Average retirement savings

[tvguy]

I've read through some of this interesting thread and have a few thoughts.
We are in our 70's and started investing later in life.
You need to know that what you need now verses what you will need in later years will vary. What we though was enough for retirement in today's world is not enough. We've had to readjust things and are ok now. If you are going to put x amount in for retirement with growth/income in mind at say 40's. What you will get in your 70's might not be enough for that time's requirements. I hope you can make sense of that For example: My Mom who is 93 worked as a medical secretary all her life and made around $3.50 to 4.00 an hour. When social security got figured when it was time, she doesn't get much at all. Back then, that was the normal wage you made. Over 7 dollars was high wages. So it's all relative.
If you are working, the Roth IRA is your friend. You can remove money, any time and any amount, without penalty!

We have everything paid off, car, house, etc. The property taxes where we are at are huge, but there is nothing we can do about that.

Our kids are saving for their kids college educations, and trying to save for their retirement while both are working full time. (though with reduced hours due to covid What with everyday expenses I don't know how they can do it.

I can see where the property taxes could be an issue. That was the entire driving factor behind Proposition 13 here in California in 1978. Seniors in their homes for 40 years or more.....which was not unusual.....were actually being asked to pay more per year in property taxes that they had paid for their houses.
But lifestyle is huge. I managed my mom's finances for the last year of her life, she passed away in 2013. She had a house that had been paid for for 50+ years. Her property taxes were $925 a year. By comparison, I sold that house at market value and the new owners property taxes were $6,605 per year. Her car was 10 years old and she paid cash for it (it only had 10,000 miles on it when she passed).
Her total monthly expenses were $650. Her social security was $1,250 a month. More than enough to cover all expenses. She had a pension of $400 and an annuity that paid her $170 a month. That was her take vacations money. Australia, New Zealand, Europe, South America.....and more cruises than I can count. But she and my dad were very tight with money. We had plenty to eat, but growing up in the 1960's pizza was the Chef Boy Ardee boxed kit for less than $1 (a little more with all the stuff mom added to it). Pizza parlor pizza was just to expensive. Dinner out was Sambos.......or if a special dinner, Mr. Steak or Happy Steak.
But it paid off, because when my dad got sick and passed away when I was 9, we could get by on just my mom's paycheck. But, like I said, lifestyle is huge.

 

[RamblingMad]

I can see where the property taxes could be an issue. That was the entire driving factor behind Proposition 13 here in California in 1978. Seniors in their homes for 40 years or more.....which was not unusual.....were actually being asked to pay more per year in property taxes that they had paid for their houses.
But lifestyle is huge. I managed my mom's finances for the last year of her life, she passed away in 2013. She had a house that had been paid for for 50+ years. Her property taxes were $925 a year. By comparison, I sold that house at market value and the new owners property taxes were $6,605 per year. Her car was 10 years old and she paid cash for it (it only had 10,000 miles on it when she passed).
Her total monthly expenses were $650. Her social security was $1,250 a month. More than enough to cover all expenses. She had a pension of $400 and an annuity that paid her $170 a month. That was her take vacations money. Australia, New Zealand, Europe, South America.....and more cruises than I can count. But she and my dad were very tight with money. We had plenty to eat, but growing up in the 1960's pizza was the Chef Boy Ardee boxed kit for less than $1 (a little more with all the stuff mom added to it). Pizza parlor pizza was just to expensive. Dinner out was Sambos.......or if a special dinner, Mr. Steak or Happy Steak.
But it paid off, because when my dad got sick and passed away when I was 9, we could get by on just my mom's paycheck. But, like I said, lifestyle is huge.

To a point. I have friends back in my old neighborhood that drive beaters, still live with their parents, and struggle get by helping their parents and receiving pay from a trade job. One is a CDL driver. The other does HVAC work. Back in the 70s and even part of the 80s, you can could start a family and own a home with these jobs. Now, it's tough. There needs to be good opportunities for those that don't go to university.

