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How much $ is enough for retirement?

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  • TexasHusker
    replied
    It's really difficult to say "how much is enough" to retire on. There are two big variables that only you can plug the number in on: 1. How much will you spend, and 2. How much will you make (from your nest egg).

    You've got to know the answer to both of those questions before you can begin arriving at your number. If you are going to live off of CDs, then 2% is your annual yield. That doesn't work for most people. More times than not, retirees eventually meet up with an Edward Jones rep who talks them into giving him all of their nest egg and setting up income from an annuity. That is usually an awful idea, but sooner or later, this is what usually happens to wealth, and there is no going back on it. The money is gone and all you have are payments.

    So if you aren't going to buy CDs, and you aren't going to buy an annuity, you've got to find a way to make consistent income off of your nest egg. This is a confounding, if not terrifying, problem for retirees, as it is the first time in their lives that they have had to figure out how to generate income from their nest egg.

    Related to that a little bit, my father in law just passed away, and each of his four daughters is set to receive around $170,000 cash. Of course, Edward Jones is trying to talk each sister into keeping the money at Edward Jones. None of the sisters have a clue as to what to do with the money. This amount could be a life changer for two of the sisters, but I am afraid they will both blow it or be ill-advised and lose their windfall. They have little chance because they've never "swam in the deep end" on anything financial.

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  • disneysteve
    replied
    Originally posted by Nutria View Post

    That's for someone born today. For men our age, it's about 81.
    Actually no. That’s for someone who is 65 now. Of course, that’s an average. SS says 1 in 3 will
    live to 90 and 1 in 7 will live to 95.

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  • Nutria
    replied
    Originally posted by disneysteve View Post

    Oops. Well it’s 84 for a man.
    That's for someone born today. For men our age, it's about 81.

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  • disneysteve
    replied
    Originally posted by Nutria View Post

    No one will ever confuse me for a woman...
    Oops. Well it’s 84 for a man.

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  • Nutria
    replied
    Originally posted by disneysteve View Post

    Actually life expectancy for a 65yo woman is about 86.5 according to Social Security and actuarial tables.
    No one will ever confuse me for a woman...

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  • disneysteve
    replied
    Originally posted by Nutria View Post

    More importantly, those are the minimum amounts I'd need. By retiring at 67, my money should last until I'm 99.
    That's good. I'd hate to see someone planning to only need money until they're 81 and them running out of money for the last 5 or 10 or 15 years of their life (other than SS of course).

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  • disneysteve
    replied
    Originally posted by Nutria View Post
    2. That's about the current life expectancy for a 65 year old.
    Actually life expectancy for a 65yo woman is about 86.5 according to Social Security and actuarial tables.

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  • Nutria
    replied
    Originally posted by disneysteve View Post

    And then what? What made you only calculate until you turn 81? You may live to be 90 or 95 or even older. My mom was 89 in August and is still doing pretty much okay, living on her own, etc.
    More importantly, those are the minimum amounts I'd need. By retiring at 67, my money should last until I'm 99.

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  • Nutria
    replied
    Originally posted by disneysteve View Post

    And then what? What made you only calculate until you turn 81? You may live to be 90 or 95 or even older. My mom was 89 in August and is still doing pretty much okay, living on her own, etc.
    1. I'm not in the best of shape or health.
    2. That's about the current life expectancy for a 65 year old.

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  • disneysteve
    replied
    Originally posted by Nutria View Post
    I only need $468,500[/B] to die penniless on my 81st birthday.
    And then what? What made you only calculate until you turn 81? You may live to be 90 or 95 or even older. My mom was 89 in August and is still doing pretty much okay, living on her own, etc.

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  • Nutria
    replied
    I took my current monthly budget and modified for the realities of retirement (no 401(k) or other savings, replaced health insurance premiums with Medicate Advantages, etc) then increased it all by 2.5% inflation for the number of years until I retire. Multiply that by 12, and that's how much I guess I'll need at age 65.

    And knowing how much I have now, estimated contributions to 401(k) until I retire, and a conservative 5% CAGR until I retire shows how much I'll hypothetically have at ages 62, 65, 66 & 67. (Spreadsheets are wonderful!)

    From there, I make a spreadsheet that's basically an annuity where my yearly budget grows with inflation.

    Including SS, retiring at age 67, and assuming a 5% CAGR before and after retirement, with 2.5% inflation before, and 3% inflation afterwards, I only need $468,500 to die penniless on my 81st birthday. Without SS, I'll only need $850,000. (Naturally, these are sterile forecasts.)

    Leave a comment:


  • jIM_Ohio
    replied
    There is a 4% rule which is the 25X multiplier. The variability of this number is volatile- for example a more conservative retirement plan could be 3.5% and 4.5% would be considered "high risk" with a 5% withdraw rate (20x multiplier) being considered close to "living on the edge".

    My parents are retired, and their account balances have increased every year of retirement, even with RMDs and an investment adviser taking a cut of their assets.

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  • ua_guy
    replied
    If time and income are still on your side, the first question to ask is what do you want retirement to look like? Then come up with a figure that supports that, within reason. Your existing lifestyle will give you a good basis. What are your expenses right now? How will they change in the future?

    Retirement calculators will blow your mind...many of those make asinine assumptions which may not be true for your scenario. Take them with a grain of salt.

    Leave a comment:


  • cypher1
    replied
    As others have said, everyone's situation is unique. I don't see myself married, nor having kids. While still healthy, that could change at any time. Right now I'm going with the 25x annual expense rule for a base, which is probably still pretty low. My monthly expenses are easily under 2500 even with a mortgage, but I rounded up to 3000, and come up with 900K. So my retirement goal for now is 1 million, which I expect it to mostly likely increase over time.

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  • rennigade
    replied
    Most people retire with less than a million, dont kid yourself. Sites like this and much much worse, bogleheads, can mess with your head. A lot of members over there have 8 figure portfolios...and a lot of mid 7 figure ones. That is not the norm.

    As for whats your number...only you can calculate that. There are rules of thumb...its all about expenses. How much do you spend? If you're not tracking, it makes it more difficult to figure out.

    Leave a comment:

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