Need $2.4 million invested for retirement

[lazysundays]

I'm assuming no ss and that $100,000 now will be worth $40000 in 30 years,

So if I want to live off of about $100,000 , will need to have a retirement income of $250,000 from funds. One retirement calculator once told me I need 2.4 mill at retirement, so that would generate an income of $210,000 says this calculator. So to live like I have a joint income of $85,000 or so (enough with no debt as bills in the future) we need to save $2.4 million. And that would be doable by saving $22,500 a year towards retirement.

So $22,500 isn't such a scary number, but what is irking me is that when I looked up ssa.gov, I figured out that joint ssa could have helped us with 1/3rd of that $210,000 annual income, so we wouldn't have to save as much. Instead, I expect ss to be bankrupt and must save $2.4 instead of $1.6 million.

Do you guys that still have years to go add or ignore ss?

[movingforward]

I think SS will be around but I don't really "count on it."  Honestly, at this point I decided I will have what I have.  I came to the conclusion about a year ago that I can't sit around worrying about it for the next 20-30 years (I was worrying too much - mainly because of YM).  I just keep throwing money into my IRA and it is what it is.

[Plain Old Petunia]

If the SS fund becomes bankrupt, that doesn't mean benefits will no longer be paid.  Rather, it means benefits will be paid from current revenue (the SS taxes being collected).

I expect to receive SS, but plan on 75% of estimated benefits.  If they "fix" it, which I do expect, that extra 25% will just be gravy.

[Rocky Mtn Saver]

Based on what I've read about its problems, I figure on a portion of the estimated benefits.  I don't agree with the hysteria that it won't be around at all in 30 years. 

[Rocky Mtn Saver]

Jul 2, 2014 17:15:31 GMT -5 Plain Old Petunia said:

If the SS fund becomes bankrupt, that doesn't mean benefits will no longer be paid.  Rather, it means benefits will be paid from current revenue (the SS taxes being collected).

I expect to receive SS, but plan on 75% of estimated benefits.  If they "fix" it, which I do expect, that extra 25% will just be gravy.

Without any reform, 75% of benefits is the current estimation in ability to pay out after 2033.   

[kittensaver]

I agree that SS will still be around, but that it will look different - perhaps very different - than it does today. I think the indexing of benefits against other assets will escalate/become even more punitive. I say punitive because after paying (involuntarily!) into the system (both us and our employers) for 30-40+ years BUT also being a responsible individual and saving our own retirement dollars "like we're supposed to," we will be "punished" by not being given our full benefits because we have other resources.

JMHO

[Plain Old Petunia]

Jul 2, 2014 17:21:45 GMT -5 Rocky Mtn Saver said:

Jul 2, 2014 17:15:31 GMT -5 Plain Old Petunia said:

If the SS fund becomes bankrupt, that doesn't mean benefits will no longer be paid.  Rather, it means benefits will be paid from current revenue (the SS taxes being collected).

I expect to receive SS, but plan on 75% of estimated benefits.  If they "fix" it, which I do expect, that extra 25% will just be gravy.

Without any reform, 75% of benefits is the current estimation in ability to pay out after 2033.   

Whoops, I did make it sound like I was just picking a number out of my...hat, didn't I?  Yes, that info is right on the statement. 

[lazysundays]

So you guys assume retirement with ss calculations? Maybe I can assume 50% of ss income by 2045...

[Rocky Mtn Saver]

Jul 2, 2014 17:32:50 GMT -5 lazysundays said:

So you guys assume retirement with ss calculations? Maybe I can assume 50% of ss income by 2045...

I include a portion of the estimated benefits in my total plan.  There's some good information out there on the various issues involving SS that you can use to come up with your own determination. 

[Rocky Mtn Saver]

Jul 2, 2014 17:30:09 GMT -5 kittensaver said:

I agree that SS will still be around, but that it will look different - perhaps very different - than it does today. I think the indexing of benefits against other assets will escalate/become even more punitive. I say punitive because after paying (involuntarily!) into the system (both us and our employers) for 30-40+ years BUT also being a responsible individual and saving our own retirement dollars "like we're supposed to," we will be "punished" by not being given our full benefits because we have other resources.

JMHO

It was designed to be insurance against poverty.  I'd rather not be in poverty, personally. 

[Plain Old Petunia]

Jul 2, 2014 17:32:50 GMT -5 lazysundays said:

So you guys assume retirement with ss calculations? Maybe I can assume 50% of ss income by 2045...

Certainly.   The only way no SS benefits will be paid is if we stop collecting SS payroll taxes.   I agree that is possible, but I personally consider it extremely unlikely.   Unless we do have a zombie apocalypse,  that is.

