Minimum Net Worth Needed to Retire in SD (San Diego: condo, mortgage)

[ndfmnlf]

How much of a net worth should one have as a minimum to retire in San Diego? Just throwing out a number here....let's say, would $3 million be enough? 500k to buy a house for cash, then 2.5 million to live off of (assuming 3% annual withdrawal rate = 75k a year)? Is this a comfortable living? Appreciate your thoughts.

[Pedro2000]

Depends what you do and how you live. There are plenty of people I know who retired and lived off of under $2500 a month. But they didn't have a mortgage anymore, didn't have car payments, and rarely traveled. They enjoyed being around their grandkids often. They enjoyed family and friends.

I know others who sold down, aka sold their 4 bedroom home in NJ, moved down to some condo in South Florida. And it was cheap. And they enjoyed the sunshine, the community developments and so on.

But if you want a $500K house near the beach, and live a luxurious life, that's not happening in San diego. $500K isn't going to buy much house or even condo in many places in San Diego. So the first question would be, what are you looking for ? You can find a $500K condo or house, but it's probably not going to be "retirement" heaven. It'll be in-land and probably not in a very walkable area. So you'd need a car to drive to the beaches and so on.

[ndfmnlf]

Thanks. So what is your minimum net worth requirement? I see your point about housing cost. What about this then: 1 million for a house, and 2 million for living expenses (at 3%, should yield 60k a year).

Originally Posted by Pedro2000

Depends what you do and how you live. There are plenty of people I know who retired and lived off of under $2500 a month. But they didn't have a mortgage anymore, didn't have car payments, and rarely traveled. They enjoyed being around their grandkids often. They enjoyed family and friends.

I know others who sold down, aka sold their 4 bedroom home in NJ, moved down to some condo in South Florida. And it was cheap. And they enjoyed the sunshine, the community developments and so on.

But if you want a $500K house near the beach, and live a luxurious life, that's not happening in San diego. $500K isn't going to buy much house or even condo in many places in San Diego. So the first question would be, what are you looking for ? You can find a $500K condo or house, but it's probably not going to be "retirement" heaven. It'll be in-land and probably not in a very walkable area. So you'd need a car to drive to the beaches and so on.

[shmoov_groovzsd]

Originally Posted by ndfmnlf

How much of a net worth should one have as a minimum to retire in San Diego? Just throwing out a number here....let's say, would $3 million be enough? 500k to buy a house for cash, then 2.5 million to live off of (assuming 3% annual withdrawal rate = 75k a year)? Is this a comfortable living? Appreciate your thoughts.

Sorry, no simple answer to a totally vague question.

For a single person that never intends on having a family or being married, 75k/yr and buying a house cash for 500k is doable of course (its expensive to live here, but not everyone in SD are all legitimate millionaires)

But on the back side, taking out 3%/yr with no average return rate is missing from your equation. What age are you talking about retiring?

[earlyretirement]

Originally Posted by shmoov_groovzsd

Sorry, no simple answer to a totally vague question.

For a single person that never intends on having a family or being married, 75k/yr and buying a house cash for 500k is doable of course (its expensive to live here, but not everyone in SD are all legitimate millionaires)

But on the back side, taking out 3%/yr with no average return rate is missing from your equation. What age are you talking about retiring?

LOL. Exactly. These kinds of questions without knowing your lifestyle and especially how old you are, if you have kids, etc. I know 75 year old guys that have young kids still.

It just totally depends on many different factors. If you are asking if you can have a great lifestyle with $3 million net worth the answer would be yes for many people. But still, there are no easy answers to that based on information you put forward.

[ndfmnlf]

Originally Posted by shmoov_groovzsd

Sorry, no simple answer to a totally vague question.

For a single person that never intends on having a family or being married, 75k/yr and buying a house cash for 500k is doable of course (its expensive to live here, but not everyone in SD are all legitimate millionaires)

But on the back side, taking out 3%/yr with no average return rate is missing from your equation. What age are you talking about retiring?

