Anyone Comfortably Retired With Retirement Savings Under the Million Mark?

[nancyfrank232]

This. I've learned that it's not what you make so much as what you spend.

If you earn $1M a year but spend $1.1M, you're not doing so well. If you earn $100k a year, but spend $80k, you're going to be in good shape.

And if you earn $1m a year, but spend $80k, you’re in excellent shape and a good candidate for “Burn that dough!”

 

[imoldernu]

Have any of you been able to make it without loads of savings?

Too long a read, but we've been retired for (now) 30+ years... and with less than $500K... No pension. Here's the full story:

http://www.early-retirement.org/forums/f27/sharing-23-years-of-frugal-retirement-62251.html

In fact... we still have almost as much as we had when we retired. In the thread, I tried to put in dollar amounts that sustained us. Now @ age 84, we feel safe to age 93, and now longer even budget our income/outgo.

 

[Ed_The_Gypsy]

It looks like you are looking at a normal retirement age scenario: pension, SS, 'divs' and w/d from IRA. Therefore, Not early retirement.

Same as us, so: yes. We do it now. Key point: we waited to take SS and we maxed it. We get the maximum household amount. We have few debts. We can live off SS. We have tiny defined benefit pensions. Our only significant holdings are less than $500k in Roths and a small IRA (RMDs apply to us). We take 3 to 4% from the big Roth and small IRA annually and they are still growing. We pay no income taxes.

We are comfortable. We travel a bit and enjoy our hobbies.

Yes, it can be done. Your circumstances may be different than ours so maybe you can or maybe you can't.

 

[Teacher Terry]

As long as your expenses aren’t more than your income you should be fine.

 

[marko]

Depending upon the income produced, your pension and two SS payments could have the effective net of 1 or 2 million in 'phantom' money.

Two good SS payments of $20K each are worth about $1MM alone.

 

[ExFlyBoy5]

I retired almost 5 years ago with a military pension, a little dividend income and a rental property income. NW was no where near $1M and we have lived pretty well on the pension alone. Sold rental property and have watched savings steadily increase...to the point of being over $1M. But as others have pointed out, there are lots of variables, so what works for me would not work for most others.

 

[akck]

We started retirement with < $500k in savings, but with pensions, SS and double coverage on health insurance. Initial plan called for us to hit savings hard the first few years, but as the income streams came online, they would cover monthly expenses. Also, once the mortgage is paid off, we’ll be saving. At least that’s the plan.

This year, monthly income covers expenses, except for travel. Since we haven’t moved, additional income streams and expense reductions, not in our original plan came online causing us to hit this milestone sooner. Our only plan change is that we’re traveling more now, so more funds are coming from savings than planned. Our thoughts are to travel while we’re able to and aging bodies will slow it down later (declining savings also, but not likely).

 

[pacergal]

As others have stated, this is "early retirement" forum, so most retired before 62-65.

We have two pensions that give us more than we had in "take home" pay while working, so our budget is fine. We do have a good savings, but not the millions that several folks have. We retired at age 60, so early to us!

IF your spending is less than your income, you will be OK.

 

[Alderman]

Under a million when I pulled the plug last year.
Pension and Ssi has covered the necessities easily.
Living a simple life and loving the retirement.

 

[Katsmeow]

My mother died at 94 last year. She and my dad had less than 1 million and no pension. He died almost 20 years ago and she was a widow. Her SS was low and her income the last several years was in the $20k to $25k range. Despite that over the last 10 years of her life she saved an average for $5k a year. Some years she saved more and some years she saved nothing (if she had major house expense or needed lots of dental). Of course, it helped that her house was paid for.

Many would say they wouldn't want to live like she lived. She was happy and could have spent more (see that saving $5k a year part) but didn't have other things she wanted to spend on. Even when my dad was alive and she was in her 60s and 70s they were frugal.

But, it depends a lot on how you plan to spend and what you like to do.

 

[ER2B]

My aunt had 350k in a taxable account, a paid for house in the San Francisco area, SS and colad pension of 2 k/month. She died at 94 yo. She lived well with this income until the last 5 years of life when she needed LTC at home. Her monthly cost was 13.2k/month. She burned through her 350k quickly and half of a 500k proceeds from a reverse mortgage. It helped that she had medicare and a low property tax.

 

[Rianne]

My aunt had 350k in a taxable account, a paid for house in the San Francisco area, SS and colad pension of 2 k/month. She died at 94 yo. She lived well with this income until the last 5 years of life when she needed LTC at home. Her monthly cost was 13.2k/month. She burned through her 350k quickly and half of a 500k proceeds from a reverse mortgage. It helped that she had medicare and a low property tax.

