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

[Fedup]

Sorry to hear that. Probably kind of embarrassing for his family.

No the whole family is vegetarian. And my other BIL from my husband's side developed diabetes because of his vegetarian diet.

 

[razztazz]

It is very tempting to answer that question at length, but the protocols about political discussions on this board are chilling. So instead I'll mention the parable about grasshoppers and ants and will worry aloud that grasshoppers who vote outnumber ants who vote. I fear, as Bridgewater does, that political and social conflict, currently very high, will increase significantly as the entitlement crisis deepens.

If things keep going in their current direction we have nothing to fear

 

[Fedup]

Was just talking about this the other day. Everyone I know is lower middle class working people. None have anywhere near $600K and very few if any have pensions or healthcare in retirement. How are they going to make it?

Interesting. In my circle, most people have a lot more and they are still working. They will retire in the earliest is 65, some will retire at 70. Even my old secretary has this at least much in pension, a house paid off and she still doesn't plan to retire. She is already 66 and single.

 

[Fermion]

Fedup, do you think being in SoCal might have something to do with the people in your circle?

 

[Scuba]

Was just talking about this the other day. Everyone I know is lower middle class working people. None have anywhere near $600K and very few if any have pensions or healthcare in retirement. How are they going to make it?

They'll work until they can't anymore and then they'll live as best they can on what they have. Maybe it won't be too drastic of a lifestyle difference vs when they were working.

I think much of the divergence of opinions on this thread can be traced back to what lifestyle one was accustomed to pre-ER. If one lived on $50K or less pre-ER, then it's easy to envision how the OP could be comfortable on $3,900/month. If one lives in a HCOL area in a nice home with high property and income taxes, and is accustomed to dining out frequently at nice places, eating high-end food at home, getting great seats at live performances, and traveling globally to somewhat costly destinations, $3,900 sounds like far less than required to provide the desired lifestyle.

It also depends how risk averse one is. As others have said, healthcare costs and events are a major uncertainty. Many of us feel the need to have a substantial cushion set aside for increasing health insurance premiums, copays, and/or LTC. Spending a portfolio of any size down to zero and then relying on SS & Medicare to cover this is beyond many people's risk tolerance.

YMMV

 

[Fedup]

Fedup, do you think being in SoCal might have something to do with the people in your circle?

Yes, but they all have 1-2 houses paid off. So it's not the high cost of living. Except my secretary has a house paid off in Hawaii.
But they all know, the minute they quit from their job, there is no going back. Aka no more money.

For example, my sister just had a low non impact car accident that cost her $3500, out of pocket for her is $1000 plus money for car rental. This is a problem due to aging, her eyes are getting bad. Where would that money come from if she is not working?

 

[rothlev]

They'll work until they can't anymore and then they'll live as best they can on what they have. Maybe it won't be too drastic of a lifestyle difference vs when they were working.

I think much of the divergence of opinions on this thread can be traced back to what lifestyle one was accustomed to pre-ER. If one lived on $50K or less pre-ER, then it's easy to envision how the OP could be comfortable on $3,900/month. If one lives in a HCOL area in a nice home with high property and income taxes, and is accustomed to dining out frequently at nice places, eating high-end food at home, getting great seats at live performances, and traveling globally to somewhat costly destinations, $3,900 sounds like far less than required to provide the desired lifestyle.

It also depends how risk averse one is. As others have said, healthcare costs and events are a major uncertainty. Many of us feel the need to have a substantial cushion set aside for increasing health insurance premiums, copays, and/or LTC. Spending a portfolio of any size down to zero and then relying on SS & Medicare to cover this is beyond many people's risk tolerance.

YMMV

I agree -

Also - expenses so totally change over time.

eg: when working our income combined around 130k - two children to support, 25% tax bracket $1000 mortgage payment - 7.5% FICA 10 - 15% deferred income

Today - yes, way less income - but, no FICA, 15% tax bracket, no children, no mortgage, no deferred income

= way more spendable income

 

[Fedup]

I think it's a disservice to suggest that people who need higher stash often live on the high hog. Far from it. My sister has always LBYM, invested 100% in stocks. Have not had a real vacation for at least 10-15 years. Buy clothes second hand from a Goodwill.

