Median boomer retirement account $144,000

[khardbored]

Fact is that about 2/3 of Nursing Home patients are on Medicaid. So the savings you have may never be enough if you or your spouse spend years in a nursing home. The ones enjoying themselves and spending their money might actually be the smart ones. And it depends on your SS and annual retirement income as well. Sometimes I wonder if the smart ones are those who blew their money on good times and travel and only had $3,000 left when they hit the nursing home. Half million bucks is only a few years if both parents are in the nursing home. Saving for retirement is a good thing but don’t hoard it once you get there. Chances are the nursing home will get it all in the end. Unless you die before going there.

This is very accurate. We've just realized this for my parents.

My parents need to transition to long-term care very soon. They both have modest pensions and Social Security, and a nest egg over $100K but not a lot over that. With their income paying some of the expenses, they will run out of savings in 3-8 years depending on where they go. Do we think at least one of them will live 8+ more years? Yes, probably.

So, if their nest egg is going to be depleted anyhow, might as well get them the nicest nursing home there is!

My dad has a small life insurance policy, and (gladly) they thought to put their house in a family trust 5 years ago. That life insurance policy will cover the funerals, and the house will be the only inheritance for my sister and I. Not life changing, might pay for 1-2 years of college and that's about it.

So yes ... when you're in early retirement, go ahead ... travel, spoil the grandkids, make memories, give to charity! Or, at least give consideration to that.

 

[Cyclones_R_GR8]

Well this thread inspired me to bump up my 401k by a couple percent.

I was thinking the same thing. Currently at 15% and I scheduled it to raise 1% for the next 5 years. Thinking of just bumping it up to 20% now and just calling it good. House is paid off and figure I will retire in 5 years. Figure I should just try to go all in for these last 5 years.

 

[MeanDean]

Do you have to pay property taxes and insurance on top of that? And agree that the amenities and upkeep of common areas are not cheap. Pools require a lot of maintenance and cleaning.

Yes, property tax is about $2k per year. Insurance is about $700 per year. No state income tax in FL so that helps.

 

[Urbandale2013]

What are people’s thoughts when factoring in a pension? Is it still a combination of all retirement to be more than 15% a year?

 

[MeanDean]

What’s it looking like next 5 years down there? I’ve got the cash I’m just waiting for little collapse. Looking for the exact same thing. Complex with a pool walkable to the beach. 1 bedroom okay, two bedroom optimal.

Things are still moving upward I think. Of course there's no way to predict.
Most of ours are 2 BR but there is one 1 BR per floor. Avg for a 2BR is about $300k now unless you get on the ground floor level (or some 1st floor that have no water views). I'm on the top floor (12) so great views of the ocean to the east and the intracoastal and bridge/town to the west. Prices are higher in Ft L and Miami. (Edit - looked at latest listings. Looks like low $300s is the avg listing price)

The dominant realtor in our area is Beachfront-Mann. They have a pretty good search option on their website so take a look around. If you want specifics I can tell you the name of our building and the one next door, our sister bldg - in a PM.

 

[CascadeClone]

I remember my wife asked my in-laws what they were leaving her when they pass (hopefully not for a long time). Their answer was something like "We plan to spend our last dollar the day we die." I remember being kind of miffed at the time, though it was like 25 yrs old so still had lots to learn.
.

Funny story. Was watching NCAAs last year with a friend and his dad was there (about 75 yo). Dad was talking about buying some high dollar whiskey, and the son was teasing him about "you shouldn't be spending money like that, what about my winnings?" meaning of course his future inheritance. Probably doesn't translate well, but it was effing hilarious at the time. Lots of faux indignation on all sides.

So now any inheritance is referred to as "winnings".

 

[cyclone101]

Some are, others are not. Trade jobs today involve a lot less physical labor than ever before. Landman do not climb poles anymore, for example. Now concrete work and stone masons, that type of work is not for older men.

In my earlier post, I mentioned kids being lazy, I had an example of that this past year. My wife works as the city clerk in our town, they had an opening for an apprentice in the gas department. We were talking about it, and I told her, that I had a former student last year that would be great for the job. Kid loves hands on activities, bright, just needed to catch a break.
I had the kid' younger brother in class, wrote information down, told him to go to the website, and apply for the job. I told him starting pay was $18.00 an hour and they will train you, includes benefits, but you have to live within 30 minutes of town. He currently lives about 45 minutes. I told the brother to tell him my wife is on the group that is doing the hiring, and generally only a few people apply, so he had a great chance at getting the job.

Kid never even bothered to apply for the job. Long story short, many are given real opportunities and just do not care.

Isn't that the truth!

When I was a high school senior, there was local elderly woman that gave $200 scholarships to seniors on awards day. She was like 90 years old and had been giving out these scholarships for years. What were the requirements to receive her scholarship? Apply. That's it. All you had to do was apply. The application was just a short letter to her saying you had a desire to get more schooling after graduation. Maybe throw in a little snippet about what you wanted to study. That was all you had to do and she would write you a check for $200 and present it to you on awards day. Every single senior that wrote her a letter would get a scholarship. It didn't matter if it was written in crayon with backwards 'R's. If you applied, you got $200. And by golly of the 60 or so kids in my class, there were 10-15 that didn't get her scholarship. All they had to do was write a letter to a little old lady and they couldn't even gather up enough ambition to do that.