Does the LTC facility use her pension and SS for payment as well as her savings?

 

[ER2B]

Does the LTC facility use her pension and SS for payment as well as her savings?

No. She was writing a check to the nursing agency every week using her taxable savings. She was at home with 24 hour nursing care. Her SS and pension were used for personal and household expenses. I offered to buy her house at 70% of market value and let her stay in the house. But she insisted on the RM.

 

[dirtbiker]

+1.

The equation is pretty simple: income (from all sources) minus expenses (all).

There is a cabal out there (mostly of FA's and there ilk) that say crap like, "You need 25X of this," or "You need 80-100% of that." That rhetoric is just horse sh!t.

FWIW - we have a modest IRA. Well under a mil. But also a couple of pensions, SS, and quality, LC health care. Now retired a couple of years, we are enjoying a slightly better standard of living than when I was w*rking. I wake up every day, pinch myself to make sure its real. Then, I offer a prayer of thanks for the life that we've been blessed with.

The 25x equates to a 4% WR (can also look at it as dividing your retirement savings by 25 to determine the 4% WR), which is widely regarded as a safe long term strategy. And the 80-100% is used as a long term estimate of the percent of your working income you'll need in retirement. Obviously it varies from person to person, but I'd say it's far from horse sh*t. Why the hardline negative stance on this?

 

[wmc1000]

At retirement our "nest egg" was about 10x expenses. While we do track expenses the number I watch is what is our 401k balance relative to retirement day. Initial planning showed we "had enough", (less than $500,000 counting 401k and brokerage accounts), to not run out even with growth at 50% of estimated inflation. 3 years into retirement our 401k balance stands about 20% higher than when we retired so we feel we can withstand a downturn fairly well as we don't anticipate having to touch the 401k prior to RMD's starting and most likely only for LTC needs for 1 of us.

 

[Tracer]

Got close to a million but not quite there. Bought a couple of SPIAs with some of it that gives me a monthly income for life. The annuity payments are mostly tax free because the SPIAs were purchased with after tax funds. For now, the annuity payments and SS cover my basic expenses. I just started pulling my RMDs also. My current income plus what's left in my IRAs and other investments will take me to age 100 if markets are "significantly below average" over that time according to Fidelity's retirement planner. If average or better, I'm sure I'll be doing more traveling. Having zero debt at retirement made all the difference.

 

[indiajust]

Pensions are just a promise, the IRA is a fact. All my corporate masters have gone bankrupt and disappeared. Fortunately I did rollovers and invested. I had just over 110k in my IRA when it seems 2008 retired me. I'm up to almost 500k now in the Roth with another 8-10 years to wait. I've been living on less than 25k a year since the GFC. At this point it is just habit. If you are frugal and exercise and read and cook, retirement is just another day.

 

[Alexi]

I retired early comfortably on a lot less. Fast forward to today, I am almost at that million mark. Single, no debt and original nest egg continues to grow.

 

[Dtail]

Pensions are just a promise, the IRA is a fact. All my corporate masters have gone bankrupt and disappeared. Fortunately I did rollovers and invested. I had just over 110k in my IRA when it seems 2008 retired me. I'm up to almost 500k now in the Roth with another 8-10 years to wait. I've been living on less than 25k a year since the GFC. At this point it is just habit. If you are frugal and exercise and read and cook, retirement is just another day.

Yep, that is why I will take my pension at 65 y.o. as a lump sum.
Since it is a smallish number, it will work out nice for that one year as a TIRA distribution substitute.

 

[RobLJ]

Neither I nor DW have pensions, so it's almost all in 401k/403b; a good pension can equate to a lot in a 401K (rule of thumb is to multiply the yearly pension by 20; perhaps 25 if it has COL increases.)


And to quote Micawber (in Dickens's David Copperfield):
"Annual income twenty pounds, annual expenditure nineteen pounds nineteen shillings and six pence, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery." (The great comic character Micawber was based on Dickens's father, John Dickens, who for a time was, like Micawber, imprisoned in the Fleet Street debtors prison along with the rest of the family, while Dickens at age 12 worked pasting labels on boot blacking jars in a factory. Dickens reworked this part of his past again, more darkly, in Little Dorritt, this time based on a young heroine who is born in a debtors prison. Lecture over!)

 

[LudditeAndroid]

I retired (sort of*) at age 39 with well under a million, but I also have very low expenses, of which healthcare is almost half because I have too *low* of income to get an ACA plan yet too many assets for Medicaid.


