Author Topic: Retirees Next Door  (Read 7522 times)

divinvestor

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Retirees Next Door
« on: September 17, 2014, 06:44:47 PM »
http://finance.yahoo.com/news/the-retiree-next-door--how-successful-retirees-stretch-their-savings--163042598.html

Before I go into my rant, I just want to say I'm happy things worked out for the people in this article. Having said that...

The first person, Toni, had to have her debt get to $200,000 before she realized it was a major problem and had to do something about it?! Facepunch number 1.

"Making up for lost time was the first step Eugenia took once she became debt free. She hired an investment advisor who now manages her $250,000 retirement portfolio, a large component of which is in low-cost index funds."

If the vast majority of your investments are in low-cost index funds, why in the world do you need an investment advisor to manage that? Double facepunch!

The second guy, Mike, sounds like he's got his head screwed on straight and is doing just fine, so good for him.

Beric01

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"The Retiree Next Door": How successful retirees stretch their savings
« Reply #1 on: September 17, 2014, 06:58:20 PM »
I thought this article was fairly Mustachian, actually. Yes, it's got a little Dave Ramsey blah-blah, but a bit surprising to see this kind of perspective at a site like Yahoo.

Looks like us Mustachians are the 2%! (more likely 1% or less), at least in 20's and 30's.



But then you have statistics like this one which are a bit depressing:

Quote
80% cite Social Security benefits as their main source of income.

deborah

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Re: Retirees Next Door
« Reply #2 on: September 17, 2014, 09:16:44 PM »
I can understand Toni not realising she was in debt - the vast majority was a $150k mortgage (which many wouldn't class as debt), and the $19,000 timeshare debt was just more real estate. The bank probably wasn't hounding her about the $30,000 credit card either. She didn't have student loans or any debt that her co-workers didn't have too.

Yes, she would be face punched if she was a member of this forum, and it is really sad that this level of debt is not a "house on fire emergency" for the general population.

By the way, this article is also reviewed from a different perspective here

http://forum.mrmoneymustache.com/index.php?topic=23905.0
« Last Edit: September 17, 2014, 09:52:49 PM by deborah »

deborah

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Re: "The Retiree Next Door": How successful retirees stretch their savings
« Reply #3 on: September 17, 2014, 09:51:35 PM »
When I looked at the graph I thought that many people (even here) are "saving" rather than "saving for retirement" in their earlier years. For instance, while owning your own home is not necessary or the best idea for early retirement, it sets you up to start to save some of your income rather than to spend the lot, and owning your own home in retirement reduces your overall expenses.

By the way, this article is also reviewed from a different perspective here

http://forum.mrmoneymustache.com/index.php?topic=23904.0

slugline

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Re: Retirees Next Door
« Reply #4 on: September 17, 2014, 10:40:25 PM »
I consider it poor form to deliver MMM face punches to someone after they've fixed their issues and retired.

Russ

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Re: Retirees Next Door
« Reply #5 on: September 22, 2014, 08:31:35 PM »
MOD NOTE: duplicate topics merged

Melody

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Re: "The Retiree Next Door": How successful retirees stretch their savings
« Reply #6 on: October 03, 2014, 07:58:56 PM »
When I looked at the graph I thought that many people (even here) are "saving" rather than "saving for retirement" in their earlier years. For instance, while owning your own home is not necessary or the best idea for early retirement, it sets you up to start to save some of your income rather than to spend the lot, and owning your own home in retirement reduces your overall expenses.

By the way, this article is also reviewed from a different perspective here

http://forum.mrmoneymustache.com/index.php?topic=23904.0

We have compulsory retirement savings of 9% of income here in in Australia, and looking at these graphs it makes sense why! It's surprising how few people save in their 20s-30s when it's the easiest time to save as compound interest is on your side. Also as a result of the compulsory retirement savings the average Millennial/Gen Y is far more aware of the need to save for retirement so a number of people save more than the minimum 9%. (I have a number of friends on very modest incomes who always made sure to save an extra 5% from the time they entered the workforce).

coin

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Re: "The Retiree Next Door": How successful retirees stretch their savings
« Reply #7 on: October 05, 2014, 04:54:13 AM »
When I looked at the graph I thought that many people (even here) are "saving" rather than "saving for retirement" in their earlier years. For instance, while owning your own home is not necessary or the best idea for early retirement, it sets you up to start to save some of your income rather than to spend the lot, and owning your own home in retirement reduces your overall expenses.

By the way, this article is also reviewed from a different perspective here

http://forum.mrmoneymustache.com/index.php?topic=23904.0

We have compulsory retirement savings of 9% of income here in in Australia, and looking at these graphs it makes sense why! It's surprising how few people save in their 20s-30s when it's the easiest time to save as compound interest is on your side. Also as a result of the compulsory retirement savings the average Millennial/Gen Y is far more aware of the need to save for retirement so a number of people save more than the minimum 9%. (I have a number of friends on very modest incomes who always made sure to save an extra 5% from the time they entered the workforce).
The thing is, the 9% mandatory savings is not enough, which is why the government co-contribution existed and they started bumping up the mandatory contributions.  It's a bit of a shame the government cancelled the mandatory contribution increase, because originally it was going to increase by .25% per year until the total was 12%.

