Incoherence on the Royalist Right
Flu and Other Shots for Elders

“Enough” Money in Retirement

Except at the most abstract, we have hardly ever discussed retirement income at Time Goes By. One reason is that the amount each person lives on varies so widely that it's hard to find common ground or consensus. Another is that in the years since the financial crash, many retirees and near-retirees have been forced to change their expectations and/or living standards.

Many of us lost a large percentage of our life savings in the market crash. Others who expected to work for a few more years have run in to the twin difficulties of layoffs and long-term unemployment coupled with age discrimination. And some, who intended to cash out the equity in their homes and downsize, have instead found themselves stuck with underwater mortgages.

These past few years have not been an easy time to figure out how to retire.

Daily, my email inbox fills up with pitches from PR people urging me to write stories about a wide variety products and services. I generally ignore them, particularly the many from financial services “experts” each of whom has a secret system (usually in a book they are flogging) to make you rich in your retirement.

In a short glance before hitting the Delete button, I've recently noticed that they have something in common: almost all claim that to maintain the standard of living you are accustomed to, you will need 80 to 90 percent of pre-retirement income.

I think that would be nice to have, but I cannot imagine that many people – especially the non-wealthy – come anywhere near that amount. Or, more importantly, that such a high percentage is necessary.

Obviously, low income workers would need nearly 100 percent of pre-retirement income (I doubt many achieve that). I'm also betting that few middle-income retirees have anything like 80-90 percent of their pre-retirement earnings.

In my case, I live on about 24 percent of the last salary I earned before retiring. Although I can't take extravagant (or much of any) vacations, I get by relatively easily. Most of what makes that possible is not having a mortgage on my home and owning my car and I know how lucky I am about that. Like many people, however, any unexpected disaster would be – well, a financial disaster.

So I'm wondering today how you, dear readers who are retired or approaching that milestone, are doing? Do you agree that 80-90 percent of your pre-retirement income is needed? How much is enough for you? What, if anything, have you given up or expect to give up in retirement? How has the financial crisis and great recession affected your retirement or plans for it?

(If you'd rather discuss this anonymously, do feel free to not use your real or usual name in the comments.)

At The Elder Storytelling Place today, Johna Ferguson: A Few Small Changes


Some government pensions have promised 100% of their working income and for awhile thought they could deliver it based on a rising stock market with 8% increase every year in investments to make it painless. That is now a dream gone wrong and it leaves states either laying off workers or raising taxes with the unions not responsive to change. Most corporations long ago quit promising anything and instead gave workers help building 401k or IRA plans which did what you said-- often dropped way below what they had hoped. I think the 80% is unrealistic if we hope to keep younger people working.

As for personally, I never cared about having a big amount of money in the elder years. I grew up in a home without a lot of money or luxuries and I think it taught me that things aren't that big a deal-- even though they can be fun. I have no desire for big trips or fancy restaurants which also helps with not minding living on less. Basically our big expense is the farm and livestock who barely paid their way during more lucrative years; so we've had to get harder about those kinds of decisions. We do not owe mortgages which as you said is a big help and are aiming ourselves to living (except for big expenses that come up unexpectedly-- like tractor breakdowns and that livestock issue) on SS period. So far so good on it because my husband made a good salary and he gets the top dollar for what is possible by waiting until he had to sign up for it. He does make money at consulting but I suggested he keep that all for his consulting expenses and the employee he has there. When that doesn't pay its expenses, he can use the part he's saved when it did, but he'll have to give it up. As on SS, you cannot afford anything but the basics which is what I expected retirement to be like. I think a whole group of people expected more from retirement and they may be the disappointed ones. I felt it'd be a time of slowing down and enjoying the simple things which does not mean no trips-- it means calculating how and when to take them and nothing luxurious or that far away.

My spouse & I are doing just fine for now on our retirement income which was litte affected by the recent financial debacles. However, there's a real possiblility that a medical crisis would do us in so I just remain as optimistic as possible. That said, it's important to note that in '03 we moved from the east coast to the midwest to be near family & that was a blessing since our cost of living plummeted. Also both of us grew up with depression moms who instilled practical & frugal ideas into us so neither of us feels deprived of much except perhaps traveling more to see granchildren. We've been lucky, & we know that. :)Dee

G is vastly younger than I and must work another seven years. He lost almost all his retirement savings and only now is it beginning to creep back up. His SS will be generous tho.

Me. After living a dissolute alternative lifestyle for fifty some years, I find my SS is 400 a month. We are well above ground on the house, and all the vehicles are paid for tho aging. But the condo is three stories tall and my hip is dying. If I didn't have what is now a small inheritance, I would have no income at all. So far the medical insurance is working well, and all those years of no money at all leaves me automatically pinching pennies.

