I'm 48, so 62 isn't exactly around the corner. We have 5 years left on the house and no other debt. I've never factored in what my SS payout would be.
OT Retirement
- Thread starter TampaBaySkers
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Agreed healthcare is huge and costs are only going to continue to rise.
That is true. 99% of the time I have been with just one friend and we get paired up it has been great.
Agree with this. I do not factor SS at all. If it’s there, it’s a bonus. Though I would be pissed if it wasn’t there after contributing for my life it won’t change my retirement goals.
The debt free advice is good. But if you refinanced to below 4%, I wouldn't pay extra on your mortgage. If you are at 3% or lower, definitely not. Better to have more liquidity, especially at the 4-5% online savings account rates.
It will be there. People have been talking about the demise of social security since I was a kid. It is the one thing a huge majority of the population wants.
It's about diversified streams of cash flow, not about a magic lump sum number.
If you have to hit 10 mil before checking out, hardly anyone can retire.
If you have to hit 10 mil before checking out, hardly anyone can retire.
I would challenge you to prove that buying only two rental properties was "dumb". It sounds like you've done an excellent job managing your money. I would assume that you invested the money that could have went into an additional rental property. You may have more net worth today with only those two properties.
Social security isn't going anywhere. Eventually, the politicians will stop arguing with each other long enough to make some unpopular decisions-- like raising the limit on social security tax past $168,000, moving back full retirement age another year or two, raising the social security tax.
By dumb I violated the rule that I had always taught students - don't get caught in the present, look at the future value of money and plan for it. In other words, I was too conservative which is opposite of my investing when I was in my earning years, I was aggressive. Go figure
I’m not saying that everyone needs to meet that number - that’s just my personal number goal to do what I hope to do and hopefully pass on a chunk for my kids and grandkids. I’m not planning on any inheritance from my folks and hope to change that for my kids.
Any retired teachers here want to chime in on how the Nebraska teachers retirement pension fulfills future needs? Right now if 9 percent of my gross pay is going to the retirement system and the school kicks in another 9 percent, how much extra should a person be investing in an IRA/roth? Right now I’m below the yearly max but hope to be maxing out my Roth in a few years.
It wasn't you who initially put the number out. Congrats on getting there, though.
They could do little things like means testing, you pay the same flat rate regardless of how high your income is with no cap, if you don't pay---you get any out, but of course, they don't have the political will to touch this political hot potato.
Did I not satisfy your curiosity with my solution to your silly "block" of gold comment?
Try again.
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Another retirement item - early in my career I only had a standard 401k. When I learned about Roth IRA’s and then my work later adopted Roth 401k I’ve tried to invest heavily in them in an effort to reduce my tax burden when I retire by pulling portions for each.
Also I’m sure many know - but if your income is higher than the allowed for Roth IRA contributions you can backdoor them by depositing into your traditional IRA and then rolling it into a Roth IRA.
Also I’m sure many know - but if your income is higher than the allowed for Roth IRA contributions you can backdoor them by depositing into your traditional IRA and then rolling it into a Roth IRA.
I guess you can say it was a dumb move if you want. I read it as you being too critical of yourself. My thought is that investing well in the stock market, especially over the past 15 years, would do just as well at out pacing inflation as buying additional properties and with far less headaches. Dropping $200,000 in VFIAX (instead of buying a house) 15 years ago at $70 a share would look pretty good right now.
I get reducing the tax burden in retirement but I ran some scenarios and found I didn't save any on taxes and probably would end up paying more using the Roth 401k in the middle of my career. I already had a Roth too, so I already had non-taxable income covered.
I do agree a Roth is key to diversifying the retirement income stream. I try to get the young guys at work to start one but they tell me 3% for a 401k is all they can afford.
The no cap idea is a good one. I'm not sure how much extra income that brings in. I'm guessing is what ultimately happens is a combination of things.
I don't totally get what you are asking.
I think in Nebraska will you get like 80% of your last 3 years salary?
Time in the market is the key. If they wait until it's finally more comfortable for them to invest in a Roth, they will be giving up 10-15 years of compounding on the back end.
