Author Topic: What my bank thinks I need to spend in retirement  (Read 4776 times)

2sk22

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What my bank thinks I need to spend in retirement
« on: January 25, 2020, 01:36:57 PM »
I got an email from my bank with links to articles about saving for retirement. I always take a glance at these articles - who knows, maybe I'll learn something. But the illustrative amounts shown are eye popping. $250k / year in retirement? We don't spend that much now, while still working!

The article also had this word salad:

Quote
Bear in mind: You should think of a “lifestyle bucket” as separate and distinct from a “liquidity bucket.” The liquidity bucket holds cash and other forms of liquidity to cover operating cash flow, big ticket purchases and opportunistic investments, while allowing you to sleep well at night. A lifestyle bucket contains financial and investment resources—set aside in a "lockbox" strategy—that you hope will reliably provide for your lifestyle needs and wants over your lifetime. If anything were to happen, there is money available for the sole purpose of a comfortable life.

Villanelle

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Re: What my bank thinks I need to spend in retirement
« Reply #1 on: January 25, 2020, 01:41:18 PM »
Did you tell them you want to donate $25k/y to your alma mater, or is that something they just manufactured based on... wanting to pad their numbers, maybe? 

Also, for me, truly the most magical part of MMM was also perhaps the most simple... the 4% rule.  I feel sort of foolish for not figuring it out on my own, but I'd done multiple retirement calculators and worked with a financial advisor, and have a huge range of answers for the amount I needed for retirement.  That's what made retirement so scary and overwhelming.  Which was correct--the calculator that said I needed "only $2.5m, or the one that said $5?  *spoiler alert*--It's neither of those!
« Last Edit: January 25, 2020, 01:44:26 PM by Villanelle »

Lucky13

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Re: What my bank thinks I need to spend in retirement
« Reply #2 on: January 25, 2020, 01:46:11 PM »
Yeah I'm in an expensive city and that still seems really high, especially since it doesn't seem to include a mortgage! curious what they think are  the "ongoing big purchases" maybe buying a new car every year? you'd need a big garage. :D

2sk22

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Re: What my bank thinks I need to spend in retirement
« Reply #3 on: January 25, 2020, 01:48:51 PM »
Did you tell them you want to donate $25k/y to your alma mater, or is that something they just manufactured based on... wanting to pad their numbers, maybe? 

This appears to be a general article - its not customized for me! And I certainly have no plans of donating $25k a year to my alma mater :-)

Oops - I forgot to include the link - here it is
« Last Edit: January 25, 2020, 02:08:15 PM by 2sk22 »

spartana

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Re: What my bank thinks I need to spend in retirement
« Reply #4 on: January 25, 2020, 02:11:56 PM »
Lol! I think I needed $250k total invested to FIRE on - not per year in FIRE. Well OK that may be a bit of an exaggeration but not by much since I had no debt, was mortgage free, had low cost medical coverage and a future small pension once 50. But still, its a far far cry from needing $250/year! Gee it's like Financial Samurai and Suze Ordmand are writing ALL the retirement articles these days. Although, according to them, even $250k/year isn't near enough to retire on unless you're cool with living in in a card board box under a bridge and eating cat food. I wish MMM and the like would counter these kinds of things more often.

joleran

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Re: What my bank thinks I need to spend in retirement
« Reply #5 on: January 25, 2020, 03:05:52 PM »
Which was correct--the calculator that said I needed "only $2.5m, or the one that said $5?  *spoiler alert*--It's neither of those!

Which one told you $5?  Just curious.

Villanelle

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Re: What my bank thinks I need to spend in retirement
« Reply #6 on: January 25, 2020, 03:19:38 PM »
Which was correct--the calculator that said I needed "only $2.5m, or the one that said $5?  *spoiler alert*--It's neither of those!

Which one told you $5?  Just curious.

I meant "$5m".  lol

scottish

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Re: What my bank thinks I need to spend in retirement
« Reply #7 on: January 25, 2020, 03:26:50 PM »
Perhaps it's 40 years in the future and inflation has increased everything by a factor of 4?

spartana

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Re: What my bank thinks I need to spend in retirement
« Reply #8 on: January 25, 2020, 04:18:04 PM »
Which was correct--the calculator that said I needed "only $2.5m, or the one that said $5?  *spoiler alert*--It's neither of those!

Which one told you $5?  Just curious.
Her Sugar Daddy ;-).

"According to SeekingArrangement's stats, the average Sugar Daddy is 38 and makes $250,000 annually, while the average Sugar Baby is 25 and makes $2,800 monthly from her Daddies. “From one, I get $1,500 a month." 

Plus her own $5.
« Last Edit: January 25, 2020, 04:20:24 PM by spartana »

RFAAOATB

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Re: What my bank thinks I need to spend in retirement
« Reply #9 on: January 25, 2020, 06:41:06 PM »
Gee it's like Financial Samurai and Suze Ordmand are writing ALL the retirement articles these days. Although, according to them, even $250k/year isn't near enough to retire on unless you're cool with living in in a card board box under a bridge and eating cat food. I wish MMM and the like would counter these kinds of things more often.

