<p>Some people want to continue to grow their principle in retirement. They need more assets than those that dont. More than double the assets of those that dont.</p>
<p>I donât want to be remembered. I want to be forgotten. Too much pressure in trying to be remembered ~ George Costanza</p>
<p>I just reran the numbers to validate my position. Itâs been a while.</p>
<p>500k nest egg at 50 with a target retirement age of 60. Conservative 6% ROI, 2% inflation, 2500/mo in SS kicking in at 62. You pay yourself 92k in year 1 and it grows annually to 147k when the well runs dry at age 85. Not bad. Double the starting point (1M) with all assumptions the same and you leave your heirs a nice chunk to remember you byâŠ(estate grows to almost 4M!)</p>
<p>You can live reasonably well with $65K, if the mortgage is paid off. As long as I can keep my kids from using my credit card, I think itâs doable. Iâve done it on much lower budget and we had to pay for health insurance, but it was about $250/per month, not outrageous like now. However, I have a separate bucket for travelling, I do not want to be frugal when Iâm on vacation. </p>
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<p>I defer to one of our long term financial gurus.</p>
<p>Ok, so how much more?</p>
<p>I ran another scenario, just for kicks and in case some of you are shooting for a goal.</p>
<p>If youâre around 50 years old and have a target retirement age of 62. 200k conservatively invested will provide 60k/year of annual income (including 2k/mo in SS), adjusted for inflation, for 22 years! If you can wait 'till 65 years old? you can approximate the same amount starting with about 150k.</p>
<p>Giterdone, how old are you?</p>
<p>Do you want to live for 30 or 40 years like your MIL lives?</p>
<p>^ #1824 actually, you donât need more than 3M. If you have approximately 3M at age 65, conservatively invested (5%) and get about 2500/mo from SS, you can pay yourself 200k/year starting that year and adjust 2% per year for inflation for about 30 years before you run out of money (income in final year is 352k)</p>
<h1>1826. Iâm already well past MILâs standard of living. But Iâm 50 this year.</h1>
<p>No matter your familyâs health history, I think it is unwise to assume that youâll live only x more years. There are medical advances all the time, and what might have killed you 20 years ago might not kill you 20 years from now. </p>
<p>Because of that, I think a safe withdrawal rate of 3% (maybe 4%) in the first year is a good idea, adjusted in subsequent years by the inflation rate. Expected expenses minus SS minus some portion of pension (since most of them arenât inflation adjusted) minus your expected taxes. That leaves your drawdown. Itâs too complicated for me, so I use ESPlanner to do my consumption smoothing for me. </p>
<p>@giterdone, is that 5% conservative return real or nominal? If youâre claiming real, thatâs great, because I will be living like a king! </p>
<p>I detect some regency bias, but maybe Iâm wrong. </p>
<p>^ its a noble thought to think medical advances might push life expectancy appreciably. But, they really havenât. Average life expectancy has only moved about 5 years in the last 40.</p>
<p>Of course you can only make predictions based on history. But Iâm comfortable thinking 5% is a ârealâ conservative number. Iâm only worried about âourâ lifetime, but people forget⊠(or never knew), rates were kept really low for about 40 years between 1930 and 1970. I think we have a case for the status quo for some timeâŠ</p>
<p>@giterdone, maybe not so noble; my fear would be being a financial burden on my kids. I would rather err on the side of having my money outlast me rather than v.v. </p>
<p>Please answer my question though â youâre throwing around numbers; is it 5% real or 5%
nominal?</p>
<p>ETA: I see we both edited, me with the question and you the answer. I hope youâre right, but Iâm not going to depend on it. </p>
<p>Sometimes too much fear is no good either. My sisterâs best friend died at 62 with $5M never used. She kept on working, if only she knew, Iâm sure she would have quit sooner.</p>
<p>@drgoogle, if she died with $5M and lived poorly, well, thatâs not a good plan. Just as someone who died at 45 with $1M and no dependents, had they known, would have spent differently. Most of us donât know when we will die, but the downside of outliving your money is worse than the downside of having some money left at the end. </p>
