Author Topic: Retire financially solvent  (Read 3646 times)

barn3gins

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Retire financially solvent
« on: September 11, 2022, 09:46:10 PM »
HI New to the group

I have a question - I spent years earning my money to achieve my goal of paying my home off in full - that goal was achieved 3 years ago - now only 10 years until retirement age can I save enough not to have to worry about money in my old age. I have not built large retirement funds in fact they are quite low as I used that money to pay the house off instead. Equity on my home is great its already up 53% from my purchase price. I have only $20k worth of debt between my credit cards and Student loans left to pay off and intend to be completely debt free by the end of next year - fingers crossed.
My question is realistically how much of a portfolio can I build in that time on an Annual salary of $60k - my expenditures monthly are low $1500 as my home is half off the grid already with septic and well water - give me some hope people please  :) would like to match my annual salary for retirement if possible - at that age every day is a blessing and a more chilled lifestyle

Brystheguy

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Re: Retire financially solvent
« Reply #1 on: September 11, 2022, 10:28:45 PM »
You have two different scenarios going here. A rule of thumb is to have twenty-five times your annul spend saved up. At $1500/month you're looking at $18000/year. You need $450k to be FI.

You also said you want the same income. That's a different outcome but the math is the same. At $60k, you're looking at needing $1.5 million to be FI. So, which is it?

Using this simple calculator

https://www.investor.gov/financial-tools-calculators/calculators/savings-goal-calculator

 
and entering a 7% return, you need $2700 a month invested to hit $450k in ten years.

To get to $1.5 million, you're looking at $9035/month.


MDM

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Re: Retire financially solvent
« Reply #2 on: September 12, 2022, 12:05:25 AM »
How much your portfolio will grow depends on how your investments perform.  Other than picking some decent investments, that's out of your control.

What you can control is how much you do invest, and in what accounts.  How do the suggestions in the Investment Order post look to you?

uniwelder

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Re: Retire financially solvent
« Reply #3 on: September 12, 2022, 04:32:12 AM »
If you have 10 years before retirement age, will you be getting a pension or social security? That might bring in the $1,500 per month you want. Also, pay off your credit card as your first priority.

How much extra were you paying each month toward the mortgage?

barn3gins

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Re: Retire financially solvent
« Reply #4 on: September 12, 2022, 05:06:52 PM »
Hi
OK I can see where my information may have been misunderstood. Ideally, I want to build a nest egg of 1.5mil for me to live off that's best case scenario, I'm currently asset rich and cash poor, hence my interest in investing for the next 10 years to build it up. My current monthly expenditures are low for my life style Bills $1500, and my debt is broken up as follows Credit Card Debt $5300, Loan $8000, student debt $6000 - paying off is in that order based on the interest rates I am being charged. CC debt 0%, Loan 2.8% and Student Loan 9%, with my current schedule I planned on paying off the Credit card Debt in Full by Feb 2023, Loan 8 2023, student loan 12 2023. I do have two small pensions which I will get when I am 65 roughly $30k and I will get social security but as I had low earnings stay at home wife for 4 kids most of my life I am thinking that might be $20k. I am also currently looking into investing and purchasing a second small home to rent out for additional income to achieve my goal.
Having read loads I can see in order to achieve my goal I have to either earn over $150k in a job - or I need to find ways to earn money in order to continue to invest monthly, I actually have up to 11 years to invest and I am planning on postponing my social security pension for 2/3 years in order to top it up as it increases by 15% every year I defer. Lastly, I would like to invest in DRIP programs that allow you to apply directly to avoid unnecessary fees. Any advice is welcome :)
I would like to find some reliable calculators in order to see what is best for me - I have done the travelling, and though I like my things would happily sell them to  have this financial stability in my old age.
 

wageslave23

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Re: Retire financially solvent
« Reply #5 on: September 12, 2022, 05:39:00 PM »
I think you need to start with providing us the basics. What is your current income? 60k. What are your current yearly expenses? Sounds like 18k. So you should be saving about $30k per year or about $2500 per month. Why will it take you over a year to pay off your loans then?  What will your retirement budget look like? If your current expenses are $1500 per month then your social security income and pension should cover it. Why are your expenses going up so much in retirement?  There is no chance of saving $1.5 million in 10 years based on your numbers. But there is also no reason for you to need $1.5 million based on your numbers. Tell us what you know (estimated expenses in retirement and estimated income from social security and pension) and we will tell you how much you need to save to retire.

Villanelle

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Re: Retire financially solvent
« Reply #6 on: September 12, 2022, 05:56:29 PM »
This isn't quite what you asked, but can you sell the house, downsize, and invest the difference?  Or better yet, sell and get a mortgage on a cheaper home, don't pay it off (paying off the mortgage may feel bad, but it isn't the financially optimal choice), and invest everything else. 

Also, you mention buying a rental property.  Make sure you run the numbers.  So many people lose money on investment properties, often without even realizing it, and especially when compared to simple index fund investing, which also happens to be less stress and less work than being a landlord.


barn3gins

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Re: Retire financially solvent
« Reply #7 on: September 12, 2022, 08:45:00 PM »
ok why do I want a 1.5 million base because I worry about health costs in the future and I don't want my paid for house which will be placed in a trust for my kids for inheritance purposes used to cover them. My current expenses do not allow for future purchases of a replacement car or any other emergency nor do they include funeral expenses when I pass as I intend to create an account solely for that purpose - also based on some of the calculations I have made which are cautious in 10 years time inflation would take my yearly needs from $18000 a year to $25-27k
The second property is an idea at this stage I would have to work the numbers to see if it was viable - I have already agreed with my husband that our current home will never be mortgaged to assure each of us has a home in old age without the debt or increased rent costs. My friend who continues to live in the same apartment complex I once lived in has had her rent increased from $1650 to $2300 in 3 months as the current landlord is updating the complex. I only paid $850 for the same unit when I lived there 20 years ago. If I was paying for a mortgage still my monthly outgoings would be $3700
If I was still paying my mortgage my yearly need would increase from $18k to $44k taking in account inflation in 12 years time I conservatively estimated that I would need nearly $60k to maintain the same lifestyle
I am only trying to figure out my best options I know I will be investing in Vanguard and S&P500 along with 3 DRIP programs and lsavings bonds to achieve the best interest rates. Please understand I am cash strapped after supporting 3 of 4 children in College and trying to create a nest egg as large as possible - because as we all know - time goes by whether we do something or nothing - the clock is ticking and I am trying to do what I can to secure a reasonable retirement - I am also seeking to go solar on my home taking my house off the grid too :) 
My husbands has health issues and due to expensive medications a fair amount of his income is taken up in medical costs. 

Villanelle

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Re: Retire financially solvent
« Reply #8 on: September 13, 2022, 12:54:19 PM »
ok why do I want a 1.5 million base because I worry about health costs in the future and I don't want my paid for house which will be placed in a trust for my kids for inheritance purposes used to cover them. My current expenses do not allow for future purchases of a replacement car or any other emergency nor do they include funeral expenses when I pass as I intend to create an account solely for that purpose - also based on some of the calculations I have made which are cautious in 10 years time inflation would take my yearly needs from $18000 a year to $25-27k
The second property is an idea at this stage I would have to work the numbers to see if it was viable - I have already agreed with my husband that our current home will never be mortgaged to assure each of us has a home in old age without the debt or increased rent costs. My friend who continues to live in the same apartment complex I once lived in has had her rent increased from $1650 to $2300 in 3 months as the current landlord is updating the complex. I only paid $850 for the same unit when I lived there 20 years ago. If I was paying for a mortgage still my monthly outgoings would be $3700
If I was still paying my mortgage my yearly need would increase from $18k to $44k taking in account inflation in 12 years time I conservatively estimated that I would need nearly $60k to maintain the same lifestyle
I am only trying to figure out my best options I know I will be investing in Vanguard and S&P500 along with 3 DRIP programs and lsavings bonds to achieve the best interest rates. Please understand I am cash strapped after supporting 3 of 4 children in College and trying to create a nest egg as large as possible - because as we all know - time goes by whether we do something or nothing - the clock is ticking and I am trying to do what I can to secure a reasonable retirement - I am also seeking to go solar on my home taking my house off the grid too :) 
My husbands has health issues and due to expensive medications a fair amount of his income is taken up in medical costs.

If you are paying your mortgage, yes, your monthly/annual expenses are higher, but so are your monthly investments. 

Also, yes, inflation will increase your annual expenses, but it will also increase the value of your investments.  It's not a direct 1:1 relationship, but that's the general direction things should move in over time. 

Again, if you are cash strapped, why not downsize your home.  If your children are in college, they should move out, if they haven't already, so you should be able to live in a much smaller home.  If you want to "assure you have a home in old age", then having a less-expensive home makes even more sense.  If $1.5m of your assets are tied up in a home and you need expensive medical care, you are in a bad position compared to having only $800k tied up in the home, and $700k in investments (but over time that will have grown to be even more).  You would be in a position to use that $700k for medical costs, or that replacement car, or anything else.  Or it can be sitting stuck as part of the equity in your home, which doesn't buy a car or an ER visit. 

