all you need is ~600K by age 50 to retire

[rothlev]

But OP is asking a question at age 50 for 4 persons.

The OP said " This is for a family of two."

 

[splitwdw]

The OP said " This is for a family of two."

The OP said in another post that he has 2 children age 7 & 3. I assume he thinks they will be gone by the time he is 50. If I remembered the ages correctly one would be 20 and the other 16 when he's 50. Also would explain "non working spouse" in original post.

 

[Fedup]

The OP said in another post that he has 2 children age 7 & 3. I assume he thinks they will be gone by the time he is 50. If I remembered the ages correctly one would be 20 and the other 16 when he's 50. Also would explain "non working spouse" in original post.

He is 37. In 13 years, his youngest kid is only 16 and the oldest is only 20. So I think it's for 4.

 

[pb4uski]

This is for a family of two.

if you can accumulate around 500-600K by age 50, that will help you survive for 17 years till age 67. From 67 you can start taking your full SS benefit; You get your amount (say 2600) and your non-working spouse gets 50% of that (1300) totaling 3900 per month. Since the medicare will take of your healthcare costs, 3900 will be good enough to survive for the rest of your life.

So the absolute minimum you need to save by 50 to retire safely is 600K. For each later year you retire, you can reduce the 600K by 50K / year. Does this sound reasonable? Not saying we can retire with 600K at 50 as it depends on economy and its good to have some buffer, but if we want a number this sounds like the absolute min. needed

- Sam

It depends on the lifestyle that you want to live and how much that lifesyle will cost. It woudl be a risky undertaking unless your living expenses were very low... akin to living paycheck-to-paycheck... which many people do but I would prefer not to do.

Even under Medicare health insurance is expensive.. part B is $105/month/person, part D is ~$40/month/person and medicap coverage is ~$250/month/person (or more) so for a couple that would be ~$400/month/person... or over 20% of your $3,900/month income.

When one of you dies, your income drops by 1/3 to $2,600/month which may require a reduction in lifestyle and even more risk of ruin if you have unanticipated expenses.

It would not be the life that I would want to live or want my DW to live.

OTOH, if your living expenses are $25k/year, it would probably work fine and the reality is that many of our fellow citizens will be retiring with less.

 

[Gumby]

I retired in late 2008 with $600k in my taxable account, after moving $300k from my company savings/retirement plan into it by cashing out the company stock at favorable tax rates. The taxable account generates about $2,400 a month, slightly more than what I have needed to cover my expenses. I own my small apartment outright, and the added medical expenses resulting from some medical issues which have arisen in the last 2 years aren't hampering my budget.


I do have an IRA which is the first of my "reinforcements" I can tap into when I turn ~60 in 6 years. That, and SS and my frozen company pension will put me in an even better financial position than I am in now. And that $600k nest egg at the end of 2008? It has risen to $900k. The IRA's value has doubled.

And my portfolio has quadrupled since its nadir during the dark days of early 2009. But I think we could agree that one should not form a plan expecting the extraordinary returns we have experienced as the country climbed out of the deepest financial hole in my lifetime.

I see no reason why a person cannot live well on $600,000 and SS if that satisfies their needs.

But as I understand the plan, he probably will not have $600K and Social Security. He will have 17 years of ~ $47k spending to be financed by a $600k nest egg (a 7.8% withdrawal rate) and then he will have social security to fund $47k of annual spending from age 67 forward. My prediction is that this plan will run short and he will be forced to take social security at 62 (if that is even an option in 25 years).

 

[RetireAge50]

Agree with OP. Working much longer to be really safe or to have a house with expensive taxes not appealing to me. That being said by age 50 you should have 2 or 3 times this amount anyway.

 

[ShokWaveRider]

As long as you NEVER get sick.

 

[Nightcap]

I know there are a lot of well off people on this site, but it surprises me that so many think that $3900 a month is undoable. Millions of people live very comfortably on less than that.

I think the difference is that early retirement is a choice. Yes, there are many who are forced by circumstance to make economies and slog on. But why would anyone deliberately put themselves in that situation?

