Amazed..... Just a comment.

[HsiaoChu]

I know that everyone wants to be properly prepared financially for retirement.

But I have to say that I am often amazed and somewhat amused when people post their concerns for being able to "make it" in retirement, and they post a retirement income that is substantially higher than anything I ever made while actually working.

Everybody has a different life style they want to maintain..... but even so, its kind of amazing to me how different the different life styles can be. Its been an interesting education. I'm afraid to know some of the people I will probably be hob-nobing in retirement what their income might be(it would be the height of rudeness to ask), in the place where I'm going to retire. Some with famous names.... I don't have to ask.

Z

 

[ERD50]

What I think I've observed is, some people (and not directing this at you, just a comment) just don't understand the things that affect others' spending.

If you have kids, you probably want to buy a bigger house, bigger kitchen, yard etc. A bigger house in an area with good schools means more $ and higher property taxes, and more maintenance and more utilities and more insurance, etc. And if you have become attached to the house/area, moving in the early stage of retirement might not be that attractive, and the housing market can affect that decision. Now is not a particularly good time for 'downsizing'.

There are some live-alone people on this forum that seem oblivious to the fact that two people need about 2x the water heated, will often need 2x the lights or TV on or computer on, or maybe need the HVAC set to a comfortable level more often (based on the schedules of two people) or that some people have no choice in their energy source (some have to use electric water heaters, versus cheaper natural gas). Yet, they still act 'shocked' over what those people spend. But I bet if they adjusted their energy costs for their cheaper source, and doubled everything to represent two people living as they do, their spending for two would be higher than those they express shock over.

The key is to find the spending level that you feel comfortable with, and that your portfolio can support with reasonable assumptions. That is bound to be different for different people.


-ERD50

 

[F4mandolin]

But....I would also respond....I work with a guy that didn't look at the car I drive as a possible purchase because it isn't "big" enough for his wife and kids. Honda Jazz (Fit). It IS big enough for his wife and kids.....it isn't as big as they "want". Multiply that out many times for almost everything in your life....I have to agree with the poster....

 

[haha]

But....I would also respond....I work with a guy that didn't look at the car I drive as a possible purchase because it isn't "big" enough for his wife and kids. Honda Jazz (Fit). It IS big enough for his wife and kids.....it isn't as big as they "want". Multiply that out many times for almost everything in your life....I have to agree with the poster....

Which one?

 

[ERD50]

It IS big enough for his wife and kids.....it isn't as big as they "want".

Ah, but 'big enough for his wife and kids' sometimes means 'and the girl scout troop', or 'the church group', or 'the group of friends going to the movies'. But all you saw was 'the wife and kids'. Two small cars would be more expensive than one modest mini-van. That's what I'm saying, there is often more than meets the eye.

-ERD50

 

[W2R]

But I have to say that I am often amazed and somewhat amused when people post their concerns for being able to "make it" in retirement, and they post a retirement income that is substantially higher than anything I ever made while actually working.

Me too! I never earned 6 figures in my life.

But since participating on this board, I have come to realize that a dollar in NYC or SF is not the same as a dollar in "flyover country". It's as though we have two different currencies even though the "exchange rate" is 1:1.

When I hear how much things cost in large coastal cities, it is enough to make my eyes water! But to some people the weather in California or the job availability of NYC is worth what is essentially a location surcharge on much of what they buy, especially real estate. And then, some have family there and do not wish to move.

I suppose that I COULD move back to Hawaii, where I am from, but my nest egg just wouldn't go very far at all there. Besides, after being away for 25 years I find that most of my relatives there other than a brother and a few cousins are either dead or moved away. So, my choice is to seek out low cost-of-living areas where I can afford to live the lifestyle I always dreamed of, and more.

 

[bruce1]

I know single people in my community who spend about $20,000 are happy and have a little money left over for presents for their kids ect, I spend about $47,000 and that is way more than I need to as I went on a minimum budget for a while before retiring and spent about $18,000. What gets me is those couples, that still in my area, have an income of nearly $200,000 one maybe two children and live literally paycheck to paycheck with absolutely no reserve. Then one of them looses their employment and they cannot survive according to them. Well they can ditch the two or three $50,000 Vehicles, seadoos, trail bikes, quads and the million dollar home. End of short rant

 

[F4mandolin]

But all you saw was 'the wife and kids'.

Nope, saw the whole message. The Fit/Jazz is big enough for 5 people and a fair amount of stuff. If you choose to add on the extra's in your life....your choice. You do not have to. You do not have to buy a big house. Very few people need a AWD vehicle (very few actually). Want.....that's another thing........

To be fair...in retirement I might choose to buy a car that doesn't get 30+ mpg...and it might even be AWD. I don't need a bigger car but I might choose to. Won't complain (much) if it costs more. Anybody who is on this site has things pretty easy compared to what they could have (or not have)......... I consider myself to be one hell of a lucky fella......

 

[mickeyd]

they post a retirement income that is substantially higher than anything I ever made while actually working.


Z

Hey Z,

Many folks that post here are the result of living a life (while working) of sacrifice and frugality. LBYM is really a life style choice that lasts a lifetime, but the rewards are collected for many years after retirement. You can spend it once when you are young, or you can spend it several times when you are older. It's just a choice that many people have made.

 

[samclem]

I don't find the "need" vs "want" distinction to be very useful, as there's no practical demarcation line. Everything after 1500 calories per day, 2 liters of water, a roof, a blanket, and the occasional tourniquet is technically a "want., and an expenditure we don't have to make. A typical family in Calcutta would probably be shocked at what even the most frugal among us counts as a "need."

