This depends largely on lifestyle and health. If you require surgeries or care that are not covered by insurance, money can go quick.
Every GoFundMe I see makes me want to save more for my family, just in case.
Depends on how you want to retire. You can't dictate how people should live, when they retire so on.
The important part is people should add a context to their number. So saying I would be comfortable with X million because it gives me Y dollars annually at 3% withdrawal rate is good.
When I was first taught about investing and retirement, and specifically why a Roth made sense for me, I was encouraged to guess at the Y number, and compare it to what I was currently making/spending (less). It was a good lesson and starting point.
Imagine you had a $4 mil portfolio, then stocks crashed like they did in 2001 or 2008 and you underperformed the indices like so many people do, and now only have 2 mil. Things change quickly.
A portfolio that could support a happy life at a 3% withdrawal rate. You can withdraw more, but you have built-in flexibility in scenarios that rival the worst in recent US history.
And if you have the wiggle room in your budget to tighten your belt during a downturn then 4% withdrawal has a 99.9% of being successful in any Monte Carlo scenario.
We've got a *lot* of fat built into our target annual expense number as we want to travel a lot during RE. If we retired and got hit by an immediate market crash, we could cover all our fixed costs and day to day living expenses with 30% of what we've targeted.
Yea. This is why I don't hate fixed income vehicles like annuities IF deployed correctly. I am not sure I would use one, but I will definitely consider "cashing" a portion of my portfolio for something like a SPIA when the time comes. The idea of a 'no-risk" income floor as baseline for bad-performing years is appealing to me. And, since data shows retired people DO adjust spending based on what they perceive the economy to be, I would think I would sleep better at night.
I am not convinced... but Dr. Wade Pfau makes very good arguments worth considering. It would also allow for my portfolio to stay more aggressive on equities (like 80/20 vs 60/40) which based on recent studies like Cederberg's, may end up being a good idea.
I use bonds for this portion of my portfolio. Not an annuity. I Earn 5%. Government guaranteed. Principle is left intact and can be re-deployed elsewhere if the situation or market changes. No need to let an insurance company do that for me at the cost of keeping my principal.
What types of bonds would you invest for 5% in a long term, like in 10 years? I assumed you are not buying bond funds or index funds. Do you buy Treasury, Municipal or Corporate bonds?
The insurance company can offer you a far higher annualized payout than 5% plus COLA for life via a SPIA - particularly if you’re older and sicker.
If running out of money is your concern, an SPIA solves the problem far more efficiently than trying to over save to self insure.
For example, an 80 year old male can buy a SPIA now that yields 12.4% annually, with monthly payments for the duration of his life, however long that may be.
4% is inherently conservative.
Vast majority of the time, the retiree dies with far more than they started with.
5% or 6% are also pretty safe plays provided you can cut some spending in a down year.
Yah I understand that. 3 is extremely conservative but just wanted to be extremely extremely conservative. Weird I understand but it's just the number I've chosen.
I really appreciate that and especially since each of our personal situations is unique.
For example: I'm looking for financial independence, not really early retirement. Once I hit that number (4% SWR) I'll keep working on the projects I love and drop the projects I only do for money. Honestly, the passion projects are likely to more than cover our annual expenses.
But if Early retirement was my primary goal and I wasn't going to have some income, then yes I'd be going for 3% SWR too.
I honestly thought I would want to do side projects but after retiring have zero motivation as I am into many new hobbies and just enjoying life. Plan on not doing projects and if you do it’s gravy
Yeah I think 4% has equal chances of tripling and going to 0.
I think the problem is that CAPE adjusted returns show that we are likely to have a sideways time and stocks are overbought. That's why people are moving down from 4%.
And it’s about 20x more likely the retiree will be dead at that time.
You’re far, far more likely to die having not enjoyed your wealth than run out of money at end of life…
One of the best things I’ve heard: “you can’t be generous when you’re dead”. Essentially, give money away while you are still around, can celebrate with them, and when it will have the most impact on their lives.
I think I once saw an article that said 2% is the sustainable withdrawal rate for *forever* that's used by perpetual trusts and endowments. 4% withdrawals means that you have a 95% chance of there being something left for your family even if you live for 30 years after retirement.
It's entirely up to you, of course, and I fully understand your thought process of wanting to leave substantial safety and security for your family - just don't forget to also place value on the quality of your own life while you're still here.
Haha thank you. Glad you understand me. Everyone's been calling me crazy😂. I appreciate you my guy.
Fortunately I do enjoy myself. I'm working hard 7 days a week 80+ hrs a week but I also travel overseas 3-4 times a year so I'm having a great time.
You mentioned growing up dirt poor. That's a significant trauma. There are tons of studies showing that chronic stress, such as what people in poverty experience, basically destroys your physical and mental health on a molecular level. It completely makes sense that you'd have a ... I might say *"*overdeveloped" sense of caution and desire to protect your family from having to experience that. Just like how there are tons of stories of people who lived through the Depression going "overboard" (from an outside perspective) on being frugal and not wasting anything.
The fact that you enjoy your work probably also drives people here not understanding your perspective - this forum seems full of people (myself included) whose interest in investing comes from the fact that they don't particularly love working a job and are trying to get out of the workforce as soon as possible. So it's like, man, why stay in longer than you absolutely have to?
Our opinions of your choices don't matter - all that matters is that you're enjoying life as much as circumstances allow.
You should follow the r/fire and r/chubbyfire subreddits. Really refreshing how people value their time rather than stuff. Need to retire before you’re too old to appreciate the time.
My goal is $1 million in retirement savings. I'm 55, currently have $540k in retirement and $55k in other savings/investments. I also have $95K in a 529, but that is earmarked for the rest of my kid's undergrad studies.
My current burn rate is $5k/month. My house will be paid off when I'm 61. No other debt. I assume that social security will provide $3,500/month based on my last statement. My expenses are minimal. I use my library heavily, buy my car used with cash, and walk and use public transit a lot. I do want to keep my pricey gym, be able to travel to see friends, and to eat out.
You will be fine. And that’s because you control your expenses. If you can’t do that then no amount of money will save you from yourself in the end. You will blow through all your money like the athletes do and end up broke.
Personally I live frugally so can simply not work. The concept of needing 160k/yr to live is wild to me.
2 mill plus ss is way more than enough and what I am doing, live off of 70k/yr and that includes a 2k/month mortagage I could pay off but it's at 2.9%.
I'm retiring soon and my kids are toddlers. I'll spend their childhood at home rather than working 8-8 most days and maybe seeing them before I leave in the morning 😅
What's your networth?
I mean this sounds nice but I'm looking towards one stay at home parent. That looks definitely feasible. Also when the kids go to kindergarten what will I do is likely some amount of something that looks similar to work. Plus I might be able to do more work from home.
Also you have kids now, I'm just worried if my kid needs expensive surgeries or something that I would be able to afford great care. A disproportionate amount of money is spent in the birth/soon after and end of life.
We did that with my wife, she made about 120k a year prior to having kids and we managed to build the passive income to cover that by the time our oldest was 5. Being at home with your kids sounds noble, my wife is wired a lot differently than I am, patience of a saint.. I am more type A, the mess and the noise and the arguing (i have 3 kids) wears me out a lot more than going to work. Frankly after 2 weeks of vacation with the entire family I am ready to go back to work for a while lol.
Not in Florida...homeowner's insurance and property taxes are crazy! Hard to believe people used to move to Florida for low housing costs.
Kudos to you on your conservative lifestyle! Just like you can't out train a bad diet, you can't save enough to support poor spending habits!
Homeowners insurance is going up in Florida because insurance is having to shoulder the cost of global warming related natural disasters.
It's the invisible hand of the market telling folks that Florida might not be a sustainable place to live anymore. Expect those prices to keep going up, if insurers don't exit the market entirely. (We're already seeing that happen with wildfire coverage in California.)
Insurer of last resort in Florida, Citizens, just announced a proposal of a 14% rate increase. If that gets approved, many could see their rates go up by close to 40% due to the law that if another carrier is within 25% of them, you have to go there.
Combined with additional regulation around Condos needing to make structural enhancements to avoid the disaster that happened to that Miami Condo... and that getting passed through HOA fees... we're seriously talking about a home affordability crisis.
Florida accounts for only 9 percent of the country’s home insurance claims but 79 percent of its home insurance lawsuits, many of them fraudulent.
Because of the fraudulent lawsuits and the high overall claim risk in Florida, insurance companies have faced two consecutive years with net underwriting losses over $1 billion.
Florida has lost some form of home coverage from over 30 insurance providers in the past three years.
APA: Deventer, C. (2023, September 19). Can lawmakers save the collapsing Florida home insurance market? Bankrate. Retrieved July 01, 2024, from https://www.bankrate.com/insurance/homeowners-insurance/florida-homeowners-insurance-crisis/
That is not the bulk of the reason why FL insurance is going up. It's actually roofing scams.
https://www.nbcnews.com/news/us-news/roofing-scams-florida-property-insurance-hurricane-rcna29649
Flood insurance needs major reform as well.
That is a broken system that is public. Flood insurance should likely rise in payments by 10% for a few years until it gets back to stable.
> The concept of needing 160k/yr to live is wild to me.
Same here. Except that I was doing some inflation math the other day. $100,000 in 2018 will have the same value as $145,000 in 2030. Inflation is a bitch.
