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Old 01-29-2016, 07:00 PM
 
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I have NOTHING even remotely close to a million dollars. But I keep reading we need that to do alright in retirement. I would assume that most people who have that much money could afford to have a house paid off. So, APART from possible pensions and social security, [ low average of $2500 a month for a couple] how much money a month would that million dollars add to monthly income? I really and truly can not figure it out. To me, a total monthly income of 4 grand [pensions, social security, million dollars] with a paid off house sounds almost wealthy. Would we NEED a million dollars in savings to give us the extra $1500 a month to bring us to 4 thousand a month?
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Old 01-29-2016, 07:18 PM
 
Location: Los Angeles area
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I think the basic idea is that if there is a more than negligible pension then we don't need a million dollars. It's just a rough estimate anyway, as there are so many variables. There have been many threads devoted to this discussion, and many posters seem to be doing fine with much less than a million dollars.
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Old 01-29-2016, 07:31 PM
 
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Thanks. I mostly avoided the other threads on this subject because the few I read depressed and terrified me. So far, we have been living twice as well on nearly half as much monthly income and I was thinking I must be missing something horribly important. I have put off asking this question for quite awhile, but was too scared of the answers. We seem to be doing fine on an income of way less than $4000 a month.
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Old 01-29-2016, 08:31 PM
 
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The rule of thumb is that for retirement at about age 65, a safe withdrawal rate is about 4% per year. For $1 million that is $40k/year, $3333/month. The 4% rule has held up very well over the past decades but no one knows how safe that rate will be in the future.
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Old 01-29-2016, 11:27 PM
 
Location: Out there somewhere...a traveling man.
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Read the other thread on this subject, you may be surprised, hope you don't faint.

Saving a million dollars for retirement
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Old 01-30-2016, 02:50 AM
 
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it isn't the pile of money that you have . it is only about how much it can safely generate and how much you spend .

you may need 1 million to safely generate 40k a year inflation adjusted with a balanced portfolio , but use fixed income instead because you are risk averse to generate that 40k and you may need 2 million to get the same draw .
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Old 01-30-2016, 11:54 AM
 
Location: SoCal
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If you have a pension that pays about $40k a year, you are good. You don't need a million. But it's a number that's thrown out a lot for convenience's sake.
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Old 01-30-2016, 12:06 PM
 
Location: Washington State
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Factors affecting how much you need to have saved up include your income streams (social security, work pensions, IRA or 401K, investments, etc), your lifestyle wanting to maintain, where you live, when you retire, some allowance for things going south. For me $1M would not be enough.
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Old 01-30-2016, 12:40 PM
 
Location: SoCal
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In that case I think $10 million, still not enough to buy an island to park my future boat.
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Old 01-30-2016, 12:59 PM
 
Location: Los Angeles area
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Quote:
Originally Posted by Tall Traveler View Post
Factors affecting how much you need to have saved up include your income streams (social security, work pensions, IRA or 401K, investments, etc), your lifestyle wanting to maintain, where you live, when you retire, some allowance for things going south. For me $1M would not be enough.
You have listed some of the variables I referred to in my earlier post. "When you retire" is significant because first, it has to do with how many years your savings will have to last, and second, people who retire before age 65 (and there seem to be a lot of them) have the issue of health care coverage until reaching that age.

"Life style wanting to maintain" is perhaps even more significant. If a person wishes to have the following in retirement, he better have tons of money:

-- Membership in a posh country club
-- High end recent model car
-- Staying in posh hotels when traveling
-- Frequent dining out at high end restaurants
-- Designer clothes
-- Housing to match all of the above

The whole life style thing is a principal reason why there is so much talking past each other, in my opinion, because the exact expectations are so rarely specified. I live quite well, but have none of the above. I eat out frequently but the average price of a meal (for just my meal) is probably around $12 or $14 including tax and tip, more if I have a beer. I travel, but I stay in places like Motel 6 or Day's Inn. My car is better than a beater, but probably cost me (new) about half of what a BMW or Mercedes costs. My housing is a rather plain-Jane (but paid-off) two-bedroom townhouse which is comfortable and plenty roomy enough and is in a decent state of repair but it certainly wouldn't impress anybody. I am not into impressing people.

The bottom line is that my tastes are modest - I don't feel "constrained" to live that way - that is the way I prefer to live, as I have a loathing for waste. Even if I had no pension at all, I just don't think I would need a million dollars to maintain my life style. As it is, I have a pension which is adequate for me to live on, so the whole question of how much savings I need is almost completely moot.
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