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Comfortable FIRE $$Number in Every State Article
Old 09-05-2020, 04:23 PM   #1
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Comfortable FIRE $$Number in Every State Article

Just saw this data about FIRE and how much for each state to be comfortable with FIRE. These are base on cost of living and average expenses for retirees. Average retirement age is 62-63

In NC and TN, it says you can FIRE comfortably on around $1.1 million

In California, you need $1.7 million

In NJ, you need $1.5 million

In Hawaii, you need $2.3 million

In Washington DC, you need $2.0 million

https://www.yahoo.com/news/average-r...090000680.html
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Old 09-05-2020, 04:44 PM   #2
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From the article, "Based on this data, the average savings needed to retire across America as a whole is $1,311,794.45."


Yet there's lots of retired people in the US. and how many have over $1M in savings (not including their homes)? Maybe the top 10%?
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Old 09-05-2020, 04:54 PM   #3
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From the article, "Based on this data, the average savings needed to retire across America as a whole is $1,311,794.45."


Yet there's lots of retired people in the US. and how many have over $1M in savings (not including their homes)? Maybe the top 10%?
Yeah, sure, but this article was aimed for the FIRE group if you read the intro (not for the general population), so these are those who can afford to retire early and is already financially independent. Anyone with a networth above $1.2 mil is at the top 10% of the population, so I agree with you there.
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Old 09-05-2020, 05:05 PM   #4
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Interesting data in the form of a clickbait article.

I retired younger and poorer than the average Californian. But I had a paid off house which means I need less $ each month for bills.

Is it household savings, or individual?
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Old 09-05-2020, 05:07 PM   #5
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Not sure how relevant this article is.

No mention of how much the SWR rate is? No mention of income sources? No mention of what the expected rate of return on the savings is? Just a flat number of what savings is required and then suggesting a call to a financial advisor!

I can't take this article seriously.
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Old 09-05-2020, 05:14 PM   #6
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In looking at it again - The spending number they say you need in California isn't that far off from what our family of 4 spends...
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Old 09-05-2020, 05:16 PM   #7
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I used to look at these type articles. The numbers can easily be off by 2 or 3x depending on their location within a state. It is tough to use a state wide average when there can be a diverse range within a state. Just as an example, an average home in southern Illinois might cost 40% of the same home in the Chicago burbs, not to mention the taxes. I will give them credit for mentioning the average cost, even though they don't break out the details of those costs or provide a calculator for doing so. As a result, I think it gives a false sense of either despair or security, depending on which side of the savings one is on. A lot more data and research is required for FIRE safely than this click-bait article.
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Old 09-05-2020, 05:28 PM   #8
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Not sure how relevant this article is.

No mention of how much the SWR rate is? No mention of income sources? No mention of what the expected rate of return on the savings is? Just a flat number of what savings is required and then suggesting a call to a financial advisor!

I can't take this article seriously.
The amount they say you need to save is 20x the annual expenses, regardless of the average retirement age for that state. So their plan starts everyone off at a 5% withdrawal rate.

As a family of 2, we spend quite a bit less than the estimated needs for CA, and I know my retired BIL/SIL who live in a more remote area of the state spend a lot less than we do.
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Old 09-05-2020, 05:36 PM   #9
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The 5% WR is probably ok for folks retiring in their mid 60's.... which is what most of the averages show.
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Old 09-05-2020, 05:41 PM   #10
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I’d kind of like to call this article ridiculous. Who defines “comfortable”? California is a big state...where are you retiring in California? ...it really makes a huge difference. Is this household savings, or individual savings? Is your life expectancy in DC 4 years longer than in AZ? ...the total requirement was simply the “expenses” X 20.

The sad part? There will be folks out there who believe this nonsense, and think they can never retire. And, there will be folks out there who actually DO have the amounts listed, and go out and retire without actually knowing what they’re spending, don’t adjust, and run out of assets in five years.
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Old 09-05-2020, 06:09 PM   #11
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I used to look at these type articles. The numbers can easily be off by 2 or 3x depending on their location within a state.
And spending habits. Our 401K adviser said we needed more money because we'd develop all these expensive hobbies in retirement, which of course we didn't. It was ironic because at the time he had a couple of kids and lived in a modestly priced, middle class suburb much cheaper than where we live, (which he raved about how great it was), and wasn't spending his vacations at $1K a night Paris hotels. So we needed much more and to be able to fund expensive hobbies and luxury vacations but he was perfectly happy working full-time and living in a middle class neighborhood.