3% is a widely accepted rate in the financial planning community as the withdrawal rate obtainable from a retirement portfolio consisting of at least 50% equities and 50% fixed income that is sustainable throughout at least a 30 to 40 year retirement. The average return rates you are looking for are the implied historic rates of returns of those 2 assets classes. In fact, the actual study on which this is based (the Trinity study) found that a more generous 4% rate is sustainable as well.

I suppose my question should be: how would you describe the kind of retirement living for a couple that 60 to 75k would provide in San Diego? This assumes that housing is paid for, and that you have the liquid assets that will throw off that kind of money at 3 to 4% a year. Given these assumptions, would you retire in SD?

[oddstray]

Originally Posted by ndfmnlf

...I suppose my question should be: how would you describe the kind of retirement living for a couple that 60 to 75k would provide in San Diego? This assumes that housing is paid for, and that you have the liquid assets that will throw off that kind of money at 3 to 4% a year. Given these assumptions, would you retire in SD?

You're still asking a really vague question. It depends on the couple, and what they like to do and have.

If they like things that don't cost much, 60 to 75K might be more than sufficient. If they things that are costly, that could be a tight budget for them.

Either way, if they run into medical catastrophe, they could be financially ruined. But this can happen no matter where you live, so I'm not sure it should enter into the criteria for choosing SD or not.

[ndfmnlf]

Thanks. I was asking about the minimum amount of net worth that would be considered comfortable living in SD. Obviously, the more money you have, the better, as you would be able to afford to enjoy more luxuries. But for a minimum, you seem to be saying that 60 to 75k annual income is sufficient, which translates to a net worth of about 3 million.

Originally Posted by oddstray

You're still asking a really vague question. It depends on the couple, and what they like to do and have.

If they like things that don't cost much, 60 to 75K might be more than sufficient. If they things that are costly, that could be a tight budget for them.

Either way, if they run into medical catastrophe, they could be financially ruined. But this can happen no matter where you live, so I'm not sure it should enter into the criteria for choosing SD or not.

[shmoov_groovzsd]

Originally Posted by ndfmnlf

3% is a widely accepted rate in the financial planning community as the withdrawal rate obtainable from a retirement portfolio consisting of at least 50% equities and 50% fixed income that is sustainable throughout at least a 30 to 40 year retirement. The average return rates you are looking for are the implied historic rates of returns of those 2 assets classes. In fact, the actual study on which this is based (the Trinity study) found that a more generous 4% rate is sustainable as well.

I suppose my question should be: how would you describe the kind of retirement living for a couple that 60 to 75k would provide in San Diego? This assumes that housing is paid for, and that you have the liquid assets that will throw off that kind of money at 3 to 4% a year. Given these assumptions, would you retire in SD?

Housing is the single most expensive aspect/barrier to living here in the total COL vs many other cities. Once that obstacle is overcome, the variance in annual income might be 5-10% give or take a few percentage points vs other cities in the country in terms of basic COL.

Other totally subjective items such as; two to three week vacations, large ticket splurges, emergencies, housing maintenance, going out to eat YYMV. Which in that case I dont think 75 is sufficient.

[ndfmnlf]

Another way of looking at this (and the reason I asked the question) is that I wanted to get a baseline estimate of the amount of money needed in SD such that working for a living becomes optional. Let's say a younger couple in their 30s and 40s who live outside of California have amassed a net worth of at least $3 million. They don't really want to retire yet and in fact they were offered jobs in San Diego that pay very well (their skills are the reason they have 3 million in the first place although that was earned in another state). This couple will have the confidence of knowing that if they moved to SD and a year later they are fired from their jobs, they can just say "the heck with it, let's retire" because they have a floor of income that can support them indefinitely. They will not starve and be homeless even if they lost their jobs. This baseline wealth eliminates a lot of the stress and fear that would otherwise exist in the minds of this couple.