Realistic calculator for retirement
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Anonymous
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If I have a paid off house and federal pension and live in a low tax state, how much will I really need have in savings?
There are certain possibilities like long term health issues, long drawn out medical treatments, stay in a nursing home, etc that there’s no way I can possibly save enough for, and it seems stupid to live on oatmeal now in case those things happen later. I don’t have expensive hobbies or travel plans. Why would I need millions? Most online calculators are from banks and finance companies and of course they will tell you to put in the absolute max. I’m 42 and I have some time. Right now I have significant home equity, a secure remote job, but I did get a late start on retirement savings (was SAHM for a few years, 2008-2009 wiped us out, divorce was costly and I had to use some retirement funds) so I only have 100k in retirement and maybe 25k in cash. Plan right now is to cash out of NoVa house in a few years, move to lower COLA, and be able to save quite a bit of my salary once kids are done with college. |
Anonymous
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If you think about your retirement in groupings.
A paid off house gives you equity and insurance to help pay for a nursing home or assisted living at the end- if you need it. Social Security, your pension and your savings give you your income in retirement. And easy way is to think of each providing about one third - ish. How many years will you have for your federal pension? What will be your highest earning years that apply to your situation? Remember, if you go to a lower cost area, your salary will be based on that and not the higher DMV rate. You can also get an estimate from social security. Depending on how many years you stayed at home, you many want to save more to make up for the lower SS and pension in your TSP. How much of your children’s college costs are you planning on funding? |
Anonymous
| OPM has a calculator for FERS. |
Anonymous
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It sounds like you are doing great. The pension and paid off house gives you security. You can always add more to your roth/403 with the catch up provision at 50.
I would draft out a really realistic budget of what you might need in the future. Include everything - monthly/yearly food needs, cell phone plans, predicted cost/gain of selling your house and moving, any savings you want to gift your kids for a wedding, new house, etc. Also make sure you know what you will be receiving for your pension. Knowing how much it will cost to "upkeep" you may give you a sense of security for the future. |
Anonymous
This calculator stupidly assumes that I need as much money during retirement as I need now when I will: - have paid off my house -no expenses for private school or college - no more trips for 4 persons (plus no more expensive ski trips) -no more expensive hobbies for DCs to pay (horses, sailing, etc) There is no way I will need all of this. There is also no way I can pay for extended qualified home care. So what’s the point of this ridiculous calculator? |
Anonymous
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I agree OP.
Once the kids are out of college and we are ready to retire we can downsize to a lower COL and our expenses will plummet. I am estimating 50k a year for us as a couple. (And this is being pretty generous. We could swing it on $35.) We will have either no mortgage, an extremely low one, or rent. We are modest people -- our biggest splurges are occasional travel and our kids. So in my case let's say we need about 4k a month. Maybe a third will come from SS and a third from our retirement funds (about $1 mil) and a third from savings/profit from our house which we plan to sell (about 1 mil). I think we'll be fine. And I think my kids will still get a little chunk of change when we die. So for people/couples like me (not big spenders or lavish lifestyle) I would sat $2 mil plus SS. |
Anonymous
When I click on that link, it takes me to a calculator that has an "options" setting where I can adjust the assumption of my expected retirement setting, and it seems to default to 70%. Just change the setting if you want lower future spending. Also, while you will stop having certain costs, the current costs that will continue (real estate taxes, medical bills, groceries, utilities, insurance, etc) will all be higher than they are now. So dollar per dollar, it's probably not as ridiculous as you think. Also, I don't know about you, but I plan to travel more, help out my young adult kids with things like weddings or down payments, etc. |
Anonymous
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The calculator worked for me. Just make sure to change the variables on the left side to suit you.
Looks like I will need $2.1 million in retirement and I am pretty much already there. |
Anonymous
I travel plenty now, but use a paid for apartment as a base to travel from. I intend to do the same in future, and don’t have plans to go on luxury river cruises and the likes. I traveled a lot as a kid/teen etc and am already revisiting lots of the same places with my DCs. There’s not much that I feel like I need to see that I haven’t seen yet. My kids will get an inheritance and that’s more than I got/will get. I don’t think I can help much with a down payment or lavish wedding. I am a sole earner and am doing my best, but being guilted by some calculator which just tells me I’ll have a shortfall of $3M doesn’t help.  )
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Anonymous
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https://www.bankrate.com/retirement/retirement-plan-calculator/
I like this one because you can adjust the assumptions (ROR, inflation, etc). |
Anonymous
It’s not ridiculous. You’ll find new things to spend money on. You can eliminate income that went toward savings and work-related expenses (commuting costs). But other than that, most retirees who *can* spend about as much as they did before. Travel, expensive hobbies of your own, grandchildren, etc. Do you really plan to sit around your house all day? Signed, a retired person |
Anonymous
| Assisted living or memory care is about $10k to $15k a month. Make sure to set aside the funds somehow. Healthcare will typically use 15% of your assets. So, think of it as replacing your mortgage payments. |
Anonymous
Can you live on that budget now? If so, ok. Otherwise, I wouldn’t count on “plummeting” expenses in a LCOL area unless you plan to lower your standard of living. We moved to a “lower cost of living” area when we retired, and inflation has hit everywhere. Taxes are lower (but I couldn’t say that everywhere, obviously). Services (plumber, haircuts, appliance repairs) were cheaper, but worker shortages are making them more expensive every day. Restaurants aren’t cheaper than DC and groceries are slightly cheaper, but not much. Things from big box stores are pretty much the same price everywhere. We could have bought a cheaper house, but it would be in a cookie-cutter subdivision with no trees that was a farm last year. A nice house/condo in a desirable neighborhood, much less near the water or Mountain View, etc, is expensive everywhere, and prices have doubled in the last few years. With WFH, nice cheap places aren’t cheap anymore. Some things are more expensive — insurance (car and homeowners), utilities, and some odd things like dry cleaning or shoe repair. Remember you’ll have to pay for your own cell phone bill in retirement. I just did some quick math and we spend almost $30,000 a year on taxes, insurance (car, home, health + deductibles), and utilities (cell, WiFi, electric/gas). Even if your costs are lower, are you really going to live on a $1,000 a month for everything else? That doesn’t include home maintenance, maintenance, groceries, travel, clothes, gifts for family, etc. I realize that people do it all the time. In fact, i have. But I worked my a** off for a long time so I never have to do that again. Which is why I ask about your current standard of living. If you live that way now, you’ll be fine. Just don’t expect to lower your cost of living dramatically in retirement by virtue of moving somewhere else. That magic place doesn’t exist in the 50 US states. Not to mention it sounds like you’re double counting your home equity — there will be a good chunk invested in your new house (or the income will be spent on rent, which will be on top of that $4k a month). If you haven’t visited a LCOL area recently, don’t count on a 2000 (or even 2010) COL. |
Anonymous
Well, obviously. One could always just spend *more*. I could go on luxury trips that cost $20k per trip or I could do the same trip on $2k. I could buy expensive clothes, get the best concert tickets at $350 per person, or I could go to the local university and get a similar experience for $20. I could take senior classes at the local college for next to nothing or go on guided archeological tours for a multiple. I mean there are no limits to spending money. Doesn’t mean I will become wasteful in retirement. |