What is your retirement number...and what do you do when you reach it?

[TexasHusker]

By that question, I mean, is there a specific dollar amount that, once you reach it, you can retire?

Let's say your number is $1 million. Once you reach that number, how do you live off of the $1 million? Do you want to just live off of the earnings and not touch the principal? Are you OK drawing down the principal to supplement?

What investments are you considering that you can put your lifetime nest egg into that will keep it safe, and pay you some sort of living? Are you planning on putting it all in an annuity so that you have a guaranteed amount with no risk (assuming the annuity ins. co. never goes under).

I hear a lot about saving and investing for retirement, but I am curious as to what number folks are planning to try to reach, and specifically how that money is utilized once they get there.

[Nutria]

We're "just" trying to save as much as possible because we started relatively late.

Since $50k/annum dividends at 3% requires $1.67M, and we won't get that, there's no way that we can live off of dividends.

Thus, I'll probably set up some sort of home-rolled pseudo-annuity where we take what we have when I'm 67 (DW is 3 years younger) and take the dividends + enough equity to last 20 years.

[Nutria]

We're "just" trying to save as much as possible because we started relatively late.

Since $50k/annum dividends at 3% requires $1.67M, and we won't get that, there's no way that we can live off of dividends.

Thus, I'll probably set up some sort of home-rolled pseudo-annuity where we take what we have when I'm 67 (DW is 3 years younger) and take the dividends + enough equity to last 20 years.

At an interest rate of 3%, an ordinary annuity of $760k would pay out $4,200/month for 20 years.

[TexasHusker]

At an interest rate of 3%, an ordinary annuity of $760k would pay out $4,200/month for 20 years.

As I understand it, once you annuitize, the money is gone. You just get income for a certain period, correct ?

[Nutria]

As I understand it, once you annuitize, the money is gone. You just get income for a certain period, correct ?

That's if you give it to an insurance company as one of the newfangled annuities. There's nothing to stop you from building a bond ladder and then selling enough of them each month or quarter so that the account is zero after 20 years. (Heck, insurance companies might still sell ordinary annuities, where if the two of you die before 20 years it would roll into your estate.)

[corn18]

As I understand it, once you annuitize, the money is gone. You just get income for a certain period, correct ?

There are myriad annuities with all manner of terms. The only type I would consider is a Single Premium Immediate Annuity. You give them a boatload of cash up front, and they pay you a fixed amount for whatever period you choose. It can start now or delayed into the future. It can last your lifetime, you and your spouse's lifetime or a fixed length of your choosing. If you die, you can choose to have any remaining capital go to your estate.

There are other types of annuities, but they get complicated and expensive. Any smart person recommends avoiding all annuities except the SPIA.

Are they a good deal? Depends. If you don't have a pension or SS, they can be used for peace of mind, but that is not the best use. The best way to use a SPIA is for longevity insurance. Don't buy one when you retire, buy it in your early 80's when it is much cheaper to ensure you have income until you die. There are mortality tables they use to determine cost and you can use them, too to determine when a SPIA is the best buy.

[disneysteve]

I expect us to get to about $1.6 million. Using the 4% rule, that would give us about $65,000/year in income. I used to think retirement would mean totally stopping work but now that I've gotten involved in the urgent care centers, I can easily see myself continuing to do that on a part time basis as long as I'm able. I could work a couple of shifts per week and pick up another 40-50K/year. I think that would give us a perfectly comfortable retirement.

[feh]

By that question, I mean, is there a specific dollar amount that, once you reach it, you can retire?

Let's say your number is $1 million. Once you reach that number, how do you live off of the $1 million? Do you want to just live off of the earnings and not touch the principal? Are you OK drawing down the principal to supplement?

What investments are you considering that you can put your lifetime nest egg into that will keep it safe, and pay you some sort of living? Are you planning on putting it all in an annuity so that you have a guaranteed amount with no risk (assuming the annuity ins. co. never goes under).

I hear a lot about saving and investing for retirement, but I am curious as to what number folks are planning to try to reach, and specifically how that money is utilized once they get there.

