You don't have to read this... wrote it 8 years ago on another forum... was when we were still snowbirding. Didn't want it to go to waste...
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Having kept some notes on our retirement, I am thinking to share them here as an overview of the ways my bride and I managed to stay out of the working world since 1989. We live simply, with no travel, and apart from any expensive social life, though our life in retirement communities FL and IL, is very social.
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Everyone has different ideas on what retirement should be. One size does not fit all.
I have some thoughts and experiences to share, not as recommendations, but just as food for thought.
First, we've been retired for almost 23 years, so a lot of our experience will not be the same as yours.
With no pension (assets from pension plan were used for starting a small business... no net gain or loss) retirement started out as "give it a try"... if it doesn't work out, go back to work... Retirement prompted by a cancer scare.
Age 53 to age 65 was tough from the health insurance angle... Even then, before medicare kicked in @ age 65, we paid about $11,000/yr... BTW... medicare is not free... we still pay about $8,000/yr (2 persons) for medicare and supplement, and another thousand for basic Pharma.
Social Security... Important to check with SS for your expected benefits. Just a phone call or visit to SS office. Has to do with how much you put in... Husband and wife... Higher income sets base SS for couple... If the smaller payout is less than 1/2 of the larger, that spouse gets 1/2. If the second income is over 1/2 of the larger, then that amount is paid. In my case, even though my wife worked, her calculated SS would have been less than 1/2, so she gets 1/2 of my payment. (Even if she had never worked, she would still get 1/2 of my SS. It's just the way the rules are written.)
In my case, I had always maxed the pay in. We took SS at age 62 so it was a reduced amount. We began receiving checks in 1999, and currently receive (2 of us)(with cumulative COLA's) a total of nearly $23,000/yr. $15K for me, $7500 for my bride. That was the max at that time... it's higher now of course.
At the time we decided to retire, we had a detailed plan... a budget... income and outgo... and looking back 22 years, despite huge variances from our initial plan, we are almost exactly on the budget.
There are hundreds of financial planners on line where you put in your estimates of assets, and return and inflation, and come up with the amount you need to retire. In our case it doesn't work... All of the planners make the assumption that you will want to maintain your asset capital until you die... In our case, had we followed their plan, we NEVER would have retired.
We just decided to die at age 85... dead broke. Made our planning much easier. Personal decision of course, but if you plan to spend down capital assets, it makes planning easier.
Our plan is extremely simple... On the spending side, we have three different budgets that we can adjust as circumstances warrant. Best case... Nominal... and Austerity.
On the Asset/Nest Egg side, We boil our assets down into three categories.
1. Fixed assets... house, auto, and other valuable non cash items... real property, jewelry, . We do not count household goods... (experience tells us that this is not realistic)
2. Non Income producing assets... bank accounts, cash, cash value life insurance policies.
3. Income producing assets... stocks, bonds, annuity.
All of these items are kept on a spread sheet and periodically updated. It's easy to come up with a total value... and then to average the income from the total...
To calculate where we stand in our retirement plan, we add
a. Social security amount.
b. Amount of interest earned on income producing assets.
c. ... and add the Total Assets divided by the number of years between now and age 85.
That establishes how much we can spend, which we then adjust to our best/nominal/austerity budget.
Sounds funky, but it works,and it takes about 2 minutes to tell if we're on budget or not.
The second part of this budgeting thing, is that we've been blessed by not having any debt. All of this makes for very simple accounting. One more thing... we don't try to calculate for inflation. In fact, it has not been a problem over the past 20 years. This may have to change.
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since then, added about 20 more chapters...
