Article: $1.7M needed for "most" to retire (support, activities, cities)
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Incidentally, this thread is not strictly about investing, it is about whether it is possible for "most" to retire on $1.7M - I think yes, because I could have retired with $1.8M (not counting soc security, and not considering it in retirement planning - although in reality I do plan to start taking it at 70), and I described how. I did not retire 100%, but I could have done it, and I could have done it at 49. I gather Carbound1 retired at 42 with the same basic amount of $, but her approach is investment-based; mine is insurance-based, and we both have some real estate to fall back on if there is a market crash in her case, or a runaway inflation in mine.
In reality, people who had worked long enough, and with high enough income, could probably live fairly normally on SS alone if they start taking it at 70. I probably could (would have to get rid of 2/3 of the real estate because it would not be supportable with SS alone- but I don't absolutely have to live in three cities on two coasts, and would have to substantially reduce traveling - but I have already been to almost everywhere that interested me anyway. It would be doable, and not even particularly uncomfortable).
I love reading retirement articles. I do so realizing that for better or worse the reality being focused on may or may not be mine.
When I read the Money Magazine article about MathJak I realized we were on entirely different paths to what is now a similar reality.
...It is that you are comfortable predicting future from all possible versions of the past, and I am not. There are always new possible versions of the future market behavior, and some of them I don't want to know about.
Just as there's a risk in supposing that the future will, on average, resemble the past - so too, is there a risk in supposing that the future will be markedly different. That risk is foregoing historical gains. If we go around burdened by fear that just because we recovered from the 20th century's Great Depression, is no guarantee that we'll recover from the next Great Depression, well, the consequence is that we'll corral ourselves into too conservative of an investment structure, just capping gains. Is that a good idea?
Quote:
Originally Posted by GeoffD
It's more that it cherry picks from the past discarding anything "really bad". Try introducing Weimar Republic economic performance into it.
Scenarios like Weimar Republic (1923) or the Bolshevik Revolution are like an inverse lottery. Would you play an inverse lottery? I would! It works like this. Every day, you receive $10 from the state lottery commission, tax-free. It's your money to keep. However, every few weeks there's a lottery drawing. If the drawn number matches that on any of your tickets, you have to pay the state $100M immediately.
I'd take this bet, because the expected return (the integral of the first moment of the probability density function) on the conventional lottery is highly negative. The inverse lottery is a good investment, because the expected return is highly positive, the odds of failure are minute, and if failure does happen, there's always the "Smith and Wesson retirement plan".
Less flippantly, the point: a Weimer-Republic event is highly unlikely, but insuring against it is expensive. I'd rather remain exposed to such an event, than to foot the cost of the insurance.
[quote=nicet4;55611914]That $1.7 million must be a figure pulled from nowhere that assumes the retiree doesn't receive social security or any other pension.
That number was written on the wall in the ladies room.
That $1.7 million must be a figure pulled from nowhere that assumes the retiree doesn't receive social security or any other pension.
Silly article that is useless.
Quote:
On average, Americans believe they need $1.7 million to retire, according to a recent survey from Charles Schwab, which looked at 1,000 401(k) plan participants nationwide
Folks the article is based on a survey of 1000 Charles Schwab investors. It is based on their feedback on the survey. I suspect that those 1.000 people present a different economic profile than many in the forum objecting to the number. It is target specific and I suspect was not meant for mass consumption. The OP link is from CNBC that incorporated it in one of their articles. Again a specific profile audience probably different than some of the forum participants.
I suspect that many found the article helpful and within their financial goals.
I found the following quote at the end of the above link very interesting.
It could help Americans to think of themselves as investors, not just savers, she said. But people — especially younger ones — tend to find the act of investing intimidating, and don’t consider themselves investors even when they have an employer-sponsored retirement account. Shifting the mind-set from saving to investing can help make a person feel more in control, said Erin Lowry, author of “Broke Millennial Takes on Investing.”
It's more that it cherry picks from the past discarding anything "really bad". Try introducing Weimar Republic economic performance into it.
Why stop at Weimar Republic, how about asteroids crashing into earth? Germany at that time had just lost a major war so entered thet era industrially depleted, under crushing debt, and under harsh unrealistic economic restrictions including massive war reparations agreements. It not nearly starved them out it made reconstruction/growth nearly impossible. The hyperinflation that is usually at the heart of the Weimar cliche came about because Germany had heavy obligations but was producing no goods for export.
Is a state similar to that possible for United States in my lifetime? Anything is possible but it doesn't seem like a risk significant enough to plan around. I'd say the odds of USA either having surrendered after losing a war or being unable to produce things is extremely low. There have been quite a few events over the past 100 whatever years of stock market returns that would qualify as "really bad" World Wars, Great Depression, Great Recession, Dotcom bust, Stagflation, whatever it's all baked in and I'm sure we'll have more of them in the future.
Planning for the worst is fine, but at some point whatever worse we imagine up isn't worth allocating effort and resources to counter.
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