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Old 03-16-2010, 06:05 PM   #41
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You have to wonder if the article was written for attention getting, or reality (duh).....
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Old 03-16-2010, 07:05 PM   #42
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You need a million until you don't... or you don't have a million... or you had more... That's the thing I've learned over the last two years. I went from wondering, "should I buy a second property, maybe on Cape Cod or in Manhattan" to "OMG, chuck the cable, the cell phone, the restaurants, I'm screwed and I'll have to go back to work."

At the end of the day, neither is correct.

A paid off house and car goes a long way to cushioning your losses.
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Old 03-16-2010, 07:09 PM   #43
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With an average household income of $46K, it would be difficult to sock away enough to grow to $2 million, wouldn't it?
You could barely do it, but as mentioned, it would require about 25-35 full years of savings, would require good investing skills, and the fortitude to save about 50% of your take-home income. As mentioned, for the majority of Americans in Gen Y (I'm Gen Y) and X, as long as nothing is horribly off with the statistical numbers, they need to start saving in their 30s, at the latest, or they will have an extremely difficult time retiring between 60-65 on anywhere near what they used to spending. This doesn't even get into retiring early, which requires more than this.

There is also another major problem, hinted at before, with not getting started by your mid 30s (for most people). That is the ugly truth of age discrimination in the workplace. Not only will SS likely be reduced from what the payout are now, but age discrimination will very likely still exist 30 years from now. While a great deal of work today is not physical, employers in most industries still prefer employees who are much less likely to have health problems, and more than 5 years of possible work left to go (training can be expensive).

Pretty much, for those in Gen X, and especially those in Gen Y, if you don't start in your 30s, or at the very latest, your lower 40's (at a back breaking pace), to plan for retirement, you are very likely doomed to fail, or so it seems from the numbers and the way the work environment operates.
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Old 03-16-2010, 07:10 PM   #44
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Perhaps what this article really points out is the dramatic increasing of no man's land in American society. You are either rich and can take care of yourself or you are poor and the state is becoming your source of income. The middle class is quickly becoming a thing of the past.
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Old 03-16-2010, 07:53 PM   #45
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The middle class is quickly becoming a thing of the past.
Interesting. Can you provide a reference for this? I honestly do not know if it is true or not, or if it can even be measured since standards of living change over the years.

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Old 03-16-2010, 07:59 PM   #46
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Interesting. Can you provide a reference for this? I honestly do not know if it is true or not, or if it can even be measured since standards of living change over the years.

-ERD50
Professor Warren attempts to use data to show the erosion of the middle class.

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Old 03-16-2010, 09:12 PM   #47
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For those advocating that one million bux is enough.........

Is it that one million is enough or is it that one million PLUS paid for house, paid for car and all the other things is enough?

In other words, is it a million? Or is it a million plus a lot more held as non-monetary assets such as the house, etc?

Here, I believe that we could do it on one million PLUS house, car, etc., each. But as a couple, I doubt we'd make it on one million split between us. Medical and property taxes alone would eat up almost 50% of a 3.5% withdrawal rate. If you included my SS, it would be a piece of cake.
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Old 03-16-2010, 10:02 PM   #48
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...
A paid off house and car goes a long way to cushioning your losses.
A paid off house and car RV goes a long way to cushioning your losses.
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Old 03-16-2010, 10:10 PM   #49
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For those advocating that one million bux is enough.........

Is it that one million is enough or is it that one million PLUS paid for house, paid for car and all the other things is enough?

In other words, is it a million? Or is it a million plus a lot more held as non-monetary assets such as the house, etc?
Two areas were critical in regards to retirement for us (52 & 55). The first being mortgage/debt free and having affordable health insurance. Fortunately we are debt free and have Megacorp health benefits. We also have a non cola pension that for now pays 25% of our expenses.

When our calculations proved we only had to take 3% from our portfolio (I only figured half of ss amt) to live a comfortable lifestyle, we knew we were good to go. One million+ will have to be enough as we have no plans on going back to work.
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Old 03-16-2010, 10:22 PM   #50
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I know all sorts of people with paid off houses or trailers that live off of social security. Often family helps with things like cars.
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Old 03-16-2010, 10:28 PM   #51
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I know all sorts of people with paid off houses or trailers that live off of social security. Often family helps with things like cars.
My parents do...with a little help from me. They certainly don't live a lavish lifestyle, but they are very content.
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Old 03-16-2010, 10:37 PM   #52
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Two areas were critical in regards to retirement for us (52 & 55). The first being mortgage/debt free and having affordable health insurance. Fortunately we are debt free and have Megacorp health benefits. We also have a non cola pension that for now pays 25% of our expenses.

When our calculations proved we only had to take 3% from our portfolio (I only figured half of ss amt) to live a comfortable lifestyle, we knew we were good to go. One million+ will have to be enough as we have no plans on going back to work.
And it sounds like a winning plan......

But I think the confusion is coming from the definition of "one million."

Is that for a single or a couple? Or, if a couple, is that one million each?

Are there pensions or SS available?

If you're not 65, do you have a source of inexpensive health insurance coverage?

Do you live in an area with high real estate taxes?

And on and on and on......

For us, if the question is could we live on one million with no other income and with no bennies like Corp or gov't provided health insurance, I'd have to say yes, but it would be painfully tight. $35k/yr pre-tax is a mighty tight budget in the Chicago suburbs. Reaching medicare age would help.

Bottom line is that understainding what it would mean to live on one million is meaningless without defining other available resources, cost of living, etc.

