Author Topic: Retirement advisor to me: Don't retire until you're 70!  (Read 8215 times)

blake201

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Retirement advisor to me: Don't retire until you're 70!
« on: October 09, 2013, 01:01:03 PM »
We had free one-on-one consultations in my office today from the bank that hosts our 401(K) retirement plan. The retirement adviser had me fill out a retirement calculator and was shocked that I put in that I planned to retire in my 40s or 50s (I wish it was sooner but we're only starting on this Mustachian thing now, ah well).

"But the retirement age when you are ready to retire is going to be 70!" she told me. "What would you do with your time if you retired in your 50s? Most people at least work until 65. How is that even possible? Won't you want to be comfortable when you retire?"

I told her that my parents were very frugal and retired in their mid-50s and were very happy—gardening, traveling, doing carpentry and taking care of their grandchildren, etc.

And that my husband and I are very frugal and are aiming to save 40-60% of our income once our daughter is done with preschool and is in public school.

And that I only wished I could retire now, because then I could spend so much more time with my 3-year-old daughter.

She just looked at me like I had two heads. "I really think 70 is more realistic!"



Frankies Girl

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Re: Retirement advisor to me: Don't retire until you're 70!
« Reply #1 on: October 09, 2013, 01:12:29 PM »
And that's when you laugh at them and tell them that they need to do some more research on financial independence and early retirement, and bid them good day, because it's obvious that they are brainless little drones. :)

What a load of hooey. We have scheduled financial meetups through our retirement group about once a year at my workplace. I never attend them as they only send out the peeps that have that mindset - retirement is for when you're older than dirt. Makes you wonder what their personal retirement savings look like, it that's what they're trying to sell everyone else on.

LalsConstant

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Re: Retirement advisor to me: Don't retire until you're 70!
« Reply #2 on: October 09, 2013, 01:54:20 PM »
Well to be fair, it is more realistic.  It does not mean it is the only possible course however.

A more reasonable consultant would have asked you how comfortable you were living on that budget, what you were doing for insurance,  would working a couple more years than projected give you additional security, what are you going to do if the market tanks and wipes out you savings, etc. Rather than just cry and look at you like a bug.

I empathize though.  I told someone the other day if everything stayed the same my worst case scenario age was 55 or so and I was trying to push it back to 50 in the next five years.  I got that look too.

It would blow their mind to know people who figured it out earlier in life can be done by 30.

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Re: Retirement advisor to me: Don't retire until you're 70!
« Reply #3 on: October 09, 2013, 02:23:31 PM »
You should have asked the retirement guy "How many people that you personally know that are still working up to 70 years of age?"

dragoncar

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Re: Retirement advisor to me: Don't retire until you're 70!
« Reply #4 on: October 09, 2013, 03:02:41 PM »
Retirement advisors are a joke

Jamesqf

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Re: Retirement advisor to me: Don't retire until you're 70!
« Reply #5 on: October 09, 2013, 04:40:11 PM »
You should have asked the retirement guy "How many people that you personally know that are still working up to 70 years of age?"

Well, there's my neighbor who was working (self-employed mining consultant) into his mid-90s.  He's 99 now: don't know if he still works (had some health problems a year or so ago, and quit driving), but I still see him out working in his garden from time to time.

I have every intention of working into my 70s, and maybe beyond (if I'm lucky).  Of course since I became FI some years ago, I'll be working on things that interest me, setting my own hours, and not doing commutes, meetings, or office politics.

SnackDog

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Re: Retirement advisor to me: Don't retire until you're 70!
« Reply #6 on: October 09, 2013, 06:35:59 PM »
We had a technical consultant at work who was in his 70s. He worked for us one day a week, mostly for fun. He was a tremendous resource!  He had been retired from the company for over ten years, spending over $200,000/yr with kids in college. He still had more principal invested after tens years than when he initially retired. His retirement advisor told him to stop consulting and get spending!!

Nords

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Re: Retirement advisor to me: Don't retire until you're 70!
« Reply #7 on: October 09, 2013, 11:12:14 PM »
We had free one-on-one consultations in my office today from the bank that hosts our 401(K) retirement plan.
Looks like you got your money's worth.

