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Old 01-11-2010, 05:53 PM   #21
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The other possibiity is that the writer or the interviewees lied.

Ha
well that is hard to argue with. maybe they lied about being satisfied too, or maybe they lied about ...
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Old 01-11-2010, 06:07 PM   #22
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The article did say the $1M was with a DB. The world does look different with that and really should be considered as a present value addition to your net worth if you have one and are comparing to someone who does not have a secure DB.
Not exactly the article said that:
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In addition, 38 percent of retirees said they depended on a defined-benefit pension for a significant portion of their income.
Well, that pretty much throws it out right there! If such a large number polled had a significant DB, then of course the sweet-spot net worth number is going to be lower. It pretty much makes the whole thing pointless!

Sheesh!

Audrey
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Old 01-11-2010, 06:07 PM   #23
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how can there be just under 80% statisfied when only 38% are depending on a DB pension?
The article doesn't say that just under 80% are satisfied. We don't know how many individuals are in each category. For example, most of the individuals could be in the sub-$250k category where only 51% are satisfied.
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Old 01-11-2010, 06:23 PM   #24
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Originally Posted by audreyh1

Originally Posted by Tesaje The article did say the $1M was with a DB. The world does look different with that and really should be considered as a present value addition to your net worth if you have one and are comparing to someone who does not have a secure DB.

Not exactly the article said that:

Quote: In addition, 38 percent of retirees said they depended on a defined-benefit pension for a significant portion of their income. In addition, 38 percent of retirees said they depended on a defined-benefit pension for a significant portion of their income.

Well, that pretty much throws it out right there! If such a large number polled had a significant DB, then of course the sweet-spot net worth number is going to be lower. It pretty much makes the whole thing pointless!

Sheesh!

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Old 01-11-2010, 06:26 PM   #25
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The article doesn't say that just under 80% are satisfied. We don't know how many individuals are in each category. For example, most of the individuals could be in the sub-$250k category where only 51% are satisfied.
you are right they could be, but even still 51% > 38%. and since we are speculating, i will speculate that most of the people with DB pensions are also in that category as how could they possibly be satisfied with their retirement with that little NW and no DB pension?
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Old 01-11-2010, 06:35 PM   #26
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Not only that, just because they say they are getting a DB pension doesn't mean that it's a substantial pension, or fully COLA'd. Most of the people I know with pensions don't have any COLA and the dollar value doesn't amount to a hill of beans anyway.
Good point. I have a pension waiting for me from a past employer -- the first Megacorp I worked for from 1987 to 1999, and they froze the pension even before I left. But since I stuck it out for more than 10 years, I was vested in what I earned before they froze it.

If I take the 100% survivor option, it's going to be about $270 a month in 2020 at age 55 or about $630 a month in 2030 at age 65. And those are not COLA'd amounts.

So do I have a pension waiting for me in retirement? Yes. But it's hardly a significant factor in my financial planning. Better than nothing, sure, but not something that significantly changes my retirement planning.
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Old 01-11-2010, 06:58 PM   #27
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you are right they could be, but even still 51% > 38%. and since we are speculating, i will speculate that most of the people with DB pensions are also in that category as how could they possibly be satisfied with their retirement with that little NW and no DB pension?
Exactly. So we can't really do anything with data that says that 51% of retired folks with less than $250k net worth are "satisfied" because probably a large chunk (we don't know exactly) of those folks are satisfied because of the DB pension rather than by their paltry sub-$250k net worth.

It's too bad the outcome of the analysis is confounded by the unaccounted for 38% DB pensions. One of the most common questions here on the forum is "how much $$$ will I need to be satisified in retirement?" The analysis and spiffy graph would have gone a long way towards answering that question except it left the 38% significant DB pensions unaccounted for.
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Old 01-11-2010, 07:38 PM   #28
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DB's often come with Health insurance also. I have a non-COLA DB plus an excellent retiree health plan to allow me to ER. Along with all the other unknowns they don't fully address this security blanket either.
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Old 01-11-2010, 08:34 PM   #29
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Exactly. So we can't really do anything with data that says that 51% of retired folks with less than $250k net worth are "satisfied" because probably a large chunk (we don't know exactly) of those folks are satisfied because of the DB pension rather than by their paltry sub-$250k net worth.
well actually we can do something with this data. lets look at the 3 possibilities. 1) there are more than 38% with DB pensions in that category, 2) there are exactly 38% with DB pensions in that category, 3) there are less than 38% with DB pensions in that category.

