How much money would it take for you to retire?

[Visel]

Curious how everyone's doing financially. Always feel like I'm pretty close to average folks.

I'm 25, no debt (paid off student loans and car), got about $10k emergency fund, and $42kish in retirement (almost vested).

Currently no house, just being a rentcel. Planning to get some non-retirement investments going to begin the dream of wealth. Planning to invest in some mutual funds that'll hopefully grow to accelerate the idea of saving for a down payment on a house.

CoL is roughly $3k/mo or $36k a year, probably lower but I'm overestimating tbh. Take home pay is $80kish, so hoping to invest like $30-40k a year.

Assuming my CoL from now till death is $3k/mo, at age 25 I'd need $1.2 million to survive till 59 1/2 with those numbers. And then in retirement I'd need $1.4 million to survive from 59 1/2 to 99. So without thinking about what I've got and am growing upon, I'd need $2.6 million (or less but enough to afford CoL while its growing/invested to ultimately become $2.6 million by 99).

So if I invest $35k a year, with a modest 8% return, that'd turn into $540k by the time I'm 35. And coincidentally by the time I'm 35, I'll need less money to survive until 59 1/2, than I would now at 25 ($360k less). Push it another 5 years and the account becomes $1012k. Crazy how money breeds money.

Fun to run these kinda numbers in my opinion. But it also puts into perspective how far away I am right now lol, would need at least 1-1.5 decades to even really consider retiring. By then I'm late 30's early 40's. And all of this is assuming I don't change CoL, change how much I invest per year, or get hit with monkey wrenches like kids and a house wife.

[criminal_manne]

I’m pretty young so ima need 20 million to retire at 32.

[twistedbodyman]

I have a takehome of about 800k but I'm spending 750k a year

[Destor]

Legit can't imagine retiring around this age, I'd need at least $50million to stave off boredom for the next 40+ years (srs)

[SimpIeJack]

- Your healthcare costs will increase dramatically as you age. By the time you reach Medicare age you'll be spending 1k/month in todays dollars for health care. And that's assuming you don't hit sudden expensive health problems. Whether it's cancer or crippling back problems a lot of people have gone bankrupt or lost their job over medical problems.

- Expected future returns in the stock market are low due to the asset inflation we have experienced over the past 10 years. Most experts don't expect better than a 6% return over the next 10 years, before inflation. 4% after inflation.

- Your COL right now is 35k and that's fine for a young guy on his own in the world. But being alone gets kind of lonely at 55 for most people. And a wife and kids aren't cheap.

- It's easy to eat rice and beans when you're young and hungry. It won't be as easy when you're 40 with $1m sitting in your bank account. Your cars will get faster, your houses will get bigger, your vacations will be longer...It's easy to justify spending money by saying "oh it's only 1% of my net worth..."

[wasp9166]

Delusion itt

[WoofieNugget]

I could probably live on 75k a year and be comfortable, even with an increased COL due to inflation. Also wouldn't need as big a living space once my kids are grown.

But I also know I'll likely be working into my old age unless I win the lottery or inherit. Due to divorce and living circumstances I have no savings, even though I have barely any debt.

[3fifty]

What you want to research is called a Safe Withdrawal Rate, aka SWR.

What that means is some % of your investments (assuming they're invested in basic mutual funds like the S&P500) is what you can withdrawal for retirement.

This number is carefully calculated to factor in recessions, inflation, all of that.



Basically, if you want to plan on withdrawing for about 30 years (a good sized retirement), you want to withdraw about 4.5% of your investments annually. Historically, this percentage, even through recessions and all of that, means you can withdraw about 4.5% every year (split it up per month) and in most all cases (including the extreme ones) you won't run out of money until the end.


If you want to find a percentage that you can withdraw forever, you make that about 4%. It used to be known as about 3.5%, but it's been revised to be about 4% of your investments, and in about 95% of cases that lasts forever and your "nest egg" of your investments actually never goes down. In about half of the scenarios, your initial investment actually increases. In something like 30% of the scenarios (using historical data), your nest egg actually doubles. That means if some medicine comes out that allows us to live to age 200, you could STILL be withdrawing and still have your original amount, and in a lot of cases your net worth continues to rise.

Again, the above account for inflation, meaning even as things get more expensive, you track inflation and things don't become more expensive to you (because you withdraw a bit more each year). You'd have to Google it to understand better.



To give numbers, if you retired with one million dollars, the "forever" rate means you could retire and plan on living 50 years after retirement, withdraw $40,000 per year, and you'd hypothetically never run out of money and most likely increase your money, so when you pass, you could still pass your kids over a million dollars.


Also keep in mind, taxes are lower when it's investments (because usually you've already paid taxes on the income you used to invest), so $40,000 of withdrawals is more than $40,000 income. It's actually quite a bit more, because on income you get taxed on all of it (minus 401k contributions). With withdrawals like this, you only get taxes on the money your stocks gained.


In other words, let's say you can take out $40,000 this year due to your $1m invested and the 4% thing. That's about $3,333 per month when you take it out every month.


This is a guess, but assuming you've been saving up and investing for that $1m for many years, it could look like this. $1,500 of that is money you bought the stock at, so you don't get taxed on that. $1,833 is the remaining money that the stock actually grew, so you do get taxed on $1,833 that month. However you get the "long term tax gains" tax, which is 15% (and everyone should vote hoping they never change this, change income tax sure but not capital gains tax), anyway you get taxed 15% on that $1,833 which is $247.

In other words you're only paying $247/month in tax, or about $3,300 per year in taxes. So in this case you're legitimately taking home just about $36,800 in income per year per million (things may change slightly).







Sooooooo OP to answer your question, I want a few mil to retire.

