Thoughts on retirement budgeting

[Timber Wolf]

I have been giving this topic some thought and another post on retirement budgeting prompted me to post. I am a few years away from the blissful day I no longer have to report to work but I can see it, albeit dimly, on the horizon. A good friend however celebrated that day a couple of months ago and his impressions of his daily, weekly, and monthly financial situation is kind of interesting given what I know. He has a real pension coming in, an increasing rarity in this day and age. In addition he has other investments including what we might call a “deferred compensation” account that should be at least $200K+. The rub is he is still a young man of 59 and therefore does not qualify for Social Security or Medicare and has to pick up the whole tab for his medical insurance.


After all that preamble the point of this post is that he seems to be thinking in terms of all the money he has to live on is his monthly pension check. Cracking any of the other nuts (pots of money) to cover day-to-day expenses does not even occur to him as a reasonable option. Now this is not a bad thing, living within your means and income, especially from someone in very good health facing possibly decades of retirement. But at some point a person has to face facts and start spending the nest egg. And I am not talking about the money you have been saving to buy that new Nest egg trailer either. This can be a hard thing for somebody used to years of saving and putting money away for them to turn around and start spending it.


I know this forum and having a little FGRV has changed my perception of what my retirement might possibly look like. Doing some workamping and hosting looks like a definite possibility along with other low cost on-the-road options (Knock-knock, Hi there, remember me? I am your second cousin Martha’s great nephew; can I park my Scamp in your backyard for a few weeks?)

[D Davis]

Lower costs camping during retirement sounds like a great idea to me. I am glad your friend has the means at such a young age. Not all folks are in that same position... Some of us will have to consider options. I have admired a blogger that I read online who is a single retired female. She has posted her expenditures for the past two years living on the road. Check out rvsue and her canine crew | Living on less and enjoying life more

[Byron Kinnaman]

Some suggestions for you.
Put as much money as you can into an IRA or 401K retirement account. As for using the "nest egg" any money that in IRA or 401K a disbursement is required by the IRS starting at 70 1/2 years of age.

The IRS estimates your life span to the age of 100. You can use that to determine the amount of money to withdraw on an annual or monthly basis.

The money does you no good sitting for ever in an account.

My experience is with my IRA is, I withdraw a bit every month and the account is still growing even with the money taken out. The IRS charts indicate that I should be taking out half of what I am.

I also look at the projected I'll need, at this point in time I choose to use my money for things like traveling. Later when I'm not so able to travel I'll need less money, at least I think so.

As for traveling expenses, the biggest expense for me is gasoline. We on the road going from A to B and need to spend a night we find a rest area, WalMart parking lot, Truck stop, etc. No charge, I'm very reluctant to spend money just to get a few hours sleep.

Once you turn 62 the Interagency Senior Pass is best deal going. $10.00 for a life pass, which gets you into all the National Parks, federal campgrounds are generally 50% of posted fees. Example of how this works, last winter we were out for only 60 days and our average campground fee was $5.45 per night. A few were free and the rest either $5.00 per night or $6.00 per night.

You have to be willing to camp without electricity or water or sewer hookups. A solar panel and controller takes care of light, the furnace fan, and electronic things battery charging. (Most of the charging I do inside the tow while running errands or sightseeing.)
Water is always close by, and we search campsites reasonably close to the potties. This has worked well for us for the past 9 years.

Sometime less is more. Less stuff equals more time to enjoy the outdoors. We learned how to live quite nicely like this by backpacking and studying backpacking techniques. Those apply to little trailer living very nicely.

[Alf S.]