How much do they charge to administer your 401(k)?  Maybe that's why they want you to work until you're 70...

blake201

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Re: Retirement advisor to me: Don't retire until you're 70!
« Reply #8 on: October 11, 2013, 09:29:50 AM »
Ha! Well, actually our 401(K) is great because my employer pays ALL the management fees on the mutual funds—I moved my old IRAs in as well.

There's nothing wrong with working in your 70s and 80s... if you WANT to and you are doing work that you love and find stimulating. But it sucks to be in a situation where you have no choice.

Personally, I REALLY wish my husband and I hadn't taken so long to discover serious frugality and the concept of FI because it would have been awesome to be able to quit work when our daughter was born. But we're 33 and 40 respectively, so we're hoping we can retire in 10-15 years if we really work at it... still much earlier than most people.

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Re: Retirement advisor to me: Don't retire until you're 70!
« Reply #9 on: October 11, 2013, 11:37:26 AM »
Let's just say you were aiming for 70. That would not account for age discrimination or for getting laid off when you need money. So, how could 70 ever work unless you were in a protected place like the federal government (where it's almost impossible to be fired)?

Why wouldn't everyone want to get to FI so they they do not NEED the money? Then, folks would not have to worry about age discrimination or feeling tired working at 68 or getting laid off at 62. Baffles me, it does.


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Re: Retirement advisor to me: Don't retire until you're 70!
« Reply #10 on: October 11, 2013, 12:41:18 PM »
Why wouldn't everyone want to get to FI so they they do not NEED the money? Then, folks would not have to worry about age discrimination or feeling tired working at 68 or getting laid off at 62. Baffles me, it does.

Color me a little glad that most people are not looking at ER. I mean, used cars had to be bought new by someone, before they could depreciate for a few years and I buy them.

I'm not surprised at the only live once attitude. Even my own wife has it (to a small degree). She says she loves her job, will never get burnt out, and therefore has little interest in alternates to working / ER. She's 27. I'm just giving it a little time before her attitude sours....! I know it took a little while before mine did. But some people do not have a choice because they've boxed themselves in with debt, or have never been exposed to another way of thinking.

Nords

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Re: Retirement advisor to me: Don't retire until you're 70!
« Reply #11 on: October 12, 2013, 08:32:13 PM »
Ha! Well, actually our 401(K) is great because my employer pays ALL the management fees on the mutual funds—I moved my old IRAs in as well.
Are you saying that your employer is paying your costs of your IRA funds that are now in your 401(k), as well as your 401(k) contributions?  Even the federal government's Thrift Savings Plan has an expense ratio, although it's tiny.  Have you been able to verify that you're not being charged through some complicated/confusing compensation reimbursement?

Regardless of who's paying, how much does your 401(k) provider charge?  Would you rather that the money going to the provider be deposited to your account balance instead?  Just the mere presence of a "free" advisor makes me suspect that someone is paying that 401(k) provider an above-market rate-- or using the discussion as a sales meeting.

Whether your employer is paying the 401(k) provider or you're paying the 401(k) provider, the advisor's fiduciary duty is to someone other than you.  In my opinion, that renders their "advice" to be suspect... even if was advice that you'd normally agree with.

And if that advisor still thinks that age 70 is a realistic retirement age for everyone then I wonder how her family & relatives react to her advice.




kyleaaa

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Re: Retirement advisor to me: Don't retire until you're 70!
« Reply #12 on: October 13, 2013, 10:16:34 AM »
Why wouldn't everyone want to get to FI so they they do not NEED the money? Then, folks would not have to worry about age discrimination or feeling tired working at 68 or getting laid off at 62. Baffles me, it does.

Because most people prefer consumption smoothing. The desire to retire extremely early is actually an anomaly. Most people don't WANT to retire early, even though most often complain about their jobs. Don't confuse frequent complaining with an actual desire. I complain all the time but I absolutely, positively do NOT want to retire early.

lizfish

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Re: Retirement advisor to me: Don't retire until you're 70!
« Reply #13 on: October 13, 2013, 10:37:47 AM »
Personally, I REALLY wish my husband and I hadn't taken so long to discover serious frugality and the concept of FI because it would have been awesome to be able to quit work when our daughter was born. But we're 33 and 40 respectively, so we're hoping we can retire in 10-15 years if we really work at it... still much earlier than most people.

