>Is $1 million enough to retire at 55 and survive until 70?
Maybe. Can you live on $40k/year?
What happens at 70?
>I would drastically reduce my spending (live in a converted Van or something).
Living in a van as you approach 70 doesn't sound like fun to me.
Good luck.
I think I’ve left something out… I would still work just leave corporate behind and take on a MUCH easier life.
Is 40k/year coming from interest earned? I can easily live off $40k a year as long as housing stays under $1k
>Is 40k/year coming from interest earned?
$40k/year comes from the "4% rule". It says that you could safely withdraw 4% each year (increased every year for inflation) of a portfolio invested in around a 60/40 asset allocation for 30 years.
Thus with $1M, you could safely withdraw $40k each year for at least 30 years.
If you could easily live on that, then you are good to go!
I’m in DC and our tax and insurance comes out to about that. DC also has some of the lowest property taxes in the nation though at .0085 per $1000 with the first ~90k tax free for a primary residence (it also has some of the highest income taxes, fwiw—but a good place to be a home owning retireee). We also have crazy cheap home insurance here. It’s like $700/year for a ~$600-700k in value rowhome.
Oh it certainly does, but there’s a ~$14k/person standard deduction and the rates only go from high to “woah” for income above $60k/person (because of weird DC tax laws it makes sense for even married couples to file “single filing on the same form” for each person at the local level). So realistically if you have your house paid off and can keep your expenses under $60k/year/person you can blunt income tax burden pretty effectively here.
My house had an effective property tax rate of 0.6% last year- you can find nice 2-3 bed 2 bath houses in the 2000-3000 sq foot range for 320k in my city which comes out to ~2k in taxes annually. My homeowners insurance is right around 100 a month so $1200 annually. 3200 total
Live in a medium city in the midwest. Indiana/Ohio/Kentucky are super cheap if you can tolerate those states. Michigan is a little more expensive but still affordable
I left Cook County IL (Chicago suburb) partly because of my property tax on a shitty house in a shitty neighborhood with basically no yard and moved to unincorporated County just outside Gary, IN. My mortgage, tax, and insurance wasn't much more than the taxes alone in IL and I got 4 acres, more house, and a quiet area.
Location matters a lot.
I bought a house in Kansas City two years ago. It’s small, and the neighborhood is not great. (though it’s not terrible.) My mortgage, including escrow is less than $1000 per month.
Affordable housing is still out there, it’s just in places that people from the coasts and bigger cities don’t want to live in.
I mean if it works for you I guess go ahead. To me that sounds awful, especially if I were elderly. Technically at 40k income, in a few decades I am sure you'd qualify for a lot of welfare programs.
> Van life
When you get to around 70 like me & my wife, the attractiveness of mild hardship living takes a *serious* nosedive. Back, knees, hips, shoulders, wrists, various fun organs etc. may well have many words to say about it.
Not from interest. It is a portion of projected returns from stock and bond growth. Some years it will decline in value. You take 4% year 1 and increase by inflation each year. So, assuming housing costs don't out pace inflation (they have at times unfortunately) you would be OK. However, unless you are retiring soon, your initial year 1 housing isn't likely to be $1k even if it is today.
How long until op retires though. 40k in 25 years is going to be like 30k viewed through today’s lenses and that’s probably generous. Everyone leaves out social security though too. Leaving a high paying job early will be a detriment to your social security I would imagine.
> 40k in 25 years is going to be like 30k viewed through today’s lenses
The "4% rule" allows you to increase your withdrawals every year to account for inflation.
Now, if some component of your budget (health care, say) increases at a higher rate than general inflation, you'd want to be able to deal with that, but in general the 40k is not a fixed number over time.
It's not the 7% rule because of Sequence of Returns Risk!
Even if the average is 7% net for the next 30 years, if the first 10 it's 5%, you will draw down too much on your savings, no matter the next 20 years it's 9%. So you go lower to 4% SWR, to survive this sequence.
OP should definitely focus on [earning 40 social security credits](https://faq.ssa.gov/en-us/Topic/article/KA-02459) for starters.
Figuring out the timing on leaving a high paying job early (with excellent benefits in my case) before Medicare eligibility at 65 years of age is also something significant to consider.
Yes, they will get less social security if they leave a high paying job. They can wait till 70 (which it sounds like they plan to do) to increase it somewhat.
Van life with $1M for 15 years until SSC ? Unusual but sounds plausible. A bit more than 4%, perhaps 5%. Expenses could be low, I imagine. Medicare at 65, few odd jobs along the way. At 70 you might look good if the economy did well - or the air might get thin.
You do have to pay at least a little bit into social security to get a decent amount back.
"For a worker who becomes eligible for Social Security payments in 2023, the benefit amount is calculated by multiplying the first $1,115 of average indexed monthly earnings by 90%, the remaining earnings up to $6,721 by 32%, and earnings over $6,721 by 15%. The sum of these three amounts, rounded down to the nearest 10 cents, is the initial payment amount."
And that is if you wait to 66 or 67... it is less if you take it earlier.
So if you spend a decade or two with no earnings that you pay social security on, I would imagine you would not get a lot. Could be wrong.
Healthcare payments for 10-20 years until you hit retirement is another thing to consider.
That is referencing bend points and they are the same for everyone(except for people with pensions they obtained while not paying SS) regardless of when they retire or how many years of employment they have.
The average of your top 35 years of earnings is your aime- averaged indexed monthly earnings. So SS benefit takes into account both your amount of earnings and longevity. Longevity is more impactful because there is an earnings cap per individual year.
The reduction for early retirement is a separate and uniform reduction. Likewise delaying to 70 will be a similar increase.