Hi: Timber Wolf... There aren't many benefits for being Canadian. One is having two Federal pensions,,, the other is health ins. At 65 I've started drawing my pensions + one from work. I've also started pulling straws out of my nest egg. A small enough amount to not raise my income into a higher tax bracket. We have a good guy at Ed. Jones and also an accountant to keep us on track.
My plan is to spend everything I get each month + a small amt. of my tax free retirement plans. When I'm gone my wife gets 60% of all my pensions + her own.
The other part of my plan is to treat my children well as they will probably be picking our nursing home!!!
Alf S. North shore of Lake Erie

[frank_a]

We're in about the same boat as Tim, or at least I am. My wife plans to work longer simply because she started later. I have a defined pension waiting for me as of February 2016. I'll be 63. If I keep working it just gets to be more. I might as well keep working till Gail retires. I think. We'll be at about 1/2 of working income in retirement, which should keep a small base home up (we hope to buy with cash after selling our current residence), and allow us to travel a substantial amount of the year.

We never have been, and never will be rich, but we should do okay.

Frank

[steve dunham]

We have been retired for 4 years and have not made any withdrawals from our 401 , annuity or savings . We are still putting money into savings every month
Byron is correct, if one is frugal ,plans for retirement and utilizes their 401 wisely you can have a nice retirement . We have retirees health insurance in our Union contract which helped us immensely when we retired. We attended a retirement seminar put on by our Union and one thing they stressed was to avoid tapping into the 401 K for as long as possible and let the fund continue to grow.
I was surprised at how well one can live on a smaller retirement income if one tries . I will admit I am a tightwad by nature

[Bobbie Mayer]

If I were your friend (I kind of am) I'd invest in paying off the house. You can live on a lot less money without a mortgage. Then just budget- a lot of what we buy is not really necessary, as most of us know once we start trying to live on less, whether because we are saving or because we have less coming in. I save a lot just by thinking twice before hitting the "Buy Now" button. Actually I think a few times- do I really need it, can I get by without it, and where will I put it?

[Timber Wolf]

Originally Posted by Bobbie Mayer

If I were your friend (I kind of am) I'd invest in paying off the house. You can live on a lot less money without a mortgage.

Yep, done. As an aside, I was telling my Mom about the concept that as more and more Baby Boomers retire they will be buying up the FGRVs out there. And as somebody on the tail end of the Boomers I was glad I already had mine! Two more months and I will have a "mortgage burning" for the Scamp!

[Franswa]

another option would/could be fulltime-partime work....that's what I do and it works quite well for me...

find a seasonal business/industry that shuts down or curtails operations greatly at the time of the year when you would rather be off/not working at all

Even if you don't have direct experience in the business/industry the reality is that for these employers finding reliable, mature, dependable employees is always a huge challenge (because of the temporary nature of the work)....once they figure out that you can think on your own...are always there on time and don't constantly whine.....you will be a valuable and rare commodity compared to their usual pool of applicants

I work four and a half months a year, in the winter...by the time november rolls around I'm actually looking forward to going back to work.. and my employer is always really happy that I'm coming back (contrast that with if I working part time in a normal job environment....after a while he'd either pressure me to work year round....or maybe not have me back the following year, preferring a person that is there fifty weeks a year (less work/trouble for him)

my present relationship with my employer is PERFECT for both of us....and it makes for a very good, fun working environment.....

[Jim Bennett]

Moved to Money Matters forum.

[Carol H]

Originally Posted by Timber Wolf

[COLOR=black][FONT=Verdana]But at some point a person has to face facts and start spending the nest egg. And I am not talking about the money you have been saving to buy that new Nest egg trailer either. This can be a hard thing for somebody used to years of saving and putting money away for them to turn around and start spending it.]

I don't think your friend is wrong in doing what he is doing. The reality is that at only 59 he could very easily live another 35-40 years or more. If he has paid off his home and has no other loans that nest egg fund he has if not touching will grow and come in very handy in later years - if wisely invested it can generate enough interest to help supplement his pension short comings in the future caused by inflation and may be what he needs to help pay for any help he may need to keep him living comfortable in his own home for many years.

He could end up like my mother who is now 93 years old and still living in her own home and living off of interest only from such an investment nest egg and a very small Canada pension. If she has a really good year in the market she will take a trip or two with her girlfriends... spent her 90th birthday on a cruise. Or she may pull a little bit extra out to help out a young family member who needs a new car or herself a really nice *big* screen TV needed due to failing eye sight .

