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Rum_Pirate
05-06-2012, 11:22 PM
How much money do you need to retire and live comfortably?

$500,000.00,

$1,000,000.00,

$5,000,000.00,

$10,000,000.00

more?

Todd D
05-06-2012, 11:46 PM
It depends on a lot of things. Among them are: what is the cost of living where you live or intend to live? Do you have a pension? Do you have to worry about health care costs? How is your money invested? What are the taxes where you live? How much debt do you have? and finally, what sort of standard of living do you expect. Given answers to those questions, it would be possible to generate a rough figure.

LeeG
05-07-2012, 12:05 AM
send me your money and I will report back with the results

John B
05-07-2012, 12:20 AM
More important is how much income do you need per annum to live your lifestyle.

David G
05-07-2012, 12:33 AM
Just as a reference point: $1m, invested conservatively, will net you about $25 - 40,000 per annum without touching the principal. If you're planning on using up the principal, then you need to decide how long you think you're going to live, and buy an annuity for the period. Your income, in that case, would be higher.

varadero
05-07-2012, 05:32 AM
5 million, one million to spend, four million invested.

Hank Rearden
05-07-2012, 06:30 AM
More important is how much income do you need per annum to live your lifestyle.

You also need to estimate the inflation rate, your estimated return on the money you have and how long you'll live.

John Smith
05-07-2012, 06:59 AM
I don't know. I would think the Koch brothers have more than enough, but they don't seem to think so.

pumpkin
05-08-2012, 02:21 PM
Need or want? If you've been unemployed you know how much you need.

How much do I want for retirement? Lets just say that I hope my last check bounces.

leikec
05-08-2012, 02:30 PM
I'll never retire. I intend to teach music, play music, and write books till the day I drop dead.

Jeff C

Milo Christensen
05-08-2012, 02:40 PM
Ever since my stroke at age 63, all those ads about buying and retiring to a vineyard in the Napa Valley make me wish there was some kind of warning (like those on smokes) - like "Do all the planning you want, but don't plan on being able to enjoy it."

TomF
05-08-2012, 02:42 PM
I'll never retire. I intend to teach music, play music, and write books till the day I drop dead.

Jeff C... bearing in mind that those things may be closely related. :D

Realistically, I won't have the same lifestyle when retired. But that's intentional - and I'm actually looking forward to the simplicity quite a bit. A good bit of the current lifestyle is associated with having kids still at home ... and that won't be the case for many more years.

Rich Jones
05-08-2012, 02:43 PM
We've got a good pension, health care and several small wooden boats. What more could anyone want?

tigerregis
05-08-2012, 02:46 PM
If one chooses an intelligent life style due to conditions or desires, it can be done relatively easily and affordable. Find a locale to your liking and search for inexpensive lodging or docking. Use minimum lifestyle requirements and shop frugally and only when necessary. Use coupons and other discounts to your advantage, give up brands and buy generic or Dollar store for cleansers, vitamins and other health necessities, like rubbing alcohol and hydrogen Peroxide. Look for 'dated' products, etc to take advantage of keeping YOUR money in YOUR pocket. I worked 6 months a year for The Annapolis Boat Show and it's other endeavours, lived on my boat and shopped at the Eastport Liquor store where a half gallon of rum was <$10. I saved enough money to live for the winter. It was slightly above minimum wage pay and I did not lack for anything I wanted, since I good afford it. YMMV

pefjr
05-08-2012, 02:47 PM
No money , just any ol tennis racket, and a Mandolin, Harmonica, or a Fiddle will keep me occupied. Wouldn't mind an 18 yr old well built young lady though. No telling what kind of comfort I could get out of that.

tigerregis
05-08-2012, 03:07 PM
It's not often I agree with peffy.

S.V. Airlie
05-08-2012, 03:32 PM
How much? Have no idea really except that it appears to be in general, as much as I need. Emergencies are rare though. Stuff I have to pay for could very likely get me to throw the budget away.Hence a cushion but one I don't need usually and don't use on a daily basis.

elf
05-08-2012, 03:34 PM
Surely the OP doesn't really think this is a sensible question.

Bob Cleek
05-08-2012, 04:58 PM
Ever since my stroke at age 63, all those ads about buying and retiring to a vineyard in the Napa Valley make me wish there was some kind of warning (like those on smokes) - like "Do all the planning you want, but don't plan on being able to enjoy it."

