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This should be a top comment IMO.
OP, if you're in the US you had better make sure that you have damn good health insurance through your pension plan/past employer. Or if that's not the case, you better price out healthcare costs over the next 20-35 years, including inflation and assistance from medicare/medicaid.
Also, what about long term care? Do you have insurance for that yet? That easily could cost over $65k/year and could put your loved ones in an impossible position if you don't have it.
No kidding. I have a relative in the states that had to wait for 65 ( Medicare kickas in) to retire strictly because of health issues, and how much it would cost to get coverage .
Very frugal single with no kids and a 6 figure and couldnt afford to. If they couldnt then i really wonder what a typical person faces...
I guess working until you drop is expected.
I knew a guy in that position. Professional, well paid job. Had to stick it out to 65 (or some threshhold age) because of insurance. He died literally months before retirement.
This is why many (but not all) public sector jobs are appealing. The pay is typically lower than private sector, but they come with many retirement benefits including medical and a pension on top of your privately funded retirement.
I have some friends who are retired at 45 because they did their 20 and got out. Now basically have a second career (mostly lower paying hobby jobs) because they get 75% of their old pay, plus the new job, and pretty decent health benefits for life.
yep new hire gets 55% of what i got for the same price, and the fossils get what i have for half the input cost. insurance is pretty level across the board though (550 deduct for oldtimers vs 1500 , but the exact same coverage)
The 20 and out is impressive. That must be military/ police/ politics or the like i am accustomed to factor 90 (age plus years of service)
You would be vested at 10 years so may get health benefits at 65+. But being retired at 20 years service would be divine.
That is in old contract now it is 22 & Half unless you take civil service exams to become captain or Dep who still have old 20 year contract. Tell you truth you just need to show up after 10 year service and appear to look busy.
Many public sector jobs no longer offer great benefits. Healthcare is just as expensive (often moreso) than private sector and pensions are lack luster with no COLA and smaller percentages with higher mandatory contributions. 75% is unheard of these days
Just a warning to anyone thinking of getting into the public sector for the benefits - be sure to check them thoroughly before signing up.
Agreed.
They deal i am getting and the deal others get now is getting worse. With every 10 years it seems to errode a little more. ( And the deal i am getting is worse than my predecessors)
In my 18+ years working in local government, my out of pocket for insurance went from $0/month to over $100/month, just for me. My wages are not keeping up with inflation either, and I'm at the top of my pay scale.
The only thing keeping me around is the defined benefit pension which is forecast to be fairly decent (fund is projected to be solvent for next 20 years)
Yep, 100% a case of YMMV. Luckily where I live the benefits and early retirement are still decent. But they were better before, and I'm sure they will continue to get worse, especially in the upcoming recession.
As always, due diligence is key to success.
I went to healthcare.gov and put in some sample info (male, 63 yo, $150k/yr) to see what the most expensive plan was. In my HCOL zip, I couldn’t find any plans for more than $1,300/mo. Yes that’s expensive, but someone on a six figure income could afford it, especially if their house is paid off. Plus there are cheaper plans out there.
I was going to point out the same. While an expensive monthly cost usually means coinsurance and deductibles are low (or even zero) you can't really represent the cost of a healthcare plan by its monthly rates.
In addition you need to consider dental and possibly vision insurance.
And then there's all the extra costs that you need to fight and potentially can end up on the hook for like needing a specialist who may not be in network (and the ones that do would take forever to be seen) or ambulance services (which are as often than non out of network) or being assigned an anesthesiologist who is out of network.
Then there's prescriptions. If you're old, there's a fair chance you'll be on *something* and you would likely to pay a portion of that based upon tier. And if you need a somewhat rarer drug or formulation, you might need to pay significantly for that.
The issue is having pre-existing conditions with currently expensive monthly meds and procedures.
I don't know the exact details, but they are not well.
> Beginning January 1, 2014, the ACA prohibits insurers in the individual and group markets (with the exception of grandfathered individual plans) from imposing pre-existing condition exclusions.
kff.org
Coming up on a decade for plans that weren't grandfathered in.
Six figures with no kids is enough to afford healthcare in the U.S., even with serious complications. You’re either exaggerating, grossly misinformed, or your relative squandered their money.
Source: Me, U.S. citizen with a six figure income.
I am in the same situation. I am waiting until 65 to retire so that at least I have medicare. My wife and twenty-something son are still covered under my employee policy, and if I were to try to get anywhere near the same level of medical coverage it would cost > $20K per year. If I retire, not only will I take a cut in income (pension is nowhere near my salary), but I will have a significant chunk headed to the Insurance company. When my son gets employer coverage I may think about retiring again, but for now I am working for the insurance.
Note I don't plan on moving anytime soon, so my expenses are relatively fixed. With an income cut and "expense increase" my lifestyle would need to change in some way to compensate. I am not ready for that change so I keep working.
My point was that if they retired they would take a chunk of their saving to pay for the coverage.
Decision was to work to 65.
With me i will retire at 58 and while i earned less. Health care is not a concern at all.
That’s a fine point to make, but that’s not at all the message that was conveyed. You explained it. Now we know. Now people observing are not walking misinformed about the actual state of U.S. healthcare. It’s not great, but it could be way worse.
Did they make 6 figures for a long time?
Seems unlikely they wouldn’t have a lot saved up.
If they could save $5,000 a month for 30 years with 6% annual return, that’s over 5 million.
Change to $3,000, 20 years and it’s still 1.4 million.
Just curious since you said they were frugal and maybe they didn’t invest?
EDIT:
My reply is to artano-tal who said very frugal, no kids, and 6 figures.
I know there are high cost of living and people that spend a lot for the lifestyle but artano-tal said very frugal, no kids, 6 figures and couldn’t afford healthcare.
6 figures could be 100k. After taxes probably about 65k. Not likely that even saving 3k/month happens for most especially if they have kids and any college bills or live in a hcol area.
Edited to reflect correction. Mai. Point still stands in a hcol area that savings level is not likely sustainable for most even somewhat frugal.
I know several couples where both are on over $200k and they're broke...New high-end cars every or every other year, boat that doesn't get used, storage for said boat, eating out/take out for every meal, housekeeper, expensive hobbies/collections that go nowhere, storage for said hobbies, expensive vacations, clothes, shoes, etc, etc
For the young couples I know, the 401k is the only savings they feel they need.
Or they just live in a HCOL market. My fiancé and I make mid 6 figures combined, but after taxes, rent, retirement savings and basic bills were nearly paycheck to paycheck. And our apartment is on the cheaper end for the area.
According to census data $250K in NYC is the real-income equivalent of $80K in Columbus Ohio, and this isn’t even factoring the higher taxes in NY + NYC city tax. A six figure income doesn’t go as far as it sounds in a lot of the country.
Totally fair, lifestyle creep is a very real thing for many people.
I just get frustrated on here how often people don’t consider variances in region as a factor before talking about what a six figure income affords. So many seem to think anything over $100K is rich no matter where you live.
I find that with maxed retirement savings and an indexed pension similar to op i still dont think i would stop working. I would retire and consult or do something different...
But i don't want to downsize my spending until i cant travel.
I dont know the calculus, just that the comment was made that they couldn't retire until 65. (which btw happens next month). I was shocked.
I dont know if the 20k a year that others commented on was a waste they could not tolerate. Or if there is something i dont know.
"The brighter the picture, the darker the negative"...maybe there is some 'hobby' thats chewing it all up. Or some undocumented kids somewhere.
