How much money is needed in your retirement account to actually retire?

[BlueRaider22]

My current plan (which obviously is subject to change......especially since we are likely getting ready for another market correction soon)


As of right now I am scheduled to retire in my mid-to-late 50's. More than likely the biggest determinate of when is my kids college. If my kids leave the nest earlier, I'll retire earlier. Also, we will likely have enough to bridge the age gap from retiring in our 50's to when we can collect from our IRA/401K......but who knows.....schtuff happens....


My wife and I are aiming for about $5000/month.....or $60k/yr. (this is a conservative overestimate)
-Assuming all major debts paid....mortgage, student loans, etc.


1. OPTION 1 (The ideal scenario) -

A rough guess-timate is that you can collect about $500/month in dividends on a $200k total.....assuming a moderate 3% yield.

So, if we have ~$2mil in dividend yielding investments we can live off the dividends without touching the total......which also gains interest with time. This would get us about $5k/month without digging into the total sum. Now, that being said, it's a little risky. So, we need another sum to balance out the risk. Another million or so, would be great to have in far more conservative, lower interest bearing accounts.....bonds, CD's, stable funds.

That would mean that ideally we need a sum of $3-4million total to make the above work. Currently we are on pace to achieve this......but you always have to be cautious of what if's.


2. OPTION 2 (Uh, Oh)

Things don't work out quite so well. If we are only able to accumulate about $1.5mil. Well first, I'd probably work another couple yrs to help this to grow. But, we could mix the $1.5mil over a nicely conservative portfolio. If we can yield 3-4% interest annually on average we can make $45k-60k per yr in interest......which would be enough to live off of.

 

[CAT Scratch FVR]

My thoughts are if you start with 1M and take 5% (50K) every year and live a long life, you’ll probably run out of money before you die. If you take 4%, good chance you make it to the end and bounce your last check. If you take 3%, you probably have something to leave to your heirs.

Just sat in a conference today that addressed $1,000,000 at 4% distribution per year. gets you to 95 from 65. Conservatively.

 

[DSmith21]

My current plan (which obviously is subject to change......especially since we are likely getting ready for another market correction soon)


As of right now I am scheduled to retire in my mid-to-late 50's. More than likely the biggest determinate of when is my kids college. If my kids leave the nest earlier, I'll retire earlier. Also, we will likely have enough to bridge the age gap from retiring in our 50's to when we can collect from our IRA/401K......but who knows.....schtuff happens....


My wife and I are aiming for about $5000/month.....or $60k/yr. (this is a conservative overestimate)
-Assuming all major debts paid....mortgage, student loans, etc.


1. OPTION 1 (The ideal scenario) -

A rough guess-timate is that you can collect about $500/month in dividends on a $200k total.....assuming a moderate 3% yield.

So, if we have ~$2mil in dividend yielding investments we can live off the dividends without touching the total......which also gains interest with time. This would get us about $5k/month without digging into the total sum. Now, that being said, it's a little risky. So, we need another sum to balance out the risk. Another million or so, would be great to have in far more conservative, lower interest bearing accounts.....bonds, CD's, stable funds.

That would mean that ideally we need a sum of $3-4million total to make the above work. Currently we are on pace to achieve this......but you always have to be cautious of what if's.


2. OPTION 2 (Uh, Oh)

Things don't work out quite so well. If we are only able to accumulate about $1.5mil. Well first, I'd probably work another couple yrs to help this to grow. But, we could mix the $1.5mil over a nicely conservative portfolio. If we can yield 3-4% interest annually on average we can make $45k-60k per yr in interest......which would be enough to live off of.

Three thoughts on your plan which is pretty solid. 1.) 3%-4% dividend paying stocks generally don't have as much growth as the overall market. So you could lose ground over time due to inflation. 2.) Your dividend income is taxable so Uncle Sam is going to take some of your income. 3.) You might consider mixing in some bonds into your portfolio rather than having all your eggs in the stock market.

 

[BlueThruAndThru]

Best age for Social Security retirement benefits

Put it off
Generally, it’s best to postpone Social Security benefits as long as possible, at least until your full retirement age as determined by the Social Security Administration, or SSA.

