Article - 35% of Millionaires won't be able to retire

[daylatedollarshort]

The Consumer Expenditure Survey has the mean 65 and over household expenses at $52K. With $40K from investment income and average SS benefits of $1.8K a month, a two person household with two SS checks, would get $43K from SS for a total income of $83K. That is higher than the U.S. median household income of $71K, and the retired couple would likely no longer have children to support, not have to pay into SS and Medicare, may get state tax breaks on the SS income, and have Medicare for health insurance. It seems like that would be more than enough for most locations. Even in pricey areas, there are usually more affordable 55+ communities.

 

[DrRoy]

A million may seem like a lot, but many people are surprised when they do the math and realize that 4% of $1 million is only $40,000 yearly,...

I could have RE'd on $1M, but we would have to stay home all the time. We spent more than $40K this year on travel.

 

[NW-Bound]

I could have RE'd on $1M, but we would have to stay home all the time. We spent more than $40K this year on travel.

How long were you gone?

After spending 1 month in northern Italy, we both decided that doing that once per year was plenty. In the past, we took European trips as long as 6 weeks.

When RV'ing, we could be gone for 1-1/2 to 2 months.

 

[Fermion]

I could have RE'd on $1M, but we would have to stay home all the time. We spent more than $40K this year on travel.

I'd pay $40k to stay home all the time. I hate travel...well, crowds and lines...I like road trips.

 

[Music Lover]

I'd pay $40k to stay home all the time. I hate travel...well, crowds and lines...I like road trips.

Some people (including us) find travel to be highly overrated. We're very happy where we live except that we don't like winter. All of our friends and family are here, and we both have 40-year friendships can't be replaced.

So we escape the cold for 6 or 8 weeks but are always happy to come home.

 

[kgtest]

You're a good candidate for using a spreadsheet for projecting your joint AGI year by year in retirement.
I'm a fan of "levelizing" your AGI to avoid big jumps when SS or RMDs start. Use Roth conversions in early years to do that.

Allow AGI to increase a few percent a year, depending on inflation through age 72, at which point things are mostly beyond your control.
Update the sheet early each year with current data...

Oh yeah! I have quite the spreadsheet going. I can't accurately pinpoint my future AGI, but I can get close "enough". I have Roth conversions considered into this plan for sure. The thing that will get me is the inheritance. Again, I can't predict when or exactly how much that might be, but that will likely come along during my Pension, and both of our SS payments...and likely continue into RMD (unless the IRS keeps pushing that date out further). That will definitely be the perfect storm of a tax torpedo.

Thankfully I recognized this early and a lot of our assets are already in Roth. DFIL has all his assets in Roth with the exception of the Real Estate...and DF has been doing aggressive Roth conversions as he approaches his own RMD. So generationally we are doing a pretty good job of maximizing our tax situation. I am also self employed so that gives me a bit more control on my current tax brackets with my S corps.

 

[RetireBy90]

I mean, I know I'm doing okay, by most metrics, I guess. But I guess I figured that, being (barely) a multimillionaire would just feel, well, more prosperous!

I guess this is good news that I’ve survived long enough that $1M isn’t what it used to be. I always thought those with a million would fly private jets and such. Now I didn’t even make page 6 when we passed that threshold.
I read the article, and true point is that if your living costs you $80K you need to understand $1M won’t fund that alone.
On the other hand most have other sources of income like SS and many have some pension income, and some have other sources also. You really need to carefully look at the whole picture, not only what is in your Fidelity or Schwab or Vanguard accounts.

 

[Car-Guy]

I'd pay $40k to stay home all the time. I hate travel...well, crowds and lines...I like road trips.

Me too exactly.. I'd pay not to fly anymore... No issue driving 100's or even 1000's of miles in one trip.

 

[NW-Bound]

...
I was just looking at airfares and hotel rates for various places. Business class airline tickets and nicer lodgings don't necessarily make me happier or enjoy the trips more. They do however allow me to avoid miserable experiences such as a 10-14 hour flight in coach...

