Credit Card Center Advertiser Disclosure

Reply
Moderator
Posts: 17,443
Registered: ‎12-30-2011
0 Kudos

Re: The Savings Playground for June, 2017 -- summer break!


iced wrote:

Revelate wrote:

iced wrote:

- Other random comments: My stress is over whether or not I'll ever be able to retire, not the next 6 months. When I sit down and analyze it, the amount I need for retirement is one that, even if my balance sheet grows by $120,000/year every year for the next 30 years, I still won't reach. As it is today, it's only growing by about half that number. That's discouraging.

 

I don't know how so many people retire at all, let alone early.


Apologies for not really playing as my savings account is fixed at basically $750 with DCU; however, how are you figuring needing 3.6M in cash assets for retirement?  What are you expecting to be spending on?  Asset appreciation doesn't magically become zero at retirement, just withdrawals instead of deposits slowing top line growth.

 

Me I'll probably find a bridge club or similar, read some books, and continue trying to get some modicum of exercise when I can.  Just not expecting to have expensive hobbies but I have a pretty boring life haha.


My retirement number is actually right around $4.625 million. We're currently between $900,000 to $1,000,000 in cash/retirement/investment savings, meaning we're about $3.6 million short of the goal, hence the 120k * 30 gap.

 

The short answer is that that's $185,000 * 25 (~75% of annual income multiplied by 25 on the plan of a 4% draw down annually). If the market continues to grow 4% and/or interest rates get back above 4%, we can live in perpetuity off the interest, but that's a risky assumption to make. Instead, I assume the following:

 

- Stock growth will be 0% - if it's a bear market for 20 years, I'm still boned, but it also shelters me from making assumptions about stock market growth thay may not happen. That is, better to assume 0 and be pleasantly surprised when it's 6-7% than plan on 6-7% and have it be 0, coming up short.

 

- Social security dies a horrible death before 2047, meaning all my contributions today are sucked up by the burgeoning mass of boomers retiring. It goes bankrupt and I get nothing.

 

- Medicare also dies a horrible death, meaning I'm paying 100% of my insurance costs out of pocket.

 

- I am no longer contributing to my retirement and am drawing off of it instead, which largely cancels out the Medicare expenses above. That is, I expect my health care costs to go up by about the amount I save each month for retirement. Today, that number is 24% of gross. However, this is further muddied by the fact I'm hoarding a HSA account and plan to maximize my contributions to it every year until retirement (my employer also contributes to it) while never touching it, so I may well have a reserve of at least $100,000 (more if markets do well) to offset some health care costs. 

 

I get that I'm planning a bit on the conservative side, but again - I'd rather be ready and not need than need and not be ready.


Ah gotcha, I'm expecting that there will still be something like muni bonds available somewhere around 2.5-3% interest tax free (hey California at least) and if I had 3m ever sitting around in one spot I'd just go do that and live off the interest, or at least go find some new job where money wasn't my primary goal (school and teaching credential or doctorate and beaker researcher or similar).

 

That said I currently live on roungly 25% of my current income and that includes my mortgage and HOA, so I can't possibly see needing 75% of it retirement wise.... I've never understood that particular retirement goal, I suspect it was set at some income level and doesn't account for incomes above (or below) that point.

Starting Score: EQ 5 561, TU 98 567, EX 2 599 (12/30/11)
Current Score: EQ 5 771, TU 4 758, EX 2 758, EQ 8 795, TU 8 762, EX 8 786 (7/28/17)
Goal Score:    EQ 5 750, TU 4 750, EX 2 750, EQ 8 800, TU 8 Blah, EX 8 800 (01/01/18)


Take the myFICO Fitness Challenge
Established Contributor
Posts: 523
Registered: ‎07-08-2016

Re: The Savings Playground for June, 2017 -- summer break!


Revelate wrote:

Ah gotcha, I'm expecting that there will still be something like muni bonds available somewhere around 2.5-3% interest tax free (hey California at least) and if I had 3m ever sitting around in one spot I'd just go do that and live off the interest, or at least go find some new job where money wasn't my primary goal (school and teaching credential or doctorate and beaker researcher or similar).

That said I currently live on roungly 25% of my current income and that includes my mortgage and HOA, so I can't possibly see needing 75% of it retirement wise.... I've never understood that particular retirement goal, I suspect it was set at some income level and doesn't account for incomes above (or below) that point.