[Plain Old Petunia]

Jul 2, 2014 17:38:02 GMT -5 Rocky Mtn Saver said:

Jul 2, 2014 17:30:09 GMT -5 kittensaver said:

I agree that SS will still be around, but that it will look different - perhaps very different - than it does today. I think the indexing of benefits against other assets will escalate/become even more punitive. I say punitive because after paying (involuntarily!) into the system (both us and our employers) for 30-40+ years BUT also being a responsible individual and saving our own retirement dollars "like we're supposed to," we will be "punished" by not being given our full benefits because we have other resources.

JMHO

It was designed to be insurance against poverty.  I'd rather not be in poverty, personally. 

I look at that in about the same light I look at prisons.  Yes, I help pay for prisons.  No, I don't want to live there.

[Rocky Mtn Saver]

Jul 2, 2014 17:40:01 GMT -5 Plain Old Petunia said:

Jul 2, 2014 17:38:02 GMT -5 Rocky Mtn Saver said:

It was designed to be insurance against poverty.  I'd rather not be in poverty, personally. 

I look at that in about the same light I look at prisons.  Yes, I help pay for prisons.  No, I don't want to live there.

  Excellent point!  I think I'd probably love to never have to receive benefits from any of my other insurance, as well. 

[kittensaver]

Jul 2, 2014 17:38:02 GMT -5 Rocky Mtn Saver said:

Jul 2, 2014 17:30:09 GMT -5 kittensaver said:

I agree that SS will still be around, but that it will look different - perhaps very different - than it does today. I think the indexing of benefits against other assets will escalate/become even more punitive. I say punitive because after paying (involuntarily!) into the system (both us and our employers) for 30-40+ years BUT also being a responsible individual and saving our own retirement dollars "like we're supposed to," we will be "punished" by not being given our full benefits because we have other resources.

JMHO

It was designed to be insurance against poverty.  I'd rather not be in poverty, personally. 

It was also designed as a supplement to retirement savings. SS has said all along that its payments are not and never have been intended as a stand-alone pension or a means to cover all of one's living expenses in retirement. So JMHO it really sucks that because of inherent flaws in the system and bad management, IF indexing escalates (it's already here and growing in some other benefits/entitlements areas) not only were we screwed out of income during our working years, we have basically paid into a mandatory system for nothing  

[Phoenix84]

I pretty much just save what I can and it will have to be enough. I save 8% into my TSP and another $5500 per year in my IRA. I should also get a federal pension, which should help.

I don't really "count" on SS.  I think it will be around in some form, but probably means tested, or paying a percentage of promised benefits, or dramatically increased age, something like that.

[Rocky Mtn Saver]

Jul 2, 2014 17:45:39 GMT -5 kittensaver said:

Jul 2, 2014 17:38:02 GMT -5 Rocky Mtn Saver said:

It was designed to be insurance against poverty.  I'd rather not be in poverty, personally. 

So JMHO it really sucks that because of inherent flaws in the system and bad management, IF indexing escalates (it's already here and growing in some other benefits/entitlements areas) not only were we screwed out of income during our working years, we have basically paid into a mandatory system for nothing  

Isn't this the description of pretty much the majority of taxes? 

[Deleted]

Jul 2, 2014 17:47:16 GMT -5 Phoenix84 said:

I pretty much just save what I can and it will have to be enough. I save 8% into my TSP and another $5500 per year in my IRA. I should also get a federal pension, which should help.

I don't really "count" on SS.  I think it will be around in some form, but probably means tested, or paying a percentage of promised benefits, or dramatically increased age, something like that.

I thought the federal pension went away many years ago?  I have a friend who just had her 30 years in as a civil servant and she said she was the first year that didn't get a pension.

[Deleted]

Do your parents and grandparents rely on SS as a major part of their livelihood ?

[Deleted]

Jul 2, 2014 17:15:31 GMT -5 Plain Old Petunia said:

If the SS fund becomes bankrupt, that doesn't mean benefits will no longer be paid.  Rather, it means benefits will be paid from current revenue (the SS taxes being collected).

I expect to receive SS, but plan on 75% of estimated benefits.  If they "fix" it, which I do expect, that extra 25% will just be gravy.

SS is pretty much already being paid from current SS taxes being collected.  What was previously collected was "loaned" to the government for then-expenses and won't be repaid.

The problem is that there aren't enough workers per retirees to support it.

I expect to receive SS because I am only 2-6 years out (I'm 60).  I think they will means-test it through income.  Right now, 85% is taxed if you are over a certain income.  It will definitely go to 100% taxed.  But then they will have to figure something else out.

[Deleted]

Jul 2, 2014 17:57:45 GMT -5 oped said:

Do your parents and grandparents rely on SS as a major part of their livelihood ?

