15 Replies Latest reply on Jul 16, 2014 6:18 PM by BoBraxton

    Will I have enough money?

    amikeroy

      I retired after teaching 33 years.  I am working part-time because I will NOT receive social security.  My house is paid and I just paid cash for a new car.  My life-pension is $39,000 yearly and I have $500,000 in IRA. 

      Presently I use about $25,000 from my pension.  At 63, I want to do volunteer work only but I fear not having enough money.

        • Re: Will I have enough money?
          JerryD
          I posted this on another TC forum regarding what the two of us need to live on. You probably have help with health care costs whereas we pay our own way on Medicare/supplement/Part D. This is a response to an academic who says he lives in a "lower cost" area on $62,000/year.  Maybe there is a tidbit or two as to making it by if you substitute your pension for my SS.

          "I have always said that how much you need to live on depends on the house you live in (and where, I guess), the car(s) you drive, the vacations you take, the restaurants you frequent. All of those are pretty much discretionary. If we ignore what we call off-budget items like a new car every 10 years, say, major upgrades/repairs to the paid for house, a very expensive new heating/cooling plant, taxes on large IRA -> Roth conversions (which end soon) and the such, we aim at living on about just over 50% of my highest salary, including SS and income on diminishing taxable savings. When Minimum Required Distributions begin soon, the savings will be very low but the distributions on retirement funds, excluding the Roth funds which we will leave untouched except for dire emergencies or outrageous desires (Not really!), will be much more than adequate even considering inflation. Oh, that amount is less than $62K/year."
          • Re: Will I have enough money?
            cyber888
            You should be Ok.   $39,000/per year pension is pretty decent.
            If you withdraw 4% from your 500,000, that's another $20,000/year. 
            That's $59,000 per year. 
            • Re: Will I have enough money?
              Celsa
              I will trade places with you!
                • Re: Will I have enough money?
                  BoBraxton

                  Not only is each situation unique but each set of views also is unique. For example, my (one year) younger brother figured out how to retire at age 60 (turned out, through no fault of his, to be more like age 61) and figured $48,000 per year would be enough. However, I do not calculate individually since my spouse and I remain married (1967, soon 47 years) so I look at our combined incomes. Just our church tithe is $8,400 per year and in addition substantial other contributions / donations - so that makes a big difference in the view of sufficient money. I do not look at retirement as some sort of entrenchment. It is more likely (in our third year in retirement) that we live on 150% rather than 50% of what we brought home (not "made") before 2011 September from paid work.

                • Re: Will I have enough money?
                  herbyreed
                  amikeroy said...

                  I retired after teaching 33 years.  I am working part-time because I will NOT receive social  security.  My house is paid and I just paid  cash for a new car.  My life-pension is  $39,000 yearly and I have $500,000 in IRA.  

                  Presently I use about $25,000 from my pension.  At 63, I want to do volunteer work only but I  fear not having enough money.

                  It sounds as if you are doing fine if you are not having to draw down your IRA at all and are saving $14,000 a year from the pension. At 70 you will have to start taking payments from the IRA but you should be able to put most of that right back into some kind of savings.  I would definitely consult with a financial adviser now though, to make sure you are making good decisions about where to put money, whether you should take out long term care insurance, etc. Long term care insurance gets more expensive the longer you wait and it is a biggie because long term nursing care is what chews up life savings in a hurry, and contrary to what some people think, Medicare does not cover it.  Medicaid will, but only after your savings are gone. 
                    • Re: Will I have enough money?
                      If the person who started this thread is single they have more than enough money saved. Good job. It seems to me that spending less should be an option if one is concerned about running out of money later in life. My goodness...a $39,000 lifetime pension plus half a million? Jeepers, man. You are set.
                    • Re: Will I have enough money?
                      tradewind2010
                      If you budget you can survive till you are 100 if don't have to go into a nursing home. I personally would not plan for a nursing home under any circumstances.  The average life expectancy for a male is 76.5 years old in the US.  While you can walk and enjoy life  spend up to the max and have fun for the next 5 years at least then you can trim back.
                       