1) this would mean that there are less than 38% with DB pensions in the other categories and would add weight to the argument that a million (maybe down to .5 million) in assets provides a satisfactory retirement.

2) this would support my earlier statement about the higher categories have almost 80% satisfactoy retirements with only 38% having DB pensions.

3) this would raise the % having a DB pension in the higher categories but it would also increase the number of satisfactory retirements in the lowest category without a DB pension.

i think all 3 of these point out that it is possible (even probable) to have a satisfactory retirement with what people on here might consider modest assets even without a DB pension and all support the authors (potentially conservative) premise of 1 million being a sweet spot.

and this assumes that every one with a DB pension feels they have a satisfactory retirement, which probably isnt true. and if it isnt true then there are even more people who dont have a DB pension but still have a staisfactory retirement.
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Old 01-11-2010, 09:18 PM   #30
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It's hard for me to know what to make of this when they don't even tell you whether that is $1M per person or per household/couple, how much the average DB is for those who have one, etc etc etc.
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Old 01-12-2010, 01:00 AM   #31
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well actually we can do something with this data. lets look at the 3 possibilities. 1) there are more than 38% with DB pensions in that category, 2) there are exactly 38% with DB pensions in that category, 3) there are less than 38% with DB pensions in that category.

1) this would mean that there are less than 38% with DB pensions in the other categories and would add weight to the argument that a million (maybe down to .5 million) in assets provides a satisfactory retirement.

2) this would support my earlier statement about the higher categories have almost 80% satisfactoy retirements with only 38% having DB pensions.

3) this would raise the % having a DB pension in the higher categories but it would also increase the number of satisfactory retirements in the lowest category without a DB pension.

i think all 3 of these point out that it is possible (even probable) to have a satisfactory retirement with what people on here might consider modest assets even without a DB pension and all support the authors (potentially conservative) premise of 1 million being a sweet spot.

and this assumes that every one with a DB pension feels they have a satisfactory retirement, which probably isnt true. and if it isnt true then there are even more people who dont have a DB pension but still have a staisfactory retirement.
Me thinks you're starting to stretch the rubber band of statistical probability.

I don't have any issue calling one mil a "sweet spot." With SS that means a SWR of over $50k for a single and $100k for a couple. Sounds like a satisfactory retirement to me!

I just think the author could have done a better job with the data, especially the DB pension data. Then you wouldn't have needed to try to draw conclusions as in your post above.
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Old 01-12-2010, 08:44 AM   #32
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Jeez... What exactly did you want the article to say.

Would you like something like

"you, a 58 year old single man living all by yourself in a 2 bedroom condo, active yet suffering from asthma, residing on the west side of Peoria, will be happy to the 93rd percentile when you have a defined benefit COLA pension that pays $1872.37 per month and savings of $932124".

As I see it many of the posters expectations are over the top.

So take the article for the one little nugget in there. And that was that beyond a certain amount your retirement contentment maxes out.

More is not better - That's the nugget.
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Old 01-12-2010, 09:29 AM   #33
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So take the article for the one little nugget in there. And that was that beyond a certain amount your retirement contentment maxes out.

More is not better - That's the nugget.
Yes, very true. After a certain amount, more is just, well, more.

Our discerning forum members are simply debating what that certain amount is.
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Old 01-12-2010, 09:50 AM   #34
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Yes, very true. After a certain amount, more is just, well, more.

Our discerning forum members are simply debating what that certain amount is.
Thats right. The concept of diminishing marginal returns seems to be well accepted in discussions here. The perplexing thing for many pre-FIRE folks, however, is where the knee in the curve is. How much accumulation, in round numbers, is enough before further sacrifices to accumulate are not rewarded with offsetting amounts of satisfaction?

It looked like the author, after an extensive effort to survey retirees for data, might throw a bone to the pack of knowledge hungry RE-wannebees lusting to understand when to pull the switch.

But I think that the commonly accepted thesis that, as you state, "after a certain amount more is just, well, more" is all we can take away from the article.

No dog in the fight for me. I'm 3.5 yrs into FIRE, loving the hell out of it and can't do a thing about how big my portfolio was when I pulled the switch........... a moot point now.
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Old 01-12-2010, 09:52 AM   #35
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Jeez... What exactly did you want the article to say.




Would you like something like

"you, a 58 year old single man living all by yourself in a 2 bedroom condo, active yet suffering from asthma, residing on the west side of Peoria, will be happy to the 93rd percentile when you have a defined benefit COLA pension that pays $1872.37 per month and savings of $932124".

