a treasury default coming. Therefore bills and notes maturing in 24 months or less I think are OK for the time being. That's just for two years' living expense cash with no state income tax. Besides, a haircut on 24 months' of spending money is not a disaster.

Based on what happened in some countries following the 2008 financial crisis, I think small depositors will be made whole on insured bank deposits, even if there's a treasury "haircut": the treasury will borrow more, before-during-after a haircut (default) to cover the FDIC for small depositors. Because the powers that be will view the alternative (pitchforks) to be worse. It's a political calculation. Maybe you all think I dunno WTF about any of this. Whatever. Yes, yes, I know: hyperinflation etc., so "made whole" payments' purchase power will be reduced a lot.

So to answer your question: for non-equities bond allocation: zero. FDIC covered deposits, short term treasuries OK.

A bond is a "promise" to pay. I don't trust government nor corporations to keep their promises.
42   HeadSet   2024 Jun 13, 12:09pm  

B.A.C.A.H. says

What is a "defined benefit plan"?

This is where one gets a defined benefit at retirement, regardless of market or contributions.

For example:

A "defined contribution" plan is where one contributes a set amount, say 10% of pay, into a fund that one can withdraw from at retirement. When one exhausts the accumulated funds/stocks, the payments stop.

A "defined benefit" plan is where one gets a set amount of money every month indexed for inflation, typically after serving 20 years or so. Usually without vesting or contributions. Military retirement is one example, as are many California municipal pensions. Payments stop only upon death, although some can be inherited by a spouse or child.
43   stfu   2024 Jun 13, 2:48pm  

clambo says

cataract surgery (LENSAR is state of the art)


Ahh, you fell for the sales pitch. I can't argue that the tech works (as do the LenSX (Alcon) and the Optimedica (J&J) Femtosecond lasers) but I always questioned the ROI of electing to get the laser assisted capsulotomy. It definitely makes a bad surgeon appear competent, but it will actually slow down a good surgeon and unless your surgery is botched it won't make much difference in visual acuity when all is said and done. Last I knew medicare wouldn't cover it. Again, not saying it isn't worth it - the tech definitely works.

Now, if price wasn't an issue I would of course elect to use the laser assist but if cost were an issue I would spend my money on the IOL - which has a much greater impact on your outcome. Again, I don't believe the premium IOL's are covered by medicare. Last I knew it was like a $2,000 per eye upcharge for the premium multi-focal/ mixed astig IOL's.

I'm not just talking shit - I spent the last part of my career working on two of those platforms and on the predecessor that they all came from - the Intralase model 1, 2, and iFS. The intralase was just a flap cutter for lasik but it's the foundation of the cataract lasers. The Engineers at intralase went on to work on these other platforms after intralase was bought (I think by Advanced Medical Optics which then sold to Abbott which then sold to J&J). Hell, there was even a lawsuit against the LenSx because it's software was so close to the intralase. I worked on both and I can tell you it was 'more than close' - down to the same user password combos for devs and techs.

Sorry to derail the thread but there's so very little in this world that I know shit about so I had to chime in to thump my own chest.

To keep in the spirit of the topic, I'm a GenXr and I have two 'defined benefit' pensions. They are not COLA'd and they are tiny but I imagine they will still be enough to pay for my internet until the day I die. There are still companies that offer a pension in the private sector but they are exceedingly rare. Nearly all of my friends who are 10 or more years older than me have a pension with somebody. None of my friends under 50 in the private sector have one.
44   stereotomy   2024 Jun 13, 6:35pm  

clambo says


I've spent more on dental work even with Delta Dental insurance.

I've been using Livionex (now LivFresh) for about 10 years, ever since I heard about it from a founder of the company on iTulip. It's fantastic - my gums are all 1-2 pocket, no plaque. My kid has braces and uses it - it completely inhibits bacterial biofilms, so the teeth and gums are clean. I wish I had this when I had braces back in the day.

If you've got gum/gengivitis problems, I'd recommend this 100%.
45   FortwayeAsFuckJoeBiden   2024 Jun 13, 7:21pm  

zzyzzx says

casandra says


Didn't anyone mention here having good traditional retirement plans or is that assumed in all the calculations being written here. And don't say they no longer exist. That may be true for the nowadays, but how many millennials and Gen x & z ers are on this board.


I would assume that almost nobody here has a defined benefit pension plan. Gen X here, no defined benefit pension.


i do, but it’s less than SS once it kicks in. i’m still working.
46   B.A.C.A.H.   2024 Jun 14, 9:50am  

HeadSet says

B.A.C.A.H. says

What is a "defined benefit plan"?

This is where one gets a defined benefit at retirement, regardless of market or contributions.

For example:


Thank you.