I look at like this - if you invest $7,000/year into a Roth IRA over 30 years you would have put in $210,000 - of taxable income. The value (assuming 10% return annually) is $1.3M. $1.1M where you do not have any taxes - which will continue to grow as it would be unlikely you would pull it all out at once.
Obviously this calculation doesn’t account for the additional investments you could make by saving on taxes for that $210,000 and what it would turn into. The younger you are the more a Roth makes sense in my opinion, but to your example it’s also where you likely have the tightest budget to invest so the tax saving is a big deal.
I've heard it said that your 9% match plus your contribution can be figured as putting in 18% yearly for retirement. And that's a pension, which is a wonderful thing. You could just let it go at that and say that you have done enough. But what you are doing is much better. The pension is pretax and its conservatively invested. So adding a Roth (maxing it out if possible) is a perfect complement to that. And I would look at the pension as a huge bond allocation. So in your Roth, focus solely on index funds. No need to invest in bonds.
I'm not a retired teacher, but I believe that you make, what, an extra 2% on your pension for every year past your first year of retirement? The longer you go, the better. The longer you wait to collect social security the better-- that goes up 8% each year if I recall. So it depends on how long you go. The longer the better. But the simple answer is social security would make up 35-40% of your income and your pension will be Years of Teaching x 2. Retire at 55 with 33 years of teaching? You will get 66%. Retire after 40 years, you get 80%....
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If you don’t plan on taking it all out at once isn’t a traditional ira/401k better? You can take out just a little per year and be taxed at a low income rate. Most likely much less than you’d be taxed today.
Of course none of us know what future tax rates will be so I understand the certainty that a Roth brings.
This is the conclusion I came to. I don't plan to retire until my house and a couple of newer vehicles are paid off. Under that scenario my income would drop considerably from pre-retirement. Running those scenarios, it looks like I would pay more in taxes using the Roth 401k option this late in the game. But full disclaimer, I already had a Roth, so that decision was pretty easy for me. Not so much so for someone without a Roth.
Right now I kind of think of my pension as something that will be a bonus which is silly considering it will be a big part of my retirement, but I am definitely trying to supplement my future retirement with the Roth , I find myself worrying that I am not doing enough but from what I hear from retired teachers is they never knew it would be as good as it is for them in retirement, but I don't know what else they did on the side to gain that either. Personally I hate the pension because when you die it dies with you depending on what retirement option you choose, you take less money in order to ensure your beneficiary gets something from it in case you die. Id rather take my 9 % and a school/company match to have and to hold as my own but I get that most people wouldn't invest wisely and be broke at 60. Right now, there is now way I will wait to retire at 60, I am retiring from teaching as soon as I can and going to do something else until 65.
I think it's more like 65% of your top 3 years salary in education. That's why you see a lot of older teachers take a swing at an admin job in their last few years to bump up the retirement.
Oh yeah, for sure. I am in teaching too, I totally get it. I guess I just thought it was a bit higher.
I have had, you as well I imagine, a lot of retired teachers that end up working in my building for a few years. Usually they start to fall in love with the extra money and stick around longer than they thought they would.
For example the NU coaching staff. I'm rounding numbers up or down here, but the 11 coaches make @ 16.5M a year.
Rhule makes 153,000.00 a week, so by the 2nd week in January he has satisfied his cap.
If 11 coaches make 16.5M and they collectively pay 1.8M in Social Security since some reach their cap a lot earlier than others, that still leaves 14.7M that isn't taxed with SS because of the 168K cap.
Another @ 8% in Social Security withholding on just this staff alone would add $ 1,176,000.00 to SS.
I'd say with no cap, nationwide it would generate a shitload of money for Social Security.
Take NBA teams, MLB, Hockey, Top PGA players, NFL teams and that is a TON of money, just from athletic entities. The other 100's of college coaches, college basketball coaches, though with much smaller staffs. Then add your University Chancellors, Presidents, etc.
Then add the CEO's, Presidents and VP's of manor companies, etc. Even tens of thousands of school district Superintendents that make way in excess of 168K a year.
