Only need $207,000 to retire at full retirement age?

[2HOTinPHX]

https://youtu.be/cJ64EhllTog

Watch a lot of this guys videos. Interesting info but hard for me to follow sometimes. Does his math seem right here? Is he missing anything in his calculations?

 

[RxMan]

The big assumption I noticed from the video was a 5% withdrawal rate for the nest egg used to make up the difference between SS and the funds needed every month. I’m not sure I’d be comfortable with that high of a withdrawal rate but I guess it depends on how old you are and what is your risk tolerance related to the likelihood of running out of money.

 

[2HOTinPHX]

On some of his other videos he talks about most people not living as long as a lot of what we're told to plan for...perhaps that's why the higher withdrawal rate?

 

[2HOTinPHX]

https://youtu.be/rjiqIQ0bnNM
Here talks about not needing a million to retire on.

 

[jazz4cash]

It looks like gross income is 5k/ mo and take home is 4.1k with 5% saving plus fica and Fed withholding. So if you are in a no tax state with 60k gross income, the math looks right.

 

[Surewhitey]

I hear bare bones #'s in addition to taking SS. If you go early like most here, you have many gap years to account for until 70 (our goal). That's 19 years from now for me.

If you live on $36k, you're not living in my world... We are frugal and spend $50k, albeit inclusive of travel...everything. Our one caveat is we get health insurance for practically free... Big one.

 

[pb4uski]

Below are all for a married couple and assumes all savings are tax-deferred. If your income is $60k and you save 5%/$2,500 in tax-deferred savings, then your take home pay in a no tax state would be $49,318.

SS normally replaces 40% of income, so that would be $24k a year, so you would need $25,563 a year to replicate $49,318 with those numbers your federal tax would be negligible ($245, so you would have $49,318 available for spending).

The present value of $25,563 a year for 30 years at a 3% real disocunt rate (5% nominal return less 2% inflation) is $425k... so if you had $425k of tax-deferred savings and earned 5% you could have $25,563 a year of inflation adjusted withdrawals for 30 years.

So $207k seems a bit low to me by quite a bit.

 

[GravitySucks]

Considering the median 70 year old has a household net worth of close to that number it must be doable.

 

[Music Lover]

If you live on $36k, you're not living in my world... We are frugal and spend $50k, albeit inclusive of travel...everything. Our one caveat is we get health insurance for practically free... Big one.

There are a lot of people that life very comfortably on $36k a year, some of them are on this site. If you live in a LCOL area with a paid off house, low taxes, and inexpensive health insurance it's fairly easy.

 

[CRLLS]

I think his quick assumption at the start is off target. He is using 60% of gross pay as the monthly needs in retirement. It may be true for someone who is saving a lot during their working career and does not save after retiring. Probably not true for most of the 60k/yr folk. My gut feel is that those 60k/year are trying to keep their head above water. I may be wrong.

It is a very gross assumption IMO. From there, it is hard to argue with his math. It probably doesn't apply to anyone in specific. One must use their numbers, which is why I-ORP, FireCalc, and other calculators are soooo much better to use.

 

[FANOFJESUS]

There are a lot of people that life very comfortably on $36k a year, some of them are on this site. If you live in a LCOL area with a paid off house, low taxes, and inexpensive health insurance it's fairly easy.

Very true we are on track this year to spend 19k. We are very happy at that level.

 

[FANOFJESUS]

Watch a lot of this guys videos. Interesting info but hard for me to follow sometimes. Does his math seem right here? Is he missing anything in his calculations?

I like this one on the Wellington.

 

[Sojourner]

There are a lot of people that life very comfortably on $36k a year, some of them are on this site. If you live in a LCOL area with a paid off house, low taxes, and inexpensive health insurance it's fairly easy.

Yep, my thoughts exactly. My elderly DF has lived quite happily and comfortably on basic SS and RMDs for the past 20 years. He never had more than $200k in retirement accounts (like IRAs, CDs, savings accounts, etc.). It's quite doable for those who have simple lifestyles, don't have expensive tastes or hobbies, and live in MCOL or LCOL areas.

 

[Out of Steam]

I hear bare bones #'s in addition to taking SS. If you go early like most here, you have many gap years to account for until 70 (our goal). That's 19 years from now for me.

If you live on $36k, you're not living in my world... We are frugal and spend $50k, albeit inclusive of travel...everything. Our one caveat is we get health insurance for practically free... Big one.

We're finding that our 2-5 year gap between retirement and Social Security has its challenges.

We don't think we're living lavishly, and are in a medium cost-of-living area, and still spent $70K after taxes last year.

We do have significant health care and insurance expenses, though.