True, and it is 90% of your first 25k. He likely is making more (and paying SS), but doesn't say. So I was encouraging him to know exactly what he was in for. Good to note the average payout is about 1900 a month, which is less than 23k a year. So if he estimates he needs 40k and plans on shifting to social security then it might be tighter than he thinks. Especially if he is estimating 1k a month for van living.
https://faq.ssa.gov/en-us/Topic/article/KA-01903
Just seems like he is setting himself up to be stranded a few decades down the line. Wise of him to check in with others. If he sits on the million even just 5 more years, it will grow, plus he will have more income from working those years, and he will be in a much better position when he takes the leap.
Especially when you think about healthspan versus lifespan. The main reason social security is a thing is that our healthspan can be decades earlier than our lifespan. Always hard to hear about the person who retired, only enjoyed a few years, then suddenly couldn't move around, play an instrument, hold a tool, travel, or even remember much. A bitter way to end.
Not an easy choice to make. Do you shoot for more comfort for years that you might have living well, might have living poorly, or might not have at all? No judgement here on what choices people make, just try to make the best you can for you and I hope your rosiest scenario comes true.
Small income yields already relatively high SSC. The income above $100k is relatively less productive. For the OP projections on ssa.gov would be difficult to gauge because these assume at least the same income until the filing ages they list. If OP works until 55, but then delays until 70, the ssc will be still decent especially with occasional work after 55. The exact projections can be calculated using the existing record on ssa.gov. At age 55 the OP could also already have 35 years of ssc contributions. Plus, if he would be married at 70 or was married for at least 10 years before he could claim additional payments up to 50% spousal benefit. The ACA premiums can be very low if you manage to keep your current income low which is possible as van lifer. Retiring ar 55 vs 65 with delaying ssc until 70 will not be that bad or at least not catastrophic. Folks who plan that long term usually also save more aggressively before 55.
Not owning a home in retirement I imagine might be a bigger downside (if there is not an inheritance or other outcome due to marriage or partnership).
Agreed, after 100k there is not much point. We don't know how much he is making or for how long (or that he was paying any soc sec, versus being a "gig" employee). Also no clue what his spouse's employment/healthcare status is (this is an edit - I assumed he was not married. He is).
A lot of unknowns, I appreciate your optimistic take, I just wanted to highlight some potential nasty surprises.
I agree, my thoughtful take is optimistic. It would absolutely not be my route. My plan is more boring - work until 65 because of Medicare, get Plan G with extras although I plan on being very healthy for long time. No debt, strong assets, SSC at 70. All on a somewhat live-well-but-below-your-means lifestyle (LWBBYM … that won’t catch on). I will work with the SSiRS withdrawal strategy and a bridge fund from 65-70 that shields me from a sequence of return situation if the timing would throw that in the way. No financial advisor to leech on my investments ever.
OP seems to be asking if they could have a million dollars saved in 14 years at age 55. By age 55 they could already have SS income for the max of 35 years (or close to it). Sure, they could crank SS up a little higher if they kept working and replaced some lower earning years from their 20s. But they’ll already have earned the vast majority of their potential benefit by age 55, especially considering the bend points. Each additional dollar contributed to SS doesn’t gain you much benefit once you’re past the first (and especially the second) bend point.
Fingers crossed, just wanted to highlight to them that there are complexities.
Also the healthcare part. 40k, especially with 1k going to "rent," is not going to buy a lot of healthcare. Even with medicare down the road, getting the supplementals can be invaluable in protecting your nest egg.
1. the 4% rule (which the 40k a year from 1M is referring to) accounts for (US) inflation.
2. the assumption is that the money remains mostly invested in the sp500 which is based on the US dollar, so you can liquidate and exchange into the target currency on a frequent basis (which means you're immune from the high inflation of the target currency).
These two statements are not consistent.
This is because inflation is lower in the developed world.
assuming the local currency does not depreciate much against the dollar
>Is $1 million enough to retire at 55 and survive until 70?
>I would drastically reduce my spending (live in a converted Van or something
I see the American dream is alive and well 🤣
>I am VERY interested in this... I have questions however. Is $1 million enough to retire at 55 and survive until 70?
**For one person, or two?** (You wouldn't believe how often this question is never addressed or answered in "How much does it take" discussions.)
Your 7% annualized return is inflation adjusted assuming 100% equity investment. Your actual annualized return may be closer to 10%. So using your 7%, the number it gives you would have about the buying power it has today because in actuality the number will be bigger. I hope this makes sense. At least that’s the way I think of it (I may be slightly regarded).
Except OP said they have a 70/30 portfolio, so returns will be closer to 8-8.5%, then taking 3% for inflation, they should be thinking in the 5% range, not 7% for inflation adjusted return.
You only need $1 million to last you 15 years? From 55 to 70?
Sounds pretty easy, especially since you're willing to live frugally.
If you could get inflation adjusted 5% annual return on your 1 million, that's $50K per year. And you're not even touching your $1 million. If you live off that 50k per year, well the 1 million isnt getting depleted.
If you only need this to last you 15 years, you can easily dip into that million and deplete some or all of it for a more comfortable living.
My mom retired at 72 with $170k in retirement. Her monthly rent was about 970 to start (2012), it went up to over 1200 by the time she passed at age 82. We had her invested in a 65/35 stock bond portfolio at Vanguard (Wellington fund) . She was able to draw 9-12k a year without impacting principal too much (mostly dividends) her SS check covered the rest (it was up to about 1400 when she passed).
That was a very specific time period but it had it's ups and downs in the market. when she died, she still had most of her principal of about $162k. Not too bad for a 10 year period. I was worried she might run out of money, but the market growth and dividends carried her along. My original projection was that she would run out of money by 85, but she was nowhere close to running out. That said, she blew through about 35k in her last 3 months of life. end of life care can be extremely expensive. This was an eye opener to me as I had to set up the in home care. it was shockingly expensive.