It sounds like you have a lot of misunderstandings about finances, which is all the more reason *NOT* to buy a rental house.  I suggest you go to the blog associated with these boards, and start with the first post, and read at leas a couple years worth of blog entries. 

Laura33

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Re: Retire financially solvent
« Reply #9 on: September 13, 2022, 03:40:05 PM »
So you have a lot of things going on here, and not a lot of detail in the numbers, but I think the biggest issue is really how you think about things.  We all have only a limited amount of money, and so you need to spend that amount in ways that advance your priorities.  Here is what I see as your priorities, based on the way you have explained your situation:

1.  Security.  You want a place to live, forever, and so you have put having a paid-off house at the top of the priority list.*

2.  Children.  You took years off work to raise your family, which obviously came with a financial tradeoff.  You are helping them pay for college.  And even the money you've managed to accumulate is earmarked for them (house in trust). 

There is absolutely nothing wrong with your priorities; it's just that they come with tradeoffs.  And the main tradeoff you have chosen -- the thing you've sacrificed in favor of those other two priorities -- is taking care of yourself in your retirement years. 

The problem is that, having now spent, what, 30 years prioritizing everything other than your retirement, you are now realizing you cannot postpone that reckoning any longer.  Now the priority is to add on an additional $1.5M in 10 years -- without detracting in any way from your other two priorities.

I hate to tell you, but that simply cannot happen.  You won't even earn enough over the next 10 years to save $1.5M, even if you had zero living expenses.  So something has to give.  Your choices are:

1.  Reprioritize.  Take the paid-off house, sell it, buy something cheaper and smaller -- WITH a mortgage, to free up the investments you need to support your future life.  I know you are not going to want to do this, because of your need for security and desire to pass it on to your kids.  But this is the only choice that likely gets you to retirement on your desired schedule.**   

2.  Decrease your planned retirement income needs.  $60K/yr is great.  But if you're actually spending only $18K/yr, you don't actually need that -- again, that extra is just to make you feel safe.  Look at how much you actually need to be able to afford things like new cars and new roofs and medical insurance and the occasional kid emergency.  Then look very, very closely at your future income streams -- don't just assume a pension is worth X or SS is worth Y, find out.  That will tell you what the gap is you need to cover.

3.  If you will not do 1 or 2, or you do 2 but still cannot fill the gap over the next 10 years, plan to work longer.  There's no magic here.  Invest all you can, defer retirement and SS and pension payouts as long as you can, and reevaluate when you're closer to your goal.

FWIW, the focus on DRIPs and finding the right calculators and all that is putting the cart waaaaayyyy before the horse.  You have debt at 9%, a paid-off house that is earning you nothing (and whose value you don't plan to touch at all, ever), and no real retirement savings.  Your top priority is maximizing the amount you invest, today -- just go for something simple like the Vanguard Total Stock Market Index fund.  How much you sock away is going to matter much more than the details of the specific thing you sock it away in. 


*So I am trying not to focus on water that has already gone rushing by that bridge, but chasing safety as you have hasn't made you one whit safer.  You still have student loans!  Those are not even dischargeable in bankruptcy!  If you can't pay them, you may well lose the house anyway.  Or what will you do if you can no longer afford medical insurance if you are laid off or retire?  Without significant savings, there are a thousand and one reasons why you could be forced to sell the house anyway -- and it can take a long, long time to do so, and there's no guarantee home values will be where they are now if that happens.  It is very, very important to understand that chasing absolute safety is an illusion, and the harder you try to grab onto it, the more you are actually putting yourself at risk from other dangers you're ignoring. 

**I note that you are averse to renting because the expenses aren't under your control -- you mention a friend whose rent went up to $2300, as compared to the $850 you paid when you lived there 20 years ago.  Yes, that's a big increase (although not so much over 20 years).  But you need to put that into perspective as part of the bigger picture.  You also said you were paying $3700/month for your house -- that's almost 3x as much!  This is what I mean about how chasing the perception of safety can leave you exposed, because you put blinders on and focus only on the big scary thing you're trying to avoid.  Here, in order to protect yourself from a $1500 rent increase over 20 years, you bought a house that cost you almost $1500 more than even today's rent -- and you paid that for years!.  Imagine what your finances would look like if you had stayed in that apartment, followed your rent from $850-$2300 over 20 years, and consistently invested the difference.  I can almost guarantee that your nest egg would already be larger than you'd ever need.

Kris

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Re: Retire financially solvent
« Reply #10 on: September 13, 2022, 04:02:37 PM »
So you have a lot of things going on here, and not a lot of detail in the numbers, but I think the biggest issue is really how you think about things.  We all have only a limited amount of money, and so you need to spend that amount in ways that advance your priorities.  Here is what I see as your priorities, based on the way you have explained your situation:

1.  Security.  You want a place to live, forever, and so you have put having a paid-off house at the top of the priority list.*

2.  Children.  You took years off work to raise your family, which obviously came with a financial tradeoff.  You are helping them pay for college.  And even the money you've managed to accumulate is earmarked for them (house in trust). 

There is absolutely nothing wrong with your priorities; it's just that they come with tradeoffs.  And the main tradeoff you have chosen -- the thing you've sacrificed in favor of those other two priorities -- is taking care of yourself in your retirement years. 

The problem is that, having now spent, what, 30 years prioritizing everything other than your retirement, you are now realizing you cannot postpone that reckoning any longer.  Now the priority is to add on an additional $1.5M in 10 years -- without detracting in any way from your other two priorities.

I hate to tell you, but that simply cannot happen.  You won't even earn enough over the next 10 years to save $1.5M, even if you had zero living expenses.  So something has to give.  Your choices are:

1.  Reprioritize.  Take the paid-off house, sell it, buy something cheaper and smaller -- WITH a mortgage, to free up the investments you need to support your future life.  I know you are not going to want to do this, because of your need for security and desire to pass it on to your kids.  But this is the only choice that likely gets you to retirement on your desired schedule.**   

2.  Decrease your planned retirement income needs.  $60K/yr is great.  But if you're actually spending only $18K/yr, you don't actually need that -- again, that extra is just to make you feel safe.  Look at how much you actually need to be able to afford things like new cars and new roofs and medical insurance and the occasional kid emergency.  Then look very, very closely at your future income streams -- don't just assume a pension is worth X or SS is worth Y, find out.  That will tell you what the gap is you need to cover.

3.  If you will not do 1 or 2, or you do 2 but still cannot fill the gap over the next 10 years, plan to work longer.  There's no magic here.  Invest all you can, defer retirement and SS and pension payouts as long as you can, and reevaluate when you're closer to your goal.

FWIW, the focus on DRIPs and finding the right calculators and all that is putting the cart waaaaayyyy before the horse.  You have debt at 9%, a paid-off house that is earning you nothing (and whose value you don't plan to touch at all, ever), and no real retirement savings.  Your top priority is maximizing the amount you invest, today -- just go for something simple like the Vanguard Total Stock Market Index fund.  How much you sock away is going to matter much more than the details of the specific thing you sock it away in. 


*So I am trying not to focus on water that has already gone rushing by that bridge, but chasing safety as you have hasn't made you one whit safer.  You still have student loans!  Those are not even dischargeable in bankruptcy!  If you can't pay them, you may well lose the house anyway.  Or what will you do if you can no longer afford medical insurance if you are laid off or retire?  Without significant savings, there are a thousand and one reasons why you could be forced to sell the house anyway -- and it can take a long, long time to do so, and there's no guarantee home values will be where they are now if that happens.  It is very, very important to understand that chasing absolute safety is an illusion, and the harder you try to grab onto it, the more you are actually putting yourself at risk from other dangers you're ignoring. 

**I note that you are averse to renting because the expenses aren't under your control -- you mention a friend whose rent went up to $2300, as compared to the $850 you paid when you lived there 20 years ago.  Yes, that's a big increase (although not so much over 20 years).  But you need to put that into perspective as part of the bigger picture.  You also said you were paying $3700/month for your house -- that's almost 3x as much!  This is what I mean about how chasing the perception of safety can leave you exposed, because you put blinders on and focus only on the big scary thing you're trying to avoid.  Here, in order to protect yourself from a $1500 rent increase over 20 years, you bought a house that cost you almost $1500 more than even today's rent -- and you paid that for years!.  Imagine what your finances would look like if you had stayed in that apartment, followed your rent from $850-$2300 over 20 years, and consistently invested the difference.  I can almost guarantee that your nest egg would already be larger than you'd ever need.

