Annual costs- better than decades ago

[shootingstar]

Only in past 2 yrs., I have estimates. I don't even track every cost every category, like Mick.   Too much detailed work in my personal life...when I have job that demands a large chunk of precise documentation or I've confused several hundred people which cascades into more problems.

I just look my credit card monthly amount and make sure charges are legit. Then if insurance, electricity and other monthly costs look normal, I give it a pass.

Still for lazy me, better than clueless.   Better than functioning by "feel" for past, few decades.  Suck up rare unexpected large costs. Yes, surprised at  latte compounded costs. As long I can save some moolah every month. 

So a friend wants to throw in the towel, but knows she can't retire early (she's younger by at least 6-8 yrs. than I), is sorta inching towards a work-free future. She claimed to me, she didn't know her costs. She  does set aside a certain minimum or % every month to save.

[Razors Edge ★]

10 hours ago, shootingstar said:

So a friend wants to throw in the towel, but knows she can't retire early (she's younger by at least 6-8 yrs. than I), is sorta inching towards a work-free future. She claimed to me, she didn't know her costs. She  does set aside a certain minimum or % every month to save.

Down here in the USofA, I think lots of folks are considering throwing in the WORK towel.  I was riding the other day, and passed an older couple on bikes riding together, and had two thoughts - 1) AWESOME to see both a couple and a pretty old couple out riding the country roads on road bikes, and 2) my wife and I need to make sure that is "us" sooner rather than later.  IOW, I want to be riding when I am older, but I also want to be riding NOW when I can, as much as possible, enjoy it and maximize it.  Living to 70, 80, and beyond is not even remotely guaranteed, so starting the "golden years" at 60 or 55 is more important to me than starting at 65 or 70.

With the massive 10+ year run-up of the stock market in the US (still banging out records regularly), folks have "paper" wealth beyond imagination, and can start thinking, "What's the point of all this money if I don't actually enjoy is ASAP?".  I'm rapidly falling into that category of if not now, when?

Retiring but not starting Social Security

Fawn Michel, a certified public accountant living in Port Orchard, Wash., retired in May at 62 but doesn’t plan to take Social Security until she turns 70.

Early this year, she and her husband analyzed their fast-growing portfolio and realized she didn’t have to keep working. As long as they kept their expenses near their pandemic lows, she could afford to retire without taking Social Security early. As her firm returned to the office, she wouldn’t have to drive two-plus hours to work in a Seattle suburb each day, then drive two-plus hours back each night.

“I just decided I’d had enough, you know?” Michel said, adding that the pandemic had really changed her thinking on retirement. “When you have friends and family dying from something like this, I’m thinking, ‘Well, you do this now, or maybe it’s never going to happen.’”

[goldendesign]

21 minutes ago, Razors Edge said:

I think lots of folks are considering throwing in the WORK towel. 

Consider this: 

Retirement age is 66, the average lifespan is 78. Twelve years of retirement is a sad return on all that effort.

[donkpow]

You can still make money even if you don't go to work every day. Many income opportunities don't require constant tending. You may not see the kind of returns you see while working. Or you could get filthy rich and get taxed like a mofo.

[Razors Edge ★]

18 minutes ago, goldendesign said:

Consider this: 

Retirement age is 66, the average lifespan is 78. Twelve years of retirement is a sad return on all that effort.

I do consider 0-21 (childhood - college) as freebie time too.    But, yeah, working 45 years for ???  Sort of a first world problem, but once you have "enough" of "it", more of "it" isn't required, so you need to redefine what the next "it" is going to be.

[Further]

I realized the other day that I have been paying Social Security tax’s for over 50 years 

I started my first real, reportable job at 14

[Razors Edge ★]

14 minutes ago, Further said:

I realized the other day that I have been paying Social Security tax’s for over 50 years 

I started my first real, reportable job at 14

Time to RUN!!!! You CAN DO IT!

I started a 15, so only 36 years in, and I doubt it was much in those 15-21 years (and really not until 30) that the numbers mattered.  How many years does SS use for the calcs?  Best 10? Best 20?  This is a little vague, "we choose those years with the highest indexed earnings", so not sure how many they choose.

 

When we compute an insured worker's benefit, we first adjust or "index" his or her earnings to reflect the change in general wage levels that occurred during the worker's years of employment. Such indexation ensures that a worker's future benefits reflect the general rise in the standard of living that occurred during his or her working lifetime.

Up to 35 years of earnings are needed to compute average indexed monthly earnings. After we determine the number of years, we choose those years with the highest indexed earnings, sum such indexed earnings, and divide the total amount by the total number of months in those years. We then round the resulting average amount down to the next lower dollar amount. The result is the AIME.

An insured worker becomes eligible for retirement benefits when he or she reaches age 62. If 2022 were the year of eligibility, we would divide the national average wage index for 2020 (55,628.60) by the national average wage index for each year prior to 2020 in which the worker had earnings and multiply each such ratio by the worker's earnings. This would give the indexed earnings for each year prior to 2020. We would consider any earnings in or after 2020 at face value, without indexing. Then we would compute the AIME and use this amount in computing the worker's primary insurance amount for 2022.

[Kirby]

I believe they take the highest 35 years.  So if you have 40 years, they drop the lowest 5.  If you have 30, they add "0"s" for 5 of the years.

But the amounts are indexed for inflation.  It's worth checking your earnings history either online or in your old written statement.  My sister noticed  they had one year marked with a zero, even though she had earnings that year  .

 

[Further]

23 minutes ago, Razors Edge said:

Time to RUN!!!! You CAN DO IT!

I started a 15, so only 36 years in, and I doubt it was much in those 15-21 years (and really not until 30) that the numbers mattered.  How many years does SS use for the calcs?  Best 10? Best 20?  This is a little vague, "we choose those years with the highest indexed earnings", so not sure how many they choose.

