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Retirement: The 4% Rule

Discussion in 'Non-Vegas Chat' started by VegasGroove, Jul 11, 2019.

  1. Electroguy563

    Electroguy563 Over-Fried Gambler

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    We're still in the planning stages with the financial planner as far as how we'll manage my annuity. He mentioned the 4% rule.

    It's a nice feeling knowing about this rule. And even nicer knowing for the time being we don't really have to rely on it.
     
  2. wesraft

    wesraft Low-Roller

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    I kind of went a little nuts with aggressively saving for my 401k and between that, the growth of the stock market the last 25 years or so, paying off all debt, and living frugally, I am looking at leaving a bit of a legacy for my kids while not really needing to tap into it for the foreseeable future. I guess Judge Smails was right!
     
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  3. Yon*sei

    Yon*sei Tourist

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    Long term care can really do a number on a nest egg. A lot of LTC policies will only pay up to two years, or a dollar amount that will seem like a lot until you really look at the cost. And since the chances of needing ltc are about 50 %, you can get beaten up if you're the one left with the bills. I see a lot of widows and widowers who have to downsize to public assistance because of the spouse's illness.
     
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  4. wesraft

    wesraft Low-Roller

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    Here could possibly be a way to address that, if it fits in with an open mindset or the "Expat" lifestyle is appealing. https://changingaging.org/culture-change/long-term-care-in-mexico/
     
  5. SandsFan

    SandsFan VIP Whale

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    Thanks for posting this as an alternative to care here in the States. A spouse could put their loved one in Mexico City and visit once a month far cheaper than putting them here.
     
  6. topcard

    topcard Older than the Stardust!

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    That all depends on how much you need each month for those 8 years.
    You definitely do not need "millions" to do this if you have no debt and your current monthly expenses run less than $4000/month.
    That is precisely the situation I'm in & I have less than a million, combined of all my accounts.
    I've done the math and, assuming these accounts earn 5%+ annually (on average), we'll be fine until we're in our 100s, assuming we live that long.
    After that, though? Could be trouble.
     
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  7. Joe

    Joe VIP Whale

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    We did. Retired at 55 and lived off our nest egg for 7 years. At age 62 we both started collecting a tiny pension and SS. No regrets on anything.
     
    38th anniversary and keep taking advantage of the Companion Pass
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  8. Yon*sei

    Yon*sei Tourist

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    Actually, I know someone who has her MIL who was moved to the Philippines because of this. Her small SS is enough to cover her care. She said her condition is that she won't be back to the US.
     
  9. Joe

    Joe VIP Whale

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    I need to add this. Our biggest monthly expense was health insurance. Nothing from the company so we were paying $1,200 per month for a policy with a $5,000 deductible. At 65, Medicare kicked in and it is $225 ea with a supplemental of $25 each every month. So $500 per month total.
     
    38th anniversary and keep taking advantage of the Companion Pass
  10. Electroguy563

    Electroguy563 Over-Fried Gambler

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    I am fortunate for when I retired 2 months ago at 62 and a half my union provides health care coverage for $150 a month, automatically taken out of my pension until 65.
     
  11. Joe

    Joe VIP Whale

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    Our company sucked. They offered an early retiree health plan and it was more than I could buy myself on the open market. I think the deductibles might have been lower. Maybe $3,000 ish.
     
    38th anniversary and keep taking advantage of the Companion Pass
  12. Electroguy563

    Electroguy563 Over-Fried Gambler

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    Yep I hear you. The cost of medical care is the biggest concern when considering retirement. For some people it can be daunting and I'm glad you were able to manage your health care.
     
  13. Joe

    Joe VIP Whale

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    38th anniversary and keep taking advantage of the Companion Pass
  14. Electroguy563

    Electroguy563 Over-Fried Gambler

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    Interesting and scary at the same time. Because I'm not well versed in financial planning, I guess I'll just hunker down and follow that age old strategy: "A bird in the hand is worth 2 in the bush".

    And hope for the best.
     
  15. Calder

    Calder High-Roller

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    Seems aimed at entrepreneurs -- invest in your business first.

    "Meaning, if we just work hard and set money aside, we are putting money into a market we have no control over."

    Well, yeah, I've no control over the markets. Talk about "...bold, and possibly controversial..."
     
  16. pebbles

    pebbles VIP Whale

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    I've been retired for 20 years now. I was ill-health retired by my company. I was 39 and they gave me benefits as if I had worked for them until 65. I really think they thought I was dying, I did too at the time. My pension isn't massive, but it's more than enough for my lifestyle.

    I'm currently deciding what to do with my money when I die. It's a hard choice, but I will definitely be giving more money to our local animal charities than I do to my deadbeat brother.
     
    Next trip to Vegas
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  17. topcard

    topcard Older than the Stardust!

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    Sorry, but this guy is being truly misleading.
    Here are a couple of things he fails to mention:
    1. At the very least, every employee with an employer-matching 401K ought to contribute the maximum that is matched by their employer. That represents an immediate 100% gain on your contributions. This guy fails to consider that.
    2. If you have debt, and the gains on your investment are lower than the interest you pay on your debt, redirect money to reduce & eliminate your debt, rather than contributing more to your 401K or IRA. (But leave those matched contributions alone!)
    3. Budget for retirement accordingly. You will not need as much per month as you do while still in the work-force. Your annual income & 'payroll' taxes will drop by a lot. You probably no longer need two cars (cutting insurance, fuel, registration, inspection and maintenance expense in half). You should no longer need to be buying lunch 5 days a week. Do you commute using a toll-road? That cost goes away too. Happy hours after work? That should drop quite a bit too. Expenses for new clothes (and having them dry-cleaned/laundered) will drop a lot.
    4. "Discretionary" spending: If you look at your current monthly budget, I suspect that you'll find considerable expense for things that are not necessities. Satellite/cable; Several $1000 a year in gifts; Eating dinner out; Going to the movies; having cell phones and a land-line, etc. You do all of this stuff now because you can afford to.
    5. Move to a less-expensive home. Most of us working-stiffs live in high-property tax counties, because of their proximity to where we work. Most of us could sell our existing home, buy a cheaper/smaller home in a low-tax county and pocket the profits. Annual savings for such a change can be significant. You can also reverse-mortgage the home you live in for additional cash-flow.

    There are more points, but y'all get my point.
    While putting my own retirement plan together, I worked on the assumption of needing just 60% of what I need now.
    Based on that assumption, my 401K, IRA & Social Security income will be more than enough to support us in retirement into our 100s.
     
  18. Joe

    Joe VIP Whale

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    @topcard I didn't post the article as advice, just a different slant on retirement. I don't agree with much he said.

    Everyone is different in retirement. We spend more now then when we worked. We travel more, eat out more. Built a new, bigger home and pay the HS kid next door to cut our grass. Buy new cars and even booked first class tickets for the first time ever.

    We worked for it, we saved for it and now we are spending it for the last 12 years and the account is going up, not down.

    We file MFJ and still donate enough to charity to itemize, even with these new limits.

    Saving and no kids really does wonders.

    My advice for a happy retirement: Start early; save until it hurts; skip the luxuries; and reap the benefits down the road. If you die beforehand, oh well sh*t happens.
     
    38th anniversary and keep taking advantage of the Companion Pass
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