Who needs a million $ cash to retire

[Music Lover]

So the short answer is NO, you can't retire EARLY on 1 mil.
Most estimators will tell you 1 mill will last around 20 yrs (depending on cost of living).
If you throw in a pension, then you adjust the no to a maybe.
And if you are just retiring at a normal age and have SS and/or a pension, then sure.
I'm 47, with no pension, no way would 1 mill suffice for 2 of us over what could be 40 yrs of retirement.

It's basic math...if your expenses are less than $25k a year (a lot of us here can say that), then 1$ million is enough to retire on. That being said, plenty of people here have higher expenses and can't retire on $1 million.

 

[NW-Bound]

I'm pretty sure solarcabin guy from youtube retired without a need for $1M -

Yes. If people are reasonably resourceful, they will find a way to live with less.

People keep talking about the homeless living on the streets, but the truth is that they all have a mental or drug problem and cannot be independent.

 

[scrabbler1]

So the short answer is NO, you can't retire EARLY on 1 mil.
Most estimators will tell you 1 mill will last around 20 yrs (depending on cost of living).
If you throw in a pension, then you adjust the no to a maybe.
And if you are just retiring at a normal age and have SS and/or a pension, then sure.
I'm 47, with no pension, no way would 1 mill suffice for 2 of us over what could be 40 yrs of retirement.

As I wrote in a post a few weeks ago earlier in this thread, I retired 10.5 years ago at age 45 with about $600k in my taxable account and $234k in an IRA I lack unfettered access to until I turn nearly 60, which is only a few years from now. That $600k, despite using only that account to fund my ER, has grown to $950k, while the IRA has more than doubled. My expenses have been between $20k and $29k per year.

Any my financial picture only improves once my "reinforcements" begin arriving. Besides the aforementioned IRA, I have a frozen company pension and SS awaiting me in my 60s.

In my original ER plan, my most challenging years were supposed to be the ones I am in now, in my mid to late 50s, using only the taxable account. I have more in my taxable account now than I did in my entire portfolio back in late 2008, so things remain quite rosy, despite upward pressure on my HI premiums, my fastest growing expense.

 

[panhead]

I keep seeing these articles and posts where the census seems to be people need 1, 2, 5 million $ cash for retirement.
Honestly 80% of the population will never get there ( i made up the 80% but you pick your own percentage).


I suspect individuals would have something like $200K plus social security and maybe work part time if needed, lucky ones (myself included) will have a pension and some passive income. We might reach a million $ cash around age 80 but I'm not waiting that long to retire....



Wondering how many on here retired with 200K single or 400K married and how your retirement is turning out. No cash millionaires need reply, jk lol

You also need to add into your nest egg the cash value of your pension. It doesn't exist in a vacuum. After you do that, you may be closer to the $1M than you think!

 

[ShokWaveRider]

As folk have mentioned it is not categoric. Different COL require different funds. If you live in a swamp in Mississippi, Louisiana or Alabama in an old or tiny house, you will need a lot less than a luxury condo in Hawaii, NY or coastal California. While some are perfectly happy to live in the swamp, others would not. What is good for the Goose may not be good for the Gander.

 

[EarlyBirdly]

3 yrs into retirement and I have more money than when I started. Started with less than 1m. No pension waiting in the wings, and no S.S. (for now).

I am already trying to figure out how to spend more, so I don't leave too much on the table...It's difficult.

I never understand people's numbers when they talk about finances. Most of my friends prove daily that they are wildly out of touch with financial reality. And, with very few exceptions, they are all generally very well educated and successful folks.

Perhaps I'm the one in living in an alternate Reality?

Whatever. Works for me....

 

[Music Lover]

As folk have mentioned it is not categoric. Different COL require different funds. If you live in a swamp in Mississippi, Louisiana or Alabama in an old or tiny house, you will need a lot less than a luxury condo in Hawaii, NY or coastal California. While some are perfectly happy to live in the swamp, others would not. What is good for the Goose may not be good for the Gander.

There are plenty of good affordable options between those two extremes.

 

[Car-Guy]

A million ain't what it once was. Thirty years ago that might have been okay but not today, from my POV. Today it's more like 2 million "cash" at age 65 and that would be my personal minimun along with SS. With a good pension, that 2 million could be reduced accordingly.

 

[ShokWaveRider]

A million ain't what it once was. Thirty years ago that might have been okay but not today, from my POV. Today it's more like 2 million "cash" at age 65 and that would be my personal minimun along with SS. With a good pension, that 2 million could be reduced accordingly.

I agree completely, with one addition; a fully paid off home, in your desired retirement location. That would allow one more choices so they would not be forced to retire in a poorer LCOL area.