As I see it many of the posters expectations are over the top.

So take the article for the one little nugget in there. And that was that beyond a certain amount your retirement contentment maxes out.


More is not better - That's the nugget.
Hard to imagine that a person who has lived in the world 40+ years would think he might get more information about happiness from some article than he would get from having a look at his own attitudes and life.

I think the nugget is not to expect anything at all useful from popular articles. They aren't intended to be useful; their only purpose is to be read, to get clicks, etc, etc.

Ha
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Old 01-12-2010, 12:05 PM   #36
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I know that with $1M I will never have to worry about having a roof over my head, food in my stomach and clothes on my back.
How do you know this? $1M will get depleted fast enough under highly-inflationary conditions if you can't keep up with that inflation, and my understanding is it's very hard / impossible to keep up with inflation in such conditions (..and if you try, you'll always feel like you are buying at the top of a huge bubble - like buying gold at $1000, $1500, $2000, etc.)
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Old 01-12-2010, 12:41 PM   #37
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Reminds me of reading the book "The Number" where the author asks people what is their "Number" (the amount of worth they would feel comfortable with the last them the rest of their lives)? When he asks, he sees the worried look on their faces...

The number can be different for one person versus another. One person may say he/she can get by with $1 mil. Another would say, no way, at least $2 mil, another would say, no way, at least $5 mil, and so on.

Amazon.com: The Number: What Do You Need for the Rest of Your Life and What Will It Cost? (9780743270328): Lee Eisenberg: Books


The book is a good read for fun. But if you want concrete answers on how to determine "The Number" for you, the book will be disappointing.
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Old 01-12-2010, 03:50 PM   #38
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How do you know this? $1M will get depleted fast enough under highly-inflationary conditions if you can't keep up with that inflation, and my understanding is it's very hard / impossible to keep up with inflation in such conditions (..and if you try, you'll always feel like you are buying at the top of a huge bubble - like buying gold at $1000, $1500, $2000, etc.)
If hyperinflation can wipe off $1M, it can wipe off $10M just as easily. I find it ironic how this board has evolved over time. I used to come here to read inspiring stories about adventurers and risk takers retiring on $500K-$1M or less in a fishing camp on Lake Pontchartrain or on a sailboat circumnavigating the globe. All I read nowadays are stories of people with multimillion dollar portfolios who think that $1M is chump change and spend their time worrying about every possible financial disaster no matter how unlikely. That is of course your prerogative. But if the consensus around here is that you can never have enough money to retire because sh!t happens, then it is time for me to stop wasting my time and bid you all farewell.
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Old 01-12-2010, 04:00 PM   #39
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If hyperinflation can wipe off $1M, it can wipe off $10M just as easily. I find it ironic how this board has evolved over time. I used to come here to read inspiring stories about adventurers and risk takers retiring on $500K-$1M or less in a fishing camp on Lake Pontchartrain or on a sailboat circumnavigating the globe. All I read nowadays are stories of people with multimillion dollar portfolios who think that $1M is chump change and spend their time worrying about every possible financial disaster no matter how unlikely. That is of course your prerogative. But if the consensus around here is that you can never have enough money to retire because sh!t happens, then it is time for me to stop wasting my time and bid you all farewell.
Don't leave - - we still have a variety of members, with different risk taking tolerances and different sized portfolios. Even me. I was going to retire on considerably less than half a million, until I inherited. I would have been just fine. And now, I am still just fine but with more to spend.

Consider the difference in point of view between members such as Ha and Aaron. Different locations, different ideas of what is impossible and what isn't. And both are right, for themselves.
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Old 01-12-2010, 04:07 PM   #40
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I think in a way, "The Number" for each person is a lot like one's asset allocation. One one hand, it should be very emperical and on the other it is very subjective.

About asset allocation, it tickles me when after going through all the possible allocations, the common approach (by planners and retirees, alike) is to use one that you feel comfortable with. I am no different -- I have my AA set to my sleeping point.

I suppose looking at a number like $1 million is only part of the equation. Another (as others have mentioned) what income stream, health benefits, age of retiree. Also what lifestyle does one want to live.

I'm pretty much a LBYM person. I have a brother who probably makes more money than me in one year than I did in a lifetime. When I told him I retired, he said it's funny, I even retired before him (he is 6 years older than me). Yet, our circumstancs are different. He lives the "Hollywood lifestyle", as he said. Different strokes for different folks. We are both happy with our choices.
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