$2.5 million to retire (Legg Mason PR story)

[Major Tom]

Quote:

Originally Posted by ready Even at 3% swr that is only $75k per year, which is far too low for me to live on in Southern California.

fify

[Fred123]

Quote:

Originally Posted by Walt34 In the news industry the companies are trying to cut way down on employees and use freelancers as much as possible. So now you have all these formerly employed writers who are desperate to come up with something - anything! - that they can sell and pay for tomorrow's dinner. They're doing the same thing with photographers - that was clear when National Geographic let go it's last full time photographer. It's also why your local news station is so eager to have you "share" your photos - for free of course - of the latest big wreck on the interstate. That way they won't have to pay a photographer to get the images.

Or generated by an algorithm: http://mobile.nytimes.com/2015/03/08...even-know.html

[Koolau]

I saw no mention of other sources of income. If two professional folks retire together, have pensions and (at least eventually) have SS, they might well knock down $100k/year without saving a dime. Now, for many of us, that $100k might be more like $20K to $60k, depending upon work history and other factors. Most folks, spending no more than $100k can get by on much less than a $2.5 mil nut (assuming the usual other sources of income.) Still, if you DID have $2.5 mil in your stash, it could be lots of fun. YMMV

[MikeWillRetire]

If I wanted to retire at age 35, I would have wanted $2.5 million.
If I retire at age 62, then I won't need anything because of my pension and social security.

[Big_Hitter]

2.5M seems pretty ample; but as everyone pointed out, there are a lot more factors to consider

[Birdie Num Nums]

Quote:

Originally Posted by Big_Hitter 2.5M seems pretty ample; but as everyone pointed out, there are a lot more factors to consider

And is that $2.5M per person or per couple? Because some of the earlier posts above refer to "us" while others concern the poster alone.

[Big_Hitter]

I think 2.5M would be ample for "us" - not counting DB/SS income.


I will acknowledge that blanket statements like these are pretty silly, as everyone has a different story/situation.

[GTFan]

Quote:

Originally Posted by Jack_Pine Of course it depends on spending and duration among other things but as a general target for the general public I don't think it's a bad number. At least it's a conversation starter. Our target number is a little over that. First few years will be at 4% SWR for a few years and then down to a right around 2. We feel pretty good and will adjust spending as needed.

I think it's an insanely high number that is obviously targeted to high cost of living areas and/or people already used to living high on the hog. And it completely ignores the impact of SS, any available pensions etc.

Way too high.

[GTFan]

Quote:

Originally Posted by youbet +1 While I admire the folks able to have a joyful retirement on less than $20k (for a couple), that's not us. $75k is more like it and if you don't have a pension or substantial SS, it takes 2.5 mil to count on that amount, inflation adjusted, over the long haul. The article is just stating the obvious.

The mind boggles at needing to spend $75k a year, but obviously I'm not used to such largesse.

For those saying they have to have that amount because of where they live, the answer is obvious.

[Big_Hitter]

Quote:

Originally Posted by GTFan I think it's an insanely high number that is obviously targeted to high cost of living areas and/or people already used to living high on the hog. And it completely ignores the impact of SS, any available pensions etc. Way too high.

completely depends on one's standard of living, even in low cost of living areas like BFE Texas, for example

if you FIRED at 55, had a mortgage, travelled and hung out at your country club every day (when not travelling) I don't think it's an insanely high number

[nuke_diver]

As mentioned there are too many variables...just like (I suspect at least) when someone says they don't need millions to retire (because they have a pension or they have a stream of income that is pretty stable like real estate). If you don't have a pension and don't count on SS as a venue sources (either because you are concerned over long term viability or because you didn't work as much and therefore won't get as much) the number for 100% safe (or as close as possible) ER needs to be a lot larger than others for a long retirement.

