NY Times article on retirement and outliving your savings

[iris lily]

So, given the doomsday scenario set out here, would you a) be more motivated to stay at a job you really didn't like much just so you could sock away $2 million or b) find a job you enjoy doing for less money, extend your working life and lower your expectations for what you think you'll need?

The assumption for this $2 million is that you withdraw only 3-4%, leaving the principle intact and then you wind up passing that HUGE chunk of money to your kids or a charity or both. I guess that's OK, but it feels like hoarding to me. Why not just try to calculate a slow divestment of principle and interest so you kind of net out closer to 0 at the end? The Die Broke philosophy.

Why can't I work at a job I like and still have $2 million? Like dmc, I agree that $1 million isn't that much, I'm shooting for multi.

I also believe in the Die Broke philosophy (especially since we do not have children) but am ever cautious about overspending no matter how much is in the bank. Right now the market is up and I feel rich, but talk to me a year from now. The swings of the market are extreme.

[ApatheticNoMore]

So, given the doomsday scenario set out here, would you a) be more motivated to stay at a job you really didn't like much just so you could sock away $2 million or b) find a job you enjoy doing for less money, extend your working life and lower your expectations for what you think you'll need?

Considering I've never been able to find a job I didn't completely loathe (fast food as a youngster was still more fun than anything I've done since ..), I'd like two million thanks. Of course that's not happening either. Most people will have neither work they like NOR two million of course! Of course if I had any idea how to even go about getting a job I like (most useless career books are useless) .... then maybe I'd choose that. But honestly accumulating two million might be a less impossible task really!! If one was skilled at investing etc. ... at least I have a vague idea how that could happen. Getting a job one likes is a complete mystery to me.

I never understand the million figures, are they are million per person or per couple? Because the latter doesn't seem that difficult if all goes well, only I'm single, so it would only be 1/2 million, so I'd be a complete and utter failure yada yada.

The assumption for this $2 million is that you withdraw only 3-4%, leaving the principle intact and then you wind up passing that HUGE chunk of money to your kids or a charity or both. I guess that's OK, but it feels like hoarding to me. Why not just try to calculate a slow divestment of principle and interest so you kind of net out closer to 0 at the end? The Die Broke philosophy

better at least have long term care insurance then.

On the other hand, both of our moms have reasonably comfortable retirements with a very small fraction of that amount. They have all the necessities covered, and many luxuries as well

honestly I've never had any real clue about finances there as it seems basically impossible information to get at. So it's an open mystery that weights ocassionally at the back of mind, what if there's not enough money for end of life stuff? But I do think earlier generations experiences of retirement are pretty near totally irrelevant to me. They had pensions. I don't. I think we should preserve the SS system, but realistically I will likely never net what they did out of Social Security, can't even collect till late 60s as is.

[Rogar]

I thought it was a pretty decent article compared to other doomsday retirement articles I've seen recently. It brought out at least three good points. One, that the old rule of a four percent safe withdrawal from the nest egg is out the window. The new rule is more like two or three percent. Two, that you probably are not going to keep up with inflation without taking some risk. Which probably includes some fine balance between stocks and bonds. And third , that there is a good chance interest rates are going to rise soon which makes some bond investments pretty risky right now.

Most of the doomsday articles I see are not making any assumptions about how simple a person is living. Like in the early example he describes a couple who is 65 and eligible for S.S. plus withdrawing four percent of a million dollars. Heck, that income is almost more than I was making when I was working, paying off a home loan and maxing out my 401k! All or most of the doomsday articles I see are more about savings and less about learning how to live a lifestyle where less is more.

[Spartana]

They wear JC Penney suits and drink Budweiser, IIRC

Ha ha. Or more likely shop at thrift stores and buy off brand beers at the dollar store :-)

While I'm not in the Millionaire Next Door club, far from it, I have found in these past 14 years of retirement (14 - yikes! And I'm only 55 now!) I need little to live on to be happy and fulfilled. How much you need to retire on is more dependant on your lifestyle than the need for a certain set amount of Monet THEY tell you that you must save. I plan to use up much, if not all, of my principal over my lifetime rather than live solely on the interest of savings.

[reader99]

Even saving a million seems to me like flying to the moon. I am just cashing out the $20K I have managed to save to pay for my med bills. Good thing I have a good attitude, because I will probably be poor in old age. Who actually can save a million dollars?!? No one I have ever met.

