Article - 35% of Millionaires won't be able to retire

[marko]

On other occasions, I also posted a photo of a single-leg chair, like this.

I sure hope the fabric on that seat holds up for that young man.

 

[Music Lover]

I'd think you'd have to be good at DIY. My current biggest expense is maintaining and upgrading the house. And not big upgrades like a redone kitchen or bathroom, but simpler ones like new countertops to replace old delaminating formica ones, or new flooring in basement to cover the cement that resulted from carpet removal due to some water in the basement during Tropical Storm Ida in 2021. I don't want to live in a slowly deteriorating residence.

People with modest incomes that own houses really need to DIY. I've saved at least $100k by doing my own repairs and upgrades.

 

[candrew]

I have been pogo-sticking quite well since age 45

Pogo-sticker

Another handle for E-R.org members. It's right up there with recycles dryer sheets.

 

[scrabbler1]

Same here - pogo-sticking since 1999 and still a few years to SS which will be our only income stream.

Not an income investor either - total return only.

Although I am pogo-sticking now and have been for the last 14 years, I have mentioned in this forum many times my "reinforcements" which include (a) a rollover IRA, (b) my frozen company pension, and (c) Social Security. I guess this means I will "grow" some legs to give me a 3 or 4-legged stool.

 

[flyingaway]

At the end of the article:
"Hire a Pro: Compare 3 Financial Advisors Near You
Finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is legally bound to act in your best interests. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now."

I guess all your discussions missed the point. The article's main purpose is to say that, even if you are millionaires, you are still not good, and you need to hire a financial advisor.

 

[flyingaway]

Not exactly. https://www.aldi.com.au/ have 'special buys' which is a jumble of 'so cheap you must buy it even if you never thought you needed it' stuff.

Main Aus national supermarkets:

https://www.woolworths.com.au/

https://www.coles.com.au/ (my 'FlyBuys' 20% discount shop)

Many small Asian grocery shops.

When I was in Australia (Queensland) about 30 years ago, the supermarkets would close on Sundays. In the afternoon of Saturdays, fresh produces such as vegetables and fruits were greatly discounted. We could buy a huge bag of grapes (at least 3 kilos) for $A0.99. Is that still the case?

 

[Samsung4321]

When I was in Australia (Queensland) about 30 years ago, the supermarkets would close on Sundays. In the afternoon of Saturdays, fresh produces such as vegetables and fruits were greatly discounted. We could buy a huge bag of grapes (at least 3 kilos) for $A0.99. Is that still the case?

My shops open 07:00 to 22:00 all days. Qld seem to open later, close earlier weekends.

Used to discount perishables Sunday or so to reduce waste going to rubbish. Cheapskates would wait until the shutters were about to come down then pounce. Free foodies would dumpster dive under cover of night.

All ceased when supermarkets diverted expiring perishables to food banks.
https://www.coles.com.au/about-coles/sustainability/environment/together-to-zero-hunger

Save them selling at discount or paying to dump while passing the problem to "food rescue organisations such as SecondBite and Foodbank".

Partly forced into food banking due to restrictions and costs at rubbish dumps where food rotting produces methane and nasty drainage.

 

[audreyh1]

Regarding this "pogo-sticking" thing - would someone please explain what that means? This is the first time I'm hearing that term used in this context. I tried to search for it but came up empty. Thanks in advance.

It’s a referral to a “one legged stool”. Generally retirement planning recommends a three-legged stool of pension, social security, and investments/savings. But some of us will never have a pension, and some of us retired well before social security age, so we retired with a one-legged stool.

I guess some here came up with the pogo stick analogy.

OK looks like NW-Bound came up with the pogo stick idea in describing a one legged stool going up and down with the volatile markets. Yes, us one-legged stool ERs do have to learn live with the ups and downs!!!

 

[oiseux]

$1M investable in article sources.

The article contains mixed references to two data sets with different definitions. Their 24.5 million millionaire number comes from the Credit Suisse report, which includes all real estate in their definition (page 19). The reference to investible assets, in the Nativis, which excludes primary real estate, is just 7 million in 2020 (original source is CapGemini). A Spectrem Group survey suggests 14.6M in non-primary real estate.

Yes it is investible assets, but the 35% saying it would "take a miracle" to secure a retirement is coming from a much smaller population. It is also a "deep down" sentiment, as 79% felt "financially secure" in their retirement. But the 38% in that survey also felt a need to have "public benefits" in place. This type of population also tends to skew to places with higher costs of living (based on the various demographic studies I've seen). Thus, this answer is not surprising, especially when the median says they only have 625K in retirement savings.

Since this is a early retirement forum, the health care cost alone is relevant. Without public subsidies (ACA), our latest health care quote is 30K to maintain a similar level of benefits. That's really elevates you into another category of required income, unless you are getting the subsidies.