                      Yes there are unexpected expenses. Watch out for the doctors who will want to give you every test under the sun which 99% of the time are a waste of time.  Eat well, exercise and have some fun! 
                       
                      • Re: Will I have enough money?
                        Sharon
                        Those of us with Social Security and NO PENSION except what we have saved in TIAA Creff think you are doing FABULOUS and if you live like my relatives into your 100's you will be just fine!
                        You are even saving from your pension as opposed to using your savings plus your pension...amazing how well you are doing!
                        I do not think much of long term care insurance unless you have had relatives in nursing homes before they died.
                        None of my relatives spent any time in nursing homes and they died in their 90's and many are still going strong close to 100.
                        Those who needed nursing home care, only did so for a few months at end of life.
                        Live healthy, simply  and keep doing what you are doing and you will be fine.
                        Wish I was in your shape!
                        Many of us have to sell our homes and use the equity in them to keep going in retirement.
                        Good luck!
                          • Re: Will I have enough money?
                            herbyreed
                            I do not think much of long term care insurance unless you have had relatives in nursing homes before they died.
                            None of my relatives spent any time in nursing homes and they died in their 90's and many are still going strong close to 100.
                            Those who needed nursing home care, only did so for a few months at end of life.
                             
                            Family history is not necessarily a good predictor of the need for long term care insurance.  You could have an accident or an illness which could change your situation drastically overnight..  Even young people can end up in long term care.  A financial counselor should be consulted on this.  They can advise on the financial considerations relative to your situation.  But one thing is certain - if you buy long term care insurance when you are younger it is more affordable.  Each birthday drives up the cost a little more and the longer you wait, the less likely it is that you will qualify for a good health discount.  There are also ways to make long term care more affordable.  A financial counselor can explore these with you.  You may still decide not to buy the insurance but you should at least go over the numbers with a counselor.
                             
                             
                             
                             
                             
                             
                             

                            • Re: Will I have enough money?
                              jkom51
                              Sharon said...
                              None of my relatives spent any time in nursing homes and they died in their 90's and many are still going strong close to 100.
                              Those who needed nursing home care, only did so for a few months at end of life.
                              This is an extremely high-risk assumption, for very simple reasons.
                               
                              The extension of lifespan has occurred VERY RECENTLY, beginning in the 1960's. The fastest growing group in population terms is the group aged 80+. Yes, that is people over eighty.
                               
                              Most elderly in previous generations were cared for by their children - as my grandmother was cared for by her eight adult children, until she became bedridden and needed 24/7 care, at which point they moved her to a facility where she did die within two years.
                               
                              However, my mother only had 3 children to care for her. In my generation, there are 2 children to support six of us (we all have spouses) as well as their own in-laws!
                               
                              In the 1960's, cancer, heart attacks, and strokes were killer diseases. In the case of stroke you were often left a vegetable, if it didn't kill you outright. If you had a massive cardiac infarction and weren't within 10 min. of a hospital, you died. Early detection and the now-standard drug/chemo treatment of cancers wasn't accepted as proven until the mid-1970's.
                               
                              Nowadays we all know people who are living fully active, normal lives after having recovered from a serious medical problem that forty or fifty years ago would have killed them. I can include several people I know in their mid-80's in this group!
                               
                              The odds against us are simple. We are living longer, and while active, unless an accident happens, we can have an independent lifestyle. But when something does happen, it's major - and the older you get, the more serious recovery problems become.
                               
                              Getting old in America isn't always pleasant. What my DH and I have seen in the WWII generation isn't the "Walton family" but rather, where the loss of community ties translates into increasing isolation:
                              - people who have outlived their family, or their children live far away
                              - increasing frailness, where changing a light bulb up in the ceiling or clearing away an entire basement wall so the pest control guy can spray it with termiticide, is simply beyond personal ability. Your home becomes not a refuge, but a financial trap. This is especially true if you cannot, or prefer not to, drive.
                              - prescriptive side effects. Statins may help you live longer, but it comes at a cost such as vertigo. Niacinamides may afflict you with extremely painful gout. BP medication dehydrates you. Etc., etc.
                               
                              Nowadays there are many excellent places for seniors that offer independent and assisted living levels, not just critical care/nursing care. As dementia risk increases dramatically in people over 80, no one should be assuming that "they will never need nursing care because granddad and mom didn't."
                               