We reached our number a couple years ago. Last year I switched to part time; wading into retirement, instead of jumping in the deep end.

I'm a total return investor, which means I will sell shares for necessary income.

[Fishindude77]

I really never had a number or a set age in mind. I'm mostly retired right now, started a few months ago at 57. Working a little part time for health insurance, don't know how long this will last.

Had been accumulating a hefty nest egg along the way, but really never started looking at the numbers, trying to figure out how much I would need, etc. until last 5 years or so, we spend about $140K per year.

A big chunk of my net worth is in investments that kick back pretty nice income streams with very little effort; farm ground, commercial real estate, stock that routinely pays a steady dividend, income from sale of business, etc. We could pretty easily live off this income only, but also have cash, a well funded 401K and social security that we will need to get into at some point. Also have several pieces of recreational real estate we can sell or rent if they ever become too costly or burdensome.

Over next couple years I will probably put some of our inactive cash into other things that produce income. Likely will be more farm ground or a particular stock I am familiar with. This stuff doesn't have real exciting return rates, but is just real easy to manage, and very safe.

[Petunia 100]

I plan to keep my money invested 60/40 and withdraw 4% per year. That should allow the principal to continue growing modestly (though of course with some ups and downs).

[Singuy]

I told my wife that we need to work for 10 more years on a sub 30-40k/year budget for expenses in order to retire with the number I want, which is 3.5 million in a taxable account.

We will be 44 by that time, which means we have a lot of years left before we die from old age.

At this time I will probably work part time and my wife will probably work 2 days/week and hire someone for the other 5 days/week.

Our income at retirement will hopefully look something like this.

250k/year worth of dividend generated from the nest egg
60k/year from my part time job (for health insurance)
200k/year from my wife's part time job


At this point we may just open up and spend 100k/year..doing some traveling but the kiddo who is in grade school will make it tough. The rest of the money not being used will be saved.

[TexasHusker]

I told my wife that we need to work for 10 more years on a sub 30-40k/year budget for expenses in order to retire with the number I want, which is 3.5 million in a taxable account.

We will be 44 by that time, which means we have a lot of years left before we die from old age.

At this time I will probably work part time and my wife will probably work 2 days/week and hire someone for the other 5 days/week.

Our income at retirement will hopefully look something like this.

250k/year worth of dividend generated from the nest egg
60k/year from my part time job (for health insurance)
200k/year from my wife's part time job


At this point we may just open up and spend 100k/year..doing some traveling but the kiddo who is in grade school will make it tough. The rest of the money not being used will be saved.

So you are going to go from $40K a year to $510K a year when you retire? Wow.

[kork13]

Z = "my number"

25x expenses < Z < 25x income
Age 55 < Z < Age 65

How will I do it?


My plan is for Z to generate sufficient income for us to live off of the returns, then craft a will/trust/empire that will leave a massive family trust fund to eventually get split between kids (as established adults) & a few charities.

Alternately, go to Vegas for my 90th birthday and go nuts. $5 MILLION ON RED!!!!

[Singuy]

So you are going to go from $40K a year to $510K a year when you retire? Wow.

No 40k is our expense. We will increase our household expense at the 10th year mark to 100k/year.

As for gross income, we are anticipating that my wife's business will hit 400k/year in 10 years. We'll hire someone plus expenses will drop that down to 200k/year working 2 days/week.

If the dividend game works out correctly, our yearly income shouldn't drop during retirement.

[rennigade]

How does anyone know what their number is if they do not know what their expenses are? Is it even possible?

Im not sure what our number is yet. We havent moved into our house we purchased. Ill know what the mortgage is but not sure about utilities, taxes, upkeep, etc. I would like to retire between 50-53 but not sure how much health care would cost until we are 65.

At this time we just keep saving/investing as much as we can. We should have a million by the time im 36/wife 35. If we can keep saving aggressively im hopefully we can be close to 3 million by the time we're 50. Who knows...we'll see.