 

I think you're mostly right about the 75% thing. It makes sense for many people because they tend to use about 75% of their income to live, such as everyone who lives paycheck to paycheck - they likely pay about 25% in taxes and everything else goes to living. The assumption with many is that by then, a home will be paid off and so livnig is a little cheaper, but now you're also paying taxes out of that 75% so it all works out.

 

However, I don't like to look at it as 'how much do I need to live on' when planning. It should be 'how much do I need to enjoy life' instead. I could maintain my standard of living today off $35,000-$40,000 per year, but that would cut out my travel and dining out, two things I enjoy a lot. That also doesn't factor in expenses I'll have when I'm older that I don't have today, like health insurance. I pay $32/month for health insurance today because of my employer, but that could easily be thousands of dollars a month by itself once I'm 70 and no longer employed.

 

Your comment about taking a job in retiremnet is also interesting. - I sometimes thought about doing that even in retirement just to be eligible to continue dropping money into a Roth.

Established Contributor
Posts: 586
Registered: ‎06-04-2015

Re: The Savings Playground for June, 2017 -- summer break!

Came across some $$ in various places this week and decided to make it a practice of putting this miscellaneous cash into savings.

 

Came up with $213.98 in CC cash rewards, $$ paid back from friends, and random small checks received in the mail . . straight into the savings account!

 

 

Ch 7 Discharge May 2015: EQ 588/TU 552/EX 570
Sept 2017: EQ 679/TU 660/EX 668 w/ 24% CC util reporting
Discover/Target/NFCU CLOC/NFCU Cash Rewards/PenFed Power Cash Rewards - $45k total revolving
Valued Contributor
Posts: 2,016
Registered: ‎01-23-2013
0 Kudos

Re: The Savings Playground for June, 2017 -- summer break!


SteelerNYC wrote:

Came across some $$ in various places this week and decided to make it a practice of putting this miscellaneous cash into savings.

 

Came up with $213.98 in CC cash rewards, $$ paid back from friends, and random small checks received in the mail . . straight into the savings account!

 

 


That's a great habit, Steeler, and a painless way to add to savings. Congrats.

Valued Contributor
Posts: 2,016
Registered: ‎01-23-2013
0 Kudos

Re: The Savings Playground for June, 2017 -- summer break!

Bump. Hey, where are all those fellow savers who were so interested in the Savings Playground when it was just a concept?

 

Building an emergency savings fund is an excellent idea for peace of mind and for avoiding living on credit cards (and ruining credit) during rough times. I think the playground is an excellent idea for building emergency savings funds. I want to hear other people's ideas and share success stories and talk strategies.

Frequent Contributor
Posts: 361
Registered: ‎05-06-2017
0 Kudos

Re: The Savings Playground for June, 2017 -- summer break!

Well due to some unexpected utilization right before cut date, I dipped into my rainy day fund (not to be confused with my oh crap let's build an ark fund). Nothing major should be replinished this week. Just caught in a spot. I am a believer that that is what it is there for, right? 

 

Starting Scores 03/17/2017 EQ 491 TU 495 EX465 Currently 09/01/2017 EQ 569 TU 564 EX 551

$300 Open Sky/ $2K NFCU CashRewards/$5.1K NFCU Flagship Rewards
Established Contributor
Posts: 523
Registered: ‎07-08-2016

Re: The Savings Playground for June, 2017 -- summer break!


Gunnar419 wrote:

Bump. Hey, where are all those fellow savers who were so interested in the Savings Playground when it was just a concept?

 

Building an emergency savings fund is an excellent idea for peace of mind and for avoiding living on credit cards (and ruining credit) during rough times. I think the playground is an excellent idea for building emergency savings funds. I want to hear other people's ideas and share success stories and talk strategies.


I'll throw out some strategy and ideas to get this conversation going (hopefully).

 

My strategy about saving is to make it interesting or fun. You see people on the credit card forum collecting cards and counting limits and they seem to make a bit of a game or competition out of it. I took that type of energy and channeled it toward saving money and watching accounts grow instead. Why collect credit limits when I can collect accounts themselves? 

