Practicing Retirement Before Retirement.

[jbett98]

Find a hobby that makes you money.

 

[nwslopoke]

Since I became debt free, I have been living within my means. That is my plan to get through retirement.

Sounds like you are planning a short retirement .

Everything gets more expensive over time. Unless things go completely tits up, I've earmarked a modest income through my early 80s. Though I still have a ski mask, so if you get robbed sometime in the 2040s by an old man, it's probably me.

That said, respectively, I take some of your posted plans with a mix of sarcasm and trolling. Like there's a rich uncle or you stashed your prison porn money from the 90s.

 

[crstrode]

Making a retirement plan just a few years before retirement is a fool's errand.

I started planning for retirement in my 20s. The plan was to spend less than I earned and save and invest the rest.

In my working years, my primary job consumed 12-hours every work day, and my free time was used mostly for community service of one sort or another. I was busy and at work 16 hours a day every day.

A combination of a changing work environment and a cancer diagnosis motivated me to retire at age 55 to avoid death at the office, or committing murder and ending up in the penitentiary.

One thing I have come to realize, is that during those years of dedication to the job and community service was that my co-workers and beneficiaries of my beneficence were not the least bit interested in me as a person, as opposed to what my hard work and generosity would do for them. That goes double for so-called "friends".

I doubt that there are many (if any at all) on this forum that are under 30 years of age. Those that are, are unlikely to take steps necessary today to allow them to retire in 25 or 30 years with enough resources to be as comfortable and financially secure as this boomer.

Just in case I am mistaken, here are the necessary steps:

1. Spend less than you earn, be patient and be frugal*.
2. Save the rest and max-out an Individual Retirement Account (IRA).
3. NEVER spend your retirement savings until you retire - no matter what.
4. Work hard and long - harder and longer than than you thought you could.
5. Don't borrow (except, perhaps on a mortgage for your first house - see #6).
6. Don't rent your house; instead, buy a very modest one and move-up gradually.

As a result of a stupid kid taking advice from "old guys" retirement has been absolutely great. Been retired for over15 years now, and I can only vaguely recall what it was like to be a workaholic.

The road to success is only lonely at first

*

FRUGAL: Economical in the use or appropriation of resources; not wasteful or lavish; wise in the expenditure or application of force, materials, time, etc.; characterized by frugality; sparing; economical; saving.​

 

[nwslopoke]

Making a retirement plan just a few years before retirement is a fool's errand.

I started planning for retirement in my 20s. The plan was to spend less than I earned and save and invest the rest.

In my working years, my primary job consumed 12-hours every work day, and my free time was used mostly for community service of one sort or another. I was busy and at work 16 hours a day every day.

A combination of a changing work environment and a cancer diagnosis motivated me to retire at age 55 to avoid death at the office, or committing murder and ending up in the penitentiary.

One thing I have come to realize, is that during those years of dedication to the job and community service was that my co-workers and beneficiaries of my beneficence were not the least bit interested in me as a person, as opposed to what my hard work and generosity would do for them. That goes double for so-called "friends".

I doubt that there are many (if any at all) on this forum that are under 30 years of age. Those that are, are unlikely to take steps necessary today to allow them to retire in 25 or 30 years with enough resources to be as comfortable and financially secure as this boomer.

Just in case I am mistaken, here are the necessary steps:

1. Spend less than you earn, and be frugal*.
2. Save the rest and max-out an Individual Retirement Account (IRA).
3. NEVER spend your retirement savings until you retire - no matter what.
4. Work hard and long - harder and longer than than you thought you could.
5. Don't borrow (except, perhaps on a mortgage for your first house - see #6).
6. Don't rent your house; instead, buy a very modest one and move-up gradually.

As a result of a stupid kid taking advice from "old guys" retirement has been absolutely great. Been retired for over15 years now, and I can only vaguely recall what it was like to be a workaholic.

