Financial independence

[lillyb]

Could you retire on a million bucks?

If you had no debts at all, not even a home mortgage payment, what amount could you live on per year?

We hope to reach financial independence between ages 52-55. When we reach that we'd have freedom. Freedom to choose to work, freedom to chose where to work, freedom to pursue other interests, freedom to do whatever we please. To me, that's wealth. Just playing around with what the actual amount we'd need to invest to be able to achieve this goal. Thoughts?

[Ima saver]

If I had that much cash earning interest, i think I would have no trouble living on the interest from $1 million. That would be about $40,000 plus a year in interest. My house is already paid off, but I would probably sell and build something smaller. (My husband wants a bigger house) I think my husband would keep on working, I can't see him sitting around doing nothing. His hobby is cars, but that is too expensive to play with on $40,000 a year!

[Broken Arrow]

If someone were to give me $1 million (after-tax), no, I still could not retire.

For one thing, I'm still fairly young. That means the money would have to last me for half a century.

The other thing is because I would get bored very quickly. I wouldn't want to retire, but I wouldn't mind taking on a job that I enjoy without worrying about how much it pays.

[b4freedom]

Nope. If I was about to retire today, I would NEED about $2.2mil in order to substain the lifestyle that I wish I enjoyed today.

[jmjj215]

I figure I'll be comfortable with a cool $10 million. Well, okay, $5 million would probably do fine as well.

[Bookie]

Speaking from personal experience, it's possible to retire comfortably on less than the income from $1 million. It really comes down to lifestyle choices and resource management.

It also depends on attitude and inner resources. Long before I left the workplace, I began shifting into a retirement lifestyle, simplifying my routines, scaling back possessions and commitments, discovering that less really can be more. I also began to invest myself in activities and interests that keep me alert, active and involved with others.

Income is only one of the factors in a contented retirement, although an important one. There's more to life than getting and spending. I have more days when I don't spend than when I do, but those days are spent exploring the richness and diversity that is living fully.

[Snoopy2645]

Oh ya if I had a million earning interest of 40k a year I could retire easily on that especially if the kids were grown!! Between dh we are taking home around 25k after all deductions now & we have 3 kids at home!!! I am sure 40k a year to take home I could live nicely on!!

[robex]

We could easily retire on a million dollars. Our take home now is about $3500 a month, but we pay about $600 monthly to retirement funds, and, obviously wouldn't have to do that if we'd reached retirement!

Our goal is to be there in 12 years, just as our youngest graduates from high school...our house will be paid off then as well. I love my job, but I'm looking forward to the day that I get to decide what I want to do without money playing a part!

[kristinecfp]

I've found that people in their 60s today could probably retire on $1M, but that younger folks, who have longer life expectancies, could NOT retire on $1M because of inflation (even more so than lifestyle).

If you looked at two different couples, one in their 60s and the other in their 30s, and both had the exact same lifestyle, the couple in their 30s would need probably about 4 to 5 times more than the couple in their 60s would need, not only because the money would have to last longer, but also to keep up with inflation.

So if I were 65, then yes, I probably could retire on $1M, but at 34 years old, I would need $3M or more to retire right now.

[lrjohnson]

Without taking inflation into account, I could live exceedingly well on $40K with no debt/bills. Pre-challenge I was living well on less than $26k net including rent, now I'm atttempting less than $13k. I coult live off $18K and re-invest the rest to help catch up with inflation.

[Tree0164]

I don't think I could retirement on a million dollars. With inflation going up each year, it will be more like 1.5 to 2 million that we are shooting for. We got about 25-30 more years to do that.

[disneysteve]

Originally Posted by lillyb

Could you retire on a million bucks?

Could I? I suppose so, but it would be impossible to maintain anything approaching my current standard of living since I earn 6 figures now. Cutting that to 40K would be a tough adjustment but we could do it if we really had to for some reason.

To fund retirement adequately, I'm shooting for $2.5 to $3 million.

[jamreed02]

I WISH I had 40K a year now! if I didn't have to pay rent or CC payments, or student loans.... that would be a HUGE increase in income for us! Right now we're bringing in a hair over 30K, with three young kids (maybe more to come) We've got rent, and student loan debts, and credit card debts, and a leased van ( ) If I had that kind of income, I'd have my farm in the country, and retire to taking care of nice gardens and a flock of sheep, maybe even start a business spinning and dyeing the wool... (sigh) but that gets into daydreaming...

[jamreed02]

out of sheer curiosity: How do those of you that make over 100K actually spend it all??? I don't know what I'd spend it on... honestly.

[lucasrd]

My wife makes 90K and we save her entire paycheck !!! I make 60K...contribute the max to 401K and we live off of about 80% of that. I make an additional 30K/yr with a side business I operate and all the proceeds from that go into the stock market.

I guess you could say we live well below our means.

So hope that answers your question....we DONT spend it all

[Broken Arrow]

lucasrd, that is... just... awesome!

However, I do understand where jamreed is coming from. I know of people who also bring in more than 100k per year, but due to their spendy lifestyle and an equally sizeable debt, they end up living rather "poorly" just the same.

[Ima saver]

The surgeon we built a house for, had a 6 figure income and no savings!!(We know because they owed us money and could not pay it)

[disneysteve]

Originally Posted by jamreed02

out of sheer curiosity: How do those of you that make over 100K actually spend it all???

Well, I can't really answer that because, like lucasrd, we don't spend it all. We currently save about 27% of our income.

We do enjoy travel. Last year, we spent about 12K on travel. And if we had the time available, we would definitely travel more. That is one thing I look forward to doing in retirement.

We bought a modest home. We paid 142K in 1994. But I know many people who have McMansions and the upkeep on those homes is quite substantial. So even if the mortgage were paid off, just continuing to live there is quite costly.

We drive non-extravagant cars: a '98 Toyota Camry and a '02 Toyota Sienna, both bought used. But lots of folks are driving Lexus, Infiniti, BMW, Mercedes, etc. You can certainly spend 60K or more on a car (not that I would).

Dining out adds up really fast. We don't care for fast food, so if we go out to eat, it is at least a nice family restaurant or better.

Our daughter goes to public school, but many of my colleagues send their kids to private school and pay prices approaching college tuition levels for school.

I could list lots of other ways people spend their money, like $2,000 plasma tvs, digital cable for $100+/month, landscaping their homes, detailing their cars, etc.

[vsjhoc]

Originally Posted by jamreed02

out of sheer curiosity: How do those of you that make over 100K actually spend it all??? I don't know what I'd spend it on... honestly.

I used to make over $100k at a job I hated, and took a 75% pay cut for one I love. It's difficult, but believe it or not, there hasn't been a huge lifestyle change. Before, 1/3 of my income went to taxes, 1/3 went to savings/investment, and I lived on the other 1/3.

[jmjj215]

Ick, a third in taxes? That makes me very sad indeed.