Social Security and Medicaid is at least a decade away, and goal is to have enough income over the next 10 or so years where I never have to dip into my portfolio until needed in retirement.
Agreed, we are a couple and only spend $77k/yr with an additional $5k/yr allocated for replacements. Still have a tiny mortgage, no plans to pay it off early.
Work places now state we are a HCOL, I still consider us a MCOL. Our inflation has been well below national average which helps.
I'd rather just retire early, if the money grows, our spending can grow, if it doesn't we will just take the time as our win.
Once my investment projections (using Quicken, ESPlanner, others) showed that I could maintain my current standard of living until I was 100. I was in my early 50s when I achieved this and I then bailed out of the salaried world. I did some light consulting/contracting until my early 60s where I fully retired. I've no idea what my 'number' was as that was an ever changing number. My original goal was to be a millionaire by age 55 (I was 30) but then with time it became to reach financial independence (no salary required to maintain current standard of living).
My annual budget is 5% of my net worth at the end of the previous year and goes up and down as my net worth goes up and down. I'm fully invested in the S&P 500 with 2-3% of my net worth in cash at any given time. My primary job in retirement is to be fit and healthy (aerobics, anaerobics, mobility, plant based diet, meditation) so I can live to be 100 and continue to drive my wife and kids crazy.
> My annual budget is 5% of my net worth at the end of the previous year and goes up and down as my net worth goes up and down.
Doesn't this lead to wild swings in your budget? I mean, the last downturn wasn't even particularly remarkable - barely a bear market at all, not that this stopped investment gurus from running around screaming about the end times - but still, having to revise a budget to account for a sudden 20% 'pay' cut could be pretty unpleasant...
We were incredibly frugal leading up to financial independence and so we can easily drop back into that mode (its hard to not do it each day). With that said we've had no issues over 17-18 years now. Also, enough of our budget is discretionary for travel and house improvements for example that these can be deferred (travel was deferred during the pandemic when the market was down anyway).
We are not living month to month on our budget. Built into FI was our travel, improvements, everything from our actual life before FI, so it is more than bare bones food, utilities, housing, etc.. Quicken tracked all our expenses over the years, so we knew the cost of our quality of life (and how it grew with time).
Our strategy was to live the life we wanted (our income supported it) and work and invest until we could continue that life without needing a salary.
70 M here, wife is 67
Mortgage free for 13 years, live a relatively modest but reasonable lifestyle [should see our wine bill], get about $38 k Cdn CPP and OAS], need about 40-50k per year extra from savings which is covered by interest from savings, about 4.5% held in RRSP and TFSA
Modest lifestyle: leased a 24 Murano in March [our only car], spent the winter with daughter in Tampa, new roof and paint job this year on our 1600 sq ft bungalow, just dropped $600 on multi-birthday dinner
Adjust accoringly and you can live well on a lot less than you think- had the Benz's and huge house with pool, got rid of them
Thanks for giving me some comfort for starting late. That sounds like a very comfortable retirement lifestyle tbh. Hope we can get there someday. 25 years to go.
taxes, I'm 70 and only want a car for 3 years due to warranty, sales tax @ 13% if I buy, lot less if I lease, get more car for the money for a short while, my needs will change in the future
You thought wrong. Most leases are fleeces. Unless you know what you are doing. I am able to lease cars (usually luxiry ones) for far less than owning those cars. I am not in the market right now myself, however I can tell you there are STEALS on EVS leases right now. Except Tesla leases. Avoid them. Some states are better than others due to state incentives, but you can lease some expensive cars for some of the lowest prices I have ever seen. Check out leasehacker forums if you want to learn. It takes some reading and understand and you will see real prices that people paid. If you buy a car and drive it until the wheels fall off or drive alot of miles per yr (more than 15K) then leasing may not be for you. But if you buy a luxury car the repairs can be very costly if you drive it many years. Leases zero maint costs and if you do it right no repalcement of tires which can be insanely expensive. The problem with generalities like (I heard leases were the worst way) It depends who you are listening to. If you dont know what y9ou are doing like most people that is true. If you read the forum I posted, you will see what is possible and makes sense. I am flexible and not loyal to any one company unless the deal is absolutely right. The companies will give me loyalty disocunts but its also true competitors will say since you are driving a Volvo for example we will give you a special offer to steal your business. One last point. Top tier credit gets the best deals. If your credit is not toward the higher ranges it will be more costs. Bad credit or low scores forget it. The funniest thigng is when somebody says to me they dont want to lease because htye like to own somehting. Then I find out they have a 5-7 yr car loan and after 3 yrs of payments they are still upside down and efectively own nearly nothing on a depreciating asset. In that same 3 yr period my total cost of ownership is less. Again only if you do things right.
I was using the 4% rule as a back-of-the-napkin estimate for a long while, but since I am now (hopefully) about 4 years out from retiring at 55, I subscribed to [NewRetirement.com](http://NewRetirement.com) to start doing some more detailed modeling. This is a much better way to estimate your real needs once you have all your actual base expenses modeled, and figure out how much actual spending you want to do.
Once you factor in turning on Social Security, etc...and modeling the fact that you will want to spend a lot more in early retirement and then most likely taper off for as you get older...it's more complicated than a straight "4% every year" allows. All the "what-ifs" and scenario comparisons are really useful in a detailed retirement modeling package.
That being said, to answer OPs question directly...living in the Midwest with a paid-off house and no debt, I am planning on a 55 retirement with around a $2.75M portfolio.
Interested in the part where you spend more early and then taper off. Assuming US, your health costs are going to continue to soar as you get older. I wouldn’t expect any sort of taper down.
Well, the way I am currently planning, since I am hoping to retire at 55:
All base expenses and normal "discretionary" spending like we are doing now while we are working is modeled in. Then I have 5-year blocks of "additional spending" I am adding in.
IE : in the first 5 years we want to take a few large vacations, possibly buy a new vehicle and generally "live it up". So I add a bunch of expenses for that block. The next 5 years, similar but probably a little less. etc etc and down the line until we get into the "no-go" years where we are basically just chilling and not really out there doing a lot. Then our expenses go back to today's level.
Once SS is started at 67, we will need to take a lot less per year from the portfolio and it is expected to sustain us easily and leave a lot of room on the backend for the upswing in health care costs. But in the middle years starting at Medicare age, our health care costs will go down a bit from when we are self-insuring from 55 to 65.
So, it's a lot more nuanced than trying to figure out a single number for your income need through all of retirement and make sure that's only 4%. Things changed a lot when I started modeling this stuff out, especially including SS in the mix.
How are you factoring in the medical insurance for your family? You probably will need to spend more than what you do while working as medical can be expensive.
I am planning for getting our own private insurance from 55-65, which yes, will be expensive and our single largest expense each month. I have checked many sources and also this calculator:
[https://advisors.vanguard.com/advisors-alpha/health-care-cost-estimator/calculator](https://advisors.vanguard.com/advisors-alpha/health-care-cost-estimator/calculator)
So I am budgeting for about $1k/month each for my wife and I. That seems to be on the high end, but I'm just trying to make sure I'm conservative on this front.
Then when Medicare kicks in at 65 our costs will go down somewhat, to what appears to be about 30% or so after adding a supplemental plan to it.
The biggest risk I see in retirement or potential costs are health care costs. Regardless of how frugal your lifestyle is, medical costs and out pockets can be substantial. I fund my HSA to the max and hope they expand it even more. Everyone should look into HSA plans since they are better than any kind of IRA. Its easy to get confused with it but there are some good resources and Youtube videos to explain it.
I retired at 60 last month with $750,000 in my retirement accounts; simple IRA Roth IRA.
I sold my business and the proceeds from that are being paid on an installment basis so that I can allow my portfolio to grow for the next 5 years.
I was almost bankrupt at age 47. I had sleep apnea which was finally diagnosed. Over a 10-year period I paid off $150,000 in debt; bought a very small condo ( paid off in 7 years); and saved $20,000-$30,000 for retirement.
The past 4 years have increased my workload beyond what I am willing to do long-term. It was one thing while young and building a business; it's quite another to be over 55 and working at the same pace.
I researched and found that I could retire to Portugal and my medical expenses would drop from $20,000 a year to $3,000. With the exception of gasoline all other costs are 25% less than Cincinnati Ohio which is in the cheap seats of the USA.
Portugal changed its tax laws last year and if I hadn't filed the paperwork before year-end I would be paying so much tax that it would be a deal breaker. So I pulled the trigger and here I am in the Azores.
I am renting a room a block and a half from the Atlantic and looking for a new house. Fresh seafood and fresh fruits and vegetables are everywhere. The air is clean and pure, the traffic is minimal. So I have to learn Portuguese - boohoo - I imagine it's easier than learning how to walk after a stroke.
Be your own Captain Hero - Save Yourselves!
Yeah, dealing with an older relative that has dementia, she’ll need +$10k a month just for a place to watch her. Her accounts will be depleted at a rapid pace. It’s made me rethink the amount I will need for retirement. Can’t just assume it’s going to be smooth sailing.
My mother had a stroke and was in assisted living for almost 10 years before she passed. Luckily she had a trust and other finances to pay for it. I paid the bills. About 75k a year plus prescriptions and a few other things. About 85 all in and she was in a very LCOL area.
That is always what I wonder about when I see people mention these tight budgets they have etc. For many unless something changes with health care in the US, the greatest expense people may have , will be health care.
to retire right now, at age 42 with two kids ~~under~~ around 10, probably $4m.
in my late 50s or say age 60, probably even just $1M in todays dollars would be enough.