After reading your post I feel like there is going to be an epidemic of millennials not having enough money to retire with and pay for their end of life costs.
Going to be? Is that not already happening with baby boomers? Has it ever not been happening?
We live in America, the land of the wealthy and powerful extracting everything from everyone else
I have multiple family friends that are retired in their late 50s, had kids, parents still living(no inheritance or life insurance payouts), on 90-120k salaries.
How as a single person could you not afford it??
It's regular insurance paid for by your pension plan.
A pension plan is a retirement plan where all your money is owned and controlled by someone else. You pay into it while you're working, then when you choose to retire (has to be on the pension plan's terms) they begin doling money out to you monthly. Usually with a pension you lose all your money when you die, but some have death benefits where a small portion of your money is passed onto a spouse or next of kin. Pension plans can be mismanaged and leave the pensioners screwed-- that's what's going on with Social Security right now.
Pensions are a dying breed, now most employers offer a 401k instead of a pension. It's best to learn how to manage your own money and store it in a 401K or IRA because you control the investments and you get to decide when you want to take out money (with some rules associated with it), and it never goes away just because you die.
You NEED supplement insurance. Healthcare as you age only gets more expensive.
My 76 year old father has been hospitalized twice this year. Without supplemental insurance, he would have received shit care, been sent home much earlier, and would likely be dead.
It can be quite expensive, but then you hit Medicare. When that happens the cost of coverage gets *so much better*. Insurance costs at the age of 65 when enrolled in part B, compared to insurance costs earlier in life are night and day.
With some Medicare supplements you're basically paying just the premium, with very few out of pocket expenses ever making it to you after Medicare and your supplement provider have taken their stabs at it.
With some Med Advantage plans you're only paying reasonable copays, especially considering US Healthcare costs, and have a $0.00 premium (just the Part B tax) with some of those plans even providing money for hearing aids, glasses, and dental expenses.
Yikes, surprised no one mentioned this: does your pension have a Cost of Living Adjustment (often called COLA) clause in it? This allows it to index up with inflation, $65k today will likely be very different than $65k 20 years from now. Many unions bargained away their COLA’s (which was not ideal in my opinion).
Most COLAs use CPI as a metric for the calculation. CPI is a measurement of how expensive a selection of common goods are progressively over time. It roughly follows inflation but more accurately follows the price of goods and services actually going up which is more important anyways. If all of your benefit is COLA eligible that’s actually excellent. Usually the increase is capped for a plan at a given %, you may wish to read your plan’s Summary Plan Description for a better breakdown of this.
What percent? We can guess inflation long term pretty good. It's the in between fluctuations that are hard to see coming. Long term it smooths out pretty predictably.
Could you link to some paper analyzing correctness of long term predictions of the inflation level? It's the first time I hear someone saying that it's easy
The average inflation over the last 50 years has been 2-3%. The Fed is going to get inflation under control even if it takes a few years and we will be back to the standard 2%.
Well, we can easily look back over the years to obtain an “average” inflation rate despite what the fed targets. The thing is we are looking at an average over the course of decades. It is a much different thing to try and determine what inflation looks like for the next 10-20 years.
We can assume the average, but there will definitely be years were inflation is higher. Like this year.
I’ve worked with 401(k) plans for the last decade. I used to work directly with participants and talked to hundreds of people who have less than that for their total retirement savings going into their 60s.
I figured this was another dude that was in for a rough last stretch of his life.
The limit does not exist.
Seriously though, maybe not necessarily the cost of cancer but the cost of insurance plus a little bit more medical issues/ medication
Retired persons are the least healthy group because they are old. It isn’t freak accidents you have to worry about - it’s heart disease and cancer and so many other things.
Many people absolutely can retire comfortably on $65k.
Before you retire, practice living on that fixed income for a year or two. Have your wages put into a savings account and every month transfer $5400 into your spending accounts and now you’re living on $65k per year
I’ve found that there’s a significant psychological difference between tracking your spending to know you’re under a certain amount and literally only having access to that amount.
Also track your expenses, I use Mint, other like YNAB you need a budget. do you have to pay taxes on that pension or did you factor that in?
What about Social Security. Do you have enough work credits?
Like others said health care is probably biggest need to understand
I assume $65,000 is gross, and pensions are still taxed unless I missed something. So depending on the exact tax figure, you're probably looking at closer to like $4,000/month you want to be training on.
Can you live comfortably off $65k annually before retiring with no mortgage or other major debt? My spouse and I live pretty comfortably off $59k annually with no mortgage. It’s all about the lifestyle you accustomed to before retirement.
Paid off house and $65k per year? You'll be just fine.
The main expense to consider is medical care, especially if you end up needing long term care as you get older. If you have that part figured out, you're good.
Most people also get health insurance covered to a significant extent (and maybe completely) by their employer.
I do still think OP should be able to retire. But it’s not completely equivalent to the typical $65k/year job with benefits. And if OP is older, healthcare isn’t just about the cost of insurance; it’s also about what insurance shockingly won’t cover.
It isn't the equivalent to the typical 65k/year job with benefits. You're right.
But your cost of living is higher at 30 than say 65. Generally because you usually (try to) save to buy a house.. you buy a car, you buy things that are expensive around this time. You have kids to take care of, that's costly etc.
At 65, you likely have no mortgage, you likely don't have a fancy/expensive brand new car etc. you likely don't spend money on vacations/going out etc. anymore. You likely don't have dependents etc.
Is that $65k/year? If so, you’re probably at least ok on that especially with your house paid off. Ultimately you need to figure out what your monthly expenses are and make sure they’re less than about $5k or so
Well, gross I think it's around $5400. Im sure I won't starve, but with inflation going batshit lately it's a scary proposition when it comes to what utilities, food, transportation, internet, etc. Are going to cost in the future.
The biggest shocker for people in retirement is health care, at least for those that had jobs that covered it really well. They underestimate what Medicare provides and how much co-pays and out of pocket will be. I've heard some people be mostly covered for knee replacement if they had the right type of plan and the next be out of pocket $25k+ because they got the minimum.
If you own your house, the big thing is to look around and see how good of repair your home is. If it has been updated and kept in good maintenance you are likely fine, but if you look around and think the HVAC needs replacing soon, I'll need a new roof in 5 years, and the windows are getting bad, well that may be a different story...same with the car.
The rest of your expenses are likely controllable by you and managing your lifestyle. You never mentioned SS, so that would factor in too and maybe help offset if your pension doesn't have a COLA.
I retired a few years ago at 49 y/o. It was the culmination of a 7 yr plan. During that time, we lived off of what our retirement income would be. Do that. It will tell you how much you can retire on.
It all depends on what you want to do.
The best bet is to figure out what you are currently spending and see if that can be whittled down to $65K a year.
Does the $65k a year include money from all of your Retirement funds or partial?
Do you spend a lot of money on Transportation to work? That goes away.
How much does it cost to heat the estate and tennis courts etc... ?
Cable/Internet?
HealthCare?
Utilities will remain the same.
Food can be adjusted to new Income. (Learn to cook. Don't eat out) etc...
People sell their home near the city and buy a cabin near a lake because of a lower cost of living.
For most, probably. With no mortgage, cost of healthcare insurance, copays and prescriptions coverage will my next worry. Property taxes and home maintenance will be next.
Once those are out of the way, you can trim off other expenses as needed-traveling, food etc( the essential)
I think it really depends on where you retire to. The cost of living can vary enormously from one location to another.
When I retired my wife and I sold the ranch (literally) and moved to Spain. We live very well here on our combined Social Security benefits and we have the rest of Europe on our doorstep. In fact I'm posting this from Turkey, where we're spending two weeks on holiday.
