How Far Does $300,000 of Retirement Savings Go?

[Katsmeow]

This is more shocking than the 300k story.
The Shocking Retirement Numbers That Will Blow You Away

According to recent estimates, there are 58 million Americans between the ages of 50 and 64. The median retirement savings for this group is only $26,000 per person.

The article also has the following quote:

According to Ghilarducci, a safe rule of thumb is that you must have 20 times your annual salary saved up by the time you retire

Sigh. If DH and I had to have that he would still be working (he is 65) and I would be working for many more years as well (I still work part-time). We don't have anywhere close to 20 times our annual salary at the time he retired and and I went part-time. But, we're doing fine.

Ghilarducci is well known to be hostile to 401(k) and seems to want us all in annuities and she definitely slants what she says to make it seem like everyone is doing awful....

 

[Moemg]

I couldn't imagine having $300k! Though it looks like I will in about 10 years or so if things keep going like they have. My pension is about $75k, with a small 2% bump in a couple of months. Plenty for me and then some, but I live in a low cost area, and don't live extravagant either, though I do what I want.

I think a 75k pension certainly trumps $300,000 in savings .It is equal to almost $2,000,000 in savings and probably includes health benefits . Good work Mulligan !

 

[Mulligan]

I think a 75k pension certainly trumps $300,000 in savings .It is equal to almost $2,000,000 in savings and probably includes health benefits . Good work Mulligan !

I certainly feel fortunate now, but when I started my career it wasn't even a thought. No health benefits, but for now it is pretty cheap for an individual plan here. Pension is based on final 3 year ave. Got a few breaks late in my career, otherwise I spent a great part of my career under 40k, so my needs aren't extravagant.

 

[NW-Bound]

I don't know about the 20X the annual salary of the two of us combined. Even adding my 2 homes to our stash, I am nowhere near it. Hah!

What I am betting on is that our expenses are 3.5%WR. That's my number and I am sticking to it. If somehow I fall short in the future because investment returns are below the historical average, they will give me my SS and take away from people who manage to live on 2.5%WR and sit on a big pile.

Hey, means testing is not all bad if I am going to profit from it.

 

[pb4uski]

.....According to recent estimates, there are 58 million Americans between the ages of 50 and 64. The median retirement savings for this group is only $26,000 per person.

I recently helped a good friend who is 58 with his retirement planning and was a bit shocked that his 401k balance was less than my annual 401k contributions the last year few years that I worked.

I just can't believe the number of people that have access to a 401k with a 50% or better match and do not even contribute an amount sufficient to get the free money.

 

[samclem]

Ghilarducci is well known to be hostile to 401(k) and seems to want us all in annuities . . ..

Righto. In fact, according to her previous writings, she wants us all in government-backed annuities with an elimination of individually-owned 401Ks.

 

[samclem]

I recently helped a good friend who is 58 with his retirement planning and was a bit shocked that his 401k balance was less than my annual 401k contributions the last year few years that I worked.

Well, that probably simplified the retirement planning process a lot.

 

[mathjak107]

I recently helped a good friend who is 58 with his retirement planning and was a bit shocked that his 401k balance was less than my annual 401k contributions the last year few years that I worked.

I just can't believe the number of people that have access to a 401k with a 50% or better match and do not even contribute an amount sufficient to get the free money.

Same here, i also helped a friend with his planning. I was shocked looking at the lifestyle,the benz and the house and just how little they accumulated. Well they retired this year and next month are leaving nyc for florida. There was no way they could even consider staying here on what they saved

 

[coolowl]

I am so glad I happened on this thread today and especially am thankful to the folks who mentioned the amount of their net worth. I don't have nearly the numbers in my investments/savings that people in this forum have. Until reading this thread I thought I was alone. It's nice to know that there are some others who aren't millionaires.

