A little freaked out by the “R” word? So are other Americans we asked.

I will be 65 next month, and with Medicare comes health insurance for the first time in 18 years. I am self-employed, and prior health problems ate up most of my cash. I am single with large and loving Black Lab. At present, I have a solid client (I do freelance editing and writing) that will be with me as long as I want to work with them. It pays the bills and leaves a bit left over each month. I have a small Roth (about 10.5k) that I continue to add to as I can, but I cannot see that exceeding 20k in the next five years. My second main client has slowed down substantially due to budget concerns, so I’m not counting on them, though I’m getting more work from some other sources. Basically, my plan now is to begin collecting soc. sec. at 66 (May 2011), when I can continue working with no penalty. But soc. sec. alone will not add to my Roth (I have to be working to do so), and with Medicare taken out gives me just enough to live on. I see two solutions: (1) Continue working at least at my one major client and whatever freelance work comes my way for as long as possible, at least to age 72 is my guess. (2) Move from my current home in a Detroit suburb to a small town in north central Michigan where the cost of living is extremely lower. This presumes any home around here can sell, of course.
I am completely debt free, which is a huge help, but income isn’t enough to let me enjoy any retirement, maybe only slow down a bit and move to a slower-paced area (all my work is done online). I’m certainly open to suggestions.

I am retired at age 52 from my corporate job after 25 years of service. My retirement was unplanned due to a layoff. I have savings and investments, and was given a severance package that helped to cushion the transition. I am now establishing multiple streams of income to include my interests and passions. I am excited to finally have the opportunity towork in my vocation. I am blessed with good jealth, and have six major expenses that my goal is to eliminate over the next three years. This is a season of change, and I am energized by the possibilities!

I would love to retire, I am 64 years old but won’t have health insurance till Medicare at 65. I have a house (along with the bank) but my mortage went up $500 just this year. My taxes have increased $2000 since I bought the house in 2003. The town got greedy when the prices of the homes in my neighborhood increase by $75,000. My home insurance went up $400 just last year. Unfortunately, my house is now worth less than what I paid for it, and definitely not the $200k that it got assessed for. And in case you get the impression that I have a large, grand mansion, my home is a 2-bedroom raised ranch with 980 sq.ft. My neighborhood is a great place to live, very safe, and good schools. My plan is to move South, where I will at least have a roof over my head and food on the table. Those are the only two things I worry about. Any profit that I make in selling my house (if it sells) will go toward the new house which should be half the price of my house now. Food and Gas are the only things in the South that are the same prices in the North. Everything else is either cheaper, or it has no cost at all. I will miss my family, but I figure that I should be able to save enough to visit them at least at Christmas.

Retirement has been a great thing for Nat and Bob. We are 88 and 87 yrs, have good health, been married 65 yrs, happily. We grow a lot of our food and eat it raw. You’d be surprised how good it is and how healthy.
We were not good savers but had our own business for 35 years. We worked our butts off and it paid off when we sold the business. If I had to do it over again I would set up a saving program and stick to it no matter what. Age 30 to 60 is a long time to accumulate cash. Wisely invested should produce a nice income for retirement. We’ve never been happier and we work every day.

My parents taught me early to save for retirement, to have cash set aside to live for at least 6 mos. and never to have debt. I didn’t drive the cars I wanted–mine were always used. But because we did all of this, we were able to retire at 60, travel a bit and do things we enjoy (many of which are free) and we have some peace of mind as we both have long term health care. So working two jobs for several years, saving faithfully and conservatively, and avoiding debt has paid off for us. The future is always uncertain with inflation, changing tax laws and so on, but we’ve chosen to live day by day.
For his 21st birthday, we opened an IRA for our son so that he might retire comfortably as well when his time comes.

Low to no interest has taken the funout of saving.

I am not a finalcial advisor, just a regular guy wanting to share my experience. Depending on how long you live (plan on at least 95), and how much you want to spend on retirement, you will need much more than you think. For example, if you currently live on $50K/year, you should plan on having about $1.3M in the bank to retire at 65 and live comfortably for 30 years. My advice, use an accounting program like quicken or on-line via mint and see how you are spending your money now. Then use some of the financial planning tools on-line and build a spend plan. The planners will forecast when you will run out of money. If you are within 5 years of retirement then start living your retirement budget to see if you are comfortable with this or if you need to make more changes.

