Survey finds $880,000 is magic number

[gauss]

Quote:

Mr. Moss: I consider a core pursuit a hobby on steroids, something you absolutely love and don't want to live without. Core pursuits are different for everyone. They can be travel, which is a big one; physical activities such as golf, exercising, hiking; volunteering; visiting family and grandchildren; Civil War reenacting; Scottish dancing; you name it. When I analyzed the results, it turned out that people in the happiest group had an average of almost four core pursuits. People who were in the least happy group reported an average of fewer than two core pursuits. If you're in your forties or fifties, just remember that the happiest retirees are really busy, that they have all these important things they want to pursue

I suspect that the multiple core pursuits may be a proxy for social contact or perhaps a desire to be needed by others which have been correlated positively by others to retirement happiness.

I know that in my case when I go out with my retired friends and family who are often 15 to 25 years older than me, they always ask what I have been up to. I mention my plans for the next 2 days and all the meetings events etc. and I suspect that they may be a bit jealous.

-gauss

[dvalley]

Well personally since I'm only about half way there I'd be super excited when I get closer to $1M (or $880k). If the house is paid for, the nest is empty and there are no major health issues I think I can ER and live quite comfortably with that amount even in most parts of California. Of course, more will be better but I'd definitely consider the daily grind optional at that point and would pursue other options to keep busy and have a supplemental income.

[rayinpenn]

I would imagine that happy working people lead to happy retired people; I find joy in simple things- yesterday we had a pretty sunny day in the 60s here in southern Pennsylvania and Home Depot had their spring mulch sale. I spent the day enlarging beds and spreading 50 $2 bags of mulch. Some people would complain about yard work- Me I love it. At 60 With tired knees I work with a lawn chair and my dog. I work a little then sit and pet the dog a little. - It took all day but my god the place looks great. I feel I earned my dinner!

If you are a person who adapts well and has a bunch of interest I suspect you'll do well in retirement. A few weeks ago my 90 year old uncle did his first parachute jump. I have a picture of him standing on a prattle board and his 80 year old lady friend sitting by his feet.

1) You need to choose to be happy.
2) You need to stay active - walk, run just get up and do it.
3) a positive attitude helps


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[golfersailor]

All I know is 6 years ago when I first retired we had a lot less than the magical number. I did have a pension and I did take SS at 62. Well we were happy then and we are happy now. We were taking one major vacation a year going to florida for a month in winter and now it will be two and the rest of the time we stay home and enjoy our home and our grandkids. I play pickleball, golf, gardening, bicycling and I deliver meals on wheels a few days a week. We sold our sailboat last year just to much work and time. Oh and our nest egg has grown past the magical number. Life is good as long as we both stay healthy, without health the magical number is $00 or $5 million it just doesn't matter.

[RunningBum]

Quote:

Originally Posted by purplesky I think they mean being happy is just feeling comfortable with the math. If you don't like what you see in the mirror, no dollar amount will make you happy. If you don't have your health the 880k will not make you happy. But 880k is enough cash to provide a feeling of "I will be OK" if I get fired or if I am forced to retire early.

That's not what the article says. It doesn't say $880K is where you think "that's good enough", it's where apparently people say "more than that won't really make me any happier."

Quote:

in order to reach a financial level where more money doesn't really buy any more happiness, families need to reach approximately $880,000 in stocks, bonds, or cash assets, such as CDs, according to my data.

And my point is, some survey number is meaningless to me. Your number is meaningless to me. What's meaningful to me is the number I came up with for my situation. I can't imagine letting someone else's number or influence me in any way. Nor their lifestyle. Someone else may decide they'd be just as happy living in some super low cost area with less money. Good for them. That's not what I'd call my sweet spot.

I am happy. I have my health. I have hit my happiness number, so I do get the point of the article that there is a number, and it's not huge for most people, at which you not only don't need any more money, but where it wouldn't really improve your life. Sometimes I think about what it would be like to have 2x or 10x the amount of money, and I really can't come up with much that would make my life any happier. About all I come up with is that I might splurge for 1st class travel (and more travel) and get a class B RV but those things aren't worth me working longer or taking more risks with my investments to get to.

[MRG]

Quote:

Originally Posted by RunningBum That's not what the article says. It doesn't say $880K is where you think "that's good enough", it's where apparently people say "more than that won't really make me any happier." And my point is, some survey number is meaningless to me. Your number is meaningless to me. What's meaningful to me is the number I came up with for my situation. ..snip good stuff too....

Your comments 100% spot on for me too.

[HFWR]

I enjoy doing Civil War reenactments while golfing in my Scottish dance attire...

[marko]

Quote:

Originally Posted by purplesky I think they mean being happy is just feeling comfortable with the math. If you don't like what you see in the mirror, no dollar amount will make you happy. If you don't have your health the 880k will not make you happy. But 880k is enough cash to provide a feeling of "I will be OK" if I get fired or if I am forced to retire early.

I wonder if a more interesting number would be a "critical mass" number: the amount that you feel that no matter what happens (large unexpected expense, heavy market drop) where you might be out $100-$200K you'd still be ok.

That would also be a number that in good times grows in marked contrast to your withdrawals.

It's a little different from the usual lumpy expenses of a new roof or new car.

[jIMOh]

75% of tax payers earn under $40k per year, right... (15% bracket), so $880k at 4% would suggest they are making about same in retirement (with SS) as they did when working (compared to 75% of tax payers).