                              My 85-yr old MIL has mild to moderate dementia. With her excellent health and genetics she could easily live to be 100+. She lived with us for seven years but we could not give her what she most needed, which was interaction with people her own age with similar interests, and 24/7 promises of assistance.
                               
                              She fought us about going into a facility. But now she is so much happier there, and admits she loves it - the food, the activities, the friendly and very excellent staff. It is a caring, nourishing, welcoming facility where she can lead a full life BEFORE she needs full-time care and forgets her own name. This way she will still be in the same facility, and will not need to move (disruption is extremely stressful to dementia patients).
                               
                              But you need money for this. It's $5K/mo. and if she needed Skilled or Memory Care, it's $8K/mo. (current to date figures in our area; she just moved Nov 2013).
                               
                              15 yrs or more of life expectency - you figure the potential total cost at those rates. Which, btw, go up 3-4% EVERY YEAR. We saw eight facilities (one for us, seven for her) over the last two years, and every one of them increases their rates on an annual basis.
                               
                              So "will you have enough money" should always include senior care costs. Not doing so is short-sighted and ignores established socio-medical historical trends.
                                • Re: Will I have enough money?
                                  cyber888
                                  Well, you worry too much.  My mom has alzheimer's.  She's in the Philippines and paying $250/month for 2 full-time maids to take care of her.  All amenities in the US are there, and everyone speaks english.  Nowaways, due to the ridiculous cost of healthcare in the US, other countries can be an alternative for retirement and long-term care.  Many retirees have move outside of the US for long-term care. You don't need to spend $5000/month let alone $8000/month.  I think that's just ridiculous.   My Mom is proof that you don't need to spend that much in retirement and for alzheimer's.   
                                   
                                  And you said you home is paid for ????   So, if you really need money for healthcare, get a reverse mortgage in case you need the equity from your home. 









                                    • Re: Will I have enough money?
                                      jkom51

                                      Thank you, but my MIL would not want to live in the Philippines under any circumstances. My DH is her only son, and we are not going to move there EVER. To cut her off from her sole living relative in the US would be a little harsh, don't you think, just to save some money? It's her $$$, and she has more than enough to keep her in the senior facility until she's approximately 126 yrs of age or more (she's 86 as of Easter Sunday).

                                       

                                      We live in an extremely expensive area. We happen to love it, and intend to stay as long as possible. We have planned our finances for decades to do so, in fact. The facility we're looking at for our own next move (we're in our 60's and have been retired for 4 and 10 yrs, respectively) is even more expensive than the one MIL is in, but it's perfect for us.

                                       

                                      Do we have enough money? We hope so, and having LTCi policies will certainly help protect our assets. If we lived in a cheaper area, we wouldn't need so much - the OP's figures are like a dream to anyone in Northern CA, LOL - but like I said, we like where we live, and wish to stay near our friends and family.

                                    • Re: Will I have enough money?
                                      BoBraxton

                                      A friend just died at age 93 - from the time of moving into a "nursing home" was eleven years - in a low-cost county, at least about $350,000 "until Medicaid kicked in." - Still, enough money (I believe) in those circumstances. Recent DRwhow (public radio) was about how "we" are now living much longer and taking much, much longer to die.

                                  • Re: Will I have enough money?
                                    jocee
                                    It sounds as if you are doing a great job managing your money and have enough reserves to relax a bit.  One of the great things about doing volunteer work is you are often so tired from helping, you aren't out shopping and spending more money!  Volunteering will also be a great boost to your physical and mental health because you are busy helping others.  Why not start with a non-profit group whose goals you really support and do a few activities?  I think you will find the morale boost is worth giving up a few hours of your part-time job.  We are hearing from more friends who got caught up in the "I have to save millions to retire" frenzy who now realize they could have saved a little less and enjoyed themselves a little more. 
                                    • Re: Will I have enough money?
                                      TAWinLondon

                                      II'm retired on SS and a small pension totaling $27k year.  I own my condo, am single, and so far life is great!  Don't plan to dip into savings of $100k until absolutely necessary.