If you could get rid of the Social Security tax and put the same amount of money into a Roth IRA over your working life time you would have millions of dollars to retire on. Of course you would need to invest your Roth IRA funds into an S&P Index Fund (Vanguard 500) that averages between 11 and 12% a year over your working lifetime. Historically the S&P Index (started in the late 1920s) has done just that, and the Roth IRA is tax free because you have paid the income tax on your initial investments each year. When compared to the Social Security System you are getting virtually nothing on the money you put into the SSS and the government has already spent it on their entitlement programs long before your are eligible to retire, and now your even have to wait longer to collect it, and finally you will be faced with 85% of it being taxed again when you finally do retire and start withdrawing it. The inputed rate of return on your contributions to the Social Security System are really non-existent and are taxed twice, once when your pay into the SSS and again when you need it most at retitement. In conclusion, it’s really too bad they don’t teach this in school and skip some of the touchy feeely classes students are required to take today. Thanks for the opportunity to comment.

I am one of those people who, I suppose, always “got it” regarding money. I always saved some, lived below my means, knowing that extravagance would not make me happier, healthier, or wiser. I took out a mortgage that I could comfortably afford and paid extra on it every month. I drove the same vehicle for years, satisfied that it got me where I wanted to go reliably , though it wasn’t the most stylish. I stayed at a job with good benefits, though I was tempted to quit numbers of times. As a consequence, I was able to retire at age 55 with a paid for home, no debt, a pension and enough savings that I do not need to work unless I want to. Life can be good if you save regularly, pay off and avoid debt, stay disciplined, and use common sense .

My story sounds almost identical to Steve’s (above). I also believe in living below your means to get to retirement. I retired at 55 last year. We have a small vacation place that is paid for and our main residence in the city has a low mortgage (paid down). But, I’d also advice taking a small piece of any windfalls or bonus and do a LITTLE something for yourself. It makes the pain of saving palatable. It’s not going to get easier. Most major corporations are moving away from pensions and individuals will have to plan for their own retirement. Start early, save a lot, celebrate a little, and keep your eye on the prize……..retirement!! It’s a wonderful thing.

I find it interesting that during the peak years of baby boomers working we certainly contributed a huge cash flow for SS. Now that it is our turn to retire we are told we have to wait until we are 66+ and that SS may run out of money. I have friends who took their SS at 62 because they are worried it won’t be there when they are 66. Unfortunately, the powers that be decided to use the windfall during our contributing years to finance other ‘projects’ that did not have a direct effect on retirement income.and most of us were oblivious to what was happening. Obviously, there is no solution now for us but I encouraged my children once they became gainfully employed to start a 401K and contribute regularly. I hope the same doesn’t happen to them. My husband and I started investing almost 20 years ago and we were on a positive track until the 2008 recession, when we lost approximately 35% on our gains. and I have retired at 62 due to health issues thinking that working part-time in the active retirement program where I work would help us out until SS. I got one year of the active retirement and they canned the program. I guess my point is that we can’t count on fairness when it comes to our financial future, I am back to shopping sales, using coupons and actually deciding that the stuff money buys may not be all that important. We were insightful enough to make sure our house was paid off by the time we retire and that will take a big burden off our monthly bills. I am beginning to look at all the ‘stuff’ we have bought that is no longer necessary and i am giving more to charities or selling at consignment or garage sales. I’ve heard it said – can’t quote exactly who – ‘that every possession we own has to be either cleaned, maintained, replaced, stored, etc.
in other words ‘less is more’ (I guess that means I need to stop writing)

Way to go Leslie. I am 52 and hope to reach the million goal to retire but not there yet!

My parents were Depression-era kids who taught us how to stretch pennies. I took a State civil service job for the benefits. although the pay was lower than the private sector. I intended to stay 2 years, and stayed 26. I put the maximum into my Deferred Comp package, paid off the mortgage, and spent the last two working years saving every extra dime to hold me over until I could collect Social Security the following year.

Surprise! I never had to touch that “hold-me-over” money, and my Deferred Comp, which tanked in the market, has been left there in the hope it will regain some value – I have 6 years left before I have to start taking it out. We are living comfortably, and three years later still think retirement is the best time of life.

I’ll never be able to retire, will have to drop dead over my keyboard (I’m a freelance scientific translator). That’s not by choice, though.