Excellent post, Laura. OP, this advice is spot on.

barn3gins

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Re: Retire financially solvent
« Reply #11 on: September 13, 2022, 04:13:23 PM »
Hello
I think of all the replies I have received your the only one who gets me !

I am not paying any longer for my kids and none live with me - I went through a bitter divorce 10 years ago that broke me financially and it took me another degree and 10 years to pay off the house which gave me the security I desired, the fact I only have $6000 left on the  student loan debt is a god send and will be cleared no later than Dec 2023 earlier if I can swing it - as I was in medicine and worked thru all the pandemics I walked away emotionally and physically exhausted - having taken the last 18 months to recover I am now seeking a lower paid role that wont give me the stress, I have always been an over achiever and I have set the amount to what I would like to achieve
People on here don't give me credit for what I have done most of my life and though I am limited financially as most are in investing I have still managed to pay off the house an support my kids...which at the time were my priorities - Money doesn't buy you happiness only some comfort I unlike my husband have no medical issues - and yes I have already considered delaying my retirement and working until I achieve my goal or live off my meager 18K
Though I understand selling the house is an option not in this market - the house behind me is on the market - 2 months later still not sold - people are getting weary the recession looming - I feel under the circumstances no mortgage or rent is best at this point financially freeing that money to be invested in Vanguard and such - people just don't understand when you have kids you make a choice at the time what's more important money or them - I appreciate your insight that only you recognised I put myself last - thank you xxx
   

Villanelle

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Re: Retire financially solvent
« Reply #12 on: September 13, 2022, 04:45:34 PM »
Hello
I think of all the replies I have received your the only one who gets me !

I am not paying any longer for my kids and none live with me - I went through a bitter divorce 10 years ago that broke me financially and it took me another degree and 10 years to pay off the house which gave me the security I desired, the fact I only have $6000 left on the  student loan debt is a god send and will be cleared no later than Dec 2023 earlier if I can swing it - as I was in medicine and worked thru all the pandemics I walked away emotionally and physically exhausted - having taken the last 18 months to recover I am now seeking a lower paid role that wont give me the stress, I have always been an over achiever and I have set the amount to what I would like to achieve
People on here don't give me credit for what I have done most of my life and though I am limited financially as most are in investing I have still managed to pay off the house an support my kids...which at the time were my priorities - Money doesn't buy you happiness only some comfort I unlike my husband have no medical issues - and yes I have already considered delaying my retirement and working until I achieve my goal or live off my meager 18K
Though I understand selling the house is an option not in this market - the house behind me is on the market - 2 months later still not sold - people are getting weary the recession looming - I feel under the circumstances no mortgage or rent is best at this point financially freeing that money to be invested in Vanguard and such - people just don't understand when you have kids you make a choice at the time what's more important money or them - I appreciate your insight that only you recognised I put myself last - thank you xxx
   

I took the time to respond twice.  At no point did I "not give you credit for what you've done".  I also didn't suggest anything that Laura didn't.  if you are asking for advice, throw spite back at the people who try to help, quite respectfully--isn't likely get it. 

Regardless, I wish you good luck and hope things work out for you. 

Kris

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Re: Retire financially solvent
« Reply #13 on: September 13, 2022, 04:53:51 PM »
Hello
I think of all the replies I have received your the only one who gets me !

I am not paying any longer for my kids and none live with me - I went through a bitter divorce 10 years ago that broke me financially and it took me another degree and 10 years to pay off the house which gave me the security I desired, the fact I only have $6000 left on the  student loan debt is a god send and will be cleared no later than Dec 2023 earlier if I can swing it - as I was in medicine and worked thru all the pandemics I walked away emotionally and physically exhausted - having taken the last 18 months to recover I am now seeking a lower paid role that wont give me the stress, I have always been an over achiever and I have set the amount to what I would like to achieve
People on here don't give me credit for what I have done most of my life and though I am limited financially as most are in investing I have still managed to pay off the house an support my kids...which at the time were my priorities - Money doesn't buy you happiness only some comfort I unlike my husband have no medical issues - and yes I have already considered delaying my retirement and working until I achieve my goal or live off my meager 18K
Though I understand selling the house is an option not in this market - the house behind me is on the market - 2 months later still not sold - people are getting weary the recession looming - I feel under the circumstances no mortgage or rent is best at this point financially freeing that money to be invested in Vanguard and such - people just don't understand when you have kids you make a choice at the time what's more important money or them - I appreciate your insight that only you recognised I put myself last - thank you xxx
   

I took the time to respond twice.  At no point did I "not give you credit for what you've done".  I also didn't suggest anything that Laura didn't.  if you are asking for advice, throw spite back at the people who try to help, quite respectfully--isn't likely get it. 

Regardless, I wish you good luck and hope things work out for you.

Villanelle, I sort of get the feeling that OP is looking more for sympathy than solutions.

Which is too bad.

Samuel

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Re: Retire financially solvent
« Reply #14 on: September 13, 2022, 05:07:57 PM »
As a child of recently retired parents I can you that I would be alarmed and dismayed to learn that their plan was to struggle unnecessarily in their twilight years because of an unreasonable attachment to the idea of needing to pass on a paid for house to my brothers and I. Especially when none of us would really want to keep their particular house enough to buy the other siblings out anyways. The house would immediately be sold and we'd all just cash a check. Guiltily, in my case at least, knowing that money could have been put to many better uses while they were still alive.

I would, and in fact have, told them I hope they use all their financial resources to have the most comfortable and rewarding retirement possible. If anything is left over after that then I'll happily take my share.

Kris

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Re: Retire financially solvent
« Reply #15 on: September 13, 2022, 05:14:02 PM »
As a child of recently retired parents I can you that I would be alarmed and dismayed to learn that their plan was to struggle unnecessarily in their twilight years because of an unreasonable attachment to the idea of needing to pass on a paid for house to my brothers and I. Especially when none of us would really want to keep their particular house enough to buy the other siblings out anyways. The house would immediately be sold and we'd all just cash a check. Guiltily, in my case at least, knowing that money could have been put to many better uses while they were still alive.

I would, and in fact have, told them I hope they use all their financial resources to have the most comfortable and rewarding retirement possible. If anything is left over after that then I'll happily take my share.

This is true. I was left a house.

I sold it. And put the money into index funds.

barn3gins

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Re: Retire financially solvent
« Reply #16 on: September 13, 2022, 05:48:27 PM »
Wow how cynical are you people

Everyone here has a different method to achieving their goals - I though coming here people would be more open minded to different scenarios

So I would not sell my paid off home to pay rent to hand that money to my kids - money that I worked hard for to give me the comfort of not having a monthly mortgage or rent payment my choice -

Only one person on here noticed I put myself last when it came to my planning in order to provide for my kids during their hardship at college - they all have student loans but I gave them money monthly to support them in purchasing expensive books they could not afford for their course and providing food money

As one knows the market can go up and go down for that matter and my house during that time is still paid for and allows me to survive on a lower income

I asked for advice on different methods to achieve my goal  - not just in an 'Index fund' - I am paying off my CC first as the 0% ends in Feb where as the student loan with the highest interest is still a tax write off - made sense to me ...don't see that box on the 1040
Even on the show that Mr Money Mustache appeared on each person was on a different journey and one solution never fit all - I had no empathy for the footballer who blew his money and afterwards still earned 10k a week with his attitude of maybe I should have saved some of it in the beginning - the other couple for whom MMM guided did not initially want to move from there nice house either and only in the end decided to sell and move with the intention of repurchasing another house at a later date money dependent

As a first time poster here I was not aware I had to respond to everyone who answered and none of you felt your reply could be construed as inappropriate or rude....funny how the one I did reply to where someone else put excellent answer

So I am emotionally attached to my paid for home - I don't expect any of my kids to keep the house - they will sell it I am sure - however just for your knowledge my kids don't expect me to leave them anything my intention is secret - it will be left with individuals notes to each one
clearly stating - don't waste this opportunity - this money could change your life -
Most parents I know have made significant sacrifices for their kids  - for you to think that your parents were foolish in their decision making was neglectful on your part as you clearly did not also see the love they had for you to make them in the first place...

