How much to retire?

I've read a few articles and there are a sh-------, err, a lot of different ideas on how much you need to retire. It seems, the vast majority of current retirees are getting it done with less than 350k in retirement savings (household). This seems grossly inadequate to me and I put "the cheap" in frugal. What do y'all think? Let's just assume a husband and wife getting a combined $4,500k/mo. Social Security check. We, currently, have no debt. Are retired folks borrowing $$$ for cars and such? How much do you think you should have? I'm 54 and have been in the business of retirement planning in the past, but I would sure like to get your take on how much is enough!?

If people can't live on $4,500 a month something is wrong.

To be honest I’m not sure if there is an answer, especially now with the way home repair costs have risen and insurance companies getting really picky about how they pay.

Truth

Don’t quit your day job!

With no debts, I'd think if there was roughly $55k household income coming in a year from SS/pensions, etc that you'd cover yearly expenses in most cases IF you arent living in an expensive area. Heck some places could easily have $15k of that going just into property taxes. However, even with the yearly income, I'd not feel very comfortable without a cushion for all those things that you havent necessarily factored in such as the new vehicles, trips, unexpected medical issues, health care premiums

I am not sure that question can be answered because everyone has different lifestyles and ideas of what "retirement" should be. I like to fish but there is a difference between a couple dozen crawlers a week and out of state trips every week. Your lifestyle will play a big part of it too. How often and far do you travel? I assume you are talking two people. Major medical would be my biggest fear.

I tried to have this conversation with a financial advisor, turns out he was just an insurance salesmen who also was hoping we'd invest our money with them.

I think Tman offers as good of advice as most professionals. That said this question is extremely difficult, I've been pondering it for some time myself as I plan to "semi retire" in 5 years

For my thinking it boils down to three things to make it on half what you both make during one year together

1 Be out of debt, all barrowed bills and buys done with, home, cars, what ever you have on credit
2 Your health is a big dose of reality when either retire if married, it should be as fine as you can get it before retiring
3 You have saved some part of your funds for a retirement helper, along with pensions or some sort of retirement fund

4 Which is really dependent on what you want to do with your self and or spouse retired and pretty personal to everyone,
travel around, visit friends, outdoor activities together or apart with others you may enjoy

Most people end at 3 if they have had the stamina and due diligence of strength to save, most don't, if you do, one should be able to live pretty easily on $4,500.00 a month in my view of my life !

Depends, if you just have 350K or less in 401K, and draw social security for a 2 leg income support mix that might be tough, and everything better be payed off.

Now if you have no debt, a pension, and draw SS you might even get by with say $250,000 401K if the amount of this 3 legged income mix can generate at least $50,000 a year for life.

My advice to the younger people is focus on getting out of debt before retiring, don't be overly concerned about getting a million or more $$ in your 401K because how are you going to get it out?... Sure you can create a financial legacy for your kids, and that's all good, but when you draw out a bunch with your other income streams you rapidly get into higher tax brackets where Uncle Sam gets it.

And, if you retire before Medicare age that higher income will work against you on medical insurance costs.

Just some stuff to consider, and just another opinion.

I'll be eligible to retire when I'm 49. 7 years left. I've put a large amount of my money to land and cattle since I began work. My pension is going to be enough to cover my families insurance and maybe $2000 per month in living money. If I didn't have the cattle I don't see it practical to retire, and if the cattle market falls to 2017 levels I probably can't.

We live on less then that. Like 160 said it all depends on what you are going to do in retirement. We don't travel and don't care to travel so life is very simple for us and the things I enjoy doing don't cost much so we don't need much. I have a ranch though that is my joy and past time.

Get a good handle on your expenses for a year and then it is just crunching number of what SS, saving, 401k, etc. you have. I was nervous when I stopped work, I went out at 58 but everything financially has been good.

If you have 350K and took 4% each year out it would last 25 years at 14K a year. If you took 2% out of the 350K you would 7K a year and 50 years. So, age and how many years do you expect to live after you retire. Figure in all your money SS and so forth and minus and pad your expenses by 10% and do the simple math.

Assuming you'll be living for a long time in retirement, and outliving your money is something you don't want to happen... The math says the "safe withdrawl rate" is between 3 and 5 percent. If the market is up wihen you retire, you need to plan on the low end of that (3), if the market is down, you can get away with being at the high end of that (5). From this you can adjust up annually for cost of living (e.g. using the social security adjustment percentages). 4% of 350k is 14k a year. If the market keeps going up your first few years in retirement, you can adjust up withdrawl based on the new balance.

