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The big question people always ask when it comes to retirement is “How much money do I need to save to retire comfortably?” And the big answer ― $1 million ― sends many of us into a head-first tailspin.
But before you say, “I’ll take that cat food in bulk, please,” consider this:
A lot of what you hear in the way of retirement advice is 50 shades of wrong. And yes, I’d include the idea that you need to save $1 million in that. It’s time to rethink some popular “truths” about retirement. (No, this does not give you permission to stop saving!)
if anyone blindly tells you how much you need don't ever waste your time listening or reading that crap . we have posters that do it here both on the minimum requirement side as well as tell others how much is enough .
it just shows they are financially mis-informed as well as have no clue what it can cost in high cost of living areas .
The estimated median annual household income among retirees is $32,000,
and more than half of retirees (53%) live on less than $50,000, ...
The median Social Security benefit was $16,295 for men and $11,999 for women
Just under a third (30 percent) of retirees receive income from either a traditional pension
or take withdrawals from a retirement savings account such as a 401(k) or individual retirement account.
I think it completely depends on your expected quality of life, right? I mean there are some general good guidelines that I think make a lot of sense, but beyond that, it's going to be up to you to decide how you want to spend your retirement years, what you can possibly afford to save, etc.
Me personally, it sounds like a nerve-racking idea that I'd be eating into my principal (which is already worth less each year because of inflation), so if I had $1 million and was able to get a 5-6% return, that's $50-60K per year before taxes, but the problem there is I'd probably need the $1M to be tied up into a good, solid investment that was illiquid to make that type of return so I'd only have access to the cash coming off the top. I would then need an emergency fund of some amount, whether that's $100K or whatever, to make sure I'm not needing to sell off the investment.
I can't see the reasoning about how you'd need less money during retirement than you do any other time, I would think it's quite the opposite actually. Most people who work regular jobs don't get to travel as much as they may like, so you may want more money for traveling. You also have to fill your days with activities, and for many people Netflix and TV are great options after 8 long hours of work, but if you're free all day, you may want to go play some golf or go fishing or watch some live sports events or whatever it is you personally like doing.
I can see how if you paid your mortgage for 30 years and then retired the same year that you paid it off completely, that could definitely make living on less money per month completely doable. Or perhaps you decided to downsize your house, but again, I have trouble relating personally to any of these things. The more time I spend in a house, the bigger I want it to be and the more features it needs to have. I work from home so there's no functional difference between my life right now and my life if I were to "retire." I can't think of a single thing that would be cheaper for me if I declared myself retired tomorrow, financially, but obviously at age 35 if I did that, I think I'd get some awkward conversations from people I know about what exactly I intended to do for the next however many decades.
Seems to me you need only what you got and make do.
The guy with half a Mil in the bank doesn't need one Million. He makes do.
Especially with a nice old fashioned Pension.
Bingo, technically you can retire off $0 in your IRA as long as you have a sufficient pension from your former employer (military, police, federal government, state, etc.). Plus social security which isn’t going anywhere for the foreseeable future and zero debt. Maybe you can even qualify for a disability pension.
As far as making it work, there’s million of ex-pats retiring in foreign countries on small pensions because they made it work (medium retiree income is only $32K)
So yes, the only place where you “need” $1 million to retire is in lala land. Even if one finds themselves in a medical emergency, there are dozens of places that cater to western medical tourism and will fix them for less expensive costs like Taiwan, India, etc.
Quote:
Liver Transplant cost: US $250,000 – $314,000
Liver Transplant Surgery Cost in India – US $40,000-$60,000
It's a combination of your needs/wants, the cost of living where you live, and how good you are at making it on less....everyone has their own number and I wanted considerably more than $1M because we have gotten accustomed to a lifestyle of doing what we want without a big consideration of cost and I would rather not start to live with frugality the biggest goal.
Certainly millions of retirees have far less than $1M and are doing fine.
we all need nothing more than a tent in a campground in a warm climate.
anything over that is going to be based on the lifestyle and location where we want to live OR HAVE TO LIVE .
it is like asking how long should a rope be?
long enough to accomplish what you want . quite frankly if all we has was ss and the 40k income a million could generate we would have not retired yet since it would meet neither the location we want to live nor the lifestyle we want . if we wanted to relocate it may be plenty . but we don't want to relocate so what we need is what we need .
Last edited by mathjak107; 06-30-2018 at 04:59 AM..
I guess that depends on your needs, social security and pension income you receive. If you have none of these a million can last 30 years taking an inflation adjusted 40,000 a year.
Problem is it may not work for you as you do not know what the future will hold.
I think the million is a good discussion point for younger workers. Gets them to start thinking about how much they will need.
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