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More on how much is enough to retire......
Posted on 4/5/21 at 1:33 pm
Posted on 4/5/21 at 1:33 pm
Over the last couple weeks, I've posted a couple articles on people wanting to know if they had enough to retire. The first article discussed the median retirement savings for people in their 60s. According to the article, the median was $600,000 (for those that actually have a IRA or pension plan). Some people felt that was enough to retire, and others of us did not.
Here's another article that discusses the average retirement age in each state and how much it takes in that state to retire at that age.
Some monetary estimates sure do seem low, but I’ve always had a more conservative approach than most.
Louisiana has an average retirement age of 62 and it requires $948,503 in retirement savings to retire at that age.
This approach seems somewhat simplistic. Perhaps the biggest question is whether these monetary requirements include having a house that is paid for going into retirement.
Here's another article that discusses the average retirement age in each state and how much it takes in that state to retire at that age.
Some monetary estimates sure do seem low, but I’ve always had a more conservative approach than most.
Louisiana has an average retirement age of 62 and it requires $948,503 in retirement savings to retire at that age.
This approach seems somewhat simplistic. Perhaps the biggest question is whether these monetary requirements include having a house that is paid for going into retirement.
This post was edited on 4/6/21 at 7:26 am
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Posted on 4/5/21 at 1:47 pm to MMauler
Would you feel comfortable with 900K at 62 retiring in Louisiana? Its deff doable. I'd like to travel a good bit once I retire so I don't think 52K a year in retirement would allow me to do everything I'd want.
Posted on 4/5/21 at 1:49 pm to tigersfan1989
House paid for and no debt, I mean, 600k isn’t all that much, but one could definitely retire on that amount. Maybe not comfortably, but again, with no debt and house paid for, it can be done.
Posted on 4/5/21 at 1:50 pm to tigersfan1989
I'd want my house paid off. To really feel comfortable though I’d want to have between $1.2 million and $1.5 million with my house paid Of course another issue is whether that money is in a taxable IRA or pension plan or is after-tax dollars that is now just earning interest.
Posted on 4/5/21 at 2:06 pm to MMauler
quote:
his approach seems somewhat simplistic. Perhaps the biggest question is weather these monetary requirements include having a house that is paid for going into retirement.
It assumes roughly $10,000 on shelter per year.
Posted on 4/5/21 at 2:08 pm to tigersfan1989
quote:
Would you feel comfortable
The biggest variable in these discussions.
The fact of the matter is very few people actually live that stereotypical retirement dream. The vast majority of Louisianians retire with far less than $900k.
Posted on 4/5/21 at 2:13 pm to tigersfan1989
I think that's why they just consider it comfortable. A lot of these sites consider travel to be more of a luxury; where as, the MT residents feel it is more of a necessity 
What I found interesting is the annual cost to live comfortably in LA is $52.7k. If the wife & I both work until 62 (age per article), our social security should exceed that amount. So, anything in retirement would be extra?
We aren't relying on SS when we retire and will view it as a bonus; but we also do not intend to retire in state. If the kids stay here, we'll probably buy a small condo to visit; but definitely want to live our lives out somewhere else.
What I found interesting is the annual cost to live comfortably in LA is $52.7k. If the wife & I both work until 62 (age per article), our social security should exceed that amount. So, anything in retirement would be extra?
We aren't relying on SS when we retire and will view it as a bonus; but we also do not intend to retire in state. If the kids stay here, we'll probably buy a small condo to visit; but definitely want to live our lives out somewhere else.
This post was edited on 4/5/21 at 2:14 pm
Posted on 4/5/21 at 2:15 pm to MMauler
I want my retirement to be fun and worry free, not being concerned about a small fixed budget. Shooting for minimums and averages won’t let you live like worry free and happy in retirement
Posted on 4/5/21 at 2:20 pm to Weekend Warrior79
quote:
What I found interesting is the annual cost to live comfortably in LA is $52.7k.
A) it’s for an individual, not a couple
B) it calculates necessary spending based on averages, not medians, then assumes necessary spending is 50% of your total spending.
Posted on 4/5/21 at 2:23 pm to MMauler
quote:
Louisiana has an average retirement age of 62 and it requires $948,503 in retirement savings to retire at that age.
Knowing if this is tax deferred vs tax free makes a big difference. Like at least 20% difference if you trust the current Congress to not raise income tax on families.
Posted on 4/5/21 at 2:24 pm to Upperdecker
As I posted in an earlier string, I’m not looking to live an extraordinarily luxurious life in retirement. I’d like to go to most LSU away games for football, maybe a couple of weekend series of LSU baseball per year, and play golf 3 to 5 times a week. I’d like to join a very non-exclusive, relatively inexpensive country club to play golf (e.g.. Beau Chene). Other than that, I’d like to go on 2 one week foreign vacations per year. I don’t need to stay at the Ritz, I’m fine with staying at clean, name brand hotels or motels.
Posted on 4/5/21 at 2:27 pm to MMauler
Lol. I’m not hating but that sounds luxurious to me.
Posted on 4/5/21 at 2:38 pm to tigersfan1989
I like to travel as well, but if we are talking 52K after taxes, that seems more than enough.
No debt. House, cars, cards are paid for. Plus my wife has her 401K and Soc Security.
No debt. House, cars, cards are paid for. Plus my wife has her 401K and Soc Security.
Posted on 4/5/21 at 2:43 pm to MMauler
Dont need a ton in retirement if you go into it totally debt free.
