Retirement goal changed due to inflation?

[WyoDoug]

Inflation puts a huge dent on retirement plans. I draw retirement from four different sources and should be able to live quite comfortably. However, inflation has knocked spending power way down and I had to do some odd jobs to get extra things I wanted like new hunting gear. I make enough to pay for the basic living expenses but discretionary spending is way down mainly because of budget. Plus I found out that retirement income is taxed at a much higher rate than earned income is. Explain that to me. LOL

 

[hank4elk]

The millionaire I know pays over $300k/year in federal income taxes and has paid over a million to the IRS in the last 3 years.

I've paid an average of 30% my whole life regardless of job or income.
Made $275k as a cabinetmaker in 1985. Like making a million a year now, easy. 33% that year and I was audited. They owed me $2500 in the end.
I pay 30% now on retirement income, double taxed.

 

[Nick87]

Made $275k as a cabinetmaker

Seriously?

 

[Trial153]

My wife and actually pushed our retirement goals up after the last few years. Life is good

 

[VikingsGuy]

Plus I found out that retirement income is taxed at a much higher rate than earned income is. Explain that to me. LOL

I don’t see how that is the case. Under US income tax regime, ordinary income is the highest taxed.

 

[hank4elk]

seriously,
my own shop ,custom homes,furniture quality, morticed joints, and pain in the ass huge houses.

 

[Nick87]

seriously,
my own shop ,custom homes,furniture quality, morticed joints, and pain in the ass huge houses.

That's impressive.

 

[Sagebrush1]

Coming from two Gen-Xers (48 and 52 this year) We’ve been pretty lucky (educations, good jobs, no major medical bills), and a little smart (kept the house small, lived within our means, put into 401Ks), we’ve never felt comfortable with our view of retirement as we saw it from whatever year we were looking from.

It seems like in order to retire at 68, and put a kid through college, we would have to both work full-time and live like misers for 40 years. It’s freaking depressing - sacrifice your whole youth and your time with family to finally start living at 68?

I mean my god- to have enough cash to retire in 2037? To live another 15 years? That’s millions in today’s money. None of the models I saw allowed both that and an enjoyable life.

And my son….I’m sunk when I think about his generation. We’re heading down a dark road in this country when it comes to how our financial systems are governed and manipulated.

 

[LopeHunter]

My wife and actually pushed our retirement goals up after the last few years. Life is good

Same for us. We are right at 60. As terrible as the pandemic has been for so many of us and personally had a light bout with Covid and not being able to travel to my father's funeral, the past two years have been some of our best financially. I enjoy working so if can find a gig where can dip in and out so can travel 2 to 3 weeks every quarter then I will work beyond retiring from full-time work.

 

[hank4elk]

That's impressive.

Yeah well, 30, BMW for weekends ,12 employees and my GF took off with the business partner and all the dough in the bank.
Life in the fast lane.

I have 4 employees now. Rio & me ,myself & I.

 

[Mallardsx2]

One of the biggest mistakes I see is people not taking full advantage of their 401K's and other retirement vehicles early on in life. We cant rewind the hands of time but if you have some extra cash there is always some catch-up contributions.

Everyone is so hell bent on paying off their house. lol Why? Doesn't make any sense to me unless you were locked in at a high interest rate. Ya, so you own your house. I'm sure that has a feel good to it but at what cost to your retirement thats right in front of you??

If a person waited until they were in their 40's to contribute max to a 401K they should be ok but they are going to have to put MAX in to acheive a decent retirement. This is of course what your opinion of "decent" is.

This is a fun little tool that may help you realize your goals:

Retirement Withdrawal Calculator |- MyCalculators.com

Retirement Withdrawal Calculator - If you're already retired, or close to retirement, calculate how much you can withdraw from your savings to last through retirement. Free, fast and easy to use online!

www.mycalculators.com

Max/year Vs $5000/ year Example Just rough figures.

Basically if you didn't start until you were 40 years old you should consider putting in the maximum amount if you can afford it.





If you were 60 you would be surprised to learn what you could withdraw for 20 years....You dont need 5 million to retire...once again it all depends on your needs and priorities.

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[Redman]

Hey now, most of us are thousandaires!

 

[Cammy]

Can't believe I started this thread back in June of 2021 because of the craziness that was happening with the next generation of the family business. The craziness has been off and on since and I finally have had enough. I resigned last week but gave them until the end of March. Will join the ranks of the retired in 4 weeks.

 

[Deleted member 18333]

Can't believe I started this thread back in June of 2021 because of the craziness that was happening with the next generation of the family business. The craziness has been off and on since and I finally have had enough. I resigned last week but gave them until the end of March. Will join the ranks of the retired in 4 weeks.

