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

[firenow]

This is for a family of two.

if you can accumulate around 500-600K by age 50, that will help you survive for 17 years till age 67. From 67 you can start taking your full SS benefit; You get your amount (say 2600) and your non-working spouse gets 50% of that (1300) totaling 3900 per month. Since the medicare will take of your healthcare costs, 3900 will be good enough to survive for the rest of your life.

So the absolute minimum you need to save by 50 to retire safely is 600K. For each later year you retire, you can reduce the 600K by 50K / year. Does this sound reasonable? Not saying we can retire with 600K at 50 as it depends on economy and its good to have some buffer, but if we want a number this sounds like the absolute min. needed

- Sam

 

[Lakewood90712]

" Does this sound reasonable? "

Ya, assuming this is in the US, if you plan on living in a rented trailer, minimal car expenses , minimal travel and spend down most of that 600K by age 67.

If you moved to south america, that 600K would provide a very nice lifestyle.

Your Mileage May Vary.

 

[Gumby]

1. According to FIRECalc, with a $600k starting balance and a 17 year period, you must spend less than $32,376 per year in order to have a 95% chance of success (i.e. - a positive amount in the bank at age 67 when social security kicks in). If you need more than that, your plan won't work because you'll run out of money.
2. The current maximum monthly benefit for social security is $2687 at full retirement age. That would require having paid the maximum social security for 35 years. You are unlikely to have done that if you quit working when you are only 50.
3. Medicare is not free. You need to budget for the Part B expenses.
4. Again, how much do you want to spend?. Roughly $32k per year would not even come close to what I intend to spend in retirement.

 

[Scuba]

Not even close to working for me!

 

[aja8888]

3. Medicare is not free. You need to budget for the Part B expenses.

Not only is Medicare "not free", a supplemental plan is a really good idea and can add $300/month per spouse.

Then there is Part D (drugs). If you happen to get sick, and maybe have a real "problem", your OOP could be thousands per year.

And if you need glasses, hearing aids, or dental work, this is on your nickle.

 

[Aerides]

"that will help you survive"

Who wants to just survive, barely? Sounds like a miserable way to live.

 

[Turboslacker]

Most retirees actually live this way so yes you can. Simply depends on what lifestyle you prefer. Nothing wrong with living frugal to gain freedom.

 

[firenow]

Good points on the medicare expenses. I wasn't aware of them.

Assuming a 3.4% pct return, on 600K, you would make about 1700 interest per month and rest of what you need monthly comes from the capital.

So if you spend 3900 per month, it will last for about 16.8 years. I think 3900 is a decent amount to have a comfortable living; rent of a 1 BR apt is 700$-900$ in lot of cities.

If you want to have a more lavish lifestyle that's a different point; we are talking about the absolute min. we need. If you disagree with that number, what is your number?

 

[2017ish]

For us, no way. Maybe take it times 10 for age 50. For my mom and siblings, probably? (Assuming they had such a vast sum.)

For you? That's your call.

 

[daylatedollarshort]

Beside the points others have made about heath, drug, vision, hearing aids and dental costs not covered or not fully being covered by Medicare, you can't count on being a couple forever with two SS checks. One will likely pass first and the remaining spouse could live many additional years with only the higher earner SS benefits.

 

[Lakewood90712]

I think if the OP just gives the 600K to BOHO to manage, they will do ok.

 

[aja8888]

Beside the points others have made about heath, drug, vision, hearing aids and dental costs not covered or not fully being covered by Medicare, you can't count on being a couple forever with two SS checks. One will likely pass first and the remaining spouse could live many additional years with only the higher earner SS benefits.

How true, and one that faces that existence would be better served figuring out how to get a long stint in a federal prison to cover the expanding expense. You wouldn't even need a car or have to pay insurance expenses then.

 

[Lakewood90712]

Good points on the medicare expenses. I wasn't aware of them.

