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We’re planning to increase our expenses for the first 10 years or so of retirement assuming our health is good. We have a lot of trips we want to take that require large chunks of time not currently available with us working. Once we do that, our expenses will be about the same as they are now excluding 401k contributions and other retirement investments.
All you can do is plan as best you can and hope it all works out.
It mostly depends on your lifestyle expectations and cost of living in your intended location.
I have an uncle who is a 1%er locally, and probably waffles on either side of that nationally. He's pulling in $300,000 on a bad year. We live in a low cost area of northeast TN.
He's consistently running to zero every month. He divorced his second wife in 2012. He's paying her around $6k/month in net income in alimony. He bought her a condo and a new SUV in cash. That was around $300,000. Child support and now college expenses for his two daughters. His older daughter is 23, and he's still somewhat supporting her living expenses.
He has married/divorced/remarried the third wife three times since 2012. Each divorce has been a $100,000-$200,000 screw up. He's paying for her condo. She's never worked her, and he paid funeral bills for her mother recently.
There have been numerous car trades in the last ten years. An Escalade for wife #2 and wife #3. A $77,000 Yukon for him. A CR-V for daughter #1. A BMW 5 series wagon for daughter #2. A Cayman S for him. An Avalanche and Silverado for him. At least two Scion xBs. None of this is cheap.
There have been two boats - a $100,000 cabin cruiser and a cheaper pontoon. $3,000/year slip fees. Insurance, gas, maintenance, etc., all extra.
Numerous bad real estate decisions. He spent about $50,000 on landscape and cabling upgrades on a house in a new lake community right before the recession. The recession came and that community is still half-baked. The lake had issues with its dam and the water level is about half of what it was. He took a huge bath on that one.
He has made some good moves on various stocks and is still a millionaire but you need a ton of cash flow to sustain this kind of lifestyle.
I'm another who will never reach $1M and isn't going to try. Having lived in Idaho my entire life, which is one of the lowest wage states, I've never, and will never have a 6 figure income. Neither has my husband. In fact, our combined income when we have both been working good jobs at 40 hours a week has never broken $80k. But we've lived very frugally. We chose not to have kids (not for financial reasons, but it definitely allows for more frugal living). I've had my car for 21 years, his is 12 years old, both are still like new (mine has 91k miles on it in 21 years, his has around 35k). Our house will be paid off in 8 more years, and in the meantime, the payment is only $750 a month. When it is paid off, all we will have is the Taxes and Insurance, which runs around $150/month.
I calculate that once the house is paid off, which will be in our late 40s, our annual average total expenses will be under $15k in today's dollars. And yes, I've calculated things like home maintenance and eventual replacement cars into that average, and padded it for unforeseens. Everything else goes in the bank.
I'm hoping we have enough saved by our mid 50s to be comfortable. What is enough? Right now, I'm thinking around $600k. SS will cover a large portion of our expenses, very possibly all of them once we reach retirement age. I'd retire at $400k, but I'm concerned enough about unknown medical expenses to keep working that much longer. We'll probably both cut our jobs back to part time once we reach $500k. If we make $15k combined for the year, it'll pay the bills, so we don't have to dip into savings for that year. If not, $500k lasts a long time when you only need $15k each year, even if you are making 0% on the money. Making any returns at all, plus making any income at all for either of us, means we would likely not have to dip into principal most years. Even if inflation halves the purchasing power of our money, we'd still be fine.
Worst case scenario, we could always tap into the equity of our paid off house if we needed it.
Medical is the huge question mark, and why I'm not retiring at 50 with around $400k.
There are other benefits to the high wage states. You're more likely to max your SS. Higher income at the same savings rate is more saved. Massachusetts employers will probably have better benefits than employers here in small town Tennessee. MA has better social assistance programs, if needed. It goes on and on.
as i said earlier , today a college degree is the equal to the old high school diploma when i went to school .
all the degree means today unless in a specialized field in demand is that you have the ability to learn and the ability to stay committed .
college was not for me so i left the 2nd year , being a techie i found a trade school in air conditioning and refrigeration perfect and of great interest to me so i had no problem learning the trade .
through the years i migrated to becoming a mall climate control specialist to a motor control specialist , and ultimately a sales engineer selling and designing custom control panels for pumps and fans .
the irony is i had no degree , it was all self taught and today in retirement i teach motor controls and variable frequency drives one day a week to engineers coming in to the field for a company i worked for .
I think the days of this ^^^^^ kind of thing are going to make a comeback. I have a few friends in RE development and they all say the same thing: there is a shortage of plumbers, electricians, welders, good ole fashioned trades. Kids don't want these jobs and the pool of candidates is getting smaller. Wages will rise to meet demand.
the company i worked for has been hiring hundreds of employees on all levels . the higher paying jobs require an electrical back ground or EE. they grew from a 6 million dollar company and 8 of us when i started 20 years ago to breaking 100 million and 300 employees today in 4 states .
i have had a constant job 1 day a week training for 3 years now
1 million isn't going to be enough for this upcoming generation, especially with the uncertainty of social security, death of most defined benefit pensions, and 401ks stopping their already abysmal matching.
I am personally aiming for closer to 2 million and hope to be out of the workforce by 50. What will probably keep me working longer is probably medical expenses.
In other words, it now takes a six-figure student loan debt to get out of the starting gate on a career you used to learn on the job. And pays, in real terms, less than it did then.
That's a bit of an exaggeration...but not by much, unfortunately.
I am personally aiming for closer to 2 million and hope to be out of the workforce by 50. What will probably keep me working longer is probably medical expenses.
If you are flexible about where you live, you can move to another country if you are concerned about medical expenses. Or even just do medical tourism. It doesn't work for everyone, but it's something to consider.
Youngster here too, but I feel like I have a past generation mind. I'd rather just work until I'm unemployable. The statement, "work til you drop" that my dad lives buy is my basis. I'm doing my travel while I'm younger whilst socking away 28% of my income.
I also like, "no one has ever said they wish they had less money".
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