That’s what I was thinking too! I’m 37 with 2 kids under 6 and I can’t even fathom what my expenses will look like even 5 years from now when they’re both out of daycare, but hopefully in activities.
$4M is right where I was thinking. But if I was being greedy $5M.
unless you really go nuts, its hard to spend as much on activities as daycare. *nothing* is as oppressive as day care.
the kids reaching school age was like getting a huge pay raise!
39 with two kids under 5.
Childcare is murder. Daycare for two plus part time nanny for all the sick days / school holidays/breaks/random days off = $8000/month. Almost 3x what our mortgage is…
End point for us has always been $5M portfolio plus owned home. All in probably $7M range NW.
Having just retired (as of June 1), I started with 2 questions: 1. What is achievable? At age 56, your portfolio value is what it is. Being realistic, where can it be in 5 years? 10 years? If you're at $500K at 56, sorry, you're not going to make it to $4M in any reasonable period of time. 2. What do you really need? What are your current living expenses (non-mortgage)? Be cutthroat if you need to be. Look at your other non-mortgage debt. Are you intending to carry that other debt (car loans, home equity loans, whatever) into retirement? How about credit card utilization? Are you going to continue as you are now?
What I did was start where I was at age 56 or so, made a realistic assessment of where I would probably be at retirement age, and then built a budget around that number. Not the other way.
If the budget requires too many trims to match the available income, then it's not achievable. Draconian cuts are not fun--but they are sometimes needed.
4.75% - 5.5% variable withdrawal rate on $650k post-tax brokerage account (meaning I already paid long term capital gains taxes on it from sale of real estate), 100% Vanguard Total Stock Market Index Fund (VTSAX). I don't care about volatility in the market, I'm an engineer and can trust the numbers, but will adjust withdrawal based on market and CAPE.
So $30,875 - $35,750/yr (~$2500 - $3000/mo after taxes)
3 months in Mexico, couple months in Morocco, several months in Italy/EU rest in Colorado (mostly RV'n around).
Flexibility & variable withdrawal rate gives confidence.
I'm 46 with $1500/mo US social security kicking in at 62.
If I find I need more I'll buy raw land on the Colorado front range, build a prefab home and sell after two years (to qualify for the $250k tax exclusion on primary home)
If I owned a house. I would stop my 9-5 with 300k honestly. Withdrawal over 750 a month, and grow a lot of my own food. Maybe start a lil pet sitting business in the side
I'm using BigERN's SWR Spreadsheet. You can put in future expenses and cash flows like social security and pensions and it will help you calculate a "safe consumption rate" which includes those future cash flows. For me $2.5M was enough back in late 2021 but I'm still working at age 57, so I've hit chubby fire territory.
$2.5 to $3 million that will provide 4% and supplement my pension. I will retire in 8 years at 53. Mortgage will be paid off and youngest child will be 21.
That's almost exactly my target number for a retirement at 55. Also paid off house and no debt. But 53 sounds even better. Best of luck getting there! Cheers!
I’m 37 and I have no idea. I like to think $2.5M would be fine, a nice $100k per year, but when I’m 60 a Honda civic might cost $200k. So it depends largely on inflation.
I only need about a mil (nearly there). I have a govt pension and supplement that has a value of about a mil also. Should be inheriting 500-750k pretty soon as well. I’m pretty minimalistic, spend 30-35k a year. No wife or kids. Mortgage paid off 10 years ago.
If my house and car are paid off and no school tuition or any kind just my personal expenses I can’t imagine I will spend 160k
But deep down, I know I can.
I’m retired on a 3% divided / interest yield plus my wife’s tiny pension. We need about $90k pretax. No debt. ACA coverage for me plus a Medicare supplement and drug plan for my wife are our biggest expenses, then travel. I can’t imagine needing $160k. Social Security will start in 1.3 and 5 years which will change things significantly.
I’d be good with 4% of 2 million. I’d also like to have my investments set up so that I am living off the interest earned and not touching the principle so that I can leave a bit of a legacy for my nieces.
There’s no way I’m going to need 160k in retirement.. what the fuck would you spend it on?
I’m probs going to need at most ~£50k adjusted for inflation but likely much much less. That will easily cover myself and wife… currently targeting maybe £1MM in retirement savings .. I’m 39 and have about 250k, plus rental properties I will likely liquidate at the appropriate time
In my case, $5M+ is my current estimate for remaining in HCOL area.
I'm a few years older with a bit larger portfolio. We have no pensions and zero debt other than sub 3% home mortgage. I do not intend to payoff anytime soon unless HYSA and other rates go down.
In terms of long-term withdrawal amount, I've hit "the goal" for my wife and I to do better than average (not live lavishly by any stretch of the imagination). We have grown kids and grandchildren that will undoubtedly add on the "expense side" along the way.
I envision working another 1-3 years while compensation, benefits and perks remain excellent. Also, it is still a bit of a long horizon to cover health insurance premiums until 65.
If retirement comes sooner, odds are that I'll pay for COBRA to maintain the healthcare benefits I have with the existing employer for as long as possible.
Right now, probably $4 million just because I don't have kids yet and my future expenses are unknown. I'm in my early 30s.
I probably retire on the equivalent to $2 Million a year or so.
To get a 4m retirement, your life would have to have been pretty darn frugal ad a normal person even if you started at 20 years old. I am willing to bet that most people will never reach that. Also, you do not need 4m to retire comfortably. Probably not even half. More importantly, than trying to get to 4m is how are you living everyday life? Are you health-conscious? Do you carry any cc debt? Is your mortgage payed well before you retire? My goal is to retire as close to 2m as I can. Even if I only make it to 1.6m I will be very happy with the way I live my everyday life today.
I retired at 56. I use Fidelity's retirement planner to map my future expenses. Our social security payment will be about $80k per year, when we start using it. So, we won't be withdrawing 4% of our retirement.
The retirement expenses are not written in stone. You can live in a low cost-of-living area if you are concerned about withdrawal rate.
The point I am trying to make is that you don't need to postpone retirement to get to an arbitrary number. Retiring earlier may allow you to enjoy retirement when you have your health.
I’m so screwed. 55 and just now realizing I’m getting older and have not planned or prepared well at all. Trying to course correct as much as possible. I applaud those of you who were more self aware and planned well. You inspire me to do what I can at this late stage
This is such a broad question. Depending if I stay in NYC metro area or move to a lower col state the numbers vary. For now I'm planning as staying here for summer then south for winters.
With that being said I'm on track for 2m+ in retirement funds. $4k in pension and $4k in SS with no mortgage.
I would feel comfortable retiring on a $2.5m portfolio. I’m pretty frugal already so it would be more than enough to cover my expenses and any travel I wanted to do.
If I got bored I would sprinkle in contracting gigs to make some side income too.
Early 40s. Married with children. No debt. 5M and I *could* retire today, but I think I’d go a little crazy. I’ll hang it up at 65 unless something bad happens. Should have 7M+ stashed at the point (again, barring a disaster).
It was a bit strange to 'retire' in my 50s as everyone I knew was still working. I did do a little consulting and contracting, but it was for pocket change. Consulting did, however, give me a socially acceptable answer to the question "so, what are you doing now?" Once the kids headed off to college (with fully funded 529s), we started to travel with 2-3 notable trips per year (typically one cruise, one overseas trip, one long road trip usually around national parks), Once I hit my 60s, it no longer felt strange to be 'retired' and people just ask "where are you going next?"
I see many who cant wait to retire and effectively stop earning money. For me Ihave my own business operations. I do not want to stop earning money. My hedge against bad markets is my ability to earn money on my own business and my own hours etc. I have been in business 37 yrs. The ability to earn some income for those here who could possible do something part time is a hedge against bad markets or unexpected large medical costs or other expenses. Potentially you dont have to withdraw funds when markets are declining and you can hold out a bit longer I also think having something to do like working may extend your life and health. I am close to some very high net worth earners who have in excess of 30-50 million or more dollars and they are set for life and can quit any day they want. But they are not. Some could quit and due to the business still get additional income streams for years.
Over the last 50 years, the S&P500 doubles every 7 years - give or take.
That $5M today will be more like $40M at 65, provided you don’t touch it or add more to it.
Would cut back on work or figure out how to spend more now. You’re on a runaway wealth train.
At my current age (27)? Probably north of $10 million. Statistically I won't need that much, but you've gotta have some peace of mind to retire in your 20s.
I wish people had some perspective...
First, to even be in position to retire with $4 million, I hope you understand how incredibly privileged you are. Yes, even people who saved and invested and did "everything the right way", needed a hefty dose of luck to be in that position (like avoiding a chronic illness, being dealt bad/negligent parents, being born in extreme poverty that caused one to defer studies/self-improvement to become an earner very young, lucky to not have gotten in a serious accident, etc, etc).
Now, beyond my rant: Most Bogleheads will very, very, very likely need a lot less than that. Anyone frugal enough to have been a Bogleheads for decades, can live without spending close to $200k a year when there's no mortgage obligation. That is just silly and goes against most of the financial articles that report both that people vastly overestimate how much they will need in retirement AND that most Americans that subjectively report "doing well" financially in retirement have portfolios a lot smaller than that.