I recently hit an age where I could start to draw from one of my regulated retirement savings funds. I am not touching it as I do not need it currently in order to live comfortable and/or travel - better to let it keep growing so its there when I actually need it in order to keep living as comfortable as I do now. But should I make my final decision in regards to my perfect forever trailer .... when then all bets are off as far as not touching it goes.

[Carol H]

BTW nice pictures Francois, but I know you didnt take those at work this week

In my efforts to keep my retirement days full I am heading to Lake Louise for the WC in a few days Fingers crossed that the snow gods come through and we have enough to pull off the races.. a little sketchy, forecast not all that promising.

[steve dunham]

36 % of Americans have less than $1000 saved for retirement and 60 % of Americans have less than $25 K saved for retirement . A rather disheartening statistic in my opinion . Having a nice fiberglass trailer and no money to travel is not my idea of a good retirement .Hopefully / thankfully the members of this forum are better at retirement planning than the majority of US citizens . I thank God my father instilled the value in me of saving for the future .

[Jim Bennett]

Originally Posted by steve dunham

36 % of Americans have less than $1000 saved for retirement and 60 % of Americans have less than $25 K saved for retirement .

Seriously? Wow! I wonder if the numbers are close in Canada. 60% have less than $25k? That wouldn't last mare than one year into retirement. It almost makes me feel selfish for wanting MUCH more for myself.

I wonder if they took into account whether or not they own their own homes, but still.......

Some people do have pensions though, which will help them out some. I don't have anything, but the pittance that I will get from the government at 65.

[Raz]

My retirement plan was based on three principles.

1) get out of debt. Once something is paid off keep making payments to yourself. Retire debt free.

2) avoid thinking of affordability as a monthly event.

3) Even if you love your job, when you work you are trading hours of your life for money. Spend accordingly. Raz

[steve dunham]

Originally Posted by Jim Bennett

Seriously? Wow! I wonder if the numbers are close in Canada. 60% have less than $25k? That wouldn't last mare than one year into retirement. It almost makes me feel selfish for wanting MUCH more for myself.

I wonder if they took into account whether or not they own their own homes, but still.......

Some people do have pensions though, which will help them out some. I don't have anything, but the pittance that I will get from the government at 65.

The surprising thing to me was that even when employers offered a 401K match most employees still did not participate or fully participate in their employeers 401 K. I have attended several retirement seminars and one of the common threads was that you should plan on Social Security to provide no more than 1/3 of your retirement income and you should have at least 8 times your highest yearly income saved for retirement. (Presuming you wish to maintain your present standard of living) These numbers / rules may be inflated because the people running the seminars were paid financial planners but the concept of saving for retirement is still valid. I am not pretending to be an expert on retirement and am only parroting what I have been told. Even so the numbers seem to indicate that most Americans are financially ill prepared for retirement

[honda03842]

I retired at 58 with no outside source of income. We have traveled for 14 years.

Our per year expenses were dramatically less than our working life expenses.

Before we retired we moved to a smaller home, a less taxed state and a different way of living. I believe there's an assumption for many that you will live as you have lived. Certainly that's what many want. For us we chose different, less but more. We spend a lot less than we did before we retired but really feel we have more.

[C&G in FL]

Reading some of the posts in this thread is somewhat depressing. Makes me glad I planned for retirement and entered it at age 62-1/2 debt free. Guess I should consider myself fortunate.


Sent from my iPhone using Fiberglass RV

[treefinder]

I retired at 48. I lived on just what my pension was and that has worked out great. I'm now 64. Indeed, it is possible to tap into one's "savings," but if you don't have to, why do it? My idea is that those funds are for the time when I need assisted care.

Living frugally does not mean living on the cheap! It is always sensible to live below one's means and save, even as an older person.

[Donna D.]

I good friend of mine has reminded me many times... it's not how much money you earn (pension, 401k, Social Security, whatever)... it's how much money you SPEND.

You have to figure income to outgo... no matter WHAT!