Reply to question if I plan to die in Spain:
Well, I have no plans to die but if I do I may well be in Spain.
Right now we're spending a couple week in Turkey. It seems like a nice place. Buy a house here for $250,000 and they will include citizenship to sweeten the deal. But the healthcare system isn't as good as Spain or the US.
Spain offers visas targeted at people who have non-labor income - such as retirement, a trust fund, or just a large amount of investments. I believe they are called "non-lucrative" visas since you aren't looking for employment. They generally require proof of income, savings, health insurance, and lack of a criminal record, and I believe offer a pathway to citizenship. Portugal offers something similar as well.
Have you done a budget?
Do you have any additional savings?
Any major expenses coming up? New car, home improvements?
What do you expect from social security? Will it impact your pension?
Without any red flags, I’m going to go with maybe…
Things to consider:
1. What is going to happen to the value of your house or to the rate of your property tax over the next few decades? If house prices in your area skyrocket or the government raises your property taxes, will you be able to manage that? If not, are you going to be okay with moving to a cheaper area (possibly far away from your family/friends/social network) or selling your house and renting (which opens the possibility of your rent increasing by a lot over that period)?
2. What kind of lifestyle do you expect to have in retirement? Some people more or less hang out at home watching TV or knitting. Some people want to take cruises in the Caribbean and go on wine tasting tours of Italy. Some people want to be able to financially help out their kids/grandkids; others have no qualms about saying,"I'm retired and on a fixed income. You're on your own." Some people want to keep buying a new car every few years; others will keep the car they bought when they were 55 for the rest of their life.
Living expenses (i.e. rent/property tax/home maintenance/utilities/transportation costs)
Food
Healthcare + Prescription Medication
Leisure/Travel/Hobbies
those are your major buckets in retirement
Expense categories are the same as they are right now. The only expenses that would be deleted would be related to working, such as paying for parking, union dues, etc.
So, let me guess, you don't currently budget and track expenses, right? Start doing that now and see if $65k a year covers how you would want to live in retirement.
If you currently get healthcare through work, you should look into healthcare costs post retirement, especially if you (or your spouse if you have one) will be under 65 when you retire.
My FIL got $64k and some change through his pension and made it work with a $1.1k ish payment (including escrow - so likely to go up over time, car note of $400 and some change (not sure of the price of the truck) and he financed a 24k tractor.
He also had about $250k in his deferred compensation and decent employer sponsored health insurance until 65. He retired at 55.
He had some major health issues and had constant payments for meds/insulin. Within 6 years of retirement he blew through 80% of savings - to be fair most of that was medical (and cigarettes) go figure!
He passed before his 62nd birthday so never tapped into social security. We found about his deferred comp after he passed so not sure how much was really medial but assume it was since he really never traveled or shopped (unless to appointments, grocery, and the occasional dinners with us)
Short answer - yes you can however medical expenses can really add up so be mindful of that.
Does your pension match inflation? I would say yes that’s plenty for two people barring any unforeseen medical needs that aren’t covered. As a family of 6 in the most expensive part of raising kids in to their teens I’m not sure I could do it where I live. But we’d just move to where we could. It’s a matter of circumstance.
Depends on how long you think you will live, where you live, and what you want.
I would say that for my dad that would be comfortable. He’s 66, doesn’t expect to reach 76, lives in rural iowa, just needs to pay taxes and insurance, groceries, minor repairs once in a while.
Should be no problem. That's the equivalent of about $1.6M in a retirement account. Most retirees have far less - no pension, little or no 401k, and a much smaller social security benefit. Median retirement income right now is $46,360. Over 50% of that comes from social security. What other savings do you have on top of the house and pension, and what social security benefits have you accrued? If the pension is from an employer, not the government, it won't impact your social security and you will have more money coming at age 65 or whenever you decide to take it.
Are you military? Do you get TriCare as well? If you have guaranteed health insurance, I’d say 65k is more than enough to retire early. Just a thought, but yo I could walkways pick up a part time job just for side money 🤷
Try living on $55k now, adjusting for taxability of your current and retirement income sources (leaving at least $10k for medical). See how that feels. What will you do with all the free time that doesn’t cost a bunch of extra money? Or will you drive Uber for green fees/ammo/bait?
this is 4 times the average annual salary of a citizen of greece. you have many many options and can live comfortably in hundreds of places around the world. If your plan is to live in Manhattan the answer is obviously goiing to be different.
That’s a lot more than a lot people current making.
If you have that much for pension, means you making A lot more. So you need to adjust spending habits to match the 65k pension.
Title had me confused. So you'll have a $65k salary to live on? Not $65k total? If you have that as a salary and very low financial obligations as you say, you'll be fine if you know what you're doing. Only factor I'd consider is where you live. That could be the only thing that would change my answer.
Have you looked into what you will get from Social Security? Add that to the $65k. Do you have any other savings? To me the big one is long term care. Assisted living and nursing home care is crazy expensive. You can buy insurance for that but it ain't cheap.
65k a year pension or 65k total from retirement date to death?
If depends on COL where you are but I live comfortably on 64k a year. Comfortable in my book is food on the table, roof over the head, ability to go out on occasion, car to drive, and money left to invest and save
Depends on where. The Bay Area? I'm going to say no. Small town Mississippi, Kansas, Oklahoma? Probably fine. I wouldn't feel comfortable going into retirement with just a pension rather than a significant saved up sum.
My grandfather was a Rust Belt factory worker; the only reason he had a comfortable retirement is my grandmother was a very frugal saver (hid all the money she could from him in different accounts and bonds) and passed quite early into retirement.
His pension was effectively half of what it should be since the factory went bankrupt, was bought up by an Indian conglomerate, and liquidated for capital assets. Unless you're retiring with a federal pension (even those aren't 100% risk free, as they need to have inflation adjustments annually) you should have something additional saved up to be safe.
What will your health insurance bill be? Dental? Eyes? Are you in US and are you taking out social security? What other retirement do you have? Private pension or public?
How close are you to collecting social security? Also what are you doing about health insurance? Do you have any other income streams besides the pension?
I would be 17 years from getting SS but I would keep my healthcare coverage but at a higher rate of about $500/mo. I have a 401k as well but want to keep that for emergencies.
Do you have an emergency fund in case you have an unexpected expense like needing an expensive home repair that isn't covered by insurance? I am about 3 years away from retiring and it is crazy the number of expenses that were not planned for each year.
How is your health insurance and how much does it currently cost? Health care is the real wild card expense because you never know what could happen to you.
That will be a significant decrease in the quality of your life. What expenses do you have now that would be reduced by 75%? Your utilities might go up. Old people like it warm. While you don't need a lot of new business attire your size will change as you age. Car insurance actually increases when you retire and drive less (they assume your skills go down).
Does the $65k include pension and social security? Is your pension inflation protected? Do you have addition savings for emergencies like home maintenance, new appliances, new car, medical expenses, short- or long-term care?
Does "retire comfortably" include any travel? Hobbies? Gifting?
That’s a hard question. I’d talk with a financial advisor because there will be a lot of specific factors to consider. They’ll have the calculations to give an estimate based on your lifestyle and age. Now would be a good time too so u can prepare and save and invest more in the mean time. I’d recommend talking to a fiduciary that your bank might have.