*

FRUGAL: Economical in the use or appropriation of resources; not wasteful or lavish; wise in the expenditure or application of force, materials, time, etc.; characterized by frugality; sparing; economical; saving.​

Not that you're wrong, but especially directed to the younger people, they have heard of IRAs or other financial tools but don't really know how they work or their values because no one really talks about them. They just say words as if everyone already understands.

Like the 2A. It's true value goes over most folks head because, well the police will protect me. Duh. I was late to the game on both fronts.

Too many Americans wrongly accept the fact that they won't live long enough or make enough to truly invest in their future.

 

[Ballardguy]

Making a retirement plan just a few years before retirement is a fool's errand.

I started planning for retirement in my 20s. The plan was to spend less than I earned and save and invest the rest.

In my working years, my primary job consumed 12-hours every work day, and my free time was used mostly for community service of one sort or another. I was busy and at work 16 hours a day every day.

Excellent advice! I have so many friends who waited until maybe 55 yrs. old, or even the same year they retired to discover their retirement income might not be enough to live on! I have one friend who told me his IRA account had $500,000 in it and he thought that would be plenty. He still had a $3500 a month house payment even! Yikes! I told him he'd be broke in 10 years, and he replied his Ebay sales would make up the difference, and he'd probably die of a heart attack by 75 anyway. Great retirement plan.

I started saving and investing towards retirement at 28 yrs. old. I knew my retirements through various employers should be enough to live on, but I was always leery some crook might run off with a company's retirement investments. It's happened before, so nothing is certain! Fortunately none of my concerns happened, so my fully vested retirement paid me a wage slightly more than what I made working. And the investments sat doing their thing until a few years ago when I was forced to take the RMD payments by IRS. That's actually a good thing as with no increases in our retirement the RMD disbursements keep our income going up the last few years, and helps fight off inflation. We're not rich, but we're very comfortable since I planned early and it all worked out as planned.

 

[crstrode]

Not that you're wrong, but especially directed to the younger people, they have heard of IRAs or other financial tools but don't really know how they work or their values because no one really talks about them. They just say words as if everyone already understands.

Like the 2A. It's true value goes over most folks head because, well the police will protect me. Duh. I was late to the game on both fronts.

Too many Americans wrongly accept the fact that they won't live long enough or make enough to truly invest in their future.

You can't fix stupid.

 

[Ballardguy]

You can't fix stupid.

Sure you can, if stupid will at least listen and pay attention. But too many young people want it all when they're young, and don't think they need to worry about retirement until they're old.
At today's better interest rates a person in their 20's who put $75 a month away for the rest of their working life could easily be a millionaire at 65 yrs. old. And if they invested that amount they could be a multi millionaire too! It takes the stick toitiveness to make yourself put that money away each month.

 

[2ndtimer]

At the end of the month, I will celebrate the 9th anniversary of my retirement. I can't believe how fast the years have gone by. Fortunately, both my wife and I are on the frugal side. She deferred to me for our financial planning, so we invested diligently for retirement. The real blessing was that as a school teacher she qualified for a defined benefit pension that she has collected for the past 7 years since she retired. This has a enabled us to only withdraw from our traditional IRA's for conversions to ROTH IRA's and since I turned 70 1/2, for qualified charitable distributions to our church and support of a missionary. (These are tax free since they go direct from the administrator to the charity.)
In two years, when I have to start taking RMD's, these will also be counted towards my RMD, but will still be tax free. By starting them early, it also will reduce my RMD's by a little.
My old boss shared with me some good advice that his old boss had given him: "the secret to building wealth is one house, one wife". We will celebrate our 45th wedding anniversary in September, and have been in our house for over 41 years. (The house has been paid off for 19 years.).
Might have to buy another house if the state of Washington continues to take away our freedom and totally ignores our own State Constitution as well as the United States Constitution. Probably in Idaho. (Anybody want to chime in how life is in Lewiston?)

