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All the articles we read today say this is a myth. Well, okay then. But one question I've always had is whether this 'myth' was refering to each member of a couple, or a couple per se. A lot of retirement rules of thumb are geared to the couple. For example Fidelity says that a couple will on average spend $220,000 on health care after they reach 65. But back to this million dollar meme, would a couple need to have saved TWO million to retire carefree? Not looking to argue the arbitrariness of this number, just wanting to understand what the original intention was.
Last edited by luv4horses; 01-29-2016 at 08:51 AM..
How much you will need depends upon multiple factors such as age when you retire, where you will retire and what you want to do when you retire. If you live in NYC and plan to travel extensively, you will need much more than someone living in a low COLA area with no plans to do anything but relax and work in your garden
It is just a target that is easy to talk about and I think it is for a household. Like you say, it is a myth that there is some magical number. If you own a small home where taxes are low, don't care to travel much or drive expensive cars then you hardly need anything more than a modest income, so if you were a high earner SS may actually cover it. Not for most people, though. Most couples that shoot for a million and get over half way there will be okay but YMMV...
Well, using 20 years (age 85) as the length of time, that is $11,000/year or $5,500/year/person. That is doable for a lot of people who don't qualify for financial aid.
a couple has one draw rate between them usually that they need to meet their lifestyle . so our combined multiple 7 figures are used jointly between both of us to generate one income stream.
in fact our portfolio is one big portfolio of combined assets working as one coherent portfolio .
what you need in retirement is usually a function of what your income was while working . some need a little less , some a little more . bbut it is usually based on both incomes so retirement is no different
I always assumed houshold. And I always interpreted it as to mean that the income henerated by $1M (approx $40k/yr) plus your SS, would ensure an "adequate retirement", AND have a nest egg for an emergency, inheritance, etc, which I Think is still true today.
I never really had a $ amount in mind but i don't expect my wife and I (combined) will reach 1Mil. Maybe, if the market goes crazy and if we work longer than expected. I suspect we will be between 1/2 a mil and 3/4. I don't expect to be in dire straights because of that but our health will likely determine that for us.
My current plan is to retire between 60 and 65. My wife is a bit younger (7 years) and has said she will keep working after i retire because she enjoys it so much. I expect to spend the first 10 or so years enjoying retirement and after that, slowing down a bit and taking it easy. I also expected to wait to draw my social security until the later part of that 10 years, if not after it.
To be honest, there is no set game plan yet. Once I hit 60 (another 10 years) i will sit down with a financial adviser and weigh my options.
All the articles we read today say this is a myth. Well, okay then. But one question I've always had is whether this 'myth' was refering to each member of a couple, or a couple per se. A lot of retirement rules of thumb are geared to the couple. For example Fidelity says that a couple will on average spend $220,000 on health care after they reach 65. But back to this million dollar meme, would a couple need to have saved TWO million to retire carefree? Not looking to argue the arbitrariness of this number, just wanting to understand what the original intention was.
A million per couple is hard if you have a stay at home wife.
But once you hit 50 your can put 24k a year in your 401K and employers can match up to 16k.
If you do all equities and have an employer giving you the 16K match and work till 67 you can most likely get to one million even starting at 50 if you have a strong bull market.
you can't retirement plan from the top down . the amount you need saved will be both lifestyle driven as well as driven by how you allocate your portfolio .
you may need 2x as much saved using cd's , short term bonds and tips as you would a 50/50 mix .
so first compute your needs in retirement , then look at your pucker factor investing wise and then see how you need to allocate to get a high rate of success of meeting that income level .
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