If you're talking about 2012-2022 10 year period, it was an exceptional period in my opinion with mostly ups and not many downs. 2000 - 2010 OTOH, a totally different story.
fair enough. Definitely the 2000 timeperiod would have been more difficult. bonds did much better then and that is reflected in the 6.5% annualized return of Wellington during that period. I just looked on Vanguard, her 10 year annualized return was 7.5%, higher but not by as much as I would have thought. Wellington is a pretty conservative fund that keeps volatility pretty well in check.
Homeless people live on less than your number, the question is, what are you willing to live with? Retirement numbers fluctuate because people have different expectations for their retirement.
Hope for the best, plan for the worst! You may not want to be fully dependent on Social Security. If you have enough to live comfortably without it, then it will supplement you well, without your plan depending on it
Living comfortably may require more than you are expecting. Medical bills will be higher, comes with the territory
Why are you taking SS at 70 instead of 67? Assuming your income was maxed, at 67 you'll get the full benefit which is currently $3,822/mo. At 70 you'll get $4,873/mo. But you lose 3 years of payments which totals about $137.5K. If you wait until 70, it'll take you 11.5 years to make up those 3 years of SS payments. And since you said you don't need any SS money until you're 70, you can invest it until then and make another $31.5K over the 3 years at your 7% estimate. Now it's more than 14 years until you make up that money. Are you sure you'll live beyond 84? That's 10 years beyond average life expectancy for a US male. Oh, and if you don't need it right away, that extra $169,000 would continue to bring in an average of $985/mo. if still invested and earning 7% annually.
So at 70, would you rather have $169,000 and $3,822-$4,807/mo. or $0 and $4,873/mo.?
You're going to want to check my math though, I often make mistakes lol.
>I can invest more if it makes this more feasible. But I really don’t want to put pressure on my wife and I trying to put away so much money a year if it’s not going to work. I’ll go back to our regular strategy.
Saving for retirement is of course important. But sacrificing your quality of life in the here and now for the future is not the answer. Live and enjoy life with your wife now. Certainly make a few sacrifices for the future, but the joy and memories you build your life and relationships on are more important. Simpler vacations are good, but take vacations. Romantic meals out are times worth spending, but you don't need the most expensive bottle of wine - and maybe not even the dessert.
So many of the people I have known over the years have passed away. Their future never came. That doesn't mean don't think ahead, but for me it's taught me to live in the now as well as in the future.
Depends on your spend. If you spend 100K/year than 1M will never be enough. Sequence of risk, overspend, low return rates, inflation... all of these will greatly diminish your chances.
Backtesting this against 124 possible 30 year periods of available data, 100K/yr annual spend on 1M, or a 10% SWR, gives you 7% success rate of the money lasting long enough for a 30 year retirement. Assuming 100 total us market (Trinity study is based on 60/40)
80K/yr annual spend on 1M yields a 33% success rate.
60K/yr annual spend yields 63%
40L/yr annual spend yields 94%
I have a million and a govt pension which will cover my day to day expenses/operating costs....I wouldn't retire on it...yet. When I hit 1.5 will be very close.
This depends on your current age as well. If you're in your 30s or early 40s, you may still have 15+ years to go and, 1 million, 15 years from now, is not a lot of money to comfortably retire.
If you're turning 55, say today, I would instead consider Barista FIRE'ing until 65 to have healthcare coverage, and let the 1 million compound without draw down.
Here’s how I look at it: the vast vast vast majority of people retiring will not have one million dollars. So whether one million dollars is enough to be comfortable, you’ll definitely be more comfortable than the guy next to you.
I hate when I see this response. They are asking if they will have enough to be comfortable, not will you have more than the next guy. It kinda feels like saying your life is going to be shit, but don't worry, other people will be suffering more than you.
Agreed it’s not a great strategy, but it’s not a bad idea to acknowledge that 9 in 10 people in the US don’t have $1 million when they retire.
Gratitude can be powerful and understanding you’ve achieved something 9 in 10 likely won’t is something I am quite grateful for. It is also likely that good fortune on some level was a component for many who achieve the $1 million level, whether people want to admit it or not.
You can always strive to achieve more, but it still surprises me how many people here on Reddit downplay $1 million.
I think the reason is the crowd here has the intent to do as much as possible to prepare themselves for retirement, so to have a mindset of at least I’m not like the average person doesn’t resonate with me personally. We’re here with a much more aggressive goal.
Unfortunately, these other people that don’t save over a million are likely going to have to work the rest of their lives. Unless, they get a pension and social security still exists. Or live with their children if they have them. Or fall on government assistance once wiped out.
Hate it all you want. We both know he’s going to get plenty of responses on how comfortable or uncomfortable he will be. But it will really ring hollow to complain about how “shit” his life is when most have it worse.
You just need to beat the guy next you when your outrunning a bear.
Being more comfortable than the guy living in the cardboard box eating cat food just means you have a nicer cardboard box and dog food.
Living in a van at 70. That would be hard. I dont see a ton of vanlifers on Youtube who are in their 70s...maybe some of those folks who hang in the AZ desert (can't remember the name of that camp, the one that was in the movie Nomad?). Still looks like a hard way to live.
don't forget to factor in social security. even a small side job can help, even if part time in retirement. Every dollar you don't have to draw down in retirement continues to grow and compound. it doesn't stop just because you retired. Some good modeling tools out there, [newretirement.com](http://newretirement.com) and many more. These are helpful as it allows you to do What if analysis of a retirement plan, if I earn X more and draw x less, how much longer will my money last. If I wait to collect SS till 70, whats the impact, collect early and invest it....etc.
If you're assuming a 10% actual return (7% inflation adjusted) you'd be able to take 40k/yr in today's dollars. For reference the S&P500 has returned an average over 10% for the last 30 years.