Now now, you won’t be homeless on 250k a year, but you still feel it when you have to pay to send your kids to the good school or fry the supersized mortgage in the good school district.  If you have to send your kids to the bad school then they could be the ones living in a cardboard box.

Cassie

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Re: What my bank thinks I need to spend in retirement
« Reply #10 on: January 27, 2020, 12:46:33 PM »
Suze Orman kept telling people to work until 70. Ugh!  Some won’t be alive. 3 of my friends who took great care of themselves died between 59-67 all due to cancer.

partgypsy

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Re: What my bank thinks I need to spend in retirement
« Reply #11 on: January 28, 2020, 11:45:24 AM »
Lol! I think I needed $250k total invested to FIRE on - not per year in FIRE. Well OK that may be a bit of an exaggeration but not by much since I had no debt, was mortgage free, had low cost medical coverage and a future small pension once 50. But still, its a far far cry from needing $250/year! Gee it's like Financial Samurai and Suze Ordmand are writing ALL the retirement articles these days. Although, according to them, even $250k/year isn't near enough to retire on unless you're cool with living in in a card board box under a bridge and eating cat food. I wish MMM and the like would counter these kinds of things more often.

Re: cardboard box... A coworker friend who does live in a beautiful multistory passive solar house. I can't remember what we were talking about but I mentioned how my mortgage was low and he said "but you live in a cardboard box." He was being serious. I live in a 1500 square feet bungalow with 10 foot ceilings in a nice neighborhood. But for him that's slumming it. 

scrunchythief

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Re: What my bank thinks I need to spend in retirement
« Reply #12 on: January 28, 2020, 12:16:19 PM »
Lol! I think I needed $250k total invested to FIRE on - not per year in FIRE. Well OK that may be a bit of an exaggeration but not by much since I had no debt, was mortgage free, had low cost medical coverage and a future small pension once 50. But still, its a far far cry from needing $250/year! Gee it's like Financial Samurai and Suze Ordmand are writing ALL the retirement articles these days. Although, according to them, even $250k/year isn't near enough to retire on unless you're cool with living in in a card board box under a bridge and eating cat food. I wish MMM and the like would counter these kinds of things more often.

Re: cardboard box... A coworker friend who does live in a beautiful multistory passive solar house. I can't remember what we were talking about but I mentioned how my mortgage was low and he said "but you live in a cardboard box." He was being serious. I live in a 1500 square feet bungalow with 10 foot ceilings in a nice neighborhood. But for him that's slumming it.

Ha!  I wonder what he'd think of our house.  It's about 650 square feet with ceilings I can touch without jumping (I'm 5'4").  And we have three people living here.  There's a few areas I wish were a smidge bigger, but I can't image comparing it to not having reliable access to shelter...

Cassie

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Re: What my bank thinks I need to spend in retirement
« Reply #13 on: January 28, 2020, 10:04:30 PM »
Gypsy, your coworker is ridiculous. There were 5 of us with one bathroom. The horrors 2 of my 3 boys shared a bedroom:))

bill1827

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Re: What my bank thinks I need to spend in retirement
« Reply #14 on: January 29, 2020, 06:37:29 AM »
Re: cardboard box... A coworker friend who does live in a beautiful multistory passive solar house. I can't remember what we were talking about but I mentioned how my mortgage was low and he said "but you live in a cardboard box." He was being serious. I live in a 1500 square feet bungalow with 10 foot ceilings in a nice neighborhood. But for him that's slumming it.

He's probably talking about the construction method. To me US stick built houses are cardboard boxes!

mathlete

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Re: What my bank thinks I need to spend in retirement
« Reply #15 on: January 29, 2020, 12:06:35 PM »
I mean, this is probably just a function of a very high income right?

mathlete

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Re: What my bank thinks I need to spend in retirement
« Reply #16 on: January 29, 2020, 12:20:11 PM »
Also, unpopular opinion, but Suze Orman's advice is pragmatic for a vast majority of Americans. Longevity is increasing. Social Security is only fully funded for another 15 years. Medical costs have outpaced the general CPI for decades now. Long term care reserves continue to be an albatross on the balance sheets of many insurance companies.

Even people who consider themselves financially independent in this community are ultimately subject to the whims of ACA subsidies, or whether or not we keep the guaranteed issue provision. (something a vast majority of congress now supports unlike 10 years ago, but is also very expensive)

partgypsy

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Re: What my bank thinks I need to spend in retirement
« Reply #17 on: January 29, 2020, 12:24:09 PM »
Mathelete I actually like Suze Orman. She was probably the first personal finance person I read before branching out. But I think she is TOO conservative. To the point most regular people reading it throw up their hands, say it is impossible to ever retire, and not save anything. Dave Ramsey is biased and inaccurate in the opposite direction (citing 8-10% stock returns) but at least he motivates and energizes people to pay down debt and invest. 

mathlete

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Re: What my bank thinks I need to spend in retirement
« Reply #18 on: January 29, 2020, 12:25:28 PM »
Mathelete I actually like Suze Orman. She was probably the first personal finance person I read before branching out. But I think she is TOO conservative. To the point most regular people reading it throw up their hands, say it is impossible to ever retire, and not save anything. Dave Ramsey is biased and inaccurate in the opposite direction (citing 8-10% stock returns) but at least he motivates and energizes people to pay down debt and invest.