 

When we compute an insured worker's benefit, we first adjust or "index" his or her earnings to reflect the change in general wage levels that occurred during the worker's years of employment. Such indexation ensures that a worker's future benefits reflect the general rise in the standard of living that occurred during his or her working lifetime.

Up to 35 years of earnings are needed to compute average indexed monthly earnings. After we determine the number of years, we choose those years with the highest indexed earnings, sum such indexed earnings, and divide the total amount by the total number of months in those years. We then round the resulting average amount down to the next lower dollar amount. The result is the AIME.

An insured worker becomes eligible for retirement benefits when he or she reaches age 62. If 2022 were the year of eligibility, we would divide the national average wage index for 2020 (55,628.60) by the national average wage index for each year prior to 2020 in which the worker had earnings and multiply each such ratio by the worker's earnings. This would give the indexed earnings for each year prior to 2020. We would consider any earnings in or after 2020 at face value, without indexing. Then we would compute the AIME and use this amount in computing the worker's primary insurance amount for 2022.

Well, that clears it up 

[shootingstar]

2 hours ago, donkpow said:

Many income opportunities don't require constant tending. You may not see the kind of returns you see while working. Or you could get filthy rich and get taxed like a mofo.

One can do both, work and investments. Sure getting taxed hugely is a problem unless one finds a Panama-like escape...which one can get caught eventually or super generous donation to charity as per tax law.

Amazing how this thread went into a different direction than expected..

[shootingstar]

2 hours ago, goldendesign said:

Consider this: 

Retirement age is 66, the average lifespan is 78. Twelve years of retirement is a sad return on all that effort.

Dearie retired at 58 and died @77. He worked for his firm for 40 yrs.  He auto-paid into federal Canadian govn't pension plan   CPP,  just like every other working person. However he choose to delay benefit payments until 72.  So as his partner, I am getting only % (as defined by law), what he paid into...after all the yrs. of work. I know he would be  pleased his effort/payments weren't  wasted.

[donkpow]

11 minutes ago, shootingstar said:

One can do both, work and investments. Sure getting taxed hugely is a problem unless one finds a Panama-like escape...which one can get caught eventually or super generous donation to charity as per tax law.

Amazing how this thread went into a different direction than expected..

The point I was trying to support was that from Razor's Edge. A person can go ahead and retire and fulfill ambitions, whatever and still have income. Then you add the social security, pension, 401K, etc. and you could sit pretty into later years.

[Square Wheels]

3 hours ago, goldendesign said:

Retirement age is 66

67 for me.

[Kzoo]

3 hours ago, goldendesign said:

Consider this: 

Retirement age is 66, the average lifespan is 78. Twelve years of retirement is a sad return on all that effort.

You are missing a statistical point here.  If the average lifespan is 78, a whole bunch of statistical data points have to have passed away long before you turn 66 to create that number of 78.  So without doing the math, statistically speaking, if you live to retirement age of 66 there is a great chance that you will live well past the average life span of 78 because others have driven that number down - not you.

[goldendesign]

24 minutes ago, Kzoo said:

You are missing a statistical point here. 

You're right. We can further quantify it with a little CDC data from 2018 applying the sample data of deaths in the last 10 years to a lifetime-distribution function with a Kaplan Meier curve we have some variances:
 

The general male population in the US has:

84% will survive to 65

68% to 75

58% to 80

25% to 90

This is a sample validation method, applying this model to yourself adds more layers of complexity and I haven't ran the math on it yet.

 

[Razors Edge ★]

57 minutes ago, Kzoo said:

You are missing a statistical point here.  If the average lifespan is 78, a whole bunch of statistical data points have to have passed away long before you turn 66 to create that number of 78.  So without doing the math, statistically speaking, if you live to retirement age of 66 there is a great chance that you will live well past the average life span of 78 because others have driven that number down - not you.

And statistically speaking, YOU have no idea which side of the coin you're on.  The longer you live, the longer you'll likely live - statistically speaking, but clearly, for every winner there are losers.  Waiting to enjoy retirement until 70 seems a guaranteed way to miss 1) the healthiest part of "retirement" and 2) a hopeful wish that you're on the winning side of statistics - year after year.

But we do need folks working as long as possible, so I support other folks decisions to do so!

[shootingstar]

50 minutes ago, goldendesign said:

You're right. We can further quantify it with a little CDC data from 2018 applying the sample data of deaths in the last 10 years to a lifetime-distribution function with a Kaplan Meier curve we have some variances:
 

The general male population in the US has:

84% will survive to 65

68% to 75

58% to 80

25% to 90

This is a sample validation method, applying this model to yourself adds more layers of complexity and I haven't ran the math on it yet.

 

Generally speaking women live abit longer...we must talk alot more to air our frustrations / anger. Very therapeutic.        

 

[shootingstar]

18 minutes ago, Razors Edge said:

 but clearly, for every winner there are losers.  Waiting to enjoy retirement until 70 seems a guaranteed way to miss 1) the healthiest part of "retirement" and 2) a hopeful wish that you're on the winning side of statistics - year after year.

But we do need folks working as long as possible, so I support other folks decisions to do so!

So very true.

[Razors Edge ★]

8 minutes ago, shootingstar said:

Generally speaking women live abit longer...we must talk alot more to air our frustrations / anger. Very therapeutic.        

 

I've never seen a "life-expectancy" list where they factor out via risky behavior.  As Kzoo writes with "statistically speaking" - men work (and die) in greater numbers because they are also over-represented in more risky professions (and often behavior in general).  Military, police, mining, and all the "most dangerous jobs" stuff is usually massively over-represented by men.

Soft girly men like me, though, have to do better against the "general" stats for life expectancy!