Retirement Planning - Lessons Learned

[Hay Dude]

Watch the wave of hyperinflation on the way. Look for ways like gold, commodities, REITs and leveraged loans as a hedge.

 

[ultrarunner]

Great Thread and plenty of food for thought...

The men in my family never retire... they were all self employed and worked until they dropped... 73 for Dad and his father and 90 for dairy farmer grandpa on the other side...

Maybe I will be the first to change this?

 

[Jstpssng]

Watch the wave of hyperinflation on the way. Look for ways like gold, commodities, REITs and leveraged loans as a hedge.

In a few weeks when I get my annual match I plan to bury my 401K into the safest place my employer's plan offers. I hit my goal for last year, putting me right on target where I want to be; and don't want to lose it by getting greedy.

 

[3Ts]

The guy died a few years later. I got the impression, right or wrong, that being adrift in retirement had a lot to do with it.

The company I worked for put out a newsletter and included an obituary section. What I noticed was that those that had no outside interests and only their job, were dead in about 2 years. They stopped the obituary section after awhile.

Having a will, health insurance plan, etc are all essentials. So is making your funeral wishes known to family. Be very careful with pre-paid funerals however. I know of several people who pre-paid, the family couldn't find the paper work, the funeral home claimed to know nothing about it. I would not recommend it. Go for cremation instead. Getting cheaper in a lot of states.

This happened to my uncle. He had a pre-paid funeral and burial plot but none of the family could find the paperwork and the funeral home deniged there was one.

 

[fried1765]

Watch the wave of hyperinflation on the way. Look for ways like gold, commodities, REITs and leveraged loans as a hedge.

You obviously also see what I see coming!

 

[Whidbey]

If you have the means...get the mortgage paid off. It takes a huge load off your mind. Even if your IRA tanks, you have your home.

If you have any credit card debt, you should not retire. You have established a lifestyle that is above your means. If you cannot control it you are going to be in trouble quickly.

Have all or most of your "toys" paid for.

If you have a spouse or partner that wants to retire "in style" and you cannot afford it...get rid of her/him if you can. If married to her/him prepare for "issues".

Cost of divorce should be evaluated. Many seniors realize they will not enjoy retirement with the person they have only had to endure 24 hours a day for two days a week. Spending 7 days a week them, with no work to escape can trigger it. If you have friends and your partner does not...that is a another "red flag".

You will need/want about 65% of your pre-retirement income until you learn to live on less.

If you do not have a company pension or government job pension, do not depend on SS. Which means you need about $500k to $1 million in investments.

About 15% of people over 65 live in poverty and only 58% live at double (or more) than the poverty level. The good news about living in poverty is that life expectancy goes down so you may not suffer for long.

Lots of folks do not have "Golden Years".

Good advice. Another thought on marriage issues: if your marriage is having problems don't ignore them hoping they will go away..
They are more likely to get worse than better.

 

[drssg]

So for the experts:

- What have you learned in retirement?

- What would you have done/planned for differently?

- Did you move away or stay at home and are you happy?

I'm 5.5 years into retirement, and the biggest thing I've learned is that I LOVE retirement. The biggest privilege for me it to get up every morning because I woke up and I don't feel like sleeping anymore. I used to have trouble falling to sleep sometimes, because I was thinking about job stuff or I had a cup of coffee a little too late. I would stress out over needing to get to sleep, because I need to get up early. The second biggest privilege is that I'm rarely in a hurry. Things take as long as they take, and that's life. I have plenty of work to keep me busy, but if I feel lazy today, that's OK too.

So far, I haven't found anything that I wish I did differently. I made a spreadsheet to estimate my future portfolio value over time, with some conservative assumptions regarding investment return, spending, inflation, and social security. I also reviewed that spreadsheet with my financial advisor to see if he thought my assumptions were reasonable. By comparing my current status with the plan, I can keep a better idea of reasonable spending.

I stayed home, but I see that as a personal decision. It all depends on what you want to do. I spent a number of years building a horse farm while I was working, so my retirement was to be able to enjoy it.