The safe withdrawl rate is assuming you'll be withdrawing the same amount every year (with COLA), like its mandatory living expenses that must continue for 3-4 decades. If its play money and you're cool skipping withdrawls when the market goes down, then you can get away with taking a lot more.

You'll find plenty of people with a high fee product to sell that will assure you that you can safely take much more. Never decide how much you can withdraw based on the advice of someone profiting from your decision.

I'd encourage you to do a lot of reading on "safe withdrawl rate". Also google "sequence of withdrawal risk".

If you are totally debt free, what else do you have to spend money on? Property taxes, electric, heat, food, medical and a little travel or fun money. I have no expectations of living to be 100 and will likely leave a BUNCH of money on the table. My favorite place to travel is home. My brand of booze was just on sale for $12 bottle. I don't eat much. $4500 month goes a LONG way in that scenario. Since I retired (at 50) just over 2 years ago, I could be drawing DOUBLE what I am and still have my 401 balance remain the same. I believe that we tend to make due with what we have and live on our income (for the most part) anyway. I may get a part time job at some point just for entertainment and the employee discount.

What do you drink for $12? Old crow?

I never considered an overall number I have retired from one job with a pension and am currently working on my second job with a pension, I've invested in stocks and have a 401K we also bought property and paid debts off, when I retire I plan to use social security (if it still exists) for bait and beer money

Want to retire early? Don't get married.

Mine is terrible with money.

My plan that may or not work out but for now the plan is retire at 57. if I can keep up my current investment rate and get a market average return should have at least 1 million to 1.75mil in the 401 and Roth 410 and Roth Ira's.

At 57 I can draw my small 16 to 1800 a month pension and I hope to be able to pull my from my investment returns at that point instead of reinventing it all and live off the returns and never have to touch the investment principle.

I'm now 44 and own my farm & rent house. only debt is on my wife's van because of the low interest rare iv not paid it off. We live simply my truck is a 2wd 97 ranger with springs going through the driver seat and no head liner. it gets me from point a to b and not having a high vehicle payment with matching high insurance and licensplates allows me more money to invest. Setting my wife and I up for retirement 8s more important than driving a flashy new truck.


I don't think social security will be an option and am not planning on having it If I make it to a million at 5% returns that's 50 k to pull a year plus 18 k on the pension. staying debt free and add other small farm income and other bills reduction plans like getting solar put in to eliminate or drastically reduce the powered bill should alow for a comfortable early retirement.

That said yes that's the plan but I have never had anything go as planed and don't expect this to either. It's just the goal.



Edit. I could retire comfortably on much less but hopefully will leave the kids and future grand kids a good chunk and having more and living of the dividends hopefully will keep me from having to spend down what we put back.

There is a lot of truth to that.

I'm retired. Wife still works.
Win:win!

well, we live on 3500, a month, and I have a house payment, you learn to live on what you have, IF IT WASN'T FOR MY FUR CHECK DONT THINK WE COULD MAKE IT,

I keep thinking it’s the really late in life costs that need to be saved up for. Assisted living, medical, that crap is super expensive and insurance options in retirement aren’t the kindest to folks.
And, that big unknown for all of us is taxes. We know what they are now, we don’t know what they look like in future. Saving pretax dollars in 401ks means the dollars get taxed later.
I also can’t count on social security. It’s here today. I retire in 10 years will it be there and will it be there when I’m in my 90s. I ain’t doing that in planning to my retirement to my spouse. I made vows to her to take care of her and I will do that. I plan to REALLY take care of her.
I’m a believer in over saving for retirement. It’s not just for me.
If she wants to take trips and have fun, let’s do it and not worry about it.
So I’m building a war chest of funds for my retirement. Yes I could retire on less, but I’m not doing that to her or our boys. I want to be able to afford trips like coyote days with Mr Graham, or head to desert and watch someone catch cats. I want to fish in the ocean. These are things that small town Midwest guys wish for.
Jim

Jim, I did the same thing, but in my early 50s. health problems slap me in the face, I thank God daily that I put money away, now 12 years later I have beat all the odds, and I'm still alive, enjoying most days, not traveling like we plan, but raising grandkids, So make all the plans you want just be willing to change them

Poor advice ! The better advice is make smart choices and stay married

4500 a month before taxes?

I could live on it I suppose. 20 years from now no way.

