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Started By
Message
Retiring at 50 - how do you calculate how much you need?
Posted on 12/9/14 at 12:16 pm
Posted on 12/9/14 at 12:16 pm
Retiring at age 50 is outside the norm, and when I look at the online calculators I do not believe they are designed for early retirement scenarios
Anyone have suggestions for figuring out how much you need to retire at 50?
Anyone have suggestions for figuring out how much you need to retire at 50?
12
Posted on 12/9/14 at 12:19 pm to Hawkeye95
Figure out how much you want to spend each year from 50 until death.
Assume a best case scenario of living to around 110...so 60 years of retirement needed.
Build the cash flows in and out in a simple excel model. Maybe assume a very low amount of SS you get once of age.
Assume a best case scenario of living to around 110...so 60 years of retirement needed.
Build the cash flows in and out in a simple excel model. Maybe assume a very low amount of SS you get once of age.
Posted on 12/9/14 at 12:19 pm to Hawkeye95
We can't answer your question unless you let us know how much spending money you think you'll need per year. Do you just want to live comfortably? Do you want to travel a lot? Or be poor.
Posted on 12/9/14 at 12:25 pm to Hawkeye95
quote:$3.5 million in financial assets, minimum.
Anyone have suggestions for figuring out how much you need to retire at 50?
Posted on 12/9/14 at 12:27 pm to SUB
quote:
We can't answer your question unless you let us know how much spending money you think you'll need per year. Do you just want to live comfortably? Do you want to travel a lot? Or be poor.
well I don't want you to tell me how much I need, I want you to tell me how to figure out how much I need.
But anyway
* Total expenditures per year is $70-75k, I expect that I will need roughly that
* Expect to travel a lot, but we travel very cheaply
* I expect to have a bit of work income in retirement, through consulting / side jobs. But do not want to count on that
* I will count on no SS, I just don't think it will be around.
Posted on 12/9/14 at 12:27 pm to LSURussian
quote:
$3.5 million in financial assets, minimum.
how did you determine this?
Posted on 12/9/14 at 12:30 pm to Hawkeye95
quote:
well I don't want you to tell me how much I need, I want you to tell me how to figure out how much I need.
That is what I started doing above...
But anyway
* Total expenditures per year is $70-75k, I expect that I will need roughly that
* Expect to travel a lot, but we travel very cheaply Is this baked into the 70-75k number?
* I expect to have a bit of work income in retirement, through consulting / side jobs. But do not want to count on that $0 impact then
* I will count on no SS, I just don't think it will be around.quote:
$0 impact then
You need to figure out how much ROI from investments (percentage) you expect over the LT on average. You also need to choose a discount rate to discount all of these cash flows so that you can get to a NPV number at age 50.
Does this make sense?
Posted on 12/9/14 at 12:32 pm to lynxcat
quote:
Is this baked into the 70-75k number?
yes.
quote:
Does this make sense?
It does.
Posted on 12/9/14 at 12:40 pm to lynxcat
quote:
Assume a best case scenario of living to around 110
Hell...I hope not
. 
Posted on 12/9/14 at 12:46 pm to Hawkeye95
Fidelity Retirement Calculator
I've found this tool to be excellent.
It will take a LONG time to properly enter your data, but it takes EVERYTHING into account. Income, expenses, changes in both, type of portfolio (or picks up your account balances from Fidelity and elsewhere), retirement age, expected longevity, etc etc.
you may have to register to access it
I've found this tool to be excellent.
It will take a LONG time to properly enter your data, but it takes EVERYTHING into account. Income, expenses, changes in both, type of portfolio (or picks up your account balances from Fidelity and elsewhere), retirement age, expected longevity, etc etc.
you may have to register to access it
Posted on 12/9/14 at 12:48 pm to LSUAfro
Don't forget about inflation.
70-75k now will not have the same buying power as it will then.
Also, I think 3.5 million is way undercutting it. I'd look more toward $10 mil as a base.
70-75k now will not have the same buying power as it will then.
Also, I think 3.5 million is way undercutting it. I'd look more toward $10 mil as a base.
Posted on 12/9/14 at 12:53 pm to Hawkeye95
quote:Life expectancy of 85, so 35 years to go at 50 years old.
$3.5 million in financial assets, minimum.
how did you determine this?
$100,000/year X 35 years = $3.5 million assuming no earnings on the principal. With earnings, the $100,000/year can be increased with inflation.
That's why I said "minimum."
Posted on 12/9/14 at 1:00 pm to LSURussian
Life expectancy is about 85 now. In 50ish years it'll likely be closer to 100.
While youre saving for retirement, make sure to eat right and exercise.
While youre saving for retirement, make sure to eat right and exercise.
Posted on 12/9/14 at 1:11 pm to white perch
quote:
While youre saving for retirement, make sure to eat right and exercise.
Counter intuitive. I'm trying to limit my retirement expenditures. Might as well knock a few years off the back end.
This post was edited on 12/9/14 at 1:12 pm
Posted on 12/9/14 at 1:23 pm to white perch
quote:Way off, and I already allowed for an increase in life expectancy.
Life expectancy is about 85 now. In 50ish years it'll likely be closer to 100.
Life expectancy for males in the U.S. is 76.4 years. USAToday, October 9, 2014
I don't know the age of the OP (at least I didn't see it when I made my first post) so assuming he's in his 30's by the time he reaches 50 I allowed for an increase in the life expectancy to be around 85 for males.
No one knows if that's a reasonable assumption but I think it's probably in the ball park since, as the article I linked says, the increase in life expectancy for the U.S. from 2013 to 2014 was +.1 years.
This post was edited on 12/9/14 at 1:25 pm
Posted on 12/9/14 at 1:36 pm to LSUAfro
quote:
I'm trying to limit my retirement expenditures. Might as well knock a few years off the back end.
Posted on 12/9/14 at 1:48 pm to lsufan_26
The big unknown is health care....who knows how much it will cost or if Medicare will survive into the coming decades intact? I know plenty of old farts who get anti-macular-degeneration shots to preserve vision at $2-4K a pop. Lord only knows how much it will take to keep a body going in the next 40 years.
Posted on 12/9/14 at 2:02 pm to white perch
quote:
I'd look more toward $10 mil as a base.
i dont see myself having $10M by 50.
quote:
$100,000/year X 35 years = $3.5 million assuming no earnings on the principal. With earnings, the $100,000/year can be increased with inflation.
That's why I said "minimum."
It seems too conservative to not include earnings in that. Historically bonds yield about 5% over the long term, so $2M would yield $100k in income.
Posted on 12/9/14 at 2:04 pm to Ole War Skule
quote:
Fidelity Retirement Calculator
I've found this tool to be excellent.
It will take a LONG time to properly enter your data, but it takes EVERYTHING into account. Income, expenses, changes in both, type of portfolio (or picks up your account balances from Fidelity and elsewhere), retirement age, expected longevity, etc etc.
you may have to register to access it
i actually did it, and found it the best tool I used (I also used Schwab, and another tool). But I also found it somewhat lacking in that it required a lot of inputs but I didn't feel like I got a lot of detail on the back.
Anyway, it said I needed $2.4M, which seems more reasonable to me than the 3.5M russian recommends.
Posted on 12/9/14 at 2:05 pm to hungryone
quote:
The big unknown is health care....who knows how much it will cost or if Medicare will survive into the coming decades intact? I know plenty of old farts who get anti-macular-degeneration shots to preserve vision at $2-4K a pop. Lord only knows how much it will take to keep a body going in the next 40 years.
yeah, healthcare costs is the one that makes me feel like 50 might be unreasonable to retire at.
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