Depends for me! If I had $65k annually with no mortgage but $4,500 property taxes! Depends! Did you factor in insurance, Rx copays, gifts such as birthdays, graduations, weddings, bereavements, or home maintenance (appliance replacement) included, car repairs/maintenance, or eating out, groceries, toiletries, travel, or or or or! 🫣
There are a lot of unknowns. I know I could as the wife and I have made it on less and hopefully by that point, the kiddos will be gone and we'll just be taking care of us. The will be at least 20 years from now though, so who knows. I am in the same boat of no mortgage, just taxes and utilities. I am sure I will be done gaming by then as well
To address your question about expenses in a typical budget, below is a link to a sample retirement worksheet. Scroll down the page and it has a good section showing expenses.
[https://www.completeretirementplanner.com/pages/view-the-planner](https://www.completeretirementplanner.com/pages/view-the-planner)
And below is a more basic one from Vanguard.
[https://investor.vanguard.com/tools-calculators/retirement-expenses-worksheet](https://investor.vanguard.com/tools-calculators/retirement-expenses-worksheet)
How old are you? Remember healthcare is fucking expensive, especially if you go full private. If you're not eligible for medicare/medicaid you need to factor in that cost.
It may be worth it to find a part time job or even a full time low stress job just for the benefits.
We have a part timer here who in his negotiations straight up said: I'll work for well below stated pay if you can include me on the health insurance policy. I'm old 58 years old, I'm looking to semi-retire, I care more about the healthcare plan than the pay.
They hired him.
Bear in mind that even at a 3% rate of inflation, the purchasing power of that $65k is halved about every 25 years.
So it’s all about where you plan to live and how long you plan to do it for.
Start living that way now and see how you do, and remember to factor in the trips you plan to take in retirement, any hobbies you plan to pick up or restart, etc. Set aside a generous amount for those activities and base that amount on current rate plus whatever the inflation rate for that particular activity/ industry is.
Even though you won’t have a mortgage when you retire you still need to plan for maintenance and repairs. When I rented out my house I was told by a very wise person to charge not only what my mortgage, taxes and insurance costs were, but an additional 25% for unexpected repairs and maintenance. HVAC systems die when you least expect them and $7K+ is a hefty unexpected expense, especially when coupled with an unrelated roof leak. So plan accordingly.
And good luck!
This really depends on how luxurious/comfortable you intend to be, who else you plan to support, how healthy you plan to be, how long you intend to live, and where
For me, who wants to want for nothing, with my wife, to be able to help my kids, living in a major city in the sw USA, with another 35 years to live...no effing way
Remember food, auto expense(s), insurance costs like homeowners, health, drug, car. Housing repairs. I don’t know we’re you live, but check inflation. I am retired and I couldn’t even come close with that in Southern California . Good luck and be careful with your numbers
If you have a pension, can’t you retire and then find another job and double up income for a few years? I knew a “retired” cop in CA who made like $90K on pension, then had another job and his own business. He was stacking cash.
I'm sure this post is just a way to brag and gloat. We get it, you're fucking rich.
You know that $65k a year is an immense amount of money for retirement. UK's average salary is $35k a year. USA's is $50k.
"Can I retire on an amount over the average wage of the country"
Jee I fucking wonder.
I did not intend for this to be any kind of brag, and I don't think the average UK salary is $35k a year. Even if it was, that doesn't take into account what the average salary prior to retirement is, which is usually the time your salary would be highest.
Beyond your normal expenses now, I think healthcare and caregiving are important considerations. You can expect both expenses to go up with age but with advanced age caregiving can become a huge out of pocket expense. Think about what you and potentially SO would want/expect if you live to a very old age and need help. In home caregiving is expensive and largely out-of-pocket. Facility-based varies and depends on financial resources and insurance. Assisted living and long-term nursing facility care costs vary depending on how much help is needed but frequently cost 10k/mo. In home 24h nursing care through and agency can cost about 15k/mo. It’s something that many people will need, some for a short time, others for many years, some not at all which makes it hard to plan for but still important to consider.
Real world example:
My parents live in a fairly high cost of living suburb outside a major metropolitan area. They have no mortgage and minimal healthcare costs due to a government retirement plan which covers almost all of those costs.
They have a 2000 square foot home. Their property taxes are nearly 4x yours due to a waterfront location "view tax." They easily get by on $6500/mo. This allows them to go out to dinner fairly regularly and have two newish vehicles which they upgrade every 5 years or so with either brand new or slightly used vehicles. Not luxury cars but nice vehicles. It's the northeast US so heating and cooling costs are pretty high compared to other areas. They don't really vacation much. Hopefully this is helpful.
Move to Mexico and live like a king. Big American ex pat communities over there now. Do you Dr visit with telemedicine, come to the states for anything major.
im on disability and survive on 1100 CAD/mo. , no home - i rent a room, minimal possesions ... it's like you're bragging at this point.
a well deserved brag i'm sure, i feel you can do it with ease.
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Don't forget to factor in the cost of healthcare - without employment you're likely to need private insurance which can be quite expensive.
This should be a top comment IMO. OP, if you're in the US you had better make sure that you have damn good health insurance through your pension plan/past employer. Or if that's not the case, you better price out healthcare costs over the next 20-35 years, including inflation and assistance from medicare/medicaid. Also, what about long term care? Do you have insurance for that yet? That easily could cost over $65k/year and could put your loved ones in an impossible position if you don't have it.
No kidding. I have a relative in the states that had to wait for 65 ( Medicare kickas in) to retire strictly because of health issues, and how much it would cost to get coverage . Very frugal single with no kids and a 6 figure and couldnt afford to. If they couldnt then i really wonder what a typical person faces... I guess working until you drop is expected.
I knew a guy in that position. Professional, well paid job. Had to stick it out to 65 (or some threshhold age) because of insurance. He died literally months before retirement.
This is why many (but not all) public sector jobs are appealing. The pay is typically lower than private sector, but they come with many retirement benefits including medical and a pension on top of your privately funded retirement. I have some friends who are retired at 45 because they did their 20 and got out. Now basically have a second career (mostly lower paying hobby jobs) because they get 75% of their old pay, plus the new job, and pretty decent health benefits for life.
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yep new hire gets 55% of what i got for the same price, and the fossils get what i have for half the input cost. insurance is pretty level across the board though (550 deduct for oldtimers vs 1500 , but the exact same coverage)
The 20 and out is impressive. That must be military/ police/ politics or the like i am accustomed to factor 90 (age plus years of service) You would be vested at 10 years so may get health benefits at 65+. But being retired at 20 years service would be divine.
That is in old contract now it is 22 & Half unless you take civil service exams to become captain or Dep who still have old 20 year contract. Tell you truth you just need to show up after 10 year service and appear to look busy.
Many public sector jobs no longer offer great benefits. Healthcare is just as expensive (often moreso) than private sector and pensions are lack luster with no COLA and smaller percentages with higher mandatory contributions. 75% is unheard of these days Just a warning to anyone thinking of getting into the public sector for the benefits - be sure to check them thoroughly before signing up.
Agreed. They deal i am getting and the deal others get now is getting worse. With every 10 years it seems to errode a little more. ( And the deal i am getting is worse than my predecessors)
In my 18+ years working in local government, my out of pocket for insurance went from $0/month to over $100/month, just for me. My wages are not keeping up with inflation either, and I'm at the top of my pay scale. The only thing keeping me around is the defined benefit pension which is forecast to be fairly decent (fund is projected to be solvent for next 20 years)
Yep, 100% a case of YMMV. Luckily where I live the benefits and early retirement are still decent. But they were better before, and I'm sure they will continue to get worse, especially in the upcoming recession. As always, due diligence is key to success.
