Preparing for Retirement

[Spikedriver]

I never thought that a portable toilet would save our butts one day, but it did.
Now back to what people should do years before they retire so they don't end up living in guvment housing and depending on food-stamps for food.
SS has always been optional and people could opt-out of it. They just never let that knowledge become publicised.
Most teachers did not pay into SS years ago.

As a railroader I don't pay into SS. Our pension is Federal, and predates SS. SS is actually modeled after our pension program. Of course, everyone who draws railroad retirement paid into it, or has (had) a spouse that did. If a railroader is eligible for a 100% retirement (360 months of service and age 60) then the railroader's spouse is eligible for 50% of that as well. So if I were to retire at 100% tomorrow and my monthly was $4000, which is about what most retirees are getting right now, my theoretical spouse would be eligible for $2000 on top of that. Seems worth it to me... I do pay into Medicare though...

 

[joel]

Spikedriver that is about what I get when you add my pension & SS.
So you did good.

 

[Spikedriver]

Spikedriver that is about what I get when you add my pension & SS.
So you did good.

I have 17 years to go before I can collect a 100% retirement. I didn't hire on until I was almost 36 years old. I'll be at least 66 1/2 when I get 360 months of service. Coincidentally, as I understand it a railroader can retire at 66 1/2 with a 100% rate if he's got 240 months of service. So either way, I'm stuck until at least April of 2039. My "out" is that at age 55 with 240 months of service, we are able to medically retire at 85% of the full rate. I should get 240 months at age 56 1/2 and could theoretically go at that time if I have a legit medical reason. However I would have no insurance until Medicare kicks in.

Another cool thing is that we can earn 13k a year in wages from any job after we retire, without affecting income from the railroad pension. So if I wanted to go be a Walmart greeter 3 days a week, I could supplement my earnings that way. I say, why not do something like that? If an older person is able to do some work, it's good for the mind and body, and I don't plan on golfing every day when I'm retired. I'll be sitting on a stool inside the door at Walmart hitting on all the retired ladies when they come in to buy cat food and crocheting supplies...

 

[Bacpacker]

My conundrum exactly.
I'm 73, and drive a small delivery truck for O'Rielly Auto Parts, delivering to commercial customers.
What am I going to do when I get too old to work? That is a real concern for me.
I'm going to see about applying for VA disability for my hearing. I thought about applying for my PTSD too - the VA treated me for it for nine years. But my wife is hesitant, too many Democrat politicians make noise every few years about denying gun rights to veterans who are on disability for PTSD.
I'm going to have to think about that for a while.......................................

RPD, not being nosy, but were you exposed to agent Orange when you were in Nam. If so that might be an in for VA disability. My dads outfit were sprayed heavily and to a man all got disability from it.

 

[Bacpacker]

I have 17 years to go before I can collect a 100% retirement. I didn't hire on until I was almost 36 years old. I'll be at least 66 1/2 when I get 360 months of service. Coincidentally, as I understand it a railroader can retire at 66 1/2 with a 100% rate if he's got 240 months of service. So either way, I'm stuck until at least April of 2039. My "out" is that at age 55 with 240 months of service, we are able to medically retire at 85% of the full rate. I should get 240 months at age 56 1/2 and could theoretically go at that time if I have a legit medical reason. However I would have no insurance until Medicare kicks in.

Another cool thing is that we can earn 13k a year in wages from any job after we retire, without affecting income from the railroad pension. So if I wanted to go be a Walmart greeter 3 days a week, I could supplement my earnings that way. I say, why not do something like that? If an older person is able to do some work, it's good for the mind and body, and I don't plan on golfing every day when I'm retired. I'll be sitting on a stool inside the door at Walmart hitting on all the retired ladies when they come in to buy cat food and crocheting supplies...

