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Waiting to 65 to retire - death risk versus finances


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3 hours ago, khantroll said:

I'm 31

I understand your reasoning but don't write off your future too much too soon. I know very little of the sort of issues that you are dealing with, but you certainly have my empathy. Sounds like sort of an opposite to diabetes issues. Even Google doesn't seem to know much about it but wish you the best success in your fulltime experience and in your health issues as you go. 

Good travelin !...............Kirk

Full-time 11+ years...... Now seasonal travelers.
Kirk & Pam's Great RV Adventure

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My younger brother never got the chance to collect any retirement despite living a much healthier lifestyle than mine. He died when when I was 58 and he was 56. He ran, did not smoke, did not drink much if at all. I drank, smoked until the month before he died, lived all over the world and roamed mountain trails around our home in the Andes at ages 5 & 6 without insect repellent. Had mosquito, wasp, spider, bee, tick, and chigger bites my whole life. We dove the Red Sea For a week off Hurghada Egypt, and visited the valley of the kings, when the State Department all but forbid travel there. We've hiked in Bear/Panther/Moose/Elk country. And much more. Only to be told by some that they were afraid to cross the border into Canada. Yet they go to festivals and sports events despite mass shootings that seem on the increase here in the US. It's now ten years later and I'm 66 and healthy.

I'm not suggesting anyone take risks with their monies or health, but don't hold back from irrational fears, or the the ostracism of naysayers, if you can squeak by while realizing your dreams. Just do it! Or not. But be happy with whatever decisions you make.

RV/Derek
http://www.rvroadie.com Email on the bottom of my website page.
Retired AF 1971-1998


When you see a worthy man, endeavor to emulate him. When you see an unworthy man, look inside yourself. - Confucius

 

“Those who can make you believe absurdities, can make you commit atrocities.” ... Voltaire

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Hi Kirk, 

Thank you :)

Yeah, I generally tell people I have anti-diabetes. It leads to a lot of the same issues. There is a higher risk of neurological issues then with diabetes, and fewer immune system issues. My father has the same condition, though his is less severe. My sister inherited the same condition, however, and she's having a tougher time with the symptoms. At 47 she has heart disease, neuropathy, and the fainting and seizures that can come with low blood sugar. 

I don't mean to imply that I'm discounting my life. I hope to be around for a good long while. But with this condition, and the high risk of cancer in my family, it doesn't seem like the best move to work for 36 years to hopefully get a chance to travel. It's possible I will live to be 90 regret it then.

But it should also be said that I'm not one of the people you see on youtube either, who quit their job and roam and try to make ends meet. I'm an IT administrator for a vocational school with campuses in 5 states, and when we go fulltime next summer I'll still have that position, just remotely. 

So, really, the only thing I'm giving up is the house. We chose this instead of our dream house. 

 

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1 hour ago, khantroll said:

I'll still have that position, just remotely. 

There are a growing number of people working on the road and I would encourage you to do so as well. You may also want to check out the X-scapers side of the Escapees club since that is mostly working folks.

Good travelin !...............Kirk

Full-time 11+ years...... Now seasonal travelers.
Kirk & Pam's Great RV Adventure

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  • 1 month later...

Maybe this discussion should return to the issues the OP posted.

First came the question of when to retire.  The OP conflated that with also starting to take pension and/or SS benefits. 

The OP also provided a lot of misleading data about morbidity and mortality. 

Instead, consider some actual facts.  The median household income in the US is now about $60K.  Median pension and SS benefits are less than half that amount.  Those (again the median) individuals who have planned ahead will have assets to cover the remaining $60K/year.   Those without will have to drastically cut back on their  costs and standard of living.  Assuming some reasonable financial planning, it often makes sense to retire, live off of other assets and defer taking SS.  The reason is simple, for each year deferred the annual payout increases by 8% plus any COL increases.  No guaranteed investment plan comes anywhere near that return.

When it comes to planning all of that anecdotal information about death is irrelevant.  Most of us would want to have a retirement plan that will handle a reasonable expectation of age of death.  It makes sense to look at actuarial tables.  For a couple retiring at about age 65 there is about a 50% chance that at least one of them will make into their 90s.  Some people spend money as fast as they get it.  They want to do the same with retirement benefits.   

