More data about retirement savings

[Kevin]

I do read all of these, and know some people here find it interesting as well.

This is from Investopedia. They have a website, but I don't know anything about them.

But my wife and I subscribe to Apple News and this Investopedia has an article about the top 10% and how the look at retirement savings. I believe, the top 10% of incomes means people must make $200,000 per year. I don't know if that's per household, or individual. And I think it also varies by location. California would be a lot different than Arkansas or Oklahoma. So the "top 10%" is kind of made up.

But, here's a couple quotes from the article. It's basically how the top 10% save for retirement, and how much they think is necessary to retire. The article says you should plan on needing 70% to 80% of your current salary to retire. It also says the top 10% think a person will need $1.26 million to retire with the same lifestyle.

BUT, I've seen other figures from Fidelity, that say people will need $2.5 million to retire with the same lifestyle. I suppose this is also depending upon what age you retire and where you live.

Quote:
Data from the Federal Reserve’s most recent Survey of Consumer Finances (SCF), which is published every three years, shows that the median retirement savings amount for the top 10% is over $900,000. In contrast, the median savings across all households with retirement accounts hovers at just $87,000."

And:

“They (top 10%) are generally better at avoiding lifestyle creep. Even with more financial means, many live below their means and prioritize saving and investing first,”

I just thought this was all interesting. The article also talked about ways to lower taxes.

 

[Jeepnik]

And tomorrow something can occur that will send us on a path to a long term economic boom or another Great Depression.

As in all things you just guess unless you are a Gypsy fortune teller.

 

[Dan in MI]

“They (top 10%) are generally better at avoiding lifestyle creep. Even with more financial means, many live below their means and prioritize saving and investing first,”

The key is right there.


The hard part is watching friends spend and borrow like there is no tomorrow. You know their headache is coming, but sometimes it just gets to you.


My desired outcome for retirement was to live, at a minimum, the same lifestyle as i had when employed. Preferably better. (Goal achieved)

 

[wproct]

There are variables. Do you want to travel a lot and see the country and world, or do you want to live basically like you do now only without all the costs of working, like clothes and gas for driving to work and such? Both my wife and I incurred a forced retirement due to company being bought out. Both of us were 61 1/2 at retirement. We had a traditional pension and social security plus our 401K accounts. We wanted to just live like we did before with little traveling. We have been retired 18 and 20 years now. We have lived comfortably but things are getting difficult. The big things getting to us is the cost of supplemental health insurance, property and auto insurance, and property taxes. Our traditional pensions have no provisions for rising cost of living increases and social security has very little. We might get a 1-2 percent increase for social security but then they increase what we have deducted for social security insurance so it's about a wash. The biggest fear for retirees is that one of us will need assisted living or nursing home care which will basically wipe out everything we have, including our home. That is a scary scenario.

 

[XUSNORDIE]

I got tired of stressing over the thought of having enough for retirement.....the numbers I always saw I knew I would not ever accomplish. Mortgage is paid off, two brand new vehicles paid for in cash, no credit card debt...basically minimal outgoing like taxes, power, etc....I finally said the heck with it...too many health issues to keep trying to save for the perfect retirement. You only live so long and each day that goes by is day you can't get back....therefore I'm going to try and enjoy what days I have left the best I can while I'm able to.

FRI 29MAY26...161 days and a wake up....and I will be retired....if they don't force me out before....which is fine, but they will have to buy me out.

 

[Kevin]

There are variables. Do you want to travel a lot and see the country and world, or do you want to live basically like you do now only without all the costs of working, like clothes and gas for driving to work and such? Both my wife and I incurred a forced retirement due to company being bought out. Both of us were 61 1/2 at retirement. We had a traditional pension and social security plus our 401K accounts. We wanted to just live like we did before with little traveling. We have been retired 18 and 20 years now. We have lived comfortably but things are getting difficult. The big things getting to us is the cost of supplemental health insurance, property and auto insurance, and property taxes. Our traditional pensions have no provisions for rising cost of living increases and social security has very little. We might get a 1-2 percent increase for social security but then they increase what we have deducted for social security insurance so it's about a wash. The biggest fear for retirees is that one of us will need assisted living or nursing home care which will basically wipe out everything we have, including our home. That is a scary scenario.