I was debt-free (had worked very hard to get there after accumulating a big business debt) and hoping to start seriously saving toward retirement until some naive soul called 911 while I had a fever spike from a urinary tract infection (thought it was the flu…) and I was toasted financially after 3 days held hostage in the hospital. All I needed was an antibiotic, but they were doing CYA (cover-your-backside in polite terms) with expensive and unnecessary tests and nobody would give me a straight answer about why (I even offered to sign a waiver saying I wouldn’t sue anybody, hoping that would get me some reliable advice… they thought I was insane!). Silly me had thought “deductible” meant I didn’t have to pay anything past the deductible ($2500 at the time) – so ended up with big debt despite paying big premiums for so long to avoid it. Plus the hospital was so focused on CYA (nobody bothered to simply sit down with a pad and pencil and get a history, which would have made it obvious I just had a UTI), they never advised me on what to do next, and the local “doctor” they brought in as my “attending physician” just gave me 5 days of antibiotic (to which I was allergic…) on discharge and was totally uninterested in followup. Never even mentioned the need to do a urinalysis after completing the course of antibiotic if problems remained, wasn’t interested in finding a different antibiotic or prescribing anything more when I reported problems with the first antibiotic and recurring fever. Result: very slow recovery (partly from damage done by the first antibiotic, worse than the disease…) and then major relapse, treated properly this time by a real doctor.

The mismanagement of my case was not just in my fevered imagination – I wrote up a detailed account of the whole thing and sent it to the CEO of the hospital, pointing out that they really should not charge anybody for anything other than the deductible if they can’t convince the insurance company to pay (the insurance breakdown was peppered with “priced too high for the region” and “medically unnecessary”). If I translate the wrong document, the client never sees the bill. I sent a copy to the neurologist when her office sent me another bill for one of those unnecessary tests not paid by the insurance company, and not only never heard about the bill again — she refunded the money I had paid her previously … She could instantly see that she had not been given the right information about the case, that no neurological work was needed at all. All my symptoms were consistent with a simple infection. But the hospital bill, ambulance charge, neurology and radiology, and the incompetent doctor’s bills added up to at least $15,000, only partially paid by insurance. Treatment by the real doctor added another $400 for antibiotics and another $2000 for several office visits and monitoring urine and blood tests. All this at a time when I had no savings left (between my needs and my brother’s needs) and was out of work.

I lost several months worktime before I could reliably take on jobs with deadlines, had to borrow gobs of $$$$ to keep going (especially with huge insurance premiums), and 3 years later have still not financially recovered since the economy got sick the same time I did and my income seriously dropped even after back to work. Finally had to drop medical insurance entirely last January. They had pushed me into a $5000 deductible (which I didn’t have, would have needed to borrow it) and kept raising the premium about 35% per year, would have been 53% of last year’s Adjusted Gross Income (i.e., gross income minus business expenses but before taxes) with 5 years to go before Medicare. Lessee – after taxes, that would leave me with 12% of my income for everything else, including the first $5000 of medical expenses. The rising premiums were really preventing me from saving anything at all. I honestly would have been better off without insurance in prior years (even with the inflated hospital and doctor bills for my UTI disaster) and just building up savings, but no way to know that in advance. Plus my brother keeps needing money transfusions since his insurance won’t cover all his medical needs and his work hours got cut (I don’t see how he’s going to be able to afford Medicare premiums, he won’t ever be able to retire either). My whole medical misadventure wouldn’t have happened in Canada, Australia, France etc. where they pay just a few percent in health care taxes (2%-4% in Australia, 5.25% in France, any copays are very reasonable because of regulation) and just go to the doctor/hospital when needed – I wouldn’t have been forced into huge debt for a simple illness and there would have been no incentive for the hospital/greedy first doctor to do unnecessary testing at such great cost.

SO I have to say that we really need to get real health care changes in the USA before we can hope to plan financially. We can’t continue with this chaotic approach to paying for health care, letting private for-profit companies decide how much to charge us and how much to pay out. We’ve tried it, and it just doesn’t work. Right now, it’s just luck of the draw whether you make it or not, no matter how frugal you are (and I am frugal indeed) – most of us are just one serious illness or injury away from financial ruin. The only time I’ve needed medical attention in the past few decades was that one UTI, easily treated with an antibiotic, it shouldn’t have destroyed me financially. The health care situation looms over us all the time, with a negative impact on so many areas of the economy. My brother has stuck in a low-paying and unsatisfactory job for years for fear of losing his medical insurance but still his employer doubled the co-pays on him to get a cheaper policy. The health insurance problem definitely affects small businesses, can make the difference between being able to hire people and not.

To be able to plan financially in general, we need to be able to just pay a certain known percentage of our income into a common pot to support the health care system (rather than paying an uncertain and uncontrollable amount to the insurance companies who like to deny claims), as other civilized nations do, so when we’re sick/injured and unemployed we don’t go down the financial drain and doctors/hospitals don’t have to pounce on whatever warm body happens their way to extract their operating expenses. Honestly, imagine if we ran the fire department that way, having them get their operating expenses only from people whose houses burned down. “Sorry, ma’am, your credit card didn’t go through. Turn off the hoses!”