We will have to start calling you Walter when u work at WM. Spike will be sitting there tellin em to "Get your $hit and get out".
Sorry my favorite Jeff Dunham charector

 

[Morgan101]

My biggest fear with all of this is that I will outlive my money. That is terrifying to me. My parents, and my wife's parents were fine, and left a nice inheritance for all the kids. My grandparents on both sides outlived their money and were almost destitute when they died. That haunts me to this day.

My other challenge is I have a special needs son who will never work again. When we are gone the plan is for him to live with his sister. It is my responsibility to provide for him as well. She will have enough of a burden taking him in. The least I can do is reduce the financial hardship as much as possible.

I think I will be O.K. I think I have a large enough nest egg, but I am still concerned about walking away from a good paying job while I am physically capable of doing it. For those who have already retired, how do you get over that?

 

[rice paddy daddy]

RPD, not being nosy, but were you exposed to agent Orange when you were in Nam. If so that might be an in for VA disability. My dads outfit were sprayed heavily and to a man all got disability from it.

We were along the DMZ, the most heavily sprayed area in the whole country.
However, the only VA disability compensation happens if the veteran has one of the 15 diseases presumed to be caused by exposure.
Parkinson’s, prostate cancer, Type II diabetes, ischometric heart disease, non-Hodgkins lymphoma, are a few of them.
While many guys in our unit have a recognized disease and many have died, by the Grace of God I have none of them.
The VA does not award disability compensation for simply being exposed.

 

[UrbanHunter]

Okay I'm still trying to get my head around how much I will actually be receiving in retirement: I have been contributing to a retirement fund, I will get a small pension and I will get a good level of SSA. So I look at it and think well that doesn't look too bad but then I read stuff like this on the government websites:
**********
Income Taxes And Your Social Security Benefit
Some of you have to pay federal income taxes on your Social Security benefits. This usually happens only if you have other substantial income in addition to your benefits (such as wages, self-employment, interest, dividends and other taxable income that must be reported on your tax return).

You will pay tax on only 85 percent of your Social Security benefits, based on Internal Revenue Service (IRS) rules. If you:

file a federal tax return as an "individual" and your combined income* is
between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits.
more than $34,000, up to 85 percent of your benefits may be taxable.
file a joint return, and you and your spouse have a combined income* that is
between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits.
more than $44,000, up to 85 percent of your benefits may be taxable.
are married and file a separate tax return, you probably will pay taxes on your benefits.
***********

When I read this I try to apply it to my retirement planning....

I come up with this type of scenario as an example:
So if you get $1200 per month in pension, and you withdraw $1500 per month from your retirement account that is $32,400 per year. Say you get $2,000 in social security, that would put you at $56, 400 per year so you would have to pay income tax on 85% of the social security and income tax on all of the pension and pension and retirement accounts. So if I read it right you would still have to pay income tax on $52,800 per year. So you would have to pay about $4,400 in Federal income tax and about $1,500 to the state. So if you didn't plan on taxes you would be expecting $4,700 per month, but due to taxes you would be getting $4,200 per month, but what about medical insurance and any other things that are hidden expenses?

It's bad enough if you lose $500 per month but if you go into it with that in your budget plan, you could be in a big hole before you realized it was coming....

These are the things that give me heart burn... when I think about retirement....

As for @Morgan101 's fear of out living my money... Well lets call that a crap shoot, both my parents died at 55, both my grand-mothers died in their mid 90s, and one grand-father died at 69 the other died at 75.

 

[Supervisor42]

My biggest fear with all of this is that I will outlive my money. That is terrifying to me. My parents, and my wife's parents were fine, and left a nice inheritance for all the kids. My grandparents on both sides outlived their money and were almost destitute when they died. That haunts me to this day.

I think I will be O.K. I think I have a large enough nest egg, but I am still concerned about walking away from a good paying job while I am physically capable of doing it. For those who have already retired, how do you get over that?

I have the opposite problem. I was born with defective DNA and going by family history, none of us outlive our retirement funds . Compound that with the fact that I have no natural children to leave the leftovers to, the state will be very happy.

