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Okay, thought I'd offer up a bit of a discussion topic on just how much money you think it will take to retire on. There's a lot to think about here, especially the younger you are. You need to project what inflation will be, what the cost of living might be, how much of Social Security will be left by the time you reach retirement, how expensive healthcare and nursing home care will be in the future, and think about your longevity.

So here it is, give the date you plan to retire, give the number of years you think you live as a retiree, and give the amount of dollars (in today's values) of what you think you'll need. And, if you do, also give some rule of thumb advise you think would help people accumulate enough funds to have a comfortable retirement.

Example:
Year: 2034
Yrs as retiree: 22
Liquid Assets (today's dollars): $1,500,000.00
Rule of Thumb: Save 15% of salary each year you work

My plan has me retiring with at least $2.5MM in assets. Based upon life expectancy, annual cost of living, inflation, etc., that should take care of it.

Something like 1.2-1.5M in today's dollars.

Year: Hopefully a couple from now
Yrs as retiree: No idea, maybe 50
Liquid Assets: Don't know what liquid means
Rule of Thumb: Save 30% of your income - in other words live on 70% of income

nm

Here's my Retirement Planner

For me retirement = being free to work wherever and however I like. So I'll still bring in some $ after "retirement"

Year: 2026
Years as retiree: 35
Assets (Today's Dollars): $1,500,000
Rule of Thumb: Save <img src="i/expressions/face-icon-small-smile.gif" border=0>

I dont even plan yet but at 4-5% inflation rate a rough number should be 5 million. to live comfortably upto 65-90 yrs.

prastogi said: [Q]I dont even plan yet but at 4-5% inflation rate a rough number should be 5 million. to live comfortably upto 65-90 yrs.

I doubt inflation will average 4-5%. I believe that the historical inflation average is very near 3.1 or 3.2%.

By the way, good thread idea.

RJL1 said: [Q]Okay, thought I'd offer up a bit of a discussion topic on just how much money you think it will take to retire on.

FYI, there is a lot of info and discussion out there already on this topic. A good place to start is the retire early home page:

REHP

The Motley Fool also has active discussions on this, but who wants to pay for discussion groups. LOL

The general rule of thumb is to plan on a 4% safe withdrawal rate, i.e., a million dollars can provide $40K per year in constant dollars (adjusted for inflation each year) for at least 30 yrs with a very high probability of your not going broke.

So, the question is, how much money do you want per year? If you have few debts, I think you can live almost anywhere pretty comfortably on $40K, or even much less. The big question is, how attached are you to stuff? Is acquiring things a major part of your life?

manuel said: [Q]Something like 1.2-1.5M in today's dollars.

Year: Hopefully a couple from now
Yrs as retiree: No idea, maybe 50
Liquid Assets: Don't know what liquid means
Rule of Thumb: Save 30% of your income - in other words live on 70% of income


ok, i'm no genius, but this isn't adding up...

to live 50 years on 1.5M would be quite frugal. Also, 50 years means that you're about what, 30 now? So are you not planning on having kids? I'm not trying to insult, just clairify. Thanks.

[Q]The general rule of thumb is to plan on a 4% safe withdrawal rate, i.e., a million dollars can provide $40K per year in constant dollars (adjusted for inflation each year) for at least 30 yrs with a very high probability of your not going broke.

Of course that varies widely with the amount of travel or pricy activities, and as many are finding out now, the price of prescription drugs and health insurance.

Then too, the assets needed for the safe withdrawal rate need to be liquid, they can't be tied up as equity in a house unless your doing a reverse mortgage.

I ask the question because I really wonder if people are really thinking about retirement. Its insane to think of it, yet it is true, that 20% of American really on Social Security as their ONLY retirement money. And upwards of 40% state that Social Security represents a "significant" portion of their retirement income.

As described by UncaMikey a 4%(or so) withdrawal rate is fairly reasonable - and I'd have little trouble living on 40-60K a year. 50 years is a wacky estimate - don't know why that question is in the OP's post, the answer is up to the fates or the gods not me. Unless your heart came with an expriation date I think one should plan to never go broke(again as discussed in UncaMikey's post).