Congrats!

 

[X13]

If I play my cards right, I'll "retire" in 17 years at 48 y.o. from the game warden business. Then I'll do something else for work until I can draw from my pension at 55 y.o. and I'll also have my 457(b) plan to draw from.

Best case, I live frugally and have enough until I kick the bucket. Worst case I'll be a part time Walmart greeter until I'm too old to hand out the smiley face stickers

 

[Sagebrush1]

If I play my cards right, I'll "retire" in 17 years at 48 y.o. from the game warden business. Then I'll do something else for work until I can draw from my pension at 55 y.o. and I'll also have my 457(b) plan to draw from.

Best case, I live frugally and have enough until I kick the bucket. Worst case I'll be a part time Walmart greeter until I'm too old to hand out the smiley face stickers

That’s a good plan!

We made some major changes three years ago (read: sold the house and GTFO of San Diego) so we could both work part time indefinitely. We started our own business- she practices and I do books and billing, etc.

The way things are going we will be able to work 20-25 hours per week as long as we need - that’s starting @ 48 & 52 years old.

It’s an unconventional, semi-retirement, and we will have to “work” longer, but we really like it so I’m super hopeful. I absolutely love being my own boss.

 

[Deleted member 28227]

One of the biggest mistakes I see is people not taking full advantage of their 401K's and other retirement vehicles early on in life. We cant rewind the hands of time but if you have some extra cash there is always some catch-up contributions.

Everyone is so hell bent on paying off their house. lol Why? Doesn't make any sense to me unless you were locked in at a high interest rate. Ya, so you own your house. I'm sure that has a feel good to it but at what cost to your retirement thats right in front of you??

If a person waited until they were in their 40's to contribute max to a 401K they should be ok but they are going to have to put MAX in to acheive a decent retirement. This is of course what your opinion of "decent" is.

This is a fun little tool that may help you realize your goals:

Retirement Withdrawal Calculator |- MyCalculators.com

Retirement Withdrawal Calculator - If you're already retired, or close to retirement, calculate how much you can withdraw from your savings to last through retirement. Free, fast and easy to use online!

www.mycalculators.com

Max/year Vs $5000/ year Example Just rough figures.

Basically if you didn't start until you were 40 years old you should consider putting in the maximum amount if you can afford it.


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If you were 60 you would be surprised to learn what you could withdraw for 20 years....You dont need 5 million to retire...once again it all depends on your needs and priorities.

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All that being said the 2022 max for a couple both working 401k + IRA is 53k.

The median US household income is $67k.

I think realistically, even if you are living very frugally you need to be making close to… 150k+ to be saving that much.

$150k is more than 75-80% of Americans make.

 

[gouch]

When I was working, I just kinda went with the flow, not worrying too much about retirement because I enjoyed working. I was putting money away in my TSP (government employee version of a 401K) mostly for tax purposes, but I figured I might be able to retire at 65. Then all of a sudden George Bush decided to give everyone some free money. He called it a tax rebate. I thought "A Republican President giving away free money?" The economic shit is about to hit the fan. So, I took all my money out of the stock market. The stock market crashed big time but when it started to look like it was going to rebound, I got back into the stock market. I made a killing. Then work started getting less enjoyable so I started looking into retiring earlier. 62 looked good so I pulled the trigger. Then with unexpected medical expenses and the house starting to fall apart, it didn't look as good. I had to do a cash out refi on the house but did managed to lower my monthly payments. Then on Sept. 8, 2020 The Alameda fire came through and destroyed everything I had. With insurance and some wheeling and dealing I managed to build a brand new house that shouldn't need any major repairs for quite some time. I paid off that new mortgage that I would otherwise have been saddled with the rest of my life and got all brand new junk to replace all the old junk I had. I also ended up with about $18,000 more in the bank than I had before the refinance.

So, My advice for anyone wanting to retire is to wait for disasters, then capitalize on them. I know this isn't your traditional financial advice but Hey, It has worked for me.

 

[RobG]

Congrats on your retirement.

One thing, at this time there are no “safe”bonds that I know of that are expected to beat inflation. Last time I looked even inflation protected securities (TIPs) were paying less than inflation all the way to 30 years. They are quite a bit below inflation in the short term.

I actually upped my equity allocation and told myself not to look at it for ten years because odds are it was a better investment than bonds over that period.

I wish I could get some money out to pay off my debt, but I’ll settle for just not putting anything else in until rates are better than debt interest.

 

[Mallardsx2]

All that being said the 2022 max for a couple both working 401k + IRA is 53k.

The median US household income is $67k.

I think realistically, even if you are living very frugally you need to be making close to… 150k+ to be saving that much.

$150k is more than 75-80% of Americans make.

I agree.