 

[IndependentlyPoor]

What gets me is those couples, that still in my area, have an income of nearly $200,000 one maybe two children and live literally paycheck to paycheck with absolutely no reserve.

I have a good friend who calls this "High dollar hand to mouth". There are lots of couples who live like that.

 

[rescueme]

You can spend it once when you are young, or you can spend it several times when you are older. It's just a choice that many people have made.

Exactly ...

I'm amazed by how my "financial insecurity" of many years helped fund a good (financially) retirement. Of course, it only took me a bit more than 40 years to get here ...

 

[HsiaoChu]

Hey Z,

Many folks that post here are the result of living a life (while working) of sacrifice and frugality. LBYM is really a life style choice that lasts a lifetime, but the rewards are collected for many years after retirement. You can spend it once when you are young, or you can spend it several times when you are older. It's just a choice that many people have made.

And that's certainly true! Its just interesting. if my daughter were to choose to retire in Oakland where she lives now, she would need way more money to do it than if she decided to retire in Mississippi.

But at the same time we all get used to certain kinds of activities and amenities and we know that we want to still have them in retirement. Or we want things we didn't have in working life, like extensive travel.

No value judgement here, just an observation.

Z

 

[F4mandolin]

Samclem......exactly....but I think you have just answered with a very decent example of the definition of need vs want.

 

[Walt34]

A typical family in Calcutta would probably be shocked at what even the most frugal among us counts as a "need."

Here's an interesting calculator:

Global Rich List

According to this site a person with a $5k annual income is still among the world's richest 14.39%.

While I'm pretty sure a loaf of bread is cheaper in the less well-to-do parts of the world I'm sure I wouldn't want to live where $5k/year makes me wealthy.

That said, I'm sure many people would feel strapped and barely surviving on what others believe is luxurious living.

 

[Katsmeow]

When I hear how much things cost in large coastal cities, it is enough to make my eyes water!

A couple of years ago I was on a board talking about buying and selling homes and I saw a question asked about a $600,000 home. The person responding started out by saying, "Well, of course, a $600,000 home is just a starter home" and went on to express that features of such a home hardly mattered since no one would live there long seeing as how it was a low end, starter home.

Living in Texas, I was dumbfounded since $600,000 around where I live buys a really, really nice house....

 

[travelover]

IMHO, anyone that "needs" to live on more than I do is a spendthrift. Anyone that spends less is a cheapskate.

 

[ERD50]

IMHO, anyone that "needs" to live on more than I do is a spendthrift. Anyone that spends less is a cheapskate.

And anyone who makes more than me is "rich" and made it off the backs of others. They should be taxed at a 150% marginal rate!!

-ERD50

 

[Rustic23]

If you have ever traveled to a '3rd world country' then you realize that what you need to retire is relative. I have seen people that live in mud floor huts with big smiles on their face. If they had 10 or 20 bucks a month to retire on they would be ecstatic. Needless to say, I would not be happy to retire on $120 dollars a year.

 

[Danmar]

I think in our case the whole retirement process was reversed. We never planned directly for retirement until well into my 50's. Really not much saved directly at that point. Eventually things worked out and we became pretty successful. Spending was calibrated later to match our retirement income. Quite surprised how early some people start retirement planning. Sometimes it sounds a little obsessive to focus on something so far away?

 

[Midpack]

I know that everyone wants to be properly prepared financially for retirement.

But I have to say that I am often amazed and somewhat amused when people post their concerns for being able to "make it" in retirement, and they post a retirement income that is substantially higher than anything I ever made while actually working.

Z

Most posters don't disclose how much hedging/safety factor they are building in, so "make it" is pretty subjective. And no matter how much you make, there are loads of people who make far less and loads who make far more. Who cares, 'the most important things in life aren't things,' something that becomes clearer with each passing year.

 

[travelover]

And anyone who makes more than me is "rich" and made it off the backs of others. They should be taxed at a 150% marginal rate!!

-ERD50

And anyone that makes less is is a lazy parasitic bum that just refuses to try.

 

[ERD50]

And anyone that makes less is is a lazy parasitic bum that just refuses to try.

So we covered the known universe of possibilities, answered each case, so let's go have a beer!

Back to Midpack's query, mmmmm, not sure what to say, it appears this has been thought out enough that anything in there is a lifestyle choice. But I suppose if others see some things as outliers, it might trigger a re-thinking.

We keep our cars 10+ years, try to stagger them so we always have one 'newer' vehicle in the mix. But if having a <5 YO car is important to you, it is what it is.

I'm a little surprised that the Prop Tax is as low as it is for 'Chicagoland' ( I know many will consider it high).

I wonder how you spend $18 month on postage (small potatoes though)? I've got almost every bill on auto-pay of some sort, I'd bet that 3/4 of what we mail is a return response with postage paid. No big deal, but it did stand out for me.

-ERD50

 

[HsiaoChu]

Quite surprised how early some people start retirement planning. Sometimes it sounds a little obsessive to focus on something so far away?

I started saving 8% of my gross salary when I was 22 years old. Of course I really didn't have a choice. It was required by my pension system.

 

[ERD50]

Quite surprised how early some people start retirement planning. Sometimes it sounds a little obsessive to focus on something so far away?

On the flip side, one could say that it seems more than a little irresponsible to not plan for the inevitable.

So what if it is far away - that doesn't mean it won't happen? It isn't like some one-in-a-million thing. People see their parents, grandparents or neighbors retired. Why not start planning now to help assure that one can do it comfortably?

-ERD50