Investing 102

[billscamaros]

[QUOTE=Sieg;393136]Just ran a conservative scenario in the Schwab's retirement planner without my wifes current income or retirement, factoring retirement age of 65, life expectancy of 80..........it's projecting a surplus of $439,000. ......QUOTE]

Out of curiousity, what's your thought process to determine the "surplus"? This is the way that I've looked at it ....

I'm 52, have a mortgage, one kid in college and two more to go.

I"ll work until at least 65.

I don't believe that anything in my current lifestyle will change drastically .... yeah, I'll get the kids thru college, but something else will come up.

So, my goal for my retirement income is to have it equal to my current income. That retirement income will be a combination of SS, pensions and interest/dividends from my retirement accounts.

Is that essentially the way you guys calculate your needs?

[Bucketlist2012]

[QUOTE=billscamaros;393156]

Originally Posted by Sieg

Just ran a conservative scenario in the Schwab's retirement planner without my wifes current income or retirement, factoring retirement age of 65, life expectancy of 80..........it's projecting a surplus of $439,000. ......QUOTE]

Out of curiousity, what's your thought process to determine the "surplus"? This is the way that I've looked at it ....

I'm 52, have a mortgage, one kid in college and two more to go.

I"ll work until at least 65.

I don't believe that anything in my current lifestyle will change drastically .... yeah, I'll get the kids thru college, but something else will come up.

So, my goal for my retirement income is to have it equal to my current income. That retirement income will be a combination of SS, pensions and interest/dividends from my retirement accounts.

Is that essentially the way you guys calculate your needs?

Somewhat, but you also have that big variable....Health... That is an asset you must keep working on. Keep fit, Doctor's visits.. I know it sounds corny, but that variable has sunk more retirement plans than any other variable..

Some say you can make it on 80%, but i would project 100% income in retirement..

If you don't need it or spend it, reinvest it.

And good on keeping the HOME out of the income mix... That is another nest egg that should something happen, you have something there too..

The best laid plans can turn to poo, with one medical situation.. So stay safe and healthy, and good luck in your plans..

[GregWeld]

[QUOTE=billscamaros;393156]

Originally Posted by Sieg

Just ran a conservative scenario in the Schwab's retirement planner without my wifes current income or retirement, factoring retirement age of 65, life expectancy of 80..........it's projecting a surplus of $439,000. ......QUOTE]

Out of curiousity, what's your thought process to determine the "surplus"? This is the way that I've looked at it ....

I'm 52, have a mortgage, one kid in college and two more to go.

I"ll work until at least 65.

I don't believe that anything in my current lifestyle will change drastically .... yeah, I'll get the kids thru college, but something else will come up.

So, my goal for my retirement income is to have it equal to my current income. That retirement income will be a combination of SS, pensions and interest/dividends from my retirement accounts.

Is that essentially the way you guys calculate your needs?

There are MANY websites that you can simply plug numbers in and they'll show you what you need to have to retire on - how long it will last - and what you need to save between now and then etc... and they'll factor in inflation etc. So you can play with the numbers as much as you like. Ignore them at your own peril!

If you need to "make" 100 grand in retirement -- be prepared to see a gut wrenching number that you need to have to do that - and live until you're 80 or 90.

An old saying comes to mind... Liars figure and figures lie.

When 'playing' with these numbers you must be really honest with yourself about how you see yourself living in retirement...

[Sieg]

Originally Posted by billscamaros

Out of curiousity, what's your thought process to determine the "surplus"? This is the way that I've looked at it ....

I'm 52, have a mortgage, one kid in college and two more to go.

I"ll work until at least 65.

I don't believe that anything in my current lifestyle will change drastically .... yeah, I'll get the kids thru college, but something else will come up.

So, my goal for my retirement income is to have it equal to my current income. That retirement income will be a combination of SS, pensions and interest/dividends from my retirement accounts.

Is that essentially the way you guys calculate your needs?

Bill, here's the basics of Schwab's:
-Are you including your partner? Yes/No
-Date of birth
-Retirement age
-Life expectancy
-Effective Federal tax bracket
-Current tax advantaged savings intended for retirement (IRA's, 401K, etc)
-Current annual amount of contributions to the plan
-Investment and bank account taxable savings intended for retirement
-How much do you plan to save yearly to these accounts

It then summarizes your total current retirement savings and total annual contributions.

