Going broke at 81

[GTM]

Okay... you ER today
You calculate your net worth
You invest accordingly
You run the #'s through Firecalc

All the data allows you to have enough money to maintain your current lifestyle until age 81
After your 81st birthday the only possible source of income is Social Security (if it's there) Medicare same situation.
If married your spouse has the same.

Are you confident or not?

 

[omni550]

One consideration might be which end of the gene pool your family is from -- long-lived or short-lived.

omni

 

[Michael]

Doesn't inspire much confidence in me.

 

[JPatrick]

Okay... you ER today
You calculate your net worth
You invest accordingly
You run the #'s through Firecalc

All the data allows you to have enough money to maintain your current lifestyle until age 81
After your 81st birthday the only possible source of income is Social Security (if it's there) Medicare same situation.
If married your spouse has the same.

Are you confident or not?

So are you saying you are broke at 81, or are you out of liquid assets and in possesion of a paid for mcmansion ?  And just how many years is it til 81 from today.  Got that evil inflation factored in?
Lastly, just how big is the cut when you hit 81 as in from what to what?
The if married is kind of key, as two small checks trumps one small check most of the time. I guess that one may be difficult to predict.

 

[Gone4Good]

Are you confident or not?

No way! Planning to live to 105.

 

[GTM]

So are you saying you are broke at 81, or are you out of liquid assets and in possesion of a paid for mcmansion ? 

If you have a house now and dont sell it by then , yes

And just how many years is it til 81 from today.  Got that evil inflation factored in?

81 minus your current age


Lastly, just how big is the cut when you hit 81 as in from what to what?

Not sure of the question
81 no income left except SS (maybe)
But if you have a home you can sell it or get a reverse mortgage.


The if married is kind of key, as two small checks trumps one small check most of the time. I guess that one may be difficult to predict.

2 checks will probably suffice

 

[Cut-Throat]

I think you should set FireCalc to live to 100 at a minimum. More importantly I think you need to Have income to support at least twice of what you need to live on. This would not include Travel, Dining Out etc. etc.

That way if we have another Great Depression, you can cut your Budget in half and still survive quite nicely.

Also my Budget does not stay the same in my FireCalc withdrawals. When and if I'm 85, spending money will not be as much fun as spending it today. So I have extra amounts in my spending from age 55-75, and reduce the budget after age 75. - Still maintaining twice what I actually need.

All these are failsafes for market downtowns, major unexpected expenditures or other calamities. Reverse Mortgages and downsizing the home are not even in the plan (another option for the exexpected)

I am planning on having my principle at least 50% gone by the time I'm 90. Folks that don't plan on spending principle are living poorer than they need to and just making their heirs richer.

 

[RockMiner]

I would not be comfortable risking a SS only budget at 81.  At 91 maybe.  SS might suffice to get by, but that would be a crummy way to spend your last few years.  I suppose there is always a reverse mortgage option but that was not mentioned in the original post.

Cut-Throat,  I thought I was conservative!...a budget that can be cut by 50%,
planning on living to 100+?  I suspect that few could swing that.  I am allowing for maybe a 25% cut in a pinch, and planning for 95 though that probably wouldn't be a good thing 

 

[RockMiner]

Cut-Throat,  Re your 11 categories for cutting, I did a rough calculation using same and I still have a tough time reducing spending by more than 25% or so...thus I conclude your budget is indeed "well padded".   

No matter, if things got as bad as "Cinderella Man" I would be happy to bust up furniture for fire wood or eat beans 3 meals a day.  I suspect we would all find some way to get by. 

GTM, sorry for the semi-hijack of the thread. 

 

[GTM]

Cut-Throat,  Re your 11 categories for cutting, I did a rough calculation using same and I still have a tough time reducing spending by more than 25% or so...thus I conclude your budget is indeed "well padded".   

No matter, if things got as bad as "Cinderella Man" I would be happy to bust up furniture for fire wood or eat beans 3 meals a day.  I suspect we would all find some way to get by. 