 

[arakboss]

I have been living a pretty lavish lifestyle lately. I need to tone it down a few notches as I head towards retirement.

It seems to me it would be helpful to have a general idea of the lifestyle you will be living in retirement, in order to know how much income you will want to have?

Nearly all of my lavish spending occurs with shopping. That behavior will have to be directed towards a cheaper activity, like using up all the stuff I bought. Or dumpster diving for free stuff

 

[Colt Carbine]

I have been living a pretty lavish lifestyle lately. I need to tone it down a few notches as I head towards retirement.

It seems to me it would be helpful to have a general idea of the lifestyle you will be living in retirement, in order to know how much income you will want to have?

Nearly all of my lavish spending occurs with shopping. That behavior will have to be directed towards a cheaper activity, like using up all the stuff I bought. Or dumpster diving for free stuff

Only you can answer how much money and the lifestyle you will live during retirement.

I can tell you depending on Social Security alone can be tough depending on one's contributions to their account.

Have you set up an account with Social Security to see what your projected Benefit will be at retirement age?

My mother passed away about 18 months ago. As the Executor of her Estate, I had access to her Financials. She was receiving about $1200/month in income. At her passing her expenses to live on where at the point of surpassing her income. She owned her Condo and vehicle with zero debt.

Yes, a person can live off Social Security alone. My mother pulled it off but she was extremely frugal. I had no idea how little she was receiving in income. She would never tell me while alive. I was quite surprised, to say the least.

Not everybody is in a position to put aside money towards supplemental investments like 401K, IRA's, Roth or stock market.

I never invested in any of the above supplemental sources of retirement income. We raised our family on my income, being my wife quit her career to raise our children. I missed a lot of my children's events of life to me working.

The construction industry is a feast or famine world. I worked overtime any time I could get it. When overtime wasn't available, I did a lot of side work as a plumber. For a few years, I was a plumber during the day and an Apprenticeship Training Instructor.

Any extra income went in the bank for a rainy day. Having any extra income not easily accessible for when work was slow was not an option. I've seen more then my fair share of being laid off over the last 40+ years.

 

[arakboss]

Only you can answer how much money and the lifestyle you will live during retirement.

I can tell you depending on Social Security alone can be tough depending on one's contributions to their account.

Have you set up an account with Social Security to see what your projected Benefit will be at retirement age?

My mother passed away about 18 months ago. As the Executor of her Estate, I had access to her Financials. She was receiving about $1200/month in income. At her passing her expenses to live on where at the point of surpassing her income. She owned her Condo and vehicle with zero debt.

Yes, a person can live off Social Security alone. My mother pulled it off but she was extremely frugal. I had no idea how little she was receiving in income. She would never tell me while alive. I was quite surprised, to say the least.

Not everybody is in a position to put aside money towards supplemental investments like 401K, IRA's, Roth or stock market.

I never invested in any of the above supplemental sources of retirement income. We raised our family on my income, being my wife quit her career to raise our children. I missed a lot of my children's events of life to me working.

The construction industry is a feast or famine world. I worked overtime any time I could get it. When overtime wasn't available, I did a lot of side work as a plumber. For a few years, I was a plumber during the day and an Apprenticeship Training Instructor.

Any extra income went in the bank for a rainy day. Having any extra income not easily accessible for when work was slow was not an option. I've seen more then my fair share of being laid off over the last 40+ years.

"Only you can answer how much money and the lifestyle you will live during retirement."

I agree with this and the only way I can know is by trying out different levels of lifestyles. When I find a modest lifestyle I can live with, it will be easier to project the income I will need to support that lifestyle.

Ideally I will live that modest lifestyle before I retire and then I can throw some more cash in the Roth.

Curing the shopping habit will be a big part of the puzzle. It's going to be a pretty tough habit for me to break.

 

[Colt Carbine]

I have been living a pretty lavish lifestyle lately. I need to tone it down a few notches as I head towards retirement.