Yes there are many variables. You are right.

Also I wanted to point out. The $200,000 salary is a lot but for example, the Plano Police Department has a huge billboard on I45. The starting pay is $119,000. And that’s based on salary, not including overtime.

So like the article said, don’t try to keep up with the Jones’s.

 

[Johnnu2]

"“They (top 10%) are generally better at avoiding lifestyle creep. Even with more financial means, many live below their means and prioritize saving and investing first,”
p.s. I always planned that assisted care/nursing home would be paid for with my savings, and my house. I figure that I'll be about 100 by the time I have to give up everything that I have left. If my financial plan works out, I plan on having a net worth of about $50 by then...
Nuff said.

J.

 

[GasGuzzler]

Met with my guy Monday. Long uphill climb for me in the next 11-17 years.

 

[jimbo1096]

The first two jobs that I had included profit sharing in the company and a 401(k). After working there six years, they never had any profit sharing as the company was trying to get out of the hole that they got into in the early 80s. So the next job I got into with a decent 401(k) and I put into it as much as I could something like 8% after 34 years at that job, I was finally able to retire with a little bit less than 500,000 in several different accounts, including CDs and an annuity. So far I have lived the same as before, except as a single instead of married person. I give as much as I can to my grandkids and buy presents for the great grandkids. My investment broker showed me on paper, at least, that I had enough to live to be 95. I’ll never make it that far so everything else is in my will and being left in trust with percentages for each of the three grandkids and my son. I don’t plan on doing any traveling out of the continental US but I will be taking more road trips and have in my plan a upgrade to a newer vehicle in the near future.
If I’m lucky, I’ll still be in decent health for another three or four years, even given all of my current issues.

 

[roylt]

People buy too much. My dad raised me to budget and pay cash. I thrift and save. Some call it recycling. Also some old, used items are better than you can get if you bought new.

Investing is key. But you have to keep your fees down.

For the past few years, before I got fired, I would take my raise and invest more instead of spending more. I guess that is the creep you mentioned.

 

[GasGuzzler]

The creep got me this year. My raise was between 30 and 40% so it was hard to fight off the creep. I did increase my investment percentage and am paying house payments 2X amount twice per month though. 'Bout to finish that nine years early and hit the books hard from here out.

 

[sixmranch]

I read these types of articles, and I always disagree. They base it on replacing your income when you were working. Since I've retired, my expenses have went to near zero. I don't need all of the stuff we used to buy. We travel more now, and have more free spending money than when we were working. I don't need to replace our prior six figure incomes.

 

[Mobuck]

I can assure all of you that whatever your fixed retirement may be--IT WON'T BE ENOUGH.
I retired the first time with a retirement income that looked fairly adequate. Fifteen years later, that's poverty level. Darned good thing I got another job after taking care of the family stuff that led to my first retirement. That job allowed me to be debt free and build up a bit of surplus--otherwise the extreme rising cost of EVERYTHING would be more difficult than it is.

 

[jg123]

S&P has been 18% last 3 years, how could one go wrong....

 

[Danjet500]

I think the biggest thing to avoid in retirement is debt. Have your house paid off, cars owned outright, no credit card debt, paid off every month if you use them. Fortunately, my wife and I have achieved all of that. I have a small pension and we both receive SS. We haven't needn't to draw from our IRAs yet although I am approaching the required withdrawal age.

 

[Kevin]

Well for those of you who've "been there, done that." I appreciate the comments. They are all read and appreciated. Thanks.

 

[Dan in MI]

I think the biggest thing to avoid in retirement is debt. Have your house paid off, cars owned outright, no credit card debt, paid off every month if you use them. Fortunately, my wife and I have achieved all of that. I have a small pension and we both receive SS. We haven't needn't to draw from our IRAs yet although I am approaching the required withdrawal age.

You should look hard at your RMD number NOW.

Depending on how much the RMD is it can really hammer you. 1) It can hit you hard for taxes 2) It can put you over the limit for IRMAA.