 

[mjkacmom]

I can see where the property taxes could be an issue. That was the entire driving factor behind Proposition 13 here in California in 1978. Seniors in their homes for 40 years or more.....which was not unusual.....were actually being asked to pay more per year in property taxes that they had paid for their houses.
But lifestyle is huge. I managed my mom's finances for the last year of her life, she passed away in 2013. She had a house that had been paid for for 50+ years. Her property taxes were $925 a year. By comparison, I sold that house at market value and the new owners property taxes were $6,605 per year. Her car was 10 years old and she paid cash for it (it only had 10,000 miles on it when she passed).
Her total monthly expenses were $650. Her social security was $1,250 a month. More than enough to cover all expenses. She had a pension of $400 and an annuity that paid her $170 a month. That was her take vacations money. Australia, New Zealand, Europe, South America.....and more cruises than I can count. But she and my dad were very tight with money. We had plenty to eat, but growing up in the 1960's pizza was the Chef Boy Ardee boxed kit for less than $1 (a little more with all the stuff mom added to it). Pizza parlor pizza was just to expensive. Dinner out was Sambos.......or if a special dinner, Mr. Steak or Happy Steak.
But it paid off, because when my dad got sick and passed away when I was 9, we could get by on just my mom's paycheck. But, like I said, lifestyle is huge.

My dad was paying over $16,000 a year in property taxes when he passed away. His unlicensed live in was $1000 a week for over 4 years. He was down to just $300,000 in the bank.

 

[crjack]

My dad was paying over $16,000 a year in property taxes when he passed away. His unlicensed live in was $1000 a week for over 4 years. He was down to just $300,000 in the bank.

Same here in MA. My dads property taxes were $10,000 a year and monthly expenses way more than $650 a month. No car and no credit card debt. We cut his aide down to 3 nights a week because of finances. In addition my sister and I supplemented a significant amount every month just to keep things going.

 

[RamblingMad]

Same here in MA. My dads property taxes were $10,000 a year and monthly expenses way more than $650 a month. No car and no credit card debt. We cut his aide down to 3 nights a week because of finances. In addition my sister and I supplemented a significant amount every month just to keep things going.

This is the other piece that people aren't talking about. Taking care of ones parents that lived paycheck to paycheck isn't cheap.

 

[crjack]

This is the other piece that people aren't talking about. Taking care of ones parents that lived paycheck to paycheck isn't cheap.

Absolutely and so much that is needed for dementia care is not covered by insurance. Daily living activities of feeding, bathing etc are considered custodial care. My childhood neighborhood was not expensive growing up but that changed while my dads fixed income didn't.

 

[tvguy]

To a point. I have friends back in my old neighborhood that drive beaters, still live with their parents, and struggle get by helping their parents and receiving pay from a trade job. One is a CDL driver. The other does HVAC work. Back in the 70s and even part of the 80s, you can could start a family and own a home with these jobs. Now, it's tough. There needs to be good opportunities for those that don't go to university.

Well I don't do those jobs but my perception is those are still very well paying jobs. Really well paying if working in a union shop.

 

[bakerworld]

My BIL retired at 63 because he didn't want to have to deal with a turnover in management. He assumed that he'd have to work part time but it turned out that he did very well on SS and hasn't had to used his retirement funds or work PT. So while he doesn't have 10x his last working income, he lives very well. He said that staying debt free living on SS is doable.

 

[cjlong88]

Saving at any financial level is powerful. I think a lot of people believe that they need to make six figures to retire comfortably, and that’s simply not true.

I think the bigger problem is that we aren’t taught how to prepare for retirement. It isn’t an innate skill. The information all around us every day encourages us to spend, spend, spend. We have to rewire our way of thinking about money, saving, and spending. I use to live paycheck to paycheck and thought, “Well, I don’t make a lot of money and I have this debt so this is just how it’s going to be.”

The best thing I ever did for myself was track my monthly expenses in a detailed spreadsheet. You really don’t know where your money goes until you see it laid out for you on paper. Most people just try to spend less than their paycheck that month, and unfortunately that will never truly lead to any sort of financial stability.