Kris

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Re: Retire financially solvent
« Reply #17 on: September 13, 2022, 05:52:03 PM »
Wow how cynical are you people

Everyone here has a different method to achieving their goals - I though coming here people would be more open minded to different scenarios

So I would not sell my paid off home to pay rent to hand that money to my kids - money that I worked hard for to give me the comfort of not having a monthly mortgage or rent payment my choice -

Only one person on here noticed I put myself last when it came to my planning in order to provide for my kids during their hardship at college - they all have student loans but I gave them money monthly to support them in purchasing expensive books they could not afford for their course and providing food money

As one knows the market can go up and go down for that matter and my house during that time is still paid for and allows me to survive on a lower income

I asked for advice on different methods to achieve my goal  - not just in an 'Index fund' - I am paying off my CC first as the 0% ends in Feb where as the student loan with the highest interest is still a tax write off - made sense to me ...don't see that box on the 1040
Even on the show that Mr Money Mustache appeared on each person was on a different journey and one solution never fit all - I had no empathy for the footballer who blew his money and afterwards still earned 10k a week with his attitude of maybe I should have saved some of it in the beginning - the other couple for whom MMM guided did not initially want to move from there nice house either and only in the end decided to sell and move with the intention of repurchasing another house at a later date money dependent

As a first time poster here I was not aware I had to respond to everyone who answered and none of you felt your reply could be construed as inappropriate or rude....funny how the one I did reply to where someone else put excellent answer

So I am emotionally attached to my paid for home - I don't expect any of my kids to keep the house - they will sell it I am sure - however just for your knowledge my kids don't expect me to leave them anything my intention is secret - it will be left with individuals notes to each one
clearly stating - don't waste this opportunity - this money could change your life -
Most parents I know have made significant sacrifices for their kids  - for you to think that your parents were foolish in their decision making was neglectful on your part as you clearly did not also see the love they had for you to make them in the first place...

We are open to different scenarios.

We also understand math, interest rates, and rates of return.

Recognize that we have no dog in this fight. We are trying to help you.

Whether you recognize that is up to you.

Also, recognizing that you put yourself last was not necessarily a compliment. It was not necessarily the best decision for you, or your kids.

You don’t have to respond to all of us. In fact, you don’t have to respond to any of us.
« Last Edit: September 13, 2022, 05:56:03 PM by Kris »

MDM

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Re: Retire financially solvent
« Reply #18 on: September 13, 2022, 05:54:22 PM »
As a first time poster here I was not aware I had to respond to everyone who answered....
You don't.  It's not a bad idea, however, to respond in some way when a poster asks you a question. :)

JupiterGreen

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Re: Retire financially solvent
« Reply #19 on: September 13, 2022, 08:07:25 PM »
So you have a lot of things going on here, and not a lot of detail in the numbers, but I think the biggest issue is really how you think about things.  We all have only a limited amount of money, and so you need to spend that amount in ways that advance your priorities.  Here is what I see as your priorities, based on the way you have explained your situation:

1.  Security.  You want a place to live, forever, and so you have put having a paid-off house at the top of the priority list.*

2.  Children.  You took years off work to raise your family, which obviously came with a financial tradeoff.  You are helping them pay for college.  And even the money you've managed to accumulate is earmarked for them (house in trust). 

There is absolutely nothing wrong with your priorities; it's just that they come with tradeoffs.  And the main tradeoff you have chosen -- the thing you've sacrificed in favor of those other two priorities -- is taking care of yourself in your retirement years. 

The problem is that, having now spent, what, 30 years prioritizing everything other than your retirement, you are now realizing you cannot postpone that reckoning any longer.  Now the priority is to add on an additional $1.5M in 10 years -- without detracting in any way from your other two priorities.

I hate to tell you, but that simply cannot happen.  You won't even earn enough over the next 10 years to save $1.5M, even if you had zero living expenses.  So something has to give.  Your choices are:

1.  Reprioritize.  Take the paid-off house, sell it, buy something cheaper and smaller -- WITH a mortgage, to free up the investments you need to support your future life.  I know you are not going to want to do this, because of your need for security and desire to pass it on to your kids.  But this is the only choice that likely gets you to retirement on your desired schedule.**   

2.  Decrease your planned retirement income needs.  $60K/yr is great.  But if you're actually spending only $18K/yr, you don't actually need that -- again, that extra is just to make you feel safe.  Look at how much you actually need to be able to afford things like new cars and new roofs and medical insurance and the occasional kid emergency.  Then look very, very closely at your future income streams -- don't just assume a pension is worth X or SS is worth Y, find out.  That will tell you what the gap is you need to cover.

3.  If you will not do 1 or 2, or you do 2 but still cannot fill the gap over the next 10 years, plan to work longer.  There's no magic here.  Invest all you can, defer retirement and SS and pension payouts as long as you can, and reevaluate when you're closer to your goal.

FWIW, the focus on DRIPs and finding the right calculators and all that is putting the cart waaaaayyyy before the horse.  You have debt at 9%, a paid-off house that is earning you nothing (and whose value you don't plan to touch at all, ever), and no real retirement savings.  Your top priority is maximizing the amount you invest, today -- just go for something simple like the Vanguard Total Stock Market Index fund.  How much you sock away is going to matter much more than the details of the specific thing you sock it away in. 


*So I am trying not to focus on water that has already gone rushing by that bridge, but chasing safety as you have hasn't made you one whit safer.  You still have student loans!  Those are not even dischargeable in bankruptcy!  If you can't pay them, you may well lose the house anyway.  Or what will you do if you can no longer afford medical insurance if you are laid off or retire?  Without significant savings, there are a thousand and one reasons why you could be forced to sell the house anyway -- and it can take a long, long time to do so, and there's no guarantee home values will be where they are now if that happens.  It is very, very important to understand that chasing absolute safety is an illusion, and the harder you try to grab onto it, the more you are actually putting yourself at risk from other dangers you're ignoring. 

**I note that you are averse to renting because the expenses aren't under your control -- you mention a friend whose rent went up to $2300, as compared to the $850 you paid when you lived there 20 years ago.  Yes, that's a big increase (although not so much over 20 years).  But you need to put that into perspective as part of the bigger picture.  You also said you were paying $3700/month for your house -- that's almost 3x as much!  This is what I mean about how chasing the perception of safety can leave you exposed, because you put blinders on and focus only on the big scary thing you're trying to avoid.  Here, in order to protect yourself from a $1500 rent increase over 20 years, you bought a house that cost you almost $1500 more than even today's rent -- and you paid that for years!.  Imagine what your finances would look like if you had stayed in that apartment, followed your rent from $850-$2300 over 20 years, and consistently invested the difference.  I can almost guarantee that your nest egg would already be larger than you'd ever need.

This is a very generous response, exceptionally written, and really covers everything.

OP, after reading your replies it sounds like you are happy with your choices in life thus far with regards to your children. That's great, try to focus on what you got for what you have given up (this balance is different for everyone). The question you asked can only be answered with math and @Laura33 (and others) covered the answer really well. The scenario may go better (or worse) than average, but those are the facts as we know them. It might be hard to swallow, but take some time to think about it. Better not to muddy your math with emotions. 

Malossi792

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Re: Retire financially solvent
« Reply #20 on: September 14, 2022, 01:31:12 AM »
Laura articulated exceptionally well what (I think) most of us did get but didn't acknowledge in writing.
Situation is, you can't have your cake and eat it, too. You fed your cake to your children, which is remarkable, but if they didn't agree to feed you theirs in your old age, then it's too bad, you have to cook with what you have.
The people on here have great recipes to share with you, but no magic wands, sorry. This is also not gofundme so you will have to use your own ingredients.
Accept what needs to be accepted and you may or may not come back here open minded to honest, helpful, if a little painful, suggestions.
It's quite a lot like fitness, the core stuff is quite simple, but if it was also easy, everyone would be fit.
Good luck on your journey!

barn3gins

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Re: Retire financially solvent
« Reply #21 on: September 14, 2022, 02:01:49 AM »
but if they didn't agree to feed you theirs in your old age, then it's too bad, you have to cook with what you have.
Explain how this 'assumption' is useful to me wanting to achieve my goal?

I agree making this post here was a mistake on my part - insulting me is one thing going after my kids another .......

Paper Chaser

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Re: Retire financially solvent
« Reply #22 on: September 14, 2022, 05:33:38 AM »
To answer the primary question, you're not going to hit your desired number within your desired time frame without a major change in approach. You need more income/investments or a longer time frame.
- You can increase income with a different job, but that doesn't sound likely since you're currently comfortable after burnout.
- You can liquidate existing assets and put that cash into investments. This would be selling or mortgaging the existing home and then investing the funds. This also sounds unlikely based on your posts.
- So that leaves extending the time line as the only other real option.

There's no magic bullet here that's going to get you what you want, when you want it without major change on your part. You could play the lottery I guess, either literally, or by chasing the next great individual stock and hoping to catch it at the right time. The chances of either of those actually working out are really slim of course. And when you have so little currently available, it could be catastrophic to lose any of it.

Tempname23

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Re: Retire financially solvent
« Reply #23 on: September 14, 2022, 06:37:34 AM »
You earn $60k and spend $20k, so, are you actually saving $40k a year? I'm skeptical.
 If you are, then a 8% yearly investment gain over 11 yrs could get you about $700k.
 But 11 years from at 4% inflation that will only have $450k of buying power.
 You say your pensions will get $30,000 at 65 yrs old, is that a lump sum or yearly amount?
 SS of $20k, means you only need $40k to get you $60k wanted income, But, again, the problem is, IF we can get inflation to average 4% over the next 11 years, $60k will only have the buying power of $40k at that time.
  Others have given you advice that you don't want to hear, you want some type of magical fix, rather than seeing the future has a problem and you must make changes  that you don't want, in order to fix it.
 Answer the above questions and we can run the numbers again.

achvfi

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Re: Retire financially solvent
« Reply #24 on: September 14, 2022, 08:38:04 AM »
@barn3gins
OP, you are in great position relative to most people in this country. You set yourself up to a decent situation.

