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not really. you can sell a bond and have full liquidity in cash crunch or when new opportunity presents itself . you can't sell the living room.
People sell houses every day.
Retirees in high COL places sell their expensive paid-for homes and downsize all the time. All that home equity creates a very nice kicker to their retirement nest egg. The C-D retirement board is littered with "I'm selling and moving" threads. They still have all the equity in that downsized house in case they have the life event where they can't stay in their home.
Tons of retirees hit that life event where they can't stay in their home, sell the house, and move to assisted living. Wander over to the C-D caregiving board and read about all of those.
These aren't 30 year olds trying to create wealth looking to jump on that next Amazon or Bitcoin. They're retirees spending down their wealth with their nest egg largely in safe investments. A big chunk of it is often locked up in their home.
I feel the use of a $1 Million target number for retirement savings is both beneficial and detrimental.
Beneficial because it will (or should) cause people to realize that saving for retirement is important and needs to be started early. The amount of safe annual deductions from this balance may be in the appropriate range of income for many people.
Detrimental for a number of reasons.
First, the size of the number may cause lower earning people, who will also have low SS benefits in the future, to resign themselves that they can never save enough and therefore never try to save.
Second, this value is too high for people who have happily lived their lives on more meager earnings in a low COL area, and plan to continue doing so in retirement.
Third, this value is too low for people who have lived an expensive life style in a high COL area and plan to continue doing so in retirement.
Fourth, this value assumes the retirees will receive no pension benefits. A $40K annual pension is roughly equivalent to earnings from a $1M retirement nest egg.
$1 million household net worth at age 60 to 64 not counting home equity is 84th percentile. The vast majority of people fall short of that.
A household led by a 60-64 year old with a net worth ignoring primary home equity of $1,000,000.00 was in net worth centile 84% in 2016. This centile ranged from $948,997.40 to $1,022,281.48.
We've been through this many times here. You adjust your lifestyle to your income and cash flow, not the other way around. All the personal finance-oriented articles do it backwards.
Retirees in high COL places sell their expensive paid-for homes and downsize all the time. All that home equity creates a very nice kicker to their retirement nest egg. The C-D retirement board is littered with "I'm selling and moving" threads. They still have all the equity in that downsized house in case they have the life event where they can't stay in their home.
Tons of retirees hit that life event where they can't stay in their home, sell the house, and move to assisted living. Wander over to the C-D caregiving board and read about all of those.
These aren't 30 year olds trying to create wealth looking to jump on that next Amazon or Bitcoin. They're retirees spending down their wealth with their nest egg largely in safe investments. A big chunk of it is often locked up in their home.
yes they sell and then , they are no longer consuming that house . that has nothing to do with what i said about living in it and consuming it yourself .
when the day comes you sell you are no longer consuming that house . then it becomes no different than any other asset once you have cash in hand and it is liquid . but until then it is still not liquid , is an expense and is no proxy for a bond .
Actually I think the correct amount to save retirement is $2,538,926.37*
A livable retirement is easy to achieve if you follow the advice of the experts:
Listen to David Bach and stop drinking lattes-this will account for a million or so.
Take the money you're not spending on lattes and invest it with Dave Ramsey endorsed brokers and you'll earn 12% on mutual funds. Be sure to tithe!
Plan to work until you're in your 70's like Suze Orman advises.
Live in shack w/o running water or electricity and live on scraps and all the other Mr. Money Mustache things...live the first 35 yrs of your life like a poor person so you can quit working and spend the rest of your life living like a poor person.
(*Don't scrimp on that $0.37. It could make all the difference.)
“Other research on long-term care costs from economists at the RAND Corporation finds that – in good part to due to Medicaid and Medicare footing the bill – the average retiree household spends only $7,300 on long-term care over its entire retirement. Ninety-five percent of households spend less than $47,000 on total long-term care costs throughout retirement. Long-term care insurance makes sense for many retirees, but the fact that bankruptcies are lower among retirees than among working-age households tells us that truly catastrophic health costs are relatively rate.”
These numbers appear to be averages. They mean nothing if you or your spouse find yourself needing care for an extended period of time. I have personally known a number of elderly people like this.
we have no differentiation here . all homes have limited medicaid beds .
the best way to do it is to pay your way in to a nice one , which they will gladly take you in and most will take medicaid assignment after 2 years here .
we have a policy that will pay for 3 years .
The nicest places don't accept Medicaid.
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