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The "Magic Number" also changes with time. Twenty years ago the number was much lower than the 1.9 million today. Twenty years from now I'm pretty sure 1.9 million won't be looking as good. Inflation has everything to do with the "Magic Number" so for planning purposes your planned retirement date will affect your "Magic Number".
The vast majority of retirees have no issue with bags of loot. Instead the vast majority fall way short of retirement incomes matching their incomes when they were working. I think that is the point of the thread. It takes lots of savings and investing for most people to make up the difference. Instead of a million or two, many retirees have little or nothing in savings and typically have no idea how to invest and grow what they do have.
Instead of focusing on 3 words in a post, why not try to understand the complete message in the post! The fact that over 60% retirees nationally do not have enough saved, has been well documented. The post is more about the mental conflict and stress that comes from constantly worrying about it!
The vast majority of retirees have no issue with bags of loot. Instead the vast majority fall way short of retirement incomes matching their incomes when they were working. I think that is the point of the thread. It takes lots of savings and investing for most people to make up the difference. Instead of a million or two, many retirees have little or nothing in savings and typically have no idea how to invest and grow what they do have.
I work for a large company with great benefits and a propensity for hiring people who made close to straight A's in college. One coworker about 10 years ago went to a financial planner before retirement worried she wouldn't have enough to live on in retirement. Her lump sum pension and 401k totaled somewhere around $2.6 million. The planner laughed and told her she would never run out of money as long as she didn't gamble or give it away. He told her the people that really have to worry are the ones with $40,000 in an IRA and no pension.
And, when people post they're worried about results of some survey, it's really about them being worried if *they* will have enough for their own retirement. No one, including them, is concerned about the retirements of some unidentified group of survey takers.
A quick calculation can get a fairly accurate nest egg number
(Amount expected to spend each year) x 25 = total starting nest egg for retirement
example
$80K x 25 = $2,000,000 starting nest egg needed
assumes a 4% yearly withdrawal from investments
assumes continued investment of nest egg to generate >4%/year ROI, after taxes.
any SS benefits and/or pension and/or other income gets subtracted from the nest egg total
the remaining "net" nest egg is the portion the retiree will need to have saved.
Or, $1,000,000 x 25 = $25,000,000 starting nest egg needed for a comfortable retirement, using the assumptions above.
Last edited by RationalExpectations; 11-08-2021 at 08:59 AM..
People writing those kind of articles are usually in the financial services/investments field. They want people to believe they need to be aggressive with risk to try to reach their pie-in-the-sky estimates.
Your own simple, common sense estimates will be much more accurate and probably less than half of what these financial marketeers say.
Once retired, it is essentially too late to change your financial situation. Tens of millions of retirees are living in poverty or just a little above. I know lots of people, including my sister, in that situation and their choices for retirement lifestyle are very limited.
The wealthiest age cohort in America is the over-65-years-of-age cohort. Retirees as a group are quite quite wealthy. There are outliers, of course, but the nation's wealth is concentrated in the hands of us old folk.
Most people’s largest costs are housing and medical insurance/costs.
My single largest budget item is my federal income tax burden, followed by my cumulative wealth taxes owed on properties in Las Vegas, NV and Park City, UT (property taxes are wealth taxes).
The variable costs of housing - utilities & maintenance - are not major expenses.
Your own simple, common sense estimates will be much more accurate and probably less than half of what these financial marketeers say.
That is not at all true. There have been a great many surveys which show that people consistently and grossly underestimate the amount of money they will need in retirement to maintain their pre-retirement standard of living.
A million dollars in savings sounds like a lot but that is only $40K in safe annual withdrawals.
The wealthiest age cohort in America is the over-65-years-of-age cohort. Retirees as a group are quite quite wealthy. There are outliers, of course, but the nation's wealth is concentrated in the hands of us old folk.
That is no surprise. We who are older have had more years to save and more years for our investments to grow. Can't compare to a 20-something who is just starting out.
Last edited by RationalExpectations; 11-08-2021 at 08:28 AM..
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