Can I live on a 10 million retirement?

[Pablo]

Nope, I would blow through a million in a week.

Oil and filters?

 

[JeffKeryk]

Nope, I would blow through a million in a week.

You hit it on the head. I would imagine this is why so many people have so little in reserve.

 

[ecotourist]

You hit it on the head. I would imagine this is why so many people have so little in reserve.

Most people who win the lottery have nothing left in 5 years. And yet one of the most common retirement plans in Canada is "winning the lottery". Many people have essentially no savings.

One of my relatives is not in good health, past age 65 and still working, and says she couldn't put together $1,000,000 if she sold everything including her house. This is someone who up until now has been buying lavish gifts for her kids and grandkids.

In Canada, Old Age Security (OAS) and Canada Pension Plan (CPP) amount to less than $1900 a month for a single. Try living on that!

I think a single person could get by with $1,000,000 in investments (ie $40,000 in annual income at 4%) plus OAS and CPP ($22,800 per year) in many communities if their needs are modest and they own their own home. But it would be tight. The hospital and physician components of medical care are "free" or based on a nominal annual fee in Canada.

 

[PandaBear]

Where? Dubai? Bolivia? Africa? Switzerland? Heck even within the US can vary from 1M to maybe 20M.

 

[RhondaHonda]

My mom retired with less than a million in assets at 63. She doesn’t spend much, drives a 9 year old vehicle and her mortgage isn’t much. Her mortgage isn’t much and real estate taxes are about $3,000.

It all depends on your lifestyle. I know someone else that made a lot of money and his annual expenses are about $300k in retirement.

 

[2strokeNorthstar]

Could I? Yes, I would start tomorrow

 

[ZZman]

I always find it interesting that most people say only draw enough to keep your original investment untouched. But why not slowly spend it down over 10-20 years?

 

[twouvakind]

Too many variables. Single, married, house paid for, location, age at retirement (SS mentioned, but early at 62, full retirement age, or bonus at 70), medicare eligibility, child support arrears.

 

[supton]

I always find it interesting that most people say only draw enough to keep your original investment untouched. But why not slowly spend it down over 10-20 years?

That'd be fine--if you knew you'd only live for another 10-20 years. If you "screw up" and live for 30... then what?

Also, for a number of people, they find their final years get really pricey. Expensive treatments, expensive help, or expensive stays in assisted living places. Should one burn through their savings before going into the retirement home, or should they try to save for their stay there, even if it means not having an estate to hand down to their loved ones?

 

[CR94]

If you have an expectation of a reasonably long life span, delay collecting Social Security to age 70. And if you guessed wrong and die early, you won't regret it. Because you will be dead, and dead people have no regrets.

On the other hand, if you start collecting at 62 and have a long life with insufficient income, you will regret it, likely very much.

That nicely articulates my thinking when I decided to wait.

 

[gathermewool]

Seriously --- some people have just tooooo much time on there hands. Donate 80% of that money & you could/should still live comfortable.

If I had that much I would absolutely donate 80% of it…when my wife and I die.

 

[gathermewool]

I’m an elder millennial. I graduated and started my job the year before they got rid of the pension. It is a far cry from historical offerings, but it’s not zero. I was also lucky enough to be able to start a Thrift Savings Plan, which I’ve heard have very low fees.

Now, I may live for a long time, but it’s not likely. I plan based on that fact and with the expectation that my wife will well outlive me.

If my health gets too bad and costly I plan to take a lot of recreational drugs and enjoy the hell out of what ever I’m able to, and then fly somewhere with a nice, cozy N2 sleep pod.

 

[ecotourist]

I always find it interesting that most people say only draw enough to keep your original investment untouched. But why not slowly spend it down over 10-20 years?

Financial planners generally recommend that you plan your finances as though you're going to live to age 95. Not many people live to age 95 but some do. [Side comment: I had many patients who were age 95 and older, most in good health both physically and mentally.]