How can anyone make it with low interest rates for saving with ING. I put my money in your electronic savings and watched the rates just keep dropping. What does ING have to offer for me with guaranteed and FDIC insured other then a measly 1.25%. I am probably one of many who have concerns about ING? You control a lot of my future. What are your plans for preventing me to move into other areas like tax free municipal bonds? The stock market has started to come back. Will ING? I am a conservative investor in your company. What will you do to prevent me from looking for a better secured place to invest. Your reply would be appreciated.

From the first day I started working at a “real” job after graduation (1974), I was convinced that, by the time I was ready to retire, Social Security would be nothing but welfare for the elderly: there would be a means test to collect it, and I intended to be above that line. I never contributed less than the amount matched by the company to the 401K. I worked 35 years in defense/aerospace software development, and not until my 50′s did I get serious about investing for growth instead of security and maxing my 401K contribution.
I was hoping for an early retirement at 62, maybe, but didn’t have any firm plans. Then in June 2009, the project I was on got “restructured” by the U.S. Army. I predicted that the recession the general economy was slogging through was just going to start hitting the aerospace industry, and that my prospects were not good. I was making a good salary, but was doing basically the same work for the last 20 years, and expected I would have problems getting another job at that salary in any area with which I was unfamiliar or even just rusty. I still had the option to take most of my pension as a lump sum. I retired in September, just short of my 59th birthday, and took the lump sum. Even with the market still down, my 401K + my lump sum came in at just over $1million. Where I’ve got that invested, that entitles me to perks and lower investment fees.
The first thing I did to lower my expenses was refinance my house, which I was paying down on a 15-year fixed. I had recently taken a 5-year fixed equity loan to finally put in central air and heat. I refinanced for just what I owed on the 2 loans and lowered my payments by $1,000. / month.
But I still didn’t think I had enough in retirement to live on for maybe 30 years or more, so I have gone back to school to get a certificate (CA-specific thing) to be a paralegal. I am planning on a second career. I don’t expect to make what I did in aerospace, but I expect I can work for another 5 – to – 10 years, leaving the maximum amount in my IRA for later years.
I have 2 daughters: one in graduate school and one a junior in college. By some of my savings from home equity (taken in a refi years in the past), and by lots of help from my mother, they will both have graduated from private college debt-free. My parents were teens during the depression and were always frugal, and my dad left my mom still very comfortable at 91. Since mine are the only grandchildren, they have gotten more help than if they had cousins, for which I am very, very grateful.
I have been lucky, no question. I have been blessed with good results and good timing. But there’s still nothing like investing for the long haul, with no thought of using or borrowing against a 401K until retirement is really here.
Oh, and both my daughters have Roth IRAs, initially funded through gifts, to which they know they have to contribute 15% of their income every year. If they will keep that up, I won’t worry about their retirements, either.

Unfortunately my generation and every generation after it will not be fortunate enough to retire. With rising taxes, national debt, inflation, global economic and political instability retirement for the average American will be impossible. Our growing population and our increasing reliance on foreign labor and robotics will continue to cause the job market to shrink. We must also take into account the decline of earth’s resources. There will be less and less aviable for the average consumer. The average American will continue to struggle to survive. A bleak and dark future awaits…….

My plans for retirement: to have a comfortable lifestyle that is at least equal to what I am used to now.

How do I get there?: SAVING. What people tend not to realize is that you can’t take your money with you when you go, and you can have your cake and eat it too. I am only 26 but I opened my ROTH IRA at 18. I have an emergency savings account which is almost up to 6 months salary put aside. (Yes, I said salary not bills since my bills will be much higher in a few years than they are now.) Once I get it to 9 months, I will just let that account grow. I am a grad student, so I am saving a certain amount out of my paycheck so that when I graduate I will be able to pay off the loans that I took out first semester. I will have saved enough money to put 20% down on a house when I graduate as well. I have a 401(k) which takes 9% out of my paycheck before taxes. (You should be putting aside 10% for yourself, AKA savings) I then take approximately an additional 3% into a ROTH IRA and just general Investments. I love to travel, so I set up 2 savings accts, one for “play” or short vacas/concerts and one for long trips like overseas. I am also socking a little waya for a new car and an unknown wedding. I pull the money I will need for bills out and what is left is my money to do the day to day stuff.

The trick is not to plan on how much you will need but to put it aside ASAP and FORGET about it. Set up automatic deposits into your retirement accts and let them be. Just consider it another bill to pay each month, and you should be ok, at least if you are young enough. Try to stay away from Debt, but if you must, be smart about it… If there is something you really want, put aside what you need to so you can obtain it in a certain amount of time. Don’t cheat yourself too, or you won’t stick to the plan. AND, when you borrow from yourself, be sure to pay yourself back!