 

[Fermion]

I think it's a disservice to suggest that people who need higher stash often live on the high hog. Far from it. My sister has always LBYM, invested 100% in stocks. Have not had a real vacation for at least 10-15 years. Buy clothes second hand from a Goodwill.

It sounds like your sister could easily live on $3900 a month.

 

[Fedup]

It sounds like your sister could easily live on $3900 a month.

Yes, but she doesn't get $3900 a month if she retires now. Last she told me her running budget is $6000 a month. I don't know why so high. But she should be alright if she sells one of her homes.

 

[Bestwifeever]

This has been a fun thread to read.


To the OP's original question (let me see if the basic premise is right - now 37 and hypothesizing that a $600K nut in 13 years is enough for two to RE - yes?):


I say that is a good target - hopefully realistic for you. Maybe you can even better that amount! So save like a mofo and see how things look at 50.


Having realistic goals is important. You can see from the range of responses that you are likely not terribly far off in terms of balancing RE time vs. financial risk.

We don't have to worry too much about the OP--his hypothetical situation of $600K to generate $3900 a month starting at age 50 probably isn't his reality. From his intro "Hi I Am" post:

So far I saved about 330K in cash and 100k in 401k accounts. I am in the bay area, make about 230k and save like 40k in cash and 27k in 401k annually. Right now it is about 70k per year but in the future with a pending promotion and some salary growth I will be able to save more. I hope I can retire on 1.5 mill in 10 years or with a 2 mill in 15 years if everything goes well. right now i absolutely hate monday mornings and going to work (nothing wrong with my work) so doing it for next 15 years will be hard. i might even retire early from a FTE once I make 1 mill and then do contract jobs for 7 months a year

 

[Lawrencewendall]

Yes, but she doesn't get $3900 a month if she retires now. Last she told me her running budget is $6000 a month. I don't know why so high. But she should be alright if she sells one of her homes.

It's gotta be going somewhere.

 

[Fedup]

It's gotta be going somewhere.

I suspect, she is paying off high credit card debt, debt that she incurred for her dead boyfriend. Somehow he sweet talked her into signing these contracts for his business. Now that he is dead. She is on the hooks. But she never spent on herself.

 

[David1961]

It is very tempting to answer that question at length, but the protocols about political discussions on this board are chilling. So instead I'll mention the parable about grasshoppers and ants and will worry aloud that grasshoppers who vote outnumber ants who vote. I fear, as Bridgewater does, that political and social conflict, currently very high, will increase significantly as the entitlement crisis deepens.

Just watch out for those anteaters! [emoji3]

 

[pb4uski]

.....The second issue is what happens if OP or spouse dies at age 62 or 67? OP's income would be reduced by 1/3rd and spouse's by 2/3rds at 62. ...

Actually, if the OP dies the spouse would receive a total equal to the OP's SS benefit.... so if either spouse dies then the household income will go down by 1/3rd. But I agree that wheter or not the surviving spouse could live on $2,600/month is a legit issue.

 

[rayinpenn]

They'll work until they can't anymore and then they'll live as best they can on what they have. Maybe it won't be too drastic of a lifestyle difference vs when they were working.

They also may be a burden on their children, lessening their children's saving furthering the cycle.

It isn't what you make it is what you manage to hang on to...

 

[LRDave]

The thing Bogle said about markets pertains equally to politics relative to the future: "Nobody knows nothin'."

 

[Free bird]

I don't know about other towns but where I live the unemployment rate is much lower than the national average. Yet there are more panhandlers stationed at the intersections near Walmart Home depot & fast foods restaurants. The cardboard signs say stranded need gas or hungry need money for food & other messages. Most often children or dogs are on display which increases donations I'm sure. It is people are not physically disabled or mentally deficient. They can count & have command of the English language. They know how to budget their income because they have money for beer cigarettes cell phones some have cars that appear to be more consistent with a middle class income level. The businesses around where they panhandle are desperate for w*rkers as they consistently have hiring signs displayed. I've heard reports they donations of dog food. They don't want you to put gas in their car. I was having a street taco at one of the many taco trucks in our area & one of the panhandlers was eating too. I asked him if he was on lunch. No I'm homeless & unemployed. He had a j*b for little while but he didn't like the commute. He had cigars & offered me a beer. Truth is anyone who isn't really doesn't want to. He gets his medical his dental & there's no alarm clocks in his world. He can't get financially wiped out by a catastrophic illness since there's no accounts or property to pilfer. Is it ideal? No. But it has its advantages. He didn't look skinny & had lots of energy. He didn't smell. Needed a shave but so did I. I'm off in the weeds I know. But since we're waxing philosophical. I think his magic number was $60.