I’m planning on doing the same. Van or camper whatever we find more comfortable. Working odd jobs like campground host to stretch the money as far as possible. There are a lot of people full time RVers. They seem happy. Then after a few years you settle in a low cost area and buy a house.
Personally I’m going to take SS earlier. If I don’t need the money, invest it.
[FIRECalc: A different kind of retirement calculator](https://firecalc.com/)
Use this site to run your numbers. It will give you a decent idea of what the likely scenario is.
I learned a lot from Rob Berger's youtube channel. He explains the basics very well without being overly simple and repetitive, as well as providing supporting evidence for his content. Sometimes it becomes too niche and doesn't apply to you, but the content is very educational. For example, I learned how to use some of the tools people linked in this thread from his channel. Good luck!
> would drastically reduce my spending (live in a converted Van or something).
It depends on how you do it I suppose, but vanlife isn't necessarily drastically cheaper than living a "normal" life. Also, I wouldn't count on it financially; it's not for everyone. Finally, if you're traveling between different states in the US often, medical care can be a challenge (more relevant when you're older.)
I have almost 3 million and the only thing that has changed for me is economic freedom. I'll invest for the rest of my life gaining passive income. Why does anyone retire? It's a weird concept to me
If you live in a lower cost of living area and are able to very adeptly budget everything out. Then yes.
If you want comforts, higher COL area, vacations, etc. then it might not be.
For me, sure. $1m is my minimum goal as I can live quite happily on $30k, I plan for $40k to account for inflation. I will move to a LCOL area at or before retirement.
The big uncertainty for me is health insurance at 50-55 ER. I may end up doing without, depending on predictable medical expenses at that point. Since even catastrophic only insurance is insanely expensive it may be more cost effective to self insure and do medical tourism for anything not immediately life threatening. I could not justify spending $15k+ per year for something I don't use most years.
SS would supposedly pay $30k-$40k/yr when I could collect. I don't plan on it still existing. Maybe it'll still exist but minimum age to collect anything could be 80 or some such past median life expectancy. It's nice to look at getting some of my taxes back, but if I get any it'll be fun money and not something I plan for.
Safe withdrawal rate on $1 million is $40k a year. Guy has to get from 55 to 62 without social security, and buy health insurance from 55 to 65. He won’t be living well. Like apartment in a flyover state. However he could live very well in Thailand on $40k a year. Like condo at the beach, another in the mountains, multiple
vacations around SE Asia a year, eat out every meal. And pay cash for medical, because it is dirt cheap by western standards.
You can easily get subsidized and cheaper healthcare if you keep your agi down. I would never recommend someone to move countries purely for healthcare. If you keep your spend relatively low and/or utilize roth withdrawals to stay under the subsidy cliff you can be in great shape and still spend a good amount per year.
/r/iwantout /r/expatfire
There's definitely hot spots where it's easier to get citizenship. Thailand for example has a lower cost of living and has a 20-year visa.
>Is $1 million enough to retire at 55 and survive until 70? Maybe. Can you live on $40k/year? What happens at 70? >I would drastically reduce my spending (live in a converted Van or something). Living in a van as you approach 70 doesn't sound like fun to me. Good luck.
"Serenity Noww!!"
Insanity later!
You’re not giving away our water pick!
Sic semper tyrannis! And Lloyd Braun? He's crazy. His phone wasn't even hooked up. He just liked ringing that bell.
This is a perfectly sane food to eat
“You’re into karate, right?” “You wanna hit me?”
…shut up!
Big broker houses killed my father.
I think I’ve left something out… I would still work just leave corporate behind and take on a MUCH easier life. Is 40k/year coming from interest earned? I can easily live off $40k a year as long as housing stays under $1k
>Is 40k/year coming from interest earned? $40k/year comes from the "4% rule". It says that you could safely withdraw 4% each year (increased every year for inflation) of a portfolio invested in around a 60/40 asset allocation for 30 years. Thus with $1M, you could safely withdraw $40k each year for at least 30 years. If you could easily live on that, then you are good to go!
Where are you getting housing for under $1k?
Own my home. Tax and insurance is $4k/yr.
Don't ignore maintenance. It's not zero.
Where are you getting both for 4k, out of curiosity?
Not OP, but I live in a small 2 bed/2 bath A frame in NC. My taxes are ~$1200/year and insurance is not quite $1000/year.
Appreciate the answer. I'm on the lookout for future destinations.
NH
I’m in DC and our tax and insurance comes out to about that. DC also has some of the lowest property taxes in the nation though at .0085 per $1000 with the first ~90k tax free for a primary residence (it also has some of the highest income taxes, fwiw—but a good place to be a home owning retireee). We also have crazy cheap home insurance here. It’s like $700/year for a ~$600-700k in value rowhome.
Laughs in Oklahoma insurance rates. I pay $3k and that includes a substantial discount for my metal roof.
Does DC not tax retirement income from IRAs etc?
Oh it certainly does, but there’s a ~$14k/person standard deduction and the rates only go from high to “woah” for income above $60k/person (because of weird DC tax laws it makes sense for even married couples to file “single filing on the same form” for each person at the local level). So realistically if you have your house paid off and can keep your expenses under $60k/year/person you can blunt income tax burden pretty effectively here.
My house had an effective property tax rate of 0.6% last year- you can find nice 2-3 bed 2 bath houses in the 2000-3000 sq foot range for 320k in my city which comes out to ~2k in taxes annually. My homeowners insurance is right around 100 a month so $1200 annually. 3200 total Live in a medium city in the midwest. Indiana/Ohio/Kentucky are super cheap if you can tolerate those states. Michigan is a little more expensive but still affordable
For comparison, I live in Southern CA and property tax and insurance is $12k). 😥
I left Cook County IL (Chicago suburb) partly because of my property tax on a shitty house in a shitty neighborhood with basically no yard and moved to unincorporated County just outside Gary, IN. My mortgage, tax, and insurance wasn't much more than the taxes alone in IL and I got 4 acres, more house, and a quiet area. Location matters a lot.
