Baby Boomers and retirement savings

I've been planning since I was 30. Or I should say acting.

I'm a teacher and have a pension through the State Teacher Retirement System. STRS is quite solvent and doing better than the market. I met with a financial planner through my educator's association and set up a Tax Sheltered Annuity when I was around 30. I started by putting in only $200 a month. Over the years, as my pay has increased I've increased my monthly deposits. I think I'm somewhere between $700 and $800 a month now. Doesn't seem like much. Maybe I'll be able to increase it to $1000 a month in a year or two. But I've been doing it for 22 years now so it has accumulated. I *could* retire when I'm 58 if I wanted. That was the original plan. My TSA will supplement my pension allowing me the same income I have now. I'll be able to pay my mortgage, eat, keep warm. But not much in the way of travel or entertainment. Maybe I'll be able to go to an occasional movie. I haven't been to one in a real movie theater in a few years. (Except for Who Killed the Electric Car with the PriusClubSD.) Of course, with gasoline approaching $5 (and then $10) a gallon, the price of everything else going up because of it, I don't know if I'll be able to afford to retire. Then there's the cost of healthcare. Healthcare hits nearly $2 Trillion. Who can plan for that kind of inflation? Give it up? Rely on Medicare? Um, I don't think so. I have medication I'll have to take until I die. Some cannot be generic. I just don't trust Medicare to take care of my health. Not according to their non-negotiating, no drugs from Canada prescription plan. After going through an emergency appendectomy I am very pleased with the way I was treated by my healthcare provider and intend to stay with them. Only $5 copay per prescription and no copay for office visits. Didn't pay one penny for the appendectomy. Even if I have to work until I'm 70, I'm keeping my healthcare. Maybe by then I can afford to retire.

<div class='quotetop'>QUOTE(huskers @ Jan 9 2007, 07:53 PM) [snapback]373370[/snapback]</div>

Despite my planning and acting, I don't doubt this. I worked with a teacher who spent his entire paycheck every month. Didn't save anything. No TSA or anything. When I asked him what he'll do when he retires, he says he has a pension. He just didn't believe me when I questioned his ability to live solely on that. (We don't get Social Security.)

 

I never expected to get rich.

All I want is my health and not to live in a cardboard box. I don't live extravagently. I don't expect to live extravagently. But I don't expect to have to eat dogfood either. Actually, dogfood is more expensive than people food. I don't want to have to live on a steady diet of rice cakes and mac and cheese.

 

We're on track to a good retirement IF things stay as they are. We're both 50, so our plans could be foiled by either extended unemployment or health issues.

We have our rollover IRA and 401K, and my wife's new job has her contributing to PERS, the California state worker's pension fund that is pretty good. My current company, which will probably go through another contraction in 20 months, doesn't have a pension plan per se ... they contribute 4% to your 401k, and then match .25 to the dollar up to 6% of your gross. I put in the maximum now (15%), and the calculations show that we will have enough for comfortable retirement until we are 95. Especially since the mortgage was re-financed with the term shortened so that when we retire, we'll also be retiring the mortgage.

But there are a lot of assumptions .... continued work and payments into the 401k, inflation at less than 5%, and earnings on the investments of about 8% per year. And the rules could change when we retire. If we do really well with investments, we might find ourselves in a higher tax bracket when we withdraw than we are in now, and Social Security might be "means tested" and we could lose those payments.

In my family, I have a brother and sister who have similar plans laid out, and a brother and a sister who haven't planned at all. So there's a slight edge for the "prepared boomers" in my family.

 

I was born in 1961, the tail of the boomers. I have been saving since age of 23, got knocked around somewhat in the .dotbomb era, but am recovering. It is going to be tough to be around when all of this plays out, as boomers who did not save begin to thrash around looking for support, and as all of their assets begin to hit the market to raise $ (fire sales on houses, big cars and big screens, depressed impact on markets...). I agree with fshagan, most of the conventional planning assumptions are up for grabs the next 10-30 years. If you are not setting aside something, you are in for a bruising.

 

<div class='quotetop'>QUOTE(TonyPSchaefer @ Jan 11 2007, 01:52 PM) [snapback]374272[/snapback]</div>

If you get lucky and work both hard AND smart, it could be much earlier. I'm 39, my wife is 41, we have three kids and we could "retire" now if we chose.

Our "lucky" moment was 9 years ago when I decided to buy some ownership in a manufacturer (client of mine). We quadrupled the size of the business over the last 9 years. This year we sold the business and we are now set. Look for opportunities where you can directly make a difference in the amount of money you earn (i.e. ownership).

BTW, I had to grin a little while ago when I saw the poll about the # of millionaires who drive a Prius - because I am one of them .

 

I'm 73. I've been contributing the max to an IRA ever since they were first authorized! My wife has been contributing since 1984. I'm still working full time. I have not had to touch any of my retirement money - YET. Hopefully, I'll not run out of funds down the road?

