How far will $1 Million go in retirement in your state?

[Astro14]

Interesting. Not sure what the typical retirement span is; if AI on google is to be trusted, it's 18 years of retirement. So if $1M could reach out to 25 years in one's state--that may well be enough. More money might be nicer, but may not be worth the tradeoff (giving up vacations while together as a family, or able to travel, or what have you).

[Yes I know, nobody knows how long they will live, and in each state, the amount to live varies by town. Only talking in the most general of terms.]

I would have guessed $1M would have lasted less time. But I keep hearing about how a number of people have decent retirement portfolios yet are managing to get by on just SS. I would never say one should not save for retirement--but at the same time, one has to have a balance.

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If they are including mortgage... then I think something is off. NH has a median home cost of about $500k with annual property tax of about $6k. That comes out to $40,500 per year. This mortgage calculator is off on property tax, but I'm just showing it for the numbers.

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Their calculation says it costs $38k to live in NH. The nominal 4% withdrawal rate from one's retirement portfolio would just cover the mortgage+tax. Maybe SS would cover the rest of one's living needs, I could see that, SS can pay up to what, $4k to $5k per month, right? Regardless: I don't see how they came up with that $38k number for NH.
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I'd rather retire without the mortgage, then 4% withdraw rate + SS would be comfortable. At least today, who knows what tomorrow and inflation would bring.

The 38K is the amount that you would spend above your Social Security, go back and read the assumptions, there’s several in there.

As far as your “balance“ well, balance, all you like, but if you’re left with insufficient funds for retirement, your balance was off. A lot of people rationalize their over spending saying that there needs to be “balance“. The balance is that you can live a decent life, while still putting away 15% of your income.

If you’re not meeting at target, then you’re not balancing anything, you are simply rationalizing failure. Failure to plan. Failure to invest. Failure to understand the consequences of delay.

When people ask about where they should place their money, I always encourage the Max for retirement first.

 

[rijndael]

Interest income on $1 million dollars is about $400 per month.

What?

4% of $1M is $40,000 / Year.
$3333.33 / Month
Did you miss a decimal shift?

 

[GON]

What?

4% of $1M is $40,000 / Year.
$3333.33 / Month
Did you miss a decimal shift?

Yes, I made an error. Thanks for catching that, posting the correct amount.

 

[billt460]

I know A LOT of retired people who have been very comfortably retired for years on a lot LESS than $1 million dollars. In fact I would say most. Like anything else, it depends on the type of retirement you desire.

Most retired people that I've come across, tend to do far less than they had originally planned when they were working. Be it traveling, playing golf, or most any other recreational activity. Simply because their desire to do so becomes much less as they get older. They have just become less active.

No one wants to believe they're ever going to run out of gas as they get older, but everyone does. I'm healthy, and can do most everything I did back in my 30's. I just don't desire to do it as much or as often.

Another thing is dealing with all of the BS that goes along with it. It all becomes more difficult as your patience subsides with age. For me that encompasses traveling. When I lived in the Midwest, I couldn't wait to get out of there as soon as Winter came. Either to Florida or Arizona.

Now I'm retired in a climate that I completely enjoy. So I have very little desire to travel anywhere else. I'm exactly where I want to be. And dealing with the headache of airports, etc. just doesn't appeal to me at my present age. 40 years ago I loved it. But admittingly, it was a lot easier then. (Pre 9/11).

If someone died, and dumped a million cash in my lap tomorrow, nothing would change in my retirement. I would just end up leaving more to someone else.

 

[paulswagelock]

A wise investment expert told me early on- you can retire at any age you want, just depends on what your lifestyle expectations are.
This chart is helpful to have a comparison normalized per state to understand relative affordability between states.
But that is all it is good for.

 

[k1xv]

Interest income on $1 million dollars is about $400 per month. Social security likely around $2500 a month if one draws it at age 62. If the generalities are accurate, that is an annual income of $34,800.