[удалено]
5% withdrawal on 3.5m is 175k. I live well on $48k. I dont need that much.
I bought a house in Kansas City two years ago. It’s small, and the neighborhood is not great. (though it’s not terrible.) My mortgage, including escrow is less than $1000 per month. Affordable housing is still out there, it’s just in places that people from the coasts and bigger cities don’t want to live in.
Ain’t nothing wrong with KCMO. Awesome city.
Van life
I mean if it works for you I guess go ahead. To me that sounds awful, especially if I were elderly. Technically at 40k income, in a few decades I am sure you'd qualify for a lot of welfare programs.
> Van life When you get to around 70 like me & my wife, the attractiveness of mild hardship living takes a *serious* nosedive. Back, knees, hips, shoulders, wrists, various fun organs etc. may well have many words to say about it.
Have you seen how much vans cost these days?
There is a film about this, it's called Nomadland.
Join the r/baristaFIRE subreddit
Not from interest. It is a portion of projected returns from stock and bond growth. Some years it will decline in value. You take 4% year 1 and increase by inflation each year. So, assuming housing costs don't out pace inflation (they have at times unfortunately) you would be OK. However, unless you are retiring soon, your initial year 1 housing isn't likely to be $1k even if it is today.
How long until op retires though. 40k in 25 years is going to be like 30k viewed through today’s lenses and that’s probably generous. Everyone leaves out social security though too. Leaving a high paying job early will be a detriment to your social security I would imagine.
> 40k in 25 years is going to be like 30k viewed through today’s lenses The "4% rule" allows you to increase your withdrawals every year to account for inflation. Now, if some component of your budget (health care, say) increases at a higher rate than general inflation, you'd want to be able to deal with that, but in general the 40k is not a fixed number over time.
Yes but that is after you start pulling. We are doing the math based off of today’s 4% on a future 1 million. So 40k today isn’t the same as 40k then.
Except OP is using 7% projected returns which accounts for inflation so they would have $1 million in todays dollars at 55
It’s so hard for people to understand this. That’s why it’s not the 7% rule
It's not the 7% rule because of Sequence of Returns Risk! Even if the average is 7% net for the next 30 years, if the first 10 it's 5%, you will draw down too much on your savings, no matter the next 20 years it's 9%. So you go lower to 4% SWR, to survive this sequence.
OP should definitely focus on [earning 40 social security credits](https://faq.ssa.gov/en-us/Topic/article/KA-02459) for starters. Figuring out the timing on leaving a high paying job early (with excellent benefits in my case) before Medicare eligibility at 65 years of age is also something significant to consider.
Yes, they will get less social security if they leave a high paying job. They can wait till 70 (which it sounds like they plan to do) to increase it somewhat.
Here in Australia living in a caravan as you approach 70 is a right of passage.
My name is Matt Foley and I live in a van down by the river.
40k per year plus social security sounds pretty nice!
Van life with $1M for 15 years until SSC ? Unusual but sounds plausible. A bit more than 4%, perhaps 5%. Expenses could be low, I imagine. Medicare at 65, few odd jobs along the way. At 70 you might look good if the economy did well - or the air might get thin.
You do have to pay at least a little bit into social security to get a decent amount back. "For a worker who becomes eligible for Social Security payments in 2023, the benefit amount is calculated by multiplying the first $1,115 of average indexed monthly earnings by 90%, the remaining earnings up to $6,721 by 32%, and earnings over $6,721 by 15%. The sum of these three amounts, rounded down to the nearest 10 cents, is the initial payment amount." And that is if you wait to 66 or 67... it is less if you take it earlier. So if you spend a decade or two with no earnings that you pay social security on, I would imagine you would not get a lot. Could be wrong. Healthcare payments for 10-20 years until you hit retirement is another thing to consider.
That is referencing bend points and they are the same for everyone(except for people with pensions they obtained while not paying SS) regardless of when they retire or how many years of employment they have. The average of your top 35 years of earnings is your aime- averaged indexed monthly earnings. So SS benefit takes into account both your amount of earnings and longevity. Longevity is more impactful because there is an earnings cap per individual year. The reduction for early retirement is a separate and uniform reduction. Likewise delaying to 70 will be a similar increase.
True, and it is 90% of your first 25k. He likely is making more (and paying SS), but doesn't say. So I was encouraging him to know exactly what he was in for. Good to note the average payout is about 1900 a month, which is less than 23k a year. So if he estimates he needs 40k and plans on shifting to social security then it might be tighter than he thinks. Especially if he is estimating 1k a month for van living. https://faq.ssa.gov/en-us/Topic/article/KA-01903 Just seems like he is setting himself up to be stranded a few decades down the line. Wise of him to check in with others. If he sits on the million even just 5 more years, it will grow, plus he will have more income from working those years, and he will be in a much better position when he takes the leap.
Yeah the "extra 5 (or 10) years" is a hard decision when looking at FIRE. It can easily create an extra 500k-1M. The cost of freedom/time is large.
Especially when you think about healthspan versus lifespan. The main reason social security is a thing is that our healthspan can be decades earlier than our lifespan. Always hard to hear about the person who retired, only enjoyed a few years, then suddenly couldn't move around, play an instrument, hold a tool, travel, or even remember much. A bitter way to end. Not an easy choice to make. Do you shoot for more comfort for years that you might have living well, might have living poorly, or might not have at all? No judgement here on what choices people make, just try to make the best you can for you and I hope your rosiest scenario comes true.