Coming from the divorced guy who retired at 50. LOL

The real time to start thinking about retirement was when you first started working. The wonders of compounding interest over 30 years really make a difference. If you are dedicated and set money aside for every paycheck, invest wisely, and don't get divorced the average middle class worker should be able to have all debts paid off and over a million dollars of assets by the time they hit 50. Seven years later that would be close to doubled. Social security should be the icing on the cake - good if you get it but okay if you don't. The other component that someone mentioned is increasing tax brackets. That is the time to work on spending down the money to avoid getting moved up into higher taxes. It is going to be fun being super generous!

Insurance might be the killers.

green bay is right, all you young guys, start now, fine an investor, that you can trust, and meet with him regularly,

What is needed is very different for every individual. If you have a good pension or say two pensions in your household and with Social security the amount one needed to save is considerably less then a household w/o good pension income. Several also have assets that they can sell like down sizing etc. that can be used for retirement. An example would be like this. If you were making 100k per year the last decade of working as a household and you estimated you would be spending 85 K in retirement and say 35 K in Social security with no pension you would need to draw 50 K out of savings per year. To last 20 years at 4% you would need 700-800K to last 20 years.
If you had say 40K from pensions you would only need to take out 15K per year or 350-400 K would be plenty. Going up or down in retirement spending can correspondingly raise or lower the amounts of social security, pension and or savings.
As Green Bay stated I started my pension saving plan in 1975. I started my market investment savings plan in 1981, so I then had 30 years of earnings and additions and that has allowed us to live on more in retirement then while I was working.
Bryce

My wife is thrifty so I scored there. Four kids are expensive. The fourth coming at 40 set the early retirement plans back a few years.

Bold of you to asume that's an easy task this days

Great advice but,,,,,,,

Learn to do it yourself

Chart your own future

Don’t pay someone else to do it

I know that feeling. I was 46 when my last one was born.

Dang. 46!

Mine is 11 now. His older siblings are doing a great job raising him!

I started saving for retirement at age 14. Figured it out back then I didn't want to work my entire life only to be broken down in retirement like my parents. Compound interest is a beautiful thing. As been stated by people far wealthier than me, the first $100K is the hardest to acquire. After that it builds quick, fast, and in a hurry! I have had it planned out since I was 14, to retire at 50 with my wife (her choice if she wants to work). So, that is what I've planned for. When my friends were buying their new trucks, boats, guns, phones, etc. I was making do with what I had, socking away every penny I could using a flip phone, driving a 12yo truck, etc. Now, I'm 11 years from retirement and in a far better position than my most all of my friends, family, and even a lot of coworkers. It SUCKS at times! I won't lie. I wanted many things, but I also want to RETIRE AND ENJOY LIFE at 50yo more.

As for a specific number, that is impossible to pin down. Everyone has their own habits, hobbies, etc. so their expenses will be different. My wife is 8 years younger than me; she likes to make money while I like to save money. We work well together. She can work another 15 plus years after I retire. But since I was so frugal and strategic in my early life, we have no debt other than our mortgage which will be paid off soon. We will continue to live off one paycheck and invest the other. Even if she takes a penalty for early retirement, we will be ok. I have a specific number in mind I would like to see before I retire (not counting my pension). I should exceed that with several years left to work. But I won't let up just because I reach my goal.

Best advice I got was to start early! I tell everyone take advantage of employer match but put at least 15-20% of your money into your retirement each check. More if you can swing it. You won't miss it if you start out doing it that way, and you will soon learn to do without. Every time I get a raise; I take 1/2 of the raise and put it in retirement. All those cool new toys now, will be worthless when you need the money the later in life. Most are too short sighted to be that disciplined. They think, "I work hard, I deserve this xyz." Then they complain they can't retire because they have nothing saved.

If you don't spend tons of money here, you can live pretty cheap .

One constant is Debt Free---the rest is optional !

C
Great advise but,,,,

The average person in their early 20s probably knows little to nothing about investing and would be better off meeting with a pro. Within 3-5 years, they should have had time to learn and figure a lot of things out and then go out on their own. Thatd be better than doing completely stupid stuff for the first 10 years of your working career. Just my opinion....

Spot on. Start early and get out of debt and never go back in.
Sorry, cant help with your specific number. As others have said, it varies too much based on location and what you want to do in retirement.

I get what your saying midlander,,,,not arguing

But would say that today’s young people have a huge advantage and likely know a lot more about finance/investing than folks 30-40-50-60 years ago,,,,,just from technology

There’s no excuse

Back in the day,,,,,you had to wait for the newspaper. and going through pages of really small print. lol
Physically go to the bank

If anything,,,,hiring help later in life makes more sense

The numbers are bigger. Taxes are more complicated

Happy wife happy life
Or is it
No wife happy life

I was tired yesterday. I'm retired today.