As far as retiring after it is too late and your body is too worn out to enjoy life, that is a terrible, irreversible mistake.
Our retired years are supposed to be the best years of our life that we worked decades to earn (our 'golden' years).
Wasting some of our best years by staying hooked to 'the plow', just because we can still pull it, is ridiculous.
I ran the numbers after I retired at 62... retiring 2 years earlier would have made ZERO difference financially.
That's 2 years of my life I will never get back... for any amount of money.
Don't be me.

 

[rice paddy daddy]

Yes, above a certain level, SS is taxed.
My wife and I, however, are poor enough that each year on our federal tax form our adjusted gross income is below the federal poverty level.
So, we pay nothing in income tax each year. Even working part time too.

I do not feel bad about this, I paid my share of taxes since I began working in 1964 until I retired in 2016.
I earned this.

 

[The Lazy L]

My biggest fear with all of this is that I will outlive my money. … For those who have already retired, how do you get over that?

Dad retired with no debts and savings. Dad died 10 years before mom. Dad didn’t leave mom rich but comfortable. Last two years of mom’s life we hired a M-F 5 hours a day secondary caregiver, my oldest sister was primary. If mom had lived another year we would have to sale the house and property.

I followed my dad’s example. No debts and a bit larger savings. Wife has full survivorship rights to my pension. My Social Security is enough for the normal bills plus. Pension goes into savings.

If I had enjoy my employment I would have stayed employed, more gravy for savings.

 

[Spikedriver]

@The Lazy L has a point about work. I'm the kind that would get lazy and worthless if I didn't have any job to do. Work gives me a sense of direction so I plan on doing some work. I just plan on doing a lot less of it, and not doing it hard...

 

[Morgan101]

Dad retired with no debts and savings. Dad died 10 years before mom. Dad didn’t leave mom rich but comfortable. Last two years of mom’s life we hired a M-F 5 hours a day secondary caregiver, my oldest sister was primary. If mom had lived another year we would have to sale the house and property.

I followed my dad’s example. No debts and a bit larger savings. Wife has full survivorship rights to my pension. My Social Security is enough for the normal bills plus. Pension goes into savings.

If I had enjoy my employment I would have stayed employed, more gravy for savings.

Exactly what I am doing. I don't even enjoy it, but it is easy and well paying and I work from home. How do you walk away from that?

 

[Neb]

My biggest fear with all of this is that I will outlive my money. That is terrifying to me. My parents, and my wife's parents were fine, and left a nice inheritance for all the kids. My grandparents on both sides outlived their money and were almost destitute when they died. That haunts me to this day.

My other challenge is I have a special needs son who will never work again. When we are gone the plan is for him to live with his sister. It is my responsibility to provide for him as well. She will have enough of a burden taking him in. The least I can do is reduce the financial hardship as much as possible.

I think I will be O.K. I think I have a large enough nest egg, but I am still concerned about walking away from a good paying job while I am physically capable of doing it. For those who have already retired, how do you get over that?

I can relate to both sides.

For my part I knew I would be working for myself (no taxes) and had enough of the travel required.

Now The Princess has in so many words voiced your exact concern. Not having the remodel house done yet gives her concern and add to that the inflation we are seeing. I stopped pestering about it because those are valid concerns and in the end, she will possibly out live me by 20 years.

So go with your gut and do what you are comfortable with.

Just my 2 cents

Ben

 

[Tank-Girl]

I'm on a pension and I do have a gov mandated superannuation fund which, up until the plandemic, I was unable to drawn from until I was 65.
Then the gov changed the rules and allowed Australian citizens to withdraw ten thousand dollars from their 'super' accounts tax free.
For those who don't know what superannuation is -

Australia's Superannuation is a Hybrid Retirement Fund Similar to Both Social Security and a 401K. ... The superannuation contribution is in addition to your salary, not subtracted out. For example, if your salary is $100,000. Your employer contribution to your super will be $9,500.