Do have 1 kid btw, he's expensive but he doesn't have a meaningful impact on the retirement questions.

RJL1 said: [Q]
Of course that varies widely with the amount of travel or pricy activities, and as many are finding out now, the price of prescription drugs and health insurance.

Then too, the assets needed for the safe withdrawal rate need to be liquid, they can't be tied up as equity in a house unless your doing a reverse mortgage.

I ask the question because I really wonder if people are really thinking about retirement. Its insane to think of it, yet it is true, that 20% of American really on Social Security as their ONLY retirement money. And upwards of 40% state that Social Security represents a "significant" portion of their retirement income.

Yes there are a lot of uncertainties in the 4% rate - depending on one's level of concern about these one might chose to use a lower or higher number.

Obviously the next month or two's draw needs to be quite liquid but overtime one would vary where the money's coming from based on tax and other concerns.

I think of social security as a potential bonus that will come along after I'm retired.

RJL1 said: [Q]Of course that varies widely with the amount of travel or pricy activities, and as many are finding out now, the price of prescription drugs and health insurance.

Health insurance, definitely, that is a big question in the US. But my wife and I have found that traveling can be fun and not very expensive. We forego stuff, have older cars, and enjoy 2-3 international trips a year, mostly W. Europe or Central America, and I guarantee that we live on far less than the majority of Americans chasing stuff, from Starbucks to SUVs.

[Q]Then too, the assets needed for the safe withdrawal rate need to be liquid, they can't be tied up as equity in a house unless your doing a reverse mortgage.

I was speaking of assets besides one's residence, yes, but they shouldn't be liquid, not fixed income stuff. I don't want to duplicate discussions elsewhere, but a 3-5 bond/cd/t-bill ladder can cover the next 3-5 years, while the remaining assets are in low cost index funds. Some of the REHP aficionados have gotten their investment work down to about 10 minutes per year, LOL -- pick a day every year, redo your bond/CD ladder, and presto, you're done. Scott Burns "couch potato portfolio" is a good match for this, too, although I like a bit more diversification of assets.

A complement to the REHP community is all the LBYM folks -- live below your means. The point is, almost everyone can come up with a plan of financial independence, a compromise between income and outgo.

But "most Americans"? Of course they won't or can't, and I am glad, because it's their uncontrolled consumption that will make my investments do well!

About 4 million. Assuming 4-4.5% interest income on bonds per year. Would aggressively invest (long-term stocks) about 10% for inflation protection. Hoping for $150,000 in today's dollars, enough to retire, be happy, buy groceries at Whole Foods, eat once a week at a nice restaurant, and travel (for travel's sake and to watch the Red Sox).


I figure I'll need $1.5M in today's dollars.

$2M, no debt, and pulling 4-5% CD income.

Assuming FI and/or ER in one's 30s or 40s, inflation rate @3% annually, assets in today's dollars, no debt, residing in US, range adjusted based on family's composition and also assuming that everyone lives only on portfolio's income not working's income whether partner's or yours part-time.
1-1.5 MM - tightly, carefully budgeted lifestyle, may lose some sleep with market's volatility.
2-2.5 MM - more carefree (financially) lifestyle, more room to adjust budget wise.
5MM+ - ideal, if you don't want to make more money then just allocate for a coasting lifestyle. If you do want to make more money, then you have the capital to play.

Regarding the no debt assumption, it's assuming that you either own your home or leveraging the mortgage for better returns or get into one of those interesting deal in Pacific Grove, CA where you can rent ocean view units for 400's-600's/month for low-income seniors which unfortunately cancels out the ER scenario.
Rule of Thumb: work hard and hope for luck along the way.

What % of the population do you think will be retiring with 1.5 million. And if real estate suffers a downturn?

10%? 5%? 3%? 1% ?

jdopple said: [Q]What % of the population do you think will be retiring with 1.5 million. And if real estate suffers a downturn?

10%? 5%? 3%? 1% ?

In present time, I would say <5%.

