OT - Retirement discussion - what is the least amount of $$ needed to retire?
- Thread starter dawgstudent
- Start date
For most of us who want to still have a decent lifestyle, $8k-$9k/month for a couple.
There are many who live off >$2000/mo social security though, obviously they don’t spend much (unless they have kids kicking in - like my mom
).
There are many who live off >$2000/mo social security though, obviously they don’t spend much (unless they have kids kicking in - like my mom
).
Maybe if you hadn't upgraded the big screens every year you wouldn't even have to worry about this.
But the short answer to me is that the median family income in the US is between $78k and $79k. If you divide that by 4.7% (which is supposedly the updated 4% rule), that gives you a little more than $1.6M so to me that's the point at which you can figure it out without any crazy sacrifices. Might not be what you're used to, but living like the median family in the US without working makes you wealthy. I assume that median wage typically comes with employer subsidized insurance, so that's an extra expense, but I would expect it will be offset by not having to pay FICA on that annual income and avoiding some other expenses that are work driven (commuting costs, extra professional clothes, etc).
If you have a paid off house, reduce your income needs by the median rent (~$1,400 per month), and that gets you down to $1.3M.
Add in the median monthly social security benefit of just under $2k, and you're down to just over $800k.
ETA: Actually, th emedian rent is probably too big a number to reduce it by because that presumably is covering insurance, maintenance, taxes, etc. that you still have as a land owner. Soe maybe those last two number should be $1.45M and $950k
Back when I was in my mid-30s, I said $2million and all my work-friends said I was crazy.
Now that I'm 52, I see that they were right.
But the other factors are : retire before or after 65, with social security + medicare benefits. If you are 65 and have $2mil, you should be in great shape. But for mid-50s, I think it's too little to keep my lifestyle (which isn't that glamorous).
I think between $3-$5mil is right for mid 50s.
Now that I'm 52, I see that they were right.
But the other factors are : retire before or after 65, with social security + medicare benefits. If you are 65 and have $2mil, you should be in great shape. But for mid-50s, I think it's too little to keep my lifestyle (which isn't that glamorous).
I think between $3-$5mil is right for mid 50s.
I would like to maintain my current lifestyle which would probably require $1.5 million assuming annual withdrawals 4%-5% plus social security.
With everything paid off it's still suprising how many expenses you still have. Insurance, taxes, gas, utilities, a new vehicle from time to time, travel,,ect. Y'all can add to the list ,but something you don't think about when your fairly young and healthy is long term care. It can break you.
There is no such thing as a fixed amount needed for retirement. Life is variable, spending is variable, wants & needs differ. $1 or a billion it's up to you and God to sort out. Build a yearly budget based on your current lifestyle including inflation and multiply your income shortfall by the number of years you have left on this earth. That is your magic number. Good luck on that.
As far as health goes I have research and figured age 64 is prime age. You still have about six years of good health to travel and do things you want to do when you retire.
I've spent A LOT of time researching this recently and obviously there are a ton of variables. Monthly expenses is a huge factor, and working an extra year or two can make a big difference.
I'll plug the Boldin retirement planning website. It's free to try but I liked it enough to subscribe.
I'll plug the Boldin retirement planning website. It's free to try but I liked it enough to subscribe.
Now this is an OT thread that’s worth a d@mn.
I guess define normal.
If I was in retirement and house paid off and no kids and no need to save additional each month, $5,000/month after tax would go a long way. I can break that out for the naysayers. That’s for a single man.
Obviously you wouldn’t have a ton of money for vacations and such but you could do stuff.
husband and wife? $6500.
The obvious difference between $1 and $1billion : is the number of times you'll be able to afford to do 2 chicks at once.
My goal is to get to $4M in household retirement savings, in about 20 years from now. A 5% drawdown + Social security for both of us will be a very comfortable retirement even if inflation sucks.
Or 20 chicks at one time.
But enough about the recent price of eggs… **
I’m 43
I’m shooting for about $4 million between 401k and non 401
Figure I can average 6% off of that
$2,000 a month in rental income
If I get $1500 or more a month in SS that’s just extra
I saved hard early and then acted stupid for a couple of years but I’m catching back up
The biggest mistake people make in thinking about money is treating a yearly spend amount as static. You can tell GPT that you are X years old, want to spend X monthly in today’s money, and plan to keep your money in an index fund with X% return. Ask it to make an inflation assumption then tell you how much you need to last you however many years you plan to be alive with some cushion.
edit: I’d probably quit now with $10M but I’d get bored. That’ll likely be more like $6-7M ten years from now
edit: I’d probably quit now with $10M but I’d get bored. That’ll likely be more like $6-7M ten years from now
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With my "financial advisor" about 33 mil.
