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Old 08-31-2014, 02:27 PM   #41
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Current Consumer Reports Article

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I do wonder if retirees with a ratio of 2 or 3 to 1 or better in retirement income to retirement expenses feel more secure than just a simple 1 or better ratio, given similar portfolio sizes.
According to the article in the current issue of Consumers Report, extra satisfaction drops off fast. The subjects of the poll were CR subscribers.
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Old 08-31-2014, 10:30 PM   #42
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Originally Posted by sengsational View Post
According to the article in the current issue of Consumers Report, extra satisfaction drops off fast. The subjects of the poll were CR subscribers.
I found that online:

"Your mother probably told you that money doesn’t buy happiness, and our data prove it. Our survey found that retirement satisfaction was significantly higher among households reporting between $400,000 and $1 million in savings than among those with less. But happiness didn’t rise much more for those who had $1 to $2 million. And we found that people are often perfectly content with far less. In fact, retirees with less than $250,000 in savings who were highly engaged socially were more satisfied with their circumstances than retirees with $1 million or more in savings who were not. And numerous studies have found a connection between social engagement and better cognition in elderly people."

Stop Freaking Out About Retirement - Consumer Reports

It does address absolute dollars but not retirement spending to income ratios.
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Old 09-01-2014, 04:44 AM   #43
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I thought the number to predict retirement happiness was the number of times one had sex every week.
with a partner??
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Old 09-01-2014, 09:02 AM   #44
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Not retired; still working. I read the article in the link. I'm a little math challenged and sometimes have to read books/articles a few times for something to sink in. How do you forecast what your monthly income will be? I know how much money I had as of Friday closing but that was then and anything can happen to my savings. Same with social security, I can figure out what both of us will receive in retirement but suppose one of us dies. That leaves a hole in your monthly income. How are the people on this forum or in that article forecasting future monthly income, guesstimate?
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Old 09-01-2014, 09:17 AM   #45
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I thought the number to predict retirement happiness was the number of times one had sex every week.
As the Beatles said, "Eight days a week, I love you....."
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Old 09-01-2014, 09:29 AM   #46
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As the Beatles said, "Eight days a week, I love you....."

Maybe I need to go get my "T" tested.... Ya, back in the day 25 years ago... Now twice a week is plenty.... 8 sounds like a full time job to me now.


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Old 09-01-2014, 10:03 AM   #47
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Originally Posted by daylatedollarshort View Post
I found that online:

"Your mother probably told you that money doesn’t buy happiness, and our data prove it. Our survey found that retirement satisfaction was significantly higher among households reporting between $400,000 and $1 million in savings than among those with less. But happiness didn’t rise much more for those who had $1 to $2 million. And we found that people are often perfectly content with far less. In fact, retirees with less than $250,000 in savings who were highly engaged socially were more satisfied with their circumstances than retirees with $1 million or more in savings who were not. And numerous studies have found a connection between social engagement and better cognition in elderly people."

Stop Freaking Out About Retirement - Consumer Reports
Wow. With journalism like that, I'm glad we dropped our consumer reports subscription. I hate it when the author makes a conclusion that is totally contradicted by their own data.

Their own survey says if you have less than 400k (which is probably the vast majority of people) more money makes you happier (strictly speaking this is correlation and not necessarily causation). Even if you have more than $1M, having more money still makes you happier.

They should have said something like people with more money are generally happier but there are deminishing returns. And many people are happy despite not having much money at all if they are socially engaged.
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Old 09-01-2014, 10:16 AM   #48
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My own plan is similar to the one in the OP, except the calculation is made in reverse.
Sharing 23 years of Frugal Retirement

Quote:
Our plan is extremely simple... On the spending side, we have three different budgets that we can adjust as circumstances warrant. Best case... Nominal... and Austerity.

