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re: Americans say they 1.3 million to have a comfy retirement
Posted on 6/28/23 at 9:56 am to biscuitsngravy
Posted on 6/28/23 at 9:56 am to biscuitsngravy
quote:
The goal of life is not retirement, and if your goal is to retire, it is time to reevaluate how you are currently living your life.
Yeah it's not so much about retiring and playings shuffleboard for my remaining years, for me it's about freedom. I work with a teacher who has had the chance to "retire" for a few years. Her husband has a great job and they've been very wise when it comes to investing and they could both walk away today if they want to and go do pretty much whatever they want. She's in her mid 50's, and keeps coming back because she likes what she does, but if it all goes south she could leave tomorrow. She seems to have very little stress because she knows she can do whatever she wants. That's what I'm shooting for. Education has been going sidewise for a while now, even prior to Covid, and for a bunch of reasons. I don't what it will look like in 10 years, and if it's awful, then I want to be able to go do something else and not worry about it.
This post was edited on 6/28/23 at 3:18 pm
1
Posted on 6/28/23 at 10:15 am to grsharky
quote:
She's in her mid 50's, and keeps coming back because she likes what she does, but if it all goes south she could leave tomorrow. She seems to have very little stress because she knows she can do whatever she wants.
I've seen this a lot.
There is a huge quality of life improvement when working as a want and not a need.
Some on this board want to retire with F U money (i.e. never have to look up the price of their jet fuel for their private plane).
If you continue to work when retirement is an immediate option, you can go through your employment with an F U mindset (without the F U $10+M dollars).
Posted on 6/28/23 at 12:19 pm to grsharky
quote:
Americans believe they need about 1.3 million to have a good retirement. ...To get that number over a 40 year career you'd need to invest about $650 a month with a 6% return. Seems fairly attainable especially if you start early in your career.
While your math is accurate, the problem is, looking at starting now, that 40 years from now, the target for a comfortable retirement will probably be a lot higher than $1.3 million
Posted on 6/28/23 at 12:35 pm to texn
We generally talk about retirement in today's dollars. That 6% figure is already accounting for inflation.
Posted on 6/28/23 at 1:51 pm to fallguy_1978
Holy shite those numbers are eye opening!
Posted on 6/28/23 at 1:55 pm to Upperdecker
Yea I wish they’d do away with Social Security all together. I’m not planning on it in any future plans, I’m holding out hope it gets shite canned one day.
I’d rather have the money myself to invest now, rather than taken out of my paychecks to subsidize people who didn’t plan for retirement
I’d rather have the money myself to invest now, rather than taken out of my paychecks to subsidize people who didn’t plan for retirement
Posted on 6/28/23 at 2:45 pm to fallguy_1978
quote:
What should these numbers look like for that 35-44 age range? I've been saving for retirement since I was 21 but really have no clue if i'm currently on the right track of where I need to be or not.
Posted on 6/28/23 at 2:56 pm to Mark Makers
A lot of places will say to have about 3x your salary saved by then
Posted on 6/28/23 at 3:19 pm to Mason Dixon Swine
quote:
A lot of places will say to have about 3x your salary saved by then
This^
My employer's 401k provider in the past had suggested 4x's earnings by 45.
Once I hit that, it suggested 5x's earnings by 45.
My guess is 35-40 years old would be about 2-3 x's earnings.
One of the challenges in practice is that earnings often go up significantly between 30-45 years old. It is chasing an ever-increasing number.
This post was edited on 6/28/23 at 3:20 pm
Posted on 6/28/23 at 3:53 pm to meansonny
quote:
My employer's 401k provider in the past had suggested 4x's earnings by 45.
Once I hit that, it suggested 5x's earnings by 45.
My guess is 35-40 years old would be about 2-3 x's earnings.
One of the challenges in practice is that earnings often go up significantly between 30-45 years old. It is chasing an ever-increasing number.
My problem with this is market fluctuations outside of your control and ever changing salaries. I always thought you should focus on what you can contribute, time in the market will equal out eventually. If you can get to 15% of your pretax salary each year you should be ok in the long run.
Posted on 6/28/23 at 4:12 pm to grsharky
quote:
My problem with this is market fluctuations outside of your control and ever changing salaries. I always thought you should focus on what you can contribute, time in the market will equal out eventually. If you can get to 15% of your pretax salary each year you should be ok in the long run.
You are not wrong.
The 2-3 x's salary posted on the 401k website is called "marketing".
How does a 401k manager make more money?
By posting that stupid shite on their website.
Never ever worry about market fluctuations until you are about 5 years from retirement.
Market fluctuations are also known as opportunity (buy on sale).
Posted on 6/28/23 at 4:29 pm to grsharky
I am 57 and I retired a little before age 56 with less than that in retirement assets.
When you think about the 10X's rule, also think about the 50% rule, and that is you are probably already living on 55% of your paycheck after you pay taxes, FICA, 401K, HSA and health insurance, and if you are doing Roth or saving money, you are probably doing out of that 55% or so. Most of those things are things you won't do in retirement, or if you have to pay some taxes, it will probably be on something a lot closer to 50% of what you used to make.