With all of that said. Debt is the enemy, no matter where is comes from. You have to spend less than you make in order to climb out of debt. Or you have to make more.

 

[Skippy918]

This is the other piece that people aren't talking about. Taking care of ones parents that lived paycheck to paycheck isn't cheap.

My friend is having to pay for her mom’s nursing home care even though she can’t afford it. Her mom lives in a state will filial law so she’s financially responsible. The mom got denied Medicaid. It’s a mess.

 

[kymom99]

My friend is having to pay for her mom’s nursing home care even though she can’t afford it. Her mom lives in a state will filial law so she’s financially responsible. The mom got denied Medicaid. It’s a mess.

That’s terrible

 

[kymom99]

I have a pension from teacher retirement. Since 13% of my pay went towards that, I saved very little additional. My husband had no pension offered in his first 2 careers but eventually 401ks came along. Now he works for a place that has a defined benefit pension but it’s not very large anymore. He does however qualify for social security. I do not. I think being debt free is the best thing you can do for yourself. We aren’t there yet, but we are working on it

 

[Starport Seven-Five]

What constitutes an emergency then?

What is an emergency then? If my water heater goes out, my washer breaks, etc the money to pay for it's replacement is going from savings, not my monthly budget. In my monthly budget is an amount that goes into savings.

Don't get me wrong, everyone is different but I view an "emergency fund" as something to offset lost income due to a black swan event like job loss or extended medical absence. Maintenance items like appliance repairs or new tires for a car are predictable expenses that should be funded elsewhere.

How we manage it is separate savings accounts for each line item (home maintenance, car fund, home improvements, vacation, etc.) and we contribute a set amount monthly to each. If the house needs a new roof or we want to redo the kitchen, it comes from the account that is allocated for it. Our emergency funds are separate to that and are funded only to offset loss of income.

Saving at any financial level is powerful. I think a lot of people believe that they need to make six figures to retire comfortably, and that’s simply not true.

I think the bigger problem is that we aren’t taught how to prepare for retirement. It isn’t an innate skill. The information all around us every day encourages us to spend, spend, spend. We have to rewire our way of thinking about money, saving, and spending. I use to live paycheck to paycheck and thought, “Well, I don’t make a lot of money and I have this debt so this is just how it’s going to be.”

The best thing I ever did for myself was track my monthly expenses in a detailed spreadsheet. You really don’t know where your money goes until you see it laid out for you on paper. Most people just try to spend less than their paycheck that month, and unfortunately that will never truly lead to any sort of financial stability.

With all of that said. Debt is the enemy, no matter where is comes from. You have to spend less than you make in order to climb out of debt. Or you have to make more.

Have you visited the FIRE thread on the budget board? Sounds like you would fit in well.
https://www.disboards.com/threads/the-intersection-of-fire-and-disney.3724231/

 

[tvguy]

My BIL retired at 63 because he didn't want to have to deal with a turnover in management. He assumed that he'd have to work part time but it turned out that he did very well on SS and hasn't had to used his retirement funds or work PT. So while he doesn't have 10x his last working income, he lives very well. He said that staying debt free living on SS is doable.

I'm 63, my full retirement age is 66 1/2 and my Social Security benefit at full retirement age is amazingly close to my current take home pay working. We hope to retire next year, I will be 64 my wife 63 1/2, and will will live off 401k money for about 3 years, then hopefully suspend withdrawals. Actually, those will be IRA withdrawals since we will roll the 401ks into IRAS when we quit working.

 

[SteveH]

...Personal finance IS taught in school; it doesn't seem to "stick" because it seems like a vague, academic concept to young people who aren't yet using that information. It's a topic that's more likely to "seem real" if parents teach it at home; that is, if it's connected to the family's real grocery shopping, etc.

Perhaps in your area it is, in my area it is not. I have two boys, neither had what Id' consider any considerable amount of time spent on it. They are far to focused on teaching for college then for real life. Both of our boys learned it at home from my wife and I. As I said in my statement, not all schools teach it, let alone teach it adequately.

