"How Much Is Enough?" (Mary Beth Franklin in Kiplingers)

[Nords]

"Depending on your age and economic circumstances, your 'number' could be:
- 15% -- the percentage of earnings young workers should be socking away, or
- 80% -- the amount of preretirement income you should aim to replace, or
- $1 million (or more) -- the size of the nest egg needed to generate that income.

The article also manages to quote Ken Dychtwald, the credibility-challenged gerontologist who apparently is everywhere this week.

 

[TromboneAl]

Do any of these article writers ever stop to realize that one's expenses and income aren't necessarily the same?

 

[Nords]

Do any of these article writers ever stop to realize that one's expenses and income aren't necessarily the same?

Those are the people who are working longer (and contributing to our SS) to balance them out...

If those article writers ever stopped watching the deadline clock long enough to think about it, they'd be ER'd too!

 

[education]

I said it before and I'll say it again: These guys and their theories are full of s**t!!!!!!!! They write to be published. They write to provoke and upset. "They" know nothing of "us" nor do "they" want to. I still say that if the house is paid off, the kids are raised and not boomeranging, the car is paid, and the credit card debt is zero (or paid in full every month) , you are well on your way to FIRE!!!!!!!!

Professor

 

[unclemick]

Hey - I'm getting there!

This being my first year of nonfrugal - all praise be to Dory 36's now ancient post - 33% That's My Story.

Took 12 years in ER to get there - but at least I'm not a "cheap SOB" anymore.

Curmudgeon - that my 'new moniker - I intend to work hard at it.

heh heh heh

 

[haha]

I said it before and I'll say it again: These guys and their theories are full of s**t!!!!!!!!  They write to be published.  They write to provoke and upset.  "They" know nothing of "us" nor do "they" want to.   I still say that if the house is paid off, the kids are raised and not boomeranging, the car is paid, and the credit card debt is zero (or paid in full every month) , you are well on your way to FIRE!!!!!!!!

Professor

Well, this would put some limits on the outgo, but it really doesn't speak to the inflow. Maybe add $1M to the above, and if you aren't real young, you should be fine.

Ha

 

[shorttimer]

I was quite dissapointed they didn't mention the Latte factor. If I read one more article about bringing your lunch to work or not picking up coffee I am going to scream.

Enough is what you decide is enough. We all have different needs, wants and goals.

 

[robert]

Enough is what you decide is enough. We all have different needs, wants and goals.

True . . . but, I seem to recall various polls on this board and others which ask the question, "how much do you spend in retirement?" The responses are generally clustered in the $30-40k/year range. If that is a fair estimate of what the average retiree needs, then, assuming a 3-4 percent safe withdrawl rate, the "average" retiree would indeed need about $1M to retire. Obvious some get by with less, and others feel they need more. But, I believe it is fair to say that the typical retiree is probably going to need about $1M or its equivalent (e.g., nestegg plus pension plus social security).

Robert

 

[Mr._johngalt]

True . . . but, I seem to recall various polls on this board and others which ask the question, "how much do you spend in retirement?"  The responses are generally clustered in the $30-40k/year range.  If that is a fair estimate of what the average retiree needs, then, assuming a 3-4 percent safe withdrawl rate, the "average" retiree would indeed need about $1M to retire.  Obvious some get by with less, and others feel they need more.  But, I believe it is fair to say that the typical retiree is probably going to need about $1M or its equivalent (e.g., nestegg plus pension plus social security).

Robert

I would only take issue with your use of the word "need".
Virtually no one "needs" $1M to retire. They might want it.
They might spend up to that level if they have it. And, I suppose
some are too dumb (stubborn?) to figure out how to go with less.


JG

 

[Mr._johngalt]

I was quite dissapointed they didn't mention the Latte factor.  If I read one more article about bringing your lunch to work or not picking up coffee I am going to scream.

Enough is what you decide is enough.  We all have different needs, wants and goals.

My theory is that people like to say "Latte". It's like the Seinfeld
episode about why people like to say "salsa".

JG

 

[azanon]

And, I suppose
some are too dumb (stubborn?) to figure out how to go with less.

Trust me, that doesnt take any intelligence to do.  In the small town of Arkansas i come from, the majority of the population there is doing it and i assure you, brain cells are not very abundant there.   

I dont want to live on 30K a year.   A million of liquid at retirement would just be a baseline for me.   I want to live at the very least, a middle class life.   One cant do that on less than 40K per year with a spouse and family.

Just "getting by" is what most people do. I'm not most people.

Azanon

 

[unclemick]

I very seldom agree with MRGALT2U:

But follow this:Soliquoy - my parents, deeply scared by rhw Great Depression went thru life waiting for the other shoe to drop - while everythng got better shipyard work, WW11 Navy Service - while we weren't poster children for Leave to Beaver or Ozzie and Harriet - I did manage a reasonible facsimile of Happy Days as a Teen chasing girls.

Was saving from day one - after JC and State College - got to toss in a few $ to help put little sister thru -"since I had a good job". Father just shook his head when I found out I was 'actually buying stocks.'

Upbringing affects each in many ways - both conscious and subconscious.

Leaving the grey area of Norwegian widow dividends aside for the moment:

Year 12 into ER will be the first to actually 'touch the 1 mil plus or minus a tad' in liquid IRA assets. Being frugal and recognizing it became 1 mil in ER because of time and the history of the 90's, makes my subconscious want to stay cheap and leave it alone.

