New here. Hi!

[MRG]

The answer she gave for it not being doable at 62 was that the numbers were just not there. That is entirely possible as she believes that when people retire, they tend to spend more money because they're bored. I don't believe that would be true in my case. But, I do need to look at everything I possibly can.

What planet is the planner from? Certainly not this one.

 

[marytaz]

Just heard back from the planner. She didn't make an itemized list of expenses. She just used an "average" retirement expenses given my age and date of retirement. That means that she used California averages.

 

[Walt34]

A more detailed SS estimator is here: Retirement Estimator

It will require that you enter your SS#, mother's maiden name, DOB and some other data but it uses your earnings record to calculated the benefit, not some average. For future years when you're not working you can just put in "0" and it will created new estimates to show how much more you will get by waiting to FRA or age 70, or anywhere in between.

 

[DEC-1982]

I had a Fidelity rep go through this once. At the time, I gave him a list of itemized expenses as I saw it, and he made some adjustments which were mutually agreed upon. Perhaps you should provide your planned expense list to your planner and have her redo the calculations, and if she makes changes to your expense list, she should be able to explain it to you, based on her experience.

 

[pb4uski]

To use averages is just plain [-]stupid[/-] silly.

You need to figure out your expenses. There are two approaches you can use and you should probably do both and compare the two.

First is 'top-down'. Start with your take-home pay for last year (you can get this from your last paycheck) and then subtract out what you saved from that take-home pay. Presumably what you didn't save was spent.

Second is bottoms up. Go through all your bank accounts and do an analysis of the total you wrote for checks and then make any appropriate adjustments for disbursements that were not expenses (like you bought a car).

Do both approaches for 2014 and 2013 and the process should give you a good sense of what your spending is.

Then go to firecalc, put in your expenses, investement savings, SS and whatever and see what it says.

 

[ivinsfan]

Just heard back from the planner. She didn't make an itemized list of expenses. She just used an "average" retirement expenses given my age and date of retirement. That means that she used California averages.

Wow, how much did this WAG cost you? That's just silly.....if you want to share more info you can get some opinions here.

 

[marytaz]

Okay, so I've been doing some number crunching and this is my "little" plan:

Retire at 62:

Monthly Expenses with 4% inflation annually.

Food & Household Items	$90
Car (gas/registration/mtce/insurance)	$150
Trailer (registration/mtce/improvements)	$35
Cell Phone / Internet	$80
Personal Care	$30
Entertainment/Hobbies	$30
Medical Insurance Premium	$500 * reduced to $300 at 65
Dental Insurance Premium	$25
Vision Insurance Premium	$6
Pet Expense (food/vet/meds, etc)	$60
Medical co-pays & OOP	$50
Dental co-pays & OOP	$40
Vision co-pays & OOP	$20
Taxes (Any possible)	$50
Rent/Utilities (if needed)	$280
Vacation, etc.	$30
Total Monthly Expenses:	$1,476

Social Security Income: $1,476 (without any cost of living increase)
Savings: Used current interest rate (0.75%) throughout retirement & start withdrawing at 63.
401K: Used current rate of return (0.34%) throughout retirement & start withdrawing required minimum at 70 1/2.

At 86:
Balance in Savings: $16,016
Balance 401K: $11,757

I'm not sure about taxes. According to Social Security, they don't tax if it's under a certain amount, which I assume I will be under. I think it will put me in the 15% tax bracket.

I put in $500 for medical premium (although I believe I would get a tax credit due to my SS income). At 65, I lowered the premium to $300/mo. due to Medicare kicking in, even though I know I'll still need supplemental insurance.

A few things I still need to look at:
1) My company is planning on going public in the near future. There could be stock options offered. Not sure if that would be a smart thing for me to get into or not.
2) I need to figure out my 401K to see if I need to reallocate funds, although I have read some advice that says not to do that. Any opinions?
3) Emergencies: Not sure what to do about that. Wing it? How do people deal with emergency funds in retirement?

I'm babbling...thanks for "listening".

 

[tmm99]

I am no expert, and I am certain the experts will respond to your post, but I have a question...

Are your monthly expenses your true expenses by tracking your expenses for at least a few months? Some of the numbers look awfully low to me, plus I saw that your social security amount was exactly your monthly expenses, (which made me think maybe you derived all the monthly breakdowns from the amount of social security you would be getting).

 

[ivinsfan]

I'm pretty certain that without at least 1 roomate getting housing, utilities and food for your 400 a month is impossible. How do you eat a healthy diet for less then 3 dollars a day?

 

[marytaz]

I am no expert, and I am certain the experts will respond to your post, but I have a question...

Are your monthly expenses your true expenses by tracking your expenses for at least a few months? Some of the numbers look awfully low to me, plus I saw that your social security amount was exactly your monthly expenses, (which made me think maybe you derived all the monthly breakdowns from the amount of social security you would be getting).

Thanks for your input! Yes, it is. I really do live frugally. My highest costs right now is rent. Everything on the list is from the tracking of my expenses over the past 12 months for most things. These are future expenses I calculated with a 4% inflation rate. I added in several things as I currently do not have them now i.e. insurance premiums...trailer costs. For rent, I removed my current rent and added in the current cost of a monthly trailer cost there. I know I won't have rent or utility costs when I retire, but I calculated that in there for worst case scenario. I initially came to $1423, so I added $ in to several categories. I like 0 balances. Food costs were a little difficult to calculate, because I only spend about $20 a month currently (I get free food at work). I will have a garden, so I approximated on the things I would possibly buy that I don't now. I also lowered my car gas & mtce as I won't be traveling as much without working.

 

[marytaz]

I'm pretty certain that without at least 1 roomate getting housing, utilities and food for your 400 a month is impossible. How do you eat a healthy diet for less then 3 dollars a day?