No one knows the future, but if you've lived for half a century you've certainly seen ruinous inflation, market crashes, bear markets, wars and rumors of wars, natural disasters, the decline and expatriation of major industries, and the subsequent impoverishment of entire towns and counties. I'm not even going to mention the expensive illnesses that often accompany age. It would be the height of folly to think that today's good times will last forever.

The person who owes the bank half a million dollars is not the one who has to tighten his belt. It's the person who's shy half a groat who suffers. At the bottom of my ever-growing spreadsheet of projections is this quote from Charles Dickens: “Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.” (Mr. Micawber in David Copperfield)

 

[UnrealizedPotential]

Yes, it all comes down to choices and the life we want to lead. 600k would be enough for some parts of the country for two people, but certainly not all of the country. Even in the cheapest areas of the U.S. for a family of four living on 600k, no I don't think it will work, and the cost to find out without knowing ahead of time is too high a price to pay for most people. I live on 15k a year, but I am in the middle of no where and there is nothing to do. I do not plan on living here forever. My family is here, and I will be here until my parents die. My investments throw off about 30k a year, so I have a lot of slack in the budget. It all comes down to the choices we make and our abilities to reach what we want out of life. Some people want more and some less. Some people are capable of more and some are not. Life isn't fair, but if one is willing to work hard , most can get their share of the pie in America.

 

[Music Lover]

I think the difference is that early retirement is a choice. Yes, there are many who are forced by circumstance to make economies and slog on. But why would anyone deliberately put themselves in that situation?

My point was that for many people, $3900 is more than enough, therefore, they are not being "forced" to get by on less than they need.

My monthly base expenses are less than $1500, and I don't have any expensive hobbies. However, many people here have monthly expenses that are several times that, so $3900 is not enough to support their lifestyle. In my case, $3900 would be more than enough to live very comfortably, and if that was achievable at 50, I would have retired (I retired at 53).

 

[Sniggle]

That being said by age 50 you should have 2 or 3 times this amount anyway.

This is not realistic for most.

 

[jim584672]

The key to low income survival is owning your home / car outright in a LCOL area. Once that is in place your base expenses go way down. If the ACA stays in place it is easy to maximize it and get free to almost free health insurance.

So it can be done. But you usually want some extra money so you can travel and do some other stuff as well.

 

[FIREd]

For the two of us, $3,900 a month actually goes pretty far and I do not consider ourselves all that frugal either.

It covers food, unsubsidized health insurance premiums, cell phones, utilities, internet, gas, auto insurance, home insurance, umbrella insurance, gym membership, haircuts, dental insurance premiums = ~ $2,600 a month

Then we save $1,300 every month on top of that for irregular expenses like medical out of pocket expenses, car replacement (only 1 car for the both of us), home repairs, car repairs, vet bills, property taxes, auto registration, and a few miscellaneous items (like paying for a new drivers license, etc...)

There is plenty of fat in there too. Our food budget (which includes eating out, wine, etc...) is very generous for 2 people. Our cell phones are iPhones with conventional plans. Our car may not need to be replaced quite as often, our house is exceedingly large for 2 people, having pets is a luxury, etc... A more frugal couple would probably be able to squeeze quite a bit of discretionary spending out of this budget.

ETA: we own our home outright (in an area with a cost of living close to the average for the US).

 

[RetireAge50]

This is not realistic for most.

Maybe true but most people do not try to retire at 50. Any effort at all makes it likely with time and compounding.

 

[ikubak]

We could live well on 3,900/mo but we have a paid off house, no debt, live in an inexpensive part of the country, and with the current health insurance environment can get very inexpensive health insurance using Obamacare and managing our MAGI to maximize the subsidy. For us, the big unknown variable is the health insurance and if you plan to RE at 50, you'll have 15 years of the big unknown variable.

 

[jkern]

I'm sure it's possible to retire with $600K at age 50 and SS at 67 and I believe many people live on a lot less. However, for me that would be a H*LL to the NO.

