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Author: Subject: When to retire?
bajaguy
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[*] posted on 9-23-2016 at 06:46 AM


Depends on where your pension is from. It's called a "setback"

Quote: Originally posted by BajaMama  
We are same age (57) and also pondering when to retire. One thing to keep in mind regarding SS and a pension - I believe, although I could be wrong, that receiving a pension reduces your social security. For some really stupid reason that is incomprehensible to me, the government sees it as "double dipping." (but hey, didn't you work for it?). Also, depending on how much you draw from your 401K, some of your SS benefits could be taxable (up to 85%).

I am a retired math teacher - I get over involved with numbers...
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[*] posted on 9-23-2016 at 07:11 AM


"...depending on how much you draw from your 401K, some of your SS benefits could be taxable (up to 85%)"
There is a calculator on an IRS website to see how much of your ss would be taxed if you're deriving income from other sources. You can use the calculator to get an idea of what your bite might be after starting required minimum distributions - an important retirement consideration. Whoever you have holding your 401k funds should be able to help you out with firm numbers.
And if you have enough qualifying SS earning years, you can take both pension and ss.
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[*] posted on 9-23-2016 at 07:16 AM



I don't think SS was meant to be a retirement program when introduced. How times have changed.




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[*] posted on 9-23-2016 at 08:20 AM


The question of when to retire is an easy one to answer.

The trick is to determine accurately the amount of money that will be required to retire successfully and whether or not you will have that amount of money.

The weird thing about all that is that the amount of money required is so very different from one person to another. I am always amazed to find out the amount of money that other people choose to spend to sustain their lives. From person to person, that required amount of money varies by multiples - amazing.

If you are planning to retire in Baja, you should plan on being debt free and buying and owning your own home their...and here is where the differences between people begins. Some Americans believe that they must live in an all American enclave and surround themselves primarily with Americans. To do that, they will buy a fancy shmancy house or condo in a resort like, non-authentic Mexican environment...and that cost will start at $200,000 and skyrocket from there. But, if you want to live in an authentic and real Mexican environment, that could cost you as little as $50,000 USD to $120,000 USD. My place in La Paz is in that price range: two bedroom house in a 9,300 sq ft lot with high brick walls all the way around with attractive rustic landscaping. Property taxes about $130 USD annually.

My house is 4 miles from downtown La Paz, 2 miles from Walmart, Home Depot, Liverpool department store and malls, big grocery stores, restaurants, Marinas, Movie theaters, and the big new hospital, plus, I can see the ocean from in front of my house. In La Paz, and elsewhere in Baja, there is low cost real estate all over the place.

Now, there are three categories of expenses to deal with: living expenses, healthcare costs, and travel plus recreation costs.

The living cost in my very realistic budget is $550 USD per month for one person, a total of $850 USD per month for a husband and wife. That cost includes food (all home cooked), property taxes, home repairs and maintenance, auto repairs and maintenance, auto insurance, clothing, internet and TV, cell phone, haircuts, all utilities (including the use of air conditioning), fideicomiso annual fee, and annual Visa charges.

What you will spend on medical and prescriptions is unique to each person and can vary substantially. You need to know what those cost will be.

What you will spend on travel and recreation is the real "variable" in the retirement equation...and that depends entirely on your discretion, not necessity. I include eating at restaurants in this category as eating at restaurants is not at all a necessity. If you have decided that you do not like to cook, or you have decided that you don't want to learn how to cook for yourself, even though all your life eating is what you have done 3 times a day, well, that's just plain discretionary.

If you have children and other family in the USA, you will surely want to visit them. That will cost you and that amount of travel is expensive and will vary from person to person by leaps an bounds. You need to know what you will need to spend for that.

If you choose to eat at restaurants and/or frequent cantinas a lot, that will add considerably to monthly expenditures. If you choose to travel within Mexico and stay at the more expensive hotels, that will balloon your expenditures. If you choose expensive hobbies, that can mushroom cloud your expenditures. If you choose to own a gas guzzling large vehicle, that will double or triple your monthly gasoline bill. But overall, it won't be that significant because you won't be traveling very far on a daily basis. La Paz, for example, is only about 7 miles from one end to the other. Just be clear and honest with yourself, and be aware of what is really a necessity rather than what is really a discretionary choice. Many people don't really know what the difference is between the two.

How early you can retire has a lot to do with what you feel are absolute necessities. If you know how to live frugally, as I do, you can eat really well at every single meal, be comfortable and warm in winter and cool in summer, be secure and safe, surround yourself with a beautiful environment, have all the conveniences, and have all your true necessities provided.

What will make the difference is what you need to spend on medical and prescriptions, what you choose to spend on travel and recreation, and whether or not you choose to be reasonably frugal. Outside of these costs, your necessities should be around $550 for one person and $850 for two if you do all your own cooking and are frugal within reason.

