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Are you financially ready for retirement?
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blueberries




 
 
    
 

Post Fri, Mar 06 2015, 11:01 am
When it comes to retirement do you think about it or you just focus on the near future like tuition, camp, bar / bas mitzvah, wedding etc.?

I feel being Frum makes it hard to plan for the future with high costs associated with it. What do you think?
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LittleDucky




 
 
    
 

Post Fri, Mar 06 2015, 11:13 am
I think that there are many issues associated with retirement and the frum life. It's not just costs now but projected costs. We have more kids- which impacts retirement in 2 ways: more expenses now and more for a much longer time. If you have a child at age 40, (not unheard of) that means you will be 58 before you are legally no longer responsible for them but we all know expenses last beyond age 18. College, chasunahs, possible post wedding help, and every single yom tov- will you be feeding the entire mishpacha?
And based off other posts here... It seems many of us are barely making ends meet now- how can we put away money every month if we can't afford now?

I think our schools should have required financial classes- both boys and girls- in high school. How to budget. What does "grabbing lunch from the bagel place" do for our financial bottom line?
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causemommysaid




 
 
    
 

Post Fri, Mar 06 2015, 11:17 am
No and I don't think most people are either. How can someone possibly save enough money to live on for 20-25 years?

I guess ideally you would save enough so you can live off the interest of what you saved but that is a lot of money to get to.
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amother


 

Post Fri, Mar 06 2015, 11:25 am
Yes, we are on the way to being ready, barring financial disaster. We have been saving since age 21 in our retirement plans. If we hadn't started saving until now (mid 30's) we would never catch up.

we were actually turned down for financial aid for Yeshiva due to the fact that we have ample 401k savings. To me, that is totally unfair. Just because we were smart and started early, we shouldn't be penalized. Those with huge homes and mortgages don't get penalized.

I agree that financial classes should be available but you can only fit so much into a day. In the end, the parents need to teach the kids.
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amother


 

Post Fri, Mar 06 2015, 11:28 am
I just turned 65. DH and I live pay check to pay check. After raising eight children ka"h, and getting by day to day all those years, paid our tuition, and b"H paid for everyone's weddings, we have very little saved. We will need to live on our social security, which is not very much. And it's not like we never thought about it, we just never had a penny to save.
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MagentaYenta




 
 
    
 

Post Fri, Mar 06 2015, 11:52 am
I entered into a brief late life marriage, and chose to take my pension early in order to escape the situation. Not the way I wanted it to be but not a complete disaster either. Luckily I had some savings and a second small pension. I live frugally, which I've always done, and still am able to provide for my needs and live independently and travel a bit. I'm in good health, and enjoy a pressure free life right now. I wouldn't want it any other way. I'll get a raise next year when I start to collect SS. I'm sure it's more difficult for folks with large families or late life children.
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amother


 

Post Fri, Mar 06 2015, 12:03 pm
amother wrote:
Yes, we are on the way to being ready, barring financial disaster. We have been saving since age 21 in our retirement plans. If we hadn't started saving until now (mid 30's) we would never catch up.

we were actually turned down for financial aid for Yeshiva due to the fact that we have ample 401k savings. To me, that is totally unfair. Just because we were smart and started early, we shouldn't be penalized. Those with huge homes and mortgages don't get penalized.

I agree that financial classes should be available but you can only fit so much into a day. In the end, the parents need to teach the kids.


I chose the large house as my savings plan. I live in a frum area and the prices are sky rocketing. You can do both. Live in a large home and have that be your retirement savings. I was smarter than you because I am not the one being penalized. You shouldn't be so smug about saving for retirement because there will always be someone smarter than you who grasps more of the big picture.

If I choose to take my profit in my house, I will not pay taxes on it.
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amother


 

Post Fri, Mar 06 2015, 12:06 pm
What about those young enough to worry that SS won't be around for them? I'm in my 20s. The system as it is now may not last long enough for me to collect at 65. People are collecting for longer periods of Time since we are BH living longer. It was set at 65 since most people at that time didn't live past the late 60s. I don't want to rely on something that may not be there (or may start later which is one idea I heard). But if our job situation stays like this for much longer I am afraid. We don't spend a lot. We have degrees. But we don't make enough to save...
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amother


 

Post Fri, Mar 06 2015, 12:13 pm
(quote)I chose the large house as my savings plan. I live in a frum area and the prices are sky rocketing. You can do both. Live in a large home and have that be your retirement savings. I was smarter than you because I am not the one being penalized. You shouldn't be so smug about saving for retirement because there will always be someone smarter than you who grasps more of the big picture.

If I choose to take my profit in my house, I will not pay taxes on it. (quote)

Sorry, I do not know how to quote.

To this amother I quoted. Honestly, if you buy a large home and then claim that you cannot afford tuition, it is cheating and stealing form those who live modestly in order to pay tuition. You can call yourself smart, but that is not the case.
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Barbara




 
 
    
 

Post Fri, Mar 06 2015, 12:22 pm
amother wrote:
What about those young enough to worry that SS won't be around for them? I'm in my 20s. The system as it is now may not last long enough for me to collect at 65. People are collecting for longer periods of Time since we are BH living longer. It was set at 65 since most people at that time didn't live past the late 60s. I don't want to rely on something that may not be there (or may start later which is one idea I heard). But if our job situation stays like this for much longer I am afraid. We don't spend a lot. We have degrees. But we don't make enough to save...


Your full retirement age is 67, not 65. Its been that way for a looooong time.