DH relies 100% on it. I don't understand exactly what happened with his 401k because I remember him being excited about it at one point. But we closed it out last year with $2500 in it.

I mentioned him because at 71, he is the right age to be someone's parent or grandparent.

I won't be relying on it to that extent. I have a pension that should pay 50% of my salary, a small IRA that represents my divorce settlement (including the house), a small 457b, and a small Roth. Altogether, the retirement savings part exclusive of pension is about $315,000. 

I hope to be ok, but it requires that I work until age 66.  I may have to work longer (or retire sooner) depending on DH's health.  Right now between my insurance and Medicare as a back-up, our only OOP are prescriptions for him.  Considering how many times he has been treated for heart issues, that is a blessing.  Just this month alone, the cardiologist removed a pacemaker/defibrillator (wires exposed) and later reimplanted one.  He had to visit the dermatologist for eczema, the gastro guy for acid reflux, the primary care guy for a check-up, and is scheduled for a "pain management" visit to try to address his back pain since the primary care guy said he can't write any more prescriptions per the gov't. 

That is one month or maybe six weeks!  It makes me dread getting old. 

[giramomma]

I don't count SS in my retirement calculations. Whatever I do get will be icing on the cake. As terrible as this is to say, one of us will take SS early. We'll have to see who takes SS early when the time comes. I'm not waiting until I'm 70 or later to finally "see" my money.

[kittensaver]

Jul 2, 2014 17:57:45 GMT -5 oped said:

Do your parents and grandparents rely on SS as a major part of their livelihood ?

My mother is 91 and she does. And no she did not outlive her retirement savings - she has always been a very (very!) poor money manager, and she pretty much blew through most of it "helping" my deadbeat DBs (2 of them). One of them is even living on her couch long term  But don't ask her about it, because all you will get is a long stream of excuses and defensiveness for how she ended up where she is . . .

[ohhkay2]

Jul 2, 2014 17:54:43 GMT -5 @singlemominmd said:

Jul 2, 2014 17:47:16 GMT -5 Phoenix84 said:

I pretty much just save what I can and it will have to be enough. I save 8% into my TSP and another $5500 per year in my IRA. I should also get a federal pension, which should help.

I don't really "count" on SS.  I think it will be around in some form, but probably means tested, or paying a percentage of promised benefits, or dramatically increased age, something like that.

I thought the federal pension went away many years ago?  I have a friend who just had her 30 years in as a civil servant and she said she was the first year that didn't get a pension.

Maybe she's referring to the switch from CSRS to FERS, it didn't go away but it decreased significantly and happened in 1986. I'm under one of the newer systems and put a little under 4% in (I think) and get 1% of my high 3 for every yr worked (1.1% if I stay on longer than 30 yrs). CSRS put in less than 1% and can get up to 80% of their high 3, so she might be in the first wave of retirees under FERS..

[Deleted]

Jul 2, 2014 18:13:12 GMT -5 kittensaver said:

Jul 2, 2014 17:57:45 GMT -5 oped said:

Do your parents and grandparents rely on SS as a major part of their livelihood ?

My mother is 91 and she does. And no she did not outlive her retirement savings - she has always been a very (very!) poor money manager, and she pretty much blew through most of it "helping" my deadbeat DBs (2 of them). One of them is even living on her couch long term  But don't ask her about it, because all you will get is a long stream of excuses and defensiveness for how she ended up where she is . . .

Ok, so then you are benefiting now from as because you don't have to support your mom.

silver lining! 

[Deleted]

Jul 2, 2014 18:16:05 GMT -5 ohhkay2 said:

Jul 2, 2014 17:54:43 GMT -5 @singlemominmd said:

I thought the federal pension went away many years ago?  I have a friend who just had her 30 years in as a civil servant and she said she was the first year that didn't get a pension.

Maybe she's referring to the switch from CSRS to FERS, it didn't go away but it decreased significantly and happened in 1986. I'm under one of the newer systems and put a little under 4% in (I think) and get 1% of my high 3 for every yr worked (1.1% if I stay on longer than 30 yrs). CSRS put in less than 1% and can get up to 80% of their high 3, so she might be in the first wave of retirees under FERS..

she told me she only gets TSP - I'll have to ask her tomorrow - and she isn't retiring now, she'll be working many more years to pay for catholic school and college tuition.

[kittensaver]

Jul 2, 2014 18:19:40 GMT -5 oped said:

Jul 2, 2014 18:13:12 GMT -5 kittensaver said:

My mother is 91 and she does. And no she did not outlive her retirement savings - she has always been a very (very!) poor money manager, and she pretty much blew through most of it "helping" my deadbeat DBs (2 of them). One of them is even living on her couch long term  But don't ask her about it, because all you will get is a long stream of excuses and defensiveness for how she ended up where she is . . .