Kind of a silly article, really.
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Old 03-16-2010, 10:46 PM   #53
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Bottom line is that understainding what it would mean to live on one million is meaningless without defining other available resources, cost of living, etc.
Amen.

I just hope the folks that read this article don't take it at face value. Hopefully they'll dig a little deeper and find out how much will be right for them.

Shoot....that's what I did. I'm a rebel, don't ya know!
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Old 03-16-2010, 10:52 PM   #54
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I know all sorts of people with paid off houses or trailers that live off of social security. Often family helps with things like cars.
My MIL (85 yo) lives on $13k SS + small withdrawals from her reverse mortgage on the condo. Still driving, still seems sharp mentally. DW and her 3 sibs buy her some things sporatically and I take care of the car.

It's actually hard to give her money so you have to grasp your opportunities and make it seem like you're not giving her anything. One of the things she misses being on such a tight budget is gifting. So I take her Xmas shopping for my grandkids (her great grandkids) every year and manage to find a number of items for them. Then I say something like, gee, I don't want to spoil the kids by giving them all this stuff myself. Would you do me a favor and let me put your name on this and this and this? Works every year.
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Old 03-16-2010, 11:39 PM   #55
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If you have no debts and no kids (like me), you surely don't need $1M to generate enough income to cover your expenses. There was a recent thread in which many of us posted our annual expenses and several of us including me had annual expenses well under $30k (mine are about $21.5k for 2010). And that includes an individual HI policy which now costs me slightly more per month than my co-op maintenance charges.

I have about $650k, most of it in a taxable bond fund, generating about $32.5k in dividends, more than enough to cover my expenses. I also have another $300k growing nicely in an IRA (about 55%/45% stock/bond), waiting for me to tap into it by the time I turn age 59.5 in about 12 years. If SS is still around, I have that to help me out. And I have a frozen annual pension of about $12k from my old job.

I actually was able to "practice" living on a reduced income when I switched from F/T to P/T work back in 2001, reducing my after-tax salary by about 42%. All that did was prevent me from investing as much of my take-home pay as before, when one bi-weekly paycheck more than covered all my expenses. Then, in 2007, I further reduced my P/T hours by 40% of my previous P/T hours. My wage income in 2008 is now about the same as my dividend income today.

I do have plan my retirement budget more carefully because my HI payment is made quarterly, not monthly, so I have to carry forward surpluses in the "off months" into the HI Premium month. But I still run a surplus of about $400 a month, excluding some automatically reinvested dividends.
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Old 03-17-2010, 05:42 AM   #56
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You could barely do it, but as mentioned, it would require about 25-35 full years of savings, would require good investing skills, and the fortitude to save about 50% of your take-home income.
I did a quick spreadsheet, assuming 3% salary growth, 30 years, 8% investment return, and saving 20% of one's salary. (can debate these numbers and I'm not sure my tax and inflation treatment are consistent - investment return is probably too high....)

However, given above, after 30 years a person would have in the bank about 13x their then current salary. Given a 4% SWR (25x), this portfolio would fund a retirement income stream of 50% of then current salary.

So even by saving immediately when starting working, saving very aggressively, and achieving a very optimistic returns, one is still left trying to live on 50% pre retirement salary.

In the "pension days", corporate pensions would kick in 35% or so of one's salary and SS would add another 10% - so the person comfortably is within 80% of pre-retirement income.

Take away pensions and push out SS, and a person is left with one helluva "squeeze play" trying to get enough saved for a retirement in their 50's
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Old 03-17-2010, 07:54 AM   #57
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Take away pensions and push out SS, and a person is left with one helluva "squeeze play" trying to get enough saved for a retirement in their 50's
OTOH, if this person knows that they won't get pension and/or SS in 30 years, then they also (should) know that they have to plan accordingly. Compare that to someone who planned on a promised SS/pension, and maybe gets one or both cut (or taxed at higher than expected rates, same effect). That's not a happy place either.

Also, companies aren't just cutting pensions because they feel like it. Due to global competition, they are cutting total compensation. So the harsh truth is, if they didn't cut these pensions, they would be cutting salaries (edit: or cutting them by more than they are) - that might leave nothing to invest, nothing to grow - which is another set of problems.

I hope these starting workers are getting the message - the company, their parents, mentors, someone, should be telling them - you need to take care of your future, and you need to start as soon as is possible (I do believe in building up an emergency fund first). It is what I'm telling my kids, and anyone in that age group if the situation comes up.


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Old 03-17-2010, 09:16 AM   #58
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Take away pensions and push out SS, and a person is left with one helluva "squeeze play" trying to get enough saved for a retirement in their 50's
Not to argue, but I/DW's pensions were eliminated while we were in our mid-30's (early 80's).

We knew that we would have to save/invest on our own, and were at $0 to start with.

Our plan was to work till our full retirement age of 65 (then upped to 66).

How did it work out? We discovered we could retire at age 59, at 100% of pre-retirement net income.

I did, DW did not (not yet "emotionally ready" to retire, even though she's 62).

It can be done. Is it easy? No, nothing of importance is. However just to give an example of one who's "been there - done that" ...
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Old 03-17-2010, 09:31 AM   #59
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This thread title reminds me of a quote attributed to Yogi Berra: "A nickel ain't worth a dime anymore."
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Old 03-17-2010, 09:33 AM   #60
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This thread title reminds me of a quote attributed to Yogi Berra: "A nickel ain't worth a dime anymore."
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