My wife and I require about $100K/year to fully sustain what I consider a comfortable middle class standard of living (including a paid off house and retiree medical insurance).

Housing, Utilities, Food, Medical, Transportation: $45K to $50K
Routine spending (entertainment, recreation, travel, gifts. etc.): $25K to $30K
Non-routine spending (replacement of stuff, buying new stuff, life happens stuff): $25K to $30k

 

[karen1972]

The simple answer though is that $600k won't generate $3900/month...over that period.

We are 45 and run at about that for budget and live a decent life, but given health care, I know that number will dramatically outpace inflation over the next 20 years.

 

[athena53]

The "life happens" stuff would scare me. In any given year you may need to replace a car or a roof or an HVAC system. If you want to build up a decent emergency fund for the really expensive things that come up every 5 or 6 years or so, you need to be spending less than the amount the OP contemplates so the money will be there for the big things.

 

[rayinpenn]

Utilities: $200
House insurance - $70
Property taxes - $200
Auto fuel and insurance - $300
Groceries - $300
Phone/internet/cable - $200
total - $1,270



Add in $700 for maintenance and miscellaneous expenses and I'm at $2000, leaving $1900.

Will your car last forever?
No doctor co pays?
No clothes? Shoes?
No booze or entertainment?
No prescription glasses?
Suggest you start following Mr Money Mustache...
Obviously my 2 grand a month health insurance premium is a budget buster...

 

[Fermion]

Now that we have our 28 acres of designated forest land, where we are camping in our RV for a bit, our expenses are quite low.

Property tax is $29 a year
We have 1100 watts of solar with another kilowatt in our plans, so electric bills are about $0 a month.

Water is $5 a month.

Garbage is $10 a month.

Phone/internet with Cricket unlimited is $55 a month

Subsidized health insurance is $92 a month with $500 year max OOP.

Various insurances including umbrella policy, boat, motorcycles and trucks comes out to about $200 a month.

So aside from food and gas if we drive anywhere, our monthly budget is $365.

Obviously that is bare bones, but pretty low.

$3900 - $365 leaves quite a bit. Probably could take a few cruises.

 

[athena53]

No clothes? Shoes?

DH and I spent, together, $300 on clothes last year. I'm at $200 YTD for 2 pair of Birkenstock sandals. Still getting T-shirts from athletic events in which I participate (already have a huge pile) and my work wardrobe still fits when I need to look respectable.

Don't ask about the travel budget, though!

 

[Independent]

70 replies in 28 hours. That's a lot of activity. Fun topic, I assume.

 

[dunkelblau]

The simple answer though is that $600k won't generate $3900/month...over that period.

We are 45 and run at about that for budget and live a decent life, but given health care, I know that number will dramatically outpace inflation over the next 20 years.

According to the Schwab annuity calculator here:
Income Annuity Estimator: Calculate Your Payout | Charles Schwab
a male in California who puts 600K into an SPIA on his 50th birthday today will receive monthly payments of 3781 for 15-year certain and 3087 for 20-year certain, so the 17-year payout would presumably be around 3500 per month. No inflation protection, but beneficiaries receive any remaining income payments until the end of the period.

 

[RetireAge50]

And the annuity company makes a bundle so if you invest it yourself should be at least $3,900

 

[Music Lover]

Will your car last forever?
No doctor co pays?
No clothes? Shoes?
No booze or entertainment?
No prescription glasses?
Suggest you start following Mr Money Mustache...
Obviously my 2 grand a month health insurance premium is a budget buster...

I live in Canada so I don't pay $2000 a month for health care. And, as I stated:

Add in $700 for maintenance and miscellaneous expenses and I'm at $2000, leaving $1900.

$1900 a month can build a nice buffer over and above the $700 a month I've already allocated. Even if I allocated very generous $1500 a month for miscellaneous and maintenance, that still leaves $13,000 each and every year...more than enough for a car replacement or a new furnace, etc.

I didn't even earn $3900 a month for 80% of my career and I still managed to pay off a house while doing extensive renovations, and I retired debt free with a good 3-4 years of expenses saved.