Assume you are retiring today at 65 and last made about $60k/yr. You start SSI immediately which should be about $1,400/mo. If you assume a 5% SWR from retirement accounts, that would leave you with:
$250k in retirement accounts = $1,400 + $1,041 = $2,441/mo
$500k in retirement accounts = $1,400 + $2,083 = $3,483/mo
$750k in retirement accounts = $1,400 + $3,125 = $4,525/mo
$1.0M in retirement accounts = $1,400 + $4,166 = $5,566/mo
At $250k in retirement accounts, almost $2,500/mo isn't terrible if you're debt free, it sucks if you are. Keep in mind these is for a single person, married couples could get a nice boost if both worked.
$500k in retirement with $3,483/mo in income means you can almost travel some if your expenses are well managed with no debt. With debt, meh, you're probably scraping by mostly with no fun allowed.
$750k in retirement with $4,525/mo in income means certainly you can have some fun traveling without debt. Even with debt, so long as it's not bad, you can still probably get out and do some fun things for sure.
$1M producing $5,566/mo is basically living it up with no debt at all, some really nice trips without any sweat. With debt, you should still be able to travel pretty freely, just maybe not quite like the other person.
Wife and I are still about 30 years away from 65, but we've come up with our number of $6M-$7M in retirement accounts by then if we work that long...and that's just based on current income and funding of retirement accounts and 10% RoR. We also are doing 100% roth, so all that will be tax free money in the future
Assume you are retiring today at 65 and last made about $60k/yr. You start SSI immediately which should be about $1,400/mo. If you assume a 5% SWR from retirement accounts, that would leave you with:
$250k in retirement accounts = $1,400 + $1,041 = $2,441/mo
$500k in retirement accounts = $1,400 + $2,083 = $3,483/mo
$750k in retirement accounts = $1,400 + $3,125 = $4,525/mo
$1.0M in retirement accounts = $1,400 + $4,166 = $5,566/mo
At $250k in retirement accounts, almost $2,500/mo isn't terrible if you're debt free, it sucks if you are. Keep in mind these is for a single person, married couples could get a nice boost if both worked.
$500k in retirement with $3,483/mo in income means you can almost travel some if your expenses are well managed with no debt. With debt, meh, you're probably scraping by mostly with no fun allowed.
$750k in retirement with $4,525/mo in income means certainly you can have some fun traveling without debt. Even with debt, so long as it's not bad, you can still probably get out and do some fun things for sure.
$1M producing $5,566/mo is basically living it up with no debt at all, some really nice trips without any sweat. With debt, you should still be able to travel pretty freely, just maybe not quite like the other person.
Wife and I are still about 30 years away from 65, but we've come up with our number of $6M-$7M in retirement accounts by then if we work that long...and that's just based on current income and funding of retirement accounts and 10% RoR. We also are doing 100% roth, so all that will be tax free money in the future
Posted on 4/5/21 at 2:54 pm to thunderbird1100
quote:
10% RoR
Good luck.
Posted on 4/5/21 at 3:00 pm to thunderbird1100
quote:Until it's not or you'll be means tested some other way to make you pay more.
so all that will be tax free money in the future
Posted on 4/5/21 at 3:01 pm to MMauler
Your monthly budget in retirement is what determines everything about how/when you can retire. It’s solving for positive cash flow without working.
If you do not have a written budget then you can’t answer whether or not you are ready to retire.
Looking at average assets per state is completely meaningless. Has 0.0 value. Not trying to be ugly as that is how most people approach this question. But assets are irrelevant until you have a budget number for expenses. Then you subtract lifetime income streams such as Social Security or pensions. The remainder tells you the number you need your investments to pay you each month. That number is going to be different for everyone
If you do not have a written budget then you can’t answer whether or not you are ready to retire.
Looking at average assets per state is completely meaningless. Has 0.0 value. Not trying to be ugly as that is how most people approach this question. But assets are irrelevant until you have a budget number for expenses. Then you subtract lifetime income streams such as Social Security or pensions. The remainder tells you the number you need your investments to pay you each month. That number is going to be different for everyone
Posted on 4/5/21 at 3:04 pm to thunderbird1100
Not bad Thunderbird!
I’d adjust your SWR to 4%. Also need to factor in pre vs after tax funding and assumed tax rates
I think your SSI will be higher than your projection but not a bad assumption. Remember that married couples will get a better benefit
I’d adjust your SWR to 4%. Also need to factor in pre vs after tax funding and assumed tax rates
I think your SSI will be higher than your projection but not a bad assumption. Remember that married couples will get a better benefit
Posted on 4/5/21 at 3:04 pm to slackster
quote:
Good luck.
10% is not hard at all, literally if you just invested in S&P 500 index fund like Vanguard's VFIAX which has .04% expense ratio it's returned over 13% since introduced in 2000. That's over 20 years of 13% annual RoR, which it would have to produce well under 7% for the next 20 years to have a <10% RoR over a 40 year span/usual working life span.
In some cases a 10% RoR is kind of conservative if you simply put the time in (or get a legit financial advisor) to get you better returns in 401k, IRAs, etc...We've got 5 different retirement portfolios going between by wife and I, curious to see how each unfolds over the coming decade or two.
Posted on 4/5/21 at 3:12 pm to amsterdam
quote:
I’d adjust your SWR to 4%.
Ours will be variable since we should have a good chunk in retirement by the time we do retire (again target of $6M-$7M) and we wont need probably even 4% of that to have fun on top of SSI. I like to use 5% SWR because honestly 4% is just to old school for my thinking, you have to be in some hyper conservative stuff to not be ok with 5% a year, but variable is so much better if you have enough to take a little out during a bad year and more out during a big year.
quote:
I think your SSI will be higher than your projection but not a bad assumption. Remember that married couples will get a better benefit
Oh our SSI should be about $2k each or so month (so $4k total there). I was using the $1,400/mo as an example for someone retiring now who last made $60k.
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