<p>I want to live long enough to BE a burden to my kids :)) </p>
<p>Seriously - I was just cruising through. this is really such a personal subject with so many variables. Iâd be crazy to suggest I KNOW (for certain) what is going to happen. I just like to demystify some of this stuff. Itâs only as scary as you make it. And it doesnât take a real strech of the imagination to see that⊠with a relatively modest sum, most people will be okay.</p>
<p>Peace!</p>
<p>Peace to you also. I probably err on the side of caution, because I had to send money to my mother monthly so that she could afford her medicine AND food. I didnât mind doing it, and my kids are good kids who would do the same for me, but I never want that to happen. </p>
<p>As it happens, Iâm retired (or if you prefer, a SAHD), but my wife still enjoys her job so she keeps at it. And, truth be told, if we didnât think it was best for the family, I would have enjoyed staying at my old job instead of being home (although that was also a lot of fun). </p>
<p>"I just reran the numbers to validate my position. Itâs been a while.</p>
<p>500k nest egg at 50 with a target retirement age of 60. Conservative 6% ROI, 2% inflation, 2500/mo in SS kicking in at 62. You pay yourself 92k in year 1 and it grows annually to 147k when the well runs dry at age 85. Not bad. Double the starting point (1M) with all assumptions the same and you leave your heirs a nice chunk to remember you byâŠ(estate grows to almost 4M!) "</p>
<p>Okay, now I think I understand. You arenât talking about retiring at age 60 with 500K, or 1 million in your double the nest egg example. Youâre talking about having that at age 50. At your conservative 6% ROI, thatâs actually about 895K at retirement (or 1.79 Mil) for your double the nest egg. I donât know if the experts would consider the 6% ROI as conservative or hopeful, over the long term, though.</p>
<p>If you are paying yourself 92K/year, I doubt you get any subsidies for health insurance, which with dental costs could be 15-20K/yr. You are also paying a substantial amount in taxes, certainly when you pay yourself 147K. I just donât think it ends up being as much as it seems, when you take away the taxes and the medical.</p>
<p>Bob, she didnât live poorly, not at all, but she could retire earlier.</p>
<p>I was working from my initial post (needing 500k and having it, wanting 1M and having that too) and the only thing certain about taxes is⊠they will go up. But there are mitigation strategies you can deploy. And tax friendly States you can take residence in. Remember - you donât pay taxes on principle! only earnings. 92k in salary might only be from 30k in deferred investment gains. i.e. âsmall potatoesâ on the tax charts.</p>
<p>6% may sound high, but you have to look at the big picture. Russell 2000 over the past 10 years, (which included the great recession) has returned over 50%! S&P over 80%. I donât think 6% is pie in the sky. But if you want to run 4 or 4.5? youâre splitting hairs and you can manage (your money) around that.</p>
<p>Your dental costs scare the crap out of me. I havenât spent 15k at the dentist in my life! (family included!!!) call it âgood mouth genesâ I guess. Havenât been to the dentist in 20 years⊠if it aint broke? donât fix it! But I think I could replace every tooth in my mouth with porcelain for 2k.</p>
<p>âYour dental costs scare the crap out of me. I havenât spend 15k at the dentist in my life! call it âgood mouth genesâ I guess. Havenât been to the dentist in 20 years⊠if it aint broke? donât fix it! But I think I could replace every tooth in my mouth with porcelain for 2k.â</p>
<p>You must be really, truly fortunate to have such good teeth. My family has terrible teeth. I think my parents spend 5K/yr (at least) each, on dental costs. And they arenât trying to look pretty, just trying to keep the bad stuff to a minimum, with crowns, gum surgery, root canals, and dental implants. I guess you mean you could get dentures for 2K? Because if youâre talking crowns, thatâs only two of them. I donât mean 15K/yr for the dentist, I mean to pay for health insurance, medical costs, and dental. 15K/yr could easily be a low estimate for two seniors, as many people here can probably attest to.</p>