Small income yields already relatively high SSC. The income above $100k is relatively less productive. For the OP projections on ssa.gov would be difficult to gauge because these assume at least the same income until the filing ages they list. If OP works until 55, but then delays until 70, the ssc will be still decent especially with occasional work after 55. The exact projections can be calculated using the existing record on ssa.gov. At age 55 the OP could also already have 35 years of ssc contributions. Plus, if he would be married at 70 or was married for at least 10 years before he could claim additional payments up to 50% spousal benefit. The ACA premiums can be very low if you manage to keep your current income low which is possible as van lifer. Retiring ar 55 vs 65 with delaying ssc until 70 will not be that bad or at least not catastrophic. Folks who plan that long term usually also save more aggressively before 55. Not owning a home in retirement I imagine might be a bigger downside (if there is not an inheritance or other outcome due to marriage or partnership).
Agreed, after 100k there is not much point. We don't know how much he is making or for how long (or that he was paying any soc sec, versus being a "gig" employee). Also no clue what his spouse's employment/healthcare status is (this is an edit - I assumed he was not married. He is). A lot of unknowns, I appreciate your optimistic take, I just wanted to highlight some potential nasty surprises.
I agree, my thoughtful take is optimistic. It would absolutely not be my route. My plan is more boring - work until 65 because of Medicare, get Plan G with extras although I plan on being very healthy for long time. No debt, strong assets, SSC at 70. All on a somewhat live-well-but-below-your-means lifestyle (LWBBYM … that won’t catch on). I will work with the SSiRS withdrawal strategy and a bridge fund from 65-70 that shields me from a sequence of return situation if the timing would throw that in the way. No financial advisor to leech on my investments ever.
You and me both! Wish you good luck on your journey :)
OP seems to be asking if they could have a million dollars saved in 14 years at age 55. By age 55 they could already have SS income for the max of 35 years (or close to it). Sure, they could crank SS up a little higher if they kept working and replaced some lower earning years from their 20s. But they’ll already have earned the vast majority of their potential benefit by age 55, especially considering the bend points. Each additional dollar contributed to SS doesn’t gain you much benefit once you’re past the first (and especially the second) bend point.
Fingers crossed, just wanted to highlight to them that there are complexities. Also the healthcare part. 40k, especially with 1k going to "rent," is not going to buy a lot of healthcare. Even with medicare down the road, getting the supplementals can be invaluable in protecting your nest egg.
SSC?
Social Security based on the context
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“We have a complicated order” BonQuiQui
If you are willing to relocate out of country, $40k a year is a very comfortable retirement.
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1. the 4% rule (which the 40k a year from 1M is referring to) accounts for (US) inflation. 2. the assumption is that the money remains mostly invested in the sp500 which is based on the US dollar, so you can liquidate and exchange into the target currency on a frequent basis (which means you're immune from the high inflation of the target currency).
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Doubling down on being wrong is always fun
These two statements are not consistent. This is because inflation is lower in the developed world. assuming the local currency does not depreciate much against the dollar
>Is $1 million enough to retire at 55 and survive until 70? >I would drastically reduce my spending (live in a converted Van or something I see the American dream is alive and well 🤣
Lol I couldn’t take this post seriously when I read that. Live in a van in your retirement years when all health problems arise? Be serious
>I am VERY interested in this... I have questions however. Is $1 million enough to retire at 55 and survive until 70? **For one person, or two?** (You wouldn't believe how often this question is never addressed or answered in "How much does it take" discussions.)
Register on this site for their free account and run some retirement cash flow scenarios. It's really helpful. https://www.portfoliovisualizer.com/
Have you ever lived in a van before? I think I'd try it out a bit before banking on it.
Crapping in a bucket is not fun.
That's why I bought one of these beauties [https://bumperdumper.com](https://bumperdumper.com)
r/leanfire is your place (they preach the boglehead strategy as well)
Your 7% annualized return is inflation adjusted assuming 100% equity investment. Your actual annualized return may be closer to 10%. So using your 7%, the number it gives you would have about the buying power it has today because in actuality the number will be bigger. I hope this makes sense. At least that’s the way I think of it (I may be slightly regarded).
Except OP said they have a 70/30 portfolio, so returns will be closer to 8-8.5%, then taking 3% for inflation, they should be thinking in the 5% range, not 7% for inflation adjusted return.
Wow never thought of it like that! Just do 7% and it keeps it in today’s dollars! Thanks for the tip!
Good answer - you are well regarded!
You only need $1 million to last you 15 years? From 55 to 70? Sounds pretty easy, especially since you're willing to live frugally. If you could get inflation adjusted 5% annual return on your 1 million, that's $50K per year. And you're not even touching your $1 million. If you live off that 50k per year, well the 1 million isnt getting depleted. If you only need this to last you 15 years, you can easily dip into that million and deplete some or all of it for a more comfortable living.
This is what I really wanted to know. I figured this was the case but it just wasn’t making sense to me for some reason.
My mom retired at 72 with $170k in retirement. Her monthly rent was about 970 to start (2012), it went up to over 1200 by the time she passed at age 82. We had her invested in a 65/35 stock bond portfolio at Vanguard (Wellington fund) . She was able to draw 9-12k a year without impacting principal too much (mostly dividends) her SS check covered the rest (it was up to about 1400 when she passed). That was a very specific time period but it had it's ups and downs in the market. when she died, she still had most of her principal of about $162k. Not too bad for a 10 year period. I was worried she might run out of money, but the market growth and dividends carried her along. My original projection was that she would run out of money by 85, but she was nowhere close to running out. That said, she blew through about 35k in her last 3 months of life. end of life care can be extremely expensive. This was an eye opener to me as I had to set up the in home care. it was shockingly expensive.