I get your point that avoiding misery is not quite the same as increasing happiness. But for most people, the hassle of air travel is what keeps them from enjoying travel more. As people get older, the negative aspect of travel keeps increasing, until it overcomes the joy of it. Then, they feel better just to stay home.

So, being able to pay for a better airplane seat so that you can continue to travel a bit more in your golden years is indeed using money to buy some happiness.

Business class = 2x Premium economy = 4x coach.

Man, that takes some getting used to.

 

[Gumby]

We just flew business class for the first time ever, to and from our Egypt/Jordan tour. It was a splendid experience. We will still fly coach to destinations in the US, but for overseas travel, it's business class for us from now on. That's why we saved all that money in the first place, so we can.

 

[Fermion]

We just flew business class for the first time ever, to and from our Egypt/Jordan tour. It was a splendid experience. We will still fly coach to destinations in the US, but for overseas travel, it's business class for us from now on. That's why we saved all that money in the first place, so we can.

I mean it is nice and all to be able to fly first class overseas but also it is nice to retire 5 years earlier and enjoy near home activities while you have the energy and youth.

It reminds me of that song. "and if he can't drive with a broken back, at least he can polish the fenders"

 

[Car-Guy]

We just flew business class for the first time ever, to and from our Egypt/Jordan tour. It was a splendid experience. We will still fly coach to destinations in the US, but for overseas travel, it's business class for us from now on. That's why we saved all that money in the first place, so we can.

The last few years that I worked, I'd refused to fly anywhere unless it was business/first... Domestic and especially International. I guess subconsciously I was really daring them to say "no"... If they had said no, I was prepared to ER sooner.

 

[Gumby]

I mean it is nice and all to be able to fly first class overseas but also it is nice to retire 5 years earlier and enjoy near home activities while you have the energy and youth.

It reminds me of that song. "and if he can't drive with a broken back, at least he can polish the fenders"

And that's the rub, isn't it? I figured out long ago that I could live like a pauper in order to retire extra early so I could continue to live like a pauper. But that didn't seem to be all that much fun, and I actually mostly enjoyed working, so I planned things so I could live well then and continue to live well now.

 

[eboats]

And that's the rub, isn't it? I figured out long ago that I could live like a pauper in order to retire extra early so I could continue to live like a pauper. But that didn't seem to be all that much fun, and I actually mostly enjoyed working, so I planned things so I could live well then and continue to live well now.

I guess what constitutes "fun" is different for different people. If you have things you enjoy doing that don't cost money, or very little of it, then you can retire early and be happy. Fortunately I'm not interested in air travel and its hassles, especially international travel, because that is one of those things that has a very fleeting fun factor, but will blow a lot of cash that could be used for retirement expenses.

 

[Music Lover]

And that's the rub, isn't it? I figured out long ago that I could live like a pauper in order to retire extra early so I could continue to live like a pauper. But that didn't seem to be all that much fun, and I actually mostly enjoyed working, so I planned things so I could live well then and continue to live well now.

Not everyone has the opportunity to earn good money and pad their stash. I only made a modest income so staying longer at work would have added very little to my net worth. But I did have a government pension and felt comfortable retiring at 53 when I had my years (I waited until 55 to collect to avoid penalty).

Had I worked until 60 all I would have accomplished was losing 7 years of retirement.

 

[Vincenzo Corleone]

We just flew business class for the first time ever, to and from our Egypt/Jordan tour. It was a splendid experience. We will still fly coach to destinations in the US, but for overseas travel, it's business class for us from now on. That's why we saved all that money in the first place, so we can.

Pretty much the same here. For longer trips to places like South Africa and Thailand, we'll fly business class. For the shorter trips to Europe or domestic, we'll fly economy+. My wife plays the credit card shuffle game to get reward miles, so we amass reward miles to fly business. Flying in business class is quite nice, indeed. I suppose when we're too old to make such long flights, we'll fly business for the shorter trips.