Looks like you are new to this forum, I would advise you to stay humble and sock up all the advice you are getting from people here. Most of them have financial wisdom that is at much higher level than average.

Take your time (months) and linger and learn.

Having a paid off home obviously is precious to you and you are right to be proud of the achievement. So don't mess with that.

Focus on saving money and increasing gap between what you make and what you spend.

Focus on investing money going forward. Again I stress investing.

and do this consistently and you will be close to your goals.

Villanelle

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Re: Retire financially solvent
« Reply #25 on: September 14, 2022, 09:15:48 AM »


OP, you asked for advice on different methods to achieve your goal.  That'z good, because as far as I can tell, if you don't change things, you will get nowhere near that goal.  So let me ask you this--you say you aren't willing to sell the house, which is the obvious answer that several people have come up with.  But you need a lot more money.  So what *ARE* you willing to do?  There is no answer that tweaks what you invest in that is going to get you where you need to go. You need big changes.  Are you willing to get a couple roommates?  That would let you keep the house and if you got 2-3 of them, you might start seeing enough additional income that it would move the needle.  Are you willing to rent the house to someone else, and live in a small rented room in someone else's place for a while?  Again, that lets you keep the house while drastically lowering your housing costs.  Are you willing to get another job?  Are you willing to keep at least a part time job until the day you die, and willing to take the risk that you will physically be able to do that? 

And additionally, are you willing to cut your expenses?  That would mean you don't need $1.5m in retirement and will still have about the same margin of safety that you say you need.  (Because $1.2m spending $12k less per year is about the same as $1.5m spending $60k/yr).  Are you willing to sell off many of the things you own, but keep the house?  That won't make much difference, but it could add $50k (as a very rough guess, but it depends on whether you own Ikea furniture or Waterford Crystal). 

These are just some example.  You want a different financial life; that meansing financial changes.  You've made off-limits the biggest change you could make, so in order to make this work, just about everything else has to be on the table, or you are going to have to change your goal because the numbers don't come anywhere close to working.  You CAN NOT save $1.5m (either inflation adjusted, or not) in 10 years on a $60k income, and that's no matter how much you decrease your spending.  So, again, what ARE you willing to do to make more and spend less?  Let's start with that as I think the responses you get will be much more helpful.

List anything you are willing to do to bring in income.

List everything you can do to cut expenses, dramatically. 

I listed a few suggestions, which are either getting 2-3 roommates, or renting that house out and being someone's roommate.  You may balk at those, but that's the drastic kind of thing you need to do to get anywhere near where you say you want to be.  So think on it and share what you are willing to do, and remember that it needs to be drastic to get to the goal you've set.
« Last Edit: September 14, 2022, 06:54:48 PM by Villanelle »

mistymoney

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Re: Retire financially solvent
« Reply #26 on: September 14, 2022, 09:27:10 AM »
Hello
I think of all the replies I have received your the only one who gets me !

I am not paying any longer for my kids and none live with me - I went through a bitter divorce 10 years ago that broke me financially and it took me another degree and 10 years to pay off the house which gave me the security I desired, the fact I only have $6000 left on the  student loan debt is a god send and will be cleared no later than Dec 2023 earlier if I can swing it - as I was in medicine and worked thru all the pandemics I walked away emotionally and physically exhausted - having taken the last 18 months to recover I am now seeking a lower paid role that wont give me the stress, I have always been an over achiever and I have set the amount to what I would like to achieve
People on here don't give me credit for what I have done most of my life and though I am limited financially as most are in investing I have still managed to pay off the house an support my kids...which at the time were my priorities - Money doesn't buy you happiness only some comfort I unlike my husband have no medical issues - and yes I have already considered delaying my retirement and working until I achieve my goal or live off my meager 18K
Though I understand selling the house is an option not in this market - the house behind me is on the market - 2 months later still not sold - people are getting weary the recession looming - I feel under the circumstances no mortgage or rent is best at this point financially freeing that money to be invested in Vanguard and such - people just don't understand when you have kids you make a choice at the time what's more important money or them - I appreciate your insight that only you recognised I put myself last - thank you xxx
   

There are a lot of possibilities between these two! It isn't either or, but just when you pull the plug.

You mentioned 2 small pensions at 30k. Is that 30k/year defined benefit, or 30K account value? I am assuming account value.

You mention 20k social security, so then to live on 60k you'd only need 40k from investments, discounting the pensions.

How old are you now? and age you hope to retire?

As mentioned find out exactly what social security payment you might get, go to ssa.gov and see exactly what that soc sec payment will be. When you log into your infomation, scroll down to the bottom of that page. You can input age you stop making income, age you take soc sec, and you can also input different future incomes to see how that will affect your payments.

You mention you are currently married. Will your husband have any pension or social security? Medical care is an issue for him, is he close to medicare age?

You are also concerned about future healthcare, but I assume you will get medicare. How many years before 65 do you plan to retire?

mistymoney

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Re: Retire financially solvent
« Reply #27 on: September 14, 2022, 09:52:20 AM »
but if they didn't agree to feed you theirs in your old age, then it's too bad, you have to cook with what you have.
Explain how this 'assumption' is useful to me wanting to achieve my goal?

I agree making this post here was a mistake on my part - insulting me is one thing going after my kids another .......

nobody has insulted you. and nobody has "gone after" your kids.

You are being way too emotional in your responses. I understand it is difficult. I got a lot of grief when I started posting here about paying towards my kids college and such, but honestly you haven't gotten near the intrusive commentary that I got!

Despite all that intrusive comments on things I didn't want to be up for discussion (because there are things we all do that are just non-negotiable), I tried to explain my POV and that there were things I wasn't going to change.....I got a lot of great information that helped me plan a better path forward.

You aren't here to make friends, although it could happen I suppose! You are here for information, ideas, perspectives to help you get from here to there. Everyone is taking the time to try to give you that, but it doesn't mean that it will all be gold, or of any use to you. Take what si useful, and maybe some of the other stuff will be useful in time.

You could maybe do a case study like I did, but it would be a lot more deep into your situation and could get highly intrusive!


ChpBstrd

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Re: Retire financially solvent
« Reply #28 on: September 14, 2022, 12:08:12 PM »
@barn3gins you have actually set yourself up to aim for something called LeanFIRE, which will not require $1.5M. A paid-for house, halfway off the grid, and sub-$20k annual expenses is a great way to earn a comfortable living off of a modest stash and be nearly immune to inflation. As others have noted, you only have to think about covering your expenses in retirement, not cover your whole previous salary and continue saving while you are retired.

I suggest setting small, attainable goals. I also suggest having a year-by-year spreadsheet and plan for how much savings you will have attained at future times. This plan should factor in your earnings, expenses, and savings.

The kids are finally off on their own, so you can direct most of your salary to extinguishing debts just as soon as you have a few thousand dollars in an emergency fund. Then you'll find yourself in a position where the majority of your salary can go to investments. When you reach that threshold thing will start happening quickly.

I assume your $18k/year spending is what you'll live on after these debt and kid expenses are gone. It is entirely possible your SS check will cover that entire amount, so your small attainable goal is to bridge the years until you take SS. Preferably, you should hold off until 70 to take SS, because the ROI for doing so is very high. Each extra year of retirement you buy for yourself not only costs only a third of a year to earn, but it also pushes back your date to start SS and increases your later-in-life income dramatically.

If you bring home $60k/year, and you spend $20k/year, then you should be saving/investing $40k or 2 years' worth of spending for each year you work. That's kicking ass by any reasonable metric, and having a $500k stash of investments that can support a $20k/year withdraw rate is within reach within 10 years. However there is a need for precision, detail, and dedication here. A plan is only as good as the accuracy of the numbers that went into it and your ability to execute. You need to look up your dollar amounts for SS, any pension, and an Obamacare health insurance plan at your future income level. Those go into the financial plan that you'll build to model the next 20 years. You also want to take whatever tax minimalization steps you can take to save a couple grand per year, such as maxing out your 401k and Roth.

By making these things concrete and using solid numbers, you can work out a plan and actually get there. The people who get trapped in OMY anxiety or worries about health insurance often don't spell out all the numbers on a spreadsheet, or don't explore ALL of their options. A couple of days' research could end up saving a year or two of work, so the yield on effort here is very high!

kite

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Re: Retire financially solvent
« Reply #29 on: September 14, 2022, 12:13:49 PM »
Relax. You're actually doing fine.