 

[Tailgate]

Hell, I can afford to buy a $60 annuity... Every day is Taco Tuesday!

 

[aaronc879]

I would retire today if I had $600K but not many 50 year olds would be satisfied with the lifestyle at that would give. I would if it meant no more work but that's just me.

 

[RunningBum]

I don't know about other towns but where I live the unemployment rate is much lower than the national average. Yet there are more panhandlers stationed at the intersections near Walmart Home depot & fast foods restaurants. The cardboard signs say stranded need gas or hungry need money for food & other messages. Most often children or dogs are on display which increases donations I'm sure. It is people are not physically disabled or mentally deficient. They can count & have command of the English language. They know how to budget their income because they have money for beer cigarettes cell phones some have cars that appear to be more consistent with a middle class income level. The businesses around where they panhandle are desperate for w*rkers as they consistently have hiring signs displayed. I've heard reports they donations of dog food. They don't want you to put gas in their car. I was having a street taco at one of the many taco trucks in our area & one of the panhandlers was eating too. I asked him if he was on lunch. No I'm homeless & unemployed. He had a j*b for little while but he didn't like the commute. He had cigars & offered me a beer. Truth is anyone who isn't really doesn't want to. He gets his medical his dental & there's no alarm clocks in his world. He can't get financially wiped out by a catastrophic illness since there's no accounts or property to pilfer. Is it ideal? No. But it has its advantages. He didn't look skinny & had lots of energy. He didn't smell. Needed a shave but so did I. I'm off in the weeds I know. But since we're waxing philosophical. I think his magic number was $60.

I'm just going to say that panhandling for hours a day isn't what I call retirement, and I'll leave you in the weeds.

 

[Free bird]

What do you have against weeds?

 

[RobLJ]

Yes--the amount mentioned is pretty much our lowend survival budget assuming everything goes wrong that can go wrong (We have a paid-off house and vehicles and I have health coverage until I qualify for Medicare, and would pay 300/month for DW's health coverage.)
To be sure, the actual retirement is figured on a little more than twice the monthly figure and investments are close to 3x. But it is doable.

It's interesting how the simplistic premise of this thread digs at the heart of what a lot of us here consider in securing out future. The OP certainly missed such considerations as medical (what a lot of my otherwise well-prepared acquaintances are struggling with) and contingencies, but living on $3700/mo is not so unreasonable. I periodically re-assess our mandatory living expenses, and I come up well below that number even for non-nominal scenarios.

That's the most significant thing I came to when I started actually planning out our retirement, the distinction between mandatory and discretionary expenses. Now, my definition of "mandatory" is more along the lines of "three hots and a cot" (yes, military service can really lower your expectations ).

I think the most important aspect of this perspective has been to plan for certain things while income is in-coming, particularly a paid-off, well-repaired house in a reasonable cost-of-living area, and health care that doesn't break the bank (well, that was more at the expense of 20 years and a couple of hours of indentured service to the U.S. Air Force).

Frankly, in spite of all the things that it's missing, I'm praying our kids at very least have a plan along the OP's lines in mind.

 

[Scuba]

I agree -



Also - expenses so totally change over time.



eg: when working our income combined around 130k - two children to support, 25% tax bracket $1000 mortgage payment - 7.5% FICA 10 - 15% deferred income



Today - yes, way less income - but, no FICA, 15% tax bracket, no children, no mortgage, no deferred income



= way more spendable income

Good point!

 

[Free bird]

The retirement industry loves people who think they'll need 80-100% of their pre retirement income.