Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 01-10-2013, 06:36 AM   #21
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,465
Quote:
Originally Posted by imoldernu View Post
........................
In a previous post, I mentioned our plan for our future living in our Continuing Care Retirement Community. This gives us a fixed cost of living within a budget that we can plan ahead. Lodging, Meals, entertainment, transportation and all utilities ad ancillary costs included in one payment. In fact, when we make the move into an apartment, we calculate that the income from the sale of our house (along with Social Security) should suffice for Phase 2... and continue to provide some estate dollars for our kids.
.......................

So what's different? Probably nothing except as a means for thinking about the later years as an entity apart, and different from the active years. In our case for the next 13 years, we'll need about $180,000 beyond our SS income... This will be covered by the sale of our current house.
In this case... Phase 2 equals the House.
The second benefit from this kind of planning is that you can put a finite date in any financial calculator. ie... the number of years in phase 1.
older, how did you prepare your cost estimate for CCRC based living? Would you mind sharing some of your numbers with us?
__________________

__________________
MichaelB is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 01-10-2013, 09:52 AM   #22
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 3,820
I had a co-worker who said that retirement comes in three stages:

Active
Passive
Dependent

I think that's what you're saying here. Expenses are U-shaped. But the Dependent phase is the least certain.

One possible planning result goes like this:

We should have an lump sum for "extra" spending in the Active years, and some plan for the potential spending in the Dependent years.

Set aside that $50k or $500k (whatever fits our finances/lifestyle) to do the fun stuff in the Active years.

Buy LTC insurance, or put aside a lump sum that we hope we never spend, to cover the potential expenses in the Dependent years.

The rest of our assets provide a level, base income for all years. That income should be about equal to our Passive years' spending.
__________________

__________________
Independent is offline   Reply With Quote
Old 01-10-2013, 04:30 PM   #23
Thinks s/he gets paid by the post
imoldernu's Avatar
 
Join Date: Jul 2012
Location: Peru
Posts: 4,616
Quote:
Originally Posted by MichaelB View Post
older, how did you prepare your cost estimate for CCRC based living? Would you mind sharing some of your numbers with us?
Yeah... sorry... it was on another thread, but here's the gist":

Quote:
...let me back off here, and give some numbers for our area... likely in the lower cost bracket. The facilities are all relatively new... begun in 2000. The price for a 2BR 1BA apartment is (no up front or contract fee) $2000/month plus $500/mo for second person, which includes:
Apt. Kitchen... refrigerator, stove, handicap equipped, elevator, 2 meals/day in formal dining room. Transportation to doctor, shopping, entertainment (twice a week) activity rooms (cards, bingo, library, hair salon, presentations/entertainment). Available garage, Free TV and Internet.

Now, here's my thinking about using this arrangement to budget for the later years... In our case, age 80, some 3 years from now. The $2500/month... comes to $30,000/yr. This amount essentially covers all living expenses except for personal care, clothing and supplemental food... (perhaps another $2,000/yr.) and about $8000 in non covered medical expenses... total $40,000/yr.
Since our Social Security is $25,000/yr... it means $15,000 per year from our savings. If we live to age 90... $150,000 from assets.

The sale of our house would much more than cover that... Leaving most of our current assets for an estate.
Here's the thread, with more on CCRC's

Sharing 23 years of Frugal Retirement post #85


...and yes, it doesn't take into consideration inflation or other influences. It also doesn't consider Nursing Home costs... (in our case a hedge, with some LTC insurance)...

I guess the main point comes down to finding a comfortable place to live in the later years... a simpler life... with a plan, right or wrong, a starting place.
__________________
imoldernu is offline   Reply With Quote
Old 01-10-2013, 05:38 PM   #24
Full time employment: Posting here.
 
Join Date: Oct 2012
Location: Reno
Posts: 556
It's interesting you posted this, because I just read Pfau's article on adjusting spending on an annual basis to maximize the "utility rate" (allowing to maximize withdrawals). I'm moving more towards this approach, in part to allow higher withdrawal and more active early retirement, until we reach Social Security, where we would cut back the withdrawal rate.
Pfau's article is here: Retirement Researcher Blog: “Optimal Withdrawal Strategy for Retirement-Income Portfolios”

Many of you may be interested, and I've seen that many of you already are doing some kind of annual adjustment.