Actually, is there/was there a thread about super?  I would be really interested in reading others perspectives on it.

Melody

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Re: Retirees Next Door
« Reply #8 on: October 05, 2014, 07:23:55 AM »
There are a few on here, I am on my phone so can't search function but will pop some links up in the Perth meet up thread for you soon when I have time.

Melody

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Re: Retirees Next Door
« Reply #9 on: October 05, 2014, 07:24:54 AM »
I think the general consensus on the boards is as we want to retire well in advance of age 65 super has limited value to us, so minimums only with a focus on non super assests.

MrsPete

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Re: Retirees Next Door
« Reply #10 on: October 09, 2014, 06:38:48 PM »
Various thoughts:

She's a pharmacy tech.  Is that really an adult job?  I mean, I've taught high school students who had that as a part-time job.  Admittedly, they seem to be among the more mature, success-oriented students, but I've taught at least 5-6 over the years.  Isn't that kind of like a specialized cashier?  I'm thinking it's rather like saying your career path is waitress.

80% of retirees cite Social Security as their main source of income.  Is it possible that this isn't as dismal as it sounds?  I'm expecting that -- once we're old enough to collect -- we'll spend that money . . . and hold onto our savings.  Thus, the Social Security will be a big source of our income . . . but that won't really mean that we don't have other money at our disposal.  The boat-guy is doing this:  He says he has quite a few sources of income. 

This is good news:  More than 40% of the retirees surveyed said they spend less than their monthly income, and more than one-third reduced their living expenses when they retired.





Sid Hoffman

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Re: Retirees Next Door
« Reply #11 on: October 11, 2014, 11:49:34 AM »
We have compulsory retirement savings of 9% of income here in in Australia

In America it's 12.4% under our "Social Security" plan, although it (currently) only applies up to your first $115k or so of ordinary income per person.  Still, if you're a two-income family of high wage earners, you could be saving $28,520 per year via the Social Security plan.  Unfortunately, it's not "real" savings, it's actually a Ponzi scheme built on actuary tables.  All the money for the program has been loaned out to other government agencies and spent already.  Thus, most of our federal government actually owes money to the citizens by way to owing it to itself in the form of those loans from the SS Trust Fund.  Still - point is that it's 12.4% in America and that's still barely a living wage.  There's another couple percent tax that goes towards paying heavily subsidized healthcare for those age 65 and older as well, but that falls under the heading of "Healthcare needs a total overhaul in America."

80% of retirees cite Social Security as their main source of income.  Is it possible that this isn't as dismal as it sounds?  I'm expecting that -- once we're old enough to collect -- we'll spend that money . . . and hold onto our savings.  Thus, the Social Security will be a big source of our income . . . but that won't really mean that we don't have other money at our disposal.  The boat-guy is doing this:  He says he has quite a few sources of income.

My parents are looking at that kind of scenario for themselves.  They have it set up where my dad took his full social security payment and my mom is taking spousal benefit, which means 50% of my dad's benefit while her own benefit increases.  They are doing it this way because (currently) her health is a little better than his, and since Social Security is only based on the individual, not the couple, they want my mom to have a larger benefit per month since she's likely to live longer, thus the math works out in favor of this.  At any rate, they just need their small pile of cash (separate from their retirement savings) to last through a few years to age 70 when my mom can take her full individual benefit.  By their math, they can then potentially live exclusively off Social Security benefits and never touch their retirement savings for anything but special circumstances or fun stuff.

In their case, living off Social Security as their primary income is indeed the goal, and it is a good one to have, since now all their retirement savings can go towards things they WANT instead of things they NEED.

Melody

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Re: Retirees Next Door
« Reply #12 on: October 11, 2014, 05:20:07 PM »
Oh, that sort of makes sense. We have pensions which are administered by centrelink and are a form of welfare (like the British system) you can access this regardless of how much or little you paid in over your lifetime via taxes however it is means tested.  (Not available to those with significant assets outside of the family home... Unfair as the system punishes the savers). The amount will leave you in poverty if you do not already own a home outright by retirement. With home ownership it allows for a modest standard of living. Then super belongs to us, it's like a managed fund or index fund but we can't withdrew til 65. I am surprised 12% is not enough. According to the projections of my superfund, my 14% will give me $56k a year after tax in retirement (made $75k after tax this year, on track to have spent something like $35k this year while paying $11k in rent, taking a $7k vacation and spending $4k trading in my car). Obviously though my super fund assumes I Will not reproduce and have a gap in contributions(not a reasonable assumption for most women). So 14% seemed like plenty to me if you are not trying to retire early.

 

Wow, a phone plan for fifteen bucks!