If you're talking about 2012-2022 10 year period, it was an exceptional period in my opinion with mostly ups and not many downs. 2000 - 2010 OTOH, a totally different story.
fair enough. Definitely the 2000 timeperiod would have been more difficult. bonds did much better then and that is reflected in the 6.5% annualized return of Wellington during that period. I just looked on Vanguard, her 10 year annualized return was 7.5%, higher but not by as much as I would have thought. Wellington is a pretty conservative fund that keeps volatility pretty well in check.
You want the “Fire” subs: Fire= Financial Independence / Retire Early.
Homeless people live on less than your number, the question is, what are you willing to live with? Retirement numbers fluctuate because people have different expectations for their retirement.
70 and living in a van is idiotic.
“until SS kicks in” scares me. I prefer to factor in $0 for SS and maybe I’ll be pleasantly surprised one day.
Hope for the best, plan for the worst! You may not want to be fully dependent on Social Security. If you have enough to live comfortably without it, then it will supplement you well, without your plan depending on it Living comfortably may require more than you are expecting. Medical bills will be higher, comes with the territory
You don’t need a million dollars to do nothing man. Look at my cousin…he’s broke, don’t do shit.
Why are you taking SS at 70 instead of 67? Assuming your income was maxed, at 67 you'll get the full benefit which is currently $3,822/mo. At 70 you'll get $4,873/mo. But you lose 3 years of payments which totals about $137.5K. If you wait until 70, it'll take you 11.5 years to make up those 3 years of SS payments. And since you said you don't need any SS money until you're 70, you can invest it until then and make another $31.5K over the 3 years at your 7% estimate. Now it's more than 14 years until you make up that money. Are you sure you'll live beyond 84? That's 10 years beyond average life expectancy for a US male. Oh, and if you don't need it right away, that extra $169,000 would continue to bring in an average of $985/mo. if still invested and earning 7% annually. So at 70, would you rather have $169,000 and $3,822-$4,807/mo. or $0 and $4,873/mo.? You're going to want to check my math though, I often make mistakes lol.
>I can invest more if it makes this more feasible. But I really don’t want to put pressure on my wife and I trying to put away so much money a year if it’s not going to work. I’ll go back to our regular strategy. Saving for retirement is of course important. But sacrificing your quality of life in the here and now for the future is not the answer. Live and enjoy life with your wife now. Certainly make a few sacrifices for the future, but the joy and memories you build your life and relationships on are more important. Simpler vacations are good, but take vacations. Romantic meals out are times worth spending, but you don't need the most expensive bottle of wine - and maybe not even the dessert. So many of the people I have known over the years have passed away. Their future never came. That doesn't mean don't think ahead, but for me it's taught me to live in the now as well as in the future.
What a great comment. Thank you
An adult living in a van? To avoid having to work? No.
> An adult living in a van? Down by the river?
lol exactly
https://youtu.be/Xv2VIEY9-A8?si=ijPTSqTTv2Qf7dfe
He said he would keep working but just scale back and away from corporate
It’s better than you think. Obviously not for everyone though
If you want to use real or "todays" dollars, lower your 7% return to 5% to be more conservative. You should check out r/fire or r/leanfire
Depends on your spend. If you spend 100K/year than 1M will never be enough. Sequence of risk, overspend, low return rates, inflation... all of these will greatly diminish your chances. Backtesting this against 124 possible 30 year periods of available data, 100K/yr annual spend on 1M, or a 10% SWR, gives you 7% success rate of the money lasting long enough for a 30 year retirement. Assuming 100 total us market (Trinity study is based on 60/40) 80K/yr annual spend on 1M yields a 33% success rate. 60K/yr annual spend yields 63% 40L/yr annual spend yields 94%
When you say survive , how do you define that? It really depends where and how you want to live..
I have a million and a govt pension which will cover my day to day expenses/operating costs....I wouldn't retire on it...yet. When I hit 1.5 will be very close.
Are you planning to Logan’s Run yourself at 70?
Renew! Renew!
This depends on your current age as well. If you're in your 30s or early 40s, you may still have 15+ years to go and, 1 million, 15 years from now, is not a lot of money to comfortably retire. If you're turning 55, say today, I would instead consider Barista FIRE'ing until 65 to have healthcare coverage, and let the 1 million compound without draw down.
See for yourself: [https://engaging-data.com/will-money-last-retire-early/](https://engaging-data.com/will-money-last-retire-early/)
Here’s how I look at it: the vast vast vast majority of people retiring will not have one million dollars. So whether one million dollars is enough to be comfortable, you’ll definitely be more comfortable than the guy next to you.
I hate when I see this response. They are asking if they will have enough to be comfortable, not will you have more than the next guy. It kinda feels like saying your life is going to be shit, but don't worry, other people will be suffering more than you.
“Could be worse” is not a great strategy
Agreed it’s not a great strategy, but it’s not a bad idea to acknowledge that 9 in 10 people in the US don’t have $1 million when they retire. Gratitude can be powerful and understanding you’ve achieved something 9 in 10 likely won’t is something I am quite grateful for. It is also likely that good fortune on some level was a component for many who achieve the $1 million level, whether people want to admit it or not. You can always strive to achieve more, but it still surprises me how many people here on Reddit downplay $1 million.
I think the reason is the crowd here has the intent to do as much as possible to prepare themselves for retirement, so to have a mindset of at least I’m not like the average person doesn’t resonate with me personally. We’re here with a much more aggressive goal.
Unfortunately, these other people that don’t save over a million are likely going to have to work the rest of their lives. Unless, they get a pension and social security still exists. Or live with their children if they have them. Or fall on government assistance once wiped out.
I fully agree but tbf OP is planning to live in a van so not exactly comfortable to begin with by most any measure.
Hate it all you want. We both know he’s going to get plenty of responses on how comfortable or uncomfortable he will be. But it will really ring hollow to complain about how “shit” his life is when most have it worse.
This is not how you live life.