On the Asset/Nest Egg side, We boil our assets down into three categories.
1. Fixed assets... house, auto, and other valuable non cash items... real property, jewelry, . We do not count household goods... (experience tells us that this is not realistic)
2. Non Income producing assets... bank accounts, cash, cash value life insurance policies.
3. Income producing assets... stocks, bonds, annuity.

All of these items are kept on a spread sheet and periodically updated. It's easy to come up with a total value... and then to average the income from the total...

To calculate where we stand in our retirement plan, we add
a. Social security amount.
b. Amount of interest earned on income producing assets.
c. ... and add the Total Assets divided by the number of years between now and age 85.
The only real difference is that this adds an end time specific planning date for sustainablilty... ie. age 80, age 90, age 100 etc.
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Old 09-01-2014, 10:24 AM   #49
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Originally Posted by splitwdw View Post
Not retired; still working. I read the article in the link. I'm a little math challenged and sometimes have to read books/articles a few times for something to sink in. How do you forecast what your monthly income will be? I know how much money I had as of Friday closing but that was then and anything can happen to my savings. Same with social security, I can figure out what both of us will receive in retirement but suppose one of us dies. That leaves a hole in your monthly income. How are the people on this forum or in that article forecasting future monthly income, guesstimate?
Not really a guess, but more in line with a bit of research. There are lots of threads here that talk about SS benefits after one spouse dies. The SS site can give you facts on that also.

As far as savings, if you are in the market, you can buy protection on stocks (puts) and not gamble on risky assets. Many retired folks move into fixed income vehicles (CD's, bonds) to minimize risk.

Figuring income going forward is not nearly as hard as figuring expenses as you have more control of the income side of the equation.
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Old 09-01-2014, 10:54 AM   #50
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Originally Posted by RAE View Post
The calculator is a joke. I have a glass of red wine every day (which is supposed to be good for health), yet by saying I drink daily, the calculator chops about 9 years off of my life expectancy. Huh? Give me a break.........I'll take my chances, and keep drinking the wine.
Me too. But if it is true, it is still worth it. It would just SEEM like we were living longer!

What about grandma who had a brandy every night and lived to be 98?
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Old 09-01-2014, 11:08 AM   #51
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I read the article about the ratio between income and expenditure and my take was that if people need to have this explained to them we are in deep, deep trouble. It's up there for uselessness with an article explaining that you have to breathe to stay alive......
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Old 09-01-2014, 11:09 AM   #52
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Quote:
Originally Posted by splitwdw View Post
Not retired; still working. I read the article in the link. I'm a little math challenged and sometimes have to read books/articles a few times for something to sink in. How do you forecast what your monthly income will be? I know how much money I had as of Friday closing but that was then and anything can happen to my savings. Same with social security, I can figure out what both of us will receive in retirement but suppose one of us dies. That leaves a hole in your monthly income. How are the people on this forum or in that article forecasting future monthly income, guesstimate?
Most current retirees do not live largely off investment income:

"Only a small number of the people who have 401(k)s and IRAs are really relying on them as a regular source of income," said Steve Utkus, director of the Vanguard Center for Retirement Research. "There's a lot more income from pensions than we expected," he adds.'"

http://www.reuters.com/article/2014/...0OQ0XD20140610

And even high net worth households (all, not just retirees) actually do not have a high percent of assets in stocks:

"As the Boston College researchers note, citing data from the Federal Reserve's 2010 Survey of Consumer Finances, most people don't own many stocks. Equities account for just 17% of the wealth of high earners, 6% of middle earners and 2% of low earners."

https://www.fidelity.com/insights/re...ext-big-crisis

So their retirement incomes are pretty predictable from sources like SS, pensions, part-time work, rental income, annuities, simple cash draw downs, and fixed income investments.