Early Social Security can cost you
If your full retirement age is 67, your Social Security benefit is reduced by:

• About 30 percent if you start collecting at 62.
• About 25 percent if you start collecting at 63.
• About 20 percent if you start collecting at 64.
• About 13.3 percent if you start collecting at 65.
• About 6.7 percent if you start collecting at 66.

Source: Social Security Administration

“Social Security is like longevity insurance,” says Brent Neiser, a Certified Financial Planner and director of the National Endowment for Financial Education. “It’s a stream of payments that will not stop throughout your life, so delaying your benefits to keep those payments as large as possible forms a helpful base to your retirement plan.”

In fact, he notes, those who undersaved for retirement should use whatever means possible to postpone their Social Security benefits until after their retirement age to help boost future income.

If your full retirement age is 66, for example, you’ll receive 108 percent of your monthly benefit by delaying Social Security until age 67.

If you wait until age 70, it jumps to 132 percent.

 

[CAT Scratch FVR]

I *hate* the idea of getting super conservative as you approach or hit retirement, and I think that’s antiquated, ignorant information. If you retire at 60, there’s a good chance you end up needing your $$$ to last as long or longer than you even invested in the first place.

I agree. Hearing this a lot lately. Can't get too conservative. Have to keep up with inflation, rising costs, etc. Still have pension with option of monthly or lump sum. Most are choosing lump sum as their is no inflationary factor for the monthly. Still need money to grow in retirement.

 

[BlueRaider22]

Three thoughts on your plan which is pretty solid. 1.) 3%-4% dividend paying stocks generally don't have as much growth as the overall market. So you could lose ground over time due to inflation. 2.) Your dividend income is taxable so Uncle Sam is going to take some of your income. 3.) You might consider mixing in some bonds into your portfolio rather than having all your eggs in the stock market.

Thanks for the advice. Obviously as I approach time things get more accurate and concrete.

The idea about the dividends isn't to render a complete "non withdrawal from the overall nest egg", but rather just to provide a steady source of monthly income. I would also likely spread the dividend investments more over funds than individual stocks.....thus being more conservative. It doesn't really matter if I lose a little ground with the dividend strategy.....because the rest of the portfolio nest egg will yield more gain than we'll ever use.

Agree about the taxes. Didn't factor those in......but also didn't factor in social security at some point. (which obviously I'll defer as long as possible)

I also didn't mention other sources of income that we're working on.....real estate.......inheritance, etc....




I mentioned bonds, cash, and other entities......and not entirely the stock market. Under OPTION 1.....last sentence of the larger paragraph. 1/3rd to 1/2 of the entire portfolio will be in bonds, cash, etc.

 

[UKGrad93]

Don’t go too conservative with investing at retirement. Unless you are really old, you still have 25-40 years for the money to work. I think that points to keeping some in stocks.

 

[dopy03]

My current plan (which obviously is subject to change......especially since we are likely getting ready for another market correction soon)


As of right now I am scheduled to retire in my mid-to-late 50's. More than likely the biggest determinate of when is my kids college. If my kids leave the nest earlier, I'll retire earlier. Also, we will likely have enough to bridge the age gap from retiring in our 50's to when we can collect from our IRA/401K......but who knows.....schtuff happens....


My wife and I are aiming for about $5000/month.....or $60k/yr. (this is a conservative overestimate)
-Assuming all major debts paid....mortgage, student loans, etc.


1. OPTION 1 (The ideal scenario) -

A rough guess-timate is that you can collect about $500/month in dividends on a $200k total.....assuming a moderate 3% yield.

So, if we have ~$2mil in dividend yielding investments we can live off the dividends without touching the total......which also gains interest with time. This would get us about $5k/month without digging into the total sum. Now, that being said, it's a little risky. So, we need another sum to balance out the risk. Another million or so, would be great to have in far more conservative, lower interest bearing accounts.....bonds, CD's, stable funds.

That would mean that ideally we need a sum of $3-4million total to make the above work. Currently we are on pace to achieve this......but you always have to be cautious of what if's.