Good luck on your journey.

 

[JethroB]

Here's a fun fact from a recent Vanguard investors newsletter:

 

[fried1765]

Here's a fun fact from a recent Vanguard investors newsletter:

View attachment 684412

Yep......I have been taking the minimum 4% from my 401K for the last 10+ years.
Even after the required distributions, the total 401K value has been increasing each year.

 

[kenmac]

the largest expense for someone retiring early will be healthcare cost.
I have many friends that would love to retire early if it wasn't for the high cost of health insurance.

I lived in town /city until I sold my business and retired.
After retirement, I bought a small farm that keeps me busy and in shape.
Had I not bought this farm After retirement, I would have been bored out of my mind

I have been retired for five yrs now, and have no regrets .. I'll turn 63 in march

 

[The Deerslayer]

Great thread and the topic/timing is spot on for me, so thanks to all for sharing. :thumbsup:

I will be retiring in a couple months at age 55 :cool2:. It was always my hope and plan to be able to do so at a relatively early age (was going to be late 50's to early 60's), but I have been fortunate enough to be able to exceed that goal and am excited to do so. I have had a good career and have realized that time owes us nothing and I want to spend as much of it with the ones I care about. All the "ducks" are in order and I am looking forward to working our "homestead" and traveling this great country of ours. Will we ever move?; possibly, but we love our property and have no immediate plans to leave it. Much depends on where our grown offspring ultimately call home.

 

[ChuckT]

Lesson 1) Retirement will cost you more than you thought, or anyone advised you. Lesson 2) EVERYTHING is (now) miles away. Lesson 3) there's not enough hours in a day. Lesson 4) you are not 30 yrs old anymore. Lesson last) See lesson 1.

 

[Frankenkubota]

Your 401k, pay yourself first. Make sure you max out on it. Maybe check into an IRA as another option for investing.

I'm in good shape financially but, I wish I had taken full advantage of the Roth IRA.

And, I believe most of the income requirement estimates are based on a married couple. I'm single with very little family. I can live comfortably on almost nothing.

Each to their own.

 

[ultrarunner]

You obviously also see what I see coming!

Yep and it makes having too much cash a concern...

I have known those that outlived their money... either inheritance gone or sold a business/business property thinking they were set but inflation/decline of buying power eroded their best egg.

 

[fruitcakesa]

After 34 years, Covid provided us the "excuse" to sell our business and retire; I am 69 and wife 66.
It coincided with the birth of our grandson and as our daughter is working on her physician assistant degree, we became the de facto baby sitters while she is at school and work.
For us, this is a wonderful opportunity to provide the little guy with a different perspective on live and to occupy much of our time.
Still plenty of homestead chores to do we stay busy and productive.
Managed to put away and invest over the years enough to be in good financial shape for the long run and we have no debt and do most of our own maintenance.

 

[Richard]

Good thread!

I'm 53 and plan to retire at 59-1/2 (That's when I can draw from my 401k with no penalty

To clarify.... you can take withdrawals of your taxable 401K funds after TERMINATING from your job at age 55. (can't do this if the funds are Roth contributions, those are stuck until age 59 1/2 along with the five year hold)

So, if you quit your job and have attained the age 55 and leave your 401K in place, you can withdrawal any amount of the taxable portion and simply pay any applicable tax.....there is no 10% penalty. Now, if you move those funds from a 401K into an IRA that your college buddy can manage for you.....you've just screwed yourself because the rules of the IRA are age 59 1/2....whereas the rules on the 401K are age 55.

What if you continue to work and are age (anything over 59 1/2)?.you can do an "in service withdrawal" and pull some funds out for whatever reason even though you are still employed and putting funds into it. Since you are of retirement age, the 10% penalty is gone.

So you have a window from age 55 to 59 1/2 that "if your plan" is to roll from your 401K into an IRA.....you might want to reconsider that move until you hit age 59 1/2 OR, only move a portion.....leaving behind in the 401K an amount that you feel would hold you over to age 59 1/2....