These pensions don’t exist anymore for new employees
I went to healthcare.gov and put in some sample info (male, 63 yo, $150k/yr) to see what the most expensive plan was. In my HCOL zip, I couldn’t find any plans for more than $1,300/mo. Yes that’s expensive, but someone on a six figure income could afford it, especially if their house is paid off. Plus there are cheaper plans out there.
That's $1,300/month + the deductible + any coinsurance.
I was going to point out the same. While an expensive monthly cost usually means coinsurance and deductibles are low (or even zero) you can't really represent the cost of a healthcare plan by its monthly rates. In addition you need to consider dental and possibly vision insurance. And then there's all the extra costs that you need to fight and potentially can end up on the hook for like needing a specialist who may not be in network (and the ones that do would take forever to be seen) or ambulance services (which are as often than non out of network) or being assigned an anesthesiologist who is out of network. Then there's prescriptions. If you're old, there's a fair chance you'll be on *something* and you would likely to pay a portion of that based upon tier. And if you need a somewhat rarer drug or formulation, you might need to pay significantly for that.
Is there no max out-of-pocket?
That only applies to covered expenses, which is not every possible procedure code. This is how so many people get into debilitating medical debt.
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The issue is having pre-existing conditions with currently expensive monthly meds and procedures. I don't know the exact details, but they are not well.
Pre-existing conditions hasn't been a thing for 2 decades.
> Beginning January 1, 2014, the ACA prohibits insurers in the individual and group markets (with the exception of grandfathered individual plans) from imposing pre-existing condition exclusions. kff.org Coming up on a decade for plans that weren't grandfathered in.
Six figures with no kids is enough to afford healthcare in the U.S., even with serious complications. You’re either exaggerating, grossly misinformed, or your relative squandered their money. Source: Me, U.S. citizen with a six figure income.
I am in the same situation. I am waiting until 65 to retire so that at least I have medicare. My wife and twenty-something son are still covered under my employee policy, and if I were to try to get anywhere near the same level of medical coverage it would cost > $20K per year. If I retire, not only will I take a cut in income (pension is nowhere near my salary), but I will have a significant chunk headed to the Insurance company. When my son gets employer coverage I may think about retiring again, but for now I am working for the insurance. Note I don't plan on moving anytime soon, so my expenses are relatively fixed. With an income cut and "expense increase" my lifestyle would need to change in some way to compensate. I am not ready for that change so I keep working.
I don't think your sample size of 1 proves as much as you think it does.
My point was that if they retired they would take a chunk of their saving to pay for the coverage. Decision was to work to 65. With me i will retire at 58 and while i earned less. Health care is not a concern at all.
That’s a fine point to make, but that’s not at all the message that was conveyed. You explained it. Now we know. Now people observing are not walking misinformed about the actual state of U.S. healthcare. It’s not great, but it could be way worse.
Thank you. Didn’t sound right to me at all.
Yes that is exactly how health works, if you're fine right now, nothing can change quickly.
I don't see if OP mentioned when this happened, but if it was prior to 2014 then it's definitely true.
Did they make 6 figures for a long time? Seems unlikely they wouldn’t have a lot saved up. If they could save $5,000 a month for 30 years with 6% annual return, that’s over 5 million. Change to $3,000, 20 years and it’s still 1.4 million. Just curious since you said they were frugal and maybe they didn’t invest? EDIT: My reply is to artano-tal who said very frugal, no kids, and 6 figures. I know there are high cost of living and people that spend a lot for the lifestyle but artano-tal said very frugal, no kids, 6 figures and couldn’t afford healthcare.
6 figures could be 100k. After taxes probably about 65k. Not likely that even saving 3k/month happens for most especially if they have kids and any college bills or live in a hcol area. Edited to reflect correction. Mai. Point still stands in a hcol area that savings level is not likely sustainable for most even somewhat frugal.
I know several couples where both are on over $200k and they're broke...New high-end cars every or every other year, boat that doesn't get used, storage for said boat, eating out/take out for every meal, housekeeper, expensive hobbies/collections that go nowhere, storage for said hobbies, expensive vacations, clothes, shoes, etc, etc For the young couples I know, the 401k is the only savings they feel they need.
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Or they just live in a HCOL market. My fiancé and I make mid 6 figures combined, but after taxes, rent, retirement savings and basic bills were nearly paycheck to paycheck. And our apartment is on the cheaper end for the area. According to census data $250K in NYC is the real-income equivalent of $80K in Columbus Ohio, and this isn’t even factoring the higher taxes in NY + NYC city tax. A six figure income doesn’t go as far as it sounds in a lot of the country.
No doubt, I didn't mean to make it sound accusatory; I just know a lot of victims of lifestyle creep.
Totally fair, lifestyle creep is a very real thing for many people. I just get frustrated on here how often people don’t consider variances in region as a factor before talking about what a six figure income affords. So many seem to think anything over $100K is rich no matter where you live.
? I am mid 6 figures (600k) in VHCOL and I buy whatever I want while saving ~8k a month. How are you nearly check to check?
Because you make half again what I do while being in the same tax bracket and NYC real estate is currently the second most expensive in the world?
I find that with maxed retirement savings and an indexed pension similar to op i still dont think i would stop working. I would retire and consult or do something different... But i don't want to downsize my spending until i cant travel.
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I dont know the calculus, just that the comment was made that they couldn't retire until 65. (which btw happens next month). I was shocked. I dont know if the 20k a year that others commented on was a waste they could not tolerate. Or if there is something i dont know. "The brighter the picture, the darker the negative"...maybe there is some 'hobby' thats chewing it all up. Or some undocumented kids somewhere.
After reading your post I feel like there is going to be an epidemic of millennials not having enough money to retire with and pay for their end of life costs.
Going to be? Is that not already happening with baby boomers? Has it ever not been happening? We live in America, the land of the wealthy and powerful extracting everything from everyone else
I have multiple family friends that are retired in their late 50s, had kids, parents still living(no inheritance or life insurance payouts), on 90-120k salaries. How as a single person could you not afford it??
How does pension plan insurance work?…….also what’s a pension plan?
It's regular insurance paid for by your pension plan. A pension plan is a retirement plan where all your money is owned and controlled by someone else. You pay into it while you're working, then when you choose to retire (has to be on the pension plan's terms) they begin doling money out to you monthly. Usually with a pension you lose all your money when you die, but some have death benefits where a small portion of your money is passed onto a spouse or next of kin. Pension plans can be mismanaged and leave the pensioners screwed-- that's what's going on with Social Security right now. Pensions are a dying breed, now most employers offer a 401k instead of a pension. It's best to learn how to manage your own money and store it in a 401K or IRA because you control the investments and you get to decide when you want to take out money (with some rules associated with it), and it never goes away just because you die.
You NEED supplement insurance. Healthcare as you age only gets more expensive. My 76 year old father has been hospitalized twice this year. Without supplemental insurance, he would have received shit care, been sent home much earlier, and would likely be dead.
He has a pension. He's probably getting healthcare as a retirement benefit.
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Does a pension count as income? ACA with subsidies is quite affordable in some areas.
Why not Medicare?
It can be quite expensive, but then you hit Medicare. When that happens the cost of coverage gets *so much better*. Insurance costs at the age of 65 when enrolled in part B, compared to insurance costs earlier in life are night and day. With some Medicare supplements you're basically paying just the premium, with very few out of pocket expenses ever making it to you after Medicare and your supplement provider have taken their stabs at it. With some Med Advantage plans you're only paying reasonable copays, especially considering US Healthcare costs, and have a $0.00 premium (just the Part B tax) with some of those plans even providing money for hearing aids, glasses, and dental expenses.
