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How much in savings before retirement?
Posted on 5/13/16 at 1:46 pm
Posted on 5/13/16 at 1:46 pm
Just curious what people consider an ideal savings balance to retire. I'll be 55 years old in a little more than five years and am considering retiring from my current job and working for myself. By then the kids will be out of college and I won't owe much on the house. Besides, I'll no longer need a house that big anyway. My main driver is to move back to my home city to take care of my parents who aren't getting any younger.
What would your goal be for 55?
What would your goal be for 55?
8
Posted on 5/13/16 at 1:52 pm to Ramblin Wreck
Honestly, my goal for 55 is the be retired for 5 years already.
When do you plan to retire? You need to figure that out then figure out how much money you need every year you plan on being retired then work backwards from your retirement year to year 55.
When do you plan to retire? You need to figure that out then figure out how much money you need every year you plan on being retired then work backwards from your retirement year to year 55.
Posted on 5/13/16 at 2:03 pm to poochie
I built a spreadsheet and did just that assuming 2% inflation every year. It's really hard to know what the equivalent value of money will be in the future and what spending habits are when you get over 70. When I graduated from college and started work in 1990, people were retiring here and thought $300K would last them a life time. Obviously that number has increased a bit.
Posted on 5/13/16 at 2:10 pm to Ramblin Wreck
For a ballpark, look at what you make now. Will any large costs be gone (house note)? Will there be any new large costs (health insurance)?
That will give you a baseline. Then do what you did with inflation. Run some different scenarios. Aim for the best you can do with worst case scenario and that should protect you.
That will give you a baseline. Then do what you did with inflation. Run some different scenarios. Aim for the best you can do with worst case scenario and that should protect you.
Posted on 5/13/16 at 2:14 pm to Ramblin Wreck
25x your annual income needs is the rule of thumb. So if you need 50k per year, you need a net worth of 1.25M.
If you want to be safe, you could do 30x.
if you plan to work on the side for a few years, you wouldn't need as much.
If you want to be safe, you could do 30x.
if you plan to work on the side for a few years, you wouldn't need as much.
Posted on 5/13/16 at 2:17 pm to Ramblin Wreck
In 25 years, I'll need about $5 mill.
Posted on 5/13/16 at 2:38 pm to ell_13
It just depends on what your investments net. I have a portfolio that spits off more than enough in dividends to cover my bills so in theory I could retire today. The minute you make enough passively via dividends or real estate investments to cover your bills you can retire technically
Posted on 5/13/16 at 3:11 pm to Ramblin Wreck
quote:
What would your goal be for 55?
My goal is 55. I'm 51 now. I have no debt, house and vehicles are paid for.
I have to save 4.5 years of expenses to bridge me to 59.5, so that his what I am working on now.
Probably somewhere in there, I will downsize house.
Posted on 5/13/16 at 4:00 pm to Ramblin Wreck
Posted on 5/13/16 at 5:20 pm to Hawkeye95
quote:
25x your annual income needs is the rule of thumb. So if you need 50k per year, you need a net worth of 1.25M.
If you want to be safe, you could do 30x.
if you plan to work on the side for a few years, you wouldn't need as much.
Income has nothing to do with how much someone needs for retirement. Expenses are everything.
Posted on 5/13/16 at 11:37 pm to lynxcat
USA Today had a story a month or so ago that said it could be done with $450k
Posted on 5/14/16 at 7:35 am to lynxcat
This.
Most people think they will spend more in retirement than they actually will. That's assuming you have no debt. If you retire with any major debt, you're basically screwed.
Most people think they will spend more in retirement than they actually will. That's assuming you have no debt. If you retire with any major debt, you're basically screwed.
Posted on 5/14/16 at 9:50 am to Ramblin Wreck
The key is a safety net.
Like?
Group home after going on SSI some point after telling a psych doc that you are real paranoid about being forced out onto the streets. It really can be the truth.
And then go on to a semi-independent program, that lets you get on foodstamps while you reside in a nice apt in a nice location. It will be with a co-tenant. And this is where one 10 min to an hour meeting takes place for goal purposes. Simple goals like money management, food prep, etc.