2. OPTION 2 (Uh, Oh)

Things don't work out quite so well. If we are only able to accumulate about $1.5mil. Well first, I'd probably work another couple yrs to help this to grow. But, we could mix the $1.5mil over a nicely conservative portfolio. If we can yield 3-4% interest annually on average we can make $45k-60k per yr in interest......which would be enough to live off of.

Blue raider: I have a few suggestions but I won’t give specific advice over the internet. If you would actually want to talk let me know.

 

[Tskware]

I *hate* the idea of getting super conservative as you approach or hit retirement, and I think that’s antiquated, ignorant information. If you retire at 60, there’s a good chance you end up needing your $$$ to last as long or longer than you even invested in the first place.

If you put money in the stock market, it should be well diversified and stay there forever. Nobody “lost” money in ‘08, unless they were dumb enough to withdraw. For those that stayed in — their account has tripled.

This is the right answer, by the way. My account has WAY more than tripled since 2008, I would guess.

Besides, you can leave plenty of money in the stock market and still be somewhat conservative, e.g., utilities, AT&T, Verizon, and the like that pay 2-4% dividends, with some growth potential.

 

[BlueRaider22]

Blue raider: I have a few suggestions but I won’t give specific advice over the internet. If you would actually want to talk let me know.

Appreciate it. It's fine if you want to say something in the open. It's a very generalized forum and someone might want to hear what you have to say if you have expertise.

I'm certainly no expert in finances which is why I'm in healthcare. I've just structured things based off of bunch of research.....Fidelity, Kiplingers, Money Mag, etc. But you could fill Commonwealth Stadium with the knowledge I don't know. My wife and I will get a financial advisor soon......but we have some things to work out first.

 

[PTI (pti)]

Playing it overly conservatively also means your money isnt working hard enough. Look at BlueRaider, who has laid out a detailed plan to save $3-4 million, all to make just $5,000 a month. Craziness.

 

[dopy03]

Appreciate it. It's fine if you want to say something in the open. It's a very generalized forum and someone might want to hear what you have to say if you have expertise.

I'm certainly no expert in finances which is why I'm in healthcare. I've just structured things based off of bunch of research.....Fidelity, Kiplingers, Money Mag, etc. But you could fill Commonwealth Stadium with the knowledge I don't know. My wife and I will get a financial advisor soon......but we have some things to work out first.

For compliance reasons I still have to keep it relatively vague.
1. I usually ask people what does your dream retirement look like to you? And second question how much are you going to have to spend to live that dream?
2. For higher net worth individuals tax free municipal bond funds are very helpful. It allows someone who has large tax obligations to generate tax free income in retirement. 3%-4% tax fee is the equivalent of 6%-7% of taxed income.

3.Without knowing everything I won’t get into any more details, by my best advice is that you find a advisor who does financial planning, and ones who are not interested in selling you products.

 

[CatOfDaVille]

Then many experts are completely out of touch, and virtually all Americans will not retire comfortably in the next couple of decades.

I guess it depends on one's definition of comfortable. $50k/yr if you want to travel, pay for medical bills, spoil your grandchildren, get a boat, play a bunch of golf, etc. is likely not enough. If you just want to sit around in retirement, then it could be enough.

For me, I want at least $100k/yr and retire in style, so I'm aiming for the $2 mill mark.

 

[BlueRaider22]

For compliance reasons I still have to keep it relatively vague.
1. I usually ask people what does your dream retirement look like to you? And second question how much are you going to have to spend to live that dream?
2. For higher net worth individuals tax free municipal bond funds are very helpful. It allows someone who has large tax obligations to generate tax free income in retirement. 3%-4% tax fee is the equivalent of 6%-7% of taxed income.

3.Without knowing everything I won’t get into any more details, by my best advice is that you find a advisor who does financial planning, and ones who are not interested in selling you products.

Yeah, I figured there were many other vessels that I could use. I’m not too close to retirement yet which is why we’re not in the largest hurry. We want to eliminate our mortgage sized student loans before we go to a advisor for options......and there are other things we want to accomplish.

Love the advice thanks.