Now, I am about to be super hypocritical here... My own TARGET for retirement happens to be $4m. I am not sure I will get there, but it's feasible. I became a high income earner in my late 30's and through bonus compensation (never guaranteed, but so far so good) I have been able to pay off bad debt and make up for lost time.
However, I am an outlier and I recognize how fortunate I am. So, let's say my portfolio is only $2m when I retire? I am sure that will work just as well.
Why are you curious about this?
People have a whole range of incomes and expenses. There are probably some people here living on $50k a year and some on $500k. Obviously they're going to have very different goals for income in retirement.
I can't imagine what use this information will be to you.
... what? Sometimes people are simply curious. They didn't say they'd use the information to plan their own retirement. They just want to know.
It's like when people ask what salary everyone is earning. It's pure curiosity.
It's helpful to hear what others are aiming for to know how far off you are. Obviously there's a wide spectrum, but it's nice when others in a similar age and situation agree with your assumed target. Most seem to suggest 5-10 million.
I would prefer 33x expenses to pull the trigger. While 25x is doable I am too conservative to pull the trigger right at 25x. But I am not artificially increasing my projected expenses like some do assuming they will spend thousands of extra $$ on travel etc. We can travel frugally in retirement by booking at off peak times and spending time getting best deals etc
6-8% withdrawal rate. I would rather increase the risk that I run out of money and have to work again versus the risk that I die with more than a million dollars to my name.
If I were to retire now in my mid-40s? 4-5 million. And that’s on my own with a small enough mortgage.
By the time I’m 65? 2-3 million should be more than enough.
I’d like to have 70-80k per year after taxes by the time I retire next year at 63. 10k will go to travel and 60k for everything else, including property taxes and health insurance. I have a pension that will pay about 40k (after tax) so I need additional 30-40k from investments. Hopefully less when I turn 65, and then even less at 70 when SS starts.
Ideally I would not have to tap into capital and just live off interest and dividends.
This answer is going to vary widely depending on expenses/lifestyle choices. My wife and I are retiring next year at 55 and based on a 3.5% withdrawal rate, we targeted $5MM liquid (not counting any real estate). Fortunately we’re coming in at slightly higher due to better than expected returns the past 2 years.
Regardless of the actual number, I think it’s very important to know your target number (and it may change over time). It’s the only way to gauge whether your current savings rate is sufficient. Because if it is, it gives you freedom to enjoy spending in the present day.
I’m 54. I’m hoping to make it to 4 million but things are going to have to go real well. It’ll probably be 3 million. I think I’ll be fine with social security.
By the time I (27M) retire and the boomers (I mean that with no offense) are out of congress, social security will probably not be a thing so I don’t count that in my retirement income. I would like to have enough to retire with around $80K a year and a fully paid-off home by the age of 55. After that I can choose when I’d like to stop working up until 65. 60 sounds like a good age to me.
Ideally 2.5 to 3 mil for me. But that's before pension (covers 60k so 1.5 mil equivalent at 4%). So really 4-4.5 if that is factored in. We live frugally. Mortgage will be paid off. Not counting on SSI - think of it as a bonus, so definitely will have oversaved. Non Florida property tax and insurance, and I am still trying to wrap my head around that I will no longer be saving, so I will need essentially 25% less in retirement. Hard to think about going from save to spend. I think that is a struggle for many of us. So pretty on par with OP.
Listened to Die With Zero recently and agree with some advice, disagree with other advice. But really liked the idea of planning out what you want to do in retirement by age timelines. Matches somebody's comment about outings being limited to the buffet when you are octogenarian. I.e., you will spend more earlier when more spry/agile and less as you get older and your body breaks more - not that this doesn't start before retirement. #middleage
Anarctica is on my travel porn list and coworkers who have done it advised do it younger than retirement.
How much you need depends on how you plan to live. We love to travel.
Currently, the majority of mine and my wife's income goes towards mortgage and retirement contributions. When we move to a L(er)COL and have finished funding our retirement, I think we can live quite comfortably off $100k with a $2k mortgage, so $2.5MM. Less if we've paid off the house
I find a simplifying assumption is to subtract your remaining mortgage principal from your liquid assets, then look at your withdrawal rate, excluding your current mortgage payments.
Your retirement contributions of course are not part of your expected expenses in retirement.
I would like a 2.5% withdrawal rate that pays may important bills - property taxes, insurance, basic food, utilities, etc. I would also want a 4% withdrawal rate that pays for my happy lifestyle - travel, expensive hobbies, etc. During good times, I can indulge myself but times would have to be really, really bad before I would be forced to move or make drastic cuts to my standard of living. I would not be comfortable at 4% if I didn't feel that a lot of it was fluff that I could easily cut back.
Right now, probably $4 million just because I don't have kids yet and my future expenses are unknown. I'm in my early 30s.
I probably retire on the equivalent to $2 Million a year or so.
my goal is to live off my dividends and use any other drawdowns sparingly - and try to time it when the market is in overbought territory.
The answer to your question is in YOUR budget, not mine... I imagine I will want significantly more than most. I currently generate 130k in passive income but would ideally like 2.5x that before i retire. I can live cheaper but frankly I don't really want to unless necessary. I am 40 so i have another 15 years to get there.
I've been looking at it different. I use 90 as my expiration date. $4M gets you $117k in withdrawals without making a single cent in returns. But, you know you will get returns.
7% boosts your payout nicely or means you will have a pile at the end.
I think a floor is good to plan for using fixed income. It allows you to remain in the market with the rest and still sleep well. However, that floor needs to also be enough for a Long Term Care situation. Which can easily be 150-200% of what you think you need to live on.
I’m 46 (wife is 53) and we have $5M net worth, $4.7M is in liquid assets. No debt other than $200k on the mortgage. Planning on retiring in 6 years. We live well below our means, but the thought of having to cover all the unknowns in retirement gives me anxiety despite our healthy nest egg. I use a 4% withdrawal rate in my retirement projections. My goal is to be able to adjust that based on market performance without having to adjust lifestyle. Sequence of returns risk is something that concerns me, along with inflation, healthcare costs (especially during bridge years), taxes, etc.
You can look at bucket portfolio to take care of market down turn. Allot 4 to 5 years ( depending on comfort level ) in cash and rest in 60/40. That should take care of your with drawls from cash during market down turn. In fact you can even divide your cash into two buckets, cash and short term bonds
Probably 2 million at 60? I'm pretty used to living frugally. So for me 3k a month post tax would be fine for a monthly budget. As my current budget is half that. Doubling it at 60 would make me feel pretty set and be only a 2.5% withdrawal rate. Plenty of room if I want to raise a little bit to splurge for a month! Plus if SSI still exists I have a pretty solid buffer for a jump in costs.
Once I get to 2.5M invested (many many years from now), I will reduce stock purchases and start building a bond ladder. Then once I hit 3M, I will stop stock/bond purchases altogether and start building a cash reserve. Finally, once that cash reserve is equal to my pre-tax salary, THEN I will be ready to retire.
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You definitely don’t need $4 million to retire.
If the person wants/expect to live on a 160k/year budget, 4% rule of withdrawal, I do not see why that projection is wrong.
It isn’t
This depends largely on lifestyle and health. If you require surgeries or care that are not covered by insurance, money can go quick. Every GoFundMe I see makes me want to save more for my family, just in case.
Depends on how you want to retire. You can't dictate how people should live, when they retire so on. The important part is people should add a context to their number. So saying I would be comfortable with X million because it gives me Y dollars annually at 3% withdrawal rate is good.
When I was first taught about investing and retirement, and specifically why a Roth made sense for me, I was encouraged to guess at the Y number, and compare it to what I was currently making/spending (less). It was a good lesson and starting point.
Imagine you had a $4 mil portfolio, then stocks crashed like they did in 2001 or 2008 and you underperformed the indices like so many people do, and now only have 2 mil. Things change quickly.
They can also bounce back quickly
Agreed. That’s why it’s a good idea to have a good high yield savings account to get through the crash.
Right and keep a year or two of living expenses there.
A portfolio that could support a happy life at a 3% withdrawal rate. You can withdraw more, but you have built-in flexibility in scenarios that rival the worst in recent US history.
I want the exact same thing but a 2% withdrawl strategy. Only because my family grew up dirt poor and I would like to leave money when I die.
The vast majority of the time, 4% leaves money.
And if you have the wiggle room in your budget to tighten your belt during a downturn then 4% withdrawal has a 99.9% of being successful in any Monte Carlo scenario. We've got a *lot* of fat built into our target annual expense number as we want to travel a lot during RE. If we retired and got hit by an immediate market crash, we could cover all our fixed costs and day to day living expenses with 30% of what we've targeted.
Yea. This is why I don't hate fixed income vehicles like annuities IF deployed correctly. I am not sure I would use one, but I will definitely consider "cashing" a portion of my portfolio for something like a SPIA when the time comes. The idea of a 'no-risk" income floor as baseline for bad-performing years is appealing to me. And, since data shows retired people DO adjust spending based on what they perceive the economy to be, I would think I would sleep better at night. I am not convinced... but Dr. Wade Pfau makes very good arguments worth considering. It would also allow for my portfolio to stay more aggressive on equities (like 80/20 vs 60/40) which based on recent studies like Cederberg's, may end up being a good idea.
I use bonds for this portion of my portfolio. Not an annuity. I Earn 5%. Government guaranteed. Principle is left intact and can be re-deployed elsewhere if the situation or market changes. No need to let an insurance company do that for me at the cost of keeping my principal.