 

[Samsung4321]

The article contains mixed references to two data sets with different definitions. Their 24.5 million millionaire number comes from the Credit Suisse report, which includes all real estate in their definition (page 19). The reference to investible assets, in the Nativis, which excludes primary real estate, is just 7 million in 2020 (original source is Cap Gemini). A Spectrem Group survey suggests 14.6M in non-primary real estate.

Thanks, that is clearer than my blanket assertion.

I consider Principal Place of Residence not 'investable' wealth because I foresee no need to sell my home to finance my expenses - other than not needing it should I reside in age care facility.

Many others certainly have different circumstances so lumping home into retirement financing wealth is more relevant to more people.

From Credit Suisse report:
'Net worth or “wealth” is defined as the value of financial assets plus real assets (principally housing) owned by households, minus their debts.'
Including home.

 

[Samsung4321]

Since this is a early retirement forum, the health care cost alone is relevant. Without public subsidies (ACA), our latest health care quote is 30K to maintain a similar level of benefits. That's really elevates you into another category of required income, unless you are getting the subsidies.

In Aus we have had substantial health subsidies for at least 4 decades so is is expected. Now have no idea what health care insurance would cost without subsides. My doctors bulk bill so instead of ~$A80 for consultation, I pay$A0. My fancy hospital insurance is ~$A3,500 / y subsidised. ACA vaguely looks like the Aus system.

Those with no insurance are treated free but, except for emergency cases, are subject to waiting lists for 'elective procedures'.

 

[ncbill]

I'd think you'd have to be good at DIY. My current biggest expense is maintaining and upgrading the house. And not big upgrades like a redone kitchen or bathroom, but simpler ones like new countertops to replace old delaminating formica ones, or new flooring in basement to cover the cement that resulted from carpet removal due to some water in the basement during Tropical Storm Ida in 2021. I don't want to live in a slowly deteriorating residence.

I stuck with carpet in our finished basement since it is easy to pull up & dry out if it gets any water versus our neighbor who lost an expensive basement wood floor that way.

Still have the Formica countertops in the kitchen, but just bought a Moen faucet to replace the builder's grade original.

 

[NW-Bound]

I found an earlier instance of my pogo stick metaphor for an ER relying solely on stock investments. It was in 2014, though I used the metaphor even earlier back in the Great Recession of 2008-2009.


See this thread: https://www.early-retirement.org/forums/f28/reached-escape-velocity-72638.html#post1466014


And in the above thread, I shared a blogger's image of a one-legged stool for retirement funding, which I relink here:

 

[Samsung4321]

And in the above thread, I shared a blogger's image of a one-legged stool for retirement funding, which I relink here:

Traditional Swiss milking stool called a "botte le cul" = 'butt kicker'

https://www.google.com/search?source=univ&tbm=isch&q="botte-cul

 

[NW-Bound]

Ah, that makes a lot of sense.

Goes to show that a single-legged stool can be very useful. And sometimes, that's all one needs.

 

[NW-Bound]

Dang, looking back at the 2014 thread, I was talking of drawing 3.5% WR then.

My WR for the last 12 months was less than 1%.

Did my stash grow 3.5x since 2014? I wish.

My stash did grow a lot, but not 3.5x.

No, my expenses dropped so much, I spend a lot less now, plus my wife is drawing her SS.

 

[djsander]

At the end of the article:
"Hire a Pro: Compare 3 Financial Advisors Near You
Finding the right financial advisor that fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is legally bound to act in your best interests. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now."

I guess all your discussions missed the point. The article's main purpose is to say that, even if you are millionaires, you are still not good, and you need to hire a financial advisor.

I’ve noticed that in SmartAsset articles. They also throw in the get an annuity if you want to have secure income.

 

[explanade]

Well, spending more does buy some happiness. Up to a point.

For me, that point is below $200K/year (way below), unless inflation runs rampant.

I'm probably headed towards my biggest spending year since retiring.

Definitely the most for travel spending.

But I'm spending less than 1.5% of my assets and I haven't had to sell much.

I was just looking at airfares and hotel rates for various places. Business class airline tickets and nicer lodgings don't necessarily make me happier or enjoy the trips more. They do however allow me to avoid miserable experiences such as a 10-14 hour flight in coach.

Yet I'm looking for value rates or ways to upgrade some of these flights without paying business-class tickets outright.

Or my lease ran out last year and I had to get another car but there were shortages and dealers were marking up cars like crazy. I found a dealer who only marked up $1000 back in January.

Worst case, if I really wanted a different car, ike an EV, I could probably have paid a few thousand markup.

Again it's not about the thing itself making you happy, it's just more buyer's remorse, the feeling that you've been taken advantage of or someone made a lot of money at your expense.

