Sub $1M no pension retirement? Any out there?

[gerntz]

Quote:

Originally Posted by bmcgonig If you've never made more than 45k/yr and you have more than 800k, you're certainly no average joes. Well done.

You're exactly right.

[brewer12345]

OP, this is just about basic math. You know your expenses better than any stranger on a message board. Will your income streams and assets cover your expenses? If yes, then it is likely you can go out with whatever asset level that implies. The wildcard is healthcare expenses. Whither the ACA and how likely is it not to blow up? The answer is that none of us know, we can only acknowledge it as a risk and plan accordingly. In your shoes, if your resources cover your expenses I would spend some time and effort developing a contingency plan that helps you ideal with health insurance becoming unavailable or unaffordable. Can you possibly land a silly job that pays whatever but offers health insurance (Starbuck's, Costco, etc.)? Can you spend a few years overseas until you are eligible for Medicare? You will likely never have a bullet proof contingency plan, but with enough plausible options sketched out one of them will probably be workable if you need to resort to alternatives.

[ivinsfan]

Quote:

Originally Posted by bmcgonig If you've never made more than 45k/yr and you have more than 800k, you're certainly no average joes. Well done.

I took that as two jobs, neither paying more then 45K..close to 90. it wasn't really clear to me as to annual income. Still a good job saving...

[daylatedollarshort]

Quote:

Originally Posted by garyt I'm looking for people who have retired with a sub $1 million dollar nest egg, no pension. So many people on this board have huge money that I can't relate . I'm interested from hearing from people who've retired on much less. Anybody here living on just savings and SS? My wife and I are just average joes, neither of us have ever made over $45K. We have a little north of $800K, will take SS at 62 getting about $30k total. Healthcare is keeping me working. Just wondering if there are other people in the same boat? .

Most people have no choice but to retire on much less and seem to make do. Mean investment income for households 65 and older is $3.5K a year according to the 2015 Consumer Expenditure Survey - https://www.bls.gov/cex/2015/combined/age.pdf.

Vanguard counts wealthier retirees as those with $100K in investable assets - https://personal.vanguard.com/pdf/CRRRIP.pdf. Median financial wealth in their survey was $395K, so you have twice that.

As other posters noted, retiring before Medicare age and without retiree health insurance is a bit trickier. The ACA made it easier with subsidies and no preexisting conditions clause, but that could all change overnight or at any future date. Under the latest repeal and replace plan, the AARP has stated their age 55+ members would get hammered on premiums alone, plus a lot of individual plans these days have high deductibles and out of pockets costs.

[garyt]

Quote:

Originally Posted by Dash man Healthcare is a huge expense. Is there a reason you can't work until 65 so you get Medicare and then start SS? Starting SS at 62 significantly lowers your benefit plus you'll have to pay the going rate for health care, which isn't cheap.

I could work till 65 and will if necessary, but I'd rather live modestly and retired if possible.

[garyt]

Quote:

Originally Posted by NW-Bound I know plenty of people who did not retire with $1M, my parents included. And people were fine, and they traveled internationally too. The healthcare cost is the only thing scary. The closer one is to 65 for Medicare, the quicker one passes through the hazardous years.

Healthcare is the only reason I don't retire now. Have to wait to see what happens to the ACA. Well, another reason is my Dad who is 92. He might need in home care or something that I would need to contribute to.

[garyt]

Quote:

Originally Posted by cyber888 It is very doable. I live in the South and so cost of living is nowhere near the big cities. We also cook at home and rarely eat out. I wont retire for another few years, but i did the numbers. $800k is ok. It will be better if you dont have a mortgage. If you have a mortgage, you can refinance so you wont be paying more than $700/month. And keep being healthy too - exercise daily + good nutrition

No mortgage , but will need a new car soon. We would like to move south.

[garyt]

Quote:

Originally Posted by ivinsfan I took that as two jobs, neither paying more then 45K..close to 90. it wasn't really clear to me as to annual income. Still a good job saving...