It seems to me it would be helpful to have a general idea of the lifestyle you will be living in retirement, in order to know how much income you will want to have?

Nearly all of my lavish spending occurs with shopping. That behavior will have to be directed towards a cheaper activity, like using up all the stuff I bought. Or dumpster diving for free stuff

Best advise I can give if you're unable to contribute any money into supplemental retirement income sources.

Get out of debt.

Pay off your condo.

Pay off your vehicles.

Learn to live as close as possible to what your projected Social Security Benefit amount is sooner rather then later.

Learn how to fix your own vehicles and home repairs, definitely helps a lot. It's extremely expensive to hire somebody like myself to fix your plumbing or vehicle.

Figure out a way to earn extra income if that's possible. Everybody's abilities and resources are different, meaning what I'm able to do to earn extra income will be different then yourself.

 

[nwslopoke]

I agree with this and the only way I can know is by trying out different levels of lifestyles. When I find a modest lifestyle I can live with, it will be easier to project the income I will need to support that lifestyle.

Ideally I will live that modest lifestyle before I retire and then I can throw some more cash in the Roth.

Curing the shopping habit will be a big part of the puzzle. It's going to be a pretty tough habit for me to break.

My advice is turn off all but the essentials then learn what you can't deal without. Do it sooner than later and as long as you are working you can turn it back on or find cheaper alternatives.

There is almost always a cheaper alternative . Reading or even writing a book. Learning a language. Anything beats cable TV. Those that speak multiple languages can earn extra income teaching online.

Retirement shouldn't be living the cheapest life you can live, but the best life you can sustain. It's your time. It would be better to push it back than live in a car.

I stopped buying guns when the 114 bs started and I realized I don't have any heirs or family that will benefit from them. It was easy to go cold turkey, for the most part. I'll whittle down the herd most likely at a substantial loss over the next few years just so my wife doesn't deal with the legal crap most don't understand.

 

[The Heretic]

I have been living a pretty lavish lifestyle lately. I need to tone it down a few notches as I head towards retirement.

It seems to me it would be helpful to have a general idea of the lifestyle you will be living in retirement, in order to know how much income you will want to have?

Nearly all of my lavish spending occurs with shopping. That behavior will have to be directed towards a cheaper activity, like using up all the stuff I bought. Or dumpster diving for free stuff

I had a monthly budget worked out years (more than a decade) in advance on a spreadsheet so I would know, that any given point, how long what I had saved for retirement, would last thru my retirement - or, if I was laid off and could not return to work, how long my savings would last. This included when SS benefits would kick in and so on.

Now, I have a month to month budget, that includes my current balances (except for my IRAs) income, bills and other expenditures. This includes a projection for expenditures for the near future (next month).

 

[Ballardguy]

Since I retired at 60 we didn't have social security until I hit 62. So we learned what it was like to live on just my retirement, and didn't touch our investment income. Then two years later my SS started, and 4 years after that my wife's kicked in. It was like getting a couple big raises after the two years of living without them.
We still live on my retirement, and our SS goes into a savings account. We use that for either fun things, or if there's some major purchase to make. The IRA accounts have added another income the last 3 years with the required 5% RMD that IRS requires us to take, so it just keeps getting better. I'm hoping by the time we both die there's nothing but the house, cars, and my gun collection left for the kids to share! None of them needs the money as all five have homes, and decent jobs.

 

[The Heretic]

The IRA accounts have added another income the last 3 years with the required 5% RMD that IRS requires us to take, so it just keeps getting better.

I will have to start that next year I think, but I am already pulling enough from the reg IRA to qualify.

I'm hoping by the time we both die there's nothing but the house, cars, and my gun collection left for the kids to share! None of them needs the money as all five have homes, and decent jobs.

But do they have tax deferred retirement accounts? Inheriting your house may be enough to help them.