I have no idea if medical expenses are part of the equation. I know Medicare is a entitlement, but not sure if Medicare always covers all medical expenses.

I think you got s decimal point in the wrong place. $ 1 million dollars invested at 4%, the present Treasury bill rate, would produce $40,000 per year, or about $3330 per month.

And if you managed to save up a million dollars, your earnings record would probably result in a SS check higher than $2500 Especially if you delayed collection of SS to age 70, as I did.

At age 77, I am collecting approx $3900 a month SS, net of Medicare deductions, and approx $2000 a month from retirement savings of about $650K in an IRA. I pay $272 a month in a gold plated Medicare supplemental plan that features no co-pays or deductibles for A and B.

So my net annual income from SS and my IRA, with a lot less than a million in retirement savings, is around $70,000. I am in a large home with about $10K per year in state and local taxes. Vermont is a cold place, so heat and utilities come to about $6K per year.

I have no mortgage or any other debts.

Enough to support my home, my cars, make some donations to 529 plans for four kids, and have my funeral pre-paid.

 

[demarpaint]

Property taxes, homeowner insurance, and HOA fees in some states might be higher monthly dollar amount than a mortgage and property taxes, homeowner insurance in other states.

Not ever tested the above but thinking property taxes, homeowner insurance, and HOA fees in Florida might be in the $1-2k per month range, which might be the same as a mortgage payment for a home in central Kansas.

Exactly! And some of these HOA can have price hikes in the 6-10% range per year, blowing away the Social Security COL increases by a country mile.

 

[GON]

Exactly! And some of these HOA can have price hikes in the 6-10% range per year, blowing away the Social Security COL increases by a country mile.

Wife mentioned that she thinks I will be too cold in Southern New Mexico during the winter months.

We discussed Florida as one of numerous possibilities, the reported homeowner insurance rates and HOA rates are something of increased concern for potential retirees in Florida.

 

[Pablo]

I guess we can go back to eating crappy food and lazing about

 

[GON]

I guess we can go back to eating crappy food and lazing about

Spent the last 12 hours studying glucose monitors, bloodsugar, and a guy that eats one type of food after a 12 hour fast and shows the results on a graph.

Fascinating information- makes one want to strongly consider changing certain food choices.

 

[Pablo]

Spent the last 12 hours studying glucose monitors, bloodsugar, and a guy that eats one type of food after a 12 hour fast and shows the results on a graph.

Fascinating information- makes one want to strongly consider changing certain food choices.

I guess you got my point

What food types surprised you?

 

[GON]

I guess you got my point

What food types surprised you?

One, is that eating proteins counters some of the impact of carbs. That bananas are very bad, but if you put peanut butter on a banana it offsets some of the negatives of a banana. Avocados and olives are fruits, not vegetables- but they are healthy fruits. If one is going to eat a carrot, a raw carrot is much better than a cooked carrot, cooking removes a lot of the fiber from a carrot. That if someone has a meal of steak and potatoes, eat all the steak before eating the potatoes, the protein digested first will better counter some of the carbs from the potato.

 

[Pablo]

One, is that eating proteins counters some of the impact of carbs. That bananas are very bad, but if you put peanut butter on a banana it offsets some of the negatives of a banana. Avocados and olives are fruits, not vegetables- but they are healthy fruits. If one is going to eat a carrot, a raw carrot is much better than a cooked carrot, cooking removes a lot of the fiber from a carrot. That if someone has a meal of steak and potatoes, eat all the steak before eating the potatoes, the protein digested first will better counter some of the carbs from the potato.

None of this surprises me at all, but I will say the countering usually means delaying, and may help glucose spikes, but not straight weight loss.

 

[goingplacesanddoingstuff]

A paid off house is not one of my retirment goals. I'd rather use that capital elsewhere.

With a paid off house, all the income you’d spend on mortgage interest can be invested.

Plus, it offers greater long term financial security because it is much harder to lose your house.

