re: Americans say they 1.3 million to have a comfy retirement

I don't think $2.6M of retirement assets for a couple 10 years from now will be a comfy retirement unless they have other sources of income. I early retired 12 years ago as of last month and still not old enough to draw SSI, nor is my wife. We never had kids and had high retirement savings including after tax accounts while earning well above average income. My wife inherited ~ $400k years ago, but that is a drop in the bucket compared to our other financial assets. Currently it is challenging to stay near a $120k annual spend rate if you live in a nice area with higher than average cost of living, want to travel and do numerous other things while you can. I have expensive dog habits and dropped low 4 figures 2 weeks ago on a 2 day top level K9 trial entry fee of $440, 5 days in CO on travel costs, etc.

ACA can be very tricky, especially if you are selling property held long term with a lot of depreciation recapture and other, have investments that throw off a lot of tax deferred income (MLPs) that gets clawed back/taxed lump sum if another company acquires the company you invested in or you choose to sell those holdings, etc as you will blow through the upper threshold for credits and premiums will run you ~ $18k for good coverage for a couple plus deductibles/co-pays etc.

We receive a lot of equity dividends across all accounts, most years they are above 98% QDI in taxable, which helps a lot. I have no idea what tax policy will be 3 years from now and into the longer future, but I would try to find a good balance between taxable brokerage levels/tax deferred and Roth accounts.

My father will be 90 in 2 years, my siblings and I may inherit significant money one day, maybe not, I'm not counting on it as have heard too many stories about 2nd or 3rd spouses bad actions. Side stepping that dumb arse dot.com implosion and getting down to 25% equity in 2008 helped a ton, but I can't say I was focused enough on the covid meltdown including all the front running selling by insiders and poli's that went down but we are still significantly ahead since Spring 2020. My wife starts receiving a pension in 7 years, she doesn't think the last 5 years she stayed with her employer to become pension eligible was worth it and we both believe that employer will probable be bankrupt in less than 3 years. 'Merica.

I’m about 4x my age bracket.

How old are you now? Are you calculating inflation? Because if you’re 30 now that 8k will spend what $3000 roughly is right now.

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Are you calculating inflation?

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Here is an interesting article about retirement income spending in relation to inflation.

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Conventional wisdom is that retirees spend a fixed amount per year in real terms, meaning that the nominal amount they need rises each year with inflation. But evidence on actual spending behavior suggests that real spending falls with age. If that’s true, people need to save less for retirement than we think.

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LINK

I agree.

It is so subjective for everyone.

If I go lawnbowling with my neighbors at 75 years old, my transportation expenses and entertainment expenses are going to plummet in retirement.

However if I join the US World Cup for lawnbowling, then my transportation expenses, entertainment expenses, and dining expenses are going to significantly increase.

It is the same hobby either way.
For someone to label something as "too high" or "too low" is kind of narcissistic.

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$2-3 million should be the target amount.

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There is no "target amount." There is no magic number so to speak. Everyone's "number' will be different.

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How old are you now?

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50 in August.

Yes generally we spend less at older. That’s why most people don’t calculate off of your 100% of income. Most people retire off of 40% of their current employed income. But that’s 40% at that time when they retire. Rule of thumb is to calculate off of 80% really. But you still have to calculate inflation. It all depends on standard of living. But saying you won’t need 8k with inflation when your income if 15k would be shortsighted. But 8k off of 9k is not true. I was making a general blanket statement because I didn’t know the age or income of the person. But yes inflation x years x % of income = retirement without running out of money really.

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LSUtiger89

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I was posting the article because I thought people may find it interesting and it pertained to the subject at hand.

When it comes to determining retirement income it should be based on a budget not a percentage of income and that budget should be adjusted for inflation. Contengencies should also be put in place for spending shocks like long term care. Retirement income planning is something you really don't want to screw up. After all it's your last great vacation.

Inflation, and its impact is relative .

Consider a person with a spend rate of 10,000/month. With that you can get by with 4,000,000. That assumes a relatively benign 2.5% annual inflation rate.


All is good until inflation starts ticking up like we seeing now. What to do? With a 10,000 / month spend rate, you can cut back on expenses to account for the uptick in inflation. Eat out less, eat less expensive steak. Raise the a/c to 74… whatever.. you can adjust spending to account for the inflation.

So it’s relative

Ilower spend rate gets hit harder. Higher spend rate can adjust