Related link: Top Ten Assets Owned By Millionaires

http://www.thomasjstanley.com/blog-a...lionaires.html
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Old 09-01-2014, 11:16 AM   #53
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Originally Posted by daylatedollarshort View Post
Most current retirees, do not live largely off investments income:

"Only a small number of the people who have 401(k)s and IRAs are really relying on them as a regular source of income," said Steve Utkus, director of the Vanguard Center for Retirement Research. "There's a lot more income from pensions than we expected," he adds.'"
Current retirees are the last of the pension generations. Those retiring now and in the future will increasingly only have SS and their 401k etc investments to live on. The only groups that still have define benefit pensions are the military and state and government workers, and we all know that they are under attack as being too expensive.
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Old 09-01-2014, 11:49 AM   #54
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Originally Posted by splitwdw View Post
Not retired; still working. I read the article in the link. I'm a little math challenged and sometimes have to read books/articles a few times for something to sink in. How do you forecast what your monthly income will be? I know how much money I had as of Friday closing but that was then and anything can happen to my savings. Same with social security, I can figure out what both of us will receive in retirement but suppose one of us dies. That leaves a hole in your monthly income. How are the people on this forum or in that article forecasting future monthly income, guesstimate?
Open a spreadsheet and add labels to the columns. This is what I have, and it's a work in progress:
Year
Seq
T_Age
S_Age
Require
k401_Bal
k401_Inc_T
SEP_Bal_T
SEP_Inc_T
Roth_Bal_T
Roth_Inc_T
TSA_Bal_S
TSA_Inc_S
IRA_Bal_S
IRA_Inc_S
Roth_Bal_S
Roth_Inc_S
Cash
Cash_Use
INC1_T
INC2_S
INC3_T
INC4_T
INC5_S
PENS_S
SS1_T
SS1_S
INC_TOT
Excess/Short
Ret Accts Bal

T is me, S is spouse. By going through this exercise and stepping down through the years I was able to find dependencies, and make adjustments. For instance, there is a COL factor for SS each year. I use that factor in the SS column.

If you hunt around this site there are many mentions of software that do a lot of this for you. I wanted to do this myself, and see the benefit of purchasing software in the future.
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Old 09-01-2014, 01:50 PM   #55
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aja, daylate & target. Thanks for the replies and information. The majority of our savings are in the stock market. Have a little over 2 years expenses in cash. I always assume (I know, I know never assume) that everyone is heavy in the stock market even though I've been reading here for a while and see your comments. Thanks again, I check out those links tonight.
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Old 09-01-2014, 07:38 PM   #56
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Originally Posted by daylatedollarshort View Post

It does address absolute dollars but not retirement spending to income ratios.
Yeah, doesn't match the thread topic exactly, but I was going from memory!
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Old 09-01-2014, 07:49 PM   #57
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Originally Posted by photoguy View Post
Wow. With journalism like that, I'm glad we dropped our consumer reports subscription. I hate it when the author makes a conclusion that is totally contradicted by their own data.

Their own survey says if you have less than 400k (which is probably the vast majority of people) more money makes you happier (strictly speaking this is correlation and not necessarily causation). Even if you have more than $1M, having more money still makes you happier.

They should have said something like people with more money are generally happier but there are deminishing returns. And many people are happy despite not having much money at all if they are socially engaged.
The contradicting conclusion somehow got by me when I read it.

Maybe you would get along better with the idea here
Quote:
relationship between money and happiness is surprisingly weak, which may stem in part from the way people spend it. Drawing on empirical research, we propose eight principles designed to help consumers get more happiness for their money. Specifically, we suggest that consumers should (1) buy more experiences and fewer material goods; (2) use their money to benefit others rather than themselves; (3) buy many small pleasures rather than fewer large ones; (4) eschew extended warranties and other forms of overpriced insurance; (5) delay consumption; (6) consider how peripheral features of their purchases may affect their day-to-day lives; (7) beware of comparison shopping; and (8) pay close attention to the happiness of others.
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Old 09-01-2014, 09:11 PM   #58
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Yeah, doesn't match the thread topic exactly, but I was going from memory!
Sorry, I didn't mean to nit pick.

I am glad you mentioned the article. It was an interesting read.
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