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

[Sniggle]

Quote:

Originally Posted by RetireAge50 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]

Quote:

Originally Posted by Sniggle 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]

Quote:

Originally Posted by Music Lover 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]

Quote:

Originally Posted by rayinpenn 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]

Quote:

Originally Posted by 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.

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]

Quote:

Originally Posted by rayinpenn 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:

Quote:

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.

[IMATERP]

Quote:

Originally Posted by trixs This just goes to show how everyone has different expenses... Monthly expenses .. Real Estate tax $200 Insurance on home $80 Health insurance until 65 $0 Car insurance $95 Utilities $200 Income of $3900 per month would leave us with about $3300 in spending money per month with a payed off home. Of course the biggest factor is insurance cost and real estate taxes.

My wife and I resemble these expenses. We split our costs down the middle which is about $1,250 each, then our w*rk and assets pick up the difference.
After taxes, full IRA Max contribution, flex plan and benefits - I net $2,500. This less the $1,250 in fixed costs leaves me an extra $1,250 a month. An amount I never come close to spending.

600k would do it for me, BUT I would have to do something (whereby I make a few dollars) to comfortably transition and supplement "a rainy day fund.). By the way, the aforementioned includes having a paid off house.

Michael

[Lakewood90712]

Quote:

Originally Posted by 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.

$3900 mo. from a 17 year immediate annuity of 600k would be easy , as most of it would be from a declining balance, and at the end of those 17 years you would be left with a zero balance. If I understood the premise of the OP, was to live on social security exclusively after age 65.

[firenow]

I am a newbie to this forum. I saw threads where few people were saying they have 3M or more and still debating whether to retire or not. It just scares the heck out of me. There are so many people who are the sole breadwinners for the family or earn low and cannot even save more than a few 100Ks in their entire life. Good for those who have saved millions already but that shouldn't be the norm for wanting to RE.

My intention is to come up with a reasonable number that actually works. 3900 per month is shocking for a few here. So many others felt that is a reasonable amount for a family of two (no kids) to live on. I agree about healthcare costs, the uncertainty of market and unexpected expenses. So may be 800K sounds like a more reasonable one then to retire at 50? With each year later we can reduce the amount needed by 50K per year; so if i retire at 56 I will need only 500K

Ideally I would love to have a 2-3M portfolio so that I could simply live off interest and keep my capital intact and feel secure for the rest of my life. But that is not achievable for most. In that case, the other option is to save whatever I can and live on that by 1) moving to a low COL area 2) not owning a home (to avoid unexpected expenses in repairs and to use that home equity to invest) 3) not spending too much on entertainment and buying stuff that's not necessary

- Sam

[Dash man]

Quote:

Originally Posted by masceratian I am a newbie to this forum. I saw threads where few people were saying they have 3M or more and still debating whether to retire or not. It just scares the heck out of me. There are so many people who are the sole breadwinners for the family or earn low and cannot even save more than a few 100Ks in their entire life. Good for those who have saved millions already but that shouldn't be the norm for wanting to RE. My intention is to come up with a reasonable number that actually works. 3900 per month is shocking for a few here. So many others felt that is a reasonable amount for a family of two (no kids) to live on. I agree about healthcare costs, the uncertainty of market and unexpected expenses. Ideally I would love to have a 2-3M portfolio so that I could simply live off interest and keep my capital intact and feel secure for the rest of my life. But that is not achievable for most. In that case, the other option is to save whatever I can and live on that by 1) moving to a low COL area 2) not owning a home (to avoid unexpected expenses in repairs and to use that home equity to invest) 3) not spending too much on entertainment and buying stuff that's not necessary - Sam

Remember this discussion is on retiring at age 50. If you can't save sufficient funds keep working until you either have enough or can't work any longer.

[Out of Steam]

When my parents were considering retirement in the early '80s, the rule I heard then was that a retiree should be able to match their Social Security check from other sources. Their situation was roughly that, and their retirement was financially successful.

This is probably still a reasonable rule for people who can live frugally.