bczoom said:
For those of you that have retired, what are some things you didn't plan on or the cost is significantly different than what you thought and it either helped or hurt you financially?
To answer your second question - predicting costs isn't too hard but predicting future investment returns, and unexpected events, is more difficult than it looks. A realistic projection starts in a narrow range but quickly has a very broad range of possible values. You can average the possible future scenarios but it's still a gamble whether the real future will fall within the range of your projections.
Life is a gamble. Accept a tiny but real chance of going broke instead of waiting until you can cover any outcome, and you might decide to retire 15 years earlier.
When I was doing my planning was in the midst of the 1990's boom. It was clearly unreal, that sort of growth couldn't go on forever. Days after I bailed (7/98) the market went flat, then a year late resumed the 'irrational exuberance' Greeenspan had warned about. I stayed fully invested, but then sold all the volatile stuff after it had fallen back to about 1998 levels in mid to late 2000. Pure gambling, but the 5 and 10 year growth rates were still spectacular if I could just forget the nightmare of the final 6 months. My projections made as of 6/98 remain pretty accurate but what happened in the meantime was beyond my wildest imagination. Expect a few periods like that during your retirement.
Part of my planning is allowing a very slight chance I might have to sell all real estate to cover high costs in extreme old age. I've made it clear to the kids that barring a collapse of the whole US economy they will probaly get the ranch, but don't count on it for another 40 years.
Mom just turned 96. As a retired college professor she has a good government pension (and health plan) that met her needs, so she never accumulated any savings. But early this year I had to arrange a HELOC (home loan similar to a remodel loan, draw just what you need) for the first 20% of the value of her home to pay for a 24 hour caregiver to live there. Now we're good for several years, but eventually sis and I may have to chip in to keep this arangement going. You can't predict everything, at least she made it to 96 on her own resources.
My main advice to anyone a generation younger is to put a large percentage of your income into long term savings and investment instead of using it for a showy lifestyle. You will be a millionaire sooner than you expected.
Pretty simple equation!!!!!!