When I moved to Germany to work and live nearly 30 years ago, women's retirement age was 60 and we were guaranteed 65-67% of our last job income as pensions. It was most often the case that everyone received decidedly more from year to year during their working career. Now the official retirement age is 67 (and that can still be increased), there is practically (mathematically) no possibility the government (tax payers) will be able to pay any guaranteed percentage. Having weathered various repercussions of the poor economic times, I am earning less now than I was 30 years ago. At 54-years-old, I wonder whether my generation might be the first that isn't able to retire. Even though these facts sound bleak when stated blatantly, I do believe there will be other factors and social changes that will occur that will make "retirement" a fulfilling and meaningful time in life.

Thanks for writing about this topic. It is interesting to read about how others are coping.

I'm 74 and still working full time as a bookkeeper out of my home office. Like many of my contemporaries, I worked in a field that had never even heard of "retirement plans"! And of course, as a woman, lived on much lower pay than any man (who was supposed to earn more because he was supporting the family! LOL!) However, I'm the one who spent most of my life raising three kids all alone.

I lived paycheck-to-paycheck and all I could think of was paying the rent, buying food, and hopefully putting my kids through college -- which I did, and am still paying off student loans. But my kids were very good about it and knew they had to work too, and they did ... part time all the way through college. They understand hard times, too, so are also surviving bad times now.

And like many of you, I grew up in the late '30s and '40s in a really poor family who had lived through the first Depression so knew how to scrimp and save a few pennies now and then when we were lucky. So this Depression is hardly new to many of us who remember how to deal with this.

I just pity the younger ones who've never had to face hard times really, and are being broken by the rough ride now.

Husband has a federal pension and I have a state pension and SS,giving us about 80% of salary years. But the very nice cushion that we had disappeared several years ago... hubbie had lots of GM stock. We live in a wealthy east coast area where housing prices have held. The sale of our 3 story home (sympathy Mage B) paid for us to get into a retirement complex. So far we are able to maintain our life-style. We've know we are lucky...but worry that my state will not be able to keep its promises, SS will never again be raised, to say nothing of the fed's future. However, let it be said, we don't buy new clothes; our cars are in good shape and paid for; our Federal health insurance is the best in the country; we have no household needs; our daily outgo is small, once we pay the monthly fees of our housing. And that is all being paid for by our former lowly very middle class gov't jobs that many people might scorn.

When the t.v. blew out, we didn't replace it. No more commercials to watch. Fewer reasons to want to spend money.
That's it in a nutshell.

I was raised during the Great Depression so doing without became a way of life for me.

My only income is Social Security ($1002. per month). That puts me in the low income category and I get help from the governement for my medication and a small amount for my utilities. I am also able to defer my property taxes until I die or until I sell the property. The taxes are placed as a lean against the property.

I do not owe anything and live within my means. By deferring my taxes I can buy a few things now and then and take a trip to visit my daughter once or twice a year.
So, for now, life is good and I have no complaints.

The future is problmatical, though. Should I become unable to care for myself I will not have enough money to pay for help in my home or for moving to an assisted living facility. I guess I will just have to stay healthy until I die.

Fortunately, or not so fortunately, I've never been rich so I'm used to living on a tight budget and manage pretty well. My then husband preferred that I didn't work and I was a stay-at-home mom most of my life. Friends joke that if I pick up a penny, Lincoln screams. That said, what I get for SS is really quite small and I have a hard time -- and it's getting worse. If it weren't for some assistance programs, I'd be dead. And if the idiots in Congress have their way, I will be.

My friends and I (mostly 60-70 year old bracket) discuss this a lot. We pretty much agree that first comes housing. For those of us who have that locked down (usually either paid off or ancient, small mortgages) and also health insurance, scraping by looks okay. Even small SS will do it.

But for those who haven't quite reached Medicare, the insurance burden is crushing. And even for some who had good employer provided health insurance, Medicare seems very expensive.

It helps that these are mostly city folks, so their transportation expenses are relatively small.

I'm too young to be a Depression baby, but my parents were young marrieds in 1932, so I learned to be frugal. My younger friends sometimes think I'm simply cheap, but I figure I don't need a lot of stuff.

Ronni--Quite frankly it makes my head hurt to contemplate trying to compare my 2010 income to 2003 (the year prior to retirement) income. It would require getting into investment income which I am not prepared to do.

On the basis of 2010 income from SS & retirement pay (which covers only 27 of the years that I worked) versus 2003 annual salary I get a figure of 46%.