I would like to have $1 million at age 60.
I save about $10k in a rIRA and 403(b) a year.
I will also be pulling from a teacher pension plan.
My income will be almost double what it is now in 1-2 years, so this should be doable.
I a guessing I will make it to 85.

its all relative....if I only had $1M at 60 (30 years from now) I would consider myself a pauper. My house costs almost that much right now!

manuel said: [Q]50 years is a wacky estimate - don't know why that question is in the OP's post, the answer is up to the fates or the gods not me.

The question is relevant to normalize the responses. If you say you need $2M and expect to live 20 years, that is different from $2M and living 10 years.

I have a goal of $1.6M (todays $$) excluding Pension & Social Security. I am 32 and plan on retiring at 59.5 and have made my calculations go 44.5 years (I don't want to outlive my savings, plus I want to give my children a litlle something)

My estimates call for an average return of 8% during my savings period, and 6% in retirement. 3% inflation is budgeted. Fixed income securities should easily return that %. The average Stock Market return over the years is 12%(going all the way back).


Good luck to all and their investment choices!

25 million minimum. And yes, I am serious.

It's not about status or hedonism. I have very expensive hobbies and passions in life.

The fastest way for me to do this is exactly what I'm doing now: Building income producing assets, as efficiently as possible, that I retain ownership of, and that will appreciate in value between present and the day I retire.

You really should consider to kick the habit.

BankruptThem said: [Q]I have very expensive hobbies and passions in life.

RJL1 said: [Q]Okay, thought I'd offer up a bit of a discussion topic on just how much money you think it will take to retire on. There's a lot to think about here, especially the younger you are. You need to project what inflation will be, what the cost of living might be, how much of Social Security will be left by the time you reach retirement, how expensive healthcare and nursing home care will be in the future, and think about your longevity.

So here it is, give the date you plan to retire, give the number of years you think you live as a retiree, and give the amount of dollars (in today's values) of what you think you'll need. And, if you do, also give some rule of thumb advise you think would help people accumulate enough funds to have a comfortable retirement.

Example:
Year: 2034
Yrs as retiree: 22
Liquid Assets (today's dollars): $1,500,000.00
Rule of Thumb: Save 15% of salary each year you work


Let's see, 1.5 mil in today's value / 22 years = $68181.81 (saved per year). Saving 15% per year... that means you make $454540.00 per year. Wow.

happytommy said: [Q]

Let's see, 1.5 mil in today's value / 22 years = $68181.81 (saved per year). Saving 15% per year... that means you make $454540.00 per year. Wow.

Not really. If you invest your money in the stock market you will average 10-13% a year. That really adds up over 20-30 years.

Your calculations are off...he thinks he will be RETIRED for 22 years, not working for 22 years.

happytommy said: [Q]RJL1 said: [Q]Okay, thought I'd offer up a bit of a discussion topic on just how much money you think it will take to retire on. There's a lot to think about here, especially the younger you are. You need to project what inflation will be, what the cost of living might be, how much of Social Security will be left by the time you reach retirement, how expensive healthcare and nursing home care will be in the future, and think about your longevity.

So here it is, give the date you plan to retire, give the number of years you think you live as a retiree, and give the amount of dollars (in today's values) of what you think you'll need. And, if you do, also give some rule of thumb advise you think would help people accumulate enough funds to have a comfortable retirement.

Example:
Year: 2034
Yrs as retiree: 22
Liquid Assets (today's dollars): $1,500,000.00
Rule of Thumb: Save 15% of salary each year you work


Let's see, 1.5 mil in today's value / 22 years = $68181.81 (saved per year). Saving 15% per year... that means you make $454540.00 per year. Wow.

BankruptThem said: [Q]25 million minimum. And yes, I am serious.

It's not about status or hedonism. I have very expensive hobbies and passions in life.

The fastest way for me to do this is exactly what I'm doing now: Building income producing assets, as efficiently as possible, that I retain ownership of, and that will appreciate in value between present and the day I retire. 25M would be nice....how far out? Agreed its not about status at all. My Bay Area standard "tract" house alone will likely be 5-6M in 30 years.

happytommy said: [Q]Let's see, 1.5 mil in today's value / 22 years = $68181.81 (saved per year). Saving 15% per year... that means you make $454540.00 per year. Wow.