The Superannuation funds are linked to the stockmarket.
For the funds to be viable they need a return of over 8% just like pension funds.
That hasn't happened for a long time even in a bull market.
With so many of the ageing population retiring and a bull market sliding into a bear market I could see the writing on the wall that there was strong possibility that my 'super' simply wasn't going to be there when I retired and inflation, taxes and fees would destroy the purchasing power of what ever amount I was left with.
Plus I didn't like the idea of all those funds being under the thumb of a grossly incompetent and financially ignorant government.
I used the plandemic allowances to draw down my super fund and return my money back to my own direct control.

I'm investing in ways that are a great deal more profitable than the super fund I was in and in ways that will translate and transfer value regardless of what currency looks like in the uncertain future.

 

[Supervisor42]

...
Plus I didn't like the idea of all those funds being under the thumb of a grossly incompetent and financially ignorant government.
I used the plandemic allowances to draw down my super fund and return my money back to my own direct control.

I'm investing in ways that are a great deal more profitable than the super fund I was in and in ways that will translate and transfer value regardless of what currency looks like in the uncertain future.

This is a very important point that you touched on.
All of my assets have been under my control for decades. Not Edward Jones, or Schwab, or some 'financial advisor' that claims to be a fiduciary, but is actually just another person with his straw stuck into your drink.
Sure you have to learn about investing and finances, but it really isn't that hard to learn... as opposed to making a good pavlova.

 

[Bacpacker]

Okay I'm still trying to get my head around how much I will actually be receiving in retirement: I have been contributing to a retirement fund, I will get a small pension and I will get a good level of SSA. So I look at it and think well that doesn't look too bad but then I read stuff like this on the government websites:
**********
Income Taxes And Your Social Security Benefit
Some of you have to pay federal income taxes on your Social Security benefits. This usually happens only if you have other substantial income in addition to your benefits (such as wages, self-employment, interest, dividends and other taxable income that must be reported on your tax return).

You will pay tax on only 85 percent of your Social Security benefits, based on Internal Revenue Service (IRS) rules. If you:

file a federal tax return as an "individual" and your combined income* is
between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits.
more than $34,000, up to 85 percent of your benefits may be taxable.
file a joint return, and you and your spouse have a combined income* that is
between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits.
more than $44,000, up to 85 percent of your benefits may be taxable.
are married and file a separate tax return, you probably will pay taxes on your benefits.
***********

When I read this I try to apply it to my retirement planning....

I come up with this type of scenario as an example:
So if you get $1200 per month in pension, and you withdraw $1500 per month from your retirement account that is $32,400 per year. Say you get $2,000 in social security, that would put you at $56, 400 per year so you would have to pay income tax on 85% of the social security and income tax on all of the pension and pension and retirement accounts. So if I read it right you would still have to pay income tax on $52,800 per year. So you would have to pay about $4,400 in Federal income tax and about $1,500 to the state. So if you didn't plan on taxes you would be expecting $4,700 per month, but due to taxes you would be getting $4,200 per month, but what about medical insurance and any other things that are hidden expenses?

It's bad enough if you lose $500 per month but if you go into it with that in your budget plan, you could be in a big hole before you realized it was coming....

These are the things that give me heart burn... when I think about retirement....

As for @Morgan101 's fear of out living my money... Well lets call that a crap shoot, both my parents died at 55, both my grand-mothers died in their mid 90s, and one grand-father died at 69 the other died at 75.

Urban, this guy goes thru the tax breakdown on SS in this video. It is a stepped tax, so much up to one level, 50% at the second level, 85% at the third level. Definately more complicated than it should be. I thought he breaks it down pretty well.



He has lots of other videos on retirement planning

 

[UrbanHunter]

When you watch the second one, he breaks down where the money comes from can double your tax burden.... He does a good job of breaking it down.