GTM, sorry for the semi-hijack of the thread. 

Not a highjack all are valid pieces of info.

Even though we can cut back on many things alot of new expenses can arise at age 81.

Medical expenses, nursing care, medications etc.
Whos knows how much of the tab the government will be able to pick up then.

 

[retire@40]

I think that everyone headed for retirement should have a budget that could be cut by 50%, if it had to. - I'm not saying that I'd enjoy cutting my Budget by 50%, but I could make it.

Sounds like we need a poll.  The most I could realistically cut is 40%.  If I were single without kids, I could cut a lot more (probably closer to a 70% cut based on a budget for one) by living with very little heat in the winter by wearing extra clothes and spending more time at the library, eating hamburger and tuna fish instead of filet mignon and lobster, and coming to the edge of deprivation (not too far off from how my family was when I was a kid anyway, so I'm used to it).

 

[Gone4Good]

How much you can cut back is greatly determined by how close to the edge you are financing your retirement.  The original post implied a retiree who was stretching his finances, possibly too much so.  Cut-Throat, on the other hand, seems to have a well funded retirement plan.  Not everyone will be able to afford Cut-Throat's level of security, but I think a reasonable retirement plan should anticipate a life span that extends beyond 81.

 

[RockMiner]

Oh all right,  30% and that's my final offer   

Anything more would likely also involve divorce.   

 

[AltaRed]

How much you can cut back is greatly determined by how close to the edge you are financing your retirement.  The original post implied a retiree who was stretching his finances, possibly too much so.  Cut-Throat, on the other hand, seems to have a well funded retirement plan.  Not everyone will be able to afford Cut-Throat's level of security, but I think a reasonable retirement plan should anticipate a life span that extends beyond 81.

Agree that it's virtually impossible to come up with a meaningful number as everyone starts from a different place. Easier to come up with $$ budgets as have been discussed at length in other threads. Having said that, spouse and I would want about a 25% cushion that we could cut to get through some bad times. Anything more would be a dramatic shift in daily life no matter where you start from.

 

[Sheryl]

I am planning on having my principle at least 50% gone by the time I'm 90. Folks that don't plan on spending principle are living poorer than they need to and just making their heirs richer.

My sentiments exactly.  I am glad to hear someone else say this - I had been thinking everyone else was planning to preserve all their capital forever. 

 

[LOL!]

My sentiments exactly.  I am glad to hear someone else say this - I had been thinking everyone else was planning to preserve all their capital forever. 

So you reach 90 years old. And you still need your 4% SWR, but now half your capital is gone. Are you gonna sit back and say, "well, I'm only gonna live another 2 years." Or are you going to think you could live another 15 years?

 

[Cut-Throat]

So you reach 90 years old.  And you still need your 4% SWR, but now half your capital is gone.  Are you gonna sit back and say, "well, I'm only gonna live another 2 years."  Or are you going to think you could live another 15 years?

Only if you are math challenged!

For example. say you start out with 1 Million and you hit age 90 with $500K. The 4% withdrawal rate would have started at $40K. Even under your mattress, $500K would provide another 12 1/2 years, which would bring you to 102 1/2  - Seems pretty safe to me!

And this does not even factor in Social Security or return on Investment (Inflation as well, I know)

 

[TargaDave]

I am planning on having my principle at least 50% gone by the time I'm 90. Folks that don't plan on spending principle are living poorer than they need to and just making their heirs richer.

My sentiments exactly. I am glad to hear someone else say this - I had been thinking everyone else was planning to preserve all their capital forever.

I think it's a very different mindset for those who have kids versus those who don't. Not better or worse, just very different.

