How does any of this effect me personally, Daily? or even change my life?
Glad you asked -
If we plan our lives and we do, based upon false or misled assumptions (thing CPI, value of a debased dollar) they we probably will not get o our goal. now if you just hope to get somewhere You will.
Lets' think about a basic retirement plan- If you watch TV or listen to the talking head gurus you should save 10-15% of your income (or max out) into a 401(k) or IRA and balance with a Roth too and when you get to retirement you can live on 4-5% on you r nest egg with our out living it Sounds great.
So if I want to live on a 50k income in retirement I need to have 20-25 times this ( 1-1.25 Million) saved just before retirement right?
Well lets dig a little deeper
This whole plan that EVERYBODY supports or uses has some assumptions (what did your Mama tell you about Assume?)
1 - You can choose how much you retire on (the 50k) How do you know what your lifestyle and need will be in 20, 30,40 years form now? Or what the Government will mandate? Or what you will choose to do or health care you want to do?
2 What if you don't get the magical rate of return the market NEVER promises? (Doesn't the SEC make them say Past performance is no indication of future performance?)
3 Inflation is constant or the CPI is accurate, this is a farce, CPI is only accurate if you do not use or use food or fuel, and buy exactly the goods an services they choose . (which changes every 10 years, has your life changed in the last 10 years?)
4 The poor Trinity Study that states that if you only with draw 4% you will not eat into your nest egg, This study Assumes that you are fully invested is the same market and risk factor while in retirement that you were invested in to get to retirement, you never have a 1987 or .com collapse or 2008-2009 type years in retirement (correction or crash) [that seems to be every 10 years] , - If you do that the whole things is hogwash. so how much can I withdraw safely?
You can only tell at the end of each year, not 20 years in advance.
So don't be retired for more that 10 years and begin right after a correction a big one, boy that sounds exciting.
Wait... What if we Assume inflation is 3% (total hog wash) they your current 75k income will need to be over 150K in 30 years, to have the same lifestyle and if the "assumption" of 80% income in retirement is used then you still will need 120k to have a similar lifestyle. What if inflation is Higher? How would we know?
Can yo see Why "just a little " inflation is BAD!
Don't forget this -
you can NOT assist parents or children and YOU MUST have your mortgage paid off - Whhoa,. what about mt tax bite on the mortgage - so sorry.
All of this income you saved for is now fully taxable as Ordinary income ie the same as you pay now. There is a rumor you pay less tax while retired- ONLY IF you make much less income and to change brackets.
Uncle Sam gets a bite at that apple one way or another, that's why they are called "Qualified Plans"; Qualified by Uncle Sam and the IRS.
Wait if tax rates go up or brackets move or there are brand spankin' new taxes what will that mean?
All I know is that Congress (you voted for 'em) has made promises we can not pay currently so we (American's , not just Working Americans) will have to pay that some how, I do not know how.
(Not to mention the Debt we have on our grandchildren , children and our shoulders - To save companies that profited in the good years [no problem with that]; then made BAD business decisions and didn't save for a rainy day SO, WE the entire population pay for it)
Glad you asked -
If we plan our lives and we do, based upon false or misled assumptions (thing CPI, value of a debased dollar) they we probably will not get o our goal. now if you just hope to get somewhere You will.
Lets' think about a basic retirement plan- If you watch TV or listen to the talking head gurus you should save 10-15% of your income (or max out) into a 401(k) or IRA and balance with a Roth too and when you get to retirement you can live on 4-5% on you r nest egg with our out living it Sounds great.
So if I want to live on a 50k income in retirement I need to have 20-25 times this ( 1-1.25 Million) saved just before retirement right?
Well lets dig a little deeper
This whole plan that EVERYBODY supports or uses has some assumptions (what did your Mama tell you about Assume?)
1 - You can choose how much you retire on (the 50k) How do you know what your lifestyle and need will be in 20, 30,40 years form now? Or what the Government will mandate? Or what you will choose to do or health care you want to do?
2 What if you don't get the magical rate of return the market NEVER promises? (Doesn't the SEC make them say Past performance is no indication of future performance?)
3 Inflation is constant or the CPI is accurate, this is a farce, CPI is only accurate if you do not use or use food or fuel, and buy exactly the goods an services they choose . (which changes every 10 years, has your life changed in the last 10 years?)
4 The poor Trinity Study that states that if you only with draw 4% you will not eat into your nest egg, This study Assumes that you are fully invested is the same market and risk factor while in retirement that you were invested in to get to retirement, you never have a 1987 or .com collapse or 2008-2009 type years in retirement (correction or crash) [that seems to be every 10 years] , - If you do that the whole things is hogwash. so how much can I withdraw safely?
You can only tell at the end of each year, not 20 years in advance.
So don't be retired for more that 10 years and begin right after a correction a big one, boy that sounds exciting.
Wait... What if we Assume inflation is 3% (total hog wash) they your current 75k income will need to be over 150K in 30 years, to have the same lifestyle and if the "assumption" of 80% income in retirement is used then you still will need 120k to have a similar lifestyle. What if inflation is Higher? How would we know?
Can yo see Why "just a little " inflation is BAD!
Don't forget this -
you can NOT assist parents or children and YOU MUST have your mortgage paid off - Whhoa,. what about mt tax bite on the mortgage - so sorry.
All of this income you saved for is now fully taxable as Ordinary income ie the same as you pay now. There is a rumor you pay less tax while retired- ONLY IF you make much less income and to change brackets.
Uncle Sam gets a bite at that apple one way or another, that's why they are called "Qualified Plans"; Qualified by Uncle Sam and the IRS.
Wait if tax rates go up or brackets move or there are brand spankin' new taxes what will that mean?
All I know is that Congress (you voted for 'em) has made promises we can not pay currently so we (American's , not just Working Americans) will have to pay that some how, I do not know how.
(Not to mention the Debt we have on our grandchildren , children and our shoulders - To save companies that profited in the good years [no problem with that]; then made BAD business decisions and didn't save for a rainy day SO, WE the entire population pay for it)
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