 

[Sigmapolis]

I've specifically told my parents to not leave me anything. It's their money, they've worked hard for it, so spend it.

My father is quite risk-adverse. That is good in many ways -- we are always very insured, he kept his costs down, and he saved profusely, like my grandparents taught him. However, he is in his late 60s now with quite the nest egg, the house and all the cars paid off, and no reasonable path to outspending his savings in his lifetime.

I am been trying to tell him to try and enjoy it while he was still around. Do not worry about me and my brother. You earned it, so you spend it. It is your money and not ours. Took a lot of convincing to make him drop $10,000 on a Hawaii vacation (which is not all that much of his net worth from what I can tell) once to join much of the rest of the family on the trip/give his long-time girlfriend and now my stepmother something like a honeymoon. I admire the prudence and caution, but enjoy life while you can.

I was hearing that in the 1980s. Very common belief. Someday it may come true. If the right things happen to individuals, maybe there will be those who dont need it. Credit is the biggest thief of dollars. Second would be living beyond your means.

The program only survived because of some massive tax increases.

The payroll tax contribution rate went from 9.9% in the late 1970s to the current 12.4% by 1990, and the maximum earnings taxed went up greatly in real terms, too. The retirement age was also moved up from 65 to 66 and 67 for younger workers. It would take a similar series of reforms to save it now, which I briefly illustrate here.

Here is just an example suite of them from CBO...



Assuming you keep the benefits structure the same...

-- raise the retirement age to 70
-- use an inflation adjustment of roughly 0.5% fewer per year
-- keep the payroll tax rate as it is, but lift the cap on it
-- that would be a *massive* tax increase (a couple percent of GDP) but would at least do the job... way more than what we did in the 1980s

That funds the program in perpetuity, but a 2% of GDP tax hike over ten years is roughly $5 trillion, so that would be a big one if we went and did it.

You got to marry right.

Dr. Sigma says hello.

Though technically I am still out-earning her, and when you net out the cost of her fancier undergraduate education, medical school, the lost work years from the same, some interest on her loans, and the relatively low salary (~$60,000 per year) paid to her during her six years of residency and fellowship, I am still going to be ahead in absolute terms for a long time and might always be ahead in NPV terms.

 

[BCClone]

What are people’s thoughts when factoring in a pension? Is it still a combination of all retirement to be more than 15% a year?

My opinion is don't worry about the percentage you put away. Figure out what you want to retire on, what you will receive from that (always back them off a little to be safe) and then figure out how much you need to put away. Maybe you need 40% put away to get there, maybe 10% does. Don't say 15% is the magic number, because you could end up with 30k/year or 300k/year when you retire. Get the number you want to retire on and work from there.

 

[candg4ever]

No way thats true. Boomers have all the people younger than them to pay for their retirements. It's the rest of us that are ******.

Take a look at how many "boomers" are still out there working, either to live or to acquire a small amount to pass on.

For a lot of them, college wasn't an realistic option... Now it's a necessity. They had to work 15-20 yrs. to make the money young people start at today. At those wages, a lot had to decide whether to plan for the future or buy a house to raise their family in. Amazingly, many chose to invest in their children's future, rather than their own...

They also contributed to helping the generations phasing out of the work force. They didn't consider it getting ******, just keeping the system going.

 

[cycloneworld]

Without giving specifics, what is the range we're talking about here? My dad received over 7 figures from my grandma when she passed and it did not change his life at all. I think he invested it and hasn't touched it, except for paying taxes on the dividends, in 20 years. I'm making up numbers now, but I often wonder how much I would need to quit my job and find something more relaxing to do? Not an early retirement but a job where I can clock out and be less worried all the time. 500k? 1 million? 3 million?

This is something I've been working through too. I love my job but I work a lot, travel a lot, and it can be stressful at times and I want, someday, to have the OPTION to walk away on my terms. I co-own 25 rentals (doors) with a partner but we've agreed its 15 years out before we will see any meaningful revenues. Combine that with my 401k that I've been maxing out, I don't have long term concerns but getting to the point to be able to access that money is 20 years away for me. So I'm working on saving as much as I can to bridge the gap between 5 years from now and then.

 

[mdk2isu]

Take a look at how many "boomers" are still out there working, either to live or to acquire a small amount to pass on.

For a lot of them, college wasn't an realistic option... Now it's a necessity. They had to work 15-20 yrs. to make the money young people start at today. At those wages, a lot had to decide whether to plan for the future or buy a house to raise their family in. Amazingly, many chose to invest in their children's future, rather than their own...

They also contributed to helping the generations phasing out of the work force. They didn't consider it getting ******, just keeping the system going.

It was a joke.

Also, college isn't a necessity today. I know plenty of people without college degrees that individually make more than the average household income in this county. I also know plenty of people with college degrees that make less than the average household income in this country. The college degree isn't what determines what you make, its what you do that determines that.

