tskeeter
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Post by tskeeter on Oct 9, 2014 16:36:23 GMT -5
According to a Money magazine article, there are only two "states" where retirees meet the target of getting 70% of their pre-retirement income in retirement. Washington DC and Nevada.
Now, Washington DC, I can believe. Many residents enjoy generous federal pensions.
Nevada, I have some questions about. I suspect some fuzzy math is behind the the article's analysis. The only way I can see the information in the article being technically accurate is if retiree incomes are compared, not to the pre-retirement earnings of the retirees, but to average incomes earned by people working in Nevada.
According to the Census Bureau, Nevada has a middle of the road median household income ($54K in 2013). If you assume that each household gets $1,200 a month in SS benefits and a 4% rate of withdrawal from retirement savings, a retiree would need to have about $585K in retirement funds to meet the 70% target. That's a whole lot more money than personal finance articles tell us that most people have saved.
So how does it work out? I suspect that the key is escapees from CA. When you compare the retirement assets of people who retired from CA to Nevada against incomes earned in Nevada, the math makes more sense. Especially when you consider who the retirees from CA are. Among my circle of acquaintances, the CA retirees include a physicist from Livermore National Laboratory, a director of engineering from a Fortune 500 company, and his wife, also an engineer, a Fortune 500 finance director, the owner of a mid sized business that employed about 250 people, two employees of the CA highway patrol (by my estimate first year CA highway patrol officers make about $85K when all compensation and allowances are considered and it goes up from there), a civil engineer, an electrical engineer, and a Fortune 100 finance manager. All pre-retirement incomes that were probably in the top 5% - 7% nationally. And many of them were two income families.
All in all, I suspect the only place in the country where retirement incomes really meet the 70% of pre-retirement income target is in DC. Fancy that.
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HoneyBBQ
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Post by HoneyBBQ on Oct 9, 2014 16:40:56 GMT -5
I read that article and decided that it only had to do with correlation and nothing really substantive to take away from it....
Your theory about DC is probably spot on.
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vonna
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Post by vonna on Oct 9, 2014 16:49:24 GMT -5
My in-laws moved to Nevada, largely due to the reason that it is one of the states that does not tax federal or military pensions.
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Bonny
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Post by Bonny on Oct 9, 2014 18:06:29 GMT -5
My in-laws moved to Nevada, largely due to the reason that it is one of the states that does not tax federal or military pensions.
Yeah, I suspect both DC and Nevada have high rates of folks who have pensions vs savings.
OR doesn't tax at least Federal pensions until they pass a certain threshold. I think it's around $100k. But I suspect their numbers are skewed based on the number of farmers and other self-employed folks.
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