How Much for Retirement

[2002 Maxima SE]

I read a lot of articles on retirement...and none seem to nail down exactly how much you would need. I don't mean the amount you need so you can buy that new Mercedes each year before your trip to the Bahamas, but enough to meet your minimum needs (assuming the house is paid for at that point). One article mentioned having $350,000 for retirement (if your income started at $65,000 and you received a standard 4% pay increase each year). Another article said you need $1M dollars to retire. A recent thread on this forum said $1M won't be enough. So, what is enough? What should be the target for a comfortable (not living on the street but not living in the Ritz) retirement?

 

[dparm]

It really depends on what you want your standard of living to be. Plus you have to remember the value of said money in the future. $1M today is not the same as $1M in 40 years, or 40 years ago.

Do a simple budget and figure out what sort of lifestyle you want to live.

I intend to retire with far more than $1M in the bank. I would like to be able to leave some money behind for the family beyond just my house, cars, etc.

 

[demarpaint]

$350,000 for retirement? Where? Obviously it depends on where you live, and how long you're going to live. But $350,000 isn't going to get you much of a retirement that's for sure. I doubt a $1,000,000 would be enough, especially if you lived in the NY Metro area. Don't count on that Million bringing in much of an investment income either, unless you want to take some risk with it.

 

[SuperDave456]

Also figure that the last 6 months you live will probably be the most expensive 6 months of your entire life.
Disposing of someone, (Burial, cremation, or donated to science) can be really expensive.
Been to too many funerals that were extra sad because of the almost "pine box" brought to the funeral parlor in the back of a relative's pickup.

Don't mean to be negative, but thinking about the ones you leave behind is the right thing to do.
BTW, A dollar isn't what it once was.

 

[LoneRanger]

You're not alone:

http://www.usatoday.com/money/perfi/reti...ough/51642848/1

My mom and dad lived comfortably on their social security plus a couple hundred thousand IRA, in decent neighborhood in staying in the 2800 sq ft family home until the end (for mom) and dad is now in a seniors apt community still comfortable at 87, still active, now with more in the bank from selling the old family home. It all depends on your lifestyle choices and what makes you happy. If you're accustomed to super duper nice vacations twice a year to exotic locations, dining out all the time, new cars often, and other finer things and expect to maintain that in retirement, you better have a huge bank roll stashed. I'm not worried about retirement a lot. Its a very long way off, but if it ever came to starving I'd just go criminal. Crime does pay, I've seen it.

I wouldn't sweat it. The way things are headed (see article link) this country is going to end up going to a socialized retirement system like Argentina did. Govt seizes all privately held retirement accounts, and in exchange doles out a monthly pre-determined stipend. Don't think it can't happen.

 

[antonmnster]

I have two pensions and a deferred comp plan, but it still looks like I can only afford to retire in Vietnam.

 

[Pablo]

$1-1.5 Meg. minimum. NOT counting houses, cars, guns, and can opener collection.

 

[Radman]

Personally I am not materialistic and could care less if I lived in a mobile home instead of a 3,000 sqft home on the Gulf. My wife on the other hand wants all of the amenities. If she would stop spending money I could save a million to retire on. Oh well I hope for her sake she enjoys Spam & cat food in her golden years.

 

[Billy_D]

The rule of thumb is that you need 18 to 19 times your salary for retirement assuming SS is still there when you retire.

 

[earlyre]

Originally Posted By: dparm
Plus you have to remember the value of said money in the future. $1M today is not the same as $1M in 40 years, or 40 years ago.


figure i saw the other day, was that if converted to today's Dollars, "The Six Million Dollar Man", would have cost around $29 Million

 

[Quattro Pete]

Originally Posted By: Billy007
The rule of thumb is that you need 18 to 19 times your salary for retirement assuming SS is still there when you retire.


Which salary? Salary when you join the workforce? Salary when you're about to retire?

 

[IndyIan]

My parents have recently retired, and I'm pretty sure they don't have 1,000,000 even including the house, but my Mom as probably $40k/year income from her pension plan and my Dad does some consulting so they aren't too bad off. They do one major trip a year and usually go south with the trailer for a couple months every winter.
I think the pension plan is indexed as well so they should be fine.
Both my wife and I have decent pension plans so if we trusted those 100% we wouldn't have to save anything but we do save some anyways. Once we get our shack paid off then we'll be able to save more but $1,000,000 in todays dollars is alot of saving and we probably won't get that far. Saving alot is fine but as I age abit I do see that spending some now isn't a bad idea either. Saving your whole life just for "comfortable" retirement that you may never see isn't that appealing!

