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

[disneysteve]

aiming for a specific number can easily lead to the mentality of, "I've reached my goal; now I can spend, spend, spend!!!"

I suppose that's possible, but I think that someone who has taken the time to estimate their expenses in retirement and devise a savings plan to accumulate a sufficient nest egg to support those expenses is not the type to do what you've suggested.

[Nutria]

I suppose that's possible, but I think that someone who has taken the time to estimate their expenses in retirement and devise a savings plan to accumulate a sufficient nest egg to support those expenses is not the type to do what you've suggested.

There are lots of things that I wouldn't expect "solid" citizens to do. And yet...

[sv2007]

Another great reason for a Roth is no RMD's. I probably won't need the money in my Roth, so it can grow tax free forever and then get passed on to my heirs tax free. They can do with it what they want, but if everything works out right, it will be a big number because I don't have to withdraw RMDs.

How big a number?

Most people are locked out of the Roth pretty early, so there's lots of tiny little Roths everywhere that's just not going to be anything big.

My Roth only has about $56k (and that's up from $46? when I first posted a few months ago after like 10 years of neglect). Thanks to this thread, I just took a look where even though it's mostly super stable stocks, saw some changes that it can use right now.

[Captain Save]

My retirement number is based on the income I hope to have, and that number will be around 2mil. I'm in my early thirties, but behind due to dumbness. It's a slow process, but we are getting there.

..like to hear people talking about income .. rather than a number.. how do you plan to turn thta 2 mil into the income you want... Do you go by the 4% rule?

[Nutria]

I'm in my early thirties, but behind due to dumbness.

You're 15 years ahead of most people. (Heck, we just bumped up 401(k) contribs from 6% to 9%...)

[Nutria]

..like to hear people talking about income .. rather than a number.. how do you plan to turn thta 2 mil into the income you want... Do you go by the 4% rule?

Whether a person says, "I want enough to earn $60k/annum in retirement", or he says, "I want to have $2M by the time I retire", a specific desired annual retirement income requires a specific invested amount, and a specific rate of return.

Algebraically, it doesn't matter which you solve for.

[~bs]

well, assuming I work until retirement age of 65, I'm probably shooting for 2 mil of investment related assets (including a few rental properties), fully paid off main residence, and a pension that replaces 65% of income with 100% covered medical (assuming the pension/medical doesnt' get gutted by then).

given that I'm single, and currently only live off $3k/month or so which includes my mortgage, my savings rate is probably excessive, but whatever. At least it'll open the door to early retirement if I choose to.

[corn18]

How big a number?

Most people are locked out of the Roth pretty early, so there's lots of tiny little Roths everywhere that's just not going to be anything big.

My Roth only has about $56k (and that's up from $46? when I first posted a few months ago after like 10 years of neglect). Thanks to this thread, I just took a look where even though it's mostly super stable stocks, saw some changes that it can use right now.

Look into the back door roth. And mega back door roth.

[Captain Save]

Whether a person says, "I want enough to earn $60k/annum in retirement", or he says, "I want to have $2M by the time I retire", a specific desired annual retirement income requires a specific invested amount, and a specific rate of return.

Algebraically, it doesn't matter which you solve for.

It cetainlly does make a difference... i've seen way too many people calling radio shows claiming they can't wait until they become mllionaire (apparently by accumulating over $1m in their retirement account) .. If these same people were focused on income .. they would probably realize that they're probably making less than they would have hoped ..

people who are focused on income.. also would probably try to figure out a strategy on how to maximize their social security income by waiting until they're 70 .. ..

if you 're focused on net income.. you might realize that a Roth yields you more net income because it's not recognized as income for Social security tax.. so you might contribute accordingly...

It's safe to say it's safe to say that most Americans who do have an idea what they will end up with in retirement .. have no idea what that means in term of income ..it's a lot more than just taking 4% of whatever your number is

[clatoden99]

$10M

The 4% rule (google it) says I would be able to have $400k a year without touching the original lump sum with $10M invested.

At $400k a year I could donate to any charity, live anywhere, see anything, and spend time with a family.

I wouldn't stop "working" but I would stop working for a paycheck. Instead I work on raising a family, helping nonprofits, and learning from people who are better than me.

If you are handing money out, I'll take it now.

[GoodSteward]

It cetainlly does make a difference... i've seen way too many people calling radio shows claiming they can't wait until they become mllionaire (apparently by accumulating over $1m in their retirement account) .. If these same people were focused on income .. they would probably realize that they're probably making less than they would have hoped ..

people who are focused on income.. also would probably try to figure out a strategy on how to maximize their social security income by waiting until they're 70 .. ..

if you 're focused on net income.. you might realize that a Roth yields you more net income because it's not recognized as income for Social security tax.. so you might contribute accordingly...

It's safe to say it's safe to say that most Americans who do have an idea what they will end up with in retirement .. have no idea what that means in term of income ..it's a lot more than just taking 4% of whatever your number is

I agree with you. Just yesterday I was talking to a friend about her 401k. I pulled my 401k calc and explained if she didn't change anything, or get any raises, but put the same in for 30 years ($230 a month with 100% match) it would be around 700k at 8%. I said ignore the wow factor, let's look at what that really means. If you use that number with a 3% return that is less than 2k a month. 30 years from now, that 2k a month is going to be probably closer to 1k a month in today's money. You will not be able to do that. If you just live off the balance you might get 10-12 years and then you are out of money. Case in point, you need to aim much higher. They doubled their 401k to 6% with 100% match, and they are looking at paying off their debts much faster to save more. Win.

[GoodSteward]

When I worked with the financial services company the very first thing we did was ask "If you had no debts, how much would you want to make a year now to live your dream life?" 50k? 100k? Ok, we plugged this into our financial needs analysis, factoring in inflation, and gave the retirement balance needed to earn that much a year. This also broke it down to how much you needed to save at whatever rate you wanted to base it off (7%-9%) factoring off the years you have left. This is what everybody needs. They need to know what they want today and have that number figured up for them to know what to aim for. Not just a random number, but a customized number and understand why they need more than they think.

We also factored in current situations, debt, etc and showed the time to pay off the debts and let that flow into the retirement as well. It's a big snapshot of what you need to do, but in this case it shows you the math and time frame instead of guessing. Sadly, the number people want appears too big for them so they just aim too low.

[disneysteve]

Most people are locked out of the Roth pretty early, so there's lots of tiny little Roths everywhere that's just not going to be anything big.

What do you mean that people are "locked out"? Are you referring to the contribution limit being low, because I certainly agree with that, but that doesn't mean you can't accumulate a decent amount.

My wife and I currently have just over $254,000 in our Roths. That's not a "tiny little Roth" by my measure.

[GoodSteward]

What do you mean that people are "locked out"? Are you referring to the contribution limit being low, because I certainly agree with that, but that doesn't mean you can't accumulate a decent amount.

My wife and I currently have just over $254,000 in our Roths. That's not a "tiny little Roth" by my measure.

I believe IRAs are usually small because people wait so late to start. If you started at 21 and maxed it out you'd have millions when you retire in Just the IRA.

[Nutria]

It cetainlly does make a difference... i've seen way too many people calling radio shows claiming they can't wait until they become mllionaire (apparently by accumulating over $1m in their retirement account) .. If these same people were focused on income .. they would probably realize that they're probably making less than they would have hoped ..

If I decide that during retirement:

1. we want $80k/year, and
2. think that it'll earn 5% in those years and that
3. we'll live for no more than 25 years, and that
4. SS shouldn't be counted on...

that computes to a certain specific number. (In this example, $1.15M.) Thus, "can't wait to become a millionaire".