Good job with the math. Now if we can just teach you that it's not a good idea to tuck away your $1.5mil in a non-interest bearing account. 10% is a reasonable long term rate of return for stock/index investment. At that rate, you only need to tuck away $18884.28 per year, so by your assumption he makes about $125K/year. Another valid assumption would be that he pulled the $1.5mil and the 15% figures out of thin air and never bothered to calculate that they don't match up for his income.

[Q]At that rate, you only need to tuck away $18884.28 per year, so by your assumption he makes about $125K/year. Another valid assumption would be that he pulled the $1.5mil and the 15% figures out of thin air and never bothered to calculate that they don't match up for his income.

Not quite. Closing in on that income number in the next few years. And with 20+ years and raises throughout that time span, my income should greatly exceed that shortly. In the continuing calculation I am assuming to have income percentage increases in excess of the rate of inflation. My assumption in retirement is a 5% return offering a $75k of yearly income from my own assets. Any social security (along with my very meager pension plan) will just be bonus on top of that should either survive the next 30 years.

I figure $1.5M. Social security, if still around, would be a nice supplement. Toss in my pension also to make it a little bit more comfy.

Come to think of it, I better sit down and do another review of my portfolio to see if it fits my needs as of this year.

double tap.

didYOUsearch said: [Q]BankruptThem said: [Q]25 million minimum. And yes, I am serious.

It's not about status or hedonism. I have very expensive hobbies and passions in life.

The fastest way for me to do this is exactly what I'm doing now: Building income producing assets, as efficiently as possible, that I retain ownership of, and that will appreciate in value between present and the day I retire. 25M would be nice....how far out? Agreed its not about status at all. My Bay Area standard "tract" house alone will likely be 5-6M in 30 years.

I should have added "adjusted for inflation" or "in today's dollars" because you are correct.

In real dollars (adjusted for inflation), the 25 million watermark or above will allow me to abandon all financial worries, invest relatively conservatively and still provide all the income I need to engage in charitable endeavors, sneak off to Nepal to climb a few rocks when the fever strikes, head to active Volcano country to satisfy my insatiable curiosity regarding Volcanic events, or jaunt down to Sydney, Autralia, to just catch some waves, lager and Aussie sunshine (and definitely check out the Great Barrier Reef).

This world is our oyster, and no one really knows what to expect when we croak (some want to believe, and others hope, but no one really knows). If you don't take everything you can from this active petri dish, you're not alive.

I'm going skydiving this afternoon. I'm off to pack my reserve.

Don't worry. Be happy.

I retired at 50. Almost 8 years ago. My pensions are more now than earning when I worked but my market savings have been up and down. Mostly down now but I'm not going to go crazy over which college my 15 year old can afford. The more you wory the less time you have to enjoy it.

I am 20 and I plan on living forever.
If I were to get the amount of 2.4 billion I would retire now. I feel this amount would be more than enough to live on. I am not greedy and don't need 90- million like bgates.

clubalien said: [Q]I am 20 and I plan on living forever.
If I were to get the amount of 2.4 billion I would retire now. I feel this amount would be more than enough to live on. I am not greedy and don't need 90- million like bgates.

2.4billion!!!!!!! I think I could scrap by too! LOL

You also need a disaster plan.

For example you become disabled at 30-40-50 yrs of age and cannot continue to contribute to your retirement nestegg.. If you are lucky you can qualify for Social Security Disability, but that would be it the for the rest of your life, hardly a good scenario.

A supplimental disability policy to ensure your retirement is intact is necessary

can I not save... and be able living in la vida loca retirement?

Dang... I may have to move overseas...

Several good calculators on this American Funds retirement site:

CALCULATORS

Skipping 59 Messages...
5% return on an investment of 1.5M is very good. You live off of your investment returns which are invested in "safe" 5% US government bonds. ~= 35,000$/year. not too frugal if you own your home.



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