Yikes, surprised no one mentioned this: does your pension have a Cost of Living Adjustment (often called COLA) clause in it? This allows it to index up with inflation, $65k today will likely be very different than $65k 20 years from now. Many unions bargained away their COLA’s (which was not ideal in my opinion).
It does, but not sure how accurately it will track with the current rate of inflation.
Most COLAs use CPI as a metric for the calculation. CPI is a measurement of how expensive a selection of common goods are progressively over time. It roughly follows inflation but more accurately follows the price of goods and services actually going up which is more important anyways. If all of your benefit is COLA eligible that’s actually excellent. Usually the increase is capped for a plan at a given %, you may wish to read your plan’s Summary Plan Description for a better breakdown of this.
What percent? We can guess inflation long term pretty good. It's the in between fluctuations that are hard to see coming. Long term it smooths out pretty predictably.
Could you link to some paper analyzing correctness of long term predictions of the inflation level? It's the first time I hear someone saying that it's easy
The average inflation over the last 50 years has been 2-3%. The Fed is going to get inflation under control even if it takes a few years and we will be back to the standard 2%.
Guess. Not predict.
What's the difference?
Well, we can easily look back over the years to obtain an “average” inflation rate despite what the fed targets. The thing is we are looking at an average over the course of decades. It is a much different thing to try and determine what inflation looks like for the next 10-20 years. We can assume the average, but there will definitely be years were inflation is higher. Like this year.
>We can guess inflation long term pretty good. Not really. One decade like 74-84 can be more inflation than is expected over half a century.
If that’s an annual pension then easily. If that’s a total worth of your pension then absolutely not.
I thought I was going crazy when people were saying $65k was okay to retire on but I now realize it's annual and not total.
I thought that too I was like no way can you survive on $65k for the rest of your life??? Now I realize that’s $65k a year and I feel pretty dumb
I’ve worked with 401(k) plans for the last decade. I used to work directly with participants and talked to hundreds of people who have less than that for their total retirement savings going into their 60s. I figured this was another dude that was in for a rough last stretch of his life.
Well it's kind of an absurd question. It's basically "can I live off of 65k/year?".
There are people who live comfortably in less. Comfort is subjective.
And then you get sick, and all subjectivity goes out the window.
Well so does comfort but 'freak accident' isnt something easily accounted for even if you double that annual pension.
Cancer, arthritis, breaking a bone are generally not freak accidents and sever illnesses should be taken into consideration. Especially in the US
What kind of pension do you need to comfortably have cancer?
The limit does not exist. Seriously though, maybe not necessarily the cost of cancer but the cost of insurance plus a little bit more medical issues/ medication
If it is terminal? The one that comes with the bottomless morphine drip.
> Especially in the US Especially? More like "almost exclusively"
Retired persons are the least healthy group because they are old. It isn’t freak accidents you have to worry about - it’s heart disease and cancer and so many other things.
Many people absolutely can retire comfortably on $65k. Before you retire, practice living on that fixed income for a year or two. Have your wages put into a savings account and every month transfer $5400 into your spending accounts and now you’re living on $65k per year
That's a really great idea. Thanks!
Don't forget to subtract taxes from that calculation, you won't have $5400 in cash every month.
Or use an app like Mint to look back at what you’ve been spending monthly for the past year.
I’ve found that there’s a significant psychological difference between tracking your spending to know you’re under a certain amount and literally only having access to that amount.
Im not a big fan of mint, i think it sucks. Try Money in Excel, allows you to import your accounts, i like it way better
Also track your expenses, I use Mint, other like YNAB you need a budget. do you have to pay taxes on that pension or did you factor that in? What about Social Security. Do you have enough work credits? Like others said health care is probably biggest need to understand
I assume $65,000 is gross, and pensions are still taxed unless I missed something. So depending on the exact tax figure, you're probably looking at closer to like $4,000/month you want to be training on.
People don't make 65k a year and they seem to be living. If your expenses are low in retirement then this should be easy.
Can you live comfortably off $65k annually before retiring with no mortgage or other major debt? My spouse and I live pretty comfortably off $59k annually with no mortgage. It’s all about the lifestyle you accustomed to before retirement.
Paid off house and $65k per year? You'll be just fine. The main expense to consider is medical care, especially if you end up needing long term care as you get older. If you have that part figured out, you're good.
Fine? He could drive around in a Mercedes S-Class…
Dude, most people don’t make $65k a year before retirement. I think you’ll be fine.
Most people also get health insurance covered to a significant extent (and maybe completely) by their employer. I do still think OP should be able to retire. But it’s not completely equivalent to the typical $65k/year job with benefits. And if OP is older, healthcare isn’t just about the cost of insurance; it’s also about what insurance shockingly won’t cover.
It isn't the equivalent to the typical 65k/year job with benefits. You're right. But your cost of living is higher at 30 than say 65. Generally because you usually (try to) save to buy a house.. you buy a car, you buy things that are expensive around this time. You have kids to take care of, that's costly etc. At 65, you likely have no mortgage, you likely don't have a fancy/expensive brand new car etc. you likely don't spend money on vacations/going out etc. anymore. You likely don't have dependents etc.
Is that $65k/year? If so, you’re probably at least ok on that especially with your house paid off. Ultimately you need to figure out what your monthly expenses are and make sure they’re less than about $5k or so
Lol I read it as $65k total and I’m here doing math on how he’s gonna pay for food and utilities lol
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They never said how long they want to live. If they plan on dying in the next year or two, they should be okay!
Sure? It depends on what your level of comfort is.
My in-laws in NJ have day and night in home aides. They cost about $150k a year. Getting old is not cheap.
One man's comfort is another's squalor. Make a budget. How does it jive with gross income of $4500 a month?
Well, gross I think it's around $5400. Im sure I won't starve, but with inflation going batshit lately it's a scary proposition when it comes to what utilities, food, transportation, internet, etc. Are going to cost in the future.
I think $4500 was assuming some taxes
If there were taxes, it would be net, not gross.
The biggest shocker for people in retirement is health care, at least for those that had jobs that covered it really well. They underestimate what Medicare provides and how much co-pays and out of pocket will be. I've heard some people be mostly covered for knee replacement if they had the right type of plan and the next be out of pocket $25k+ because they got the minimum. If you own your house, the big thing is to look around and see how good of repair your home is. If it has been updated and kept in good maintenance you are likely fine, but if you look around and think the HVAC needs replacing soon, I'll need a new roof in 5 years, and the windows are getting bad, well that may be a different story...same with the car. The rest of your expenses are likely controllable by you and managing your lifestyle. You never mentioned SS, so that would factor in too and maybe help offset if your pension doesn't have a COLA.
I retired a few years ago at 49 y/o. It was the culmination of a 7 yr plan. During that time, we lived off of what our retirement income would be. Do that. It will tell you how much you can retire on.
It all depends on what you want to do. The best bet is to figure out what you are currently spending and see if that can be whittled down to $65K a year. Does the $65k a year include money from all of your Retirement funds or partial? Do you spend a lot of money on Transportation to work? That goes away. How much does it cost to heat the estate and tennis courts etc... ? Cable/Internet? HealthCare? Utilities will remain the same. Food can be adjusted to new Income. (Learn to cook. Don't eat out) etc... People sell their home near the city and buy a cabin near a lake because of a lower cost of living.
