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Old Today, 08:59 AM
 
36 posts, read 11,281 times
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Quote:
Originally Posted by lottamoxie View Post
In simple mathematical terms, without calculating inflation or anything else, if a person expects to be spending $50K/year in retirement and they expect a 30 year retirement horizon, they will need upwards of $1.5M to cover that retirement.

So $1.7M isn't that outrageous a retirement nest egg number to estimate for a future need, for an average college educated worker who works over a 35 year timespan.
1.7 M invested in equities should provide at 4% SWR $68,000 yr inflation adjusted.
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Old Today, 09:03 AM
 
71,456 posts, read 71,629,249 times
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The same 1.7 million in a balanced fund would not only spin off 4% inflation adjusted but stand a 90% chance of ending with your 1.7 million intact 30 years later You would have a 67% chance of having 2x what you started with That sure beats an annuity. Remember you can’t spend that 130k from the annuity because you need to hold it for inflation adjusting later so you are limited to what you can actually spend of it .

Last edited by mathjak107; Today at 09:21 AM..
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Old Today, 09:20 AM
 
7,166 posts, read 8,620,829 times
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Quote:
Originally Posted by TMSRetired View Post
So if you plug that 1.7 million into an immediate annuity
Why would you do that?

You have no idea where that $1.7M is coming from, how much is SS and/or a pension and/or some other future expected amount. No one who will get SS in their retirement years is going to be handed their SS benefits upfront to use. Such a person may amass $1M of their own by the time they get to retirement and the rest may come from other income streams in the future and the total by the end of their retirement horizon may come out to $1.7M. But they're not going to be getting the equivalent of $130K+/year to spend each year.
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Old Today, 09:24 AM
 
7,166 posts, read 8,620,829 times
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Quote:
Originally Posted by Deuce88 View Post
1.7 M invested in equities should provide at 4% SWR $68,000 yr inflation adjusted.
Specifically I said my simple calculation was *not* including anything else like inflation and that also meant it wasn't including investment returns.

I also used the example of $50K/year, which if you insist on doing the 4% SWR calculation, would be $1.250M nest egg.
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Old Today, 09:26 AM
 
Location: Tennessee
23,541 posts, read 17,525,434 times
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Quote:
Originally Posted by Hefe View Post
If it is the same article I read over the weekend, & the $1.7M figure makes me believe it is, I assumed that it meant that for current young workers they would have to accumulate that figure for the future over their 30+ years of working, not for current or near retirees.

And frankly with the typical annual rates of inflation + the seemingly endless wage stagnation + the seemingly endless healthcare costs upward spiral + the likelihood of extended bouts of unemployment in the new economic model of switching jobs every 4-5 years + increased joblessness due to the tectonic shift of jobs being automated more & more, & less financially adequate jobs for unskilled/uneducated workers + the need for taxes to rise to cover "entitlements" & the huge deficits being built up now... that figure doesn't look all that wrong to me in 30-40 years at all.
I don't think a lot of retirement planning articles get this point.

If you look back over the past several generations, life expectancy has increased significantly. It's very common now for people to be in good health well into their 70s, and for some, into their 80s, yet common retirement age is still in the 60s.

Previously, most people worked, had a fairly short retirement, then died. Their savings only had to do X years. Today, it's common to need X + 10 or X + 20. You also didn't typically have the extended nursing home stays and tail end of life health spending common today.

A lot of people have job stability issues after 50 and sometimes even in their 40s. It's now fairly common for people to enter the labor force later due to more schooling/taking longer to graduate. I didn't get my first "adult job" until I was 24. You're not only living longer, but being ejected from the career focused labor force earlier and starting later. You might be having to fund a 30+ year "retirement" or being in jobs in a 20-30 year career.
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Old Today, 09:27 AM
 
Location: New Mexico
6,540 posts, read 3,650,165 times
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Just another click-bait article to sell advertising.
The opening statement "When it comes to retirement savings, many Americans miss the mark" is true enough but I don't know anyone retired with $1.7 million or who even need that amount stashed away. There are places or cities where people need more than others and some folks like to spend and live high on the hog but most people don't need that kind of money. I've been retired 19 years and have not spent anything close to that amount (and probably won't) and have a very comfortable life.
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Old Today, 09:27 AM
 
429 posts, read 104,127 times
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Quote:
Originally Posted by lottamoxie View Post
Why would you do that?

You have no idea where that $1.7M is coming from, how much is SS and/or a pension and/or some other future expected amount. No one who will get SS in their retirement years is going to be handed their SS benefits upfront to use. Such a person may amass $1M of their own by the time they get to retirement and the rest may come from other income streams in the future and the total by the end of their retirement horizon may come out to $1.7M. But they're not going to be getting the equivalent of $130K+/year to spend each year.
I only did it to get some numbers..treat it like a pension.

How many people need over 100K a year in retirement money ?
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Old Today, 09:29 AM
 
429 posts, read 104,127 times
Reputation: 1026
Quote:
Originally Posted by lottamoxie View Post
Why would you do that?

You have no idea where that $1.7M is coming from, how much is SS and/or a pension and/or some other future expected amount. No one who will get SS in their retirement years is going to be handed their SS benefits upfront to use. Such a person may amass $1M of their own by the time they get to retirement and the rest may come from other income streams in the future and the total by the end of their retirement horizon may come out to $1.7M. But they're not going to be getting the equivalent of $130K+/year to spend each year.
The article is about how much they need to retire. You don't calculate any lump sum SS in that.
And same with pensions unless you take a lump sum payment.

The article is all about 401K accounts.
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Old Today, 09:32 AM
 
Location: Rust'n in Tustin
2,158 posts, read 2,362,842 times
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Quote:
Originally Posted by mathjak107 View Post
The same 1.7 million in a balanced fund would not only spin off 4% inflation adjusted but stand a 90% chance of ending with your 1.7 million intact 30 years later .
Yep, that's what my financial planner told me. We'd have the same amount in 30 years. Of course the purchasing power of 1.7mil will be much less in 30 years., but I'll be 91 by then.
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Old Today, 09:33 AM
 
Location: Silicon Valley
3,604 posts, read 1,622,110 times
Reputation: 6112
Quote:
Originally Posted by marino760 View Post
You might be on to something there....
There was a man in my home state that would do that. Every fall once it started getting cold, he'd break into the bottle shop, take 1 bottle of liquor and drink it until the police showed up to arrest him. They'd usually let him out again in the spring and come fall, the cycle would repeat.
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