More meaningful, to me, is that my net worth at the end of 2010 was still 97% of my net worth at the end of 2003. Since the stock market plummet occurred in that time span, I don't feel that I'm on the edge of catastrophe.

I don't know how my husband is doing as we have not mingled our finances.

I still find it a bit annoying that although my only income is $830 a month SS I do not qualify for medicaid, food stamps etc. because I have $15,000 from my reverse mortgage. The taxes and insurance on the house are around $5,000 so that's all the money is used for. Could not sell house for what it would cost to pay back mortgage and can't walk away from it as rents around here are high.
I wish I had known how to game the system as so many people have...spend all your money on expensive vacations, new car every year,eat out a lot, latest phone etc. and then when its gone and you retire get subsidized housing, free healthcare, free cell phone, food stamps and whatever else is available.

Bitter?? You bet I am.

P.S. I guess I didn't give those who do not know me much to go on. I am a 73-year-old retired aerostructures engineer. My husband and I split joint expenses. Our house, because I refused to get a loan when we built in 1999, is paid for. We each buy our own cars (and neither of us has taken a loan on a car since the first one in 1959).
My rule throughout my economic life was: 1/3 for taxes, 1/3 for investments/savings, and 1/3 to live on. I am happy, happy, happy that this was the case.
We live simply. Some of our furniture is still Montgomery Wards hand-me-downs from my grandmother, we don't travel, we don't dine out, and I don't spend much on clothing (frequenting thrift stores during my infrequent shopping tours). I feel that we are fortunate to enjoy life without feeling the need to keep up with the Joneses!

I've been having this same discussion with another blogger who managed to retire in her 40s and now writes about retirement. She cited the research that uses the formula of needing 25 to 33 times one's current expenses to retire. Calculating expenses is subjective. But the best case she has come up with is to need $1.25 million for a worry-free retirement.

Of course, that would put you in the 1 percent, not the 99 percent.

So we discussed a prior post of hers that talked about looking at what you have, then figuring out how to live on that, which is of course what the vast majority of us have to do all our lives.

What I've been able to glean from the comments today and others I've seen on other sites is that people are most willing to forgo vacations, dining out and television. But if you already don't do those things, the choices get far more difficult in that you have to be more creative. I'm still struggling with that one.

Medical insurance takes a huge bite of my small teacher's pension and hubby's disability check, but the house is paid for. Cars are racking up hundreds of thousands of miles & at least one must be replaced. Living out in the woods is peaceful for the brain, but it's $10 for a RT trip to town, which is often daily and then some. We're trying to escape the snow and winter in AZ or some such, but rentals are way too high. If we could get a used 20-22 foot RV, I'd feel like a queen. Can anyone out there use a 35-ft converted school bus, 1966 Gillig with another half million miles in her, for trade?! If we can travel, even regionally, we feel rich, but find groceries and gas are making us in the red more and more often. NOT the retirement I'd envisioned!! But we still have time to volunteer and make music, so that's a blessing.

The "advice" of the retirement blogger you cite is pretty much what prompted this post today. Who do all these retirement "experts" think they're talking to with their million-dollar savings and 90 percent of income?

Also, they do not seem to understand how much money people lost in the 2008 crash - from past discussions here, that would be anywhere from about 30 to 90 percent of life savings. If you were retired or near retirement when that happened, you will never, with very few lucky exceptions, recover that money and that changes retirement dramatically.

I think you're quite right that most of us work backwards in figuring out retirement. What do we have and how can we make it work?

For me (and I'm sure many others), it's not that I'm "willing" to forgo vacations and other things I enjoy - it's that I have no choice.

But I'm not sitting around lamenting that. It's not much different than wanting to own a Ferrari when I was young. Yeah, right - nice idea, honey, but get real.

And that's okay.

Last year, the nonpartisan Employee Benefit Research Institute (EBRI) found that "almost two-thirds (64 percent) of Americans in the two lowest preretirement income levels will be running short after 10 years in retirement."

The study went on to say that "after 20 years of retirement, almost a third (29 percent) of those in the next-to-highest income level will run short of money, as will more than 1 in 10 (13 per-cent) of those in the highest-income level."

No surprise that the study found that rich people were at the lowest risk of running short of money – "but many in the highest income category still face significant risks of not being able to pay basic expenses and uninsured medical expenses for the remainder of their lives."

Another EBRI study I read said that even if people worked well into their 80s, they had no guarantees of retirement solvency. That's when I decided to examine what is more important to me: working a few more years to boost my Social Security a few more dollars, or retire rather soon to battle my work and stress-related health problems, a move that might mean lower health-care costs later?