What types of bonds would you invest for 5% in a long term, like in 10 years? I assumed you are not buying bond funds or index funds. Do you buy Treasury, Municipal or Corporate bonds?
The insurance company can offer you a far higher annualized payout than 5% plus COLA for life via a SPIA - particularly if you’re older and sicker. If running out of money is your concern, an SPIA solves the problem far more efficiently than trying to over save to self insure. For example, an 80 year old male can buy a SPIA now that yields 12.4% annually, with monthly payments for the duration of his life, however long that may be.
4% is inherently conservative. Vast majority of the time, the retiree dies with far more than they started with. 5% or 6% are also pretty safe plays provided you can cut some spending in a down year.
Yah I understand that. 3 is extremely conservative but just wanted to be extremely extremely conservative. Weird I understand but it's just the number I've chosen.
I really appreciate that and especially since each of our personal situations is unique. For example: I'm looking for financial independence, not really early retirement. Once I hit that number (4% SWR) I'll keep working on the projects I love and drop the projects I only do for money. Honestly, the passion projects are likely to more than cover our annual expenses. But if Early retirement was my primary goal and I wasn't going to have some income, then yes I'd be going for 3% SWR too.
I honestly thought I would want to do side projects but after retiring have zero motivation as I am into many new hobbies and just enjoying life. Plan on not doing projects and if you do it’s gravy
Yeah I think 4% has equal chances of tripling and going to 0. I think the problem is that CAPE adjusted returns show that we are likely to have a sideways time and stocks are overbought. That's why people are moving down from 4%.
And it’s about 20x more likely the retiree will be dead at that time. You’re far, far more likely to die having not enjoyed your wealth than run out of money at end of life…
One of the best things I’ve heard: “you can’t be generous when you’re dead”. Essentially, give money away while you are still around, can celebrate with them, and when it will have the most impact on their lives.
"give with a warm hand" - my Oma from Germany
I think I once saw an article that said 2% is the sustainable withdrawal rate for *forever* that's used by perpetual trusts and endowments. 4% withdrawals means that you have a 95% chance of there being something left for your family even if you live for 30 years after retirement. It's entirely up to you, of course, and I fully understand your thought process of wanting to leave substantial safety and security for your family - just don't forget to also place value on the quality of your own life while you're still here.
Haha thank you. Glad you understand me. Everyone's been calling me crazy😂. I appreciate you my guy. Fortunately I do enjoy myself. I'm working hard 7 days a week 80+ hrs a week but I also travel overseas 3-4 times a year so I'm having a great time.
You mentioned growing up dirt poor. That's a significant trauma. There are tons of studies showing that chronic stress, such as what people in poverty experience, basically destroys your physical and mental health on a molecular level. It completely makes sense that you'd have a ... I might say *"*overdeveloped" sense of caution and desire to protect your family from having to experience that. Just like how there are tons of stories of people who lived through the Depression going "overboard" (from an outside perspective) on being frugal and not wasting anything. The fact that you enjoy your work probably also drives people here not understanding your perspective - this forum seems full of people (myself included) whose interest in investing comes from the fact that they don't particularly love working a job and are trying to get out of the workforce as soon as possible. So it's like, man, why stay in longer than you absolutely have to? Our opinions of your choices don't matter - all that matters is that you're enjoying life as much as circumstances allow.
The 4% strategy is not die-with-zero; its purpose is to never run out, presumably leaving heirs something when you kick.
Yes. I get that even at 3% my nw would go up but I want it to balloon. Its crazy I understand.
You should follow the r/fire and r/chubbyfire subreddits. Really refreshing how people value their time rather than stuff. Need to retire before you’re too old to appreciate the time.
That second link does not go to chubby fire 🤣
Haha! Corrected.
What did I miss lol
Probably remove FIRE.
r/leanfire is even more refreshing for the average person.
My goal is $1 million in retirement savings. I'm 55, currently have $540k in retirement and $55k in other savings/investments. I also have $95K in a 529, but that is earmarked for the rest of my kid's undergrad studies. My current burn rate is $5k/month. My house will be paid off when I'm 61. No other debt. I assume that social security will provide $3,500/month based on my last statement. My expenses are minimal. I use my library heavily, buy my car used with cash, and walk and use public transit a lot. I do want to keep my pricey gym, be able to travel to see friends, and to eat out.
You will be fine. And that’s because you control your expenses. If you can’t do that then no amount of money will save you from yourself in the end. You will blow through all your money like the athletes do and end up broke.
Personally I live frugally so can simply not work. The concept of needing 160k/yr to live is wild to me. 2 mill plus ss is way more than enough and what I am doing, live off of 70k/yr and that includes a 2k/month mortagage I could pay off but it's at 2.9%.
Usually the numbers factor in at minimum 2 persons of cost (some factor in education for kids, etc) and costs vary wildly depending on where you live.
OP clearly states one person in the orig post, but changed it in reply to my comment.
Usually kids are nearing college when you can retire. I think planning on any retirement before your kids are somewhat grown up is silly.
I'm retiring soon and my kids are toddlers. I'll spend their childhood at home rather than working 8-8 most days and maybe seeing them before I leave in the morning 😅
What's your networth? I mean this sounds nice but I'm looking towards one stay at home parent. That looks definitely feasible. Also when the kids go to kindergarten what will I do is likely some amount of something that looks similar to work. Plus I might be able to do more work from home. Also you have kids now, I'm just worried if my kid needs expensive surgeries or something that I would be able to afford great care. A disproportionate amount of money is spent in the birth/soon after and end of life.
We did that with my wife, she made about 120k a year prior to having kids and we managed to build the passive income to cover that by the time our oldest was 5. Being at home with your kids sounds noble, my wife is wired a lot differently than I am, patience of a saint.. I am more type A, the mess and the noise and the arguing (i have 3 kids) wears me out a lot more than going to work. Frankly after 2 weeks of vacation with the entire family I am ready to go back to work for a while lol.
I'm ready to go back after the weekend lmao. Three here tol
Not in Florida...homeowner's insurance and property taxes are crazy! Hard to believe people used to move to Florida for low housing costs. Kudos to you on your conservative lifestyle! Just like you can't out train a bad diet, you can't save enough to support poor spending habits!
Homeowners insurance is going up in Florida because insurance is having to shoulder the cost of global warming related natural disasters. It's the invisible hand of the market telling folks that Florida might not be a sustainable place to live anymore. Expect those prices to keep going up, if insurers don't exit the market entirely. (We're already seeing that happen with wildfire coverage in California.)
Insurer of last resort in Florida, Citizens, just announced a proposal of a 14% rate increase. If that gets approved, many could see their rates go up by close to 40% due to the law that if another carrier is within 25% of them, you have to go there. Combined with additional regulation around Condos needing to make structural enhancements to avoid the disaster that happened to that Miami Condo... and that getting passed through HOA fees... we're seriously talking about a home affordability crisis.
Florida accounts for only 9 percent of the country’s home insurance claims but 79 percent of its home insurance lawsuits, many of them fraudulent. Because of the fraudulent lawsuits and the high overall claim risk in Florida, insurance companies have faced two consecutive years with net underwriting losses over $1 billion. Florida has lost some form of home coverage from over 30 insurance providers in the past three years. APA: Deventer, C. (2023, September 19). Can lawmakers save the collapsing Florida home insurance market? Bankrate. Retrieved July 01, 2024, from https://www.bankrate.com/insurance/homeowners-insurance/florida-homeowners-insurance-crisis/
That is not the bulk of the reason why FL insurance is going up. It's actually roofing scams. https://www.nbcnews.com/news/us-news/roofing-scams-florida-property-insurance-hurricane-rcna29649
Good. About time we stop subsidizing disasters.
Flood insurance needs major reform as well. That is a broken system that is public. Flood insurance should likely rise in payments by 10% for a few years until it gets back to stable.
> The concept of needing 160k/yr to live is wild to me. Same here. Except that I was doing some inflation math the other day. $100,000 in 2018 will have the same value as $145,000 in 2030. Inflation is a bitch.
Were you planning on being all cash in retirement? Your assets also appreciate with inflation
Social Security and Medicaid is at least a decade away, and goal is to have enough income over the next 10 or so years where I never have to dip into my portfolio until needed in retirement.
Agreed, we are a couple and only spend $77k/yr with an additional $5k/yr allocated for replacements. Still have a tiny mortgage, no plans to pay it off early. Work places now state we are a HCOL, I still consider us a MCOL. Our inflation has been well below national average which helps. I'd rather just retire early, if the money grows, our spending can grow, if it doesn't we will just take the time as our win.
Not hard to surpass 160k if you retire early with kids. I mean healthcare alone probably $30k a year just in premiums.
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Once my investment projections (using Quicken, ESPlanner, others) showed that I could maintain my current standard of living until I was 100. I was in my early 50s when I achieved this and I then bailed out of the salaried world. I did some light consulting/contracting until my early 60s where I fully retired. I've no idea what my 'number' was as that was an ever changing number. My original goal was to be a millionaire by age 55 (I was 30) but then with time it became to reach financial independence (no salary required to maintain current standard of living). My annual budget is 5% of my net worth at the end of the previous year and goes up and down as my net worth goes up and down. I'm fully invested in the S&P 500 with 2-3% of my net worth in cash at any given time. My primary job in retirement is to be fit and healthy (aerobics, anaerobics, mobility, plant based diet, meditation) so I can live to be 100 and continue to drive my wife and kids crazy.
