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I do not count on Social Security being there for me.
I know some people really fear SS won't be there but I think this is an unrealistic fear for someone your age, almost 50. The geezers are the most powerful voting block, and they do vote and they simply won't allow gutting of SS. If any politicians did that, they'd be booted out and others put in to restore the cuts. There may be some reforms in the future which may make some slight reductions in future benefits or raise the age a bit, but the only thing that would cause major cuts would be some huge economic catastrophe, in which case we'd all be in serious trouble.
ohh my I see some really off answers. Being someone who just did it , it would take a lot and I mean a lot if your under age 50. You would need at least 5 million. You could live another 40 years. And if you live in the North East , ohh forget anything less. Also think of what a loaf of bread will be in 20 more years??
Assuming my house was paid off, just property taxes and maintenance to take care of, I'd only need about $20k/yr to be able to retire. At 3% drawdown, that works out to $600,000.
Quote:
Originally Posted by stevemorse
ohh my I see some really off answers. Being someone who just did it , it would take a lot and I mean a lot if your under age 50. You would need at least 5 million. You could live another 40 years. And if you live in the North East , ohh forget anything less. Also think of what a loaf of bread will be in 20 more years??
I quoted these two because they represented opposite ends of the opinion spectrum. I'm closer to the first of these than the second. I think the 1st is overly optimistic for a younger person and the second doesn't realize COL is very cheap in some areas.
Husband and I currently live on about $23-24k a year, even though we gross almost 3 times that. Now that our non-mortgage debt is paid off, we save/invest about 50% of our net each year. But while I absolutely would retire at 65 with only $600k (even less if SS is still around and contributing then), I wouldn't do it today, at 36.
On the other hand, I think $5M, as stevemorse said, is unnecessary for many areas. I don't intend to have kids, so that cuts expenses a lot, also. I only owe $80k on my house, and after that, my expenses will only be about $17-18k a year, in today's dollars.
Even if I figured huge inflation and assumed I will actually need $4500 per month average (triple what I would need in today's dollars), at only 3% return, only $1M would last me 26 years. So $2M would be as much as I needed for anything normal. I could get 0% returns and live on $2M for 37 years. At a measly 3% return, it would never run out at $4500/month. And remember, if my house was paid off, which it would be, I would only need about $1500/month today.
Given all of that, I'd definitely retire today if I had $1.5M in the bank/investments and my house was paid off. At only 3% returns, that would last about 60 years, at triple the rate of withdrawal that I expect to need.
Just to throw a different perspective into the mix... I live in Central NY.
We will be retiring before the end of the month of January. Hubby will be almost 57 and I am 44. Our plan doesn't require as much savings as many have suggested. It will be funded by our rental properties. We live in an area where housing prices are fairly low. We currently own several rentals and will use money in the 401k to pay off the (tiny) amount left on any mortgages. We will also purchase a few more rentals over the next few years (1 or 2 at a time) to provide additional income and will convert another vacant building that we own into another rental. After 3 years, we don't expect to have to remove any money from the 401k and what's left will be allowed to grow. Our plan hinges on the fact that we owe very little and don't plan to pick up any expensive hobbies.
We've been landlords for about 20 years and expect the rents that we charge to keep pace with inflation and provide us with a good income. I'm currently back in school to gain another graduate degree in a growing field. I want to be sure that I could re-join the workforce as a consultant if I ever had the desire or need to do so. We will also continue to contribute to retirement accounts. We believe in always having a safety net.
ohh my I see some really off answers. Being someone who just did it , it would take a lot and I mean a lot if your under age 50. You would need at least 5 million. You could live another 40 years. And if you live in the North East , ohh forget anything less. Also think of what a loaf of bread will be in 20 more years??
Well I said living in the North East. I have just done it husband age 50 /me 48. I have added insurances and taxes and that alone is a lot!! Look if you knew you were going to die at age 70 you don't need 5 million but if you live to 90's that's 40 years!!!! Look at prices of things 40 years ago, and compare it to now!! Its shocking!!!! I looked and in 1974 to 2014 you would be shocked at the difference.
Of course there are countless variables to consider, and of course there isn't a one-fit-all answer to the above question....so, the question is directed at YOU!
Assume your house is Paid off.
How much would you need in the bank (401k/cash/bonds/stocks/etc.) in order for you to retire on 1/1/2015?
How old are you and which state do you live in?
I don't need any "money" to stop working.. I don't wish to quit work entirely and pursue leisure 100% of my waking life if that's what you're thinking about.
But I do wish to quit the rat race as soon as possible and stop working for a boss and do meaningful volunteer activities to kill time or raise a family. 2 million dollars is my magic number.
Well I said living in the North East. I have just done it husband age 50 /me 48. I have added insurances and taxes and that alone is a lot!! Look if you knew you were going to die at age 70 you don't need 5 million but if you live to 90's that's 40 years!!!! Look at prices of things 40 years ago, and compare it to now!! Its shocking!!!! I looked and in 1974 to 2014 you would be shocked at the difference.
but remember , as long as everything is not a need our spending patterns change big time as we age. by mid 70's spending takes a dive and stays down until mid 80's when healthcare costs ,gifting and charity kicks up.
that spending reduction offsets more than the price increases generally on the stuff we still do and buy.
that factor has a huge difference in inflation adjusting needed through our older years and hense the amounts we need.
of course if you have no descretionary income because everything is a need there is nothing to cut out as you age .
'Stop working' to me = quit current job + leave your current career completely behind.
Here's my magic number: 3.5 million liquid. A net (of taxes, inflation) RoR of 3% on that amount gives me about 100K. That won't be enough as I currently make multiples of that amount. I would work part time as a non-profit director or JuCo teacher to provide an additional 75K+ in net money. That would give me a total of 175K net.
Of course, this is all a nice fantasy. I'm 31 and have no desire to stop working any time soon regardless of my financial situation. There are too many things I'd like to accomplish first.
You can make 75k a year net working as a part time Juco teacher? Are junior colleges paying that much?
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