THEN AGAIN.....you want to make sure that your 401K allows partial distributions after you separate from service. Some 401K's do NOT which means if you're age (enter any age) and you want to simply take $1,000 out of your $900,000 401K.... you can't. You have to take it all or none. This is your 401K's polite way of saying "you've terminated.....please move your account somewhere else"

Don't wait until needing that money is critical before you discover your 401K doesn't allow partial distributions.

 

[Richard]

Yep......I have been taking the minimum 4% from my 401K for the last 10+ years.
Even after the required distributions, the total 401K value has been increasing each year.

I presume you know this.... but your RMD (as a percent of your account) will grow slightly every single year. At age 72 it's approximately 4% (3.9%) and goes up slightly every year after.

They changed the laws about a year ago and now, RMD age starts at age 72 instead of 70 1/2.

At age 80 for example, you have to take 5.3% out. Typically your brokerage or 401K company will keep after you about getting the correct amount out.....but....if you have accounts at different firms, they can't see the OTHER money so the burden falls on you to make sure you get it all out.

Failure to take your RMD is a 50% penalty "of the amount you fail to take". So if your RMD is $4,000 and you take $1,000..... you failed to take $3,000 so your penalty would be $1,500....oops.



RMD Table - Required Minimum Distribution

 

[fried1765]

I'm in good shape financially but, I wish I had taken full advantage of the Roth IRA.

And, I believe most of the income requirement estimates are based on a married couple. I'm single with very little family. I can live comfortably on almost nothing.

Each to their own.

Same here......divorced 25 years ago.
That WAS expensive!
I do have a long time live in, but she has her own house in FL.
We share houses seasonally.

Retired 20 years ago.
Retirement was mandatory at age 60, and I knew that the day I began the job.
I we live comfortably on what little she has, and about 40% of what I made.
I did have a job that paid well.

 

[Richard]

I am also a school teacher with 7 years invested in the retirement system. You need 30 years to retire with full benefits of 60% of your best 3 years. Doubt I will make it to 30 with the way kids are now a days. I feel like I am not doing great in my preparations for retirement, but it could be worse.

What advice do you have for us "youngins"? Those of us who have +/- 20 years left in the rat race. Please enlighten us!

And BTW thanks for all of the great insight thus far.

Do you teach in TN or GA?

If you teach in TN, you are in "TCRS" which is the TN Consolidated Retirement System. As such, you are then either a "Legacy" or "Hybrid" teacher.... if Legacy you are accruing your pension at roughly 1.5% per year and if you are Hybrid you are accruing at 1%/year. So after 30 years, as a Legacy, you'd have 47.25% of your "AFC" (your highest 5 consecutive years) or if Hybrid, 30% of your AFC.

You can't control either.....but you can INFLUENCE your pension a bit.... you can coach something.... you can drive the bus.....both get you paid and both would serve to RAISE your AFC which in turn would raise your pension.

Realistically the place where YOU can control things is in your 401K.... so that is where you'd have to focus your efforts.


If you are a teacher in Georgia, then I have no idea.

As it happens.... I'm one of about 15 people in the entire State of TN.....that happen to be one of your TCRS reps and my job is to help anyone in the State system.

If you have any questions you are free and invited to reach out to me personally.

 

[Bendboater]

I did not adequately anticipate the rapid rise in health insurance. If you retire before reaching Medicare age and have to purchase your own health insurance, be aware of this high (and rapidly rising) cost. At age 62, I now pay $812/month (yea, it sucks big time) for a high deductible (~$7700) plan. Hoping it doesn't go over $1000/month before I get to 65, but I suspect that is just a dream. I could go with the ACA (Obama Care) but prefer not to. The only "advantage" is that, since it is a "high deductible" plan, I can continue to contribute to my HSA (Health Savings Account) which you can no longer do once you reach Medicare Age. IMO, a HSA is an even better retirement tool than IRA's or 401K (above the company match that is) because the monies are completely tax free .... as long as it is spent on medical expenses (including Medicare premiums and long term care).

Good luck on your journey.