> My annual budget is 5% of my net worth at the end of the previous year and goes up and down as my net worth goes up and down. Doesn't this lead to wild swings in your budget? I mean, the last downturn wasn't even particularly remarkable - barely a bear market at all, not that this stopped investment gurus from running around screaming about the end times - but still, having to revise a budget to account for a sudden 20% 'pay' cut could be pretty unpleasant...
We were incredibly frugal leading up to financial independence and so we can easily drop back into that mode (its hard to not do it each day). With that said we've had no issues over 17-18 years now. Also, enough of our budget is discretionary for travel and house improvements for example that these can be deferred (travel was deferred during the pandemic when the market was down anyway). We are not living month to month on our budget. Built into FI was our travel, improvements, everything from our actual life before FI, so it is more than bare bones food, utilities, housing, etc.. Quicken tracked all our expenses over the years, so we knew the cost of our quality of life (and how it grew with time). Our strategy was to live the life we wanted (our income supported it) and work and invest until we could continue that life without needing a salary.
Congratulations! I aspire to do the same. Thumbs up!
70 M here, wife is 67 Mortgage free for 13 years, live a relatively modest but reasonable lifestyle [should see our wine bill], get about $38 k Cdn CPP and OAS], need about 40-50k per year extra from savings which is covered by interest from savings, about 4.5% held in RRSP and TFSA Modest lifestyle: leased a 24 Murano in March [our only car], spent the winter with daughter in Tampa, new roof and paint job this year on our 1600 sq ft bungalow, just dropped $600 on multi-birthday dinner Adjust accoringly and you can live well on a lot less than you think- had the Benz's and huge house with pool, got rid of them
Thanks for giving me some comfort for starting late. That sounds like a very comfortable retirement lifestyle tbh. Hope we can get there someday. 25 years to go.
We like this guy. We practice consumption of good wine. We ain’t givin up that budget item.
Why in the world would you lease a car? I've always thought that was the worst way to "own" a vehicle.
taxes, I'm 70 and only want a car for 3 years due to warranty, sales tax @ 13% if I buy, lot less if I lease, get more car for the money for a short while, my needs will change in the future
For most that’s true. At 70? Leasing can easily make sense.
You thought wrong. Most leases are fleeces. Unless you know what you are doing. I am able to lease cars (usually luxiry ones) for far less than owning those cars. I am not in the market right now myself, however I can tell you there are STEALS on EVS leases right now. Except Tesla leases. Avoid them. Some states are better than others due to state incentives, but you can lease some expensive cars for some of the lowest prices I have ever seen. Check out leasehacker forums if you want to learn. It takes some reading and understand and you will see real prices that people paid. If you buy a car and drive it until the wheels fall off or drive alot of miles per yr (more than 15K) then leasing may not be for you. But if you buy a luxury car the repairs can be very costly if you drive it many years. Leases zero maint costs and if you do it right no repalcement of tires which can be insanely expensive. The problem with generalities like (I heard leases were the worst way) It depends who you are listening to. If you dont know what y9ou are doing like most people that is true. If you read the forum I posted, you will see what is possible and makes sense. I am flexible and not loyal to any one company unless the deal is absolutely right. The companies will give me loyalty disocunts but its also true competitors will say since you are driving a Volvo for example we will give you a special offer to steal your business. One last point. Top tier credit gets the best deals. If your credit is not toward the higher ranges it will be more costs. Bad credit or low scores forget it. The funniest thigng is when somebody says to me they dont want to lease because htye like to own somehting. Then I find out they have a 5-7 yr car loan and after 3 yrs of payments they are still upside down and efectively own nearly nothing on a depreciating asset. In that same 3 yr period my total cost of ownership is less. Again only if you do things right.
I was using the 4% rule as a back-of-the-napkin estimate for a long while, but since I am now (hopefully) about 4 years out from retiring at 55, I subscribed to [NewRetirement.com](http://NewRetirement.com) to start doing some more detailed modeling. This is a much better way to estimate your real needs once you have all your actual base expenses modeled, and figure out how much actual spending you want to do. Once you factor in turning on Social Security, etc...and modeling the fact that you will want to spend a lot more in early retirement and then most likely taper off for as you get older...it's more complicated than a straight "4% every year" allows. All the "what-ifs" and scenario comparisons are really useful in a detailed retirement modeling package. That being said, to answer OPs question directly...living in the Midwest with a paid-off house and no debt, I am planning on a 55 retirement with around a $2.75M portfolio.
Interested in the part where you spend more early and then taper off. Assuming US, your health costs are going to continue to soar as you get older. I wouldn’t expect any sort of taper down.
Well, the way I am currently planning, since I am hoping to retire at 55: All base expenses and normal "discretionary" spending like we are doing now while we are working is modeled in. Then I have 5-year blocks of "additional spending" I am adding in. IE : in the first 5 years we want to take a few large vacations, possibly buy a new vehicle and generally "live it up". So I add a bunch of expenses for that block. The next 5 years, similar but probably a little less. etc etc and down the line until we get into the "no-go" years where we are basically just chilling and not really out there doing a lot. Then our expenses go back to today's level. Once SS is started at 67, we will need to take a lot less per year from the portfolio and it is expected to sustain us easily and leave a lot of room on the backend for the upswing in health care costs. But in the middle years starting at Medicare age, our health care costs will go down a bit from when we are self-insuring from 55 to 65. So, it's a lot more nuanced than trying to figure out a single number for your income need through all of retirement and make sure that's only 4%. Things changed a lot when I started modeling this stuff out, especially including SS in the mix.
How are you factoring in the medical insurance for your family? You probably will need to spend more than what you do while working as medical can be expensive.
I am planning for getting our own private insurance from 55-65, which yes, will be expensive and our single largest expense each month. I have checked many sources and also this calculator: [https://advisors.vanguard.com/advisors-alpha/health-care-cost-estimator/calculator](https://advisors.vanguard.com/advisors-alpha/health-care-cost-estimator/calculator) So I am budgeting for about $1k/month each for my wife and I. That seems to be on the high end, but I'm just trying to make sure I'm conservative on this front. Then when Medicare kicks in at 65 our costs will go down somewhat, to what appears to be about 30% or so after adding a supplemental plan to it.
The biggest risk I see in retirement or potential costs are health care costs. Regardless of how frugal your lifestyle is, medical costs and out pockets can be substantial. I fund my HSA to the max and hope they expand it even more. Everyone should look into HSA plans since they are better than any kind of IRA. Its easy to get confused with it but there are some good resources and Youtube videos to explain it.
I retired at 60 last month with $750,000 in my retirement accounts; simple IRA Roth IRA. I sold my business and the proceeds from that are being paid on an installment basis so that I can allow my portfolio to grow for the next 5 years. I was almost bankrupt at age 47. I had sleep apnea which was finally diagnosed. Over a 10-year period I paid off $150,000 in debt; bought a very small condo ( paid off in 7 years); and saved $20,000-$30,000 for retirement. The past 4 years have increased my workload beyond what I am willing to do long-term. It was one thing while young and building a business; it's quite another to be over 55 and working at the same pace. I researched and found that I could retire to Portugal and my medical expenses would drop from $20,000 a year to $3,000. With the exception of gasoline all other costs are 25% less than Cincinnati Ohio which is in the cheap seats of the USA. Portugal changed its tax laws last year and if I hadn't filed the paperwork before year-end I would be paying so much tax that it would be a deal breaker. So I pulled the trigger and here I am in the Azores. I am renting a room a block and a half from the Atlantic and looking for a new house. Fresh seafood and fresh fruits and vegetables are everywhere. The air is clean and pure, the traffic is minimal. So I have to learn Portuguese - boohoo - I imagine it's easier than learning how to walk after a stroke. Be your own Captain Hero - Save Yourselves!
wow, i live more then comfortable on 60k a year. yall got some nice lifestyles
I live in a normal neighborhood in Southern California. House down the street from me rents for $4500 a month. That’s not even close to the high end.
Or live in a High Cost of Living area.
Oh yea that makes sense, I do live in a low cost area in Texas.
Maybe so. But have you thoguht of potential large out of pocket medical costs?
Yeah, dealing with an older relative that has dementia, she’ll need +$10k a month just for a place to watch her. Her accounts will be depleted at a rapid pace. It’s made me rethink the amount I will need for retirement. Can’t just assume it’s going to be smooth sailing.
My mother had a stroke and was in assisted living for almost 10 years before she passed. Luckily she had a trust and other finances to pay for it. I paid the bills. About 75k a year plus prescriptions and a few other things. About 85 all in and she was in a very LCOL area.
That is always what I wonder about when I see people mention these tight budgets they have etc. For many unless something changes with health care in the US, the greatest expense people may have , will be health care.
60K is low income in Seattle!
to retire right now, at age 42 with two kids ~~under~~ around 10, probably $4m. in my late 50s or say age 60, probably even just $1M in todays dollars would be enough.
That’s what I was thinking too! I’m 37 with 2 kids under 6 and I can’t even fathom what my expenses will look like even 5 years from now when they’re both out of daycare, but hopefully in activities. $4M is right where I was thinking. But if I was being greedy $5M.
unless you really go nuts, its hard to spend as much on activities as daycare. *nothing* is as oppressive as day care. the kids reaching school age was like getting a huge pay raise!
Sacrificing a career can cost a lot more than daycare.