[Edited on 9-23-2016 by MitchMan]

[Edited on 9-23-2016 by MitchMan]
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JoeJustJoe
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[*] posted on 9-23-2016 at 08:28 AM


Quote: Originally posted by BajaMama  
We are same age (57) and also pondering when to retire. One thing to keep in mind regarding SS and a pension - I believe, although I could be wrong, that receiving a pension reduces your social security. For some really stupid reason that is incomprehensible to me, the government sees it as "double dipping." (but hey, didn't you work for it?). Also, depending on how much you draw from your 401K, some of your SS benefits could be taxable (up to 85%).

I am a retired math teacher - I get over involved with numbers...


A pension doesn't normally reduce your social security, nor does interest, capital gains, annuities, or other types of retirement income.

However, if you work for a government agency or employer that doesn't withhold Social Security from your paycheck, than any pension you get from that work can reduce your SS benefits.

It's called the Windfall Elimination Provision.( WEP)

We non government workers who paid into social security all our lives don't want government workers, like teachers, and especially cops double dipping and getting windfall unearned profits, so the WEP makes sense, although things could get complicated when second jobs are considered, and I understand the WEP provision isn't always fair to all workers, and Congress is looking to change the WEP.
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[*] posted on 9-23-2016 at 09:41 AM


And what about those pesky government workers who qualified for their SS benefits before or after their government service???.....Why should the SS Administration "withhold" their money or provide a reduced benefit and why shouldn't they be entitled to full benefits??
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[*] posted on 9-23-2016 at 10:35 AM


Quote: Originally posted by bajaguy  
And what about those pesky government workers who qualified for their SS benefits before or after their government service???.....Why should the SS Administration "withhold" their money or provide a reduced benefit and why shouldn't they be entitled to full benefits??

BG:
It's worse than that:
SWMBO worked for 10 years in private thus earing substaintial SS benes. She quit and became a teacher under Cal-Strs. Not only is her SS benefit reduced to less than $300 per month (way less than she earned) under double-dipping rules which do not apply here; but she does not get survivor benefits should I die before her, a very likely outcome. I EARNED those benes for me and family but SS will not give her them. We know this to be true because one of her co-workers recently buried her husband and has been told by SS bugger off. Her survivor SS would have been higher than her CalStrs but she is out.
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[*] posted on 9-23-2016 at 10:46 AM


Retirement has been set up so that you retire when you are no longer productive at your job. Unfortunate by then you're incapable of fun either. Retire as soon as you can on the income you feel comfortable with.
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[*] posted on 9-23-2016 at 10:59 AM


Quote: Originally posted by Skipjack Joe  
Retirement has been set up so that you retire when you are no longer productive at your job. Unfortunate by then you're incapable of fun either. Retire as soon as you can on the income you feel comfortable with.


Alternatively, choose a career that's fun so you enjoy your life in the now. Who said fun only comes after retiring?
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[*] posted on 9-23-2016 at 11:08 AM


The wife and I live in Nopolo in a large home, on the golf course and the ocean accros the boulevard and we can easily get by on $ 1500 a month if we just stay around Loreto and have no travel or high medical expenses.
We maintain US health insurance with an evacuation policy with SKYMED.
Live couldn't be better.




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[*] posted on 9-23-2016 at 11:12 AM


Quote: Originally posted by mtgoat666  
Quote: Originally posted by Skipjack Joe  
Retirement has been set up so that you retire when you are no longer productive at your job. Unfortunate by then you're incapable of fun either. Retire as soon as you can on the income you feel comfortable with.


Alternatively, choose a career that's fun so you enjoy your life in the now. Who said fun only comes after retiring?


True Goat.
I have been most of my life in the booze business and enjoyed pretty much every minute of it.
However it didn't hold me back from retiring at 55 and I have enjoyed that life as well.




I think my photographic memory ran out of film


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[*] posted on 9-23-2016 at 11:45 AM


Nobody has mentioned transportation costs. I'm 66, retired for 6 years, and planning on buying at least two more cars and I like new cars, but I may buy my first used cars from here on out.

No need to explain that new cars are an expensive way to go, I know.

Also expect unexpected expensive car repairs in addition to the usual maintenance.

And then there was the $9000 kitchen remodel last year............happy wife, happy life

It's the recurring non-recurring, unexpected expensive costs that you need to plan for. :o

[Edited on 9-23-2016 by SFandH]
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[*] posted on 9-23-2016 at 12:04 PM


Besides figuring out what you need to retire comfortably you also need to put a price on what the extra years of freedom are worth. I retired two years early and figure it cost me over 100k in lost wages and retirement benefits. Worth every darn penny!
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[*] posted on 9-23-2016 at 12:38 PM


Quote: Originally posted by bajaguy  
And what about those pesky government workers who qualified for their SS benefits before or after their government service???.....Why should the SS Administration "withhold" their money or provide a reduced benefit and why shouldn't they be entitled to full benefits??


You have to understanding that Social Security, is a great democrat basically socialist plan that was provided to serve as a safety net when we workers in America get old.

Social security also uses a progressive formula that delivers a higher replacement income to lower income earners, and a lower replacement rate for higher income earners, which pretty much protects us all from eating Alpo dog food in the golden years.

The problem or fear, was you were also getting these now highly paid union teachers, cops, firemen, and other government workers not paying into the Social security system, and then retiring on a fat government pension, or other workers retirement programs, and then if these workers who had previous regular jobs would double-dip in the regular social security program. These double-dippers would make out like bandits because social security is skewed favorably towards the low income earners.