Then asks how will your portfolio be invested prior to retirement.
-Short term (expected return 3.1%)
-Conservative (expected return 4.3%)
-Moderate Conservative (expected return 5.4%)
-Moderate (expected return 6.4%)
-Moderate Aggressive(expected return 7.2%)
-Aggresive(expected return 7.9%)


Then it asks how your portfolio will be invested after retirement.
-Short term
-Conservative
-Moderate Conservative
-Moderate
-Moderate Aggressive

Then it asks how much you plan to spend in retirement
-Percentage of your current income
-Monthly amount you will spend
-Annual amount you will spend

Then what income do you expect to receive in retirement
-Social Security
-What age you begin to receive benefits

Other Retirement Income
-Monthly amount
-One-time lump sum amount

It then gives you
-Your Projected Retirement Savings and Income
-Your Retirement Funding Needs
-Your Projected Surplus
-Likelihood of Meeting Goals Chart in percentage to projected age


That's the laymans summary. How honest and realistic you are with the data input is critical IMO.

The Schwab site and I'm sure others have some pretty valuable tools for the independents who want to quickly run and save multiple scenarios.

[billscamaros]

Thanks Sieg. I'll look thru the Schwab website tonight, as well as Fidelity's. Although I think that I have a fairly sound evaluation of how I'll retire .... it's good to bounce ideas off of other folks too.

Solar - I'm with you 100% on the health viewpoint. It's all a matter of balance .... making these plans to fund future lifestyles while at the same time making sure that we enjoy the family, friends and life around us today.

Best thread I've ever been a part of!!!!!!

[GregWeld]

Who needs me? You guys got it going on!!!



Bill et al....

So here's something everyone needs to give some thought to - in a funny backwards sort of way... about retirement. I know this -- because I'm living proof having been retired 20+ years already (I'm 58 now - and plan to live to be 300!)

I - being retired - want to see RAGING INFLATION.... and you hope that when you retire you'll have the same. Blasphemous you say! How stupid is that idea!!

Well.... let's think about it this way -- In retirement I should already own my house.... shouldn't be buying new cars as often - should maybe already have enough "toys" to carry me into my 70's... so what are my costs to live? Heat, Gas... phone.... food... property taxes and home maintenance... simple clothing... the trips I used to fly to I now have time to drive and enjoy...

So... if I could make 10% on my tax free muni bonds (more than double what I'm getting now on average!) my income would be FANTASTIC! Either I could have saved HALF what I needed and get to the same income -- or my income just took a giant jump... I can afford the "inflation" on prices of basics because I'm really not buying that much or that often!

If you want to see what this looks like -- plug in some wild numbers to the "retirement calculator" -- keeping your "required income" the same -- but the rate of return on your investments "high"... use 8 or 9% (unrealistic currently) rather than 4%.

Personally -- I'd love a return to the 80's when I could get 14% on a simple CD...

[Sieg]

Originally Posted by GregWeld

(I'm 58 now - and plan to live to be 300!)

My seat of the pants calculator had you funded to age 330.........but then you entered into an affair with Roger. He's quite talented and I've become concerned about your fiscal well-being.

[Bucketlist2012]

Originally Posted by GregWeld

Who needs me? You guys got it going on!!!



Bill et al....

So here's something everyone needs to give some thought to - in a funny backwards sort of way... about retirement. I know this -- because I'm living proof having been retired 20+ years already (I'm 58 now - and plan to live to be 300!)

I - being retired - want to see RAGING INFLATION.... and you hope that when you retire you'll have the same. Blasphemous you say! How stupid is that idea!!

Well.... let's think about it this way -- In retirement I should already own my house.... shouldn't be buying new cars as often - should maybe already have enough "toys" to carry me into my 70's... so what are my costs to live? Heat, Gas... phone.... food... property taxes and home maintenance... simple clothing... the trips I used to fly to I now have time to drive and enjoy...

So... if I could make 10% on my tax free muni bonds (more than double what I'm getting now on average!) my income would be FANTASTIC! Either I could have saved HALF what I needed and get to the same income -- or my income just took a giant jump... I can afford the "inflation" on prices of basics because I'm really not buying that much or that often!

If you want to see what this looks like -- plug in some wild numbers to the "retirement calculator" -- keeping your "required income" the same -- but the rate of return on your investments "high"... use 8 or 9% (unrealistic currently) rather than 4%.

Personally -- I'd love a return to the 80's when I could get 14% on a simple CD...

Oh man, that would be the ticket.... I would be my own King...Cash and no debt.....sweet...

You are right about the Inflation, but the regular investor needs to be making money on their money and low in consumer debt, with a fixed home loan in the 4% range...

If inflation, or when Inflation really takes off, I will be ready...I am deleveraged, and ready to rock.