I hear you. I'm 31 and my DH is 39 and if we were to get our backsides into gear (mainly me on the income side) we could retired in 10-15 too. No kids yet, but it will be soon if ever and although we've always been 'good' with money compared to friends (never carried credit card debt, made max overpayments on mortgage when income was good, paid cash for the wedding, lived in a flat for 8 years when we could 'afford' a house etc) we've never been exactly frugal. But I guess, working it out now is better than working it out at 65. The mindset also leads us to think about alternative work arrangements that are possible through lower spending that we might not have thought of before. I want my DH to be able to spend as much time with our future kid(s) as he wants. He has so much to teach them.

Jamesqf

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Re: Retirement advisor to me: Don't retire until you're 70!
« Reply #14 on: October 13, 2013, 08:34:12 PM »
Most people don't WANT to retire early, even though most often complain about their jobs.

Yeah.  I would bet that if they retired, most of them would go on complaining about retirement :-)

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Re: Retirement advisor to me: Don't retire until you're 70!
« Reply #15 on: October 13, 2013, 09:21:55 PM »
To play devil's advocate, this guy's job is to make sure people can retire comfortably.  He wouldn't do a favor to point out to the average person that he could retire at 45 . . . If he would move to a smaller house and cut his spending to 20-something thousand per year.   A whole lot of people would immediately say, "I could never live on so little!  Why, I owe that much!"  And others would jump at the chance to retire, but would not reduce spending and would then be trying to get back into the work force at 55 or 60. 

He would have done better to say, "Your goals aren't something accessible to most people.  What are your plans, and let's see if they're actually workable." 

cats

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Re: Retirement advisor to me: Don't retire until you're 70!
« Reply #16 on: October 13, 2013, 10:25:29 PM »
My company offers free retirement planning workshops also and I've always avoided them b/c this is pretty much exactly the response I expect to get.  But now I'm thinking I should go to one, just to see if I can get a good reaction from the advisors!

beltim

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Re: Retirement advisor to me: Don't retire until you're 70!
« Reply #17 on: October 14, 2013, 01:18:43 AM »
I went to a retirement seminar where I work once that was specifically aimed at graduate students. The advisor went on and on about investing in the 401(k), saying that not doing so was turning down free money in the employer match.  This would normally be great advice - except that graduate students were not eligible for 401(k)s, let alone matching!  So the advice was wrong for every single person in the audience.

I went because I wanted to see if there were any options for those of us on stipends not considered earned income (that prevented me from contributing to an IRA), and the advisor had no idea how we could have unearned income.  Worthless...

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Re: Retirement advisor to me: Don't retire until you're 70!
« Reply #18 on: October 17, 2013, 04:28:53 PM »
Ha! Well, actually our 401(K) is great because my employer pays ALL the management fees on the mutual funds—I moved my old IRAs in as well.

There's nothing wrong with working in your 70s and 80s... if you WANT to and you are doing work that you love and find stimulating. But it sucks to be in a situation where you have no choice.

Personally, I REALLY wish my husband and I hadn't taken so long to discover serious frugality and the concept of FI because it would have been awesome to be able to quit work when our daughter was born. But we're 33 and 40 respectively, so we're hoping we can retire in 10-15 years if we really work at it... still much earlier than most people.

Blake I feel the same way you do (I wish I had found this blog earlier)...but then, like you, I get jazzed because, well, we've found it now and we're still going to be retired earlier than most! 

That is such a silly experience with the retirement advisor!  How bad did you want to deliver a big facepunch!?  Probably pretty badly.

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Re: Retirement advisor to me: Don't retire until you're 70!
« Reply #19 on: October 17, 2013, 06:48:39 PM »
We had a short seminar on retirement investing at the office several years ago, I was horrified!  They basically "proved" mathematically that you could just invest to the employer match, and at 65 have enough saved up.  Uh, right *sarcasm font*.  That doesn't take into account so very many things!

Like just this summer when 47% of my department was laid off.  Yeah, a bunch of those people were higher paid middle managers who most likely didn't have enough saved up to fully retire yet, but would have a really hard time finding a new job as good as their old one.  It just made me so sad to see them all go, especially knowing the financial hardship so many of them will soon be in (once their severance packages run out).