My question was meant to be sarcastic.
47   zzyzzx   2024 Jun 14, 10:29am  

stereotomy says

LivFresh


$70 toothpaste?
48   zzyzzx   2024 Jun 14, 10:30am  

stfu says

Last I knew medicare wouldn't cover it


Which is why everyplace that does cataract surgery only offers the laser version.
49   zzyzzx   2024 Jun 14, 10:34am  

stfu says


Now, if price wasn't an issue I would of course elect to use the laser assist but if cost were an issue I would spend my money on the IOL - which has a much greater impact on your outcome. Again, I don't believe the premium IOL's are covered by medicare. Last I knew it was like a $2,000 per eye upcharge for the premium multi-focal/ mixed astig IOL's.


It's my understanding that health insurance doesn't cover the upcharge for premium lenses, but they would still pay something.

Since you seem to know a lot about this can you elaborate more with respect to what you would pick if you needed cataract surgery. And no, I'm not asking for a friend.
50   ForcedTQ   2024 Jun 14, 10:39am  

Back to the original topic, if you can get to where 5% returns will generate 70% of your gross pre-retirement income you’ll probably be able to at least live the life you have been. Figure that your mortgage is paid off, no consumer debt, have a 6 month emergency fund, you won’t be paying payroll taxes and won’t be having 401k, IRA, or 403b contributions deducted. The biggee will be making sure to adjust your annual withdrawals to leave no less than what the accounts principal + devaluation of the dollar has been for that year. That way you can make sure to give yourself a COLA as the years go on. Not financial advise, just ideas to chew on.
51   zzyzzx   2024 Jun 14, 10:43am  

HeadSet says

B.A.C.A.H. says


What is a "defined benefit plan"?

This is where one gets a defined benefit at retirement, regardless of market or contributions.

For example:

A "defined contribution" plan is where one contributes a set amount, say 10% of pay, into a fund that one can withdraw from at retirement. When one exhausts the accumulated funds/stocks, the payments stop.

A "defined benefit" plan is where one gets a set amount of money every month indexed for inflation, typically after serving 20 years or so. Usually without vesting or contributions. Military retirement is one example, as are many California municipal pensions. Payments stop only upon death, although some can be inherited by a spouse or child.


Actually you can make your own defined benefit pension plan, it's called an annuity.
52   zzyzzx   2024 Jun 14, 10:44am  

Obligatory:

Although you actually need that several times over.
53   stereotomy   2024 Jun 14, 10:59am  

zzyzzx says

stereotomy says


LivFresh


$70 toothpaste?

It's worth every penny. I brush with it only five times a week and I have the gums of a 10 year-old. You don't need nearly as much as with regular paste, it's kind to sensitive teeth, and by brushing your tongue too you can say goodbye to halitosis.

I get it - PatNet is besieged with trolls, bots, and fluffers. And no, it's $30 for 1 tube. I'm grandfathered so I pay less. One tube is about a month for one person. Try it if you dare.

There are a few people on Patnet that relate true experiences and encourage others to try what they have done. @Rin is the outstanding example here. His recommendations brought my family through the fear of the scamdemic. I'm trying in my small way to pay back to the PatNet community.
54   Ceffer   2024 Jun 14, 11:15am  

I haven't used toothpaste of any kind forever. The bacteria are always in there, you just reduce their density and remove them from the surfaces and gum area so they don't become enlodged and erode enamel/dentin or build up tartar. Floss with unwaxed floss, or use a semi soft toothpick for in between the teeth.

There is a strong genetic component to tooth decay, so it can be the luck of the draw.

For halitosis, scrape and brush your tongue if you must with some kind of chemical.

Oddly, humans have a very toxic bite. A bitten adversary without antibiotics will likely fester badly.
55   WookieMan   2024 Jun 14, 12:48pm  

Ceffer says

There is a strong genetic component to tooth decay, so it can be the luck of the draw.

This. No pain, no cavities in 40 years. I'm sure there's problems, but if I don't have pain I ain't doing anything. I can eat what I want. Everyone I know that brushes 2-3 times a day has teeth issues. So could be genetics or I question if you overdo the cleaning that it makes the teeth more vulnerable.

With anything medical I question everything at this point. Maybe they tell you to brush more to expose your teeth more to the shit you eat so they stay in business. Or I have rocks for teeth? And yes I still brush daily at minimum. Everything is still a business. Technically if everyone brushed 3 times a day dentist would be out of business. They aren't. I notice this with my nurse friends. Hypochondriacs and their kids are always sick.
56   stereotomy   2024 Jun 14, 12:57pm  

It could very well come down to genetics - since I'm half-Irish, I inherited the rotten Irish teeth (which are even worse than english teeth).
57   clambo   2024 Jun 15, 4:18am  

There are three reasons to go to the dentist frequently.
1. Cavities are small if found quickly and are easy to fix. Today a CO2 laser is used instead of a drill, so no novacaine and the filling is done in 10 minutes.
2. Cleaning helps remove nasty bacteria which actually end up in your system, not just your mouth. No cleaning can result in gum disease and later loss of teeth.
3. Mouth cancer screening; this is pretty routine, and they use a special flashlight thing for a minute to see you are free of lesions.

« First        Comments 19 - 57 of 57        Search these comments

Please register to comment:

api   best comments   contact   latest images   memes   one year ago   random   suggestions