Ok, so then you are benefiting now from as because you don't have to support your mom.

silver lining! 

Very true - thanks for the silver lining . The Bank of Mr. and Mrs. Kittensaver closed permanently quite some time ago. Thank goodness I'm not her executor (older, very responsible DB is) - I hate to think of the emotional hell (guilt and emotional blackmail) he's going to go through in kicking out younger deadbeat DB after she passes on . . . (the house has a reverse mortgage on it and will be confiscated at the end of the month in which she passes).

[tskeeter]

Jul 2, 2014 17:04:17 GMT -5 lazysundays said:

I'm assuming no ss and that $100,000 now will be worth $40000 in 30 years,

So if I want to live off of about $100,000 , will need to have a retirement income of $250,000 from funds. One retirement calculator once told me I need 2.4 mill at retirement, so that would generate an income of $210,000 says this calculator. So to live like I have a joint income of $85,000 or so (enough with no debt as bills in the future) we need to save $2.4 million. And that would be doable by saving $22,500 a year towards retirement.

So $22,500 isn't such a scary number, but what is irking me is that when I looked up ssa.gov, I figured out that joint ssa could have helped us with 1/3rd of that $210,000 annual income, so we wouldn't have to save as much. Instead, I expect ss to be bankrupt and must save $2.4 instead of $1.6 million.

Do you guys that still have years to go add or ignore ss?

I don't think that any politician in their right mind is going to let SS disappear.  Just think about what happens when a simple, small reduction in benefits is discussed.  That's when undesirable things hit the fan and politicians get voted out of office.

I supect that what will happen is that benefits could be scaled back.  Especially for folks who have had higher than average incomes during their working lives.  According to current estimates, without any changes, withholdings will cover about 75% of the benefits for the Boomers.  Unless Congress diverts retirement withholdings to fund programs like medicare.

In addition to possible benefit reductions, I expect that the full benefits age will be increased again.  And it is possible that the age to qualify for early retirement might be increased from 62.  And, that the limit on the income subject to SS withholdings will be removed.  And that the withholding rate will be increased for both employers and employees.

For retirement planning purposes, I'd be pretty comfortable with including 75% of the current SSA benefits projection in my projections.  I think that's the most realistic, but conservative, approach you can take until something is done to change SS.  

[tskeeter]

Jul 2, 2014 17:30:09 GMT -5 kittensaver said:

I agree that SS will still be around, but that it will look different - perhaps very different - than it does today. I think the indexing of benefits against other assets will escalate/become even more punitive. I say punitive because after paying (involuntarily!) into the system (both us and our employers) for 30-40+ years BUT also being a responsible individual and saving our own retirement dollars "like we're supposed to," we will be "punished" by not being given our full benefits because we have other resources.

JMHO

[tskeeter]

Jul 2, 2014 17:38:02 GMT -5 Rocky Mtn Saver said:

Jul 2, 2014 17:30:09 GMT -5 kittensaver said:

I agree that SS will still be around, but that it will look different - perhaps very different - than it does today. I think the indexing of benefits against other assets will escalate/become even more punitive. I say punitive because after paying (involuntarily!) into the system (both us and our employers) for 30-40+ years BUT also being a responsible individual and saving our own retirement dollars "like we're supposed to," we will be "punished" by not being given our full benefits because we have other resources.

JMHO

It was designed to be insurance against poverty.  I'd rather not be in poverty, personally. 

Agreed.  But, with most other types of insurance (until recently), I can choose to self insure.  Not so with SS.  Basically SS is a plan for high income earners to subsidize the retirement living expenses of lower income earners.  

[kittensaver]

Jul 2, 2014 18:35:28 GMT -5 tskeeter said:

Jul 2, 2014 17:38:02 GMT -5 Rocky Mtn Saver said:

It was designed to be insurance against poverty.  I'd rather not be in poverty, personally. 

Agreed.  But, with most other types of insurance (until recently), I can choose to self insure.  Not so with SS.  Basically SS is a plan for high income earners to subsidize the retirement living expenses of lower income earners.  

And it's not supposed to be. It's supposed to be a supplemental retirement/old age anti-poverty plan. And the people who paid into it are supposed to benefit from it - especially since it is mandatory/statutory. The indexing/means-testing and other ways of fiddling with the program are just work-arounds for all the political gaming and bad management. I could have done much better keeping and investing that money for retirement myself - and in the process pretty much could have assured that I will never be a "burden on the system." But instead I will pay for YEARS and probably see very little to nothing. Chaps my hide (sorry).