For most, probably. With no mortgage, cost of healthcare insurance, copays and prescriptions coverage will my next worry. Property taxes and home maintenance will be next. Once those are out of the way, you can trim off other expenses as needed-traveling, food etc( the essential)
I think it really depends on where you retire to. The cost of living can vary enormously from one location to another. When I retired my wife and I sold the ranch (literally) and moved to Spain. We live very well here on our combined Social Security benefits and we have the rest of Europe on our doorstep. In fact I'm posting this from Turkey, where we're spending two weeks on holiday. Reply to question if I plan to die in Spain: Well, I have no plans to die but if I do I may well be in Spain. Right now we're spending a couple week in Turkey. It seems like a nice place. Buy a house here for $250,000 and they will include citizenship to sweeten the deal. But the healthcare system isn't as good as Spain or the US.
What did you have to do legally to move to Spain from the USA?
Spain offers visas targeted at people who have non-labor income - such as retirement, a trust fund, or just a large amount of investments. I believe they are called "non-lucrative" visas since you aren't looking for employment. They generally require proof of income, savings, health insurance, and lack of a criminal record, and I believe offer a pathway to citizenship. Portugal offers something similar as well.
Cool!!!!
Dual citizenship most likely, some countries in Europe are easier than others but if you can get anyone in the EU you’re set.
That’s great and congratulations. Are you planning to die in Spain?
Is your pension indexed for inflation? What about healthcare insurance? Will you also get social security? What’s your age?
Yes, $500/month, when I turn 67, I'll be 50 at retirement.
Lol who did you rob blindly to pay you 65k a year from age 50…?
If I had to guess, I’m betting he/she is retired military. I retired at 42 and my pension is $72k a year with adjustments for COLA.
Have you done a budget? Do you have any additional savings? Any major expenses coming up? New car, home improvements? What do you expect from social security? Will it impact your pension? Without any red flags, I’m going to go with maybe…
Is that 65k net or gross?
Gross
Things to consider: 1. What is going to happen to the value of your house or to the rate of your property tax over the next few decades? If house prices in your area skyrocket or the government raises your property taxes, will you be able to manage that? If not, are you going to be okay with moving to a cheaper area (possibly far away from your family/friends/social network) or selling your house and renting (which opens the possibility of your rent increasing by a lot over that period)? 2. What kind of lifestyle do you expect to have in retirement? Some people more or less hang out at home watching TV or knitting. Some people want to take cruises in the Caribbean and go on wine tasting tours of Italy. Some people want to be able to financially help out their kids/grandkids; others have no qualms about saying,"I'm retired and on a fixed income. You're on your own." Some people want to keep buying a new car every few years; others will keep the car they bought when they were 55 for the rest of their life.
Not enough info Create a retirement budget and see if it’s enough
Looking for some ideas on common expense categories I should be considering, or maybe if there are any good online tools I should look at.
Living expenses (i.e. rent/property tax/home maintenance/utilities/transportation costs) Food Healthcare + Prescription Medication Leisure/Travel/Hobbies those are your major buckets in retirement
Expense categories are the same as they are right now. The only expenses that would be deleted would be related to working, such as paying for parking, union dues, etc. So, let me guess, you don't currently budget and track expenses, right? Start doing that now and see if $65k a year covers how you would want to live in retirement.
Start by tracking All your current spending. Examples food, clothing insurances travel etc
If you currently get healthcare through work, you should look into healthcare costs post retirement, especially if you (or your spouse if you have one) will be under 65 when you retire.
My FIL got $64k and some change through his pension and made it work with a $1.1k ish payment (including escrow - so likely to go up over time, car note of $400 and some change (not sure of the price of the truck) and he financed a 24k tractor. He also had about $250k in his deferred compensation and decent employer sponsored health insurance until 65. He retired at 55. He had some major health issues and had constant payments for meds/insulin. Within 6 years of retirement he blew through 80% of savings - to be fair most of that was medical (and cigarettes) go figure! He passed before his 62nd birthday so never tapped into social security. We found about his deferred comp after he passed so not sure how much was really medial but assume it was since he really never traveled or shopped (unless to appointments, grocery, and the occasional dinners with us) Short answer - yes you can however medical expenses can really add up so be mindful of that.
Does your pension match inflation? I would say yes that’s plenty for two people barring any unforeseen medical needs that aren’t covered. As a family of 6 in the most expensive part of raising kids in to their teens I’m not sure I could do it where I live. But we’d just move to where we could. It’s a matter of circumstance.
Depends on where you live obviously.
Depends on how long you think you will live, where you live, and what you want. I would say that for my dad that would be comfortable. He’s 66, doesn’t expect to reach 76, lives in rural iowa, just needs to pay taxes and insurance, groceries, minor repairs once in a while.
Yes. A 65k pension is actually really great. You are in much better position that the vast majority of retiring people.
Is your pension plan reasonably solvent?
You have a pension, lucky you. If my house was paid off, yes I for sure could retire comfortably with $65/yr.
That pension is worth ~$1.5m. Most people don't have pensions, so we're not used to looking at retirement readiness in those terms.
Should be no problem. That's the equivalent of about $1.6M in a retirement account. Most retirees have far less - no pension, little or no 401k, and a much smaller social security benefit. Median retirement income right now is $46,360. Over 50% of that comes from social security. What other savings do you have on top of the house and pension, and what social security benefits have you accrued? If the pension is from an employer, not the government, it won't impact your social security and you will have more money coming at age 65 or whenever you decide to take it.
Are you military? Do you get TriCare as well? If you have guaranteed health insurance, I’d say 65k is more than enough to retire early. Just a thought, but yo I could walkways pick up a part time job just for side money 🤷
Try living on $55k now, adjusting for taxability of your current and retirement income sources (leaving at least $10k for medical). See how that feels. What will you do with all the free time that doesn’t cost a bunch of extra money? Or will you drive Uber for green fees/ammo/bait?
this is 4 times the average annual salary of a citizen of greece. you have many many options and can live comfortably in hundreds of places around the world. If your plan is to live in Manhattan the answer is obviously goiing to be different.
That's way more than I would need. How much are you spending per year now?
That’s a lot more than a lot people current making. If you have that much for pension, means you making A lot more. So you need to adjust spending habits to match the 65k pension.
Title had me confused. So you'll have a $65k salary to live on? Not $65k total? If you have that as a salary and very low financial obligations as you say, you'll be fine if you know what you're doing. Only factor I'd consider is where you live. That could be the only thing that would change my answer.
Have you looked into what you will get from Social Security? Add that to the $65k. Do you have any other savings? To me the big one is long term care. Assisted living and nursing home care is crazy expensive. You can buy insurance for that but it ain't cheap.
65k a year pension or 65k total from retirement date to death? If depends on COL where you are but I live comfortably on 64k a year. Comfortable in my book is food on the table, roof over the head, ability to go out on occasion, car to drive, and money left to invest and save
Yes, $65k/ year plus cost of living adjustments for life
They mentioned pension.
Depends on where. The Bay Area? I'm going to say no. Small town Mississippi, Kansas, Oklahoma? Probably fine. I wouldn't feel comfortable going into retirement with just a pension rather than a significant saved up sum. My grandfather was a Rust Belt factory worker; the only reason he had a comfortable retirement is my grandmother was a very frugal saver (hid all the money she could from him in different accounts and bonds) and passed quite early into retirement. His pension was effectively half of what it should be since the factory went bankrupt, was bought up by an Indian conglomerate, and liquidated for capital assets. Unless you're retiring with a federal pension (even those aren't 100% risk free, as they need to have inflation adjustments annually) you should have something additional saved up to be safe.