Yes, both of us working making never more than $90K combined probably averaging more like $75-$80K. We're both savers but we still travel and enjoy life. we just don't blow money unneccessarily

[garyt]

Quote:

Originally Posted by daylatedollarshort Most people have no choice but to retire on much less and seem to make do. Mean investment income for households 65 and older is $3.5K a year according to the 2015 Consumer Expenditure Survey - https://www.bls.gov/cex/2015/combined/age.pdf. Vanguard counts wealthier retirees as those with $100K in investable assets - https://personal.vanguard.com/pdf/CRRRIP.pdf. Median financial wealth in their survey was $395K, so you have twice that. As other posters noted, retiring before Medicare age and without retiree health insurance is a bit trickier. The ACA made it easier with subsidies and no preexisting conditions clause, but that could all change overnight or at any future date. Under the latest repeal and replace plan, the AARP has stated their age 55+ members would get hammered on premiums alone, plus a lot of individual plans these days have high deductibles and out of pockets costs.

It's definitely all about healthcare. If we had coverage in retirement I'd be gone now. Heck, if I thought the ACA would be around awhile I could manipulate my income enough to qualify for the largest subsidy, Medicaid even.

[imoldernu]

Quote:

Originally Posted by garyt I'm looking for people who have retired with a sub $1 million dollar nest egg, no pension. So many people on this board have huge money that I can't relate . I'm interested from hearing from people who've retired on much less. Anybody here living on just savings and SS? My wife and I are just average joes, neither of us have ever made over $45K. We have a little north of $800K, will take SS at 62 getting about $30k total. Healthcare is keeping me working. Just wondering if there are other people in the same boat? .

Me. For the last 27+ years.
... and considerably less than $1 million. Comparatively speaking, healthcare was a still a major expense, even in the 1990's.

http://www.early-retirement.org/foru...ent-62251.html

[marko]

Quote:

Originally Posted by brewer12345 You will likely never have a bullet proof contingency plan, but with enough plausible options sketched out one of them will probably be workable if you need to resort to alternatives.

+1 Who does have a bullet proof plan?

You to your math, plan for the worst, hope for the best, expect the unexpected, prepare to be flexible and adjust accordingly.

Same as the first 40-50 years that got you this far.

[Freedom56]

Quote:

Originally Posted by garyt I'm looking for people who have retired with a sub $1 million dollar nest egg, no pension. So many people on this board have huge money that I can't relate . I'm interested from hearing from people who've retired on much less. Anybody here living on just savings and SS? My wife and I are just average joes, neither of us have ever made over $45K. We have a little north of $800K, will take SS at 62 getting about $30k total. Healthcare is keeping me working. Just wondering if there are other people in the same boat? .

If you have $800K to invest, you could build a portfolio investment grade preferred stocks corporate notes and get about $48K to $50K of interest and dividend income annually. That plus your $30K of SS income will give you about $80K annually without depleting your capital. If you are debt free, you can live very comfortably on $80K per year. Stay away from so called wealth managers. They will rob you.

[FreeBear]

Garyt,

Congratulations on your savings! You guys did a great j*b!

In my mind, the biggest question is what are your current expenses and how are these projected to change when you both retire?

Your $800K can give you roughly the same income as your SS at 62. Here are some examples at various SWR ("safe" withdrawal rates), assuming roughly a 30 year retirement plan:

$ 32K/yr at 4% annual withdrawal
$ 28K/yr at 3.5% annual withdrawal (fairly conservative for 30 yrs)
$ 24K/yr at 3.0% annual withdrawal (very conservative for 30 yr horizon)

So, say $ 30K/yr withdrawn from your investments + $ 30K/yr from SS = $ 60K/yr for living. Is this enough?? Don't forget to include taxes (probably much lower than when working) and ACA health insurance & projected Out of Pocket health expenses (checking healthcare.gov, could be $ 10K+ yearly if can't manage income for substantial ACA subsidies).

Also, how close are you to 65 & Medicare? Perhaps 3-4 years from Medicare and SS at 62 yo if necessary is more encouraging than if you are 10-15 years from Medicare.

