Is $1 Million Enough to Retire On?

[jeffrey]

Becoming a millionaire once conjured up images of wealth and luxury, or at the very least financial security. But is a million bucks enough to retire comfortably on anymore? Many baby boomer millionaires don't think so, at least for the lifestyle they want to lead.

If you drew down 4 percent of your $1 million nest egg every year, a share many financial advisers recommend as prudent, you would receive about $40,000 annually, before adjusting for inflation—a pretty comfortable salary outside major metropolitan areas, especially if your house is paid off. Of course, how far that $3,333 a month goes depends on your lifestyle, health, and inflation. Here are three viewpoints on the $1 million question:

Is $1 Million Enough to Retire On? - US News and World Report

[sweeps]

Nope.

[disneysteve]

Thanks for the link, sweeps.

Obviously, I agree. $1 million wouldn't be enough for me, though the $4 million I mentioned on the other thread was to retire now at age 43, not at age 65. I wouldn't need that much then because my home would be paid off, my daughter would be grown and independent, we'd both be collecting Social Security (assuming it still exists in a form similar to today) and eligible for Medicare and I could draw at 4-5% instead of the 3% I'd want to stick to now.

$2.5 million should be adequate at that point.

[sweeps]

Counterpoint: How to retire on $12,000 a year

[tripods68]

Both interesting articles.

I have my DW's side, her auntie lives on $15K per year social security. She works part time, lives on trailer park, but lives very comfortable. I remember back in the 80s the average retiree lives under $10K a year.

[Ima saver]

I get $6000 a year in social security. We will have to rely on interest income when dh retires. I am saving as hard as I can. Right now, I am earning about $2000 a month in interest, but it goes down because rates have gone down.

[LuxLiving]

Thanks sweeps for the relevant article. Relevant for those of us who have no hopes of getting close to a million, that is! If something happens to Hubster first, I am looking at the possibility of living w/my Sister.

Of course, I haven't told her that yet! hahaha!!! But, she's a mother hen type and wants everyone to come 'home' to her house all the time anyway. She's got a large acreage and likely wouldn't mind sharing her electrical pole & septic system when I pull up in my little RV! Or she could come here as well. She wouldn't, but she'd be welcome.

[disneysteve]

Originally Posted by LuxLiving

Thanks sweeps for the relevant article. Relevant for those of us who have no hopes of getting close to a million, that is!

I think discussion forums such as this tend to be skewed toward higher income earners. We're the ones with the access and leisure time to sit around chatting, rather than out busting our behinds to support ourselves and our families.

Keep in mind that the median income in this country is just under $50,000. So fully half of Americans earn 50K or less. If you make 40K and need to replace 80% of your pre-retirement income when you retire, that means you'll need $32,000 income. Social Security will pay $1,000/month or so I believe. That means your investments need to generate perhaps $20,000/year. With the 4% withdrawal rate, you'd need about $500,000. Still a lot of money, but much less than the numbers some of us keep throwing out there. And if your home is paid for and you don't plan to be jetting around the world or dining at 5-star restaurants, you may need considerably less than that. If that person earning $40,000 invests 10% of income in a retirement plan for 35 years and earns a 7% return, he'd end up with well over that half-million mark.

[LuxLiving]

Yes, disneysteve, while inputting numbers into the retirement planning financial calculators at places like Fidelity, I find that it is the expenses that you plan for in retirement that make or break you. Just like live budget planning. If you can plan on keeping expenses low, you might just make it on less!

It's those numbers that make me want to put in solar, dig a well, add a fireplace to my home, etc. So, just maybe, I'll be able to afford medication & food in my old age. I've already got a running stream (not ideal), water filtration system & a burn barrel for trash. I'm almost set to go entirely off-grid. Then I'd just have to buy a goat and be able to feed it to keep the grass down! ...and no, I'm not being entirely facectious!

I'm hoping the small town clinic that's just 4 minutes down the road stays in business. As we are approaching retirement Hubster and I will be switching our health/dental care to our small town providers from the ones we had when we lived in the middle of the metro area. Mine are all out here now, Hubster still makes some visits while on the clock, so will switch providers to make commuting easier & hopefully less expensive in the future. That's one problem w/living with sister - I'm rural, but 15 minutes to a major hospital. Sister is 45-60 minutes from one. Our clinic that's four minutes from the house has a helicopter-pad.

Those who are wanting to replace vehicles to new every few years better be saving like a madwoman!

[LivingAlmostLarge]

My grandmother lives on $9k/year. But realize that she depends on her children to buy everything like her car, pay for car insurance, give her a place to live, medications, etc. And it's been like that for 30 years.

Sure it's doable to live on $12k/year but whose helping you? Government? Or your family?

[Ima saver]

Gosh, i would not like to live with 3 other people.