 

[SteveH]

What constitutes an emergency then?

This is a good question, and this is where I do agree with Dave Ramsey about having an Emergency Fund. Here is a good piece from his daughter, A Quick Guide to Your Emergency Fund

Basically start off with $1,000. From there the Emergency Fund will vary depending on each persons situation.

When should I use my emergency fund?
When a sudden expense pops up, it can feel like an emergency—but that might not be true. Here are three questions to ask yourself to determine if you need to tap into your emergency savings:
1. Is it unexpected?
2. Is it necessary?
3. Is it urgent?

 

[cjlong88]

Don't get me wrong, everyone is different but I view an "emergency fund" as something to offset lost income due to a black swan event like job loss or extended medical absence. Maintenance items like appliance repairs or new tires for a car are predictable expenses that should be funded elsewhere.

How we manage it is separate savings accounts for each line item (home maintenance, car fund, home improvements, vacation, etc.) and we contribute a set amount monthly to each. If the house needs a new roof or we want to redo the kitchen, it comes from the account that is allocated for it. Our emergency funds are separate to that and are funded only to offset loss of income.


Have you visited the FIRE thread on the budget board? Sounds like you would fit in well.
https://www.disboards.com/threads/the-intersection-of-fire-and-disney.3724231/

I didn’t even realize there was a FIRE board on here! I’ll definitely check it out.

 

[kymom99]

This is a good question, and this is where I do agree with Dave Ramsey about having an Emergency Fund. Here is a good piece from his daughter, A Quick Guide to Your Emergency Fund

Basically start off with $1,000. From there the Emergency Fund will vary depending on each persons situation.

When should I use my emergency fund?
When a sudden expense pops up, it can feel like an emergency—but that might not be true. Here are three questions to ask yourself to determine if you need to tap into your emergency savings:
1. Is it unexpected?
2. Is it necessary?
3. Is it urgent?

This is in line with what I’ve read. My thing is, an emergency is different for different people.

 

[barkley]

To a point. I have friends back in my old neighborhood that drive beaters, still live with their parents, and struggle get by helping their parents and receiving pay from a trade job. One is a CDL driver. The other does HVAC work. Back in the 70s and even part of the 80s, you can could start a family and own a home with these jobs. Now, it's tough. There needs to be good opportunities for those that don't go to university.

where i live they can't fill all the trade jobs. there are constant ads running for staff-starting wages between $17 and $29 an hour (depending on the individual trade), retirement plans, fully paid medical and dental, 60 hours pto per year, if a person wants to take college course towards a degree-employer paid, and many other benefits. there is such a demand there are moving programs for people interested in relocation from other parts of the country.

the issue we are seeing in our region is 2 fold-increased demand and an aging work force. not as many young people want to go into the trades so the workforce is largely older and retiring out. to meet the demand there are several programs at the high school and community college. in high school a student can opt to do their last 2 years as half days of academics at the high school/half days at the vocational technology school. when they graduate with their diploma they are also 2 years into their apprenticeship. the local community college has an apprenticeship program in a variety of trades that has recently expanded through a partnership with one of our local universities so that if someone wants a bachelors there's a special pathway in place to build on the trades classes they are taking (huge support from the trades community on this-they see it as a means to attract that population of kids who would love to go into the trades but b/c of parental/societal pressure that dictates 'everyone needs a college degree' they shy away from it).

 

[mjkacmom]

This is the other piece that people aren't talking about. Taking care of ones parents that lived paycheck to paycheck isn't cheap.

My parents were never even close to living paycheck to paycheck, they had a solid financial retirement plan that was messed up by mom passing early at 69 (so healthy, no vices, her mom lived until 91), and my dad getting Alzheimer’s in his 60’s. They made some financial decisions based on her outliving him (with a financial advisor and attorney, my CFP husband went through it all years before they died and said they were in great shape). His expenses increased about $5000 each month, plus lost her SS and pension, I believe, still less expensive than assisted living.