LOL! Thanks! See my comment above I just wrote which may explain better. My housing will be only lot rent, which is very low there now. I also used my current utility costs and unless the little town I'm moving to becomes the next dot.com area, I think I'm safe (although most parks include utilities). I more than likely won't need either of those things unless worse case scenario happens. I currently only spend $20 a month on food/household items, so I added on to that.

 

[hnzw_rui]

At 86:
Balance in Savings: $16,016
Balance 401K: $11,757

3) Emergencies: Not sure what to do about that. Wing it? How do people deal with emergency funds in retirement?

I think I understand why the financial planner you went to said the numbers just weren't there. I'm guessing this is all your savings and you plan on living off just the monthly SS checks?

Personally, I wouldn't do it but my grandmother did. She did mostly okay but I don't know what would have happened if she didn't have children to help her with "emergency" expenditures.

 

[marytaz]

I think I understand why the financial planner you went to said the numbers just weren't there. I'm guessing this is all your savings and you plan on living off just the monthly SS checks?

Personally, I wouldn't do it but my grandmother did. She did mostly okay but I don't know what would have happened if she didn't have children to help her with "emergency" expenditures.

hnzw_rui,

No, that's not what I'm going in with. That's the balance left if I reach the age of 86 y/o. Genetics are against that happening for me as the past 3 generations in my family all passed in their 60's & 70'sy. The amount I currently have between my 401K and my savings is roughly $52K . I have 10% of my pay deducted from my paychecks and my employer matched 50% up to $2,500 (I've already met that match). At time of retirement (age 62), I calculated my current amounts with an interest rate on savings (0.75%) and my current rate of return on my 401K (0.34%). At retirement age of 62, that gives me ±$200K combined to start off retirement with. I'd start using my savings in addition to my SS to make up for the 4% inflation on expenses. I wouldn't withdrawal from my 401K until I'm 70 1/2 y/o, making the required minimum distribution amounts each year.

 

[hnzw_rui]

You're currently 56 and plan to retire at 62 at which point, you expect to have $200K saved. I'm estimating you'll be saving ~$140K over the next 6 years which comes out to ~$23K/yr. Assuming you're contributing the $18K max to your 401k, that's an income of $180K ($18K/10%). Where is the rest of that money going if your monthly expenses are just $1500?

If that 10% isn't maxing out you 401k, then I highly suggest your start doing so instead of giving more of your money to Uncle Sam.

That said, your situation is still too close for comfort for me but hey, your life. If you're sure you have enough funds to retire and it'll make you happy, go for it.

 

[marytaz]

You're currently 56 and plan to retire at 62 at which point, you expect to have $200K saved. I'm estimating you'll be saving ~$140K over the next 6 years which comes out to ~$23K/yr. Assuming you're contributing the $18K max to your 401k, that's an income of $180K ($18K/10%). Where is the rest of that money going if your monthly expenses are just $1500?

If that 10% isn't maxing out you 401k, then I highly suggest your start doing so instead of giving more of your money to Uncle Sam.

That said, your situation is still too close for comfort for me but hey, your life. If you're sure you have enough funds to retire and it'll make you happy, go for it.

hnzw-rui,
I'm currently in California and paying $1,500 mo/rent. I won't have that once I retire.

 

[ivinsfan]

90 bucks a month is around 3 dollars a day.. or one dollar per meal. This doesn't include any sort of thing like spices, pantry items, tp, laundry detergent. I also don't think 5 bucks a day is going to keep you in cars and gas for the next 25 years.

So you own some type of mobile home/trailer that you will be living in?
Where is the 140K you are going to bump up your savings with coming from? Are you going to be saving over 20k a year from your paycheck? I think I agree with your planner that the numbers are not there yet.

 

[marytaz]

90 bucks a month is around 3 dollars a day.. or one dollar per meal. This doesn't include any sort of thing like spices, pantry items, tp, laundry detergent. I also don't think 5 bucks a day is going to keep you in cars and gas for the next 25 years.

So you own some type of mobile home/trailer that you will be living in?
Where is the 140K you are going to bump up your savings with coming from? Are you going to be saving over 20k a year from your paycheck? I think I agree with your planner that the numbers are not there yet.

My car is brand new and I will not be driving it much, if at all. Gas should be fine. Most of the $ in that category is for registration & insurance.

Yes, I will be in a trailer with free rent/utilities.

In $'s, I'm currently putting $18.3K in my 401K annually. I'm also currently putting $7,800 annually in savings, which will be bumped up after one debt is paid off to $11,050 annually, and then again bumped up to $25,350 annually when my last debt is paid off. All of that takes place in the next 7 yrs pre-retirement.

 

[ivinsfan]

My car is brand new and I will not be driving it much, if at all. Gas should be fine. Most of the $ in that category is for registration & insurance.

Yes, I will be in a trailer with free rent/utilities.

In $'s, I'm currently putting $18.3K in my 401K annually. I'm also currently putting $7,800 annually in savings, which will be bumped up after one debt is paid off to $11,050 annually, and then again bumped up to $25,350 annually when my last debt is paid off. All of that takes place in the next 7 yrs pre-retirement.

When you hit that 25,350 mark another extra year or 2 of work will really help the savings and by then you should have your living/spending ideas fine tuned. Good Luck! I think you will know more five years down the road.

 

[irishgal]

Wow, how much did this WAG cost you? That's just silly.....if you want to share more info you can get some opinions here.

You beat me to it! OP- average in California- I lived in California my entire life and expenses are generally higher than lower COL states.

I think the scariest emergency situations would involve your health or-- I think you mentioned a pet. Either one could be a big hit orbit was not covered by insurance.

Do you have any type of plan to try to earn a few bucks a month when you retire? Like doing something crafty in Etsy?


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