Jump to content
RalphWaldoMooseworth

So I went to a Vanguard Retirement Seminar yesterday

Recommended Posts

Interesting how 4% annual withdrawal from savings is sort of a breakpoint below which things look much mo better than above.

Interesting how when he asked who thought boredom would be a problem, scoffing abounded!

What got me though was mention of the psychological adjustment from accumulating savings to declining savings.  That one is going to be tough.  I also need to see how the 80% replacement income applies to me - sounds pretty darn high to maintain.  But the only real decrease is commuting costs.

 

Share this post


Link to post
Share on other sites

I never got the 80% thing. Maybe if you live a lavish lifestyle and want to continue to do so. I have 5-7 years before retirement but I will get 60-62% of my gross once I do. I also have a deferred comp plan which has accumulated nicely. Our home is paid for and we have no other debts.  We should be able to do the things we want and be quite comfortable.

Share this post


Link to post
Share on other sites
2 minutes ago, Zackny said:

I never got the 80% thing. Maybe if you live a lavish lifestyle and want to continue to do so. I have 5-7 years before retirement but I will get 60-62% of my gross once I do. I also have a deferred comp plan which has accumulated nicely. Our home is paid for and we have no other debts.  We should be able to do the things we want and be quite comfortable.

There is never enough money in retirement unless you're a 1%er.  There will be disasters like failed wells and trees falling on your home or floods when the drain system backs up or medical costs that will eat up your retirement faster than you could possibly believe.  I'd mention more but I don't want to depress you.

Share this post


Link to post
Share on other sites
32 minutes ago, maddmaxx said:

medical costs that will eat up your retirement faster than you could possibly believe.

This is the one expense I find most challenging to plan for.  I can estimate with a reasonable degree of accuracy how much I will spend on housing, utilities, food, entertainment and other expenses 20 years from now.  The one wild card is medical expenses.  You have no way of knowing what health issue that you will need to address so there is no way to properly plan for medical expenses.

Share this post


Link to post
Share on other sites
17 minutes ago, Mr. Silly said:

This is the one expense I find most challenging to plan for.  I can estimate with a reasonable degree of accuracy how much I will spend on housing, utilities, food, entertainment and other expenses 20 years from now.  The one wild card is medical expenses.  You have no way of knowing what health issue that you will need to address so there is no way to properly plan for medical expenses.

How does Medicare/Medicaid play into your retirement plans? My mom seems to be doing fine at 70+ using solely the Medicare system.  Lots of surgeries and many, many visits to various doctors for check-ups and tests. 

For me, the wildcard is the years from retirement (hopefully at 55) to the START of Medicare coverage.  I need to get informed on how Medicare works.

Tom

Share this post


Link to post
Share on other sites
2 minutes ago, Razors Edge said:

How does Medicare/Medicaid play into your retirement plans? My mom seems to be doing fine at 70+ using solely the Medicare system.  Lots of surgeries and many, many visits to various doctors for check-ups and tests. 

Tom

From what I've gathered from my mother is a) Medicare covers 80% of medical costs b) you can get "gap insurance" to cover the 20% c) gap insurance costs about what you'd spend for health insurance from when you're working and d) expect to go broke if you don't have gap insurance.  

Share this post


Link to post
Share on other sites
1 minute ago, Mr. Silly said:

From what I've gathered from my mother is a) Medicare covers 80% of medical costs b) you can get "gap insurance" to cover the 20% c) gap insurance costs about what you'd spend for health insurance from when you're working and d) expect to go broke if you don't have gap insurance.  

Hmm.  I think my mom, who has had knee replacement surgery and had cataract surgery (including correcting her vision) and many, many diagnostic tests, has either been able to negotiate the out-of-pocket expenses to essentially zero or has found some other loopholes.  She has zero income beyond social security, so maybe that has a big impact - ie qualifying for "assistance" or low income waivers?

Tom

Share this post


Link to post
Share on other sites
2 minutes ago, Razors Edge said:

She has zero income beyond social security, so maybe that has a big impact - ie qualifying for "assistance" or low income waivers?

Thinking about my own comment, it would be interesting to see if you could convert retirement savings and personal property to a "trust" (or similar), and thus reduce your income and assets to below a threshold where medical costs are simply deferred, reduced, or relieved completely.

Tom

Share this post


Link to post
Share on other sites
1 hour ago, RalphWaldoMooseworth said:

What got me though was mention of the psychological adjustment from accumulating savings to declining savings.

