How much do you think you'll need for retirement? Status?

[recentcollegegrad]

Hi everyone...I am young (only 23) but am already starting to save for retirement. Just curious to see what everyone's strategies/plans are for retirement income. Obviously, everyone is different as those in the private sector will find retirement income from saved money whereas a teacher for example will receive a pension.

1) Do you plan to live off a "nest egg" and only live off interest payments?
If so, what is the amount of that nest egg you hope to build and what (realistic) % of that nest egg do you expect to earn in interest?

2) Do you plan to live off saved funds and withdraw a certain percentage a year? If so, how much will you save up?

I find the strategies are interestingly different - obviously, living off interest and never decreasing your nest egg may give you some more financial security and also an inheritance to pass on to your heirs. But not everyone can amass such capital in their life times to earn (risk free) interest on their investments while generating sufficient retirement income.

In today's dollars, I think I would be comfortable with $100-125000 in retirement income, assuming I own a home and don't have any major expenses other than health care. That would equate to about 2.5-3 million nest egg but obviously 40 years from now that number will vary greatly and is almost impossible to predict.

[krantcents]

I am close to retirement (less than 6 years). I will draw Social Security, pension and 3% of my retirement savings. I expect that I will be only usig interest earned on my saving for most of my retirement. I am retiring at 70 years old and plan to live 25 years.

[kork13]

Like you, I'm only 25. All of my planning assumes that I'll be drawing only interest off of my savings during retirement, amounting to 3%-4% per year. So my baseline/goal figure that I'm looking to have saved is $2M-$2.5M by the time I retire, drawing an income of about $80k/yr. I like the idea of building (and preserving) a sizable amount of money that I can leave to my family.

I'm assuming that social security will not be around anymore (or at least in no way resembling today's SS), so I'm not counting on anything there.

That said, I am planning to retire from the US military, so I expect to have a military pension which will supplement my interest income. I'm not considering that in the above right now, though -- any pension I receive in the future is basically gravy, and a way to fund extravagances for myself (travel/hobbies) and family (gifts).

Of course, all of that is probably 40 years away for me, so alot can change. This is just my (VERY) long-term plan/idea/fantasy as I have it right now.

[tlscott1]

That is a difficult question to answer for a 25 year old b/c there are so many variables! Most experts say you'll need 80% of your pre-retirement income, BUT who knows what that will be at 25? There are also so many variables....will you have debt? Do you want to pay for your children's education? What type of lifestyle do you want? How do you define retirement?

Personally...I never see myself retiring fully! I just can't see myself sitting around, playing golf, and occassionally getting out. On the other hand, I would love to quit the corporate world at 45 and do stuff I love! So my goal is to sock away $1,000,000 by the time I am 45 (currently 32) and draw interest off of that at four percent. That way I can get $40k/year and have the pricipal grow. At that time, I want to have a consulting biz that will generate another $45-50K on a part-time basis. That way I can work when I want, spend time with the family, and do what i want. Maybe it's crazy....but we are embarking on a new era where retirement isn't the same as it was 20 years ago.

[StellarSaver]

I am probably about 10 years away from "retirement" (I'm currently in my mid-40s), but like tlscott1, I can't see myself just sitting at home or puttering around the yard all the time. I will need something to occupy my mind and provide some motivation for getting out of bed every day. So I plan to continue working in some capacity (maybe part-time, or doing consulting work) even when "retired". With all that said, I expect to need somewhere in the neighborhood of $1.5 million to generate a yearly income of roughly $50,000 over a span of 35-40 years, supplemented by my part-time income and, when I reach 67 or 68, some form of Social Security. I am a frugal person by nature, so I don't need $100K a year in income to be comfortable. My house is fully paid for and I have no debt, so my actual spending on a yearly basis is only around $35,000.

[artwest]

I'm planning on retiring in 9-10 and like some others, I don't see myself just sitting around, however, I am not planning on returning to(or staying in) the work force. I hope to occupy my time by volunteering and hobbies. Since my wife is 9 years younger than me, she will have to work another 6-12 years depending on how our finances look.

Since my wife and I don't have any kids, we have the luxury of spending all of our savings if necessary. We are currently planning for me to live to age 104 and my wife to age 95. I will have Social security and my wife will either have Social Security or some form of it. We also each have 401k's from our work and we each have small IRA's. I will receive a lump sum distribution from work of somewhere in the $100,000 range which I will roll over into an IRA.

We will estimate what amount we will be able to withdraw for our investments to last until age 104/95. It currently looks like our net income should be around 85-90% of our current monthly income. At 85-90% of our current income, we estimate that we should be able to maintain our current lifestyle.

[Like2Plan]

I am going to retire in 31 days. My income will come mainly from my pension. I will be getting a percentage of my current income (it is a complicated formula), but since I only draw about 33% of my pay right now due to savings, contributions to retirement and so on--I expect to receive about the same amount of cash flow when I retire as I do now. Just in case I didn't figure correctly (or have unexpected medical costs), I have my 401k to suppliment my income. If all goes well, I will only draw the required minimum distribution from the 401k after I turn 70 and the rest will eventually go to our son.
On the expense side, our son is finishing up college, we have our house paid off and we do not carry over any credit card debt. (Of course, I am always looking for ways to cut expenses. )

[StellarSaver]

In re-reading your original post, recentcollegegrad, I am curious about something. You stated that you "would be comfortable with $100-125000 in retirement income" in today's dollars. On what basis are you coming up with that number? I ask because I currently make a healthy six-figure income, but I don't expect to have expenses anywhere near $100K (again, in today's dollars) when I retire. As I stated in my post above, I usually spend only about $35K a year, and I live quite comfortably on that. What kind of expenses are you anticipating that will require a retirement income of $100-125K, assuming that you will have no mortgage or other debt by that time?

BTW, I highly recommend checking out FireCalc - an excellent retirement calculator (www.firecalc.com). It's by far my favorite long-term financial planning calculator. Very easy to use and understand.

[feh]

My wife and I need a minimum of $1.5M to retire. We will hopefully hit that mark in the next 7-10 years (currently 45 yo).

At that point I would probably semi-retire. To me, that means quitting my 40 hour/week job and doing something else part time.

[paul_btam]

My wife and I are each 30 years old and currently have ~130k in retirement savings, in 401ks and a Roth IRA. Honestly I've done all the calculators and still can't tell you how much I will need to retire. Every one gives you a different answer. In addition, I don't know what my lifestyle will be like, nor what I will want my lifestyle to be like in retirement.

Basically my strategy is to save as much as possible while maintaining a comfortable pre-retirement life. Luckily, I have a good job that has allowed me to hit the legal maximum for contributions to my 401k and Roth IRA last year. I'm now looking into other non-retirement investment options, as well as increasing my wife's contribution to her 401k, and maybe opening her a Roth. You can never save enough!