Save early. Safe often. And save as much as you can. Your savings plan for retirement should be your first payment to you.

Money should be scattered in multiple plans. You want streams of income coming in from multiple locations.

Live within your means. Try to be as debt free as you can when you retire. But that can’t always be the case. Each individuals situation is different. And life can throw you a curve at anytime.

Your best investment is in yourself.

The key to retirement is not the amount of money that you have saved but how much you have coming in. Can you make it comfortably with you retirement income? If so you're golden.

I live on less than that. It all depends on how much you've saved your whole life, if you got married or not, had kids or not, etc.
I never got married, never had kids and saved my butt off since my late teens. I retired at 55 11 1/2 years ago. I don't try to keep up with the Jones' , I don't spend money like a mental patient.
I've got more money in the bank now than I did when I retired. I'm STILL socking away the money.

Your lifestyle will determine how much you're going to need later. If you live beyond your means you're in for a TON of trouble later. Guaranteed.

You sure have a good point about tax complications ....

There are some simple considerations that can help answer the complex question.

How much you save / wisely invest for retirement is important.
How much you spend when retired is important.
How is your health?
How much debt do you have?
Will you inherit any money?
How early do you retire?
Do you have any income when retired?
Do you receive blessings from God?

Take advice from wealthy people.
Marry well.
Work to improve yourself.

I was extremely fortunate with the woman that i married.
She was a beautiful tall model, great personality, very intelligent with a great non-modeling career, loved the outdoors, asked me to marry her, encouraged me to enjoy my outdoor activities, and she bought me a new truck as a wedding gift.

We both worked very hard.
I retired at 55.
We both had great careers.
After retirement from my career, i started a business which was successful and eventually retired from that.
Now while retired we are involved in a different business from which we have business expenses and business income - very important.
I work approximately 15 hours per week in our business and managing our retirement projects.
We have no debt.
Many of my / our successes can be directly attributed to being blessings from God. He presented blessings and opportunities. We worked diligently to make the most of those blessings and opportunities.
Consider looking at retirement in a different way. It does not necessarily mean a completely idle life of no responsibility.
it is possible to make a significant income after retirement.
Other than health problems, we are very happy with our situation.

Thanks for staying the obvious lol.

Can here as well as long as one doesn't own much and don't leave the house.

Back to your question Brian. 45 k combined income where you live wouldn't be enough IMHO. I'd shoot for a combined income of 80 to a 100k of you plan on staying in MN

10g a month is about avg Id say.

You mean you aren’t planning on your retirement trapping income to cover any gaps ? LOL. With the price volitivity of the cost of living expenses and periods of 20+% inflation there is really no real way to know how much one going to need. My plan is save everything we can, live frugal see how long we can make it last. I love the financial planners first question” How much do you WANT to spend when you retire?”

I dont like frugal
When your dead your dead for a long time.

Amount of money is irrelevant if you don't have well thought out and achievable personal goals. Plan your work and work your plan(s). Educate and condition yourself to achieve those goals. Set and realize your priorities and discipline yourself mentally, physically, and financially wise to follow through with those plans. Eliminate all financial responsibilities and obligations as much and as soon as possible. Learn to live comfortably within your means and enjoy the knowledge of not being obligated. :-)

50 g x 20=…….. add it up.,,,,, now if ya live older……
Rest home is 10- 13 g
My property taxes are 8 g in wa and 5 in az…..

That's the problem Vinke, if you have much, cant run from the tax man.

After that it's the insurance man.

Truth,,,,,, run poor,,,,,
Trust for inheritance………
And I am poor white trash in my blood….
.

You live in the wrong part of the State, Dave. My property taxes are $1200/year
I'll start drawing SS in 3 months, 70 years old. Don't owe anything and I live on $2000/month. I would be a nervous wreck though if I did not have a nest egg that is growing.
One thing though in wife/no wife debate though, I recently broke up with my girlfriend and that has saved me mucho money. Single and looking could be the worst yet.

I haven't had a full time job since 1992. I kind of semi retired when I was 29 . Things should get even easier when i sign up for my first ever gubmint wealth transfers. I see no reason why retirement will be much better or worse than semiretirement was except the falling apart part that has already been happening.

Start early and young and take full advantage of compounded earnings and market returns. Its powerful savings boosts. A coffee can in the freezer with cash, or a paltry savings account yield ain’t going to cut it.
Be smart about where and what you invest in too.
Jim