Author Topic: 250 k/year salary . . . saves 20k a year. Unable to retire.  (Read 4503 times)

GuitarStv

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http://www.thestar.com/business/personal_finance/retirement/2013/06/08/monday_makeover_freedom_55_for_this_couple_possible_but_not_advised.html

Paying 50 k a year for your adult child's lifestyle seems a little extravagant.  Perhaps the time has come for the adult child to get a job?  They own their 800k house outright . . . where the hell is all their money going?

Article concludes that they clearly need to work for another 10+ years to generate the 1.6 million they will need to retire at age 65.

Megatron

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Re: 250 k/year salary . . . saves 20k a year. Unable to retire.
« Reply #1 on: July 02, 2013, 09:32:44 AM »
oh the things I could've done in college on 50k a year instead of living on 10 cent chicken pot pies from Meijers or going to club meetings for the free pizza.

LDoon

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Re: 250 k/year salary . . . saves 20k a year. Unable to retire.
« Reply #2 on: July 02, 2013, 06:05:09 PM »
The thing is the financial advisor in the article is correct.  The couple wants to have an annual income of $65k, and is being very conservative on any government income (so essential ignored by advisor).  So $65k x 25 = $1.625 million. 

Of course here in MMM-land everyone sees the opportunity to lower expenses ($50k for a college-aged kid?!?).  And living in a paid-off home worth $800k seems ripe to down-size and substantially increase the stash. 

Knock those expected expenses down $10k, downsize the house, and this couple is probably only $400k from a comfortable retirement (instead of a million).  That could be only 3-4 years from now by doing very minor changes.  Count on government income and it's evener quicker.

pom

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Re: 250 k/year salary . . . saves 20k a year. Unable to retire.
« Reply #3 on: July 03, 2013, 03:17:36 AM »
http://www.thestar.com/business/personal_finance/retirement/2013/06/08/monday_makeover_freedom_55_for_this_couple_possible_but_not_advised.html

They own their 800k house outright . . . where the hell is all their money going?


Probably quite a bit of money goes to the housing money pits: taxes, repairs, utilities, furniture ...


StarryC

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Re: 250 k/year salary . . . saves 20k a year. Unable to retire.
« Reply #4 on: July 03, 2013, 03:38:51 PM »
The article explains where the money is going:

Expenses/savings (2013)

Income taxes $55,000, support for child and second Ontario home $47,500, overseas housing $52,500, retirement and other savings $20,000, meals and entertainment $24,000, church donation $18,500, cost of visits back in Canada $12,000, gifts to parents $4,800, life insurance $3,100, transportation $2,400, clothing and personal care $2,400, communication services $2,200, miscellaneous $2,300. Total: $246,700.

If they had only one home and didn't travel their expenses wouldn't be so bad.  If they retired to the Canadian home they would reduce expenses by $64,000 a year. Are they literally spending $12,000 on airfare to and from Canada?  Since they have a home there, they can't be spending it on lodging!  That would allow them an additional $30,000 of savings I'd bet.

The meals and entertainment at $24,000 are also a big budget suck.  Seems like that could be reduced to a measly $1,000 a month and save them another $12,000. 

The college kid might be just tuition since the total includes the tuition, support for the child, and an Ontario apartment.


MrsPete

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Re: 250 k/year salary . . . saves 20k a year. Unable to retire.
« Reply #5 on: July 05, 2013, 05:24:17 PM »
The single most telling sentence in the whole article is the comment that they seem to have been spending without a plan.