 

[Car-Guy]

I agree completely, with one addition; a fully paid off home, in your desired retirement location.

Fully agree. I was talking about "2 mil in cash". Having a fully paid off home and cars (or just no debt) is a prerequisite from my POV.

 

[MarieIG]

Fully agree. I was talking about "2 mil in cash". Having a fully paid off home and cars (or just no debt) is a prerequisite from my POV.

From my POV as well; although many disagree. (Including DH who wants to take out a loan for a new vehicle just before retirement. )

 

[Audie Murphy]

Having a fully paid off home and cars (or just no debt) is a prerequisite from my POV.

This is my and DW's belief also. Our home is worth @350k. We owe @118k. It will be paid off in roughly 3 years. After that time we will pile up the house payment monthly cash into a cash on hand fund that will be available as an income supplement, if needed, after retirement. Also, selling and downsizing will also be a nice option that will free up some cash, if needed. Currently, 52 (me) and 49 with 677k in 401k/Roth’s. Retirement anywhere in late 50's to early 60's depending on assets and what feels right. To me, retirement will be going part time with more leisure and travel.

 

[youbet]

3 yrs into retirement and I have more money than when I started. Started with less than 1m. No pension waiting in the wings, and no S.S. (for now).

Be careful not to confuse retiring into an era of very favorable sequence of returns and low inflation with a hard and fast rule that says your FIRE portfolio will always grow and prices will always be relatively stable. This past decade has been great for retiring folks and many can make the same statement as you regarding having more money than when you started. But at some point things will change for a while. Your portfolio will operate at a loss (beyond your withdrawals) every year and prices will escalate surprisingly fast at the same time.

FireCalc takes low returns and high inflation into account which is why most folks, most of the time, wind up in situations where their portfolios diminish more slowly than planned or even grow since they FIRE'd based on worse case projections. But these are favorable times and nothing guarantees future results will resemble these.

 

[Teacher Terry]

I don’t know anyone retiring with 2 million plus other things mentioned.

 

[ShokWaveRider]

I don’t know anyone retiring with 2 million plus other things mentioned.

Perhaps it is your demographic. Most folk here where we live have at least $2m invested, with a home paid for, and new cars every 3 - 5 years. We have RE type meetings periodically, and while no one actually shares their total number. Most appear to be in the $3m + Home range and are very adverse to debt, although do one can assume they have none. Our immediate close friends who do share are well over $2m + No debt. We are concerned about our position sometimes (internally of course as discussed between myself and DW) as we are amongst the lower end. But that is OK. It takes all sorts. I am sure there are those in surrounding areas where we are that have less and others who have way, way more. That is how it works. I must say there are some Non RE pensioners in the area that seem to have way less, and the amount of older folk working in the local stores and FF outlets may be an indication.

 

[Perryinva]

As mentioned by others, a paid off home as a requirement depends on income sources and net amounts. I get more income from having a mortgage than not. Affords me a home that appreciates more in real dollars, and that strategy has worked very well for me for 40 years. I have over $4k/m total discretionary after all housing, healthcare, food, utilities and taxes are paid for by fixed incomes. No mortgage means nothing to me.

 

[NW-Bound]

... What is good for the Goose may not be good for the Gander.

If one cannot be a gander, he will make do as a goose.

I don’t know anyone retiring with 2 million plus other things mentioned.

I am one of the fortunate ones.

We do not share financial info, but I suspect my sister and her husband have twice our investable assets, plus they both have pensions to boot. My BIL is retired but my sister is still working. She likes her teaching job at a university too much.

Yet, very few know how much money they have, looking at their lifestyle. We are spendthrifts compared to them.

 

[Teacher Terry]

My friends are all professionals but in occupations such as teaching, social work, etc. Many have pensions. Most of us drive our cars a lot longer than 3-5 years.

 

[NW-Bound]

3 to 5-year-old cars? They have not been broken in yet. Try 10 to 20-year-old cars.

At the recent gathering, my two younger brothers talked about plan for retirement for the 1st time to me. They both plan for 62. Again, we do not share financial info, but I don't think they have as much as my sister and I do.

I could be wrong. They have larger and more expensive homes, and drive BMW SUVs, but they worked till 62 while we goofed off much earlier. It is indeed hard to leave work when you are at the top of your career, and get paid so much more than people with less experience. If we did not have the LBYM attitude and hung around people who were big spenders, I would still be working for sure.

 

[rothlev]

My friends are all professionals but in occupations such as teaching, social work, etc. Many have pensions. Most of us drive our cars a lot longer than 3-5 years.

I travel in your crowd. I think the posters here lean towards the upper class and way upper middle class. Most of the middle class and upper middle class professionals do not accumulate near the numbers mentioned here. Having a pension helps a lot. But without it they still manage a reasonable retirement.