For someone who changed carriers 3+ times, went to college as an adult, and later went back to graduate school as a mature adult, who find themselves carrying a mortgage and some student baggage into retirement, it can be down right scary....

 

[angie_nrs]

but I am still concerned about walking away from a good paying job while I am physically capable of doing it. For those who have already retired, how do you get over that?

We didn't. LOL! We both continue to work b/c we enjoy it and we don't have a boss. Each of us can pretty much do whatever we want at our flexible jobs. We make our own schedules and if we decide to take off on a vacation, we will. We both get satisfaction of a job well done and we both feel like we need to earn our weekend parties, not monetarily, but mentally and physically (hope that makes sense). We work hard so we can play hard. I guess we just can't outgrow that mentality, although now it's more like we work 'not so hard' and party 'not so hard'. I've got lots of projects at home I could do (and probably should do), but I need a reason to get out of the house even if it's only for a few hours some days. Otherwise, I could easily stay holed up at home all the time and that's just not healthy for me. I still like a bit of a challenge.

We've noticed that older folks who still stay active and bring in some income seem to do better in the long run than those who don't. They seem happier, move around better, and typically have a better overall attitude. My FIL and MIL are perfect examples. FIL is always on the go. He does a lot of cash jobs, sometimes drinks a few beers in the afternoons, goes fishing, hunting, etc. He likes to mingle with people. I've observed some of the self inflicted damage he's done to his body, but that dude can still outpace most Millenials and he's certainly more intelligent than the vast majority of them. MIL, on the other hand, pretty much just stayed home when she retired. She only went out to go shopping when it was required. She didn't clean or update her house. She'd mow the lawn sometimes and maybe cook a meal, but that was about it. Today she pretty much only leaves the house for Dr. appointments. She looks several years older than she actually is. Yeah, I'd pass on that.....but I'll have a beer with FIL.drink buddy

 

[Mountain trapper]

We have a great financial manager. Shes able to separate our reportable income from non-reportable income. So on paper it looks like we're at the "poverty" level. But in reality we're doing pretty good.
For someone to retire comfortably today they need to have a minimum of a million $$ in an investment account; IRA, 401k etc, and be debt free. SS is just a little bonus and was never meant to be a retires only source of income.
Prior to retirement we bought all new vehicles, except my truck, new tractor, implements, and equipment, new atv's, welder, generators, tools, etc. Everything is new.
Since our kids have no interest in the ranch our plans now are to sell the place in about 10 years.
Our youngest grandson says that he wants to have the ranch someday. He's only 6 so we'll see if he keeps his interest up as he gets older. None of the other grandkids want it either. I guess to them it means to much work, too remote. They'd all rather sit around and play games and fuss with their hair.

 

[joel]

There are people who live comfortable with one half million, but the more you have the safer you are.

 

[Mountain trapper]

There are people who live comfortable with one half million, but the more you have the safer you are.

It can be done no doubt. Debt free and little expenses. But for us to live a "simple" life on a mountain ranch is very expensive. Even though everything is paid for, we still have a lot of expenses.

 

[joel]

So far we make more than we spend & we will start SS next year.

 

[The Lazy L]

Save 10%
Tithe 10%
Live on the 80%

 

[Morgan101]

We have a great financial manager. Shes able to separate our reportable income from non-reportable income. So on paper it looks like we're at the "poverty" level. But in reality we're doing pretty good.
For someone to retire comfortably today they need to have a minimum of a million $$ in an investment account; IRA, 401k etc, and be debt free. SS is just a little bonus and was never meant to be a retires only source of income.
Prior to retirement we bought all new vehicles, except my truck, new tractor, implements, and equipment, new atv's, welder, generators, tools, etc. Everything is new.
Since our kids have no interest in the ranch our plans now are to sell the place in about 10 years.
Our youngest grandson says that he wants to have the ranch someday. He's only 6 so we'll see if he keeps his interest up as he gets older. None of the other grandkids want it either. I guess to them it means to much work, too remote. They'd all rather sit around and play games and fuss with their hair.

