4 ms·

1) $200K isn't a very good retirement fund. 2) I'm afraid 7% above and beyond inflation is pretty optimistic going forward

by nly 2y ago

ryandrake 2y ago
Exactly. I think people don't realize just how much they're going to need in order to live an arbitrarily long retirement. Retiring with only $200K is pretty much a retirement into severe poverty. $200K at a 3% draw-down is $6,000 a year. If you want to eat into your principal, do a 4% draw-down and you can live on a whopping $8,000 a year. And that's not today's dollars, that's the value of the dollar in the future. US Poverty level for a couple retiring today is $20K/yr. You need $500K saved up to get that kind of income in retirement. And next year, inflation means you need even more.
- hollerith 2y ago
  Almost every American citizen of retirement age (currently 67) will receive a monthly social security check. Even if you never paid into the system (because for example you never worked a day in your life) you would get $943 for an individual and $1,415 for a couple.
  - ryandrake 2y ago
    Yea, I disregarded Social Security on purpose since there is so much political risk around it, especially the closer we get to the financial shit hitting the fan. When you consider it though, yes, it adds a non-trivial baseline amount to these calculations.
    - hollerith 2y ago
      I disagree that the risk is any higher than the failure of whatever asset your retirement savings are in.
      - ryandrake 2y ago
        I'd agree with that in normal times, but we're not in normal times anymore. We just had a presidential candidate promising he'll "fix it" so people don't have to vote anymore[1]. Who knows what things are going to look like by the time I retire. Literally anything could happen to anything run by the government, and I don't think anyone can take SS for granted anymore. 1: https://www.youtube.com/watch?v=FOGTCKQklPQ https://www.youtube.com/watch?v=FOGTCKQklPQ
        hollerith 2y ago
        >we're not in normal times anymore Many voices have been saying that SS can't be relied on since about 1981.
        Izkata 2y ago
        That framing is severely misleading. He's talking to people who normally wouldn't bother to vote, telling them if they actually did it just this once he'd fix the problems the current administration caused that they're facing (one of his standard talking points) so they can go back to business as usual.
  - dbjacobs 2y ago
    That's simply not true. If you did not pay into Social Security for at least 40 quarter, the only way you can get retirement Social Security is through marriage (spouse benefit or survivor benefit). You can qualify for both benefits even if you're divorced if you were married at least 10 years. I'm ignoring disability benefits for the moment. For those who qualify for Social Security the minimum benefit for 2024 is $50.90/mo (10 yrs of work) and $1,066.50 for 30 years of work [1]. [1] - https://www.ssa.gov/OACT/ProgData/tableForm.html https://www.ssa.gov/OACT/ProgData/tableForm.html
    - deleted 2y ago
      [deleted]
    - hollerith 2y ago
      Most of my neighbors are considered disabled by the Social Security Administration and they all get at least $943 a month from the Administration -- even the ones who never had a paying job -- and when they get old enough (66 years and a few month in one recent case) they no longer have to prove that they are still disabled to continue to receive the income. For what you write to be true, the Administration would have to have a rule that if you apply for disability income when you are of working age, you get enough to survive for life even if you paid nothing into the system (through FICA), but if you apply past the retirement age and you didn't pay into the system, you get basically nothing. I suppose that could be true (and I'm not going to search the web to try to find out) but it seems unlikely. If you have a very strong work ethic, but have piss-poor ability to get paid a decent income and never applied for Social Security disability income, you've almost certainly worked some and consequently paid some amount into the system. When you get to retirement age, my strong guess (although I don't have personal knowledge) is that the SSI program kicks in such that the combination of your month Social Security retirement check and the SSI check adds up to $943 if you are single (plus $20 because the first $20 per month of non-SSI income is not counted) just like the millions of chronic schizophrenics that went on SSI in their 20s who never paid any FICA. But if someone replies saying that they personally know an American with no other sources of income and no savings who has applied, but gets less than $943 a month from Social Security, I'll believe them. ADDED. If you apply for disability or retirement benefits, the Administration automatically assesses whether you qualify for SSI benefits: one application suffices for both programs.
linotype 2y ago
It’s better than zero, and I wasn’t talking about the future. Don’t shift the goalposts.