Coming out of the closet, being 'born again NON frugal' and er ah rocking up in recognition I'm not going to take it with me - will be a mental transition with the appropriate degree of angst.

Really, really, really gonna miss being a cheap bastard. I DO intend to keep my 247,000 mile 1994 GMC Sonoma - WITH rusty fender as long as possible - as a source of comfort.

heh heh heh

Oh Yeah - one more time - MY ALL TIME PERSONAL BEST was 12k/yr in the early 90's - should had a trophy made for myself.

 

[Jarhead*]

Oh Yeah - one more time - MY ALL TIME PERSONAL BEST was 12k/yr in the early 90's - should had a trophy made for myself.

BFD, you probably had cheap "Green Fees" in your area.

 

[SteveR]

The idea of want or need is relative to your frame of reference.  
What JG wants or needs is his own belief in his relative world.  What I want or need is in mine.  Can I live on $10k, $20k, or even $50k a year?  Sure I can.  But I don't want to.  If I HAD to I could.  I choose to live much higher on the hog and I have planned for that and I am willing to do what it takes to live at my chosen income level post retirement.  

I can alway adjust down to suit the economy...but I can also adjust up too.  Having the $$ "in the bank" gives one a lot of options and choices.  My choice of income level in ER is dependent upon my ability to create enough $$ to pay for it.  The concept of need or want is a sliding scale and is whatever lets you sleep at night.  

I have no intention of going super frugal.  I save where I feel it makes the most sense but I would not say we will need to be frugal.  That was the part of the goal; make enough, save enough and plan an income stream to equal what we want and not just enough to get by.  

I respect all those that want to ER really early or are willing to cut expenses to the bone to live on existing income streams so they can retire.  It all comes down to choice based on assets and income needs/wants.  

There is a lot of divere opinions, backrounds, income levels, etc. represented on this board,

That is one of the things that makes this board so interesting.  

 

[HFWR]

My theory is that people like to say "Latte".  It's like the Seinfeld
episode about why people like to say "salsa". 

JG

Delores...

 

[igsoy]

Mulva?

 

[shorttimer]

what we have done to figure out enough is track expenses.

scenario # 1. bare bones, decent food and roof over our heads, ability to pay taxes and share one auto.
#2. enough to travel once a year to Europe for a few weeks, go out to eat dinner with friends, go to a play or sporting event or even a movie now and then. Maybe a small boat or camper.
#3. what I consider and extravagant lifestyle. Two homes, lots of travel and eating out. Bringing whole family on vacation yearly. Fund grandchildrens college accounts.

we are between 1 and 2. Goal is to be comfortably at 2. I won't extend my work years to get to 3. This is strictly a personal choice.

 

[Zipper]

I'll give you 5 samples of a Canadian retirement (couple) with ballpark figures.

This assumes the mortgage is paid for, and the kids are gone.

I could break any of them down further but here is a start.

#1 "Conservative" C$25 000
Modest home in a small city
Most time spent with family and friends nearby.
Leisure time gardening, socializing, walking-hiking.
Modest vacations usually by car.
Most meals prepared at home. (Food in Canada is excellent and fresh)
I can eat better and cheaper in ON than FL.

#2 "Comfortable"  C$43 000
3 bedroom home in a medium sized city.
Newer vehicle every few years.
Free time and some money for community and charities.
Summer and winter sports and recreation.
Vacation at a Canadian resort.

#3 "Above average"  C$60 000
3 bedroom home in a large city and perhaps a modest cottage on the Lake.
1 or 2 newer vehicles.
Vacation in Southern US or Caribbean each winter.

#4 "Luxury"  C$94 000
Split time between a long-time home in an upscale metropolitan suburb and a FL condo.
2 luxury vehicles.
Dine out and entertain first class.
Yearly tours to other continents.

#5 "Prestige"  C$120 000
Executive home in a large city.
A condo in the south with all the amenities.
Luxury vehicles.
Summer cottage with luxury country club close-by.
Dine out and entertain in style.

*note that health care is not an issue.

Canada Pension Plan for a couple would be ~ C $19 000 indexed @ 65 or 30% less if taken at 60.
Old age security would be C $11 000 indexed @65.

Canada is one of the most egalitarian societies in the world, along with Australia. The vast majority of Canadians occupy the first 3 categories.

With CPP/OAS and modest incomes from pensions and/or RRSP's most Canadian retirees are quite comfortable.

 

[lonedog]

All of these plans are interesting but remind me of a joke I heard. Do you know how to make God laugh ? Tell him your plans.

 

[ladelfina]

"They" know nothing of "us" nor do "they" want to.

Professor, you are so right. I remember reading a send-up of USA Today back when it was a new thing.. They loved to write headlines like "We're eating less red meat!", "We're putting in more Jacuzzis!", and so on..

The bulk of the article doesn't seem so much wrong as it seems completely schizophrenic! Don't they have editors at Kiplinger's? How can you start out the article saying "You may be better prepared for retirement than you think." and then say "the average 401(k) balance was $57,000...[f]or those age 60 and over with 30 years on the job, the average balance was nearly $180,000." Woooohoo! Break out the champagne!