Quote:
Originally Posted by Mark17
I've got no pension or defined benefits except $1500 in social security. Also, my 401k has been in a money market the past 10 years drawing close to zero interest, because I was burned badly in the 2008-9 meltdown and that reserve is something I cannot risk. So I don't agree with your thesis.
The key is to make more than you spend, and save for the sake of saving. Develop side revenue streams, like buying/selling cards, maybe get an inexpensive house, cabin, or boat or two and rent them out, or get a few wooded acres in a rural area and spend your weekends having fun cutting and splitting firewood to sell.
A side business or two not only adds to your savings, and provides tax benefits, but it also means your retirement can also include having that extra income rolling in. My retirement, for example, includes rental income from a couple properties I've been able to pick up over the past 20 years, some modest hobby income, and some assorted small, safe ventures.
It's easier to save a dollar than to make one, so if you're looking forward to your retirement, keep in mind, if you can figure out a way to save just one dollar a day (simple, right?) that's $365 dollars a year, or $3,650 per decade. Get a cheaper phone service, cancel TV cable or streaming services you can live without, buy used cars and furniture instead of new, and so on.
If I was suddenly 35 years old again, I assure you, I could count on being retired at 60. But you have to want long-term fiscal security more than current gratification.
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Yeah...I am going to sort of disagree with you there. Your buck a day with another buck a day compounded over 30 years at 3.15% (the average Treasury interest over the last 30 years) is the princely sum of $18,575.51. It is a drop in the bucket. In the United States, assisted living costs an average of $4,300 per month, according to the 2020 Genworth Financial Cost of Care Survey. For the mathematically challenged, that is $51,600 a year. Your dollar a day nest egg vanishes in four months. You either have to sock away far more money, work much longer, or you have to chase a higher ROI. That means equities, and they've crapped out multiple times since I started working. The last crash punched a ten-year hole in our retirement (it took ten years for the inflation-adjusted value of our portfolio to return to where it was in 2007). The average time in assisted living is 28 months; the average long-term care insurance runs three years. It covers 40%-60% of costs. And did I mention health care inflation, which vastly outstripped regular inflation over the last two decades. Even an inflation rider on a long-term care policy will be overrun unless you pay (through the nose) for an indexed rider. Take the typical 3% rider and you are losing 1% a year to inflation even in normal times. Skilled nursing, the next stage of care, averages over 150% of what assisted living does. My father, who passed away recently, spent nearly a year in assisted living at $6,000 a month plus all life expenses, then two months in a skilled nursing facility at $9,750 a month. And if you or your spouse need dementia care, well, throw another 25% or more onto the number. My mother is in dementia care at $8,000 a month. Between the two of them they were chewing through your $18,000 nest egg
every month. Now, go to a region where most people actually live and the cost is even higher. But wait, how about that long term care insurance? Sure, price it out. My wife and i just got it (mid-fifties). 3% inflation rider. We are going to invest $6K a year just to pay for a policy that is likely to pay about 40% of the monthly costs of assisted living 30 years from now. That's another $180K to account for. But if you run out of money the government will take care of you, right? Wrong! That safety net has been shredded since 1980. I live in Cali, which has one of the more generous care packages. You must first be truly destitute then you can apply. But try finding a Medicaid facility that isn't a hell-hole and you will find a waiting list stretching 6-12 months.
Here's a suggestion: before making blithe pronouncements about it merely being a process of wanting it more, try actually pricing out what you are likely to need in terms of goods and services if you become one of the millions of infirm elderly, then back into the actual savings numbers to cover that downside so as not to be a burden to your children. The result will shock you.
I do agree with starting early and being disciplined though. I am so happy that I religiously saved into my IRA and SEPP in the 1990s instead of buying more vintage baseball cards. Er, wait...