This is my worry when I retire in 2 years. I felt guilty after I quit my part time job of teaching college night classes. I wasn't enjoying it anymore and didn't need the money; however, I felt guilty every time I drove by the college for a few years.

Share this post


Link to post
Share on other sites

Was this a seminar given at work, Ralph, or somewhere else.  One tip on the medicare supplement plans, if you want one, be sure to get it when you sign up for medicare originally.  If you delay, the plans can do "medical underwriting" and either deny you for pre-existing conditions or charge you more. 

One other expense that goes away when you retire is "saving". Consider that some percentage of your current income is likely deferred to a 401(k) or other savings options.  One economist talks about how unlike the standard 80% rule a lot of people use, most people actually have a curve to their expenses with an increase during early retirement (people doing travel or delayed house repairs), then expenses get a bit less as people tend to slow down, with expenses going up a bit at the end if you have to pay for extended nursing care which isn't covered by Medicare.

Share this post


Link to post
Share on other sites
28 minutes ago, Razors Edge said:

For me, the wildcard is the years from retirement (hopefully at 55) to the START of Medicare coverage.  I need to get informed on how Medicare works.

Tom

Who knows whether ACA will survive, but currently, subsidies depend on annual income and not accumulated savings.  So many retirees can manage their withdrawals so they're using post-tax savings (amounts not in 401ks or IRAs) before medicare eligibility, to keep their incomes low and  qualify for subsidies.  People who are retiring with pensions have less flexibility in this area, but they may also still be covered by retiree medical plans.

Share this post


Link to post
Share on other sites

...IME, the time period when people go broke because of medical expenses is either catastrophic illness like cancer, or end of life care, which is poorly addressed under Medicare beyond 60 days.

And it's usually the healthy, surviving partner in a marriage who ends up living out whatever remains of his/her life in severely reduced circumstances.  I saw this a lot when I worked fo' de gubb'mint, picking cotton in the paper mill. :(

Share this post


Link to post
Share on other sites

One advantage working where I do is we get to use our accrued sick leave to continue our insurance post retirement. If you have the max, 1500 hours, you will be covered for life.

Share this post


Link to post
Share on other sites
1 hour ago, Razors Edge said:

Hmm.  I think my mom, who has had knee replacement surgery and had cataract surgery (including correcting her vision) and many, many diagnostic tests, has either been able to negotiate the out-of-pocket expenses to essentially zero or has found some other loopholes.  She has zero income beyond social security, so maybe that has a big impact - ie qualifying for "assistance" or low income waivers?

Tom

She's lucky she can find doctors who will accept medicare as the sole payee.  For skin tumors I had to drive my sis in law on a 75 mile round trip to the doc.  She lived a block and a half away from a hospital complex but no takers there.  If you listen to the ads you will hear the words "any doctor you want if they accept medicare".  Many doctors don't want to negotiate their prices down to medicare levels if they have enough patients with insurance plans.  This is how you learn that our current system has bloated prices because of greed.

Share this post


Link to post
Share on other sites

I am lucky.  I have no debts.  I have Medicare and good health insurance to boot.  I have a good retirement income.  Every year of my retirement, I have spent less than I took in.  My estate has actually grown significantly since I retired.  

Also, I have plenty of stuff to keep me busy.  I am certainly not bored.  I think retirement has proven to be the career that suits me best.  :)

Share this post


Link to post
Share on other sites
Just now, Road Runner said:

I am lucky.  I have no debts.  I have Medicare and good health insurance to boot.  I have a good retirement income.  Every year of my retirement, I have spent less than I took in.  My estate has actually grown significantly since I retired.  

Also, I have plenty of stuff to keep me busy.  I am certainly not bored.  I think retirement has proven to be the career that suits me best.  :)

So you are one of the few people who are not spending his kids' inheritance!

Share this post


Link to post
Share on other sites

I thought I had it figured out, but I forgot to add in depression treatment.

My savings currently add up to almost 20%, so I guess I'm at that 80% number already.  Now if my retirement fund would support that 80%........

 

Share this post


Link to post
Share on other sites
7 hours ago, RalphWaldoMooseworth said:

Interesting how 4% annual withdrawal from savings is sort of a breakpoint below which things look much mo better than above.

Interesting how when he asked who thought boredom would be a problem, scoffing abounded!