I don't know how you all did it. I worked a steady 9-5 job, saved as much as I could and don't know how I could have saved/invested more. Those of you with millions....Jeepers. How'd you do it? You either had some super high-paying jobs, you inherited it, or what....

Anyway, good for you.

 

[NW-Bound]

I cannot answer for others, and can only speak for myself.

Yes, I have a 7-figure net worth. It does not come from inheritance, nor from being a small business owner, and only from our pay. I was among the founders of a couple of small tech start-ups, and that actually cost me money due to lost wages (worked for stocks that became worthless).

My money came from a LBYM lifestyle, no marital problems, children attending public schools, regular 401k contribution, and also after-tax savings, etc... The wind on my back from the stock market in 1980-2000 also helped a lot.

We were a dual-income couple, working for megacorps (both are among the Dow 30). Good pay, but not outrageous. No stock options as that privilege at our established (stodgy!) megacorps started at about 2 or 3 grades of pay higher than we ever attained.

So, it's just money accumulated after 30+ years of nose-to-the-grind-stone work. I've got a flat nose to prove it.

PS. I made the above joke because I recalled a conversation with another guy, early in my career. This guy did not believe in working hard, because he said all one would get for keeping his nose to the grinding stone was a flat nose. Well, if I see this guy again, I will say that my nose is still intact, and yet I have a stash to retire early on. Heh heh heh...

 

[ER Fireball]

I think a 75k pension certainly trumps $300,000 in savings .It is equal to almost $2,000,000 in savings and probably includes health benefits.

So, how do you put a value on a pension plus health care benefits?

For many years it was proclaimed that the folks toiling away at the 'old brick and mortar' businesses were the stupid ones. The road to the future was jumping jobs and running to wherever the big money was being made.

Now, when it comes times to close out this career and move on to the next big thing, some of us are fortunate enough to have a pension and health care benefits in retirement. My calculations for 'how much is enough' are simpler in some ways, simply because I know that a significant amount of my expenses are covered. And if everything crashes, well, we will still be in a better place than the vast majority of people out there.

PV = f(# of payments, payment, interest rate)

# of payments = years left converting oxygen to carbon dioxide
Payment = pension payment
interest rate = ? expected portfolio return - inflation rate? for non-COLA pension? Would this be the same rate as a 'safe withdrawal rate'?

 

[Mulligan]

So, how do you put a value on a pension plus health care benefits?

For many years it was proclaimed that the folks toiling away at the 'old brick and mortar' businesses were the stupid ones. The road to the future was jumping jobs and running to wherever the big money was being made.

Now, when it comes times to close out this career and move on to the next big thing, some of us are fortunate enough to have a pension and health care benefits in retirement. My calculations for 'how much is enough' are simpler in some ways, simply because I know that a significant amount of my expenses are covered. And if everything crashes, well, we will still be in a better place than the vast majority of people out there.

PV = f(# of payments, payment, interest rate)

# of payments = years left converting oxygen to carbon dioxide
Payment = pension payment
interest rate = ? expected portfolio return - inflation rate? for non-COLA pension? Would this be the same rate as a 'safe withdrawal rate'?

Many people compare them to a value of a purchased annuity, but comparing it to someone's asset base isn't very meaningful because there usually is no legacy value after death. But it sure makes budgeting and daily life easy. It's just like having a monthly paycheck except in retirement. Spend X each month , save X each month and wait for the next one the following month. Even a simpleton like myself can do that!

 

[rescueme]

Would this be the same rate as a 'safe withdrawal rate'?

It is the inverse of a 4% withdrawl rate. Multiply $75k x 25 and you come up with a portfolio value of $1,875,000. A 4% annual withdrawl would get you that $75k/year.

 

[rescueme]

So, it's just money accumulated after 30+ years of nose-to-the-grind-stone work. I've got a flat nose to prove it.

I think that there are more than a few of us on this forum that have taken that path and suffer from the same condition ...

 

[NW-Bound]

I know I have a lot of company here on this forum.