 

[uncledrz]

Yrs and CT, I'm with you, planning to live well into my 90's (although if I go by family history I won't even get close).
CT and Sheryl, I'm with you that DW and I feel free to spend every dime we have, we've given our kids guidance, strength, solid family and spiritual backing and a good education, the money's for us.
CT, one small difference.  While we probably won't be spending as much after 85, we still plan to enjoy it just as much if not more -- the sorta "we've pulled one over on you by still being here" idea.  
Uncledrz

 

[snowbird]

It really would be interesting to see what people are actually planning to live on at 55, 65, 75, 85 & beyond. It would also be nice to see what makes up that amount, i.e., SS, COLA or Non-COLA'd pension, 401k WD, IRA WD, dividends, interest, cap gains, etc. Lastly, what % of the portfoilio would be left at each interval.

Probably should be fresh post but thought I'd plant the seed here.

Pete

 

[HFWR]

I buy store brands, pack my lunch to work, and generally don't give a hoot about cache, all of which help to keep my budget where it is. I would still be "frugal" even if I was a brazilianaire...

 

[cute fuzzy bunny]

Besides slimming my budget down from now until then to squeeze a few extra years out, but lets also look at the real spending requirements of someone in their 80's.

My dad lives in Sun City, where he's a fairly young 71 compared to the average of high 70's/low 80's neighbors.

In the majority of couples he knows, at least one spouse (and sometimes both) are severely limited by a physical ailment - strokes, bad hips/knees, minor to moderate alzheimers, etc. Most dont drive very much, if at all. Not many are eating exotic foods, and several are in fact putting bland food through a blender. Many dont drink, although a few are heavy drinkers despite their doctors advice. Quite a few travel and thats a fair source of cost. Quite a few also like to take the bus to reno or tahoe and gamble, which can suck a few dollars out of your wallet.

The vast majority are doing something, not sure what, inside their houses for most of the day. When I spend the day down there, the place looks like a neutron bomb went off a year earlier. Once or twice a day someone will hobble out to the mailbox or take the dog out for a 10 minute walk up and down the street. Maybe 20-25% get into their privately owned golf carts and buzz over to the golf course for 9-18 holes one to three times a week at a cost of about a buck a hole.

Providing you've got a paid for house and a paid for car (if you're even still driving), and you dont have an expensive taste for travel or gambling, i'm gonna bet your need for cash in your 80's and beyond will be pretty nominal. My dad has no debt and while he still buys himself a new car every 3-4 years and likes good food and wine, he's spending under $20k a year. He could easily get by on his social security and a few extra bucks. Ten years from now I doubt his needs are going to run much past a bowl of soup and something good on television.

 

[brewer12345]

I think it's a very different mindset for  those who have kids versus those who don't. Not better or worse, just very different.

Maybe I am unusual in this regard, but I don't plan on leaving my kids huge sums of money, barring one of them having developmental disabilities. I've seen too many people whose lives were pretty much ruined by having a trust fund. These folks basically never really had a real need to do anything, and tend to lead rootless lives.

 

[SteveR]

Ten years from now I doubt his needs are going to run much past a bowl of soup and something good on television.

Now there is a happy thought about "living" in retirement.  Sitting in front of the TV drooling into your bowl of soup.   :

Actually, I agee with the overall reduction in spending as we age.  The only exception is healthcare and some sort of long term care needs as we become more dependent on others for our daily care.  

It is hard to spend much when you are immobile or your brain has turned to swiss cheese.  I handle my mother's finances and while her overall costs of living have increased due to moving into Assisted Living, her "pocket money" expenses have gone to just about zero.  Getting on the bus to do to WalMart to go shopping for a few snacks is about the extent of her spending beyond the monthy facility charge which includes food (such as it is  ).  

Spending budgets for most of us that live into our 80's and beyond may well be far less than that projected by many calculators.  If you have your long term living arrangements taken care of through personal funds or insurance ( ) then you can live on near nothing.  

Save enough to take care of that old person you will become but spend now on the "kid" that can still play.  The old person will be here soon enough.  

 

[cute fuzzy bunny]

Now there is a happy thought about "living" in retirement. Sitting in front of the TV drooling into your bowl of soup. :

You should look FORWARD to drooling into your soup, as you can then brag all week long about having a "bodily emission"

Whoops, there goes our G rating for the day, and its only 9:30...