What got me though was mention of the psychological adjustment from accumulating savings to declining savings.  That one is going to be tough.  I also need to see how the 80% replacement income applies to me - sounds pretty darn high to maintain.  But the only real decrease is commuting costs.

 

The 4% number was originally developed by T. Rowe Price in the 1990's to show that even though long-term balanced bond/stock might produce and average 7.5%.

The reason is that if there is a down year in stocks, your 7.5% withdrawal might be 15% of the value the year before stocks crashed, and it's hard to make that 15% back.

Since then, much lower bond rates, etc. have meant that the 4% might need adjustment depending on what your income sources are.

Share this post


Link to post
Share on other sites

The way I heard it William Bengen developed the SWR in 1994. 

https://en.wikipedia.org/wiki/William_Bengen#CITEREFBengen1994

Then some profs at Trinity University popularized it. Now sometimes called the Trinity Study

I'm using 3% as a rule of thumb. My party money will be my bottle deposit money that i pick up on my walks

Share this post


Link to post
Share on other sites
9 hours ago, RalphWaldoMooseworth said:

Interesting how 4% annual withdrawal from savings is sort of a breakpoint below which things look much mo better than above.

Interesting how when he asked who thought boredom would be a problem, scoffing abounded!

What got me though was mention of the psychological adjustment from accumulating savings to declining savings.  That one is going to be tough.  I also need to see how the 80% replacement income applies to me - sounds pretty darn high to maintain.  But the only real decrease is commuting costs.

 

I highlighted your statement...that will be the tougher one.  

I'm always bemused by people who aim to retire in their early 50's  (vs. being laid off and having difficulty finding permanent/full time work).  Sure $1 million  @45 yrs. old, looks like a lot right now even without any debt..but with inflation if one lives to 90-95 yrs. old, that money needs work hard in the bank or one just lives a modest lifestyle.

In buying my bike light recently...I nearly got nostalgic for $20.00 light I paid 20 yrs. ago vs. now $46.00 and that is a somewhat lower end light.

Should bookmark this thread for any CAnadian who bitches about our health care system...those who complain have no clue how lucky they are  -- especially if they live in major city.  It's not perfect but I haven't had to game the system even when I was unemployed.  To get surgery when I am unemployed vs. employed, there is no difference in what I consider in "costs" for the procedure. The biggest would be drugs post surgery..which employer's benefit might subsidize.   For instance I had a mandatory colonoscopy a few years ago..no direct pocket cost and later when I am retired, I will be required to have it. (Every 10 years if one is healthy), No direct pocket cost.  Except for laxative...:(which is fine).  

 

 

Share this post


Link to post
Share on other sites
14 hours ago, Scrapr said:

The way I heard it William Bengen developed the SWR in 1994. 

https://en.wikipedia.org/wiki/William_Bengen#CITEREFBengen1994

Then some profs at Trinity University popularized it. Now sometimes called the Trinity Study

I'm using 3% as a rule of thumb. My party money will be my bottle deposit money that i pick up on my walks

Thanks for the history and context, things I always enjoy knowing. :) 

Share this post


Link to post
Share on other sites

Yep, be sure and apply for your medicare at the appropriate time.  I didn't and did not want to pay the penalty they charged to join at a later time.  I still carry the insurance that I've had for many years with payroll deduction.  So far, we are doing fine, but one never knows what the future holds.  I retired at 64 and am pretty sure I was not mentally or financially ready at 55.

Share this post


Link to post
Share on other sites
23 hours ago, Kirby said:

One other expense that goes away when you retire is "saving". Consider that some percentage of your current income is likely deferred to a 401(k) or other savings options.  One economist talks about how unlike the standard 80% rule a lot of people use, most people actually have a curve to their expenses with an increase during early retirement (people doing travel or delayed house repairs), then expenses get a bit less as people tend to slow down, with expenses going up a bit at the end if you have to pay for extended nursing care which isn't covered by Medicare.

The way how I look at it, is to do more vigorous travel while still healthy and also travelling overseas, when a person is less bothered by "foreign" conditions/significant environmental differences.  All more the reason to cultivate long-term passions that are done indoors or near home for hrs.  At this time, I don't have a huge bucket list of foreign places...just priority ones outside of North America. It helps a lot  (for me) to already to live in cities with highly diverse populations.  

It's just a bother to live in such a huge country like Canada with family and friends scattered across.  If we weren't car-free for past few decades, we wouldn't have been able to do the range of travel outside of Canada.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now

  • Recently Browsing   0 members

    No registered users viewing this page.

×