What's IRMAA? That's an income limit that can cost you in Medicare. You make too much money (per IRMAA) and your medicare goes up the next year. Luckily it only for the year following you make too much, unless you make too much the next year. (in short it's an annual calculation with an annual Medicare hit if you go over)

I was all set withdrawing an amount that didn't hit me hard in taxes and would have my normal withdrawal less than the RMD number when the time came. Then I learned about rarely mentioned IRMAA. Now I can't withdraw what I want and come RMD time I may be subject to what they want me to take out versus what I want to take out.

 

[Kevin]

What's IRMAA? That's an income limit that can cost you in Medicare.

I've never heard of this? I guess just a google search of IRMAA? Does it completely wipe out Medicare?

Got it. Thanks, I'm only 56. But have wondered about how Medicare works.
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
From the internet:

IRMAA (Income-Related Monthly Adjustment Amount) is an extra charge on Medicare Part B and Part D premiums for higher-income beneficiaries, determined by your Modified Adjusted Gross Income (MAGI) from two years prior (e.g., 2023 income for 2025 premiums). It's a progressive surcharge, meaning higher income means a higher fee, and you pay it on top of the standard premium, but you can appeal if you have a life-changing event or a tax error.
How it Works

1. Two-Year Lookback: The Social Security Administration (SSA) uses your IRS tax return from two years ago to determine your IRMAA.
2. MAGI
   : They look at your Modified Adjusted Gross Income (AGI + tax-exempt interest)

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

So it looks like another tax on the wealthy...

Also from the internet:

• Based on your 2023 income, if you filed as an individual and earned over $106,000 (or $212,000 for joint filers), you'll pay an IRMAA for 2025.

In short, IRMAA ensures higher earners contribute more to their Medicare costs.

 

[Richard76]

I am 62 1/2 .plan on retiring at 67 . not so much retiring as not working for someone. I hope to start doing work at my own pace. I like building and sawing logs and a few other hobby's I can make money at if need be. Problem with where I live is the property taxes drain your retirement savings, a lot of retirees move away for that reason including quite a few of my relatives

 

[Dan in MI]

I didn't know about IRMAA until it was almost too late. It's kind of a hidden tax that no one talks about, plus you almost can't calculate for it since it looks backwards and they don't give the annual number until October of the previous year. --- They look at your 2023 MAGI for 2025 BUT the number they compare to 2023 isn't given until October 2024.

I wouldn't consider myself wealthy, but when you add in social Security, interest and what I was trying to withdraw to get out of government control it almost put me up there short term. Would have if I hadn't learned about it.

What I mean by out of government control is this. Almost all (at one time all) of my retirement savings is in tax deferred accounts, (IRA, 401k etc...) My company didn't offer Roth until a year before I retired. That makes anything still in those accounts when I hit 72 (or whatever the number is now) is hit with Required Minimum Distribution (RMD) Which in laymen's terms is the gov't says you WILL withdraw X amount no matter what tax rate that puts you in. So if you've been cruising along taking only what you need it is entirely possible you get bumped in 24%, 32 or even higher brackets. (even worse if the Trump laws change by then 25%, 28, 33)

My plan was to take out as much as I could to stay just under the 24% rate. This would help get my total nest down so by the time RMD's hit, the forced amount was no more than what I wanted to take out. This would keep my tax rate low and I would just reinvest what I didn't need. Because of IRMAA I may not be able to get my total down that far as I had planned.

Part of this is my fault. Against all the common retiree investing advice I still have my foot on the gas pedal (so called high risk/ high reward investments)

 

[jav]

I been retired 6 years love every minute of it we travel a lot the rental properties we have are all paid up . The house we live in we owe 200000 with an interest rate at 2% . I am not paying thst off it’s free money . I make more money in investment and ss than when I worked . Own a new car paid cash no credit card debt. We are good

 

[Bear Paw Jack]

I don’t work off the premise that there’s a certain amount of money you need to have as long as
1. You are debt free.
2. Your retirement income can replace your work income.
3. You’ve created multiple streams of income that brings in cash to live on.
4. Your stock investments keeps you ahead of rising inflation costs.

 

[Jeepnik]

We sold some property and properly reinvested the money. IRS was happy but was hit with a huge IRMAA. It took over a year to get it straightened out. Then they insisted of returning the money in three payments.
On the other hand I learned what types of income affect IRMAA.