 

The company where I've worked for the past 7 years had a SEPIRA plan when I started, and they put 15% of your gross pay into it each year! I got it ONCE, then they sold the company, and we haven't gotten a thing since. One of the main reasons I relocated to Florida was to have some retirement funds, as promised, but the new management doesn't even offer a 401K plan. They are supposed to be starting one soon, but with NO company contribution whatsoever. :angry:

 

"...bets on to-mor-row never pay...
...you'll re-gret what you did to-day..

You can shove tomorrow where you want..."

(The character, 'The Fly,' from the new Weill/Brecht English language recording of the music from the play, HAPPY END)

--------------------

Seriously, my employment doesn't pay that well, but a company with which I was involved did an IPO in January, 2000. This helped a lot. I never became one of the 'super rich' but, having been basically homeless for a time in my life, I feel *extremely* fortunate.

I try to plan for tomorrow, but not at the expense of today.

The present, after all, is the only thing we can know with any degree of certainty.

Honestly, concerns over the uncertainty of the future (which, you'd think, would encourage me to invest more) are actually a bit of an impediment for me when it comes to investing.

 

<div class='quotetop'>QUOTE(Pinto Girl @ Jan 12 2007, 07:15 PM) [snapback]374912[/snapback]</div>

Maybe you're just not as afraid of not having material goods and other securities for the future as you've not had them in the past and have survived. You've experienced this and have landed on your feet and could do it again if pressed, probably. There's probably a strength in that. It's an admirable trait. I'm going to go add that to your fan club thread header now. Survivor.

Me, I've been saving all of my working adult life and it never seems to amount to much. We've been putting max in my husband's 401K and I still don't see how we're going to be able to retire in 10-20 years. He's 50, I'm 40 so this disparity will probably see me working while he's off having fun. I'll be happy for him as he's deserved of it.

 

I was on the road to being an old starving artist and luckily landed in the right place at the right time. make enough money now to save and enjoy myself. should have some money to retire and go back to being an artist.
there are jsut too many who are in the ME mode and have no concept of the future...... sad but true!

 

man i wish DH's employer would also contribute to his 401k... we only started last year this time but have been quite diligent and continued through the rough times.

me, i'm hoping when i graduate i get a good job so i can start socking away money as well.

i'm the kid of a baby boomer who was the classic "how not to live your life" example... so i got the negative reinforcement lesson indirectly.

 

I probably should not answer, since I am under the impression that 'baby-boomers' are the group born in the five years or so after WW II like my father, and I am a generation later.

I plan for retirement. I also plan for a carbon taxed future, for breakdown in SS, for stagflation or recession.

How, you might ask ?
First and foremost, I look after my health, and my family's health. It's a physician thang
Second, we live below my financial means. My family's annual expenses have stabilized years ago, and as our income has increased, it has been saved.
Third, we spend a *lot* of effort in educating our children. Both are good candidates for merit scholarships.
Fourth, I spend a fair amount of time looking after my investments. I am just about at a point where investment income in good years equals salary income.

 

Wife and I don't expect Social Security to be there by the time we retire(in our mid thirties). So we've been max stuffing our SEPIRA/401K/Keogh since we've qualified. I've also been setting aside monthly stock DRIP taxable investment contributions over the last decade. Our NW is certainly above average compared to those our in our age group. Hopefully it will be enough to retire.

 

I have been retired for three years, the three most valuable things I have are:

1. good friends
2. good health
3. enough money.

Enough money doesn't mean I get to live like Bill Gates, who would want to? It just means I get to do some of the things I want to do, like take a trip to Russia or India. It also means that I have a slightly higher standard of living than I did when I was working. But mostly it means I don't have to pinch pennies or worry about finances any more.

 

I just retired. My monthly pension is just about $300 less than my take home was at work- about $3200 / mo (that is for those who say they cannot afford to retire)

DW still works, but very iffy as the city is talking about outsourcing her job, maybe as early as 1/08.

I do part time work that gets me about $1000 a month (before self employment taxes- no "under the table money" for me)

Each of us has money in a Roth which we will continue to max out contributions to. We have a mutual fund we put $150/m into. DW has deferred comp since 1990 which she puts $100/mo into and sits now at 50K.

I am ready to get away from the vagaries of the stock market (my Roth lost money last year while my wifes went up pretty well) and am looking at Fixed Asset Annuities and Real Estate Investment Trusts (feel free to give any input on those if you have knowledge)

My debt- 50K student loan for daughter with a "promise" to eventually pay me back. About 5K left on the Prius, about 10K Home equity loan. (both should go away when I get my first pension check in April. (plus my severance pay from city)

Health insurance is through wifes work (so that could go in '08) but I want to open a MSA for small stuff and buy a catastrophic only insurance plan if that happens.

All in all, I am pleased with my financial picture and have actually given about 10K away last year and expect to be close to that again this year.

I have been given to abundently, far beyond what I deserve, and look for ways to help others.

 

<div class='quotetop'>QUOTE(Walker1 @ Jan 15 2007, 09:30 AM) [snapback]375801[/snapback]</div>

Most likely scenario? Major illness and no medical insurance.