Don't feel bad, Milo. We live on a farm in the Sonoma Wine Country (Napa's next door) and we're both still working our butts off to keep it going. Unless I win the lottery or something, I won't get it paid off until I'm 85 and that's without the stroke! I've seen those ads and I don't know what the attraction of "retiring to a vineyard" is all about. We picked our place because we wanted commercial/ag zoning with a big workshop and lots of room for critters. It'll keep you plenty busy just keeping the weeds from overgrowing it all and if I ever plant grapes it will only be a few vines for eating. A real vineyard is a whole lot of work. Way more than one person can do and maintain enough acreage to make it pay anything at all. You have to hire skilled crews to harvest at the crush and skilled crews to prune. The rich guys who "retire to a vineyard" in the Wine Country all end up running a business or leasing their land out to somebody else, usually at a net loss. Even so, it costs them huge bucks just to be there, while the old farm families (whose land was paid for generations ago) laugh up their sleeves at 'em. Still, it seems an enduring dream. Must be all the TV car ads they film up here.

Bob Cleek
05-08-2012, 05:01 PM
... bearing in mind that those things may be closely related. :D

Realistically, I won't have the same lifestyle when retired. But that's intentional - and I'm actually looking forward to the simplicity quite a bit. A good bit of the current lifestyle is associated with having kids still at home ... and that won't be the case for many more years.

Even when the kids leave, they keep coming back to hit you up for money! Then, when they have kids, grandma spends huge amounts of stuff for the grandkids. Once you have kids, Tom, it's "in for a penny, in for a pound" and "in for life." :)

purri
05-08-2012, 09:32 PM
We "get by" on a low nett six figure combined income (pensions included) but when we retire in full it isn't a big deal to live very well on a guaranteed inflation indexed high end five figure amount. For the moment I'm carrying adjusted losses against income for at least the next 3 to five years and my tax free threshold has now risen to $28K per annum.

Don't need any more $ but it'd be nice to commission an Alden Malabar 2 just for the hell of it.

Steve McMahon
05-08-2012, 09:46 PM
I'm on the "freedom 95" or "work till you die" plan. Less stress if you simply plan on working till you drop dead.

WX
05-08-2012, 09:58 PM
I would say $500,000 would be enough.

2MeterTroll
05-08-2012, 11:35 PM
I would say the two are different questions. to retire you would (if sane) want all of your bills paid off, totally out of debt. so that number varies per person and what things they want in retirement. to live comfortable in many places 30K -50K a year is pretty nice. then you kinda need to figure out how long you will live. personally i would say 1 mil would have Erica and i in high cotton till we both die; kids grow up and all the animals pass on. its all in the what you actually own and what your bills are. we own the land and our bills are rock bottom. some folks are way higher maintenance than we are.

so realistically you would want about 1 mil in the bank earning interest and we could get along pretty well for the next 50 years. that would also allow us to build the big boat and spend most of our time at sea.

WX
05-09-2012, 12:07 AM
I'm working on $50,000 allowing for inflation. I live on a lot less!

2MeterTroll
05-09-2012, 12:28 AM
I'm working on $50,000 allowing for inflation. I live on a lot less!

Believe you me we live on a fraction of what 50,000 would give us. the fact that we are comfy makes it all worth while. more so we would never have to worry about money would be nice but is not a must. that might change with a child on the way or something.

purri
05-09-2012, 01:06 AM
Addendum: Living in a high end capital city location alters the formula somewhat but we're happy with our situation (no mortgage etc).

AussieBarney
05-09-2012, 05:18 AM
Whats this 50 grand you need? My wife and I live on a disability support pension, actually below the official poverty line and we want for nothing. We are reasonably canny about what we buy, but if either Sue or I need or want something we can normally save for it in a reasonable time frame. we own the house, car and bus outright so we have no debt except the normal utility bills and rates which hit us in a quarterly cycle. I have a friend who lives on about 8 thou a year, and he seems to do alright.

skuthorp
05-09-2012, 06:54 AM
Ever since my stroke at age 63, all those ads about buying and retiring to a vineyard in the Napa Valley make me wish there was some kind of warning (like those on smokes) - like "Do all the planning you want, but don't plan on being able to enjoy it."
Gotta agree Milo, you just do what you do, plan in hope and tidy up as you go. That way no one else get's stuck with the mess. I managed to actually retire, am now 69 (and no one is more surprised than me) and that's how we do it. Although my clan is long lived I am aware that in an instant it could all end any time. Never leave a cross word unresolved till tomorrow.

skuthorp
05-09-2012, 06:57 AM
Ever since my stroke at age 63, all those ads about buying and retiring to a vineyard in the Napa Valley make me wish there was some kind of warning (like those on smokes) - like "Do all the planning you want, but don't plan on being able to enjoy it."
Gotta agree Milo, you just do what you do, plan in hope and tidy up as you go. That way no one else get's stuck with the mess. I managed to actually retire, am now 69 (and no one is more surprised than me) and that's how we do it. Although my clan is long lived I am aware that in an instant it could all end any time. Never leave a cross word unresolved till tomorrow.
Money? Well I'm sure I could find a good use for bags of it in some scholarship trusts etc but we're doing ok as it is. Time is what I run out of.