 

[EarlyBirdly]

^^^ What's new?

A poster would state "2+2 = 4".

Another would reply "But 2x2 = 4".

Then, both maintain that they are right.

Very succinctly stated Sir!

 

[daylatedollarshort]

I travel in your crowd. I think the posters here lean towards the upper class and way upper middle class. Most of the middle class and upper middle class professionals do not accumulate near the numbers mentioned here. Having a pension helps a lot. But without it they still manage a reasonable retirement.

In our area we seemed to have unintentionally freaked out some of our friends and neighbors when we retired early. I never quite understood that because many of them are in the same kinds of careers and must have similar household incomes as we did. Most of our neighbors are in white collar professions like doctors, dentists, college professors, lawyers, nurses, small business owners, and middle managers. I think the difference is we both grew up blue collar and kept much of those spending habits even with white collar careers, so we were able to save more when we were working and are probably happy living on much less in retirement than they would be.

Most of the households I grew up around wouldn't have enough money if their cars needed new tires, let alone $1M in savings.

 

[NW-Bound]

I travel in your crowd. I think the posters here lean towards the upper class and way upper middle class. Most of the middle class and upper middle class professionals do not accumulate near the numbers mentioned here. Having a pension helps a lot. But without it they still manage a reasonable retirement.

A lot of people get their stash due to risk taking, and not because their income is beyond the norm.

For example, my brother-in-law took a big gamble when his megacorp took a stumble in the early 90s. While others moved 401k money out of company stock, he went all in! The gamble paid off, and when the company recovered he increased his stash 2x or 3x.

A friend of my younger brother was an engineer working in California, where he hung around with like-minded people and picked up on the tech trend in the 90s. He invested heavily in Qualcomm early enough to make out like bandit. And in contrast with other fools who joined in too late, he bailed out when the market went nuts in 2000. Smart guy. I think he made a 7-figure just on his after-tax investment alone, let alone what he did with his before-tax savings. And that's 20 years ago.

Me, I did not take these kinds of big risk, so do not have as much. But I still have enough. I have no pension though, so I need more than people who do.


PS. Just looked at Qualcomm stock. Share price was $4 in Jan 1999, becoming $88 in Dec 1999.

 

[ncbill]

So the short answer is NO, you can't retire EARLY on 1 mil.
Most estimators will tell you 1 mill will last around 20 yrs (depending on cost of living). If you throw in a pension, then you adjust the no to a maybe.
And if you are just retiring at a normal age and have SS and/or a pension, then sure. I'm 47, with no pension, no way would 1 mill suffice for 2 of us over what could be 40 yrs of retirement.

$1 million works just fine for those of us in MCOL/LCOL areas.

For a 40-year retirement, best to use a 3.3% "perpetual" withdrawal rate.

Here, given our family's size & ages a $33,000 mAGI would qualify us for a heavily subsidized silver-level ACA plan with a premium of ~$100/month ($2,600 max OOP)

Home maintenance (HOA fee), home & auto insurance, property taxes, utilities (electricity/natural gas/internet) run ~$900/month.

So I can see why people here report spending $30,000/year (or less) in retirement.

 

[EarlyBirdly]

Be careful not to confuse retiring into an era of very favorable sequence of returns and low inflation with a hard and fast rule that says your FIRE portfolio will always grow and prices will always be relatively stable...

UH...That would be the very definition of "Stupid" as regards finances and planning wouldn't it ?




Not to worry. All too familiar with down markets. I retired the first time in 2008 at age 49. Well, I changed that plan after almost 2 years and could have adjusted to the failing markets, but coupled with the housing market crash and an additional property dragging me down I decided to return to work in late 2010 when a great opportunity came along. I didn't have to, but it gave me the opportunity to pad the nest a bit more and also accomplish a few additional life goals.

As it now stands, I have enough cash to make it the next 6-7 years ( with 3% cola/inflation allowance factored in ).

When S.S. kicks in, less than 18 mos. from now, I will pretty much be able to live off of it alone and the above cash becomes nothing but Fun Money.

Oh, and then ...there's all those pesky IRA's, 401K's etc., etc., that just keep sitting there (growing and shrinking as they always have) until the day I feel like taking a few Bucks when the markets are ripe...And ONLY when the markets are ripe.


Basically, I am not dependent on a monthly/yearly income stream from the tax deferred portion (which is the bulk) of my investments to enjoy life in retirement. I consider them to be the " icing on the cake" if you will.


B. Man


P.S. - I'm fully aware that most folks consider Investments as primary and then S.S. etc. as the "Icing" on the cake. It seems I use a different recipe. Works for me..