- Listen to NPR's Marketplace money's weekly podcast. This program gets the basics right and is easily digested. If you love it and want more there is a daily Marketplace podcast as well. All are free and very useful.
A lot of Financial programs are fairly unrealistic about what your goals should be. "You need about 1.2 million to retire in this environment" NOT! I find this to be discouraging for most people causing them to give up on that unrealistic goal. Marketplace Money is more realistic on this front.
The daily Marketplace program gives more Stock market news and what affects it. OK I will stop shilling for MPR now. I also like The New York Times Weekend business. They get a lot more in depth but are always spot on.
Which Financial podcasts do you like? Let us all know in the comments section below.
Hey Brandon
ReplyDeleteI love MPR too. And this was a good reminder to get back into purposefully listening to marketplace instead of just happening upon it now and then.
So - what is your guess on how much we need to retire then? Granted, we all have different commitments and lifestyles and families and such.
But if it's not 1.2, what is more realistic?
I got the above email from a friend yesterday.
ReplyDeleteYou are right in stating that the number would be different for each unique situation. While I can't pull a number out of the air for you. I can help you calculate it yourself.
Start by adding up your current annual expenses. Mortgage (Unless it will it be paid off by retirement?), property taxes, utilities, food, clothes, etc...add 10-20% for inflation.
Subtract your expected annual social security payments from this number. This should be on your annual SSL statement. That will give you a bare minimum for your annual expenses.
Multiply this number by 25. This gives you your whole nest egg goal assuming a 4% withdraw rate.
Here are some more detailed retirement calculators from reputable vendors.
http://cgi.money.cnn.com/tools/retirementplanner/retirementplanner.jsp
http://personal.fidelity.com/planning/retirement/quick_check.shtml
Let's say you run the numbers and you come up with 1.2 million. There are some ways to manage your expectations of retirement.
#1 Downsize your home. Moving from a house to an apartment will not only save you money on Mortgage, Property taxes, and some utilities. You will also save time and money on maintenance yard-work, and cleaning. Moving somewhere that you do not need a car will also save you a ton.
#2 Stay on the job longer. Retiring at 65 will get you covered on Medicare without an interruption in coverage assuming you have coverage at your job. Retiring at 70.5 maximizes your SSL benefits and continues to build your nest egg over that period. 70.5 is the age you must start taking distributions from your traditional IRA. You can work longer if you wish.
#3 Relocate to a cheaper location. There are many places you can move to and maintain your lifestyle while paying less. This requires a lot of homework but is doable. Check Money magazines annual best places to live.
#4 Become a 1 car family. In retirement it's much easier to share. Also Zipcar has some options that may be helpful but this dose require you living in their service area. i.e. in the city.
http://www.zipcar.com
#5 Not or less funding of your children's education. This is an emotionally charged idea. If you are in danger of not being able to fund your retirement then fully funding their education is reckless. When you do retire and money is too tight you will have to become a burden on your children. Asking them for money or worse, Living with them. I believe education is the key to future prosperity for all of us. But do not mortgage your retirement to do it. There are lots of financial options open to students. They also have a much greater time horizon for which to pay back any loans.
#6 Working during retirement. You can work as much as you like at full retirement age or older and not affect your SSL payments. If you take SSL payments early you have some limitations. See the following link.
http://www.ssa.gov/retire2/whileworking2.htm
This is just the low hanging fruit. Keep an eye on my blog for some frugality tips.
She responds
ReplyDeleteWe're already doing #1 on your list. Met w/the realtor and home stager today as a matter of fact. Will sell after Jan 1st and then move to a smaller house, hopefully in the same general area. The idea is to use the proceeds to retire almost all debt and also hopefully pay at least a 50% chunk down on the new home. And then have much smaller mortgage payments.