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Jim, I would agree with you if all of the retirement funds are not in 403b/401k/IRAs that will be taxed when pulled.  By NOT taking our IRAs until 701/2 we kept them working for us.  And they have done VERY well since we retired.  Plus, whatever is left goes to our heirs unlike SS.  

It really does take some analysis to figure out what’s the best way to go and what is right for one person isn’t what’s right for another.  Same with financing part of purchase of rig versus keeping tax deferred funds working.  Have to run different scenarios to figure what works best for the individual.

Barb & Dave O'Keeffe
2002 Alpine 36 MDDS (Figment II), 2018 Ford C-Max HYBRID
Blog: http://www.barbanddave.net
SPK# 90761 FMCA #F337834

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25 minutes ago, Barbaraok said:

By NOT taking our IRAs until 701/2 we kept them working for us.  And they have done VERY well since we retired.  

 

We did the same with the same sort of result. 

Good travelin !...............Kirk

Full-time 11+ years...... Now seasonal travelers.
Kirk & Pam's Great RV Adventure

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7 hours ago, Barbaraok said:

Jim, I would agree with you if all of the retirement funds are not in 403b/401k/IRAs that will be taxed when pulled.  By NOT taking our IRAs until 701/2 we kept them working for us.  And they have done VERY well since we retired.  Plus, whatever is left goes to our heirs unlike SS.  

It really does take some analysis to figure out what’s the best way to go and what is right for one person isn’t what’s right for another.

We started taking transferring funds from our tax deferred accounts early once Dave realized the minimum distributions required at 70 1/2 were going be taxed at a higher rate then than by taking them earlier. He didn't think the lost interest would offset the tax hit for us. So he figured out how much to withdraw without going up into the next tax bracket each month and took that amount and put it in interest bearing savings. Since Dave has always been very good at math, I trust his judgment on these things--for us.

Linda

Blog: http://sandcastle.sandsys.org/

Former Rigs: Liesure Travel van, Winnebago View 24H, Winnebago Journey 34Y, Sportsmobile Sprinter conversion van

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Linda, we did the same thing.  I love the ‘What if” sheet in Turbo Tax that allows you to put in various amounts for the coming year and see how it affects your taxes. We just moved the money into the same type of fund and let it continue to grow.  

Barb & Dave O'Keeffe
2002 Alpine 36 MDDS (Figment II), 2018 Ford C-Max HYBRID
Blog: http://www.barbanddave.net
SPK# 90761 FMCA #F337834

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23 hours ago, JimK said:

When it comes to planning all of that anecdotal information about death is irrelevant.  Most of us would want to have a retirement plan that will handle a reasonable expectation of age of death.  It makes sense to look at actuarial tables.

I think you would be better served looking at your family's health history and, with provisos, DNA testing.

SKP #79313 / Full-Timing / 2001 National RV Sea View / 2008 Jeep Wrangler Rubicon
www.rvSeniorMoments.com
DISH TV for RVs

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It pays to choose your grandparents well.

my mother turned 96 this summer, older than her Grandmother ( my great grandmother) who died 3 months short of 96.   Her sisters are 95 and 9o, and all of them are still active, mentally as sharp as ever!    I inherited a lot from my father, hoping I also got the Norwegian long life genes.😊

Barb & Dave O'Keeffe
2002 Alpine 36 MDDS (Figment II), 2018 Ford C-Max HYBRID
Blog: http://www.barbanddave.net
SPK# 90761 FMCA #F337834

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On 6/12/2018 at 7:17 AM, Kirk Wood said:

Fortunately for us, my father convinced me not to change employers for more money with less retirement benefit, back when I was in my 30's and our kids were in school.

 

On 6/12/2018 at 12:16 PM, Barbaraok said:

I should also add that we CONSCIOUSLY made the move to Texas for our jobs there  (UT Tyler) because of their retirement package.  

Y'all were lucky.  Frontline this week is called The Pension Gamble, and it covers the mess that is the Kentucky Retirement System. 

Same story as yours--people making current employment decisions based in part on retirement benefits.  But these days, those retirement benefits, while promised, aren't necessarily going to be there. 

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1 hour ago, Blues said:

Y'all were lucky.  Frontline this week is called The Pension Gamble, and it covers the mess that is the Kentucky Retirement System. 

Same story as yours--people making current employment decisions based in part on retirement benefits.  But these days, those retirement benefits, while promised, aren't necessarily going to be there. 

That's another reason I am glad to be old.