 

[BlueRaider22]

Playing it overly conservatively also means your money isnt working hard enough. Look at BlueRaider, who has laid out a detailed plan to save $3-4 million, all to make just $5,000 a month. Craziness.

We’re being overly conservative because we can be. But we’re lucky that we don’t have to be. Right now we’ve set a retirement budget at $60k/yr but we’d have waaaaay more spending power that’s that. Shoot, if we have $3-4million spread over a conservative bunch of entities, it’s not unreasonable to gain several hundred thousand dollars in interest per yr......without even touching the principle.

Conceivably you could have $600k spread over mutual funds and earn $60k/yr in interest. It’d be risky and would fluctuate quite a bit but you could do it. But you wouldn’t have much flexibility.

 

[VT/UK Rondo]

I have purchased a nice used van. It will benefit me nicely as a reside in it down by the river.

 

[ymmot31]

You phuckers are so funny. All of you are so smart.

Here's how much you need. Enough to cover your hard bills, along with enough to cover your discretionary expenses. YOU decide if you have enough by not spending more than you have. Remarkably, it's the same as it is now. If you are deep in debt now, you'll be deep in debt in retirement.

I need about 50 million to retire again in the manner I would like to. But I'm a happy camper right now.

 

[lz]

I have purchased a nice used van. It will benefit me nicely as a reside in it down by the river.

Sounds like you’re going to work your funds down to food stamps. Watch that first step out of the van every morning!

 

[jameslee32]

The only thing I really tell people is, nobody cares more about your money than you do.

 

[ymmot31]

How much should you eat? How often should you mow your grass? How many squares should you use to wipe your ass? Same question. It's up to you.

Some of you idiots are asking PTI what to do with your money when you should be asking Dr. Bob how often you should breathe.

 

[lz]

How much should you eat? How often should you mow your grass? How many squares should you use to wipe your ass? Same question. It's up to you.

Some of you idiots are asking PTI what to do with your money when you should be asking Dr. Bob how often you should breathe.

I think this is a great thread for those with questions, these aren’t idiots, was pretty insecure about retirement myself when younger. I luckily have a pension, not stupendous, but my wife and I have lived comfortably in retirement for 10 years, gradually using the pension, Roth IRAs and $100,000 taxable investing fund (good practice for stock investing over the years) I saved for several years outside of our 401K plans, then SS kicked in, finally tapping some of the 401Ks converted to regular IRAs. I invest anywhere from 30% to 70% in diversified stocks, the rest in a money market fund, about 60% Cash currently. As others have said, you have to know yourself and needs in retirement, got most travel out of our system when younger, some friends go go go or own two homes, my brother spends a bunch on various types of entertainment-fishing, golf, all kinds of hunting, they need much more than us.

 

[entropy13]

Best age for Social Security retirement benefits

Put it off
Generally, it’s best to postpone Social Security benefits as long as possible, at least until your full retirement age as determined by the Social Security Administration, or SSA.

Early Social Security can cost you
If your full retirement age is 67, your Social Security benefit is reduced by:

• 
  
  
  • About 30 percent if you start collecting at 62.
  • About 25 percent if you start collecting at 63.
  • About 20 percent if you start collecting at 64.
  • About 13.3 percent if you start collecting at 65.
  • About 6.7 percent if you start collecting at 66.

Source: Social Security Administration

“Social Security is like longevity insurance,” says Brent Neiser, a Certified Financial Planner and director of the National Endowment for Financial Education. “It’s a stream of payments that will not stop throughout your life, so delaying your benefits to keep those payments as large as possible forms a helpful base to your retirement plan.”

In fact, he notes, those who undersaved for retirement should use whatever means possible to postpone their Social Security benefits until after their retirement age to help boost future income.

If your full retirement age is 66, for example, you’ll receive 108 percent of your monthly benefit by delaying Social Security until age 67.

If you wait until age 70, it jumps to 132 percent.

Counterpoint is, the older you are, the less you can really enjoy your money. Hey, great, I'm getting 132% SS benefits! Too bad between 62 and 70, my health went to sh!t.