So What does this have to do with TRANCHING?

Here's what I see in a nutshell. Phase 1- Twenty +or- years of spending to the activity level, and
Phase 2 - Ten +or- years of a slower , less expensive life.

An arbitrary example of spending... excl. inflation
Phase 1 - $55,000/yr
Phase 2 - $40,000/yr
....................... or any other combination of numbers.

Why do this? In our case, had we planned for what we now see as reduced spending in our later years, we might have spent more in the early years. (doubt it)... More important, If we had thought this way in the beginning, we might have been able to retire earlier.
Thus the reason for the post.
........................
In a previous post, I mentioned our plan for our future living in our Continuing Care Retirement Community. This gives us a fixed cost of living within a budget that we can plan ahead. Lodging, Meals, entertainment, transportation and all utilities ad ancillary costs included in one payment. In fact, when we make the move into an apartment, we calculate that the income from the sale of our house (along with Social Security) should suffice for Phase 2... and continue to provide some estate dollars for our kids.
.......................

So what's different? Probably nothing except as a means for thinking about the later years as an entity apart, and different from the active years. In our case for the next 13 years, we'll need about $180,000 beyond our SS income... This will be covered by the sale of our current house.
In this case... Phase 2 equals the House.
The second benefit from this kind of planning is that you can put a finite date in any financial calculator. ie... the number of years in phase 1.

Whether using this approach or not, I would suggest that though your mileage may vary, understanding the difference between living style and expenses at age 57 through 77
and those at age 77 to 87 ,
will be quite significant..

And, at the VERY LEAST... considering the possibility that the final years of retirement may not be as active as the early years, will help in appreciating what you're doing today. [/QUOTE]
__________________
RobLJ is offline   Reply With Quote
Old 01-12-2013, 08:54 AM   #25
Full time employment: Posting here.
 
Join Date: Jan 2007
Posts: 585
Put another way.

1.) The Go Go 60s
2.) The Go Slow 70s
3.) The No Go 80s
4.) The No Show 90s.
__________________
Cut-Throat is offline   Reply With Quote
Old 01-12-2013, 11:27 AM   #26
Full time employment: Posting here.
 
Join Date: Jan 2008
Posts: 882
1) non-working child
2) working
3) retired <--- you are here
4) dead
__________________
jebmke is offline   Reply With Quote
Old 01-12-2013, 11:37 AM   #27
Thinks s/he gets paid by the post
 
Join Date: May 2005
Location: Texas
Posts: 1,038
Quote:
Originally Posted by jebmke View Post
1) non-working child
2) working
3) retired <--- you are here
4) dead
Stage 3 should be as long as possible.
__________________
In theory, theory and practice are the same. In practice, they are not.
Lazarus is offline   Reply With Quote
Old 01-12-2013, 06:56 PM   #28
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Lsbcal's Avatar
 
Join Date: May 2006
Location: west coast, hi there!
Posts: 5,686
Quote:
Originally Posted by jebmke View Post
1) non-working child
2) working
3) retired <--- you are here
4) dead CANCELED UNTIL FURTHER NOTICE
.
__________________
Lsbcal is offline   Reply With Quote
Old 01-12-2013, 07:11 PM   #29
Recycles dryer sheets
 
Join Date: Aug 2004
Posts: 86
1) When we're young, we want to be older.
2) When we're older, we want to be rich.
3) When we're rich, we want to be young.
__________________
If you really do what you want.........you will please few and astonish many.
Surfs_Up is offline   Reply With Quote
Old 01-12-2013, 11:32 PM   #30
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,431
This is what I want.

1) When we're young, we want to be older.
2) When we're older, we want to be rich FIREd.
3) When we're rich FIREd, we want to be young live forever (in health of course).
__________________

__________________
NW-Bound is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


 

 
All times are GMT -6. The time now is 04:43 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.