Owning your home outright, mortgage free, is fantastic if it's done before retirement. Don't sell it if it still serves your purposes. It allows you to keep your expenses low indefinitely. This is huge!
[Those rent-is-superior-to-owning analyses rest on a a few assumptions and a giant omission. Entire books can (and will) be written on how wrong this often is. So don't have second thoughts and don't be swayed by critics.]

Generally, it's smarter to prioritize retirement savings ahead of your kids' college education. But that ship has sailed, so no point in coulda, woulda, shoulda.  Besides, successfully launched kids are a tremendous benefit to you. You did great there, too. You don't need to look backwards and defend that.

Just keep attacking the debt and saving/investing for the future.

As far as investing, DRIPs are for fun money. It's better than lottery tickets, BeanieBabies or Thomas Kinkaid paintings. But you can lose a lot. And as a small buyer, you are guaranteed to be getting the worst matching price. The market will move against you both with the buying and selling.
A low fee, balanced mutual fund is the way to go. Start now. I Bonds might also be right for your situation.

If/Since you are keeping the house, make sure it supports aging in place. Maybe you've already got this covered (I'm trying to read between the lines). But now that I'm middle aged, and caring for disabled & dying family members, this is in the front of my mind. 

The biggest challenge is in paring expenses, and you seem like you are already an honor student at that. Great job. Keep it up.


Laura33

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Re: Retire financially solvent
« Reply #30 on: September 14, 2022, 01:13:18 PM »
but if they didn't agree to feed you theirs in your old age, then it's too bad, you have to cook with what you have.
Explain how this 'assumption' is useful to me wanting to achieve my goal?

I agree making this post here was a mistake on my part - insulting me is one thing going after my kids another .......

OP, if you're still around, I think what we have here is a major difference in communication styles, not any kind of intentional insult. 

You have made a number of significant sacrifices and faced hard circumstances in your life.  Faced with all that, you've done very very well to keep your expenses low, help your kids, and get the house paid off and debt paid down.  You are clearly an empathetic person, and so you would like some empathy from other people -- some appreciation of what you've done and how much you've achieved under the circumstances. 

This board is not particularly good at empathy and feelings.  ;-)  It's not that people don't care -- they actually do care, very very much.  But they think in terms of numbers and logic and spreadsheets and, perhaps most of all, optimizing everything.  So when people read your story, you largely get two reactions:

1.  "Here is what you can do" -- answering the question with mathematically-optimal, non-emotional choices, without paying attention to the emotional subtext.  People may well appreciate how well you've done to get your house paid off, but you're asking what to do now, so they're focusing on that question instead of giving the pat on the back you'd like to hear for your prior achievements.

Or

2.  "But -- but -- what she did isn't mathematically optimal!  Must follow the numbers and get optimized ASAP!"  Again, note the lack of focus on the emotional aspects.  I think these are the responses that are putting you on the defensive, because you feel like people are insulting your life choices and efforts.  But it's not an insult as much as it is a different reality, a different way of looking at the world.  It's not even apples and oranges -- it's apples and purple.  Different universes.   

The conflict, of course, is that if you want to get as close as possible to your goal in 10 years, you need to think in numbers and optimization, not feelings.  Which, ironically, means that the people who you most need to listen to are the very people who you think are insulting you, because you very much need the insight they can provide from their entirely different perspective.  So please, please try not to be hurt or insulted by how people say things, because you'll miss what you need most.

Since it seems like I was able to say some of the same stuff in a way that didn't get your back up to the same degree, I'm going to give some advice for more concrete actions. 

First, figure out what retirement assets you actually have as of right now, and how those assets may be affected based on when you draw on them. 

-- Pension:  get info about the monthly payout you could get, when you're eligible to begin drawing, and whether you can get a larger payout by waiting until 65 or 70 or more to start drawing.

-- SS:  if you have a spotty employment history, you may be better off with 50% of your husband's benefit (also note that if he passes before you, your benefit converts to the higher of yours or his -- so long-term, that is a great safety net).  Spend some time with the SS website and figure out what you're looking at there.

-- What about your current DH?  Are you two pooling retirement assets and planning as a team, or are you dividing expenses and each covering your own share?  If the former, your analysis should really include his assets and liabilities, too. 

-- What about your former DH?  Are you entitled to any assets from the divorce (such as part of his pension)?

Second, track your expenses, if you're not doing so already.  It's great that you're spending $18K/yr.  But as noted above, that implies you have around $40K left to invest, not counting taxes (which should be low in your income bracket).  I'm guessing you used that excess to pay down the debt and the house.  But a lot of times, people think they're spending $X, but they're not paying attention to the "lumpy" costs, like new tires for the car, or gifts to the kids), and if they actually tracked their spending, they'd really see it's $X + Y. 

Given your low investments/cash to date and short timeframe until retirement, you're not going to have $1M in investments at 65, so it's going to be critically important to delve into these details now to know precisely how much you actually need (and how much future kid support and other luxuries you can afford).  In addition, I think that doing these things will also help with your need for security.  When you have a big scary unknown out there (like, say, future medical expenses), it can balloon up into this giant beast in your head, and so to "feel" like you're protected against that, you have to make really conservative assumptions about future expenses (a/k/a "I need $60K/yr because medical expenses!").  Whereas when you actually delve into the research and put some facts together, that gives you real numbers to work from -- and those real numbers are usually smaller than you feared. 

Fear thrives in ignorance.  So go get the information you need to beat the giant beast back down to size.  And not coincidentally, when you beat the fear beast back, that turns off your lizard brain fight-or-flight response, and thus gives the logical part of your brain the ability to function and thus make those kinds of numerically optimal decisions you need to.  Which means the more research you put in, the better your decisions are likely to be, for more reasons than one.

Villanelle

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Re: Retire financially solvent
« Reply #31 on: September 14, 2022, 01:45:24 PM »
but if they didn't agree to feed you theirs in your old age, then it's too bad, you have to cook with what you have.
Explain how this 'assumption' is useful to me wanting to achieve my goal?

I agree making this post here was a mistake on my part - insulting me is one thing going after my kids another .......

OP, if you're still around, I think what we have here is a major difference in communication styles, not any kind of intentional insult. 

You have made a number of significant sacrifices and faced hard circumstances in your life.  Faced with all that, you've done very very well to keep your expenses low, help your kids, and get the house paid off and debt paid down.  You are clearly an empathetic person, and so you would like some empathy from other people -- some appreciation of what you've done and how much you've achieved under the circumstances. 

This board is not particularly good at empathy and feelings.  ;-)  It's not that people don't care -- they actually do care, very very much.  But they think in terms of numbers and logic and spreadsheets and, perhaps most of all, optimizing everything.  So when people read your story, you largely get two reactions:

1.  "Here is what you can do" -- answering the question with mathematically-optimal, non-emotional choices, without paying attention to the emotional subtext.  People may well appreciate how well you've done to get your house paid off, but you're asking what to do now, so they're focusing on that question instead of giving the pat on the back you'd like to hear for your prior achievements.

Or

2.  "But -- but -- what she did isn't mathematically optimal!  Must follow the numbers and get optimized ASAP!"  Again, note the lack of focus on the emotional aspects.  I think these are the responses that are putting you on the defensive, because you feel like people are insulting your life choices and efforts.  But it's not an insult as much as it is a different reality, a different way of looking at the world.  It's not even apples and oranges -- it's apples and purple.  Different universes.   

The conflict, of course, is that if you want to get as close as possible to your goal in 10 years, you need to think in numbers and optimization, not feelings.  Which, ironically, means that the people who you most need to listen to are the very people who you think are insulting you, because you very much need the insight they can provide from their entirely different perspective.  So please, please try not to be hurt or insulted by how people say things, because you'll miss what you need most.

Since it seems like I was able to say some of the same stuff in a way that didn't get your back up to the same degree, I'm going to give some advice for more concrete actions. 

First, figure out what retirement assets you actually have as of right now, and how those assets may be affected based on when you draw on them. 

-- Pension:  get info about the monthly payout you could get, when you're eligible to begin drawing, and whether you can get a larger payout by waiting until 65 or 70 or more to start drawing.

-- SS:  if you have a spotty employment history, you may be better off with 50% of your husband's benefit (also note that if he passes before you, your benefit converts to the higher of yours or his -- so long-term, that is a great safety net).  Spend some time with the SS website and figure out what you're looking at there.

-- What about your current DH?  Are you two pooling retirement assets and planning as a team, or are you dividing expenses and each covering your own share?  If the former, your analysis should really include his assets and liabilities, too. 

-- What about your former DH?  Are you entitled to any assets from the divorce (such as part of his pension)?

Second, track your expenses, if you're not doing so already.  It's great that you're spending $18K/yr.  But as noted above, that implies you have around $40K left to invest, not counting taxes (which should be low in your income bracket).  I'm guessing you used that excess to pay down the debt and the house.  But a lot of times, people think they're spending $X, but they're not paying attention to the "lumpy" costs, like new tires for the car, or gifts to the kids), and if they actually tracked their spending, they'd really see it's $X + Y. 