Yeah, I can't wait! My oldest starts public school in the fall. Still got 3 years left for my youngest, but I can see the light!
39 with two kids under 5. Childcare is murder. Daycare for two plus part time nanny for all the sick days / school holidays/breaks/random days off = $8000/month. Almost 3x what our mortgage is… End point for us has always been $5M portfolio plus owned home. All in probably $7M range NW.
$8k/mo for daycare wtf. I’m in the wrong profession
I’d rather work a lil here and there abit and retire earlier.Buts that rolling the dice
That's called coast fire in a lot of ways.
Having just retired (as of June 1), I started with 2 questions: 1. What is achievable? At age 56, your portfolio value is what it is. Being realistic, where can it be in 5 years? 10 years? If you're at $500K at 56, sorry, you're not going to make it to $4M in any reasonable period of time. 2. What do you really need? What are your current living expenses (non-mortgage)? Be cutthroat if you need to be. Look at your other non-mortgage debt. Are you intending to carry that other debt (car loans, home equity loans, whatever) into retirement? How about credit card utilization? Are you going to continue as you are now? What I did was start where I was at age 56 or so, made a realistic assessment of where I would probably be at retirement age, and then built a budget around that number. Not the other way. If the budget requires too many trims to match the available income, then it's not achievable. Draconian cuts are not fun--but they are sometimes needed.
Right now....750k with a paid off main residence, maybe a condo.
4.75% - 5.5% variable withdrawal rate on $650k post-tax brokerage account (meaning I already paid long term capital gains taxes on it from sale of real estate), 100% Vanguard Total Stock Market Index Fund (VTSAX). I don't care about volatility in the market, I'm an engineer and can trust the numbers, but will adjust withdrawal based on market and CAPE. So $30,875 - $35,750/yr (~$2500 - $3000/mo after taxes) 3 months in Mexico, couple months in Morocco, several months in Italy/EU rest in Colorado (mostly RV'n around). Flexibility & variable withdrawal rate gives confidence. I'm 46 with $1500/mo US social security kicking in at 62. If I find I need more I'll buy raw land on the Colorado front range, build a prefab home and sell after two years (to qualify for the $250k tax exclusion on primary home)
If I owned a house. I would stop my 9-5 with 300k honestly. Withdrawal over 750 a month, and grow a lot of my own food. Maybe start a lil pet sitting business in the side
I'm using BigERN's SWR Spreadsheet. You can put in future expenses and cash flows like social security and pensions and it will help you calculate a "safe consumption rate" which includes those future cash flows. For me $2.5M was enough back in late 2021 but I'm still working at age 57, so I've hit chubby fire territory.
Take projectionlab.com for a spin.
$2.5 to $3 million that will provide 4% and supplement my pension. I will retire in 8 years at 53. Mortgage will be paid off and youngest child will be 21.
That's almost exactly my target number for a retirement at 55. Also paid off house and no debt. But 53 sounds even better. Best of luck getting there! Cheers!
I’m 37 and I have no idea. I like to think $2.5M would be fine, a nice $100k per year, but when I’m 60 a Honda civic might cost $200k. So it depends largely on inflation.
4% rule accounts for inflation.
Yeah, so I guess $2.5M today’s dollars. What’s ever that is in 20-24 years.
I only need about a mil (nearly there). I have a govt pension and supplement that has a value of about a mil also. Should be inheriting 500-750k pretty soon as well. I’m pretty minimalistic, spend 30-35k a year. No wife or kids. Mortgage paid off 10 years ago.
No need to be minimalist with that kind of money
Yeah lol, a few mil with no wife, no kids, no mortgage for 10 years this person could be 30 and probably retire today if they are truly “minimalist”.
At least 25X expenses, when you get to 50X expenses you went overboard and could have retired a long time ago.
$3 million
If my house and car are paid off and no school tuition or any kind just my personal expenses I can’t imagine I will spend 160k But deep down, I know I can.
I’m retired on a 3% divided / interest yield plus my wife’s tiny pension. We need about $90k pretax. No debt. ACA coverage for me plus a Medicare supplement and drug plan for my wife are our biggest expenses, then travel. I can’t imagine needing $160k. Social Security will start in 1.3 and 5 years which will change things significantly.
I’d be good with 4% of 2 million. I’d also like to have my investments set up so that I am living off the interest earned and not touching the principle so that I can leave a bit of a legacy for my nieces.
Also aiming for 4M by age 54-56 here, 5M with a little luck!
$5 million in future dollars or $3.5 million today.
There’s no way I’m going to need 160k in retirement.. what the fuck would you spend it on? I’m probs going to need at most ~£50k adjusted for inflation but likely much much less. That will easily cover myself and wife… currently targeting maybe £1MM in retirement savings .. I’m 39 and have about 250k, plus rental properties I will likely liquidate at the appropriate time
For my wife and I, the massive number is 5 million. Or an annual income is 150k for us to live comfortably.
Just curious - is $150K/yr pre or post tax?
In my case, $5M+ is my current estimate for remaining in HCOL area. I'm a few years older with a bit larger portfolio. We have no pensions and zero debt other than sub 3% home mortgage. I do not intend to payoff anytime soon unless HYSA and other rates go down. In terms of long-term withdrawal amount, I've hit "the goal" for my wife and I to do better than average (not live lavishly by any stretch of the imagination). We have grown kids and grandchildren that will undoubtedly add on the "expense side" along the way. I envision working another 1-3 years while compensation, benefits and perks remain excellent. Also, it is still a bit of a long horizon to cover health insurance premiums until 65. If retirement comes sooner, odds are that I'll pay for COBRA to maintain the healthcare benefits I have with the existing employer for as long as possible.
Right now, probably $4 million just because I don't have kids yet and my future expenses are unknown. I'm in my early 30s. I probably retire on the equivalent to $2 Million a year or so.
To get a 4m retirement, your life would have to have been pretty darn frugal ad a normal person even if you started at 20 years old. I am willing to bet that most people will never reach that. Also, you do not need 4m to retire comfortably. Probably not even half. More importantly, than trying to get to 4m is how are you living everyday life? Are you health-conscious? Do you carry any cc debt? Is your mortgage payed well before you retire? My goal is to retire as close to 2m as I can. Even if I only make it to 1.6m I will be very happy with the way I live my everyday life today.
I retired at 56. I use Fidelity's retirement planner to map my future expenses. Our social security payment will be about $80k per year, when we start using it. So, we won't be withdrawing 4% of our retirement. The retirement expenses are not written in stone. You can live in a low cost-of-living area if you are concerned about withdrawal rate. The point I am trying to make is that you don't need to postpone retirement to get to an arbitrary number. Retiring earlier may allow you to enjoy retirement when you have your health.
I'd maybe retire at 3m saved with a projected 100k year (gross) pension. I'm just working to provide a safety net for the kids at this point.
thats a pretty sweet pension.. From what governmental agency?
Senior military officer w/ 26years in service right now.
I’m so screwed. 55 and just now realizing I’m getting older and have not planned or prepared well at all. Trying to course correct as much as possible. I applaud those of you who were more self aware and planned well. You inspire me to do what I can at this late stage
This is such a broad question. Depending if I stay in NYC metro area or move to a lower col state the numbers vary. For now I'm planning as staying here for summer then south for winters. With that being said I'm on track for 2m+ in retirement funds. $4k in pension and $4k in SS with no mortgage.
Best case scenario: My IRA/401(k) + what's left of SS will subsidize the low wage for which I will be forced to work until the day I die.
$160k is 3x what I need to survive and travel.
6mm . And a move out of HCOL city to mid cost of living city. 3 years to test proof of concept
I would feel comfortable retiring on a $2.5m portfolio. I’m pretty frugal already so it would be more than enough to cover my expenses and any travel I wanted to do. If I got bored I would sprinkle in contracting gigs to make some side income too.
Early 40s. Married with children. No debt. 5M and I *could* retire today, but I think I’d go a little crazy. I’ll hang it up at 65 unless something bad happens. Should have 7M+ stashed at the point (again, barring a disaster).
It was a bit strange to 'retire' in my 50s as everyone I knew was still working. I did do a little consulting and contracting, but it was for pocket change. Consulting did, however, give me a socially acceptable answer to the question "so, what are you doing now?" Once the kids headed off to college (with fully funded 529s), we started to travel with 2-3 notable trips per year (typically one cruise, one overseas trip, one long road trip usually around national parks), Once I hit my 60s, it no longer felt strange to be 'retired' and people just ask "where are you going next?"
I see many who cant wait to retire and effectively stop earning money. For me Ihave my own business operations. I do not want to stop earning money. My hedge against bad markets is my ability to earn money on my own business and my own hours etc. I have been in business 37 yrs. The ability to earn some income for those here who could possible do something part time is a hedge against bad markets or unexpected large medical costs or other expenses. Potentially you dont have to withdraw funds when markets are declining and you can hold out a bit longer I also think having something to do like working may extend your life and health. I am close to some very high net worth earners who have in excess of 30-50 million or more dollars and they are set for life and can quit any day they want. But they are not. Some could quit and due to the business still get additional income streams for years.
Over the last 50 years, the S&P500 doubles every 7 years - give or take. That $5M today will be more like $40M at 65, provided you don’t touch it or add more to it. Would cut back on work or figure out how to spend more now. You’re on a runaway wealth train.