How would you like to be one of the lucky ones who lived to age 95 (in good health and with all your marbles) but you had spent all your money in the first 10 or 20 years of retirement? It's not so lucky to be 75, 85 or even 90 years old and broke. That's why.

In normal times a 4% (indexed) withdrawal rate will not exhaust the initial amount after 35 years, 95% of the time. For the record, the most likely outcome is that you'll likely have way more money than you need even after 35 years.

 

[Leo99]

Financial planners generally recommend that you plan your finances as though you're going to live to age 95. Not many people live to age 95 but some do. [Side comment: I had many patients who were age 95 and older, most in good health both physically and mentally.]

How would you like to be one of the lucky ones who lived to age 95 (in good health and with all your marbles) but you had spent all your money in the first 10 or 20 years of retirement? It's not so lucky to be 75, 85 or even 90 years old and broke. That's why.

In normal times a 4% (indexed) withdrawal rate will not exhaust the initial amount after 35 years, 95% of the time. For the record, the most likely outcome is that you'll likely have way more money than you need even after 35 years.

It's a gamble. For everyone one of them there are 10 that died before reaching that age or are too feeble to worry about spending money and left money on the table.

 

[JustinH]

If you don't have a ton of money move to Thailand and live in a condo on the beach, you can do pretty good for about $2k per month all expenses in.

 

[andrew_j]

Million is doable if you made okay money and max out SS. The key thing is not a single debt, owning a paid for home/condo to fix rent costs and owning paid for vehicles always.


The million should be invested assuming a draw down but trying to grow it.

My parents make $50k from SS and he has some sort of pension that pays $28k. They don’t touch retirement which exceeds the $1M . Paid for home, cars etc.

 

[BMWTurboDzl]

I read an article and almost fell out of my chair that this was even a topic. Of course 99% of people could live well on that.

Now back to reality, do you think 1 million is still enough to live comfortably in retirement when you include SS?

$1M is enough to survive but not what I'd call living and obviously cost-of-living matters.

Central Florida is a lot different than Los Gatos CA.

 

[joekingcorvette]

Most financial planners want you to spend almost nothing and keep working and investing. In turn they make more money but many of them retire at 66 or less. Ha! Go figure. I retired at 66 and have no regrets. Once you hit 80 years old that is considered the "stay at home years" if you are lucky enough to live that long. I don't care what others do in retirement but I like not having to go to work.

 

[Vil_Riker]

Most financial planners want you to spend almost nothing and keep working and investing. In turn they make more money but many of them retire at 66 or less. Ha! Go figure. I retired at 66 and have no regrets. Once you hit 80 years old that is considered the "stay at home years" if you are lucky enough to live that long. I don't care what others do in retirement but I like not having to go to work.

What's the point of working hard to reach retirement unhealthy but wealthy if you can't enjoy life?

 

[ARCOgraphite]

Been retired now for 3+ years. I have not had a month where my SS payment hasn't met expenses. This includes money doled out for useless trinkets ect. My retirement IRA has not been touched and is guaranteed 5% interest every year. It is a locked in rate. Had a choice a 15 years ago to play the float at 8.5% variable, or 5% forever as long as I renew the annuity with the Catholic Church every 3 years. Recently bought some 4% CD's and the income from those is used for taxes and insurances. Would anyone here know where and how to buy I-Bonds? Someone said recently that they pay 6-8%.

Watch out, just found out the IRS lumps in certain tax-exempt income in the calculation of the taxable portion of your Social security income. This surprisingly includes tax exempt Muni Bonds.

Roth distributions are NOT counted as income or in the RMD.

Taxes on social security recorded on your 1040SR thankfully do not go in to the general fund bucket rather they go back to fund the Social Security engine.

I Just found this gem of a retirement tax calculator:
https://www.aarp.org/money/taxes/1040_tax_calculator.html

- Ken