Assuming a 3.4% pct return, on 600K, you would make about 1700 interest per month and rest of what you need monthly comes from the capital.

So if you spend 3900 per month, it will last for about 16.8 years. I think 3900 is a decent amount to have a comfortable living; rent of a 1 BR apt is 700$-900$ in lot of cities.

If you want to have a more lavish lifestyle that's a different point; we are talking about the absolute min. we need. If you disagree with that number, what is your number?

Need a city and state to do a more in depth s.w.a.g. Aside from rent, general c.o.l. varies a lot by location.

 

[daylatedollarshort]

Good points on the medicare expenses. I wasn't aware of them.

Assuming a 3.4% pct return, on 600K, you would make about 1700 interest per month and rest of what you need monthly comes from the capital.

So if you spend 3900 per month, it will last for about 16.8 years. I think 3900 is a decent amount to have a comfortable living; rent of a 1 BR apt is 700$-900$ in lot of cities.

If you want to have a more lavish lifestyle that's a different point; we are talking about the absolute min. we need. If you disagree with that number, what is your number?

I don't know what my minimum number would be because I've never had to test that out as a working adult. But supporting kids in college reminded me that life can be pretty fun without spending a ton of money. Housing is expensive where we live, but I have widowed friends with mortgage free homes and low property taxes under Prop 13 who live well on less than $3,900 a month.

 

[Fedup]

Go where you can find cheap housing, maybe Mexico.

 

[aja8888]

I don't know what my minimum number would be because I've never had to test that out as a working adult. But supporting kids in college reminded me that life can be pretty fun without spending a ton of money. Housing is expensive where we live, but I have widowed friends with mortgage free homes and low property taxes under Prop 13 who live well on less than $3,900 a month.

All of this sounds good and easy to do based on today's situation(s). Life is fun until you and your spouse get sick, and feeble, and maybe need assistance or have very expensive medications. And you WILL get sick and need medical care. Then $3900 a month looks like chump change. Heck one of my 72 year old wife's meds is near $4000/month, but she can only take it for two years. Then there are the 8 or so other prescriptions for her. Maybe we are unusual, but we never planned for any of these expenses.

This year I will spend well over $20K (maybe $35K) on dental expenses to repair old work.....try that on for size. One benefit is we will have a low tax bill this year.

Go ahead, plan out two decades to live on a limited fixed sum. It's not that easy.

 

[daylatedollarshort]

All of this sounds good and easy to do based on today's situation(s). Life is fun until you and your spouse get sick, and feeble, and maybe need assistance or have very expensive medications. And you WILL get sick and need medical care. Then $3900 a month looks like chump change. Heck one of my 72 year old wife's meds is near $4000/month, but she can only take it for two years. Then there are the 8 or so other prescriptions for her. Maybe we are unusual, but we never planned for any of these expenses.

This year I will spend well over $20K (maybe $35K) on dental expenses to repair old work.....try that on for size. One benefit is we will have a low tax bill this year.

Go ahead, plan out two decades to live on a limited fixed sum. It's not that easy.

I'm not on Medicare so I don't know exactly what our expenses will be or what the max could be. Your amounts seem much higher than the Fidelity estimates of $260K for a couple retiring at 65:

https://www.fidelity.com/about-fide...lth-care-costs-for-couples-in-retirement-rise

And much more than the mean amounts in the Consumer Expenditure Survey:

https://www.bls.gov/opub/btn/volume-5/spending-patterns-of-older-americans.htm

"Total annual expenditures averaged $49,279 among older households. Expenditures declined from $56,267 for the 55–64 age group to $36,673 for the 75-and-older group." That's total expenses, including heath care.

 

[unclemick]

1993 - 2004. Way less.

But that was then this is now.

heh heh heh - I was such a cheap SOB I even scared 'The Four Yorkshire-men.'