I will be 62 in a few months. I have decent savings, though of course not enough for every little thing. But since Social Security pays everyone her basic pot of money, whether it's smaller checks over a longer period of time or bigger checks over a shorter period of time, I'm pretty certain I won't work past 63. That extra year, however, will prove a real challenge.

In short (hah), I'm ready to play it as it lays. Your blogs, Ronni, have helped me to muster my courage to do so.

I am fortunate with universal health care here in Canada, a huge burden off my shoulders and I totally sympathize with my USian friends, I can't imagine having that pressure, it is unconscionable in a civilized society.
That said, I was self-employed for years and years, and had employees but more times than I'd care to think about, clients stiffed me to the tune of thousands of dollars and the courts didn't help, they just ignored the payment orders and no one could enforce. I still had to pay my employees. That left me with debt which I am still paying off.
7 years ago I decided to slowly move to Newfoundland and bought a house for a song there and then 3 years ago I sold my Toronto house in peak market.
I am living mortgage free and drive a 7 year old car.
A small inheritance bought me some much needed improvements and I have small savings which pay for the odd trip. Oh yeah and I still work. Can't imagine being able to live (financially) without it but I guess I could. Extremely frugally. My CPP (Canada Pension Plan) and OAS (Old Age Security) together yields $1,500/mo. And I get free prescriptions which would run me, if I had to pay, $600/mo.
I know I am very well off compared to most. I would be better off if living with a partner as most of my friends are.
Being single, and having been a solo parent to two children, has a huge cost factor in retirement years. I could never save.

I live on 40% of my pre-retirement salary, and quite nicely since everything I own is paid for and my wants and needs are pretty simple. I thought I would be sitting pretty until the market swallowed my personal retirement savings, so thank god for a pension. I know many, many retired folks who are still working in order to get by. I really feel guilty when an 80+ year old woman who is crippled with osteoporosis bags my groceries and offers to carry them to my car for me.

At 52 and single, I worry about this all the time. I'm sure I mentioned this before but for me paying off my mortgage is my #1 priority, hopefully in the next 3-4 years.

I'm lucky that my employer has been contributing 5% of my income for the past almost 20 years into a TIAA-CREF retirement account. I've also been contributing about $100 a month into the same account (although I did lose close to $20,000 in 2008).

If my calculations are correct, I should be getting around $2,400 a month with SS and my retirement account. I also have a little less than $100,000 inheritance in the bank thanks to the frugality of my mother. With a paid off house, I should be able to live quite well on that.

I, too, no longer travel and have always lived beneath my means. Any extra money is always put back into my old tiny bungalow. I think my only vice is rescuing stray cats!! Those vet bills do add up!

Retired at 62 in 2008. Husband is retired but drives a school bus for insurance benefits. And he pays for my insurance on his policy. Sometimes he even has a bit of his check left over afterwards. We have always lived below our means( that is, always after we paid off credit cards and car about a decade after we married). We both are offspring of depression-era survivors and had some financial truths implnted in our brains. Our home has been paid off for several decades; we saved to put our 2 kids through college, so no student loans. Our vehicle is paid for and when I retired we decided to experiment with having one only.

We have yet to see what the economy and state politicians do does to my state employees retirement. What limits travel now is my April 22, 2011 stroke. Same with dining out. Health issues have resulted in strict dietary limitations. It's hard to find places that can equal or surpass how well my husband serves up tasty meals that abide by the new rules. Groceries are costing more, both from price hikes and from buying more fresh fruits and veggies.

Fortunately we enjoy simple, and mainly inexpensive pleasures.

wow--these are so thought-provoking...My husband is 68 and I am 64---both still working. We are terrified to retire---are holding out for 66 and 70 to get more SS $. Just got our quarterly reports from Vanguard and Fidelity---we lost nearly $30,000.00 this quarter! Makes me sick---my husband is considering collecting SS at 70 and continuing to work full time. Our only trips are to see our kids/grandkids. Fortunately, as we live in FL. they come to us mostly.

Somehow I never bought into that security thing. I always worked as an independent contractor, I had NO perks except that I set my own hours and had time for my creative pursuits (writing, which earned me very little money but much satisfaction) Because moderate amounts of money came to me from a divorce, my mother's estate, and a small bequest from a wealthy part time employer, I was able to contribute to an IRA and have some money on the side and to travel frugally but with great enjoyment. I had no health insurance from the time of my divorce at 35 until I reach Medicare age -- and I did not need it [thank heavens!] I paid for annual checkups, dental, optical and it cost less than insurance would have. Bless my parents for healthy genes!!