We too have an excellent financial manager. I wish I had found him ten years sooner, and I would recommend using a professional. Check their references. See what kind of returns they are getting for other clients. I chased my tail looking for a good one for far longer than I care to admit. This guy has gotten me great returns, usually double digits. He is conscious of all the fees, and manages our money like it is his own. If he had a batting average it would be about .900. He has made a few recommendations that did not work out, but overall he has had far more winners than losers.

 

[Supervisor42]

This isn't so much advice on retirement planning, as a testimony that yes, it does work.
I can't stress enough on how important it is getting expenses/debt down.
Well, tax-day came and went and low&behold, I made it all the way thru 2021 without pulling a single dime from my IRA, or dividends, or selling any stock.
The govment>----
Paid the state $425, (we withhold zero for them), and the fed sent us $1K back because of DW's pension.
Seeya' next year, suckers!!!...we be po-folk, doncha know.

 

[sonya123]

Interesting thread....
We are doing something very different from most people. We quit our regular jobs around age 50 , sold our Florida house, bought a run down farm in the middle of nowhere and live on the extra money we had left over from selling the Florida house, plus savings. We pay no taxes and have free health insurance since our income is below poverty level ( well non existent, you don't make much farming)
I am trying to figure out how to spend our 401ks without losing our health insurance or paying taxes on it . If we start collecting SS , it will put us over the poverty limit so that 401k money needs to be spent first. But that's some years away so I am not going to worry about it at all.
Goal is to not ever pay taxes again ( they got enough from us) and leave the property to the kids
Oh and we went on vaccations every year we worked all over the place. But a lot of it we camped and didnt spend much money
My advice to people that don't want to be stuck in some job they hate until 70 or something is to make do with less and save all you can so you can quit early. I have never owned a new car for example. We bought 1 house in Florida and paid it off.

 

[The Lazy L]

My… but I am still concerned about walking away from a good paying job while I am physically capable of doing it. For those who have already retired, how do you get over that?

As long as you don’t hate going to work each day I‘d keep on working too as long as I had free time for hobbies.

I used my dad’s example. He retired debt free, a pension and $X in the bank. His pension ended when he died. Mom was left comfortable until we needed to hire a caregiver. When she died 12 years after dad, still debt free, a house and very little $X left in the bank. Dad‘s planned worked perfectly.

I made two changes to dad’s plan. Wife has full rights to survivorship regarding my pension. I have $X + in the bank. Also have a HSA that I let accumulate over the years. Downsizing the house would provide a nice buffer too. Social Security currently pays our monthly expenses. As we age I expect to start drawing on the HSA. Our children are all financially sound.

God willing we‘ll be OK

 

[sonya123]

It can be done no doubt. Debt free and little expenses. But for us to live a "simple" life on a mountain ranch is very expensive. Even though everything is paid for, we still have a lot of expenses.

Why? We live on a mountain farm and can live just fine on very little
we produce a lot of our own food
no utility bill except a very small electric bill ( negligable compared to what we paid in Florida)
no insurance except $650 a year car insurance
free internet
about $100 a month cell phone bill
( we do have one big expense, paying our son's college and gas to get there but we sold a property last year to do that)

 

[Morgan101]

As long as you don’t hate going to work each day I‘d keep on working too as long as I had free time for hobbies.

That is a big part of it. The fact is I hate it. I have hated it for the last three years, and I hate it more everyday. The job was summarily changed with new management three years ago, who has since been fired, but the damage is done. It is not the job I was hired to do, and the changes have all been for the worse. It is also full time or no time. There is no part time so you can work when you want and play when you want. My cross to bear.

I figure I am in for about another month, and pray we don't have any catastrophic illness that could bankrupt us. My health is still good, and I think I could find something else if we were desperate. I would like to take a few months and see what doing nothing is like.