 

[Rebelfreedomeagle]

I want to err on the risky side personally. I legitimately fear saving a sweet pile only to have the whole thing go to a nursing home when I'm an unconscious sack of bones and urine. I want to use it down to the last hundred and use it to buy a lethal dose of fentanyl.
For possibly the first time, I'm not joking.

 

[CAT Scratch FVR]

Counterpoint is, the older you are, the less you can really enjoy your money. Hey, great, I'm getting 132% SS benefits! Too bad between 62 and 70, my health went to sh!t.

And this is the range advisors say most travel occurs in retirement. As you age, you will spend less beyond this point.

 

[BlueRaider22]

And this is the range advisors say most travel occurs in retirement. As you age, you will spend less beyond this point.

Brings up a good question. Obviously most gurus say to hold off on SS as long as able, but what if SS doesn't matter? Meaning, that let's assume that someone has a retirement fund that enables the individual to the point where the money provided by SS really doesn't matter. If a SS is basically extra is there a point where you might as well just take it sooner? Or is there a point where you shouldn't wait too long?

 

[Tskware]

We are getting closer to retirement age, wife and I are both near 60. Our advisor told us to start tracking our expenses every month to see how much we really spend (note, it is usually more than you think). He told us too many people wait until they retire, then see how much they have, and then have to make hard decisions. It is better to know before you retire exactly how much you spend, and determine what you can do without comfortably, before you pull the rip cord. That way you have a much better idea whether you have "enough" or not.

 

[Ron Mehico]

Ahh yes the retirement thread, where people talk about how many lifelong memories they are going to sacrifice, how many vacations they’re not going to go on while they are energetic and able to enjoy them to the fullest, how many nice things they’re not going to enjoy for decades, all in the name of getting the best tennis balls for their walker when they’re 80 or for a large percentage dying with half of it left.

 

[CAT Scratch FVR]

Brings up a good question. Obviously most gurus say to hold off on SS as long as able, but what if SS doesn't matter? Meaning, that let's assume that someone has a retirement fund that enables the individual to the point where the money provided by SS really doesn't matter. If a SS is basically extra is there a point where you might as well just take it sooner? Or is there a point where you shouldn't wait too long?

If you don't need it, then you should probably do a life expectancy analysis to determine break even point for when taken early vs later.

 

[lz]

Brings up a good question. Obviously most gurus say to hold off on SS as long as able, but what if SS doesn't matter? Meaning, that let's assume that someone has a retirement fund that enables the individual to the point where the money provided by SS really doesn't matter. If a SS is basically extra is there a point where you might as well just take it sooner? Or is there a point where you shouldn't wait too long?

After battling Hodgkin’s at age 46, I decided I was retiring ASAP, not going to bet I lived a long, long life, so at almost 60, I retired, my wife two years later at 61, we both took SS at 62, don’t regret it.

 

[lz]

And this is the range advisors say most travel occurs in retirement. As you age, you will spend less beyond this point.

People should travel when younger and try to go to different places instead of Disney yearly, much easier when you have the energy, plus it helped dealing with work stress to get away on a nice trip or two, plus occasional business travel. We pick and choose travel now, stay fit, but long drives and airport travel, dealing with luggage gets harder in your 60s+. We had a great trip to Ireland because drivers could be hired reasonably, a trip to Italy was fun but we had to do the driving and bad ending for me at Venice with seemingly a mountain of steps to cross the water to walk to our lodging with two bad shoulders to carry luggage weighted down with Tuscany purchases...great place, though.

 

[GhostVol]

I’m truly blessed. Don’t need SS. That’s going to be my travel money. My former neighbor traveled to Hawaii before he passed away. He was 85. You can’t enjoy Hawaii at 85. His widow is 94 now. Still sharp as a tack. But she told me they should have went when they were younger. I’m heeding her advice.

 

[Col. Angus]

I have no idea. I have a Roth IRA with an advisor I trust and put in $700/month toward the 401k, but I know I'll probably never really retire.

Will probably die before I can collect or just work til death.

 

[Wildcats1st]

Can anyone recommend a good financial advisor in the Lexington area? Asking for a friend who is 58, has 600,000.00 in his retirement account and has no idea what to do with it.