And there were plenty of people living well past their 60s when Social Security was established in 1935. "Life Expectancy" included the large number of people who died very young -- in childbirth, infant mortality, childhood diseases. For men, for example, almost 54% of the them could expect to live to age 65 if they survived to age 21, and men who attained age 65 could expect to collect Social Security benefits for almost 13 years (and the numbers are even higher for women).
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mommish613




 
 
    
 

Post Fri, Mar 06 2015, 12:22 pm
amother wrote:
I chose the large house as my savings plan. I live in a frum area and the prices are sky rocketing. You can do both. Live in a large home and have that be your retirement savings. I was smarter than you because I am not the one being penalized. You shouldn't be so smug about saving for retirement because there will always be someone smarter than you who grasps more of the big picture.

If I choose to take my profit in my house, I will not pay taxes on it.


Fyi you will have to pay capital gains tax if you sell your house (and keep the profit). If you keep your house and take out money for retirement thru a reverse mortgage or some other type of mortgage your are, in essence, acquiring debt.
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amother


 

Post Fri, Mar 06 2015, 12:32 pm
mommish613 wrote:
Fyi you will have to pay capital gains tax if you sell your house (and keep the profit). If you keep your house and take out money for retirement thru a reverse mortgage or some other type of mortgage your are, in essence, acquiring debt.


Same amother:

1 I can take up to half a million profit without paying gains.

2 I can do a like kind exchange of real estate again without paying profit.

3 I can die with a step up in basis and my heirs never have to pay a gain.

I wouldn't consider a reverse mortgage ever.
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MagentaYenta




 
 
    
 

Post Fri, Mar 06 2015, 12:37 pm
"2 I can do a like kind exchange of real estate again without paying profit." 1031 Starker exchanges are not for residential owner occupied real estate.
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Barbara




 
 
    
 

Post Fri, Mar 06 2015, 12:40 pm
amother wrote:
Same amother:

1 I can take up to half a million profit without paying gains.

2 I can do a like kind exchange of real estate again without paying profit.

3 I can die with a step up in basis and my heirs never have to pay a gain.

I wouldn't consider a reverse mortgage ever.


If you don't sell it, and don't take a reverse mortgage, how is it retirement savings? You'd need to sell it, have another place to live, and still have the house net you enough to live on in retirement. Since you'll likely need very substantially more than $500,000, your argument seems not to be valid.

In any case, and as someone else said, the "big house" loophole is one that needs to be closed for financial aid. Home equity should be treated as an asset available for tuition, so that everyone understands, in advance, that they cannot buy themselves an expensive home and then force others to pay for it through tuition assistance.
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amother


 

Post Fri, Mar 06 2015, 12:43 pm
MagentaYenta wrote:
"2 I can do a like kind exchange of real estate again without paying profit." 1031 Starker exchanges are not for residential owner occupied real estate.


It wouldn't be owner occupied at the time.
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MagentaYenta




 
 
    
 

Post Fri, Mar 06 2015, 12:43 pm
amother wrote:
It wouldn't be owner occupied at the time.


Ah gaming the system. Now I see.
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amother


 

Post Fri, Mar 06 2015, 12:44 pm
Barbara wrote:
Your full retirement age is 67, not 65. Its been that way for a looooong time.

And there were plenty of people living well past their 60s when Social Security was established in 1935. "Life Expectancy" included the large number of people who died very young -- in childbirth, infant mortality, childhood diseases. For men, for example, almost 54% of the them could expect to live to age 65 if they survived to age 21, and men who attained age 65 could expect to collect Social Security benefits for almost 13 years (and the numbers are even higher for women).


As you can see, the difference for me in 65 or 67 is about the same- it's over 30 years out for me. But thanks for clarifying that. And a midline projection of when SS stops being solvent is 2040 or so- less than 30 years from now. The numbers ranged obviously but this was the SSA own numbers. The problem is that our elderly population will double in the coming years as all the baby boomers retire.
But I didn't want to derail this to a debate on SS. I was just trying to point out that we shouldn't rely on it-especially those of my generation. We need to figure out how to save for ourselves and it is so hard but we need to start now. How??
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amother


 

Post Fri, Mar 06 2015, 12:50 pm
Barbara wrote:
If you don't sell it, and don't take a reverse mortgage, how is it retirement savings? You'd need to sell it, have another place to live, and still have the house net you enough to live on in retirement. Since you'll likely need very substantially more than $500,000, your argument seems not to be valid.

In any case, and as someone else said, the "big house" loophole is one that needs to be closed for financial aid. Home equity should be treated as an asset available for tuition, so that everyone understands, in advance, that they cannot buy themselves an expensive home and then force others to pay for it through tuition assistance.


My house today is about a 1.8 million fully paid for. I would simply invest the money income producing property. I could split this house into four units and rent out 3 when I don't need the space. I could take out the equity and invest it, etc. I could also gift it to my kids in a life estate deed with retained powers of appointment. I know that doesn't help with retirement, but it has many positive tax advantages, and all my eggs are not in one basket.

How could you close out the loop hole? You can't force people to take on more debt than they can afford to pay? All that will happen is people will take out a bigger mortgage and have less equity.
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amother


 

Post Fri, Mar 06 2015, 12:52 pm
MagentaYenta wrote:
Ah gaming the system. Now I see.


Sorry, what are talking about?

One is allowed to legally tax plan.
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amother


 

Post Fri, Mar 06 2015, 12:55 pm
to the last amother- this is probably off topic nut with regards to closing the loop- I think I've heard of a school that says if you pay more than x amount of real estate taxes etc.. you can't qualify for a scholarship. There are probably other ways as well.
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