 

[Koolau]

This is for a family of two.

if you can accumulate around 500-600K by age 50, that will help you survive for 17 years till age 67. From 67 you can start taking your full SS benefit; You get your amount (say 2600) and your non-working spouse gets 50% of that (1300) totaling 3900 per month. Since the medicare will take of your healthcare costs, 3900 will be good enough to survive for the rest of your life.

So the absolute minimum you need to save by 50 to retire safely is 600K. For each later year you retire, you can reduce the 600K by 50K / year. Does this sound reasonable? Not saying we can retire with 600K at 50 as it depends on economy and its good to have some buffer, but if we want a number this sounds like the absolute min. needed

- Sam

I'm certain there are folks here who live on this amount. My biggest single concern would be health care before MC kicks in at 65.

I know this amount would not cover DW and me in the life style we have chosen. Still, with health care taken care of, we could adapt, though it would cause us to move from where we want to be to a place less desirable to us. YMMV

 

[Jerry1]

I'm struggling to find a way to live under $80K per year (about $6,700/month) and I own my home and have some retiree healthcare. Which, by the way, you did not mention health care/health insurance cost from 50-67. I understand people can live on a lot less, but when you ask for a minimum to "exist", you still need to define exist. Existing for me includes good healthcare. I may be wrong, but I imagine that people living on less than $50K/yr suffer when it comes to health care.

If you really think $3,900/month will do it, fill in the rest of the budget. You started with rent but there's a lot more than that. Also, I didn't check all the math, but it would be good to know how you expect to get a consistent 3.4% return. No market risk?

 

[DrRoy]

I'm struggling to find a way to live under $80K per year (about $6,700/month) and I own my home and have some retiree healthcare. Which, by the way, you did not mention health care/health insurance cost from 50-67. I understand people can live on a lot less, but when you ask for a minimum to "exist", you still need to define exist.

I'm not struggling over it, but I'm not interested in the bare minimum to survive. I want to be comfortable, travel, and enjoy some things. DW wouldn't have let me RE if it was to just barely survive.

 

[Free To Canoe]

This is a good framework of a plan. It is not a plan.

This is my 10th year of ER. All of the years we kept below $3900 / mo. DW and I live comfortably and do what we want to within reason. However, we own our home free and clear. Also, this annual amount does not include "one of" items like a new car. We spent $5800 for a new furnace last week. Would you have to go back to work if this happened in your plan? As many have mentioned, stuff happens. You need to have some fudge room for this unknown "stuff".

I am in a low cost of living area of the country. In the Bay Area or NJ, this is not even a framework of a plan.

To be a plan, the devil is truly in the details.

Gumby's remarks are useful.

 

[sarasota]

That is very close to my situation:
- 500k savings (been a good saver but bad investor)
- 400k paid-for house
- 62k pension starting at age 60 with another 10k starting at age 62 (reduced to 85% with lifetime spouse benefit at 100%)

The pension is significantly underfunded so that could be reduced. My plan was to retire at age 55 which is still a possibility, but more than likely I will keep working until age 60 and since i won't be retiring with the companies giving me the pension I will still need to come up with health insurance money until medicare kicks in.

 

[Scuba]

I agree with the comments re needing details and COL info for your area before making a firm assessment. However a broad rule of thumb is that if you have assets equal to ~25 times your annual cash flow needs, you are financially ready. If you feel you can live the lifestyle you want and fund healthcare costs on $3,900/month, that suggests you need about $1.2M. My "number" is much higher, but we live in So CA, and our subsistence costs are more than $3,900/month, before considering travel, dining out and other "luxuries."

 

[imoldernu]

While I try not to give advice, planning for the future has to start somewhere.

While our retirement began at age 53, and the planning did not come by way of a financial calculator, the past 28 years were based on a situation, not unlike that proposed by maceratian.

While I don't think I'd be ready to do it over again today, wouldn't trade the happiness of our years of freedom for anything we might have missed along the way.

Some of our history here:

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