Is his house paid off? Does he have other debt? Does his job include a pension or will he be relying on ss? Does he plan to absolutely retire or work part time? Where does he live? Does he have kids to put through college? Is he expected to inherit any money??? Is he leveraged against inflation?

The last question is most important bc between our national debt, quanitative easing, countries dumping our treasuries, ditching the dollar for gold; etc we are about to have some serious inflation. 600k may be worth 50-100k soon. First thing he should do is hedge against the coming massive inflation.

Soon the housing market is going to have a set back. I’d have some money ready to invest in real estate personally if I was sitting on 600k liquid. House where you want to retire, house where you’re home is. Rent them on air bnb when you’re not there.

 

[buckethead1978]

I have no idea. I have a Roth IRA with an advisor I trust and put in $700/month toward the 401k, but I know I'll probably never really retire.

Will probably die before I can collect or just work til death.

Limit is $5500 if under 50 for a Roth.

 

[BlueRaider22]

People should travel when younger and try to go to different places instead of Disney yearly, much easier when you have the energy, plus it helped dealing with work stress to get away on a nice trip or two, plus occasional business travel. We pick and choose travel now, stay fit, but long drives and airport travel, dealing with luggage gets harder in your 60s+. We had a great trip to Ireland because drivers could be hired reasonably, a trip to Italy was fun but we had to do the driving and bad ending for me at Venice with seemingly a mountain of steps to cross the water to walk to our lodging with two bad shoulders to carry luggage weighted down with Tuscany purchases...great place, though.

We’d love to travel to more places other than the beach or Disney right now. The problem is time and money. When you’re older you have the time and money.....no kids, money has matured, etc.

 

[CAT Scratch FVR]

I think travel may need some clarification. Hard to take a month off and go to Florida for the winter when you're working. Hard to take 6 weeks off to go see the Grand Canyon and points west, stop and see friends along the way. It's not taking a 10 day vacation to Europe. I agree you should travel early. But, it's having the money to pick up and go for an extended period beyond a normal work vacation.

 

[Sawnee Cat]

You can't answer that question without having the complete facts of a person's life on the table.

There are a few very important factors that must be known. Example, what is the state of your health? You will be on medicare and you better plan for a supplemental policy to cover you above medicare. Is there any other person (other than a wife or husband) who is dependent on you. Did your daughter dump the grandkids on you to support, etc.

What is your debt status. House paid for, automobiles paid for? Boats paid for? I never carried much debt but I was able to be completely out of debt five years before I retired. Not having a house and car payments saved me about $2,500 a month. That is a conservative figure for many people.

Now that I am in retirement I only take out of my old 401k the amount required by the government. I have an employers pension plus social security and I can live on that. My old 401k money is used for travel, etc. Not for basic needs.

As we know each individual is different, with different needs and expenses. The question can not be answered for a group of people unless they are all the same with the same life and financial needs.

 

[Col. Angus]

Limit is $5500 if under 50 for a Roth.

A month? Yea I’ll never get close to touching that haha

 

[Get Bucket$]

Is his house paid off? Does he have other debt? Does his job include a pension or will he be relying on ss? Does he plan to absolutely retire or work part time? Where does he live? Does he have kids to put through college? Is he expected to inherit any money??? Is he leveraged against inflation?

The last question is most important bc between our national debt, quanitative easing, countries dumping our treasuries, ditching the dollar for gold; etc we are about to have some serious inflation. 600k may be worth 50-100k soon. First thing he should do is hedge against the coming massive inflation.

Soon the housing market is going to have a set back. I’d have some money ready to invest in real estate personally if I was sitting on 600k liquid. House where you want to retire, house where you’re home is. Rent them on air bnb when you’re not there.

How much of the 600k are you proposing he allocates to residential real estate?

 

[lz]

We’d love to travel to more places other than the beach or Disney right now. The problem is time and money. When you’re older you have the time and money.....no kids, money has matured, etc.

Except you won’t have quite the physical energy, aches and pains, more pills, etc, hit the ground running, it gets tougher each year after you hit 60.