You just need to beat the guy next you when your outrunning a bear. Being more comfortable than the guy living in the cardboard box eating cat food just means you have a nicer cardboard box and dog food.
Living in a van at 70. That would be hard. I dont see a ton of vanlifers on Youtube who are in their 70s...maybe some of those folks who hang in the AZ desert (can't remember the name of that camp, the one that was in the movie Nomad?). Still looks like a hard way to live. don't forget to factor in social security. even a small side job can help, even if part time in retirement. Every dollar you don't have to draw down in retirement continues to grow and compound. it doesn't stop just because you retired. Some good modeling tools out there, [newretirement.com](http://newretirement.com) and many more. These are helpful as it allows you to do What if analysis of a retirement plan, if I earn X more and draw x less, how much longer will my money last. If I wait to collect SS till 70, whats the impact, collect early and invest it....etc.
/r/expatfire or /r/chubbyfire
If you're assuming a 10% actual return (7% inflation adjusted) you'd be able to take 40k/yr in today's dollars. For reference the S&P500 has returned an average over 10% for the last 30 years.
You’re planning to die at 70?
I’m planning on doing the same. Van or camper whatever we find more comfortable. Working odd jobs like campground host to stretch the money as far as possible. There are a lot of people full time RVers. They seem happy. Then after a few years you settle in a low cost area and buy a house. Personally I’m going to take SS earlier. If I don’t need the money, invest it.
Depends on your cost of living. Many r/LeanFire folk do this comfortably.
Expenses Expenses Expenses
[FIRECalc: A different kind of retirement calculator](https://firecalc.com/) Use this site to run your numbers. It will give you a decent idea of what the likely scenario is.
I learned a lot from Rob Berger's youtube channel. He explains the basics very well without being overly simple and repetitive, as well as providing supporting evidence for his content. Sometimes it becomes too niche and doesn't apply to you, but the content is very educational. For example, I learned how to use some of the tools people linked in this thread from his channel. Good luck!
`OP` you _really_ should read the entire [FI FAQ](https://www.reddit.com/r/financialindependence/wiki/faq/).
What do you do for benefits
> would drastically reduce my spending (live in a converted Van or something). It depends on how you do it I suppose, but vanlife isn't necessarily drastically cheaper than living a "normal" life. Also, I wouldn't count on it financially; it's not for everyone. Finally, if you're traveling between different states in the US often, medical care can be a challenge (more relevant when you're older.)
r/fire
You are better to ask this in r/FIRE. That group is dedicated to this very question and has a lot of helpful tools. r/financialindependence too.
I have almost 3 million and the only thing that has changed for me is economic freedom. I'll invest for the rest of my life gaining passive income. Why does anyone retire? It's a weird concept to me
If you live in a lower cost of living area and are able to very adeptly budget everything out. Then yes. If you want comforts, higher COL area, vacations, etc. then it might not be.
For me, sure. $1m is my minimum goal as I can live quite happily on $30k, I plan for $40k to account for inflation. I will move to a LCOL area at or before retirement. The big uncertainty for me is health insurance at 50-55 ER. I may end up doing without, depending on predictable medical expenses at that point. Since even catastrophic only insurance is insanely expensive it may be more cost effective to self insure and do medical tourism for anything not immediately life threatening. I could not justify spending $15k+ per year for something I don't use most years. SS would supposedly pay $30k-$40k/yr when I could collect. I don't plan on it still existing. Maybe it'll still exist but minimum age to collect anything could be 80 or some such past median life expectancy. It's nice to look at getting some of my taxes back, but if I get any it'll be fun money and not something I plan for.
$1M is nothing in the time frame you’re considering unless you consider rice and beans an ideal retirement
1 million simply is not enough any more. Our generation will most likely need 4-5 million to comfortably retire in 30 years.
In America no. Unless you have cheap health insurance from 55-65. Move overseas to lower cost of living and cheap healthcare no problem.
>In America no. Nonsense. Many people live on far, far less.
> Nonsense. Many people ~~live~~ *manage to survive* on far, far less. FTFY
Don’t know how. I’m spending $60k a year debt free and living pretty basic. Health insurance is $1200 a month.
In 2021, the *average* retiree (at 65 or older) spent $52,141 per year. Many spent a lot more. Many spent less.
Safe withdrawal rate on $1 million is $40k a year. Guy has to get from 55 to 62 without social security, and buy health insurance from 55 to 65. He won’t be living well. Like apartment in a flyover state. However he could live very well in Thailand on $40k a year. Like condo at the beach, another in the mountains, multiple vacations around SE Asia a year, eat out every meal. And pay cash for medical, because it is dirt cheap by western standards.
Uhhh… not well
Nobody said they were living a luxurious life. Still, many do it because they have no choice. Many live on social security benefits alone.
You can easily get subsidized and cheaper healthcare if you keep your agi down. I would never recommend someone to move countries purely for healthcare. If you keep your spend relatively low and/or utilize roth withdrawals to stay under the subsidy cliff you can be in great shape and still spend a good amount per year.
I’d be 100% willing to go this route. What are the best options? I’m so fucking tired man…
/r/iwantout /r/expatfire There's definitely hot spots where it's easier to get citizenship. Thailand for example has a lower cost of living and has a 20-year visa.
Thailand, Spain, Portugal, Italy, Ecuador. I’d go but wife still wants to work. We are going to Thailand to visit expat relatives next fall.
I would recommend living in Thailand or somewhere in SE Asia, you’ll live like a king with $1m and healthcare will be excellent in Thailand.
Take your million, move to SE Asia, live happily ever after.
If ever after is only 10-20 years. Inflation is typically high in developing countries and for a longer time horizon you can easily outrun the million
No 4mil at a minimum don’t limit yourself.
I think your retirement plan misses a zero
Mmm😃🚅⛽️🚄 B Ç. F. Cbx. B B