But here's a better close up of the statues.

 

[ejman]

I cannot answer for others, and can only speak for myself.

Yes, I have a 7-figure net worth. It does not come from inheritance, nor from being a small business owner, and only from our pay. I was among the founders of a couple of small tech start-ups, and that actually cost me money due to lost wages (worked for stocks that became worthless).

My money came from a LBYM lifestyle, no marital problems, children attending public schools, regular 401k contribution, and also after-tax savings, etc... The wind on my back from the stock market in 1980-2000 also helped a lot.

We were a dual-income couple, working for megacorps (both are among the Dow 30). Good pay, but not outrageous. No stock options as that privilege at our established (stodgy!) megacorps started at about 2 or 3 grades of pay higher than we ever attained.

So, it's just money accumulated after 30+ years of nose-to-the-grind-stone work. I've got a flat nose to prove it.

PS. I made the above joke because I recalled a conversation with another guy, early in my career. This guy did not believe in working hard, because he said all one would get for keeping his nose to the grinding stone was a flat nose. Well, if I see this guy again, I will say that my nose is still intact, and yet I have a stash to retire early on. Heh heh heh...

+1 that's exactly the prescription that worked wonderfully for us as well. Graduated (with an MBA) in 1976 and by end of 2002 just by following the LBYM lifestyle and investing in a diversified low cost portfolio of mutual funds we were able to start our early retirement in a lower cost area (SW Oregon). Like wise, while compensation was good (fortune 500 companies), there were certainly no extravagant salaries and (unfortunately) no stock options either.

I can't tell from the picture in your post below if the comely lady has a flat nose?

 

[NW-Bound]

I have been trying to tell my children to find their own grindstone and stick their nose to it. I hope they will follow this old tried-and-true method of becoming a millionaire.

There was a lady in the photo? Let me look again. Hmm... Her nose looks fine to me.

How about a different photo? This one shows that there is a body under those flat-nosed heads. How 'bout that?

 

[pb4uski]

....I don't know how you all did it. I worked a steady 9-5 job, saved as much as I could and don't know how I could have saved/invested more. Those of you with millions....Jeepers. How'd you do it? You either had some super high-paying jobs, you inherited it, or what........

.....It does not come from inheritance, nor from being a small business owner, and only from our pay. ....My money came from a LBYM lifestyle, no marital problems, children attending public schools, regular 401k contribution, and also after-tax savings, etc... The wind on my back from the stock market in 1980-2000 also helped a lot. .....No stock options as that privilege at our established (stodgy!) megacorps started at about 2 or 3 grades of pay higher than we ever attained.

So, it's just money accumulated after 30+ years of nose-to-the-grind-stone work. .......

Same here. While I worked very hard and was paid very well, we lived below our means, regularly saved and invested in low cost index funds before they were fashionable (beginning in my late 20s), didn't panic and sell when the going got tough. No divorce and no jobs losses along the way really helped too.

 

[veremchuka]

A $75k pension and with a COLA! Wow, that can go a long way indeed especially if you a LBYN person. But how safe is the pension? I have one that's 1/3 of that and no COLA and I have medical benefits that I pay what I consider a modest amount. But I hope my pension or medical aren't taken away, there are no guarantees with mega corp.

I really LBMN and there probably are some here that out do me but I'm really good at this by choice. I hope to not need much of my nest egg that is mid 6 figures, not even close to 1M. If I keep the retirement bennies and don't have a lot of big unexpected expenses, I may well do it. My desire is to leave as much as possible for my sister as she has next to nothing, I'm OK and I want to help her future to be secure.

 

[Mulligan]

A $75k pension and with a COLA! Wow, that can go a long way indeed especially if you a LBYN person. But how safe is the pension? I have one that's 1/3 of that and no COLA and I have medical benefits that I pay what I consider a modest amount. But I hope my pension or medical aren't taken away, there are no guarantees with mega corp.