That doesn't include the other 300 million citizens, where a % of citizens make way in excess of 168K a year. Next thing you know, millions of additional dollars turn into billions of additional dollars.
I promise you, they wouldn't want me writing the parameters based on everyone paying @ 8% of their gross income with no cap, and I would also instill a cap on how much is the maximum amount any individual can draw at different retirement ages.
Even that stupid ass $ 255.00 death benefit should be phased out. Maybe, with an exception being those who have a 1K or less social security payment. But, does 255.00 really make any difference to 99% of the people? I don't think it matters.
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One thing you could consider if your pension ends when you pass, is purchase a relatively inexpensive 20-30 year level term policy for quite a large face amount to pass on to your wife or children to lessen the impact of what would be a missing pension.
As a side note, I always recommend you purchase a OPAI that is an option to buy addiitonal insurance in the event you are stricken with a nasty illness and feel the need to leave more money to you heirs. Just my opinion because OPAI is super cheap.
OPAI is an acronmy for "Option To Purchase Additional Insurance". The purpose it serves is in the event you are stricken by a nasty illness that would otherwise make you ineligible to buy more insurance. It guarantees you the right to purchase more (as a %) as part of the insurance contract.
Good to know, that was something that wasn't mentioned to me 6 years ago when my wife and I purchased 30 year term limit insurance.
Wow, this turned into a depressing, apocalyptic thread.
I never really thought about retirement, but wife and I always saved around 10% of income and had it in mostly stock funds. Around age 50 I had a friend at work who was the "jailhouse financial planner" and he encouraged me to list out anticipated income streams in retirement and what I spent to live at the time. He suggested I track EVERY expense for a year to get a baseline. That was too much work so I did buckets like insurance, healthcare, mortgage, food, fun to get a general idea where my money went. I adjusted my spending and savings numbers every quarter. When we got to around age 60 and had no debt we made the decision to retire because the income streams added up to a fair amount more than living expenses, which left wiggle room for inflation and a nice vacation once a year. Things were a little tight until we both took Social Security at age 62. We were fortunate that one employer let us continue paying on the company insurance plan to age 65.
So my answer to your question is everyone's circumstance is different. If you start calculating your numbers as early as possible, stay on top of how your savings and investments are going, ultimately decide how much you need to live your lifestyle in retirement, then the numbers will guide you toward what age and nest egg is required to retire.
My wife and I both volunteer, a couple organizations we volunteer together and we each have one or two of our own agencies. It is great working with other people who give time, we have made many new relationships, and are so busy the concept of being "bored" isn't thought of. Plus we spend time with family. I loved my job I worked at for many years and most of the people, but I put it behind me and do not miss getting up at 5 am everyday and commuting to work.
As far as doom and gloom, I'm thinking of buying some physical gold, but for the most part what is going to happen is going to happen and I can't let thoughts of that interfere with me living a normal life.
And to the folks who want to remove the contribution cap and means-test Social Security, you do realize that doing so causes it to be a welfare program and not "old age insurance". If that is what you want to do to save it, fine, but let's call a spade a spade. It will then be another government welfare program.
I'm not in the insurance game, and I don't know (without checking) If you could now add an OPAI after the fact. But, its worth asking your agent because it does serve a great purpose and its always been very inexpensive to add.
When my grandson got a great job I told him to protect his wife, and their now young family. I made it a point to tell him not to forget to add the OPAI to his rather large insurance contract, I think it only cost about 5.00 - 7.00 a month more for a 3 Million dollar face amount. I could be wrong.
I agree and applaud you on 90% of what you posted here. As far as the last paragraph, I don't agree.
My position is, if you didn't contribute, you don't receive money from Social Security.
Among other things that no "cap" would do is replenish funds in the account caused by the number of deaths suffered from folks in the younger age groups that obviously, would no longer contribute to Social Security.
Based on acuaries and mortality tables, no one knows WHO will die in those younger age groups, but we do know about how many WILL die.
As far as a welfare program, that's probably SSI, and that's a different program, primarily for folks who don't have or never did have much money.
There are a 100 pros and cons to any suggestions regarding this and many other bloated systems.
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