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So it’s 315K now? Last time I read the estimate it was $220K. They conveniently omit the fact that the large expense occurs over decades. Financial advisors routinely use numbers like that to try and scare people because their “solution” is for clients to hand them all their money so they can extract a 2-5% annual service fee.
I'm not sure who you're referring to when you say "they". The $315,000 figure did not come from a financial advisor. It's the consensus figure if you were to do a query on it and they did not omit the fact that the large expense occurs over decades.
What about the investment return. It will run that $1m a lot longer.
If you can expect 4% return, then $1m will give you $40k/year without ever dipping below $1M. Of course that's hypothetical, nobody knows how any given year will be, and maybe there will be a negative 30% year, blowing the whole thing up. Maybe the value of $40k now will be like $15k in a decade if inflation is bad. One never knows.
But to OP, figure out what you want to spend. Estimate a CONSERVATIVE ROI and then figure out what it takes to sustain that into perpetuality when added to your SS and other expected incomes. That's the best approach in my non-expert opinion. Don't forget to account for market fluctuations, inflation, unexpected expenses (car, new roof, a new hip, etc...)
Good luck.
four percent returns won’t work when that 4% needs to be inflation adjusted .
in order for 4% inflation adjusted to hold one needs at least 2-1/2% over inflation over the first 15 years of a 30 year retirement, AND THAT CAN LEAVE YOU WITH A BUCK LEFT under worst case outcomes.
inflation can ravage one’s outcome not to mention to even draw 4% inflation adjusted requires at least 35-40% equities and market sequences play a big roll
Last edited by mathjak107; 08-17-2023 at 01:49 PM..
I've been told for quite some time that my wife and I should be shooting for somewhere in the ballpark of $2.5 million. Our combined SS should be between $5k to $5500 a month. I anticipate about $800k in savings and home equity (2 homes) of roughly $1 to $1.2 million. I'm just wondering which figure is more accurate ($1 million or $2.5 million)?
1 million or less is a pretty good estimate. My retired friends mostly have that as we worked for a big company and have CA equity in our homes.
2 million seems like a lot for us working stiffs but not out of reach if you had a higher income.
Hubby retired from high pressure job at 55 and we lived of his 380 thousand dollar 401K. He was ready for a nervous break down(Pharma industry and dealing with the FDA etc.)
So we went through our saving fast. He took a Postal Service job at 60 which he loves. He is 67- we do not have much in the savings since we used it but with SS and his pension we live on 6500 a month which is well enough for us to get by on.
You don't think that will change with health care costs as you age? I thought end-of-life care was considered most expensive.
I don't know.
I have an excellent healthcare policy.
Whenever my Dw or I have something that our PCPs are not certain of the diagnosis, they will routinely check to see what coverage we have, and as soon as they verify it, they order additional tests. Apparently most insurance policies are more restrictive on what they will pay for. I am currently wearing a heart monitor. After a head MRI, an echocardiogram, and an EKG my doc still was not sure what the issue is, so after verifying my policy he ordered a heart monitor.
Next year I have to signup for Medicare. At that time my normal healthcare policy takes a backseat to Medicare, and I think they pay all extra Medicare fees.
No one in our families ever had close to a million dollars and they all did fine in retirement. What most had was a paid off home and enough social security/pension to cover their small monthly expenses.
This is my mom. She is 83 and has a paid-off single level town home (bully for her for deciding 20 years ago that she no longer wanted a house and sold in a good market - the single level, ground floor town home with an attached garage in a unit with all outdoor stuff handled by the HOA). She has no pension. She has SS and about $300k in very conservative investments (mostly CDs - she simply will not go with anything riskier).
She has had a very nice quality of life the past 15 or so years of retirement from a part time job that she loved (lots of interaction with friends and neighbors as a cashier at a grocery store - people would cue up to be in her line to talk with her and the managers saw her as a draw for business).
Her SS and interest covers her needs. She is on Medicare with a drug plan. Her primary doctor is half a mile away and her pharmacy delivers her meds from that location at no charge (her meds are actually cheaper there than any online pharmacies or other competitors we checked), which is great because she no longer drives.
My parents were frugal and conservative with money. They saved very well for their incomes but took no risks. Her next stop will be assisted living and we are now looking into how to make that happen within her means.
It is a mystery to me why there aren't more people who are into reading books. It is a VERY addictive habit, but it will never get you in trouble like other addictions, and library addicts will neglect every expensive pursuit so that they can read. Which guarantees a very cheap yet highly satisfying life, eg, in retirement. Book addiction can solve all your financial problems. I wish someone would do a study, to ask retirees how many pages they read per month, and how much money they spend per month, and I bet there would be a highly significant reverse correlation. Why would someone who only eats, sleeps and reads need $1M to retire? Provided that the person owns a small place to live, what else would this person be buying except food and health insurance (which is generally Medicare after 65)? That is what I had in mind when I said I could live on $1k per month if needed (though I'd prefer not to if not needed, but that is chiefly due to wanderlust. I like to drift around the country and the world almost as much as I like to read :-).
This discussion about having a million dollars reminds me of a scene out of Office Space, if any of you have seen it.
Peter (the main character): I sure wish I had a million dollars.
His construction worker friend: What would you do with a million dollars?
Peter: Nothing. I would do nothing.
Construction worker friend: Hell, you don't need a million dollars to do that.
It is a mystery to me why there aren't more people who are into reading books. It is a VERY addictive habit, but it will never get you in trouble like other addictions, and library addicts will neglect every expensive pursuit so that they can read. Which guarantees a very cheap yet highly satisfying life, eg, in retirement. Book addiction can solve all your financial problems. I wish someone would do a study, to ask retirees how many pages they read per month, and how much money they spend per month, and I bet there would be a highly significant reverse correlation. Why would someone who only eats, sleeps and reads need $1M to retire? Provided that the person owns a small place to live, what else would this person be buying except food and health insurance (which is generally Medicare after 65)? That is what I had in mind when I said I could live on $1k per month if needed (though I'd prefer not to if not needed, but that is chiefly due to wanderlust. I like to drift around the country and the world almost as much as I like to read :-).
I am totally addicted to reading books. From the library. For nothing. So many hobbies you can have that are very low to no cost. Thankfully, I have no desire to travel or spend much money, and also thankfully, I don't have huge bills. We do not have a million dollars and for the last 45 out of 50 years never made an income over five figures combined. I have never ever felt deprived. Just grateful that I have what I need.
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