New Retirement

[steelpony10]

     www.newretirement.com/retirement/average-retirement-income-2022-how-do-you-compare/

     Many studies and stats for amateur investors. No fancy charts, sorry. I boiled it all down years ago to more is better and forget the living 30 years in retirement. But including my mother I know a few outliers. That cost 128k+ a year now for skilled nursing in the area we probably will end up. I’m planning on 150-200k a year and being past age 90. God help you if a spouse lives outside.

[Chahta]

“The bottom line is that half of today’s households will not have enough retirement income to maintain their pre-retirement standard of living, even if they work to age 65 and annuitize all their financial assets, including the receipts from a reverse mortgage on their homes.”


In 1981 I took an investing class. At the time the teacher said "only 25% of retirees can maintain their lifestyle." Now only 50% is pretty bad.

[steelpony10]

Chahta ,

      I never saw what was so bad about not maintaining a lifestyle or why stopping work at all was so great a choice. One adapts to the reality of their situation or should live how they wish just like they always have.

[alvinthechipmunk]

Lifestyle changes: Location. Work status. Age. Living on your own, or in assisted living? Still married? Widow? Widower? Down-sized? Down from 2 cars to just one?

.....And on and on. We moved to Hawaii. MUCH more expensive than the Mainland. The exception, particularly recently, is gas. Food prices? Just get outa Dodge. You want me to pay WHAT for THAT? Example: can of hash = $5.00 now. We would not be able to do all that we are doing, if my prettier half did not work, and at the pretty good wage she's getting. Rewards points on the credit cards become cash whenever we want to convert them. Electric rates are highest in the USA. But we are smart consumers, so the bill is easily managed. Save a little each month, so that the bigger bills don't leave you sweaty and itchy, when they come. (Example: we like to pay the full year at one time for car insurance. Otherwise, there are extortion fees added.)

Wife routinely takes the car. I routinely take the bus. The annual senior pass is rising next time: $35 to $45/year. Still a bargain. And how much gas do I need to buy? How much do I need to pay for insurance on a 2nd car? (Grin.). Wife keeps a phone, not me. Did I mention how much I enjoy not answering the phone? Ya, that TOO. 

Am I maintaining my lifestyle? January's a lot nicer in Polynesia than in New England. 

[retiredat48]

steelpony10,…thanks for article.

Couple points…

Note government pensions are highest. That is one of reasons why the gvt secretly loves inflation…it takes much less real wealth to pay those future monthly pensions.

Amazing how those 50% of people underfunded will still retire and survive. Living with adult kids etc. This is how society lived up until USA in 1950s and on. Think Downton Abby…most worked until they physically couldn’t,t. The USA created the middle class, and is now in the process of taking it away.

Studies of past societies, from cave man on, show a 2/98 rule. That is 2% of the people accumulate wealth…the other 98% have no such wealth.

From my experience, these articles overestimate the costs in retirement. Most retirees I encountered stated they worked too long, and could have retired earlier.

R48

[FD1000]

This article doesn't make sense.

1) Discussing mainly INCOME does not make sense.

Examples:
1) Jeff Bezos has 100+ billions of AMZN. In theory, if he doesn't sell one share, he has zero income.
2) Suppose someone has 10 million dollars and one million in Roth IRA and in the next 10 years, this guy only uses his Roth. He doesn't have income but still plenty of money
3) Person A has 1 million Dollar invested in PDI while Person B has 1 million invested in SPY.  Both need $100K to live.  In the last 3 years: Person A income has been 10% annually, while Person B had less than 1.5%.  After 3 years, who has more money? PDI had 30% income in 3 years while SPY had less than 5% but Person B has a lot more money, because PDI total performance was -5% and SPY was +51% (link). 

2) You must discuss how much someone spends in retirement
- If both investors have one million each, but person A spends 2/3 of person B, then Person A is in better shape.

Basically, income doesn't tell the whole story and never will. Total portfolio, total performance, and annual spending compared to what you have are more important.