Given your low investments/cash to date and short timeframe until retirement, you're not going to have $1M in investments at 65, so it's going to be critically important to delve into these details now to know precisely how much you actually need (and how much future kid support and other luxuries you can afford).  In addition, I think that doing these things will also help with your need for security.  When you have a big scary unknown out there (like, say, future medical expenses), it can balloon up into this giant beast in your head, and so to "feel" like you're protected against that, you have to make really conservative assumptions about future expenses (a/k/a "I need $60K/yr because medical expenses!").  Whereas when you actually delve into the research and put some facts together, that gives you real numbers to work from -- and those real numbers are usually smaller than you feared. 

Fear thrives in ignorance.  So go get the information you need to beat the giant beast back down to size.  And not coincidentally, when you beat the fear beast back, that turns off your lizard brain fight-or-flight response, and thus gives the logical part of your brain the ability to function and thus make those kinds of numerically optimal decisions you need to.  Which means the more research you put in, the better your decisions are likely to be, for more reasons than one.

I believe she said somewhere here that her budget doesn't account for things like new car replacement, so I do think this is the case and that $18k is probably very optimistic.  That's one reason I continued to assume $60k/yr was probably closer to what she needs, even with SS and a pension.  I didn't entirely follow the track on inflation, so I'm also not sure if that accounts for things like increasing property taxes, and I suspect home maintenance and the significant amount required for that (since you don't need a new roof or ac/heater replacement every year, but when you do, it's spendy!) likely isn't represented in that $18k, either. 

OP, it would be helpful to do a case study.  You can read the post on how to put one together.  But be aware that people will comment on every aspect of it, so if that isn't okay with you, you need to proceed with caution.  The more open you are, the better the advice you are going to receive, but also the more scrutiny you'll get. 

Kris

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Re: Retire financially solvent
« Reply #32 on: September 14, 2022, 07:59:18 PM »
I don’t think she’ll be back.

Which is really sad. She could have gotten a lot of help here and steered her life in a better direction.

Adventine

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Re: Retire financially solvent
« Reply #33 on: September 15, 2022, 02:15:35 PM »
I don’t think she’ll be back.

Which is really sad. She could have gotten a lot of help here and steered her life in a better direction.


Yeah, it's too bad. It seems to me OP was already feeling very anxious and vulnerable when she first posted. Then she started getting defensive. That statement "People on here don't give me credit for what I have done most of my life" was telling. But I think the community really lost her when she started interpreting feedback as personal attacks on her and her kids.

Hopefully when she's in a more receptive state of mind, she can come back to the comments here and understand that people were trying to offer solutions, not just judge her choices.
« Last Edit: September 15, 2022, 02:24:36 PM by Adventine »

ChpBstrd

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Re: Retire financially solvent
« Reply #34 on: September 15, 2022, 02:38:04 PM »
I don’t think she’ll be back.

Which is really sad. She could have gotten a lot of help here and steered her life in a better direction.


Yeah, it's too bad. It seems to me OP was already feeling very anxious and vulnerable when she first posted. That statement "People on here don't give me credit for what I have done most of my life" was telling. But I think the community really lost her when she started interpreting feedback as personal attacks on her and her kids.


Hopefully when she's in a more receptive state of mind, she can come back to the comments here and understand that people were trying to offer solutions, not just judge her choices.

I think we sometimes mix up requests for advice moving forward with our facepunches for past decisions, investment choices, and other sunk costs. OP was asking for advice moving forward. Additionally, it's not 100% clear the OP would have actually been wealthier had they invested in stocks over the past several years. Maybe OP would have bought in 2017, sold in the Spring of 2020, bought in the Fall of 2020, and now they're right back where they started instead of having a paid off house. Hindsight is often rose-tinted.

Yet, money does not tend to care about anyone's hurt feelings or flame wars. If OP bailed on the conversation rather than wait for more targeted advice on the question they asked, the consequences of that reaction are all their own. There are advantages to being a marginally-human, semi-robotic INTJ like myself, but that's kinda water under the bridge too isn't it?

uniwelder

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Re: Retire financially solvent
« Reply #35 on: September 15, 2022, 03:47:22 PM »
I don’t think she’ll be back.
Which is really sad. She could have gotten a lot of help here and steered her life in a better direction.

Hopefully when she's in a more receptive state of mind, she can come back to the comments here and understand that people were trying to offer solutions, not just judge her choices.

If OP bailed on the conversation rather than wait for more targeted advice on the question they asked, the consequences of that reaction are all their own.

I might be unfairly lumping everyone's responses together, but its only been a day since OP last wrote, so give her a break.  Also, its not clear OP even needs financial help. 

Not enough information was provided to tell whether OP was simply afraid of not having enough money in the future or if there is a real basis for concern.  From what had been written, it sounds like OP will have more money coming with a pension (30k?) and social security (20k?) than expected expenditures (27k?).  OP has been asked to clarify, but hasn't provided details.  I'm preaching to the choir, as there have been numerous other responses just like this questioning OP's actual expenses and income.

Villanelle

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Re: Retire financially solvent
« Reply #36 on: September 15, 2022, 06:01:07 PM »
I don’t think she’ll be back.

Which is really sad. She could have gotten a lot of help here and steered her life in a better direction.


Yeah, it's too bad. It seems to me OP was already feeling very anxious and vulnerable when she first posted. That statement "People on here don't give me credit for what I have done most of my life" was telling. But I think the community really lost her when she started interpreting feedback as personal attacks on her and her kids.


Hopefully when she's in a more receptive state of mind, she can come back to the comments here and understand that people were trying to offer solutions, not just judge her choices.

I think we sometimes mix up requests for advice moving forward with our facepunches for past decisions, investment choices, and other sunk costs. OP was asking for advice moving forward. Additionally, it's not 100% clear the OP would have actually been wealthier had they invested in stocks over the past several years. Maybe OP would have bought in 2017, sold in the Spring of 2020, bought in the Fall of 2020, and now they're right back where they started instead of having a paid off house. Hindsight is often rose-tinted.

Yet, money does not tend to care about anyone's hurt feelings or flame wars. If OP bailed on the conversation rather than wait for more targeted advice on the question they asked, the consequences of that reaction are all their own. There are advantages to being a marginally-human, semi-robotic INTJ like myself, but that's kinda water under the bridge too isn't it?

I don't think any of the posts in this thread were face punches.  I'm not going to reread everything, but I don't recall posts that didn't offer suggestions for what to do going forward and only addressed past choices, either. 

lifeisshort123

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Re: Retire financially solvent
« Reply #37 on: September 17, 2022, 05:26:02 AM »
Whether you sell the house or not is your choice.  I would personally not suggest getting another mortgage on the property.  Interest rates are now hitting around 6%+.  Based on your income, your rate might be a little higher, but based on assets it might be a little lower.  I would certainly not do a 30 year right now, and am struggling in your case to see the appeal even of a 15. 

While you “may” (most likely) based on historic rates of return be able to exceed that in the market, especially approaching retirement, it is cutting it a little close for my sense of risk, especially for someone approaching retirement who will want safer investments rather than index funds.   

Owning your own home makes you feel secure based on your words. 

Here would be my suggestions - if I am reading your comments you are looking for two things $1.5 million and enough to cover your expenses.  If your spending numbers are accurate, your Social Security check will get you pretty far.  If you are saving even 24k a year over the next 10 years, at a conservative 6% rate of return you’ll have $324,000.  If the market outperforms and you get 10% annual rate of return you’re looking at almost $400k which would give you about $16k of your $18k of living expenses right there, without touching social security. 

It was unclear to me if your pension was a lump sum payment of $30k or $30k annually.  If it is annually, you’re in even better shape obviously.  Even the lump sum though will be great, and can help you establish a fuller emergency fund, give you opportunity to buy iBonds, invest in the market, etc.  It’s especially great if you get your hands on this money for a few years BEFORE you retire, so that you can start to invest it and be living off the interest of it.  On only $18k of expenses, even $1000 a year gets you a big chunk of the way there.

Villanelle

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Re: Retire financially solvent
« Reply #38 on: September 17, 2022, 10:10:16 AM »
Whether you sell the house or not is your choice.  I would personally not suggest getting another mortgage on the property.  Interest rates are now hitting around 6%+.  Based on your income, your rate might be a little higher, but based on assets it might be a little lower.  I would certainly not do a 30 year right now, and am struggling in your case to see the appeal even of a 15. 

While you “may” (most likely) based on historic rates of return be able to exceed that in the market, especially approaching retirement, it is cutting it a little close for my sense of risk, especially for someone approaching retirement who will want safer investments rather than index funds.   

Owning your own home makes you feel secure based on your words. 