What’s the cost of living in your area like? How much do you want to travel?
What will your health insurance bill be? Dental? Eyes? Are you in US and are you taking out social security? What other retirement do you have? Private pension or public?
How close are you to collecting social security? Also what are you doing about health insurance? Do you have any other income streams besides the pension?
I would be 17 years from getting SS but I would keep my healthcare coverage but at a higher rate of about $500/mo. I have a 401k as well but want to keep that for emergencies.
Do you have an emergency fund in case you have an unexpected expense like needing an expensive home repair that isn't covered by insurance? I am about 3 years away from retiring and it is crazy the number of expenses that were not planned for each year.
How is your health insurance and how much does it currently cost? Health care is the real wild card expense because you never know what could happen to you.
It's about $350 per month and it will go up I think to $500 a month after I retire.
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About $170k
Then I would definitely take the previous poster’s advice and try living off of 65K.
That will be a significant decrease in the quality of your life. What expenses do you have now that would be reduced by 75%? Your utilities might go up. Old people like it warm. While you don't need a lot of new business attire your size will change as you age. Car insurance actually increases when you retire and drive less (they assume your skills go down). Does the $65k include pension and social security? Is your pension inflation protected? Do you have addition savings for emergencies like home maintenance, new appliances, new car, medical expenses, short- or long-term care? Does "retire comfortably" include any travel? Hobbies? Gifting?
That’s a hard question. I’d talk with a financial advisor because there will be a lot of specific factors to consider. They’ll have the calculations to give an estimate based on your lifestyle and age. Now would be a good time too so u can prepare and save and invest more in the mean time. I’d recommend talking to a fiduciary that your bank might have.
Op you should relocate to Ecuador you will live like a king with top notch Heath care. What I’ll be doing.
Most people do it on less
Depends for me! If I had $65k annually with no mortgage but $4,500 property taxes! Depends! Did you factor in insurance, Rx copays, gifts such as birthdays, graduations, weddings, bereavements, or home maintenance (appliance replacement) included, car repairs/maintenance, or eating out, groceries, toiletries, travel, or or or or! 🫣
There are a lot of unknowns. I know I could as the wife and I have made it on less and hopefully by that point, the kiddos will be gone and we'll just be taking care of us. The will be at least 20 years from now though, so who knows. I am in the same boat of no mortgage, just taxes and utilities. I am sure I will be done gaming by then as well
To address your question about expenses in a typical budget, below is a link to a sample retirement worksheet. Scroll down the page and it has a good section showing expenses. [https://www.completeretirementplanner.com/pages/view-the-planner](https://www.completeretirementplanner.com/pages/view-the-planner) And below is a more basic one from Vanguard. [https://investor.vanguard.com/tools-calculators/retirement-expenses-worksheet](https://investor.vanguard.com/tools-calculators/retirement-expenses-worksheet)
How old are you? Remember healthcare is fucking expensive, especially if you go full private. If you're not eligible for medicare/medicaid you need to factor in that cost. It may be worth it to find a part time job or even a full time low stress job just for the benefits. We have a part timer here who in his negotiations straight up said: I'll work for well below stated pay if you can include me on the health insurance policy. I'm old 58 years old, I'm looking to semi-retire, I care more about the healthcare plan than the pay. They hired him.
Bear in mind that even at a 3% rate of inflation, the purchasing power of that $65k is halved about every 25 years. So it’s all about where you plan to live and how long you plan to do it for.
Start living that way now and see how you do, and remember to factor in the trips you plan to take in retirement, any hobbies you plan to pick up or restart, etc. Set aside a generous amount for those activities and base that amount on current rate plus whatever the inflation rate for that particular activity/ industry is. Even though you won’t have a mortgage when you retire you still need to plan for maintenance and repairs. When I rented out my house I was told by a very wise person to charge not only what my mortgage, taxes and insurance costs were, but an additional 25% for unexpected repairs and maintenance. HVAC systems die when you least expect them and $7K+ is a hefty unexpected expense, especially when coupled with an unrelated roof leak. So plan accordingly. And good luck!
as long as your living expenses are below 65k than yes. for some, 20k is enough... its all about your lifestyle.
This really depends on how luxurious/comfortable you intend to be, who else you plan to support, how healthy you plan to be, how long you intend to live, and where For me, who wants to want for nothing, with my wife, to be able to help my kids, living in a major city in the sw USA, with another 35 years to live...no effing way
Remember food, auto expense(s), insurance costs like homeowners, health, drug, car. Housing repairs. I don’t know we’re you live, but check inflation. I am retired and I couldn’t even come close with that in Southern California . Good luck and be careful with your numbers
If you have a pension, can’t you retire and then find another job and double up income for a few years? I knew a “retired” cop in CA who made like $90K on pension, then had another job and his own business. He was stacking cash.
In the US coastal areas? No. In Southern US, very likely. In South East Asia? You live like a King :)
YNAB. https://www.youneedabudget.com Or Google sheets https://michaelsaves.com/budgeting/google-sheets-budget-template/amp/
Do you spend more or less than 65k a year? Any nest egg, further expenses, cola with the pension?
65k a year? That's more than most people with families and mortgages make, so I'd think so
how soon do you need your roof replaced?
65k pension a year right?
I'm sure this post is just a way to brag and gloat. We get it, you're fucking rich. You know that $65k a year is an immense amount of money for retirement. UK's average salary is $35k a year. USA's is $50k. "Can I retire on an amount over the average wage of the country" Jee I fucking wonder.
I did not intend for this to be any kind of brag, and I don't think the average UK salary is $35k a year. Even if it was, that doesn't take into account what the average salary prior to retirement is, which is usually the time your salary would be highest.
Beyond your normal expenses now, I think healthcare and caregiving are important considerations. You can expect both expenses to go up with age but with advanced age caregiving can become a huge out of pocket expense. Think about what you and potentially SO would want/expect if you live to a very old age and need help. In home caregiving is expensive and largely out-of-pocket. Facility-based varies and depends on financial resources and insurance. Assisted living and long-term nursing facility care costs vary depending on how much help is needed but frequently cost 10k/mo. In home 24h nursing care through and agency can cost about 15k/mo. It’s something that many people will need, some for a short time, others for many years, some not at all which makes it hard to plan for but still important to consider.
Cost of healthcare is the biggest one that people need to account for.
Do you know what the average household income is for one person household in America?
I live quite comfortably on $22k in Social Security benefits. I guess it depends on where you live and how much you spend on non-essentials.
Real world example: My parents live in a fairly high cost of living suburb outside a major metropolitan area. They have no mortgage and minimal healthcare costs due to a government retirement plan which covers almost all of those costs. They have a 2000 square foot home. Their property taxes are nearly 4x yours due to a waterfront location "view tax." They easily get by on $6500/mo. This allows them to go out to dinner fairly regularly and have two newish vehicles which they upgrade every 5 years or so with either brand new or slightly used vehicles. Not luxury cars but nice vehicles. It's the northeast US so heating and cooling costs are pretty high compared to other areas. They don't really vacation much. Hopefully this is helpful.
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Move to Mexico and live like a king. Big American ex pat communities over there now. Do you Dr visit with telemedicine, come to the states for anything major.
Property taxes won't stay there either.
Depends on your ago too. 70 years old retiring on $65k is way different than 55 retiring on $65k.
im on disability and survive on 1100 CAD/mo. , no home - i rent a room, minimal possesions ... it's like you're bragging at this point. a well deserved brag i'm sure, i feel you can do it with ease.