Living on a " fixed " income while not going " broke " .

[Forty Niner]

So I ask those who have recently left the work force . Do you have regrets ? Are you managing to eek out a living ? Hardships to be considered ? Pros and Cons ? I'm at the point where I'm pulling the trigger on SS . I know Jeff and Mike retired recently and I realize today is different than 5-10 years ago . Chime in please .

My advise is to NOT trust financial managers. I retired in 2008, so that is not recent, but before I retired I tested the waters. I tried three different financial management organizations. I put $100,000 in each of their hands and measured the results after 1 year. They all made money off of me, but the results for me were unacceptable. Fees canceled out any gains at one place. One firm put my money into money market funds that had no gain in value over the year, but reported supposed dividends paid by the investments. Bottom line was I had to pay taxes on dividends that I never got. One firm actually lost money over the year.
Friends of mine have had their life savings totally drained by financial managers. Now that was sad.

So I decided I would not let anyone manage my money. My advice is to ignore those financial advisors that invite you to the rubber chicken dinners and wow you with their supposed successes. They lie lie lie. They will tell you that you will be able to live on less money because you don't have to drive to work and buy work clothes and on and on.
We drive more that we did when working. All of our expenses have gone up since retiring. But because of years of saving, we have managed to not spend any of our savings. We live strictly off annuity, social security, interest, and dividends. But our income is more that when we were working because of good investments in dividend paying stocks.

 

[Aaron_W]

Apparently it's best to not take an early retirement, then you can receive full benefits and even do some work on the side if you want
and they won't deduct from your SS
If you take an early retirement and still want to work they take a percentage of your SS
-Mark

This only applies until you reach your full retirement age (65-67 depending on when you were born) then you can earn as much as you want.

As of 2022 the earnings cap is $19,500 and will likely increase in 2023.

The other part is any earnings can increase your benefit if it is enough to offset a lower year likely something early in your career or perhaps during a layoff where your income decreased.


SSA benefits

 

[snoopdog]

If anyone would like to invest in cattle, I'll gladly share with you a portion of the profit, based on your percentage of investment.

 

[Winegrower]

If anyone would like to invest in cattle, I'll gladly share with you a portion of the profit, based on your percentage of investment.

Back many years ago when that was a big thing, a friend invested in a cattle deal, and was awarded so many units of the partnership. Later, the value declined. He asked why, and was told “it seems a lot of your units died.”

 

[Asm109]

I am 64 wife 62.. She retired a year ago, I retired in July. She has a military pension. 24 years, retired as a captain in the public health service.
We are drawing heavily on my 401k/ IRA to make things balance. In 3 years, I reach SS full retirement age and our mortgage is paid off.
At that point we should only need 1 or 2 % out of my IRA. Life is good now, itll be even better then.

 

[Alcap]

Everyone‘s story will be different along with their idea of retirement. I’ve worked with guys working crazy OT that spend so much that they couldn’t live on what I made while working ! I retired Oct. 2020 so 21 months 61 1/2 . Before I retired I figured I wanted to keep my meager standard of living , wife was pretty much a stay at home mom and enjoying life so no retirement income from her and she’s 4 years younger too . I wanted 100% of my take home pay in retirement or close knowing Some things like health care was going to be more coming off that amount . Looked at income being pension + taking money from my 401k and not taking SS so that would increase so my wife would get more if I die I took the 75% survivors spouse option on my pension which gave a lower amount to begin with then 75% of that . I let her decide so I started SS at 62 , When pension + SS got me close to my income goal with the 401k making up the rest . In the 2 years now the first year the money taken out of the 401k was used for house upgrades this year we didn’t need it so did a Roth IRA conversion. It gives us a nice option . As for your questions, I didn’t think working longer for the increase in both pension and SS was worth it being that the 401k making up for that and so far even with stock market ups and downs . For me , I’m enjoying retirement !

 

[CJ5Dave]

I retired 18 months ago. My wife retired the same day. Not touched 401k or SS yet. When we retired 401 k was earning $20 k a year. Then it lost $150,000 in a few months. We were breaking even on our retirement annuities and expenses. Now we are $1000 down each month. Meds, gasoline, food is up . Dramatic change since January. It’s better if you are debt free. Then I have necessities like tools and ammunition. Don’t mind fixed income., as long as it is fixed high enough. I was on a fixed income (salary) before I retired. I just got people allergies and needed to get out of public life. Was mad every day about something. Retirement really helped my people allergies.

 

[rabler]

I recommend that you use caution when/if picking an expert. Remember, they are in it to make money and that money comes from you. ...

This is the philosophy I took to heart when I retired in 2019. If someone was really that good with managing money, they'd be doing something more like running a mutual fund, not advising people. Or, more bluntly, they'd be managing their own money rather than getting paid to manage someone elses. And even those that run mutual funds, etc, don't do so hot. The advice of investing in some basic index funds has a lot of merit. I look at it as getting paid for my effort, even if that effort is managing my own money rather than paying someone else to do so.

A simple spreadsheet, starting with a retirement balance, is a great tool. Punch in some numbers for % interest earned, % inflation. Add in when you start drawing social security. You can pretty quickly make up a plan that shows how much you can spend a month and how old you'll be when you hit $0 (or straight social security only). The rest is just guessing what inflation and investment return (interest) you will earn. No one has a crystal ball for that, most advisors are just looking at history and taking some worse-case scenarios.

As someone else mentioned, I do find costs go down, especially after a couple of years of "settling in" to retirement. You don't put as many miles on a car unless you travel. You don't have work related expenses associated with eating out, clothes for work, etc.

What works against you is inflation and medical expenses.

Plan to stay active physically and mentally.

 

[Aaron_W]

Something else I think worth considering is will your income increase at some point or remain flat.

In my case I was able to retire at 50 because I worked as a firefighter and they like to get us out relatively young so we don't croak on the job. Heart attacks and strokes have a big uptick in line of duty deaths after 50.

Because we can go so much earlier than SS kicks in, my pension includes a supplement until I turn 62. The supplement is 50% of what SS pays at 62. At 62 the supplement goes away regardless of whether or not I start taking SS. My wife is almost 10 years younger than me.

At 62, if I start taking SS it will be double what we currently receive from the supplement so a nice boost. If I hold out until 66, an even bigger increase of we have any concerns over living on our fixed income. I have part time work I can increase if I find I need to bridge the gap for 62 to 66.

At 72 my wife will be 62 and becomes eligible for SS, so we add whatever she gets to our fixed income.


For us my pension works out to about 90% of the take home of what I received in a base check (gross is much less, but I get to keep most of my pay now, lower income bracket, no SS, no retirement taken out etc). We have a young child still with us so my wife was able to go back to full time when I retired and I'm still able to work part time / intermittent which between the two of us adding income actually has us living more comfortably than before I retired. We spent many years living on just my paycheck.

House is paid off, and our only debt is a car payment with about a year left on it. Property tax is one area that California is pretty good, so it can only rise a small amount each year. Oldest will hopefully be fully self sufficient before I'm 62 (hopefully very successful and he decides Dad needs a bigger shop with all the best tools ). Youngest will be 18 when I'm 64, so our expenses should also be declining as we go forward.

 

[jbobb1]

I've been 100% self-employed for 9 years and work is on track to fizzle out, so the wife and I will start receiving SS benefits starting Jan 2023. I'm 65 and the wife will be next May. We have a great financial advisor that has helped us make some very smart moves. Our future looks to be comfortable. I think my biggest problem is having something to keep me mentally healthy. I'm used to being on my feet, busy and many times under a lot of pressure, so time will tell. I just hope my wife won't kick me out!