 

[Out of Steam]

Yep, my thoughts exactly. My elderly DF has lived quite happily and comfortably on basic SS and RMDs for the past 20 years. He never had more than $200k in retirement accounts (like IRAs, CDs, savings accounts, etc.). It's quite doable for those who have simple lifestyles, don't have expensive tastes or hobbies, and live in MCOL or LCOL areas.

The planning concept when my parents retired in the 1980s was to be able to match your Social Security income from other sources. They met this while they both were alive, though not after my father died.

Had my mother lived to be 90 instead of dying in her early 80s, she would probably have run out of savings. Though there was no reasonable expectation she would have lived that long.

 

[Running_Man]

There is great value in what he went through for people with limited funds which shows the risk money even at those low levels could run out at age 87 taking SS at 67 but by deferring retirement money would last forever. There are literally millions of people living exactly this way in retirement.

 

[ExFlyBoy5]

I tried watching a couple of his videos but...come on, no need to YELL to get your message across. Oh, and DRIVE YOUR CAR....get off the damn phone.

 

[Music Lover]

There is great value in what he went through for people with limited funds which shows the risk money even at those low levels could run out at age 87 taking SS at 67 but by deferring retirement money would last forever. There are literally millions of people living exactly this way in retirement.

There are millions of people with limited funds who take SS or CPP early and run out of money, except for the monthly payments, so they really still have money coming every month, although perhaps not as much as they'd like.

There are also millions of people that don't make it to 87 or even 77.

And there are millions of people with limited funds that take CPP or SS early and don't run out of money regardless of how long they live.

So...it depends.

 

[NW-Bound]

I don't think my mother has much over $200k in investable assets. However, she lives in a $400k home that she owns.

Too old to travel and running out of things she needs to buy, she lives well on her SS and a small pension.

 

[jkern]

Very true we are on track this year to spend 19k. We are very happy at that level.

I'm curious how you create a standard of living on $19K/yr or even $36K/yr for that matter.

My property tax, home insurance, food, utilities, medical, dental, and transportation equal about $28K/yr.

 

[2HOTinPHX]

I'm curious how you create a standard of living on $19K/yr or even $36K/yr for that matter.

My property tax, home insurance, food, utilities, medical, dental, and transportation equal about $28K/yr.

Hello there, do you live in Castro Valley, Ca? We grew up in bay area and wifey and I owned our first 2 bed 1 bath home in Castro Valley from 1994 thru 2004. Still remember when we purchased it for 180,000 and thought WOW that's a lot of money did we just make a huge mistake.... Turned out well for as we sold it for 460,000...way more that we ever expected.
Relocated to Phoenix AZ for the half off home sale pricing ...big mistake so hot here in the summer...wish we could afford to move back but the bay area is crazy expensive now. Our little home in Castro Valley recently sold for 825,000...

https://www.redfin.com/CA/Castro-Valley/21612-Baywood-Ave-94546/home/1783178

So I would guess your property taxes are pretty high being in the bay area. Along with everything else there now be so pricey. But hey its a great place to be...enjoy it for us...LOL

 

[FANOFJESUS]

I'm curious how you create a standard of living on $19K/yr or even $36K/yr for that matter.

My property tax, home insurance, food, utilities, medical, dental, and transportation equal about $28K/yr.

I have income taxes in there to for 19k. If we were forced to we could go lower. Maybe down to 14k a year. So we still have extras in there for 19k. I am sure I could really help cut your budget if you were willing (most folks are not) Step one move out of CA.

 

[Calico]

I'm curious how you create a standard of living on $19K/yr or even $36K/yr for that matter.

My property tax, home insurance, food, utilities, medical, dental, and transportation equal about $28K/yr.

How do people do it?

1. Don't live in California
2. Don't live in California
3. Don't live in California
4. Choose a small house and pay it off (lower carrying costs)

My total costs run $24,000 per year.

One person, 1100 SF house on half an acre, MCOL, safe, beautiful area.

My annual property tax is $1,445.
My annual homeowner's insurance is $702.
My annual utilities are $6,000. (elec, water, gas, trash service, yard service)
My annual grocery bill is $4,200.

 

[2HOTinPHX]

How do people do it?

1. Don't live in California
2. Don't live in California
3. Don't live in California
4. Choose a small house and pay it off (lower carrying costs)

My total costs run $24,000 per year.

One person, 1100 SF house on half an acre, MCOL, safe, beautiful area.

My annual property tax is $1,445.
My annual homeowner's insurance is $702.
My annual utilities are $6,000. (elec, water, gas, trash service, yard service)
My annual grocery bill is $4,200.

Ok, I am in....where would find such a safe, beautiful area? We want to eventually get out of Phoenix...too hot here in the summer....

 

[Calico]

Ok, I am in....where would find such a safe, beautiful area? We want to eventually get out of Phoenix...too hot here in the summer....

RTP area, NC.

Note: summers here can be warm and sticky, though probably not as warm as Phoenix.