 

[Sigmapolis]

It was a joke.

Also, college isn't a necessity today. I know plenty of people without college degrees that individually make more than the average household income in this county. I also know plenty of people with college degrees that make less than the average household income in this country. The college degree isn't what determines what you make, its what you do that determines that.

College degrees do not generally create good jobs. They just give those with the degree a better chance of landing them than those without the degree.

The problem is when more and more people get degrees... so that advantage disappears... so you need to go another level up to gain that advantage, and the whole thing turns into a rat race of incredible stress, time wasted, and money spent.

 

[Gunnerclone]

College degrees do not generally create good jobs. They just give those with the degree a better chance of landing them than those without the degree.

The problem is when more and more people get degrees... so that advantage disappears... so you need to go another level up to gain that advantage, and the whole thing turns into a rat race of incredible stress, time wasted, and money spent.

I feel the best thing about a college degree are the options it gives. More doors, more choices, more freedom. Plus you learn a ton going through the undergraduate process. School learning, life learning, mental toughness.

 

[Dopey]

Several years ago my dad sat my sister and me down to go over the estate. He laid out everything from attorney names to pension funds and everything in between. It jives with what you've said in here about people with less being more secretive about it. His point was he wants to make sure no one takes the "family money" and that my sister and I don't fight over it when they are gone. We don't fight about anything so I can't imagine we'd fight about splitting their assets straight down the middle. Neither of us is in a position to *need* the money ASAP.

He has always wanted a Corvette but never bought one. He can afford one without it impacting his life at all and he still won't buy it. I asked him about it and he says, "that's less money for your sister and you when croak." So for father's day, I'm getting him a weeklong Corvette rental.



Without giving specifics, what is the range we're talking about here? My dad received over 7 figures from my grandma when she passed and it did not change his life at all. I think he invested it and hasn't touched it, except for paying taxes on the dividends, in 20 years. I'm making up numbers now, but I often wonder how much I would need to quit my job and find something more relaxing to do? Not an early retirement but a job where I can clock out and be less worried all the time. 500k? 1 million? 3 million?

My parents will probably retire with between $2-$3 Million. Her parents probably a bit more. There'd be siblings on both sides that would get equal shares.

The real unknown is what the aunts & uncles situation. One uncle has been divorced more than once, so probably not much there. The other set is retiring off pensions and a house sale they struck gold on in CA. Not sure they'll have much assets to actually pass forward. But the 3rd (the one that already promised it to my wife) have had very successful careers. No idea the amount & I won't be asking any time soon. It's also worth mentioning, my wife is more than capable of pissing them off at any time.

Back to my original post on this though, even if it could, I would not allow it to change my life drastically. I wouldn't be able to sleep well living care-free on someone else's hard work.

 

[Sigmapolis]

I feel the best thing about a college degree are the options it gives. More doors, more choices, more freedom. Plus you learn a ton going through the undergraduate process. School learning, life learning, mental toughness.

Indeed -- but the more and more people that have degree, the more and more crowded the field competing for those opportunities and options becomes. That is why we are so over-leveraged into higher education as a society, but that is a larger topic.

One thing I will add to your list -- access to the dating pool of fellow college-educated professionals. Being part of a household of two high-income professionals with stable jobs is a pretty surefire route to personal financial success. By far the highest return of my Iowa State degree (and the attached master's) was the bearing and standing to date my then-girlfriend now-wife and be approved of by her family.

I doubt her Ph.D./J.D. grandmother is accepting me if I am some dropout or even if I had a good trade job. Snobbish? Heck yes, but that is reality for you sometimes. That is why I am just Sigma and she is Dr. Sigma. Marrying up is nice.

I think most people probably learn more about real world toughness and skills (e.g., salesmanship, managing people, etc.) from real jobs than from school.

 

[ca4cy]

I'm sure many on here run various scenarios but;

What do people use for their inflation adjusted rate of return on their investments when calculating future values, and

What do you use for a rate of return (withdrawal rate) at retirement if you're planning on leaving the principal alone or a minimal burn rate?

 

[yowza]

I got really lucky on the timing. I bought in 2011 at the bottom of the Florida real estate market. In a high-rise, not a huge place but yes, right on the water.

Imagine what that would cost per night if it was a hotel. Great timing.

 

[yowza]

If she goes to nursing home it will all be gone soon. $60,000 plus per year just to stay plus Medicare and Medicare Supplement. My in-laws spent 8 and 9 years respectively in the nursing home. Took their rental properties, home, motor home, boat, vehicles, and lots of cash when all was said and done. And they saved and saved their whole lives. Get both in a nursing home and it eats up a lot of cash. Doesn’t take too many years and the nursing home has it all.

Long term care insurance. I know it sucks paying those premiums but you just never know and I have seen more than a few nursing homes for those without much for resources and I do not want to spend a day living in one of those.

 

[yowza]

I was thinking the same thing. Currently at 15% and I scheduled it to raise 1% for the next 5 years. Thinking of just bumping it up to 20% now and just calling it good. House is paid off and figure I will retire in 5 years. Figure I should just try to go all in for these last 5 years.

If you are able to do the catch up, max it out.