Comments on: Ten Tough Retirement Questions http://www.getrichslowly.org/blog/2006/06/26/ten-tough-retirement-questions/ personal finance that makes cents Thu, 24 Jul 2008 01:52:44 +0000 http://wordpress.org/?v=2.5.1 By: Kira http://www.getrichslowly.org/blog/2006/06/26/ten-tough-retirement-questions/#comment-881 Kira Mon, 26 Jun 2006 14:11:01 +0000 http://www.getrichslowly.org/blog/2006/06/24/ten-tough-retirement-questions/#comment-881 What if I’m getting close to retirement and don’t have enough? “Keep working.” And defer your social security payments, if you can. I remember reading an account written by a person who worked in financial planning at a bank, whose most dreaded client was a person who walked in two weeks before retirement with $50k and no pension, and asked if they were all right. It's those sort of people (who apparently believe in Magic Retirement Fairies) that make me sad. They ask this question and somehow believe that there is something that no one else has heard about that will come along to help them. What if I’m getting close to retirement and don’t have enough?
“Keep working.” And defer your social security payments, if you can.

I remember reading an account written by a person who worked in financial planning at a bank, whose most dreaded client was a person who walked in two weeks before retirement with $50k and no pension, and asked if they were all right. It’s those sort of people (who apparently believe in Magic Retirement Fairies) that make me sad. They ask this question and somehow believe that there is something that no one else has heard about that will come along to help them.

]]> By: George http://www.getrichslowly.org/blog/2006/06/26/ten-tough-retirement-questions/#comment-856 George Sun, 25 Jun 2006 17:44:47 +0000 http://www.getrichslowly.org/blog/2006/06/24/ten-tough-retirement-questions/#comment-856 "The conventional wisdom is that you’ll typically need 70 percent to 85 percent of your working income. But there is no one-size-fits-all answer.” I really don't like the "70 percent to 85 percent" numbers; they create a huge misconception about retirement income. The best way to figure out what you'll need in retirement is to add up all of your yearly spending right now, subtract any expenses that won't (or at least shouldn't) exist in retirement, such as child care expenses, retirement account contributions, and mortgage payments, and add about 10% for some "wiggle room". This will result in a figure that is completely reflective of your financial situation, and will allow you to retire with the same standard of living that you have right now. The best step to take in retirement planning is to eliminate all debt (including mortgages). It is very difficult to retire while still making debt repayments, and it is much easier to retire if your debt retires before you do. “The conventional wisdom is that you’ll typically need 70 percent to 85 percent of your working income. But there is no one-size-fits-all answer.”

I really don’t like the “70 percent to 85 percent” numbers; they create a huge misconception about retirement income.

The best way to figure out what you’ll need in retirement is to add up all of your yearly spending right now, subtract any expenses that won’t (or at least shouldn’t) exist in retirement, such as child care expenses, retirement account contributions, and mortgage payments, and add about 10% for some “wiggle room”.

This will result in a figure that is completely reflective of your financial situation, and will allow you to retire with the same standard of living that you have right now.

The best step to take in retirement planning is to eliminate all debt (including mortgages). It is very difficult to retire while still making debt repayments, and it is much easier to retire if your debt retires before you do.

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