In other words don't ask me to feel sorry for government workers drawing income from multiple pensions, and from a fat social security check, that is skewed favorable to them, because they look like low income earners, because they didn't contribute to Social Security for 40 years like the rest of us.

Today, most average workers do not have a pension, like most government workers, nor do they fully invest in their 401K program at work, and now most non government employees are forced to live off mostly their social security check, and other meager incomes or under funded personal retirement plans. ( damn you Ronald Reagan)

But like I said, in my earlier, there are some cases where Windfall Elimination Provision does hurt some workers, and I understand there is support from both the democrats, and republicans to change WEP, and the formula to make it more fair and proportional to all.




[Edited on 9-23-2016 by JoeJustJoe]
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[*] posted on 9-23-2016 at 01:32 PM


Quote: Originally posted by philodog  
Besides figuring out what you need to retire comfortably you also need to put a price on what the extra years of freedom are worth. I retired two years early and figure it cost me over 100k in lost wages and retirement benefits. Worth every darn penny!


You hit the nail on the head. As a veteran non-management IT drone, I'm probably at my peak earning potential right now; but why tempt Fate, who already has me on speed dial? Provided that my employer doesn't sacrifice me to the layoff gods, I should be able to retire early enough to enjoy my salad days. No need to get greedy.




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[*] posted on 9-23-2016 at 01:50 PM


Paul.......see if you can make a deal your employer can't refuse and possibly buy you out with benefits

Quote: Originally posted by pauldavidmena  
Quote: Originally posted by philodog  
Besides figuring out what you need to retire comfortably you also need to put a price on what the extra years of freedom are worth. I retired two years early and figure it cost me over 100k in lost wages and retirement benefits. Worth every darn penny!


You hit the nail on the head. As a veteran non-management IT drone, I'm probably at my peak earning potential right now; but why tempt Fate, who already has me on speed dial? Provided that my employer doesn't sacrifice me to the layoff gods, I should be able to retire early enough to enjoy my salad days. No need to get greedy.
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[*] posted on 9-23-2016 at 02:17 PM


Yeah the peak earning power thing is a dirty trick.
I made the most money ever in the last few years. But lots of OT.
I have been home sick for a week so have had lots of time to think about this. I am back to work but found out yesterday I have pneumonia... again.
4 of the days were a near coma interupted by coughing fits.
Needed a nebulizer yesterday cause my asthma is in overdrive now.
Sure I like my work.
I am an Aircraft Airworthiness Inspector for the Boeing Company. Top scale.
Stressful, complicated and physically difficult.
I'm bathed in carcinogens constantly. I now need a resparator just to survive in the factory.
I wear double hearing protection, a bump cap, and safety glasses.
It's always hot in there due to giant "hothouses" that we use to accelerate cure time on all the varies paints, sealant, epoxy, and who know what the heck else is in that place.
But I will work today and collapse tomorrow... again.
This is now a litterally a game of survival for me now.
But a top scale Boeing employee makes about 100000/year.
And a real go getter pulls about 150000.
So that is very hard to walk away from.
When I was back in Long Beach our sick joke was that when we saw the abulance inside the building someone would proclaim "Looks like someone retired"!

[Edited on 9-23-2016 by fishbuck]




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[*] posted on 9-23-2016 at 02:23 PM


Mike... run away, run away!!!



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[*] posted on 9-23-2016 at 02:52 PM


Quote: Originally posted by mtgoat666  
Quote: Originally posted by Skipjack Joe  
Retirement has been set up so that you retire when you are no longer productive at your job. Unfortunate by then you're incapable of fun either. Retire as soon as you can on the income you feel comfortable with.


Alternatively, choose a career that's fun so you enjoy your life in the now. Who said fun only comes after retiring?


Oh, I enjoyed my work. Never said I didn't. But retirement gives you much more freedom. You can do this today or that tomorrow, and nothing the following day. You are a free man to live and choose as you wish. Money is no longer a goal either.
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[*] posted on 9-23-2016 at 11:04 PM


Good discussion- it's been on my mind recently.

As for "double dipping"- that's describing my situation: I worked enough and paid enough into SS to earn a modest check, but I've also worked as a teacher- and so my SS will be reduced as a result of earning a pension. Not sure how those calculations are made by the SSA.

And I'm still not sure where all those hi-paying teaching jobs are- because of budget cuts the last 10 years, I've taught mostly part time. My teacher's pension reflects that, and won't be a whole lot of money when I choose to take it.

FInally- I come from a family with pretty good longevity (parents lived into their 80s, grandmother made it to 97). Add the fact we all are living longer than imagined back in the 30's when this system was devised, and the problem becomes clear: how do I, and others like me, avoid outliving my savings?

I'm pulling out the calculator, excel spreadsheets and abacus....




Quote: Originally posted by bajaguy  
And what about those pesky government workers who qualified for their SS benefits before or after their government service???.....Why should the SS Administration "withhold" their money or provide a reduced benefit and why shouldn't they be entitled to full benefits??




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