 

[pkunk]

It depends. Everything I own (house, cars, RV, Cabinet shop) is paid for, no debt. My expenses are food & fuel. My SS is only $600 a mo. but I suppliment it with woodwork as a part time hobby business. I can afford to take vacations in the RV, eat well, am healthy, and hope to be able to enjoy life until I'm at least 90(another 20 years). YMMV, but you have to do the math.

 

[2002 Maxima SE]

Originally Posted By: Pablo
$1-1.5 Meg. minimum. NOT counting houses, cars, guns, and can opener collection.


Who can save that? I make a pretty decent living and have maxed out my 401k since my first job (15 years ago). I add another 10%-20% of after tax savings depending on if work was good that year. I won't have a pension or any company sponsored retirement perks (I don't think the perks would be there in 20 years anyway).

Even with all of that...unless the stock market doubles my money in the next 10 years I don't see how you could reach $1M in savings...maybe if I count the house.

 

[Pablo]

It's not easy. As I stated in another thread, I wish I had been saving more earlier. Everyone needs to be more investment savvy.

I'm not sure what to say about the people who saved zero. I'm sure some will expect to be bailed out....

 

[Tom NJ]

Assuming a 6% return on your investments (stocks & bonds) and a 4% rate of inflation, $500,000 will deliver $26,500 per year inflation adjusted for 25 years, or $23,000 per year inflation adjusted for 30 years. One million dollars will deliver twice as much for the same periods, i.e. $53,000 for 25 years or $46,000 for 30 years. To this you can add your social security, pensions, and any other income.

Keep in mind that these figures are very sensitive to the inflation rate and your return on investment. For example, if you invest in risk free treasuries at say 3% return, $500,000 will run out in 18 years instead of 25.

A proper calculation can be very complex as there are a lot of factors to take into account, such as how long will you live, changing medical costs, the costs for aging parents & kids college & weddings, investment style, inflation rate, etc. If you are getting close it makes sense to see a professional and develop a plan. Alternatively there are many calculators available on the Internet that will give you a feel.

My advice - save more than you are told you need if possible. I saved nearly twice my minimum number and was able to sleep when the market crashed in my first year of retirement in 2008. Of course that is not always possible.

Tom NJ

 

[Billy_D]

Originally Posted By: Quattro Pete
Originally Posted By: Billy007
The rule of thumb is that you need 18 to 19 times your salary for retirement assuming SS is still there when you retire.


Which salary? Salary when you join the workforce? Salary when you're about to retire?


The salary when you are about to retire which is usually higher.

Here is another retirement calculator by Fidelity. The calculator calculates assets needed to replace 85% of your pre-retirement income before taxes. The calculator estimates social security payments, but does not consider other retirement income.

You can use MyPlan® Snapshot link to calculate how much Fidelity thinks you should have for retirement.

https://401k.fidelity.com/public/content/401k/Home/AmIsavingenough

 

[Pablo]

My plan is to move all the jobs back from China and have elderly folks who didn't save a dime, work and live on the factory campus, just like China. Laugh, or not like it - but it's not going to be pretty....and well the alternatives may be rougher.

 

[Billy_D]

Originally Posted By: 2002 Maxima SE
Originally Posted By: Pablo
$1-1.5 Meg. minimum. NOT counting houses, cars, guns, and can opener collection.


Who can save that? I make a pretty decent living and have maxed out my 401k since my first job (15 years ago). I add another 10%-20% of after tax savings depending on if work was good that year. I won't have a pension or any company sponsored retirement perks (I don't think the perks would be there in 20 years anyway).

Even with all of that...unless the stock market doubles my money in the next 10 years I don't see how you could reach $1M in savings...maybe if I count the house.


If you have been maxing out your 401k for the past 15 years, I don't see why you shouldn't reach 1 million dollars.

Assuming that you have an average balance of $200,000 in your 401K, and you have 30 years before your retire. you should have $864,388.48 in 30 years if your money grows at a conservative rate of 5% with no further contributions to you 401k. If you keep contributing to you 401k, you should have 2 mil-4 mil by the time your retire.

“The most powerful force in the universe is compound interest”. Albert Einstein

 

[hattaresguy]

I plan on just working until I die, why not I enjoy what I do.