BTW, I just read several articles by the author, Kathleen Coxwell, and she is obsessed about income.  Are you surprised? 

[mozart522]

FD1000,The article makes plenty of sense. Income is the only thing that is important to those who don't have enough. This isn't an opinion piece, it is a fact piece. You are not understanding "income" as used in this article, IMO. It is what is reported, and has nothing to do with how much residual wealth one has. Both person A and person B above will spend as much as they need/(want/can) too. One may get dividends and one may sell shares. The money doesn't know the difference.

These are the stats that are important: Median Income – $46,360 (down from $56,632 in 2019)

Households Aged 75 and Older: $36,925 median income. This means half the households(not individuals) have less than S36,925 income.

Just how many do you think are sitting on millions but just choose to live on 37K?

[FD1000]

mozart522 ,
I have to disagree with you. I'm not discussing the masses, I'm talking about the possibility, especially for above average investors. I have the option to invest in SPY or PDI. If I used SPY I made more money after 3 years and my income was much lower.
Others, less fortunate, don't have options.

[richardsok]

Wife & I have worked out my long-term care should I need it. (She's 22 yrs younger.)

When the time comes, she'll tell me "It's time." The whole portfolio will go into preferreds (FPF), floating rates, big cap energy, shipping, PDO, commodities and 5% split into protective SJB & HDGE. (If I'm too far gone to do this, my daughter has written instructions what to buy.) All dividends and income plus soc sec and pension payments will flow continuously into the BankAm account and wife gets the debit card.... but my name only is on the account.    (She has access to income but not the principal.)

That done, wife takes me back to Colombia to a balcony apartment with flowering vines, a view of the Medellin mountains and iced fruit juices and aged rum on tap. (I'd like to try fly fishing fast-flowing South American mountain rivers, but I may be too far gone for that.) I will end my doddering days with Netflix and reading or fiddling with my laptop while the $60/day Colombian nurse is off in the kitchen making me fresh coffee and banana/mango salads and singing old latin love songs. (If all else fails, cocaine & similar 'helpers' are readily available. It's Colombia, after all.)

Wife consoles herself running around with her latina gal-pals making full use of the plastic in a shopping/dining marathon. It's a deal.

And that's how my LTC plan beats your LTC plan.

[mozart522]

Jun 9, 2022 14:19:45 GMT FD1000 said:

mozart522 ,
I have to disagree with you. I'm not discussing the masses, I'm talking about the possibility, especially for above average investors. I have the option to invest in SPY or PDI. If I used SPY I made more money after 3 years and my income was much lower.
Others, less fortunate, don't have options.

That's fine, but then why trash her article that was clearly about the plight of the masses.  Whether SPY or PDI made more money really is not an issue here.  It may well be an issue for income vs TR investors, but this about household income for expenses.  Do you think there is even a small chance that anyone who posts here hasn't already seen your position on PDI vs SPY?

[retiredat48]

Jun 9, 2022 15:18:22 GMT richardsok said:

Wife & I have worked out my long-term care should I need it. (She's 22 yrs younger.)

When the time comes, she'll tell me "It's time." The whole portfolio will go into preferreds (FPF), floating rates, big cap energy, shipping, PDO, commodities and 5% split into protective SJB & HDGE. (If I'm too far gone to do this, my daughter has written instructions what to buy.) All dividends and income plus soc sec and pension payments will flow continuously into the BankAm account and wife gets the debit card.... but my name only is on the account.    (She has access to income but not the principal.)

That done, wife takes me back to Colombia to a balcony apartment with flowering vines, a view of the Medellin mountains and iced fruit juices and aged rum on tap. (I'd like to try fly fishing fast-flowing South American mountain rivers, but I may be too far gone for that.) I will end my doddering days with Netflix and reading or fiddling with my laptop while the $60/day Colombian nurse is off in the kitchen making me fresh coffee and banana/mango salads and singing old latin love songs. (If all else fails, cocaine & similar 'helpers' are readily available. It's Colombia, after all.)