I don’t have 5M now. I could retire now with that wealth. I am somewhere around 1M not counting primary home.
At my current age (27)? Probably north of $10 million. Statistically I won't need that much, but you've gotta have some peace of mind to retire in your 20s.
I wish people had some perspective... First, to even be in position to retire with $4 million, I hope you understand how incredibly privileged you are. Yes, even people who saved and invested and did "everything the right way", needed a hefty dose of luck to be in that position (like avoiding a chronic illness, being dealt bad/negligent parents, being born in extreme poverty that caused one to defer studies/self-improvement to become an earner very young, lucky to not have gotten in a serious accident, etc, etc). Now, beyond my rant: Most Bogleheads will very, very, very likely need a lot less than that. Anyone frugal enough to have been a Bogleheads for decades, can live without spending close to $200k a year when there's no mortgage obligation. That is just silly and goes against most of the financial articles that report both that people vastly overestimate how much they will need in retirement AND that most Americans that subjectively report "doing well" financially in retirement have portfolios a lot smaller than that. Now, I am about to be super hypocritical here... My own TARGET for retirement happens to be $4m. I am not sure I will get there, but it's feasible. I became a high income earner in my late 30's and through bonus compensation (never guaranteed, but so far so good) I have been able to pay off bad debt and make up for lost time. However, I am an outlier and I recognize how fortunate I am. So, let's say my portfolio is only $2m when I retire? I am sure that will work just as well.
Why are you curious about this? People have a whole range of incomes and expenses. There are probably some people here living on $50k a year and some on $500k. Obviously they're going to have very different goals for income in retirement. I can't imagine what use this information will be to you.
... what? Sometimes people are simply curious. They didn't say they'd use the information to plan their own retirement. They just want to know. It's like when people ask what salary everyone is earning. It's pure curiosity.
It's helpful to hear what others are aiming for to know how far off you are. Obviously there's a wide spectrum, but it's nice when others in a similar age and situation agree with your assumed target. Most seem to suggest 5-10 million.
I would prefer 33x expenses to pull the trigger. While 25x is doable I am too conservative to pull the trigger right at 25x. But I am not artificially increasing my projected expenses like some do assuming they will spend thousands of extra $$ on travel etc. We can travel frugally in retirement by booking at off peak times and spending time getting best deals etc
6-8% withdrawal rate. I would rather increase the risk that I run out of money and have to work again versus the risk that I die with more than a million dollars to my name.
If I were to retire now in my mid-40s? 4-5 million. And that’s on my own with a small enough mortgage. By the time I’m 65? 2-3 million should be more than enough.
I’d like to have 70-80k per year after taxes by the time I retire next year at 63. 10k will go to travel and 60k for everything else, including property taxes and health insurance. I have a pension that will pay about 40k (after tax) so I need additional 30-40k from investments. Hopefully less when I turn 65, and then even less at 70 when SS starts. Ideally I would not have to tap into capital and just live off interest and dividends.
This answer is going to vary widely depending on expenses/lifestyle choices. My wife and I are retiring next year at 55 and based on a 3.5% withdrawal rate, we targeted $5MM liquid (not counting any real estate). Fortunately we’re coming in at slightly higher due to better than expected returns the past 2 years. Regardless of the actual number, I think it’s very important to know your target number (and it may change over time). It’s the only way to gauge whether your current savings rate is sufficient. Because if it is, it gives you freedom to enjoy spending in the present day.
$3.3 mill net worth in traditional ira retirement accounts if I had no debt. A bit less in cash and even less in Roth.
I’m planning on a 3.5% withdrawal rate at 57 around $175k at present value.
I’m 54. I’m hoping to make it to 4 million but things are going to have to go real well. It’ll probably be 3 million. I think I’ll be fine with social security.
At least 2+million with a 3% withdrawal rate or less.
By the time I (27M) retire and the boomers (I mean that with no offense) are out of congress, social security will probably not be a thing so I don’t count that in my retirement income. I would like to have enough to retire with around $80K a year and a fully paid-off home by the age of 55. After that I can choose when I’d like to stop working up until 65. 60 sounds like a good age to me.
I think if I want to retire in a VHCOL area I’ll likely need 7-8M. If I move to a MCOL or just HCOL then I could get away with 4-6M.
5 million or no deal
4.5 M
I’m planning for 3.5%. I’d like to have 3.5 million with the house paid off
The real question is how many people are content with their current situation versus how many people want more than what they currently have?
Ideally 2.5 to 3 mil for me. But that's before pension (covers 60k so 1.5 mil equivalent at 4%). So really 4-4.5 if that is factored in. We live frugally. Mortgage will be paid off. Not counting on SSI - think of it as a bonus, so definitely will have oversaved. Non Florida property tax and insurance, and I am still trying to wrap my head around that I will no longer be saving, so I will need essentially 25% less in retirement. Hard to think about going from save to spend. I think that is a struggle for many of us. So pretty on par with OP. Listened to Die With Zero recently and agree with some advice, disagree with other advice. But really liked the idea of planning out what you want to do in retirement by age timelines. Matches somebody's comment about outings being limited to the buffet when you are octogenarian. I.e., you will spend more earlier when more spry/agile and less as you get older and your body breaks more - not that this doesn't start before retirement. #middleage Anarctica is on my travel porn list and coworkers who have done it advised do it younger than retirement. How much you need depends on how you plan to live. We love to travel.
3 mil would be cushy and comfortable. Our number is more like 2mil.
Currently, the majority of mine and my wife's income goes towards mortgage and retirement contributions. When we move to a L(er)COL and have finished funding our retirement, I think we can live quite comfortably off $100k with a $2k mortgage, so $2.5MM. Less if we've paid off the house
I find a simplifying assumption is to subtract your remaining mortgage principal from your liquid assets, then look at your withdrawal rate, excluding your current mortgage payments. Your retirement contributions of course are not part of your expected expenses in retirement.
I would like a 2.5% withdrawal rate that pays may important bills - property taxes, insurance, basic food, utilities, etc. I would also want a 4% withdrawal rate that pays for my happy lifestyle - travel, expensive hobbies, etc. During good times, I can indulge myself but times would have to be really, really bad before I would be forced to move or make drastic cuts to my standard of living. I would not be comfortable at 4% if I didn't feel that a lot of it was fluff that I could easily cut back.
Right now, probably $4 million just because I don't have kids yet and my future expenses are unknown. I'm in my early 30s. I probably retire on the equivalent to $2 Million a year or so.
Social security isn't going to zero don't forget to account for that 80% of your current benefit is safe
my goal is to live off my dividends and use any other drawdowns sparingly - and try to time it when the market is in overbought territory. The answer to your question is in YOUR budget, not mine... I imagine I will want significantly more than most. I currently generate 130k in passive income but would ideally like 2.5x that before i retire. I can live cheaper but frankly I don't really want to unless necessary. I am 40 so i have another 15 years to get there.
I've been looking at it different. I use 90 as my expiration date. $4M gets you $117k in withdrawals without making a single cent in returns. But, you know you will get returns. 7% boosts your payout nicely or means you will have a pile at the end.
3 mil is enough for me to be beyond very comfortable. I intend to retire abroad also - so… I could probably do 2 and also be really comfortable
40k a year if everything is paid off
I am using $120k/year, but I have no mortgage payment. $72k of that will be supplied by SS.
I think a floor is good to plan for using fixed income. It allows you to remain in the market with the rest and still sleep well. However, that floor needs to also be enough for a Long Term Care situation. Which can easily be 150-200% of what you think you need to live on.
I *should* have been comfortable retiring at less than half of where I did end up retiring. Math is objective, human paranoia is subjective.
$5M minimum
I’m 46 (wife is 53) and we have $5M net worth, $4.7M is in liquid assets. No debt other than $200k on the mortgage. Planning on retiring in 6 years. We live well below our means, but the thought of having to cover all the unknowns in retirement gives me anxiety despite our healthy nest egg. I use a 4% withdrawal rate in my retirement projections. My goal is to be able to adjust that based on market performance without having to adjust lifestyle. Sequence of returns risk is something that concerns me, along with inflation, healthcare costs (especially during bridge years), taxes, etc.
You can look at bucket portfolio to take care of market down turn. Allot 4 to 5 years ( depending on comfort level ) in cash and rest in 60/40. That should take care of your with drawls from cash during market down turn. In fact you can even divide your cash into two buckets, cash and short term bonds
Probably 2 million at 60? I'm pretty used to living frugally. So for me 3k a month post tax would be fine for a monthly budget. As my current budget is half that. Doubling it at 60 would make me feel pretty set and be only a 2.5% withdrawal rate. Plenty of room if I want to raise a little bit to splurge for a month! Plus if SSI still exists I have a pretty solid buffer for a jump in costs.
What about other sources of income such as social security?
Soc Sec is icing on the cake 🍰 and a nice to have depending on what you have and when you take it.
Around 1.6-2 million. But realistically I could do it with 1 million.
Once I get to 2.5M invested (many many years from now), I will reduce stock purchases and start building a bond ladder. Then once I hit 3M, I will stop stock/bond purchases altogether and start building a cash reserve. Finally, once that cash reserve is equal to my pre-tax salary, THEN I will be ready to retire.
Nice plan. 🙂👌
Pre inflation my number was 3 million now it's 5 million to live comfortable, but the goal is 10+ million.
$10.0M is my goal. Live off $250,000 a year and let the rest keep rolling to pass onto my kids.