Condensed version: for many people that "10 times your salary" rule of the thumb may actually be 20 times their annual spending, and remember, even the dreariest predictions believe you will still get about 80% of your SS even if the GOV does nothing, so maybe your spending will actually be 35% of your old salary after SS kicks in, and maybe the trick is to be as tax efficient as possible.
A few replies back someone mention the ACA might give you free or very low cost health insurance in retirement before 65 if you can keep your taxable income low, that is one of the keys. Roth assets are very useful to do this if you plan well.
Now, if you expected to travel the world in retirement, this won't work for you, but for me, it works fine, but I like thinking about this stuff, some people just want to set this on autopilot and go.
When you think about the 10X's rule, also think about the 50% rule, and that is you are probably already living on 55% of your paycheck after you pay taxes, FICA, 401K, HSA and health insurance, and if you are doing Roth or saving money, you are probably doing out of that 55% or so. Most of those things are things you won't do in retirement, or if you have to pay some taxes, it will probably be on something a lot closer to 50% of what you used to make.
Condensed version: for many people that "10 times your salary" rule of the thumb may actually be 20 times their annual spending, and remember, even the dreariest predictions believe you will still get about 80% of your SS even if the GOV does nothing, so maybe your spending will actually be 35% of your old salary after SS kicks in, and maybe the trick is to be as tax efficient as possible.
A few replies back someone mention the ACA might give you free or very low cost health insurance in retirement before 65 if you can keep your taxable income low, that is one of the keys. Roth assets are very useful to do this if you plan well.
Now, if you expected to travel the world in retirement, this won't work for you, but for me, it works fine, but I like thinking about this stuff, some people just want to set this on autopilot and go.
Posted on 6/28/23 at 5:24 pm to grsharky
More than 50 percent of Americans in their 50's are married and these articles / studies frequently ignore this probably because it complicates the article. 1.3 per person seems pretty reasonable with social security or a pension kicking in but I am basing that on my lifestyle and being cautious not to over draw investment accounts early in retirement.
Personally expecting north of 3 mil for myself and wife in investment accounts and plus social security estimated at about 5 K. I will work another 5-8 years.
Goal is 10 K per month take home of mostly taxable income but also drawing very conservatively off investments.
monthly
5K SS
4K dividend off investment
1-2 K investment capital draw down
Zero debt including house.
Without long term care insurance if ome or both need to scramble 1,000,000 for long term care we should still be ok.
Personally expecting north of 3 mil for myself and wife in investment accounts and plus social security estimated at about 5 K. I will work another 5-8 years.
Goal is 10 K per month take home of mostly taxable income but also drawing very conservatively off investments.
monthly
5K SS
4K dividend off investment
1-2 K investment capital draw down
Zero debt including house.
Without long term care insurance if ome or both need to scramble 1,000,000 for long term care we should still be ok.
Posted on 6/28/23 at 7:35 pm to agilitydawg
quote:
4K dividend off investment 1-2 K investment capital draw down
quote:
Personally expecting north of 3 mil for myself and wife in investment accounts
You should be able to safely and reasonably build a growth and income account that generates $90-120k/yr in rising dividend/interest income, and that’s on the conservative side. Not sure why you’d need to draw on principle/capital with $3MM invested, at least based on your plans.
Posted on 6/28/23 at 7:44 pm to meansonny
quote:
My employer's 401k provider in the past had suggested 4x's earnings by 45. Once I hit that, it suggested 5x's earnings by 45. My guess is 35-40 years old would be about 2-3 x's earnings. One of the challenges in practice is that earnings often go up significantly between 30-45 years old. It is chasing an ever-increasing number.
I’ve posted this before, but JPMorgan’s Guide To Retirement is an excellent resource for retirement planning, and it’s free to the public. You may disagree with the conclusions or assumptions, but it’s in relatively plain English and lays out the assumptions and resources it uses.
LINK to the Guide
Posted on 6/28/23 at 8:10 pm to slackster
quote:
You should be able to safely and reasonably build a growth and income account that generates $90-120k/yr in rising dividend/interest income, and that’s on the conservative side. Not sure why you’d need to draw on principle/capital with $3MM invested, at least based on your plans
I would agree that is fair criticism. I just evaluated current dividends on a growth oriented portfolio, projected a future value and therefore a future dividend amount. I have not put much energy into transtioning into growth and income yet.
Posted on 6/28/23 at 9:08 pm to grsharky
I could easily make that work with no kids at home, house paid off plus social security should it still be solvent. However I don’t plan on living past 75-80
Posted on 6/29/23 at 7:53 am to grsharky
Real world example. I'm 53 never made 6 figs until 2011 and I have that much in retirement accounts. It's not enough. Would I be homeless and starving? No but I've just gotten accustomed to having disposable income and I'm not ready to give that up yet.
Posted on 6/29/23 at 8:16 am to CharlesUFarley
Curious - are you drawing down your portfolio annually or are you living off dividends and interest? Any surprises in retirement so far?
Posted on 6/29/23 at 8:27 am to Zzyzx
quote:
Yea I wish they’d do away with Social Security all together.
Unless they do a major overhaul of system anyone born after 1972/1973 has very little chance of seeing a penny of SS. Of course those people will continue to pay into the Ponzi scheme until it is completely gone.
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