But the one size fits all implied in that article is also not correct. IIRC Mr MoneyMoustache is retired on $600K with a family (though I suspect that there is some income from the blog/website). He also does a lot of things that not everyone could (or would want to) do

[jerome len]

So much depends on your lifestyle prior to retirement. If you've been successful and have an expensive home, you need more in retirement. If you've been used to flying 1st class because you're business allowed that, travel will be more expensive. That's why we should look at around 80% of our pre-retirement income instead of a dollar amount that would satisfy all. I suspect someone living a middle class lifestyle in Montana would need less than 1/2 the retirement money than someone living a middle class lifestyle in New York City.

I've always LBYM.......yet, I'll need more than most......why? I've made more than most and my church, kids, grandkids and favorite restaurants would hate to see me cut back since they've depended on my support all these years. I'm lucky, shared my luck and don't want to change my conservative but comfortable life style.

[Andre1969]

As others have said, there are too many variables for a one-size-fits-all approach. Your age, location, number of dependents, lifestyle, SS/pensions, etc, all factor in here.

Now in my case, if I had amassed $2.5M, I'd be putting in my 2 week notice right now! FireCalc says that, at the 95% success level, I could live off of about $92K per year, assuming no SS. When I factor in SS (~$13K per year starting at age 62 in 2032), I can bump it up a bit to $97K.

$92-97K, even taking taxes into account, would be a nice lifestyle bump for me. To put it in perspective I'm almost 45, single, live in Maryland just east of DC, and don't really live an extravagant life. So for me it would be like hitting the lottery. But to others, having to live off of $92-97K per year could represent a severe hardship.

[Independent]

Let's remember two things:

On another thread, we learned that only 10% of households ages 65-74 have $1.0 million.
Presumably, most of these people are retired, so the other 90% have found some way to live in retirement without 7 figure net worth.

The average age of respondents to this survey was 58. They averaged $400,000 in retirement accounts (maybe just 401k?). Somehow, I expect that most of them are not going to get to $2.5 million by 65.

[eta2020]

No You do not need 2.5 Million if you plan to retire at age 65, collect SS and have Medicare.

But retiring at 50 when you do not collect SS and you have to buy medical insurance is different story.

2.5 million is not enough IMO unless you have some nice pension like O-5 from US Army .

[jim584672]

A 2.5 million immediate annuity pays $10,425 per month for a 50 yo male.
I don't see how this would not be enough, then again I am a "frugal" type.

I am not recommending annuities, just using it as an example.

[Focus]

Quote:

Originally Posted by Birdie Num Nums And is that $2.5M per person or per couple? Because some of the earlier posts above refer to "us" while others concern the poster alone.

Ding ding ding! Articles on this topic are usually vague about this very crucial point. Makes a world of difference.

[Retch The Grate]

That's my target number for a 4% withdrawal rate, assuming Social Security is still there as a backup longevity insurance when I retire and my folks end up passing along some money (which I don't want, I'd prefer they live indefinitely but...), otherwise I go with a 3% withdrawal rate and need $3.333 million to feel like I will be at my retirement number...

[Car-Guy]

The 2.5 mil caught my eye since that was my magic target number before I retired. That along with being debt free were two of my three main financial goals for retirement. Of course like many here on this board, once I hit my targets, the OMY syndrome set in. (at least twice )

While I was working, I worried a lot more about financials and investing than I do now in retirement. As I have gotten older, and then retired 3 years ago, my investment strategies have become much more conservative and "for me" that has taken away most of my financial worries.

[rodi]

ready:
I live in So. Cal. I retired on a LOT less than 2.5M in net worth not including real estate.
But I have a paid for house and rental that generates income. I live in an older neighborhood that doesn't have mello roos or HOAs. That cuts my spend. I do spend more than 75K - but I have 2 kids at home still.

jerome len:
While working my gross pay was reduced by
- max 401k contributions - that was a big percentage of my income.
- mortgage payments with extra principal - again, a big percentage of my income.
- extra investment/savings

Those added up to a LOT more than 20%... so the 80% of your previous income doesn't fly for me (and many other LBYM's types.) I was living on a less than 50% of my gross pay prior to retirement after accounting for the above adjustments.