Regarding ACA, I retired 2 years ago in good part because of ACA made health insurance portable, although not necessarily inexpensive. So I'm weathering the current situation, and although ACA seems to have survived the recent political challenge, little seems to have been done about increasing premiums and out of pocket and shrinking provider choices. So it help to have some margin/headroom in your calculations.

So retiring before Medicare and without the protection of big gov or Megacorp health bennies is NOT for the weak or the dumb. It's certainly a calculated risk that needs to be weighed with care. Still, you managed to rack up $800K on a sub 6 figure salary, so you must be either very lucky or very smart and determined :-)

Additional caveat: safe withdrawal numbers assume very low investment expenses, say 0.2% or less. All bets are off if you are paying 1%+ to financial advisor PLUS 1-3% or more for expensive actively manage funds and/or annuities.

Good luck!

FB

[brewer12345]

Quote:

Originally Posted by marko +1 Who does have a bullet proof plan? You to your math, plan for the worst, hope for the best, expect the unexpected, prepare to be flexible and adjust accordingly. Same as the first 40-50 years that got you this far.

There are some. My former employer has a pension plan with zero chance of default, you can start it as young as age 50 (at a discount to age 65 value), you can use 401k funds to buy more pension credit, and if you have 10 years of service by the time you retire at age 55 or later you are allowed to buy health insurance at the employer group rate. Bullet proof, as far as I can see.

[ItDontMeanAThing]

I retired, mostly voluntarily, with $580k in the pit of the global economic crisis of 2008. Became an expat. Eight years later in Dec '16 my nest egg was $870k and I started $20k SS. Projections are that will give me a comfortable life by my standards. Should the root causes of the high cost of US healthcare ever be fixed, I expect it would give me a comfortable life in the US. In the mean time, fueled by the extra 20k a year, I'm country shopping. Portugal is next.

[cyber888]

Quote:

Originally Posted by ItDontMeanAThing I retired, mostly voluntarily, with $580k in the pit of the global economic crisis of 2008. Became an expat. Eight years later in Dec '16 my nest egg was $870k and I started $20k SS. Projections are that will give me a comfortable life by my standards. Should the root causes of the high cost of US healthcare ever be fixed, I expect it would give me a comfortable life in the US. In the mean time, fueled by the extra 20k a year, I'm country shopping. Portugal is next.

Nice. So what country are you in right now.

[rayinpenn]

Seems to me location is a big driver on expenses...

[DEC-1982]

Quote:

Originally Posted by garyt Anybody here living on just savings and SS? My wife and I are just average joes, neither of us have ever made over $45K. We have a little north of $800K, will take SS at 62 getting about $30k total

Well done garyt. Keep an eye on healthcare costs, since nobody really knows if Obamacare will still be available AND if the Obamacare insurers will continue in your retirement location. Obviously you have (or should have) a backup plan.

[garyt]

Quote:

Originally Posted by Freedom56 If you have $800K to invest, you could build a portfolio investment grade preferred stocks corporate notes and get about $48K to $50K of interest and dividend income annually. That plus your $30K of SS income will give you about $80K annually without depleting your capital. If you are debt free, you can live very comfortably on $80K per year. Stay away from so called wealth managers. They will rob you.

That would be more than enough. Any reccomendations or places I can read more? I'm not too up on preferreds.

[Totoro]

There are a few here.

Not sure I would count - I am sub $1M and consider myself FI, but am still doing things. Last year did a startup that actually cost me money in the end (not too much, luckily). Am stopping that one right now. The year before that I basically did nothing, one or two consulting gigs adding up to two months of work (roughly).

At 36 I still feel like doing some silly things that add value. Because I want to, not necessarily for the money. Although increasing a buffer is always nice.

Next Tuesday I'll start a new venture. Getting a small salary out of it since I'm teaming up with another existing company, nothing compared to my (apparent and declining) market value. I actually offered to work for no salary, company wouldn't have it

Other example not on this forum: my mother. She doesn't even have SS (equivalent, Europe here). Healthcare (the big one) is covered though.