1) $200K isn't a very good retirement fund. 2) I'm afraid 7% above and beyond inflation is pretty optimistic going forward

by nly 2y ago

1) $200K isn't a very good retirement fund. 2) I'm afraid 7% above and beyond inflation is pretty optimistic going forward

ryandrake 2y ago

Exactly. I think people don't realize just how much they're going to need in order to live an arbitrarily long retirement. Retiring with only $200K is pretty much a retirement into severe poverty. $200K at a 3% draw-down is $6,000 a year. If you want to eat into your principal, do a 4% draw-down and you can live on a whopping $8,000 a year. And that's not today's dollars, that's the value of the dollar in the future. US Poverty level for a couple retiring today is $20K/yr. You need $500K saved up to get that kind of income in retirement. And next year, inflation means you need even more.

hollerith 2y ago
Almost every American citizen of retirement age (currently 67) will receive a monthly social security check. Even if you never paid into the system (because for example you never worked a day in your life) you would get $943 for an individual and $1,415 for a couple.
- ryandrake 2y ago
  Yea, I disregarded Social Security on purpose since there is so much political risk around it, especially the closer we get to the financial shit hitting the fan. When you consider it though, yes, it adds a non-trivial baseline amount to these calculations.
  - hollerith 2y ago
    I disagree that the risk is any higher than the failure of whatever asset your retirement savings are in.
    - ryandrake 2y ago
      I'd agree with that in normal times, but we're not in normal times anymore. We just had a presidential candidate promising he'll "fix it" so people don't have to vote anymore[1]. Who knows what things are going to look like by the time I retire. Literally anything could happen to anything run by the government, and I don't think anyone can take SS for granted anymore. 1: https://www.youtube.com/watch?v=FOGTCKQklPQ https://www.youtube.com/watch?v=FOGTCKQklPQ
      - hollerith 2y ago
        >we're not in normal times anymore Many voices have been saying that SS can't be relied on since about 1981.
      - Izkata 2y ago
        That framing is severely misleading. He's talking to people who normally wouldn't bother to vote, telling them if they actually did it just this once he'd fix the problems the current administration caused that they're facing (one of his standard talking points) so they can go back to business as usual.
- dbjacobs 2y ago
  That's simply not true. If you did not pay into Social Security for at least 40 quarter, the only way you can get retirement Social Security is through marriage (spouse benefit or survivor benefit). You can qualify for both benefits even if you're divorced if you were married at least 10 years. I'm ignoring disability benefits for the moment. For those who qualify for Social Security the minimum benefit for 2024 is $50.90/mo (10 yrs of work) and $1,066.50 for 30 years of work [1]. [1] - https://www.ssa.gov/OACT/ProgData/tableForm.html https://www.ssa.gov/OACT/ProgData/tableForm.html
  - deleted 2y ago
    [deleted]
  - hollerith 2y ago
    Most of my neighbors are considered disabled by the Social Security Administration and they all get at least $943 a month from the Administration -- even the ones who never had a paying job -- and when they get old enough (66 years and a few month in one recent case) they no longer have to prove that they are still disabled to continue to receive the income. For what you write to be true, the Administration would have to have a rule that if you apply for disability income when you are of working age, you get enough to survive for life even if you paid nothing into the system (through FICA), but if you apply past the retirement age and you didn't pay into the system, you get basically nothing. I suppose that could be true (and I'm not going to search the web to try to find out) but it seems unlikely. If you have a very strong work ethic, but have piss-poor ability to get paid a decent income and never applied for Social Security disability income, you've almost certainly worked some and consequently paid some amount into the system. When you get to retirement age, my strong guess (although I don't have personal knowledge) is that the SSI program kicks in such that the combination of your month Social Security retirement check and the SSI check adds up to $943 if you are single (plus $20 because the first $20 per month of non-SSI income is not counted) just like the millions of chronic schizophrenics that went on SSI in their 20s who never paid any FICA. But if someone replies saying that they personally know an American with no other sources of income and no savings who has applied, but gets less than $943 a month from Social Security, I'll believe them. ADDED. If you apply for disability or retirement benefits, the Administration automatically assesses whether you qualify for SSI benefits: one application suffices for both programs.

linotype 2y ago

It’s better than zero, and I wasn’t talking about the future. Don’t shift the goalposts.