Well there’s a small chance, but likely not at my current employer. But I would rather work an extra 2 years than work 4 years part time.
And part time would likely mean working busy times of year and having other months off, not working 3 days per week most of the year.
Maybe you should look into annuities and/or long-term care to manage the risk of a long life. You can live more lavishly earlier in retirement, knowing that even if you live 20 years beyond the average lifespan, you’ll get by under a more meager lifestyle.
This dilemma is all about the uncertainty of contingent liabilities.
If all I have are hard assets (no annuities) then I have to plan on living off of the earnings of those assets and the returns (capital gain and/or interest) from those assets.
So I guess one thing I can investigate is trading my cash for a life annuity.
On a scale of overall health for 1 (just hit by a truck) to 10 (olympic athlete) I am probably a 3 or a 4. It bothers me that I pay more for life insurance because of my lack of health but annuity companies won’t give me a discount for likely dying sooner rather than later.
I had friends tell me they were seriously thinking of leaving the US to retire, becoming ex-pats in some place more desirable and cheaper. It’s got me thinking too.
If you want to live comfortably and use conservative assumptions, you pretty much always wind up with an estate after you pass like you stated. I’m there myself.
Don’t you have other options in the US?
Defer SS until 70 and use that $$$ as longevity insurance in case your hard assets run out before shuffling off the proverbial mortal coil.
while deferring to 70 is an option, that deferment puts earlier use requirement on the actual savings - the savings you worry about draining too fast. and then IRA/401k’s have required withdrawals (RMDs) starting soon after that, so leaving those funds alone isn’t an option.
for me, if I tap SS relatively young it will allow me to wait a couple of years on my personal accounts and then draw only 2.5%-3% of personal accounts when I start that and i am pretty comfortable with that level of withdrawal. (withdrawal to increase, of course, when RMDs kick in)
This is true and good advice, yet file me in with the multitudes that don’t actually want to build a pillar of retirement on the crumbling foundation that is OASDHI.
So if you would like to retire and spend 100k (just to pick a round number) per year, what kind of asset base would you target as your career finish line/retirement beginning?
So TF just implied he would need between 3.33M and 4M to retire. =100/.025 and 100/.03 which is actually a pretty big range, yet realistic IMHO if you want to be a little conservative
I just hope & plan that my SS checks will cover my medicare Part B and any copays I have.
The 4% rule is what’s always quoted and it’s a good starting point. If you withdraw 4% of your nest egg year one, growing by inflation, it’s estimated (with historical data, YMMV) that you have something like a 97% chance of not going broke in a 30 year window. If you have some flexibility, maybe cut expenses when asset prices are down, you can improve it a little bit.
As you get somewhere around 3% to 3.5% (again, historical data was used to model) the risk gets very near zero. Even retiring into the great depression or the 2008 collapse, you should be fine in the 3.25%-ish range. Now if there’s a depression followed by another depression, sure, you’re hosed. At that point everyone is hosed.
So yeah, something like 25-33x your annual spend is a good range to work with. Gotta figure out taxes and all that, it’s a little tricky.
Yeah maybe focus on your health/wellness
I think every old person basically has the same advice to share “I wish I took better care of my body and that I didn’t work so much for money”
If you believe SS will pay per current schedule, then both expected value and coverage of longevity risk are maximized by delaying as long as possible.
I appreciate all of your thoughts, Mathman and TommieF. Yet 25 or 33 or 40 times is a really really big range.
And if I am sitting at 20x, then 40x seems really really really far away. I don’t want a retirement where I can afford all of my regular bills but I have no extra cash to enjoy life, travel, have hobbies, etc.
I also have to consider the tax situation. I think 2/3 of my net worth is in pre-tax accounts, so I know I’ll have to knock down 12k or 13k to spend 10k.
The changes in RMDs seem to me to make them somewhat negligible. They are so small now, that I am not worried about them.
Plus healthcare. It’s a really complicated thing, I’m struggling with these same questions.
The other thing I’ll say is it’s a much tougher question if you’re retiring at 35, that’s a huge time span. If you’re retiring in the 45-55 range, it’s a shorter horizon - and SS kicks in sooner. Even if it gets cut, it’s something in the bank in 10-20 years. Takes a lot of risk off the table.
Also, getting from 20x to 30x or even 40x won’t take all that long, you’re at the point where that money is snowballing. First million is the hardest.
And I’m probably about like you, I’ll probably err on the side of working a year or two extra to have padding in case I want to travel a ton, or buy some toys, or whatever.
My wife is “retiring” at 55 but is then switching to PT consulting type jobs. She has one of those rare gold-plated DB index-linked pensions.
I have seen a lot of older Americans living/retiring in Portugal/Spain these last few years due to the lower cost of living and good weather. The cost of healthcare is also a big draw (much cheaper vs US).
Wasnt there someone on the AO though who was like screw that though, live in the moment and then overdose when youre 60? Maybe old people are just biased!
I think that was JSM
Yeah, he disappeared about a year ago
I guess he became old…
Am curious,
Is there a large market in the US for Equity Release (from your home) for people over 55?
Yes. We call that a reverse mortgage here. I think you have to be at least 62 in the US to qualify.