[dallas27]

880 is probably a fair amount to represents our needs being met with a degree of safety. Not our wants.

Re:haha'd post, pretty rough that you let that out without self editing more.


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[Looking4Ward]

Quote:

Originally Posted by raymondjmillsjr A few weeks ago my 90 year old uncle did his first parachute jump. I have a picture of him standing on a prattle board and his 80 year old lady friend sitting by his feet.

I bet that's a cool picture.

[Dog]

My take from the article is that you just need to have enough $ to lead a comfortable retirement. $880k may be the sweet spot for the average retiree without debts and mortgage. Just as important is to have engaging interests/hobbies (a reason to get out of bed)....whatever that may be for you as an individual.
My FIL retired and just sits and watches TV all day. Keeps asking what DH and I will do with our time when we retire. I haven't had any trouble finding things to do. But I know lots of retirees that seem bored and I don't think they thought about or planned how to spend their time.

I liked the article.


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[daylatedollarshort]

I don't really get the emphasis on magic numbers not including pensions and SS. At 3% SWR $880K would generate $26.4K in retirement income. With zero pension and $12K SS that would be $38.4 in retirement income.

A $500K portfolio with a $50K a year pension and $50K in SS would generate $115K annually. Portfolio savings by itself is a meaningless number. Then there is factoring in cost of living (Detroit vs. Manhattan), debt and a host of other factors.

A study from Vanguard on retiree income found that for wealthier retirees (defined as $100K+ in financial assets), nearly half of nonhousing wealth came from SS and pensions -

https://personal.vanguard.com/pdf/CRRRIP.pdf

"Our survey respondents had a median income of $69,500 for the prior year (Figure 2). Median financial assets are $395,000. When the lump-sum value of Social Security and pension benefits were added in, median nonhousing wealth was $1.1 million."

So for most wealthier retirees, financial assets accounted for 35% of nonhousing wealth. I don't see how the 35% number would be the sole driver of happiness / financial security.

[Spanky]

Quote:

Originally Posted by RunningBum No offense, but I'm not going to base anything in my life off of a survey of what makes others happy.

Agreed - but what makes you happy?

[Spanky]

$880,000 is just a number, which is very different for everyone. Some people would never be happy no matter how big this number may become. Their insatiable desire to want more may never end. Happiness is highly individualistic. What' make some one happy may not may you happy. In my opinion, happiness is highly correlated to the level of expectations and desires. The more you want or expect, the less happier you are.

[haha]

Quote:

Originally Posted by purplesky WOW. What an arrogant post. Most people would kill to retire with 880k. 880k well diversified is enough to not have to worry about putting food on the table and keeping the lights on. That happy place that allows a person to sleep at night. You can pursue a hobby on 880k invested properly. Not to mention SS and a pension that some people still have. 880k is a realistic happy place retirement number to start with. Yes 2 or 3 million is better. But 880k is reality.

I won't bother to give a reasoned response to someone who is so off base. You are attacking me ("arrogant"), I am not attacking you, I am not even sure I have ever read one of your posts before. And I won't ever again, so adios.

Sure, 880k is also plenty, even if you have no ss or pension, but your wife is an heiress. Good for you! Way to make realistic plans.

All I said that most here would probably not choose to retire on $880k, again without a lot of alsos like those that you helpfully supplied. If you doubt this, do a poll.

Myself, I plan to retire to a corncob-cement ketch and spend the rest of my life sailing the South Seas, on 25 cents/day. All you need is faith.

Ha

[dvalley]

In my case I'm shooting for $1.2MM with a 3.5% SWR ($42k without SS) and hopefully I can quit before my 50th b.day. My budget is loosely based on what I'm currently spending and what sort of things will be reduced/eliminated (child support, mortgage etc) in the future when I retire:

Mortgage: 0
prop taxes: $2000
utilities: $3500
house up keep, maintenance: $2000
Car/RV insurance/gas/repairs/AAA etc: $8000
Food: $7000
Pets: $1500
Entertainmet: $3000
Healthcare: $2500 (ACA silver plan for 2 adults with $35k income and financial help)
Income taxes 15%: $5500

Total: $35000 (add another $5k for a buffer and I'm at $40k per year and I live in SoCal).

[brett]

I think that the number really depends on your age, your health, where you live, your lifestyle, your home ownership situation, your retirement plans, and whether you have any sources of monthly income-indexed or non indexed.

An 'average' number is meaningless to most people.

[RunningBum]

Quote:

Originally Posted by Spanky Agreed - but what makes you happy?

I don't have a set answer for this. It actually doesn't have much to do with money. Having enough money reduces/eliminates the stress of being in debt, and worrying about how I will support myself in the future. Not having those worries puts me in a better state of mind to be able to be happy. Some of the happiest people in the world may be strapping to get by day-to-day, but I've lived that way and I'm happier now.

It also gives me much more leisure time to do things I choose to do rather than having to work, and also gives me the funds I need to pursue things I want, whether it is equipment for my hobbies or ability to travel different places. Again, it's no guarantee of happiness, but I'm more likely to be happy if I'm able to do what I want to with fewer restrictions on time or money.

[swakyaby]

$3M in non-housing investments. This is for a couple with no pensions, a paid off mortgage, the need to pay all health care costs, the desire to early retire, and the desire to maintain one's current standard of living-- with perhaps a few extra splurges each year.