By the time my daughter/SIL retire (about 15 years from now), the SS benefits they get probably won't be enough for them to live on, and neither of them has much in their 401Ks, which is why I am trying to build up the $ in my IRAs. My real estate will help them too.

 

[Hawaiian]

I retired 3 years ago. I worked until I was 73. I was ready to retire before then however, I was working from home and was not very busy. Got everything done and still had free time during the day. So, I kept working getting full pay and benefits while building my retirement fund and paying off the house and all bills. I wanted to make sure my wife and son would be OK financially should I pass.
Downside to this was by the time I finally retired, I was too old physically to do many of the things I wanted to do.

While I am far from being wealthy, my family is financially secure for the long haul.
I quickly learned that I needed a larger monthly budget than I earlier thought. There will always be unexpected expenses. Dental/Medial co payments where more last year that the last 30 years combined.
House will need a new roof in a few years
House will need painting which I no longer can physically do.
Bought myself a fancy new car as a retirement present to myself. Not necessary, but I could afford it
Replaced the hot water heater.
Going forward other household appliances will need replacement.
And don't forget those lovely property taxes.
Our utilities and car insurance have almost doubled in the last few years.
Inflation is going to hit us hard going forward, The funds we currently have won't last as long as we planed.
Oregon and Washington will keep finding new way to tax us on anything they can get away with.
God help us if we end up in a nursing home. I told my son to pull the plug if that happens to me.

Bottom line, you are going to need much more than you think to be financially secure in retirement.

 

[AshWilliams]

Those who are discussing passing on inheritance, I hope you all have done estate planning and set up a trust and put all of your assets into it for your kids. Probate is brutal and expensive.

You worked hard all your life for your estate. Don't let your state take a portion of it in addition to the high taxation you've been subjected to.

 

[Bobbygun]

Those who are discussing passing on inheritance, I hope you all have done estate planning and set up a trust and put all of your assets into it for your kids. Probate is brutal and expensive.

You worked hard all your life for your estate. Don't let your state take a portion of it in addition to the high taxation you've been subjected to.

Yes, on the estate planning. A trust isn't always the answer, but sometimes. Other times they themselves are expensive and more work. My mom passed the majority of her assets through Payable on Death bank accounts and Transfer on Death deeds. We didn't have to take the remainder through probate. I had one attorney tell me that Oregon probate costs weren't that bad, but for estate taxes they are one of, if not the worst state. He didn't mention how painful (or not) the probate process was to go through though.

There was an Oregon Senate Bill (1511) in process to raise the Estate Tax exemption level from $1,000,000 to $2,500,000. That would have been helpful, but it looks like it died today as the session ended.

 

[Hawaiian]

Yes, Oregon estate taxes tax everything over 1mil. We set up a "Disclaimer Trust". This allows a surviving spouse to 'disclaim' assets of the passing spouse and place them in a trust. When the surviving spouse passes, both her estate and the trusts estate each receive the 1mil tax deduction thereby gaining an extra mil tax deduction for a total of 2mil on the total assets.
Note, if you own property, house, cars ect, their value in included in the estate value along with other savings, investment or retirement accounts.
Also when someone inherits a 401k or IRA, they are required to withdraw all funds within a 10 year period. Note, it will continue to earn gains during this time and will be substantially larger than the initial value. This could place them in a very high tax bracket when added to their other income. If you totally trust your kids and both you and your spouse have substantial IRA/401K accounts, you could consider having the surviving spouse decline the retirement account and letting it pass to the child as the secondary beneficiary now, thereby reducing the tax bracket from them getting both at the same time to draw down over ten years.
You could gift them money now to avoid them paying taxes later.
Or, you could move to another state with lower estate taxes and no or lower state income taxes for the kids and end the problem.
This is all based on Oregon tax laws. The fed estate tax exemption is 15mil for individuals, 30mil for couples. I don't think many of us here need to worry about that. Except they will still tax the recipient on the 401k/IRA distributions.