Max: $35,262.39
That is how much I need to save per year if I want to retire at age 65 and have the equivalent of $40,000 a year in today's money to live on.
That is just a few grand less than I currently make per year.
I am going to be working until the day I die. The last moment of my life will be spent in a beige cubicle, getting bitched out because I can't magically undo the results of some user's stupidity.
Wee.
That is just a few grand less than I currently make per year.
I am going to be working until the day I die. The last moment of my life will be spent in a beige cubicle, getting bitched out because I can't magically undo the results of some user's stupidity.
Wee.
posted by Max Dobberstein at 8/04/2008 12:41:00 PM
12 Comments:
Really?
Okay, I know you are depressed.
I understand your job sucks - so there is some hyperbole here.
I realize I'm in a two income house-hold and that I make more than you do. Of course, our bills are far higher. For the sake of this argument, considering when you retire you'll probably still be in STL, let's call us even.
According to my 401k calculator (again, major estimate) - to make what I make now, I need to invest $7000 this year, I'm sure it will change from year to year as we go.
I'm not there yet. I'm at about $5000, I'll be uping that soon. But, that's no where near your figure.
I've been chucking money into my 401k for eight years. However, my calculator says that even with nothing in savings, it would be $12,000 - not $36k.
Also, think about it. Will you need as much money for your day to day life when you retire?
I understand inflation will come and make things worse, but there's also compound interest, so, for the sake of argument, let's not talk dollars - let's talk percentages. Right now, you need 100 percent of your income to live. Will you need a 100% of what you make now when you retire?
By the time you retire, your house will likely be paid off. So, the approx. 25% of your income that currently goes to your home won't need to go there anymore.
You won't need to support your commuting budget. I don't know about you guys, but between car payments, insurance, maintenance and fuel, that's easily 15% of our income. In retirement, you could easily get by on one car, old but reliable and hardly used.
You will want to remain active and get out of the house (perhaps your car will mostly be used to get you to the airport!) However, leisure travel changes when you don't have to be back to go to work. So, you can take a cheaper bus or train instead of a plane - you have time! The seniors love their group trips! And, why not? You get to meet new people, go places, get treated like you matter and it's inexpensive! With the population aging and more people living off retirement salaries - I'm sure these trips will only increase, diversify and lower in price while increasing value.
You'll have medical bills. You have medical bills now. This might not be as big of a change as you might imagine - depending on your health. (My recent health has been poor - future medical bills won't be that much of a shock!) We're not even factoring in the huge advances in medical technology we might see by the time we retire. I'm looking at this as if we are still dealing with 1990s medicine.
I've read up, most planners say you'll need anywhere from 60 to 80% of your current income, adjusted, in retirement, depending on your health, spending habits and activity level.
Max, considering you live like an elderly shut-in now, it could be closer to 40%! :)
All kidding aside, I don't think it's as bad as all that. I'm not sure where your numbers are coming from, but my numbers are telling me a vastly different story and we are not that far apart.
How much do you have in your IRA/401k? Mine is in four figures because contributions have been a luxury I can't afford.
With my current income, I am barely making ends meet. If I make them meet. I don't want to spend my retirement deciding between groceries, meds and utilities like I do now.
As it stands, I will be almost 70 before I will have my mortgage paid off. That is assuming I don't move or find myself having to cash out equity to take care of the emergencies I tend to fall into a few times a year.
I want to be able to feel free to enjoy myself, not just have enough to pay the bills. And I would not mind having a bit of padding should I suffer the misfortune of living past 90.
Taking that into account, even with a conservative rate of inflation and a generous but not entirely wild rate of interest, the number stands.
I reran the numbers with a interest rate that is a bit overenthusiastic, and took away the assumption that there will come a day when I won't be getting a check from Uncle Sam on or about April 15th. I continued with my (hopeful) assumption that payroll taxes will not rise and that I will never run up against the alternative minimum tax. The number came out at just under $25,000. If I could figure out how to live on $12,000 a year, I would have it made.
Another thought, you have a 401K, not an IRA. That means that your employer will be throwing some cash into your pot over and above your $5000-7000 contribution, correct?
I have an IRA. That means when (if) I can put money in, my employer will contribute nothing. Hence, my number is higher than yours.
My calculator didn't figure in my employer contribution. We're talking an additional 4% if it did.
I ran the calculation requiring $12000 a year as if I had nothing in my 401k.
(I realize you can't contribute $12k, just saying.)
If you pay off you house at 70 and you live to 90, that's 20 years of just maintainance, property tax and insurance. You could also get a reverse mortgage to hand some money back to you. You end up not owning your house - but you can't take it with you.
I did however use the average for long term stock investing. My 401k is more than 98% invested in stock funds. Over the long haul, stocks tend to earn 10 to 11 percent. I used 10. If you used anything less, this would be conservative and might account for your numbers.
Over the last 8 years, my 401k has beat the 10% mark handily (Double!). Even with the down turns of the last year or two, I'm still above 10%. Over the longer haul, I'm sure 10% is about right.
If you are not investing heavily in stock, you are young, you can stand the risk, you should reconsider.
I used a 10 percent return in my first calculations and 15 in my second.
Again, I want more than paying for maintenance, taxes and insurance. I want to look forward to enjoying at least a little of the tail end of my life.
I hope you are right. Unless I somehow find a job I genuinely love, I really don't like the idea of working until the day I drop.
Of course, even $2000 for my IRA is out of my price range at the moment. I hope things get better. I am trying to figure out a way to make things better.
But so far, frustration rules the day.
The problem with retirement accounts is that they are useless if you can't put something in them.
My current account is in five figures. If I calculate it out - I'm looking at being a millionaire by the time I retire. Hopefully, that will still mean something.
However, I've been long considering cashing out my 401k, paying the penalties and taxes and taking a year off from work to restore my health. If it worked, I'd come out a year older, unemployed with an empty retirement account but healthy.
I keep thinking that if I don't work on my health, that I won't get to spend my retirement money at retirement anyway - I'll end up spending it on medical bills and likely it will do me no good. Can't enjoy retirement if you are dead.
This job is killing me slowly. I turn to food to combat the stress. I don't feel like leaving the couch or the computer to exercise. It just seems to never end.
I've looked for other jobs. I've gotten no training in the last five years and no new skills. Employers seem to be looking for kids who have more skills than me and cost less - and they are finding them.
The jobless rate here in the state, while better than the national average, is currently at it's highest point in 15 years. With WaMu cutting jobs - all of those people are filling any possible jobs I might find.
This still leaves me thinking about draining my 401k in January. I mean, my diet is going okay right now - 494 at last check. They just put me on a diuretic - so I'm getting a boost from that. I just don't want to keep risking my health for a job that is giving me nothing but a pay check.
But, am I willing to risk my current employment and future retirement for *possible* short term gains?
When you wake up on January 1, 2009, take your pulse. If you have one, you'll know for certain that you are alive then. So live then. Do it for both of us.
Ahem. I will be going on Design Star and winning, so nothing to worry about. I'll make millions. My show will be an outstanding hit. :D
And if that happens, you will most likely dump me.
OMG. You're a dork. I have no reason to dump you, especially considering the fact that you will have supported me though design school and though the Design Star auditions and stuff... so I'd totally owe you, anyway.
I LOVE YOU. And you're stuck with me.
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