[meanstringbean]

2 - 2.5 million and I am done


Can spend the new freetime blogging and trying to set up some other income streams. Retirement doesnt just mean living on a beach

[Dan916]

I want to retire in Thailand or somewhere other than California

My goal right now is $1,000,000. I currently save 20-40k/year but about to buy a truck with cash so RIP 2021 savings

[meanstringbean]

- Your healthcare costs will increase dramatically as you age. By the time you reach Medicare age you'll be spending 1k/month in todays dollars for health care. And that's assuming you don't hit sudden expensive health problems. Whether it's cancer or crippling back problems a lot of people have gone bankrupt or lost their job over medical problems.

- Expected future returns in the stock market are low due to the asset inflation we have experienced over the past 10 years. Most experts don't expect better than a 6% return over the next 10 years, before inflation. 4% after inflation.

- Your COL right now is 35k and that's fine for a young guy on his own in the world. But being alone gets kind of lonely at 55 for most people. And a wife and kids aren't cheap.

- It's easy to eat rice and beans when you're young and hungry. It won't be as easy when you're 40 with $1m sitting in your bank account. Your cars will get faster, your houses will get bigger, your vacations will be longer...It's easy to justify spending money by saying "oh it's only 1% of my net worth..."

Will also add though that retirement likely means house paid off. If that's the case then living on 50k - 60k a year shouldnt be an issue.

OP if he wants can have a surfire retirement by mid 50s

[Visel]

Will also add though that retirement likely means house paid off. If that's the case then living on 50k - 60k a year shouldnt be an issue.

OP if he wants can have a surfire retirement by mid 50s

Yeah that was my thinking too. The best way to lower CoL is to eliminate rent/mortgage, so might as well buy a house, which obviously grows in value over time but also takes up a chunk of your net worth along the way. Perhaps an end game move might be to pay off a house in full in your 30's, and then sometime in your 50's sell the house and live off of its equity/gains, on top of your other investments, in rentals till death.

[snufy]

I'm planning on stroking out in the cubicle whenever. I will never make enough to retire. too far gone at this point.

[meanstringbean]

Yeah that was my thinking too. The best way to lower CoL is to eliminate rent/mortgage, so might as well buy a house, which obviously grows in value over time but also takes up a chunk of your net worth along the way. Perhaps an end game move might be to pay off a house in full in your 30's, and then sometime in your 50's sell the house and live off of its equity/gains, on top of your other investments, in rentals till death.

Different schools of thought on that though. In the current interest rate environment it makes sense to put your money into investments early (20s and 30s) instead of paying down a house. Your net worth will not only grow quicker, but be more diversified. That said that advice is for the financially frugal. MOST would agree with that statement BUT:


- buy a house at the max mortgage the bank provides for them
- put min down not out of financial strategy (opportunity cost of that money) but because of inability to save for a major down payment
- use that money that should be invested and instead get that car they have their eye on, buy nicer clothes, eat out more, etc.


Leverage/debt can be very useful in RE if you know what you're doing. Most dont, so as a good rule of thumb youll never regret paying off your house.

[ScramFranklin]

Like 5 mil or more. I'm fine working since I don't have that.

[goonsondeck]

2mil

[dc3119]

2mil is what I'm thinking too.

I think I read that 1.1million was enough to comfortably live off the profits from investing that money in safe investments. But with inflation, etc., I bet that ends up being higher.

[mchabs]

I'd need a passive income stream from rental properties (without a mortgage) and a hefty stock portfolio.

[Kev1972]

500k in a vanguard 100 fund should get you 40-50k a year. Plenty to retire to SE Asia or South America and live like a king. I'm sure you could also do some kind of tourism work as well. Run some vacation cottage or hotel.

[poundXpound]

We've been retired 39 months. I was 2 weeks shy of turning 59 and wife was 62. It took $1.7 million for us. Investments are now at $2.07 million and living very comfortably. Both taking social security and 3 pensions. Asset allocation of our investments is 60% stock funds, 30% bond funds and 10% cash.

[eatmycrackers]

We've been retired 39 months. I was 2 weeks shy of turning 59 and wife was 62. It took $1.7 million for us. Investments are now at $2.07 million and living very comfortably. Both taking social security and 3 pensions. Asset allocation of our investments is 60% stock funds, 30% bond funds and 10% cash.

mirin srs

I plan to have about 2 Milly and a few paid off investment properties throwing off decent cash flow. For the numbers to work you need your main residence paid off as well tho IMO. Property taxes are deductible against your taxable income hehe although retiring in the 3rd world like Brazil or something is also tempting since COL is 1/10 of USA.

[jafomofo]

if you want to retire and live on your investments you need to plan on a 4% draw down. So if you really think you can get by on 36K per year then you can get by with a 900K nest egg. Realistically though most people will need 2.2 million to retire excluding passive income.

[DizzySmalls]

Never going to happen

Plus I don't think I'd even do anything unless I was forced. I'm pretty much already dead outside of wage slavery.

[MikeLowrrrey]

It's pretty sad we have to think about retirement in our 30s. Go to school till your early 20s then it's straight to working to live.

Op have you thought about retiring overseas. Cheap 2nd world countries seem to have the best bang for buck. I'll be damned if I'm working past 60.

[DizzySmalls]

It's pretty sad we have to think about retirement in our 30s. Go to school till your early 20s then it's straight to working to live.

Only sad because of how lame everything is when not working. Would be fine otherwise

[MikeLowrrrey]

According to this article you can live on less that $1000/month in Mexico City. I'm thinking I go this route


https://www.google.com/url?sa=t&sour...9JG1EZPhHPXju4

[friesbruh]

About $300k