My octogenarian mother exists on social security and pers. She’s comfortable.
I'm shooting for $10 million and a micro family office situation. Not because that's what I need, but that amount sets my family up for generations.
Yeah. Mine pretty much lives off her social security. She does draw on the IRA a little for big expenses. But we still have to make a minimum withdrawal.
This is another problem i have with our social security system.
Scenario 1
Without contributing to a 401k
Lower middle class earner making $40,000 a year in 2021 (What Is Middle Class Income? Thresholds, Is It Shrinking?)
If 2/3 of their SS went into mutual funds vs the current system, they'd contribute 8.27% of their salary to that retirement fund. (6.2% x 2 b/c of employer contribution times 0.667) - 8.267%
At age 65 their retirement account would be approximately $1.325 million.
Starting at age 23
$40,000 per year
3% annual wage increase
8.267% mandatory contribution to retirement
7.5% annual return (this is very low estimate)
$1.325 million would yield about $6,073 a month (WELL ABOVE WHAT SS IS PAYING). Thats assuming 5.5% annual return in retirement.
That person would still be contributing 4.13% of their paycheck to the WELFARE SYSTEM so could likely get some of that money back in a SS check monthly.
Scenario 2
Upper tier middle class making $80,000 a year What Is Middle Class Income? Thresholds, Is It Shrinking?
government mandated 8.267%
yielding 7.5% with 3% annual raise
$2,651,800 at retirment
5.5% annually gives them $12,154 monthly (WELL ABOVE SS BENEFITS)
They are still contributing 4.13% of their check to the welfare pot
They could also contribute say 4% of check to a 401k with a 4% company match.
Their 4% and companies 4% with annual salary growth of 3% and annual return of 7.5% would yield another $1.334 million or $6,114 a month
So Scenario 2 makes you well off as 17 in retirement while likely contributing less than you do now. $18,268 a month in retirement income equates to the same dollars made in 2021 after 2.5% inflation. I used 2021 b/c thats the first article i found.
I guess somebody needs to side track it with some completely irrelevant topic like the others. Quilted Northern or Charmin Ultrasoft?
Pers is a bigger Ponzi scheme than social security. My confidence that it will last for my wife’s full retirement years is not high.
You’d be surprised how few generations it takes to blow that kind of money.
Yeah, my mom gets an RMD auto deposit that turns out to be not needed, except to pay the extra income taxes associated with it. Pain in the @$$.
Memo: "kids out of school" doesn't always mean "kids off the payroll"
I’m not to that decision point yet. I expect that at conservative rates her net would create about 4k/yr in income vs pers paying her about $3,500/mo so I’ll have to take a chance one way or another…
My wife and I retired 6 years ago at age 64 so we have some experience with this. It depends on a few things. Overall health, retirement plans for traveling, desire to still eat at restaurants on a regular basis, family responsibilities, etc. everyone has different wants and needs. Figure out what you spend per month now, how much you want to spend for entertainment, healthcare cost, etc. then decide how much income you need above social security and any other steady income you have, like a pension for example. Then decide how much additional savings you need to draw from. Just make a spread sheet and put it all down in black and white. Don’t forget that you will still need a new vehicle occasionally and nursing homes are currently running around $10,000 per month. To be fair to your children, you need to plan to live to 100, even though most people don’t make it. You don’t want to become a burden to them. With all of that being said, I expect that you will decide that you are going to need $2-3 mil in most cases. Your going to want to be a bit more conservative with investing to protect your available cash stream against the unexpected, like Covid or a 9-11 type of event crashing the market for a few years. If you do your homework and plan correctly it is a wonderful reward for all of your years in the workplace. We travel, go on western hunting trips, and pretty much do whatever we want too only because we planned correctly. I know other retired people who are restricted from doing anything other than going to Kroger and complaining about the price of potato salad. DETAILED PLANNING IS THE KEY!
I have no idea how the PERS retirement works, but my wife is a school teacher and she's grandfathered in where she can retire after teaching for 25 years. This will be her 17th year teaching. Is that when the 13th check comes in to play when she decides to retire?
It looks like only about 2.5% of the population have over a million in their 401k. Only 25 percent or so of those 55-64 has 250k.
The Pack has exceptional investing skills apparently!
The Pack has exceptional investing skills apparently!
It can…
I chose monthly COLA distributions.
I’d rather have the increase spread out and don’t want the state to hold on to what’s due to me.
I think there are more benefits to doing it that way… but what works for me doesn’t necessarily work for others…
Let's say 60-65. My goal is 60 until I turn 60 and then I will probably want to work a few years longer.
What is a COLA distribution? Is that where they take the 13th check and incorporate it into the monthly retirement payments or is it something different?