I really LBMN and there probably are some here that out do me but I'm really good at this by choice. I hope to not need much of my nest egg that is mid 6 figures, not even close to 1M. If I keep the retirement bennies and don't have a lot of big unexpected expenses, I may well do it. My desire is to leave as much as possible for my sister as she has next to nothing, I'm OK and I want to help her future to be secure.

Since it is out of my control, there is always a little concern, but it is close to 90% pre funded for everyone, so it's in pretty good shape. They lowered the cola to fixed 2% instead of CPI match to protect it. I would guess if trouble loomed down the road they would do something like reduce the multiplier from 2.5% per year, back to what it was before the boom years for future employees. My "stash" is no where the size of yours, but I share the same philosophy. Probably a good thing because my DD, has taken a vow of poverty by declaring her intent on graduating with an art degree, despite my protest. I told her she better hope I live a long time so I can save up for HER retirement.

 

[gerrym51]

I am so glad I happened on this thread today and especially am thankful to the folks who mentioned the amount of their net worth. I don't have nearly the numbers in my investments/savings that people in this forum have. Until reading this thread I thought I was alone. It's nice to know that there are some others who aren't millionaires.

I don't know how you all did it. I worked a steady 9-5 job, saved as much as I could and don't know how I could have saved/invested more. Those of you with millions....Jeepers. How'd you do it? You either had some super high-paying jobs, you inherited it, or what....

Anyway, good for you.

my wife and i have 750,000 in 401k/savings. and a paid off condo. i am 62 she is 66. we have ltci. we think we can live well at 60,000 per year. i am retiring feb.

by the way second marriage for me 3rd for her been married now 24 years.when we married she had debts. it can be done but it requires heavy savings and relatively frugal living below means


no pension for me 6000 a year for her. will be ss and savings for us

 

[janeeyre]

I remember reading this forum around 2004 where most of the folks lived off $30,000 to $50,000 per year and were proud of it. The ER forum topics were often focused on the pursuit of a free lifestyle not a "big" lifestyle. Interesting how this forum has changed. Where is cutthroat anyway

 

[Alan]

I remember reading this forum around 2004 where most of the folks lived off $30,000 to $50,000 per year and were proud of it. The ER forum topics were often focused on the pursuit of a free lifestyle not a "big" lifestyle. Interesting how this forum has changed. Where is cutthroat anyway

Hi Jane,

Cut-Throat is still around and has been posting quite recently.

It has been a year or so since you last posted. Have you made it to Bronte Country yet?

http://www.early-retirement.org/forums/f46/long-vacation-in-england-55351-4.html#post1055160

 

[jflynn4]

So, after reading all of the posts.....

HS grad (1 year college), raised a kid (who graduated from college with no debt), own a home F&C, and just relocated to be less than 3 miles from the ocean, after retiring at 58 with a net worth just north of 7 digits. Wife stopped working outside the house when my kid was born and "total" inheritances from both sides combined at less than $60000.

How?

Simply lived within my means and always paid myself first, did without the fancy dinners out, owned a very modest but comfortable home, always drove a used car, sent my kid to a community college and then two years to a state college, spent vacations simply by visiting friends and relatives (while always staying in low cost motels). In other words, paid my dues when I was young.

Was smart enough to exit the market before the last crash (saw too many people being greedy), and reinvested in corporate bonds when the crash happened in companies like Verizon, GE, and Disney (paying net values of 5 to 7% on a long term basis) and some preferred stock. Drawing about $9000 annually on a pension and about $3800 per month in interest and dividends.....have absolutely no debt .....and thoroughly enjoying life.

As Ramsey says "live like no one else other tomorrow you can live like no one else."

 

[janeeyre]

No, Alan, I have not. Although the dream still lives. My DH has been ill and unable to travel. He needs chemo every week and tlc. But thank you for remembering and I still have your information ready when the time for Bronte country arrives.