In retirement my social security is not much, basically rent (after all the deductions). I have safe savings that earn enough to let me live without feeling pinched (but I am frugal by nature) but I cannot travel as I wish I could -- happily I have great memories. Will good health continue? I'll live as healthily as possible without making it a fetish and I will enjoy the life I have. I come from a lower income family, I saw relatives live happily with very little, {our was not an ambitious or acquisitive family} I never bought into most of the great American "way of life" crap. I do not compare what I have with what others have in material terms. I have always had the independence to do the creative work I wanted and that has been more important than anything else.

My children are getting by but have little to spare, I do not expect financial help from them and they do not expect financial help from me. My children and grandchildren are good, loving and kind people who also do not put material possessions above expression of their talents.

If my life becomes more restricted in the future than it is now, I will deal with it. My most basic needs are music and book - after modest shelter and basic food.

All I can add to this discussion is this.

I have enough money to last the rest of my life.....Unless I want to buy something.

D. and I have nothing like the salaries we earned but are comfortable in retirement. We each get a State pension plus a public employee's one each, which we contributed to. Here in Spain there are reciprocal arrangments, which entitle us to free health care and prescriptions.

We lead a simple life, rarely eating out but cook with home-grown or local produce. Our biggest expense is electricity and the internet. But, we are eligible every year for the Winter Fuel Allowance of £250 from the UK Government.

We fix a budget every year in view of the yo-yoing euro exchange, have an emergency fund in case the well pump needs replacing and minimal savings. We drive a 10 year old car and as we spend much time around the house, don't spend much on clothes - certainly not fancy ones. A couple of odd balls slobbing around really!

We both remember the "age of austerity" and rationing in England in the 50s, when parents and grandparents were on the bread line. Happily, we are not in the position they were in then.

I count my blessings every day. In 1978 out of frustration of no where jobs I returned to the Navy. Retired from there in 94 and skills they gave me worked as a technical instrucotor in telecom until the melt down. Only picked up a couple of contracts and then when I turned 62 I filled for early SS. My wife will teach for two more years and then she will retire. We figure our income may be around 60% of what we earned as full time workers. We are doing some upkeep to our house so it will be ready to sell in a year or two so we can downsize.

I'm single and have been totally dependent on myself to get to this point in my life. I was fortunate to be able to retire from state employment in 2003 at the age of 54. I actually netted about the same amount I was earning while working full-time given there were less deductions applied to the retirement check. I have had a part-time job for the past 5 or so years and have more monthly income than when I worked for the state. I have a very modest amount in a 401-K (around $100,000) as a cushion and three months emergency funds set aside. I don't plan to file for SS until I am 66 (in four years) and will continue to work until then and, perhaps longer. I've estimated that my SS will be about $2000 which is what I earn working part-time so I should not notice too much of a change. I do have a mortgage but I recently refinanced to a shorter term. I drive a leased car and will continue to do so as long as I am working. All things considered I guess I'm in fairly good shape for the near future but I still worry about what may eventually happen with SS and the economy long-term.

Computers make me crazy sometimes! I was just about to post my comment and the dang thing turned itself off to "reconfigure" with no warning whatsoever. I'm not going to start over, so that's that.

When we were both working we didn't use 80-90 percent of our income.

It's hard to compare straight income to investment income, but we do have more coming in than going out with investments, one SS, one monthly check from a corporate buy-out (maybe comparable to a pension check?), and some part-time jobs. We also inherited some money last year which we invested.

The buy-out included health insurance which paid most of the bills for my husband's heart attack two-years ago and continues to cover most of the medicines he will take for the rest of his life (we pay about 20-percent).

We each work part-time jobs that we enjoy (most of the time), but are not dependent on the income to live. My formerly biggest writing client is using almost only staff writers, so I have lost some freelance income from them.

The financial crises has affected us very little. Our net worth went down, but has slowly crept back up and is almost recovered.

Anticipating retirement we paid off our mortgage in 1997 and we always PIF for our cars and keep them for 13-16 years.

Your comment "the amount each person lives on varies so widely that it's hard to find common ground or consensus" certainly applies to us as we happen to be very cell phones, extra TV channels, fancy dinners out, manicures, bottled water, etc. We don't travel much as my husband was "traveled out" by the time he retired and I don't enjoy it.

Actually, my mother claimed that I had the first nickel I ever earned and that I squeezed that nickel until the buffalo ran.

Please don't think that we are spending our retirement watching the grass grow (and cutting it). There are always enjoyable activities in our area that range from free to a few dollars. There is so much to do that sometimes we just have to choose.

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Your comment could not be posted. Error type:
Your comment has been posted. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.


Post a comment

Your Information

(Name and email address are required. Email address will not be displayed with the comment.)