Chris Coose
05-09-2012, 06:59 AM
I've been working a retirement plan since I moved to Maine in 1974. Some days I have to earn money is part of that plan.

WX
05-09-2012, 07:26 AM
We live on about $22,000...a bit more would soften the edge a bit, say $30,000 to $35,000. That would allow a trip to visit my daughter, her husband and grandkids in the US. Oh and I've wanted to do a pub crawl from Lands End to John O'Groats without driving on a major road.:)

Flying Orca
05-09-2012, 09:08 AM
A little less than I have. :)

TomF
05-09-2012, 09:17 AM
Even when the kids leave, they keep coming back to hit you up for money! Then, when they have kids, grandma spends huge amounts of stuff for the grandkids. Once you have kids, Tom, it's "in for a penny, in for a pound" and "in for life." :)Bob, I can only give what I've got.:D They'll be more than welcome, always, but in large measure our kids have had their "inheritance" up-front, measured in the career choices and paths we've had as they grow up ... and the resulting time and focus we've spent on the family.

I'm absolutely "in for life," but my currency going forward will pretty closely mirror the currency I've had in the past.

2MeterTroll
05-09-2012, 11:07 AM
Whats this 50 grand you need? My wife and I live on a disability support pension, actually below the official poverty line and we want for nothing. We are reasonably canny about what we buy, but if either Sue or I need or want something we can normally save for it in a reasonable time frame. we own the house, car and bus outright so we have no debt except the normal utility bills and rates which hit us in a quarterly cycle. I have a friend who lives on about 8 thou a year, and he seems to do alright.

yep and if i lived in AU i could likely do the same. For us its different because i was forcefully retired due to injury. Im in my mid 40's so i have a longer row than most of you provided i dont die.

David W Pratt
05-09-2012, 12:25 PM
A very tricky question. A banker once told me that if you have a sum of money invested, you can take 3% a year and it will grow, 4% ayear and it will stay constant 5% or more and it will shrink. It is easy to calculate what sum will yield the income you need/want, what is tougher is figuring out how to have some contingency plan for the stroke, or what ever and how to make sure the kids are set up. A shroud has no pockets, but you don't want to bottom out permateurly.

Concordia 33
05-09-2012, 01:06 PM
Way to many variables to answer that question, unless you're speaking of a specific individual or couple with living standards, specific health issues, etc.

Investment professionals will argue that you need 80% or less of your pre-retirement income, because you won't have 'employment expenses' (clothing, gas for commuting, etc).... but then again, while you were employed, you had less ability to spend time enjoying yourself, so I'm not all that sure it's good advice.

I'd say that you need enough money invested to produce 80-100% of your pre-retirement income, as well as still maintain the possibility of some capital appreciation, so that in the long run, the lean and fat years wouldn't make all that much of a difference. For example, if you earned $75K the year before you retire, you'd need maybe $2.25M to assure a yield sufficient to keep drawing the $75K.... or half that (somewhat over $1M), if on the basis of actuarial tables, you expect to live maybe 20 years or less. You could buy an annuity, or annutize the money yourself. In the very final years, your expenses could rise for assisted living or nursing home care, so you can't assume too much.


Picking up on what Norm has said, I would recommend the following as an answer. Norm says that you need about 80% of your current income as "retirement" income. That is a reasonable figure. However let's assume that you may want to live better than currently, or that you are willing to live more modestly in the future. Start with 80% of current income and adjust up or down as you feel appropriate to your situation. This will give you your desired annual income.

Now, let's assume that wise investing will yeild about 4% annually (on average). Since a decent index fund will average about 5% a year this is a reasonable (but not guaranteed) assumption, and your risks of dipping into principle would be greatest in the first few years after which you would tend to be protected through the law of averages.

Given the above assumptions, take your desired annual income and multiply it by 28.5 - and that is what you would need to maintain your desired lifestyle without depleting your principle.

Using Norm's example of wanting a $75,000 a year income.....

75,000 X 28.5 = $2,137,500

This also assumes that there is no additional income such as Social Security - in which case you can deduct the anticipated annual income of social security from your desired annual income before the calculation.....

Social Security Benefit of $1,400/month X 12 Months = $16,800/year

$75,000 - $16,800 = $58,200 Additional annual income needed

$58,200 X 28.5 = $1,658,700

so your nest egg can be about $478,800 less assuming income from Social Security.