 

[demarpaint]

Wife mentioned that she thinks I will be too cold in Southern New Mexico during the winter months.

We discussed Florida as one of numerous possibilities, the reported homeowner insurance rates and HOA rates are something of increased concern for potential retirees in Florida.

Absolutely! That is the problem we're having. My brother is in Florida about three years now and his taxes and HO more than doubled. He is not in an HOA. His auto insurance is insane. One of the areas we were looking at the HOA went up 47% in four years. My wife wants to be in Florida, when we started looking about 4 years ago, prior to the Hurricane we would have saved in taxes and insurance factoring in $300/month for an HOA about $5K per year. That $5K savings is just about gone with their insanely high auto and HO insurance. I'm estimating within the next year or two where I'm living on Long Island will be cheaper. We've just about ruled Florida out. I say we in case my wife walks in and looks over my shoulder.

 

[rijndael]

With a paid off house, all the income you’d spend on mortgage interest can be invested.

Plus, it offers greater long term financial security because it is much harder to lose your house.

My mortgage is 2.5%. I can invest that money and make 4% with almost zero effort. I think 5% woul be easy with minimal risk. I can use an automatic withdrawl and payment system to never worry about it.

IMO, there's also a difference if your house/mortage is approaching $1M vs $200K. Peach of mind has different costs.

I get the emotional attachment people have that make a mortgage feel like a "noose". I try real hard to net let emotions drive my financial decisions, I'm not always successful but I do try.

 

[4WD]

With a paid off house, all the income you’d spend on mortgage interest can be invested.

Plus, it offers greater long term financial security because it is much harder to lose your house.

Not to mention the classic wants and needs debate - you need a home - IMO, one that you own - and not exposed to investment crashes - now how much home is up for debate

 

[goingplacesanddoingstuff]

The

My mortgage is 2.5%. I can invest that money and make 4% with almost zero effort. A few more % would be easy with minimal risk. I can use an automatic withdrawl and payment system to never worry about it.

IMO, there's also a difference if your house/mortage is approaching $1M vs $200K. Peach of mind has different costs.

I get the emotional attachment people have that make a mortgage feel like a "noose". I try real hard to net let emotions drive my financial decisions, I'm not always successful but I do try.

I’m aware of this line of thinking popularized in Rich Dad, Poor Dad. I am pointing out that is it not always as much of surefire way of getting more money in the end as some people think, because it discounts the fact you can invest more, earlier when you don’t have a mortgage.

It’s not just about the difference in interest percent vs investment percent. It’s the fact you can invest more in higher returning assets at an earlier point in your life. The investments have more time in the market to grow the sooner you own the house outright. Does that make sense?

In your case, with an extremely low 2.5%, it may not be worth it. But if you run the numbers, it’s way closer than you might think as long as you factor in the returns for earlier investing of the money you would have spent on mortgage interest (and beyond, since you can afford to be more high-risk/high reward). Those years matter.

 

[rijndael]

I’m aware of this line of thinking popularized in Rich Dad, Poor Dad.

I think I gleaned it from a Ric Edelman book.

I am pointing out that is it not always as much of surefire way of getting more money in the end as some people think, because with often discounts the fact you can invest more, earlier when you don’t have a mortgage.

Sure. It's rare that anything investing is 100%. It always depeneds on something. Got a 7% mortgage? Way different. Can't be disciplined with that account dedicated to the mortgage? Also different.

It will be interesting to see how some of these homeowners vs mortgage holders situations play out in NC with all of the floods. It's a no-recourse state. I can imagine folks who lost everything - even their plot of land - may be considering just walking away and letting the bank foreclose and deal with it. That's one more option than a outright homeowner.

 

[Davejam]

The issue with averages is that some states have a wide range for cost of living...with some obvious examples: NYS, Washington State, FL, etc.

Bottom line is things go farther in LCOL (Low cost of living) area and consider how a state taxes retirement, etc.