There are some destinations where high demand or limited supply makes lodging prices really poor. Banff is like that, the Canadian Park service limits lodgings within their parks so the prices are ridiculous. Hawaii was like that, at least last year.

I'd like to go to those places but there are other places I can enjoy as much or more, where the travel markets are not so distorted.

 

[explanade]

I basically eat like a broke college student. I spend under $2000/yr on food even with the recent inflation. That includes drinks(99% water). I buy almost everything on sale and/or in bulk. I don't order in or dine out unless someone else is paying.

SYSCO, the company that supplies restaurants with everything from basic ingredients to ready to heat dishes has a slogan on their trucks, something like "Enjoy life, dine out more."

 

[explanade]

Off to Australia for four weeks before long, that should be fun...

Wait until February 2023 when school summer holidays have finished:

https://www.australia.com/en/facts-and-planning/when-to-go/australian-school-holidays.html

I just returned from Australia.

The exchange rate at the start of November was so favorable to the USD.

Highest it got was at the end of the trip, just around Thanksgiving, when it was $0.67 for 1 AUD.

So meals were good and very good value, unless you went for a big steak meal. Even then, probably cheaper than what you'd pay in the US.

In the CBD of the big cities, there are these cafes and food courts in these office towers or nearby, which offers good variety and surprising quality of takeaway meals.

You see all these office workers at lunch hours queuing up and then taking these food containers back to their offices -- because these places didn't always have a lot of seating.

 

[Samsung4321]

In the CBD of the big cities, there are these cafes and food courts in these office towers or nearby, which offers good variety and surprising quality of takeaway meals.

Bigger shopping malls have food courts which have a diversity of cuisines at prices workers can regularly afford and also supermarkets with delicatessen. Thai is tasty.

Also even small shopping centres will have some takeaway often pizza / fish&chips / burger. Ask for "Hamburger with the Lot", select your preferred ingredients. Labourer / tradesman's sized satisfying lunch / dinner to go.

You see all these office workers at lunch hours queuing up and then taking these food containers back to their offices -- because these places didn't always have a lot of seating.

Timing avoids crowds. Often there is a nice quiet place nearby: a park or beach ...

Like Barbecue in the Park?
https://www.meatinapark.com.au/

 

[kgtest]

I am aiming for 2.5MM to 3MM before I ER. Will get a SS raise at 70, DW will get her SS "raise" at 70. Small Pension at 65. Inheritance will give us another 40 to 80k /annual spend. My plan is to live super cheap the first year or two. Then start re-assessing. No mortgage, low taxes, but I will help launch the kids...wedding gifts, home purchases, college etc. 1.2MM spend before my small pension comes online. That would leave be with half my nestegg before SS. I will likely have some inheritence in there so I feel comfy with 2.5 to 3mm.

 

[TheWizard]

I am aiming for 2.5MM to 3MM before I ER. Will get a SS raise at 70, DW will get her SS "raise" at 70. Small Pension at 65. Inheritance will give us another 40 to 80k /annual spend. My plan is to live super cheap the first year or two. Then start re-assessing. No mortgage, low taxes, but I will help launch the kids...wedding gifts, home purchases, college etc. 1.2MM spend before my small pension comes online. That would leave be with half my nestegg before SS. I will likely have some inheritence in there so I feel comfy with 2.5 to 3mm.

You're a good candidate for using a spreadsheet for projecting your joint AGI year by year in retirement.
I'm a fan of "levelizing" your AGI to avoid big jumps when SS or RMDs start. Use Roth conversions in early years to do that.

Allow AGI to increase a few percent a year, depending on inflation through age 72, at which point things are mostly beyond your control.
Update the sheet early each year with current data...

 

[Alex The Great]

Well, that's me who will retire with ~1.3M investable at some time next year. I live in Bay Area and spent ~36K this year. No mortgage but property tax $14K for home worth ~1.5M and growing 2% each year. I plan to spend $15K on health care in a worst case which will make $51K as a total projected expense. In Santa Clara county where I live ACA premiums are quite high even for low income folks. I also may have SS ~45K at age 70 but this can change. I know the numbers are not looking good but I have to retire to take care about the close relative who's condition is quickly deteriorating. It would be interesting to see how things will progress in this situation. Of course backup plan is to sell the home and move to low cost area if things really fall apart.

 

[daylatedollarshort]

I plan to spend $15K on health care in a worst case which will make $51K as a total projected expense.

Are you sure about that cost? I picked a random zip code for San Jose and plugged it into Covered California and and the plans started at $73 a month, with a $6K deductible, total expenses estimate for the default usage was $2K a year. That is with a $51K income, age 55. At age 60, with a $45K income, the two cheapest plans were $0 - $26 a month, $6.3L to $7K deductible.

We only paid $2 a month for a Bay Area Bronze plan, most years, when we were both on the ACA.