Here would be my suggestions - if I am reading your comments you are looking for two things $1.5 million and enough to cover your expenses.  If your spending numbers are accurate, your Social Security check will get you pretty far.  If you are saving even 24k a year over the next 10 years, at a conservative 6% rate of return you’ll have $324,000.  If the market outperforms and you get 10% annual rate of return you’re looking at almost $400k which would give you about $16k of your $18k of living expenses right there, without touching social security. 

It was unclear to me if your pension was a lump sum payment of $30k or $30k annually.  If it is annually, you’re in even better shape obviously.  Even the lump sum though will be great, and can help you establish a fuller emergency fund, give you opportunity to buy iBonds, invest in the market, etc.  It’s especially great if you get your hands on this money for a few years BEFORE you retire, so that you can start to invest it and be living off the interest of it.  On only $18k of expenses, even $1000 a year gets you a big chunk of the way there.

I got lost in the part where she talked about inflation and what she had factored in to it and what she hadn't, but I think $18k is not inflation-adjusted, so in 10 years, she's going to need meaningfully more than $18k. You can't count the portfolio growth toward it but then not count the inflation of costs.  She also said the 18k doesn't cover a lot of major expenses (like car replacement).  So in 10 years, she's probably going to need $30k, if not more. 

ToTheMoon

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Re: Retire financially solvent
« Reply #39 on: September 17, 2022, 12:47:39 PM »
So I am emotionally attached to my paid for home - I don't expect any of my kids to keep the house - they will sell it I am sure - however just for your knowledge my kids don't expect me to leave them anything my intention is secret - it will be left with individuals notes to each one
clearly stating - don't waste this opportunity - this money could change your life -

Most parents I know have made significant sacrifices for their kids  - for you to think that your parents were foolish in their decision making was neglectful on your part as you clearly did not also see the love they had for you to make them in the first place...

It sounds to me like you have done a lot right, both with regards to rebuilding after a divorce, keeping your expenses reasonable, and raising awesome kids who don't expect handouts, and who appreciate the help they have been given.

I think it is noble that you want to leave your kids a life-changing sum of money when you are gone, but realistically don't you hope to live a good long time? Meaning your kids would be well into their own retirements by the time this exchange comes to pass?

If questioned, wouldn't they rather that you use some of the existing equity that you have worked so hard to build and save, to improve YOUR life sooner? Just how much equity do you have in your home? Could it allow you to work less years? What about your husband (who you say has medical issues)? Would it allow the two of you more quality time to spend now before his medical issues worsen?

Of course I am looking at this through my own lens - right now my Dad is fighting for his life after a cancer diagnosis and a major surgery. He is still in his (late) 60's. If he were to pass and I found out that he had spent his last 10 years of healthy life working to provide us an inheritance instead of enjoying the fruits of his labour I would be SO upset. (Thankfully this is not the case, and he has been able to enjoy many years of retirement and spent lots of time with his kids and grandkids as we have all set up our own lives.)

I would encourage you to apply your own words to your kids to your own situation don't waste this opportunity - this money could change your life - and consider that a lot of the advice that has been provided thus far could really help move you in that direction!

mistymoney

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Re: Retire financially solvent
« Reply #40 on: September 17, 2022, 01:41:36 PM »
So I am emotionally attached to my paid for home - I don't expect any of my kids to keep the house - they will sell it I am sure - however just for your knowledge my kids don't expect me to leave them anything my intention is secret - it will be left with individuals notes to each one
clearly stating - don't waste this opportunity - this money could change your life -

Most parents I know have made significant sacrifices for their kids  - for you to think that your parents were foolish in their decision making was neglectful on your part as you clearly did not also see the love they had for you to make them in the first place...

It sounds to me like you have done a lot right, both with regards to rebuilding after a divorce, keeping your expenses reasonable, and raising awesome kids who don't expect handouts, and who appreciate the help they have been given.

I think it is noble that you want to leave your kids a life-changing sum of money when you are gone, but realistically don't you hope to live a good long time? Meaning your kids would be well into their own retirements by the time this exchange comes to pass?

If questioned, wouldn't they rather that you use some of the existing equity that you have worked so hard to build and save, to improve YOUR life sooner? Just how much equity do you have in your home? Could it allow you to work less years? What about your husband (who you say has medical issues)? Would it allow the two of you more quality time to spend now before his medical issues worsen?

Of course I am looking at this through my own lens - right now my Dad is fighting for his life after a cancer diagnosis and a major surgery. He is still in his (late) 60's. If he were to pass and I found out that he had spent his last 10 years of healthy life working to provide us an inheritance instead of enjoying the fruits of his labour I would be SO upset. (Thankfully this is not the case, and he has been able to enjoy many years of retirement and spent lots of time with his kids and grandkids as we have all set up our own lives.)

I would encourage you to apply your own words to your kids to your own situation don't waste this opportunity - this money could change your life - and consider that a lot of the advice that has been provided thus far could really help move you in that direction!

wow - what an incredibly thoughtful and thought-provoking post. Hope OP reads this.

I'm going to get more coffee and read it again myself :)


Villanelle

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Re: Retire financially solvent
« Reply #41 on: September 17, 2022, 01:54:26 PM »
So I am emotionally attached to my paid for home - I don't expect any of my kids to keep the house - they will sell it I am sure - however just for your knowledge my kids don't expect me to leave them anything my intention is secret - it will be left with individuals notes to each one
clearly stating - don't waste this opportunity - this money could change your life -

Most parents I know have made significant sacrifices for their kids  - for you to think that your parents were foolish in their decision making was neglectful on your part as you clearly did not also see the love they had for you to make them in the first place...

It sounds to me like you have done a lot right, both with regards to rebuilding after a divorce, keeping your expenses reasonable, and raising awesome kids who don't expect handouts, and who appreciate the help they have been given.

I think it is noble that you want to leave your kids a life-changing sum of money when you are gone, but realistically don't you hope to live a good long time? Meaning your kids would be well into their own retirements by the time this exchange comes to pass?

If questioned, wouldn't they rather that you use some of the existing equity that you have worked so hard to build and save, to improve YOUR life sooner? Just how much equity do you have in your home? Could it allow you to work less years? What about your husband (who you say has medical issues)? Would it allow the two of you more quality time to spend now before his medical issues worsen?

Of course I am looking at this through my own lens - right now my Dad is fighting for his life after a cancer diagnosis and a major surgery. He is still in his (late) 60's. If he were to pass and I found out that he had spent his last 10 years of healthy life working to provide us an inheritance instead of enjoying the fruits of his labour I would be SO upset. (Thankfully this is not the case, and he has been able to enjoy many years of retirement and spent lots of time with his kids and grandkids as we have all set up our own lives.)

I would encourage you to apply your own words to your kids to your own situation don't waste this opportunity - this money could change your life - and consider that a lot of the advice that has been provided thus far could really help move you in that direction!

It seems the OP is long gone, but I agree so much with this.  My parents both turn 80 next year.  They have made it very clear for many years that their goal is to leave a large sum of money to myself and my sister.    First, it would make no difference if they left a house or a bank account.  Actually, I suppose technically, the latter is better, so the OP's focus on a house doesn't make much sense to me (though I acknowledge that it is more difficult to take a house to pay some medical bills than to take a bank account.)  But also I wish my parents would spend more money now.  They are certainly comfortable and do many things that are extra costs, like travel. So it's not like they live austere lives.  But I'll go to the outlet mall with my mom during a visit and they will eye a $45 sweater, and eventually not buy it because it's not on sale.  They are never going to spend down their money, and frankly I'd rather she have that non-sale sweater than I inherit another $50 that I won't need.  I'll hopefully be well into my 50s, if not older.  By then I will be financially set on my own.  What does another $50, or $5000 or even $50,000 really mean to me at that point?

Thankfully, I feel them loosening the purse strings slightly the last few years.  We just convinced them to book a fairly spendy family trip for  them, my sibling and myself, and the 2 sons-in-law, to celebrate their 80th birthdays next year.  I'd much rather have that experience and those memories with them than inherit another $15,000. 

Maybe if I were going to inherit when I was 24 and fresh out of college and counting every penny.  But once I achieved my own financial stability, I reached a point where I'd rather see them spend on themselves.  It is not a gift to me to see my mom not buy that sweater.  I'm happy they don't have to worry about money, and that I don't have to worry about supporting them or them having enough.  Anything else is likely to be money in inherit that doesn't make a meaningful difference in my life.  I'll likely end up donating most of it. 

But the memories will will make on that family trip?  Or even the joy I know she'd have when she wore that sweater (not that she doesn't have a plentiful wardrobe)?  Those things mean a lot more to me than extra money when I'll already be FI anyway.  And if I had to see them really scrimp--not just not buying a sweater--in order to leave me that money?  that would be stressful and unpleasant, and far, far lease positive than inheriting some money that won't change my life anyway.