I suspect many of these articles, beside being click bait, and some of the financial advisers, just have a vested in interest in keeping people working longer so they can collect their fees and admin costs from the client funds. We definitely got the vibe our 401K guy was more concerned about funding his retirement than ours.
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Old 09-05-2020, 06:40 PM   #12
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According to that article

Quote:
Maine
Average retirement age: 63

Annual cost of a comfortable retirement: $72,579.03

Retirement savings needed: $1,451,580.60
Maine has the highest percentage of retirees in the nation.
I retired at 42, and I have been retired for 19 years at this point.
To say that it takes $73K to retire here is pure fantasy.
My pension is less than $19k a year.
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Old 09-05-2020, 07:08 PM   #13
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They got my spending number in NC as well for $58K, which includes taxes and yearly travel to Europe. Well, mine could go lower to $57K and still be fine.

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In looking at it again - The spending number they say you need in California isn't that far off from what our family of 4 spends...
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Old 09-06-2020, 05:14 AM   #14
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There are too many unknowns buried within the article. Biggest "hole" I see (because it applies to me.) What if one already owns their residence? What do they "spend" per year on housing? Condos in our bldg rent for about $2500/mo. but we only pay HOA dues of about $700 plus internal maintenance (plumbing leaks, replacing screens, curtains, etc. etc.)

I assure you that I do not NEED $118K per year to live in Hawaii. If I spend that much (or more) it's because I choose to give money to kids, charity, etc. and/or maintain a second residence year round on the mainland, etc., etc.

I'm guessing DW and I could live comfortably on half the $118K though it would change several things we splurge on now (as alluded to above.) Of course, YMMV.
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Old 09-06-2020, 05:42 AM   #15
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What one spends in Palm Beach/Naples, etc in Florida, will most likely be quite higher than one spends living in the northern interior in the state.
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Old 09-06-2020, 07:22 AM   #16
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I thought that the fact that none of the numbers were under $50k (Before or AFTER Taxes ?) a year income for anyone was optimistic. Many do not make that when working let alone when retired.

Also, assuming the average couple gets about ~$3k in SS/Pensions at retirement. That is ~$36k before taxes. So the shortfall is only $14k. One need a lot less that $1m to offset that for say 25 years, ~$350k without any return on the capital ($14k x 25 years).
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Old 09-06-2020, 08:54 AM   #17
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Pretty useless as COL varies considerably by state, even parts of metro areas. For example San Francisco’s COL is 162% higher than Bakersfield - so what does a CA COL mean? Where I live there are neighborhoods with median prices 3X our neighborhood, and undoubtedly there are some that are 1/3X...
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Old 09-06-2020, 11:20 AM   #18
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There are too many unknowns buried within the article. Biggest "hole" I see (because it applies to me.) What if one already owns their residence? What do they "spend" per year on housing? Condos in our bldg rent for about $2500/mo. but we only pay HOA dues of about $700 plus internal maintenance (plumbing leaks, replacing screens, curtains, etc. etc.)

The same housing situation applies to California. Many of the neighborhoods with homes now over $1M have original residents who might have paid $40K for their now mortgage free homes and have $1K in property taxes because of Prop 13. That is a big difference between a newer buyer with a $12K property tax bill and an $800K mortgage but comes out to the same house in the same neighborhood.


A theoretical low income retiree here could have a $1M home without a mortgage, $1K in property taxes, qualify for Medicare and Medicaid, SNAP for groceries, have a senior club membership with free activities, transportation and lunches and a library card with free movie streaming, passes to over 50, music downloads and more. That would be a pretty decent life on a small retirement income.
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Old 09-07-2020, 12:31 AM   #19
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Basically they take the cost of living (as they have defined it for each state) then multiple it by 20 to come with their numbers. It is amusing to me that they have to the penny like you couldn't retire if you have one cent less.

The other thing is that assumes that no one ever gets SS or pension. While many early retirees may not have it immediately on retirement, most will eventually have one or the other (or both).

I look at the cost of living for a comfortable retirement in my state and DH and I's combined SS almost covers it off the top. Of course, eventually one of us will pass on and that SS will divide in half.

But, wait. Now that I look at it these seems to cover retirement for one person in a household. It doesn't seem to address if there are 2 people. So is it double required for 2 people.

The whole thing is ridiculous. Most people get SS and for most people it actually covers a substantial part of their spending. Most people -- even most couples -- don't have over a million dollars. I know so many people who are completely content with retirement who have far less than that. It really just depends on circumstances.
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Old 09-07-2020, 08:22 AM   #20
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I agree, any article that uses statewide averages can be misleading. However it is funny how my budget is pretty close to what it say OH annual cost needs to have. I am actually a little lower, but like was mentioned, not having any mortgage is a big factor.
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