I'm unlikely to even EARN a million in my lifetime. A lot of jobs pay $20k or less. 45 years times $20k is $900,000. Some of that would have to be spent to , you know, live. I started working when $8,800 a year wasn't a bad salary. I had years when I was caring for stepkids or my health crapped out. I think my average earning has been under $10k a year when you count the zero years.

[Spartana]

So, given the doomsday scenario set out here, would you a) be more motivated to stay at a job you really didn't like much just so you could sock away $2 million or b) find a job you enjoy doing for less money, extend your working life and lower your expectations for what you think you'll need?

The assumption for this $2 million is that you withdraw only 3-4%, leaving the principle intact and then you wind up passing that HUGE chunk of money to your kids or a charity or both. I guess that's OK, but it feels like hoarding to me. Why not just try to calculate a slow divestment of principle and interest so you kind of net out closer to 0 at the end? The Die Broke philosophy.

I would choose option "c". Make some likable but drastic changes to my lifestyle, drasticly reduce both my "needs" and my spending, chance my housing situation so I can be mortgage free sooner rather than later, look into alternative ways to live that are different and more frugal but very enjoyable than the traditional house-with-a-thirty-year-mortgage. I would work hard to reduce my expenses and become debt free so that I don't need one or two million in order to retire.

[Zoebird]

If I had to choose between staying in a job that I didn't like to sock away $2m vs doing a job that I enjoyed for less money, longer, -- well, I've chosen the work for joy.

And, the nice thing is that because it's not a "job" -- I have the opportunity to earn a lot more than $2m over time.

I think this also goes hand-in-hand with what Spartana says -- because in order to do this, you do need to get ahold of your finances. By living simply (and small/minimally), we are able to do a lot more and live on a lot less day to day, and any extra goes to savings, etc. It works great.

Right now, we're in the process of developing a virtual studio (online classes) that my clients, friends and family in the US, around NZ, AUS and the greater world (there are a few out there!) can attend classes with me in a way that is accessible, easy, and efficient (ie, I open up my available hours and people sign up for private lessons, live streaming classes, etc). And, i can record and host several hours of videos besides. So, it extends my reach without really extending expenses, work, or travel of a second location.

Though I still plan on other locations, too.

[herbgeek]

I'd like to have 2MM to retire, but I don't know if that will be possible given the market doing dismally in the last few years- and I don't expect it to be better any time soon. If it were entirely up to me, we'd likely be retired by now (on much less than that) but hubby is worried about the effects of inflation and the future cost of healthcare under Obamacare (given that its likely to at least double or triple based on what I've seen projected so far). So its likely another 3-15 years (depending on whether we still enjoy our jobs and can do them). We aren't big on things, and have proven to ourselves we can live on fairly small amounts through extended bouts of unemployment. I also did some self employment and realized that really wasn't my thing. So when I retire, its likely play and volunteering and not another career.

[ApatheticNoMore]

If I had to choose between staying in a job that I didn't like to sock away $2m vs doing a job that I enjoyed for less money then .... I'd really like to have those choices!

[morris_rl]

Even saving a million seems to me like flying to the moon. I am just cashing out the $20K I have managed to save to pay for my med bills. Good thing I have a good attitude, because I will probably be poor in old age. Who actually can save a million dollars?!? No one I have ever met.

I believe moderator "Loose Chickens" once wrote that she and her husband had lived an itinerant lifestyle in an RV for decades, been frugal, and had a financial net worth north of $1,000,000. They never had a high income.

I started saving for retirement in 1990 and living frugally. Now, at age 62, I have about $647,000 in retirement savings and Zillow estimates that the home I bought in 1977 for $40,000 is worth a bit more than $500,000. This puts me into the "Millionaire Next Door" category of the book by Doctors Stanley and Danko of the same name.

For a good look at the typical millionaire in the USA and their spending habits, read "The Millionaire Next Door (1996) and "Stop Spending Like You're Rich and Start Living Like a Real Millionaire" (2009). The latter book is by Dr. Thomas J. Stanley.

The original title for "The Millionaire Next Door" was going to be "The Blue Collar Millionaire", but an editor suggested the title that was used as being more accurate.

My income back in August of 1989 was $28,831 per annum and it topped out at $97,082 per annum. While the latter figure is somewhat above the median household income in the USA, it is nowhere close to the level of household income considered necessary to become "rich".


Best,


Rodger