Wife consoles herself running around with her latina gal-pals making full use of the plastic in a shopping/dining marathon. It's a deal.

And that's how my LTC plan beats your LTC plan.

Hey R...we live 20 minutes apart...let's have a final lunch on your way to Columbia!

Love your post.

For FD1000, why do keep cherry picking the stock index of the decade to compare income funds to??

I consider it a 50-50 bet that PDI will have a better total return than the S&P500...or QQQ, in the next decade.  Stocks can do very poorly, for long periods of years.


R48

[retiredat48]

Jun 9, 2022 16:45:53 GMT retiredat48 said:

Jun 9, 2022 15:18:22 GMT richardsok said:

Wife & I have worked out my long-term care should I need it. (She's 22 yrs younger.)

When the time comes, she'll tell me "It's time." The whole portfolio will go into preferreds (FPF), floating rates, big cap energy, shipping, PDO, commodities and 5% split into protective SJB & HDGE. (If I'm too far gone to do this, my daughter has written instructions what to buy.) All dividends and income plus soc sec and pension payments will flow continuously into the BankAm account and wife gets the debit card.... but my name only is on the account.    (She has access to income but not the principal.)

That done, wife takes me back to Colombia to a balcony apartment with flowering vines, a view of the Medellin mountains and iced fruit juices and aged rum on tap. (I'd like to try fly fishing fast-flowing South American mountain rivers, but I may be too far gone for that.) I will end my doddering days with Netflix and reading or fiddling with my laptop while the $60/day Colombian nurse is off in the kitchen making me fresh coffee and banana/mango salads and singing old latin love songs. (If all else fails, cocaine & similar 'helpers' are readily available. It's Colombia, after all.)

Wife consoles herself running around with her latina gal-pals making full use of the plastic in a shopping/dining marathon. It's a deal.

And that's how my LTC plan beats your LTC plan.

Hey R...we live 20 minutes apart...let's have a final lunch on your way to Columbia!

Love your post.

For FD1000, why do keep cherry picking the stock index of the decade to compare income funds to??

I consider it a 50-50 bet that PDI will have a better total return than the S&P500...or QQQ, in the next decade.  Stocks can do very poorly, for long periods of years.

Put another way, who would like to bet $20 , me saying that PDI total return will beat TESLA stock price (total return) from the Tesla peak...after the next ten years.


R48

[FD1000]

Jun 9, 2022 15:24:28 GMT mozart522 said:

Jun 9, 2022 14:19:45 GMT FD1000 said:

mozart522 ,
I have to disagree with you. I'm not discussing the masses, I'm talking about the possibility, especially for above average investors. I have the option to invest in SPY or PDI. If I used SPY I made more money after 3 years and my income was much lower.
Others, less fortunate, don't have options.

That's fine, but then why trash her article that was clearly about the plight of the masses.  Whether SPY or PDI made more money really is not an issue here.  It may well be an issue for income vs TR investors, but this about household income for expenses.  Do you think there is even a small chance that anyone who posts here hasn't already seen your position on PDI vs SPY?

PDI vs SPY is just an example.
I know several investors who selected more than 10 years ago ATT+IBM over SPY or MSFT, just because they pay high income. Again, high income doesn't have anything special. I will keep repeating this forever. On the other hand, I posted earlier this year that value and high Div HDV are where you want to be, because the trend is better. Basically, one category can be out of favor for years.
Another example: investor A has 20K SS + 20K pension annually, her portfolio equals to $100K. Another investors has 20K SS, no pension but 1 million portfolio. The article says that investor A is in better shape, but it's not.
So, you got to look at everything, basing your portfolio on high income as a better choice isn't enough. Many posters on this board and other investment boards are in better shape than most.

[Chahta]

I might take that bet but I’m sure I will be around in 10 years to collect.

[cactusjack]

Jun 9, 2022 20:33:52 GMT Chahta said:

I might take that bet but I’m sure I will be around in 10 years to collect.

I am not even buying green bananas these days.