How much would it take for you to retire now?

[disneysteve]

Originally Posted by sweeps

That would make for a good thread topic. How much would it take for you to retire right this minute. I think it would be $3 million for me.

This question came up in another thread. Assuming you would want to retire early, how much would you need to have right now in order to do so?

I said $4 million. Retiring at 43, I would want to be conservative and not draw more than 3% from my portfolio, at least in the early years. That would give me $120,000 which should be just fine. This assumes that my wife would stop working as well.

[moneybags]

I'd consider it at $2.5 million, but that would have to be after the 2 kids finish college and the house is paid for.

[gamecock43]

I have no idea. Or to phrase it better~ I have no idea of the amount of millions I would need.

[Caoineag]

Right now, at the ripe age of 26, I think 3 million would be enough to support my husband and I (excluding health coverage). BUT, being this young, I am pretty sure I would have to find something else to do like starting a business of my own.

Including health coverage, well, I am not sure I am insureable. Or for that matter, I am not sure my husband is either. We both have a strong family history of multiple cancers. So that would probably raise the real number to more like 8 million to be on the safe side.

[jIM_Ohio]

2.3 million

300k to pay off house
2 mil is a 60k income on 3% withdraw rate. I could probably retire on less, but 60k would make me pull the trigger and not look back.

[mom-from-missouri]

4 mil. So, we are about 1/2 there now. As soon as the houses are paid off, the mortgages amounts will go to the retirement funds.

[tripods68]

We can't imagine retiring at 39 and DW 33. We're just too young! But that doesn't stop us from buying lotto!

[Snave]

I would probably be in that 4 million mark area. I am 33 and my wife is 30, so we also would need to find something to do. I would take a year and screw around and play golf and have fun, but then it would be back to work for me - at least part-time.

[KellyB]

I'd need about $80K annually, so at a 3% drawdown I guess that's about $2.7 million? Plus paying off the house up front another $150K, so a total of $2.85 million. Wow.

[maat55]

I would give it a crack at 2 million. I would have to split it in half, with one half being a little more aggressively invested.

[Daylily]

That is a difficult question to answer without knowing how much health insurance will cost in coming years. I was recently on Cobra continuation and it was $800 a month for two people.

[Reldon]

I don't think I want to retire right now. It would be a little boring. My plan is also to move to a different country where the expenses are lower so I would probably be 2-3 Million if I was to retire right now.

[yellow heel]

Since we are young. I'd say 6 mils. 1 mil for a house in san diego and 5 mils to live off of. I am conservative.

[MonkeyMama]

Since I am 30 I have to go with the "no idea." I haven't really run the #s.

I think one of the biggest unknown factors for the young folk is longevity. A lot of my family has lived to 100 (like in the 80s) and now you hear life expectancy is going up at a rapid pace.

Then there is inflation and everything.

It would have to be many millions. Mostly I am way to risk adverse to retire so young. If I was on the brink of being able to, financially, I'd wait it out a bit.

I really haven't run the #s though. When I figure retirement #s I usually assume I'd live 40 years after retirement. I am not sure how the numbers change if the years significantly increase.

I wouldn't need much to live on today, but I'd want to make sure I was prepared for inflation for the next 100 years, just in case. I still have kids to put through college and all that too... So all that leads me to the conclusion that I would need many millions.

Yeah, I would have no desire to retire so young anyway.

[LivingAlmostLarge]

$6M at least. I'm under 30 so I need a lot, but worse, what the heck would I do? I have no kids, I guess get to having a few?

[Merch]

I would say $5 million that would need to be liquid. In otherword, not including the house, cars, etc.

Why so much? Well, I see my expenses after retirement going up. I would want a lake or beach house before I retire. I would also like to try things like flying and real estate venture. All pretty expensive.

But then, I don’t plan to sit in the backyard sipping ice tea in the cool breeze of the oak trees.

So $5 million would be enough to for me to stop working for the man, with no worries,

[jIM_Ohio]

Originally Posted by MonkeyMama

Since I am 30 I have to go with the "no idea." I haven't really run the #s.

I think one of the biggest unknown factors for the young folk is longevity. A lot of my family has lived to 100 (like in the 80s) and now you hear life expectancy is going up at a rapid pace.

Then there is inflation and everything.

It would have to be many millions. Mostly I am way to risk adverse to retire so young. If I was on the brink of being able to, financially, I'd wait it out a bit.

I really haven't run the #s though. When I figure retirement #s I usually assume I'd live 40 years after retirement. I am not sure how the numbers change if the years significantly increase.

I wouldn't need much to live on today, but I'd want to make sure I was prepared for inflation for the next 100 years, just in case. I still have kids to put through college and all that too... So all that leads me to the conclusion that I would need many millions.

Yeah, I would have no desire to retire so young anyway.

I would suggest looking up the trinity study. This will educate you on the longevity of portfolio's. That is where the 4% rule generally comes from.

A 60-40 equity/bond mix can last 30-40 years (based on past market performance) if 4% of portfolio is withdrawn per year (increased each year for inflation).

A 100% equity portfolio takes on more principal risk. If that porfolio had a 3% yield, it would be worth more at death than it would during withdraw. Lowest withdraw rate needed is 3%, assuming you could find a 3% yield (S&P 500 yields 2.2%, so slightly more yield is needed than the market itself). Even if the principal dropped 30% in a year, the dividend payout would probably not change (dividend paid per share).

[noppenbd]

Originally Posted by jIM_Ohio

I would suggest looking up the trinity study. This will educate you on the longevity of portfolio's. That is where the 4% rule generally comes from.

A 60-40 equity/bond mix can last 30-40 years (based on past market performance) if 4% of portfolio is withdrawn per year (increased each year for inflation).

To follow up on this, the Trinity study assumed you pick an initial withdrawal rate of 4% and adjusted the dollar amount upward each year for inflation (not the 4%). So as an example, say you had a portfolio of $2M at retirement. The first year you could take out $80K (4%). If inflation for that year runs at 3.5%, then the 2nd year you could take out $82.8K ($80K * 1.035), regardless of your portfolio value at the time of withdrawal. So if your portfolio performed poorly and lost 10% of its value, you would end up drawing a lot more than just 4.14% (which is 4% * 1.035). In this example, your actual draw for year 2 would be 4.8% of the total portfolio value.

In the Trinity study, this strategy had something like a 90% chance of success after 30-40 years. In reality, anything more than a 90% chance of success is probably just noise anyway.

A more conservative strategy is to index the percentage of withdrawal to inflation, which means you withdraw lower amounts in years when your portfolio has not done so hot, and more when it is doing well. To incorporate this strategy you would need to be able to adjust your standard of living in lean years.

[MonkeyMama]

Okay so where does this leave someone with a 100-year time horizon?

IT doesn't really answer my question.

Not that it matters. I wouldn't bother running the #s because I really have no desire to retire in the near term. In a decade I may be more curious about the answer to this question.

[jIM_Ohio]

Originally Posted by MonkeyMama

Okay so where does this leave someone with a 100-year time horizon?

IT doesn't really answer my question.

Not that it matters. I wouldn't bother running the #s because I really have no desire to retire in the near term. In a decade I may be more curious about the answer to this question.

If you can live off dividend yield from a 100% allocation to dividend paying stocks, history shows a 99.9% chance of never running out of money (and probably having more money at death than you did when you decided to retire).