 

[Johnnu2]

IRMA is a ................tch.

J.

 

[Ranger]

Really good info. I too hadn't heard of IRMAA. Fairly certain to be hit hard by that when time comes. This just reinforces that I need to talk with a financial planner.

 

[peachhead]

We have retirement savings, but right now my plan is to start drawing social security at 62. I have had a lot of people that don't understand that I will take what I can get as soon as I can get it- unless something comes up and I start making a butt load of money somehow, and I don't see that coming. I doubt I will have a problem with IRMAA either.

 

[Johnny-Baseball]

I retired 11 years ago (at age 66). My first move was to pay off my mortgage. Cars were already paid off. No credit card debt, and kids' college costs had previously been fully paid out of my normal earnings.

My bride and I both collect SS (her checks are at the minimum amount since she hadn't worked (at a job) since our first child was born in 1980). My SS payments are at the max.

I take the minimum mandatory RMD. And we have some taxable investment income (mostly from mutual funds, etc.). My RMD payment monies are used, first, to pay off the FIT we owe - due to the investment income. The rest is invested in the market. I always keep a cash reserve for "surprise" expenditures - big buck dental work, car repairs, etc.

But mostly we live solely from the SS payments and a $30,000/yr fixed income payment. And even then, we save some of that money.

Texas has a law that caps residential real estate taxes at the amount paid when the taxpayer reaches age 65. So, our real estate tax bill was frozen for many years. But during the most recent two years, Texas passed laws reducing real estate taxes. My most recent real estate tax bill is about 60% of what it was 10 years ago, despite the value of my house doubling during that same timeframe.

State sales taxes have been frozen for many years. Gasoline taxes have likewise remained frozen. The primary escalating costs during our retirement years have been (a) electric, gas and water utilities, (b) homeowners and auto insurance premiums, and (c) groceries. I shop for my own groceries (wife and I each cook our own meals) so I know precisely what my monthly food costs are. And I pay all of the household bills, so I know what's going out the door. It is true, however, that inflation in food, insurance and utilities costs have significantly exceeded the increases in my retirement income (from all sources).

Gasoline costs (per gallon) have declined about 25% over the last year. But my bride and I drive very little, so the direct effect of those cost reductions is very modest. Still, the beneficial effect of lower gasoline/diesel costs is beginning to show up at the grocery store.

We occasionally travel - primarily to my eldest son's house near Fort Hood. But we haven't taken a vacation in quite a while, except only the trip my bride took to Paris (France) to visit my youngest son right after their first child was born. Even then, we used American Airlines AAdvantage miles to pay the R/T airfare. [I'm an AA Platinum card member courtesy of the 4+million miles I flew during my work days. That status allows me free upgrades from coach to 1st Class for all domestic flights, and to business class on international flights. But we don't fly, so....]

Bottom line for my bride and me? We are living comfortable, conservative and well-within-our-means lives.

 

[BSA1]

My wife and I have a different view about retirement. We had to put her 90 year old Dad in a memory care facility. To get Medicare to pay for his care he first had to spend all of his savings and retirement for his care before Medicare would start paying.

This had a real world effect on us. You have to be basically bankrupt before Medicare will pay for your care. We decided that investments are just numbers on the computer screen / piece of paper so we decided to build a new home that is elderly friendly (No steps, no basement, wide hallways for wheelchair, handicap bathroom). So we brought a very rundown house in a nearby small town that my wife found. I used a chunk of my 401 to purchase it outright and then more to have the house, sheds demolished and the trash cleaned up. So instead of numbers on the computer we have a piece of real estate we can walk on and touch.

Long range plans are to build a new house in 2027. We will be selling our place and will still have a mortgage but will be enjoying the last view years of our life enjoying what is left of it.

 

[Dan in MI]

Really good info. I too hadn't heard of IRMAA. Fairly certain to be hit hard by that when time comes. This just reinforces that I need to talk with a financial planner.

Bring it up and ask about reducing your possible future RMD now. My financial guy didn't mention until I did, by then I had lost5 years of time to reduce my deferred accounts.

 

[GasGuzzler]

I am surprised so many have a mortgage at 65+ years of age.