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05-19-2019, 11:57 AM #1
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Here's How Many U.S. Households Will Run Out of Money in Retirement
"Running out of money is indeed very frightening, as no one wants to be without the cash they need in their 70s and 80s. But how likely is it that you'll actually run out of money during your retirement years?"Stop trying to organize all of your family’s crap. If organization worked for you, you’d have rocked it by now. It’s time to ditch stuff and de-crapify your world.
If you're not using the stuff in your home, get rid of it. You're not going to start using it more by shoving it into a closet.
Use it up, Wear it out,
Make it do, Or do without. ~unknown
A clean house is a sign of a wasted life. ~unknown
05-20-2019, 09:05 AM #2
The article is rather vague. I am not sure how the figure things out. Are they assuming that people require that people need the same amount of money as when they were working? If not, what figure do you choose?
Generally speaking many people will have less expenses. For example, often the mortgage and other debts are paid off. You are not usually still supporting children. No more pay deductions to for social security, pensions, retirement savings. Some people may move to a smaller home if they are empty nesters. I am not sure how common this is across the US, but in a high cost of living area, such as where I am, most people move to someplace cheaper after they retire.
Which is not to say this is not potentially a huge thing. But I really can't tell from this article.KathyB
06-17-2019, 07:07 PM #3
Okay, here are my rambling thoughts on the subject.
It all depends on an individuals circumstances. You can make the best plans, but if you become ill and require expensive medical care or medications not covered by Medicare or your RX policy, your funds will evaporate quickly. Every time you dip into savings that is money that is gone as living on retirement does not allow for savings. Replacing a vehicle can be impossible. Home maintenance is another budget breaker. Constantly increasing prices for EVERYTHING when income is static is painful. Be aware that your health insurance premiums increase annually as your age goes up. Property taxes go up. If your credit rating does not remain high your car and household insurance premiums will also increase.
A spouse going to a nursing home is another financial crisis that if not handled correctly will wipe you out. The loss of a spouse is another financial crisis that may require major changes in the way you live. Funeral expenses are ridiculously high and, if you do not have life insurance or a burial trust, you can end up with serious debt while your income will decrease.
One thing for sure, you will need a huge amount of savings if you wish to continue living at the level you do pre-retirement or have plans to live it up during your retirement.
Make a plan then work your plan. Do the best you can in preparing for retirement and then don't worry about it. Things have a way of working out. Figure out what your retirement income will be and make a budget for that amount then live on it for a year or two before you retire. That will show you how well your plan will work. A plus is that you can save all your income above the retirement budget to add to your retirement savings. Absolutely essential is to be debt free when you retire even if that means delaying retirement.
The last couple years I worked I saw a big increase in senior citizens filing bankruptcy. One of the main causes was failure to reduce spending to the lower income. They continued spending using credit cards for "supplemental income", then cashed in retirement plans to cover the credit card debt, then ran the cards up again with no way to pay turned to bankruptcy. They were left with only social security to live on and no emergency savings. Other causes were health issues, death of a spouse, a spouse in a nursing home, being taken advantage of by family member, having a major home repair, replacing a vehicle.
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06-19-2019, 08:34 AM #4
I feel like if you are frugal, it ups your odds greatly in retirement. Firstly, because you already have a habit of being frugal. I think it is much harder to start being frugal when you retire if you have never practiced it before. Second, if you are frugal, you are much more likely to be starting retirement in a better position - more money saved and less (or no) debt.
I also think it is important to find what I call your "happy frugal." Find hobbies and interests you genuinely enjoy that are frugal. Find frugal foods that you like. Find things that save money without feeling deprived. Of course this is true before retirement as well. But the things might change as you have more time and less money. For example, there are foods I would like to make that are too time intensive for me to fit in my current schedule.KathyB
06-20-2019, 11:46 AM #5
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What we found when we started looking at our expenses was, because we are already frugal, we don't have much flexibility when it comes to spending. Our fixed expenses can't be reduced. We can shave a little off the grocery bill, but not much because we're not willing to give up stuff like healthy foods, and because we already buy most food items as cheap as we can find it. We have only a couple areas of luxury, sat TV service and camping. If we gave up Dish, we would have no TV because sat service is our only option. Not acceptable. As for the camper, it's paid for as is the truck, and license and insurance costs are minimal, so camping fees and gas are pretty much our only travel expenses. The annual camper costs pay for themselves vs. hotels in approximately 3 nights, plus we don't have to pay for restaurants or kenneling our dogs. I guess the smart phones are a pure luxury, but even that wouldn't save that much.
Because we are frugal to begin with, there's nowhere to go when it comes to cutting our COL. We can't stop buying expensive coffee we never bought, can't stop eating at fancy restaurants we never went to, can't stop buying brand new cars when we've always bought used and driven them into the ground, can't cut costs by not shopping at Nordstrom when we've always bought our clothes at garage sales.
What it all boils down to is the COL we had before retirement is about the same as now, after retirement, plus we're paying a gigantic health insurance premium now, too. Living a frugal, home based lifestyle helps us be more content staying home, but I don't see where it helps us accumulate more money in retirement.
06-25-2019, 09:40 AM #6
I think some of the advice makes certain assumptions. Much of it seems to be targeted toward the higher earners. for example, the assumption is that if you are frugal, you will have money left over to save, invest, etc. However, some people have to be frugal just to cover basic expenses. Even with being frugal there is not much, if anything left at the end of the month.
Living below your means is much easier if you are earning a good salary. But the less you make the more difficult it becomes to live under your means. Similarly, the ability to be able to get by at 80% or 60% or 50% of your current income seems to imply that your current income is relatively good.
Another bit of advice that comes up sometimes is moving to a lower cost of living area. That is really good advice for people like me who live in a high cost of living area. But it is useless to people living in an area that is already low cost of living.KathyB
07-14-2019, 03:11 PM #7
The bottom line is you must do whatever is necessary to keep spending less than income whether you are retired or not. I always keep in mind where I can make immediate cuts should it become necessary. Cannot get any TV here without cable or dish, but that would likely be my first SHTF financial cut. Don't have a smart phone but would cancel landline if necessary along with Internet. I keep in mind food, water, shelter, medical care, transportation and consider nothing else more important.
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