The safety net is due to the federal and state government benefits turned on for life. Whoever frowns upon things like SSI and EBT, is a fool.
Like?
Group home after going on SSI some point after telling a psych doc that you are real paranoid about being forced out onto the streets. It really can be the truth.
And then go on to a semi-independent program, that lets you get on foodstamps while you reside in a nice apt in a nice location. It will be with a co-tenant. And this is where one 10 min to an hour meeting takes place for goal purposes. Simple goals like money management, food prep, etc.
The safety net is due to the federal and state government benefits turned on for life. Whoever frowns upon things like SSI and EBT, is a fool.
Posted on 5/14/16 at 9:54 am to lynxcat
quote:
Income has nothing to do with how much someone needs for retirement. Expenses are everything.
I think you cut off part of what he was saying with your bolder words. I think he wanted to say "income needs", aka the amount of money you need per year to live off of.
Posted on 5/14/16 at 10:01 am to bourne1978
As for as retirement goes with me...
I am either with SSI/EBT/free heathcare/Semi-independent living program/co-tenant w/ a lighter illness label or flat out with $2 million after taxes (age 38 is a factor which tells me I can live the rest of my days off of $2 million).
I am either with SSI/EBT/free heathcare/Semi-independent living program/co-tenant w/ a lighter illness label or flat out with $2 million after taxes (age 38 is a factor which tells me I can live the rest of my days off of $2 million).
Posted on 5/14/16 at 12:06 pm to Ramblin Wreck
My goals would be:
Home paid off
Two cars paid off:
Over one million in a 401k
Passive income(rental homes)
Over 300,000$ in a IRA or Investment account.
With you retiring that early the main thing I would focus on is health insurance.
Home paid off
Two cars paid off:
Over one million in a 401k
Passive income(rental homes)
Over 300,000$ in a IRA or Investment account.
With you retiring that early the main thing I would focus on is health insurance.
Posted on 5/14/16 at 12:17 pm to Ramblin Wreck
My retirement goal is 2 million in today's dollars not counting the house. Ideally I would live off the interest and not touch the principal. That's not even counting on social security.
Who knows if this is a good goal or not. I currently don't have kids, in final house, etc. I might be over saving, but that's fine. I'd rather have too much than too little. As someone said it all depends on expenses.
I'd like to retire by 55, but all depends on my rate of return. I just turned 40; if my average annual rate of return is 6-7% for the next 15 years I should make it. The last 10 years it's been closer to 10%. The market crash in 2008-2009 was a miracle in disguise if you didn't sell out and plowed more money in.
Who knows if this is a good goal or not. I currently don't have kids, in final house, etc. I might be over saving, but that's fine. I'd rather have too much than too little. As someone said it all depends on expenses.
I'd like to retire by 55, but all depends on my rate of return. I just turned 40; if my average annual rate of return is 6-7% for the next 15 years I should make it. The last 10 years it's been closer to 10%. The market crash in 2008-2009 was a miracle in disguise if you didn't sell out and plowed more money in.
Posted on 5/14/16 at 12:29 pm to Jabstep
My goal has always been to have $3M, but the market hasn't been overly kind the last few years. I looked at a really conservative annual spending budget and assumed it would increase by 2% every year due to inflation. Also assumed my savings plan would earn 5% per year.
Even with taxes, insurance policies, and charity, $80K per year to live on seems pretty conservative. I don't expect social security to be an available source of income. At the inflation and earning rates I used, I'll still have plenty of money for family to inherit even if I don't meet my goal.
Even with taxes, insurance policies, and charity, $80K per year to live on seems pretty conservative. I don't expect social security to be an available source of income. At the inflation and earning rates I used, I'll still have plenty of money for family to inherit even if I don't meet my goal.
Posted on 5/14/16 at 4:30 pm to Ramblin Wreck
I don't have a number. I'll work until I don't feel like it anymore. I will probably do something part time later in life.
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