As other people have said, as long as your expenses are low enough, "one million dollars" isn't some sort of magic number you have to hang your hat on.


[* - I say "sort of" because I still choose to work for a family member on rare occasions.]

 

[Old Microbiologist]

As most have said it depends on lifestyle. Having no debts, living in a paid off house, where you live, all contribute to determining how you will live in retirement. We were like you and had several pensions and social security which we took early. We had roughly $500k in IRA's and brokerage accounts and like others that has grown since. The plan was to live on the pensions siphoning off what we need extra out of the cash and brokerage accounts. We spent about $400k to get moved to Europe (including shipping all household goods and a car) and purchase a house including major renovations. That money came out of the equity from the sale of our 4 houses we owned in Northern Virginia and North Carolina. Other than the major expenses at the outset we have lived 10 years now and haven't touched our savings at all. Because we live in a relatively low cost area (for Europe) our expenses are also relatively low. We do not have medical insurance at all and pay cash for all medical expenses which when you add it up is still less than the Part B costs for Medicare required by the military to continue military health care coverage. From what I read medical expenses in the US are now a major expense item where for us it is less than $200 a month (including several major medical emergencies). Our cash reserves are for if and when some medical catastrophe occurs. As we age we see these costs slowly rising but not enough to justify purchasing medical insurance or even paying the Part B premium so we could get the very bad Tricare Overseas plan (60% coverage with pre-payment and annual premiums). So, medical is a major expense which you can't predict and requires a buffer. We have not touched our reserves at all in the 10 years we have been retired. In fact because our living expenses are around $2000 a month we are building up a rather large cash account in our bank accounts. It is, in fact, a problem as I have my military pension coming to our bank here in Hungary but the US gets wonky if you have an overseas account that goes over $10k and triggers all kinds of reports and issues which are tar babies with the IRS and FBI which if you fail to file all required reports (under FATCA) gets you a stiff 50% of everything you own penalty. So, we are extremely careful to keep that account under $10k and cash it out when necessary which we keep in a safe and use for travel. We also use that account to pay off our credit card we use to make all payments here with (getting a minimum 1% cash back in the process). We can pay all utilities etc. here by credit card at the post office. So, for us, and probably all other Americans living outside the US balancing FATCA requirements is a major problem. Personally, I am pushing SWMBO to move the military pension back to our US account (Credit Union) and just transfer cash as necessary here using a REVULO account but she is happy with the status quo. She hates bank transfer fees. She also loves this kind of stuff and is the kind of person that enjoys doing taxes.

 

[Tyrone]

Yup. Pulled the plug for the most part (work less than 5 hours per week with summers off) this past summer at age 52. 700k in retirement accounts with 250k of that available due that amount in a 457b plan. That, plus wife's pension of 48k/year (COLA with health care for both of us for life) made this a possibility. House not paid off, but have about 125k in equity. Without pension, this would not be a possibility.

 

[SonofCohoes]

When reading these boards, so many people have retirement savings in the millions.
We have less than 500K - we will have a pension, social security, dividends and some withdrawal from IRA - but not what I read on here.

Have any of you been able to make it without loads of savings?

Yes, pension, rental income, ss and minimal withdrawals from ira keeps us in the 12% bracket. We’re not world travelers so we’re just fine.

I suppose if you count the equity in the rentals we’re darn close but not over.

 

[Red Badger]

The 25x equates to a 4% WR (can also look at it as dividing your retirement savings by 25 to determine the 4% WR), which is widely regarded as a safe long term strategy. And the 80-100% is used as a long term estimate of the percent of your working income you'll need in retirement. Obviously it varies from person to person, but I'd say it's far from horse sh*t. Why the hardline negative stance on this?

You answered your own question.

There are exhaustive posts on this forum calling out the fact that its all about the spending. Income has zip to do with retirement success. A retiree can be gold by these two benchmarks, but if the spending exceeds the income stream, what the hell good are these rules?

Also, there are no shortage of folks in the money management (FA's) arena that espouse these "rules of dung." Part of the reason is that these FA's are rewarded handsomely in an AUM structure if they encourage customers to amass a portfolio that may be significantly larger than required.

So, some may find this sort of counsel as helpful. I just consider it shortsighted at best, and quite dangerous at worst. Had I followed either premise, I'd still be w*rking, but I retired a couple years ago without coming anywhere near these "common sense" rules.

About the hard line stance; when it come to really, really important stuff (like retirement success), I serve it up straight, no chaser.