 

I approached saving the same way I approach dieting, and the same discipline is needed. Start with small lifestyle changes you don't even notice - go out one less day a month, cut Showtime and Stars off your cable bill, stuff like that. Do it for a few months until it's normal and natural, then cut a little more. Those $20/paycheck drops turn into $50 and then $100 and so on.

 

People think they can't do it because they don't realize just how much above their means they're really living. Ten years ago, I made $60k a year and had monthly expenses of about $3,000. Now I make three times that amount and have monthly expenses of less than $2,500 with a goal to have monthly expenses under $2,000 by 2020 (barring my wife convincing me to move into a bigger home). I also lived in a cheaper part of the country 10 years ago, so the distinction is rather striking.

Regular Contributor
Posts: 233
Registered: ‎05-06-2008

Re: The Savings Playground for June, 2017 -- summer break!

[ Edited ]

Gunnar419 wrote:

Bump. Hey, where are all those fellow savers who were so interested in the Savings Playground when it was just a concept?

 

Building an emergency savings fund is an excellent idea for peace of mind and for avoiding living on credit cards (and ruining credit) during rough times. I think the playground is an excellent idea for building emergency savings funds. I want to hear other people's ideas and share success stories and talk strategies.


I was one of the interested and I'm still here!  Not much for me to contribute at this time as I have nothing going on.  Hopefully I will receive a bonus check on Friday.  Right now, I'm not sure of the amount because it is based on time of service/salary/team pot.  Since I've been with the company less than a year, I haven't figured out how to calculate the formula yet.  LOL!

 

I'll update later on what I do to save money!

 

Valued Contributor
Posts: 2,016
Registered: ‎01-23-2013
0 Kudos

Re: The Savings Playground for June, 2017 -- summer break!

Great to see you all here! I look forward to hearing all about strategies, bonuses and other surprise opportunities to save, and of course FUN.

Frequent Contributor
Posts: 366
Registered: ‎12-26-2014

Re: The Savings Playground for June, 2017 -- summer break!

 

My strategy is boring and painless:  automatic deductions, deposits, and sweeps for retirement and miscellaneous savings.  I live comfortably off the remainder.  If I find my checking account has built a good balance, I'll transfer a big chunk to my investment account.  I check on my portfolio twice a year (check-in and tax time) and that's when I'll plan to move money around if I have to.  The rest of the time I don't think about it. 

 

I do the same with my credit cards.  I review whether the line-up meets my needs every 4 years or so.  If not, I'll close some or get new ones.  The rest of the time I don't think about it. 

 

Forums posts are not provided or commissioned by FICO. Forums posts have not been reviewed, approved or otherwise endorsed by FICO. It is not FICO's responsibility to ensure all posts and/or questions are answered.

† Advertiser Disclosure: The listings that appear on myFICO are from companies from which myFICO receives compensation, which may impact how and where products appear on myFICO (including, for example, the order in which they appear). myFICO does not review or include all companies or all available products.
‡ Credit cards for FICO Score ranges: The score ranges are guidelines based on internal myFICO analysis of actual applicant approvals, and having a FICO Score in a particular range does not guarantee you will be approved for credit cards recommended in that range. These ranges were not provided by any card issuer.

* For complete information, see the terms and conditions on the credit card issuer’s website. Once you click apply for this card, you will be directed to the issuer’s website where you may review the terms and conditions of the card before applying. While myFICO always strives to present the most accurate information, we show a summary to help you choose a product, not the full legal terms - and before applying you should understand the full terms of products as stated by the issuer itself.

Copyright ©2001-2015 Fair Isaac Corporation. All rights reserved.   | Terms of Use | Privacy Policy | Sitemap

IMPORTANT INFORMATION: All FICO® Score products made available on myFICO.com include a FICO® Score 8, along with additional FICO® Score versions. Your lender or insurer may use a different FICO® Score than the versions you receive from myFICO, or another type of credit score altogether. Learn more

FICO, myFICO, Score Watch, The score lenders use, and The Score That Matters are trademarks or registered trademarks of Fair Isaac Corporation. Equifax Credit Report is a trademark of Equifax, Inc. and its affiliated companies. Many factors affect your FICO Score and the interest rates you may receive. Fair Isaac is not a credit repair organization as defined under federal or state law, including the Credit Repair Organizations Act. Fair Isaac does not provide "credit repair" services or advice or assistance regarding "rebuilding" or "improving" your credit record, credit history or credit rating. FTC's website on credit.