 

[Vincenzo Corleone]

I guess what constitutes "fun" is different for different people. If you have things you enjoy doing that don't cost money, or very little of it, then you can retire early and be happy. Fortunately I'm not interested in air travel and its hassles, especially international travel, because that is one of those things that has a very fleeting fun factor, but will blow a lot of cash that could be used for retirement expenses.

The memories and the experiences are outstanding and last a lifetime, though.

 

[NW-Bound]

Not to boast, but FIRECalc says I can spend more than $200K, and that's if I live another 30 years, which is quite doubful.

But we are LBYM type and are not used to pay $7K-10K per seat. Even taking several trips like that per year will not get us close to the $200K.

Still doing premium economy, although we both know how nice business class seats are, thanks to our megacorps paying for it when we were working.

"Conscience is what hurts when all your other parts feel so good." - Steven Wright



.

 

[Andre1969]

Some people (including us) find travel to be highly overrated. We're very happy where we live except that we don't like winter. All of our friends and family are here, and we both have 40-year friendships can't be replaced.

So we escape the cold for 6 or 8 weeks but are always happy to come home.

I like the kind of travel where you can just hop in the car with a suitcase and just drive around, spur-of-the-moment. But anything involving getting on a plane, train, boat, bus, etc, I hate. At least, I hate the traveling part.

I used to go to Aruba fairly regularly. I always hated the process of getting down there and back...getting to the airport, waiting around for the plane, sitting on the plane, getting out of the airport, getting the rental car, checking in at the resort, etc. And then all the hassles of getting back. Now once I was there, and settled in, I loved it. It's just the getting there and back part I hated.

 

[NW-Bound]

... It's just the getting there and back part I hated.

Is that not true with any air travel, unless one enjoys the layout and decor of different airports?

RV'ing is different, because I stop along the way to explore. The problem is after so many trips originating from home, I have exhausted most of the interesting points along the way, and have to go quite further out to get something new.

 

[Teacher Terry]

Air travel has become increasingly unpleasant however still worth it to me to see more of Europe. On my last trip I was offered to upgrade to premium economy for 145 and the difference in leg room was amazing. My first trip to Europe was in 2002 and I still remember everything about that trip.

 

[Gumby]

One of the more pleasant surprises of travelling business class was the ability to use the fancy lounges (United Polaris lounges and the equivalent Lufthansa and Royal Jordanian ones in Frankfurt and Amman). The best was our last. On the way home, we had a five hour layover at OHare and spent it in the United Polaris lounge. After over 17 hours of travelling from Amman, it was grand to be able to take a long hot shower, shave and change into clean clothes, and then enjoy a good meal and a couple glasses of wine while we waited for our plane to Hartford.

 

[audreyh1]

The memories and the experiences are outstanding and last a lifetime, though.

Agreed - it is definitely not fleeting!

 

[Alex The Great]

Are you sure about that cost? I picked a random zip code for San Jose and plugged it into Covered California and and the plans started at $73 a month, with a $6K deductible, total expenses estimate for the default usage was $2K a year. That is with a $51K income, age 55. At age 60, with a $45K income, the two cheapest plans were $0 - $26 a month, $6.3L to $7K deductible.

We only paid $2 a month for a Bay Area Bronze plan, most years, when we were both on the ACA.

Yes I think your observations are correct. But these are HMO plans which do not cover doctors I use. In fact the cheapest one is Kaiser which always get mixed reviews. The cheapest plan I can use is Anthem Blue Cross EPO but even this plan has lot of limitations. The one without limitation is BCBS PPO which I quoted. But again my estimation is a worst case i.e. very likely I will spend less than $15K on health care unless some real problem show up.

 

[Samsung4321]

Some people (including us) find travel to be highly overrated. We're very happy where we live except that we don't like winter. All of our friends and family are here, and we both have 40-year friendships can't be replaced.

So we escape the cold for 6 or 8 weeks but are always happy to come home.

Perfect candidates for arm chair travel.

Just today I was wafting down the Amazon in 4K: https://www.bbc.co.uk/programmes/b0bx73pk

No knowing where I'd fetch up tomorrow.