Linda

Blog: http://sandcastle.sandsys.org/

Former Rigs: Liesure Travel van, Winnebago View 24H, Winnebago Journey 34Y, Sportsmobile Sprinter conversion van

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I am lucky. Through no planning of my own at age 55 I began receiving the equivalent of $85,000 before taxes. My rather is looking at retirement in 5 years. He doesn’t have any company supplied retirement. He is a CFO at the top of his pay scale. He projects he will have to have $800,000 in investments to generate $60,000 per year income in retirement. I am better off than I thought although my retirement will not pass on to the kids, only the DW will be taken care of. 

Ron C.

2013 Dynamax Trilogy 3850 D3

2000 Kenworth T2000 Optimus Prime

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2 hours ago, JimK said:

No, the 4% rule means having $1.5 M for a $60k annual withdrawal.   That is for retirement ar age 65.  You need more to retire at a lower age. 

You need that only if you mean to leave behind the principle. If you are willing to spend down principle you can start with less. Like we did.

Linda Sand

Blog: http://sandcastle.sandsys.org/

Former Rigs: Liesure Travel van, Winnebago View 24H, Winnebago Journey 34Y, Sportsmobile Sprinter conversion van

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3 hours ago, JimK said:

No, the 4% rule means having $1.5 M for a $60k annual withdrawal.   That is for retirement ar age 65.  You need more to retire at a lower age. 

We live quite comfortably on less than that.  Plus you forgot to include SS in your retirement income stream.  Plus $1.5M would give you $50K a year if you figured to spend it all by the time you are 95, without taking into account it’s earning potential.  

Barb & Dave O'Keeffe
2002 Alpine 36 MDDS (Figment II), 2018 Ford C-Max HYBRID
Blog: http://www.barbanddave.net
SPK# 90761 FMCA #F337834

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2 hours ago, sandsys said:

You need that only if you mean to leave behind the principle. If you are willing to spend down principle you can start with less. Like we did.

Linda Sand

Wrong.  The 4% rule is designed to last 30 years before depletion of the portfolio.   It also requires a minimum of about 40% invested in stocks. 

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1 hour ago, Barbaraok said:

We live quite comfortably on less than that.  Plus you forgot to include SS in your retirement income stream.  Plus $1.5M would give you $50K a year if you figured to spend it all by the time you are 95, without taking into account it’s earning potential.  

The 4% rule predicts $60K adjusted for inflation.   A flat $50k is not going to be worth much 30 years from now.  In fact based on historical averages it will be worth about $15k in today's dollars. 

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29 minutes ago, JimK said:

A flat $50k is not going to be worth much 30 years from now.

It would be nice to have that much. 

Quote

The average household led by a retiree makes $48,000 annually before taxes and spends roughly $46,000 a year.

That’s according to the Bureau of Labor Statistics’ (BLS) measure of the income and outflow of “older households,” meaning ones headed by someone 65 or older. Meanwhile, the annual average pretax income for all U.S. households is about $74,000 and expenditures are $57,000.

 

Good travelin !...............Kirk

Full-time 11+ years...... Now seasonal travelers.
Kirk & Pam's Great RV Adventure

            images?q=tbn:ANd9GcQqFswi_bvvojaMvanTWAI

 

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You are assuming that (1) the rest of us don’t have investments that are currently growing, (2) that everyone will live 30 years past retirement, and. (3) we are all 20years away from retirement.  Plus, you are assuming a LESS than a 4% growth every year the money.  

Are you currently retired?  If not, what are you basing your amount needed in retirement?  And how old are the people you are pitching your scenario to?  You might be amazed to find out that people can live on less than you think.  

Barb & Dave O'Keeffe
2002 Alpine 36 MDDS (Figment II), 2018 Ford C-Max HYBRID
Blog: http://www.barbanddave.net
SPK# 90761 FMCA #F337834

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One of the assumptions of the 4% rule is that the amount withdrawn is increased to cover inflation every year.  This complicates the math.  There are arguments for and against the 4% rule.  Some respected financial advisers even suggest 4% is to much.  One of the arguments for less is how a significant market event, especially early in retirement may cause losses that are difficult to recover from.  The math gets complicated and the number of investment variables leaves me confused at best.  We were able to retire early but we  continued to pursue other income opportunities.  It's a good thing because our original retirement would have left us little after inflation over the years.  

Randy

2001 Volvo VNL 42 Cummins ISX Autoshift

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