Do you have evidence of the bold? I'd also find that very concerning. Enough to reconsider my defense of her.

partgypsy

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Re: What my bank thinks I need to spend in retirement
« Reply #19 on: January 29, 2020, 12:30:08 PM »
Mathelete I actually like Suze Orman. She was probably the first personal finance person I read before branching out. But I think she is TOO conservative. To the point most regular people reading it throw up their hands, say it is impossible to ever retire, and not save anything. Dave Ramsey is biased and inaccurate in the opposite direction (citing 8-10% stock returns) but at least he motivates and energizes people to pay down debt and invest.

Do you have evidence of the bold? I'd also find that very concerning. Enough to reconsider my defense of her.

True for people in my family, when I used her stuff. I think she's gotten even worse as time has gone by. For my nephew I instead gave your money or your life.

mathlete

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Re: What my bank thinks I need to spend in retirement
« Reply #20 on: January 29, 2020, 12:35:48 PM »
True for people in my family, when I used her stuff. I think she's gotten even worse as time has gone by. For my nephew I instead gave your money or your life.

In her defense, the prospects for future retirees have gotten worse too. I wonder if the current edition YFAB Suze Orman book talks about working until 70. Maybe it's best not to scare kids off with that.

Cassie

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Re: What my bank thinks I need to spend in retirement
« Reply #21 on: January 31, 2020, 04:01:40 PM »
Suze used to give better advice. When she was on tv people would call in and ask if they could retire. Frequently they had enough money but she would say to keep working so they could spend more. Tell my 3 dead friends that money is worth more than time.

zolotiyeruki

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Re: What my bank thinks I need to spend in retirement
« Reply #22 on: February 03, 2020, 02:04:05 PM »
Re: cardboard box... A coworker friend who does live in a beautiful multistory passive solar house. I can't remember what we were talking about but I mentioned how my mortgage was low and he said "but you live in a cardboard box." He was being serious. I live in a 1500 square feet bungalow with 10 foot ceilings in a nice neighborhood. But for him that's slumming it.

He's probably talking about the construction method. To me US stick built houses are cardboard boxes!
To be fair, some houses in the US have sheathing which is practically cardboard (Thermoply).

spartana

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Re: What my bank thinks I need to spend in retirement
« Reply #23 on: February 06, 2020, 12:01:53 PM »
Re: cardboard box... A coworker friend who does live in a beautiful multistory passive solar house. I can't remember what we were talking about but I mentioned how my mortgage was low and he said "but you live in a cardboard box." He was being serious. I live in a 1500 square feet bungalow with 10 foot ceilings in a nice neighborhood. But for him that's slumming it.

He's probably talking about the construction method. To me US stick built houses are cardboard boxes!
To be fair, some houses in the US have sheathing which is practically cardboard (Thermoply).
That may be true but doubt that was what @partgypsy was talking about. Maybe cracker box house is more common instead.  "Noun. crackerbox (plural crackerboxes) (US, Canada, sometimes derogatory) An uncomfortably small and boxy house". Or just "crack house" if they aren't as kind.

partgypsy

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Re: What my bank thinks I need to spend in retirement
« Reply #24 on: February 07, 2020, 09:17:44 AM »
He's originally from England and he does have a low opinion of how houses in the US are built. Still, it felt insulting.

Car Jack

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Re: What my bank thinks I need to spend in retirement
« Reply #25 on: February 13, 2020, 01:38:13 PM »
I'm sorry but at some point......maybe she fell off the boat on the way to her private island, Suze absolutely went off the deep end.

Have you heard her rant?  Her number to retire is $10M minimum.  What's this based on?  Her mother went into a nursing home and she's paying out of pocket for it.  So her view of the world is that everyone will have to first get transportation from their private island to the nursing home, then bring piles of cash because the nursing home is likely $200k a year.


2sk22

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Re: What my bank thinks I need to spend in retirement
« Reply #26 on: February 14, 2020, 02:31:25 AM »
I'm sorry but at some point......maybe she fell off the boat on the way to her private island, Suze absolutely went off the deep end.

Have you heard her rant?  Her number to retire is $10M minimum.  What's this based on?  Her mother went into a nursing home and she's paying out of pocket for it.  So her view of the world is that everyone will have to first get transportation from their private island to the nursing home, then bring piles of cash because the nursing home is likely $200k a year.

Wow - this is bonkers. I found this article in which the author says:

Quote
His takeaway is that $5 million in after-tax income generates $200,000 a year in passive income, and that’s about right if you have a family and want to live an urban existence, such as San Francisco, New York, Seattle, Boston, etc.

I live near NY City and can assure you that even in this area, you can get by with a lot less :-)