Can you retire on 190 USD a month?

[Bateluer]

http://money.cnn.com/2010/12/08/retirement/savings_nest_egg/index.htm?hpt=T2

This is an interesting read.

The survey, which polled nearly 2,000 middle-class Americans ranging from 20 to 60 years old, found that Americans aren't saving enough, they are underestimating the amount of money they will need in retirement, and they are more likely to end up working through retirement.

While most Americans predict they will need a nest egg of $300,000 to live on for 19 years in retirement, the average savings of 50-somethings is only $29,000, which comes out to an income of $190 a month over 20 years assuming a 5% rate of return.

Honestly, I've always targeted 1M+ for my retirement 'nest egg'. My psuedo-personal finance instructor in High School related something similar to this CNN/Money article, where people vastly underestimate the amount of retirement money they'll need. He believed that people think that because their home is paid off, their car is paid off, etc, they'll need less money. Obviously not the case.

Can't speak for everyone, but when I retire, I don't plan to spend it as a complete shut-in living on Ramen and PBJs. I'd prefer to travel some, cruises, nice toys, etc. That's going to require more than 190 a month.

So, ATOT, I know you're all millionaires already, so you're targeting multi-billion dollar nest eggs, right?

 

[illusion88]

Yeah, that seems real low. That's not even $10 a day on food!

 

[TuxDave]

How did you get 190 a month?

oh nvm, that was in the non-bolded half of the paragraph with $29,000 savings.

 

[techs]

You can retire on 0 dollars a month.
Although you would have to live on the streets.

 

[Alone]

Well, I've got a pension to look forward to, but hopefully some decent coin in the bank.

I'm hoping for something around 50K, including pension.

 

[dud]

The world thinks the US is a "wealthy" country but we know better. I know a number of bank branch managers and asked what they thought of the "average" customers at their banks. The replies I received can be summarized as follows:

"The average American/customer lives paycheck-to-paycheck, has little-to-no savings and is in debt up to their ears."

While many here talk up their financial savy ... they are just like most everyone else.

 

[bhanson]

the average savings of 50-somethings is only $29,000

This is completely idiotic. This is why we need more financial education.

Yeah, that seems real low. That's not even $10 a day on food!

I don't spend $10/day on food. Over in the dave ramsey circle the number thrown around is $100/month.

 

[Capt Caveman]

That doesn't include Social Security. I believe some islands in the south pacific, one could live on that amount.

 

[Bignate603]

Yeah, that seems real low. That's not even $10 a day on food!

It's $190/month plus social security and any other benefits. If you're careful you could do it. You wouldn't have any fun money though.

 

[slayer202]

The world thinks the US is a "wealthy" country but we know better. I know a number of bank branch managers and asked what they thought of the "average" customers at their banks. The replies I received can be summarized as follows:

"The average American/customer lives paycheck-to-paycheck, has little-to-no savings and is in debt up to their ears."

While many here talk up their financial savy ... they are just like most everyone else.

i see

 

[kranky]

We've worked hard to live below our means, and save for retirement. My wife doesn't work and I'm determined to have enough set aside for her to live comfortably if I go first. It will be dicey if Social Security doesn't come through at all, but we're on track to be OK. We're encouraged that since we try to save a good amount, we won't need the proverbial "80% of pre-retirement income" as once I retire, we won't need to save any more, just watch our spending.

I don't know why so many people consistently underestimate what they should save for retirement. There are plenty of online calculators that will take all the heavy lifting out of the math. Maybe it's just denial. But I've seen too many people I know who found themselves having to scrimp majorly because they simply did not prepare adequately.

 

[Bateluer]

How did you get 190 a month?

oh nvm, that was in the non-bolded half of the paragraph with $29,000 savings.

Just went by their numbers, didn't check them myself.

This is completely idiotic. This is why we need more financial education.

I don't spend $10/day on food. Over in the dave ramsey circle the number thrown around is $100/month.

Agreed. PE and Finance should be requires courses, PE from Kingergarten through HS, Personal Finance through High School. Dave Ramsey seems to give good financial advice, from what I've heard on the radio. I spent more than 100/month on food.

 

[slayer202]

This is completely idiotic. This is why we need more financial education.



I don't spend $10/day on food. Over in the dave ramsey circle the number thrown around is $100/month.

$100/month on food is just as ridiculous as only having 29k in savings at 50+

 

[bhanson]

Just went by their numbers, didn't check them myself.





Agreed. PE and Finance should be requires courses, PE from Kingergarten through HS, Personal Finance through High School. Dave Ramsey seems to give good financial advice, from what I've heard on the radio. I spent more than 100/month on food.

I do often as well, but I also save $800+/month so when I spend more on food (good food from the grocery store or farmers market), I don't feel bad. There are people that spend $400-500/month on food alone because they eat out a lot yet save only a few hundred a month.

$100 is the target number where you can comfortably eat healthy if you shop intelligently and prepare your own food.

 

[Bateluer]

$100/month on food is just as ridiculous as only having 29k in savings at 50+

How so? I spent 100+ a month on food now, easily. And I'm just feeding myself.

 

[thegimp03]

Average savings of 50-somethings is $29k? Jesus that's sad...it's like putting away less than $100 a month not taking into account any inflation or market fluctuations... How do they expect to be able to make it through retirement?

 

[Bignate603]

We've worked hard to live below our means, and save for retirement. My wife doesn't work and I'm determined to have enough set aside for her to live comfortably if I go first. It will be dicey if Social Security doesn't come through at all, but we're on track to be OK. We're encouraged that since we try to save a good amount, we won't need the proverbial "80% of pre-retirement income" as once I retire, we won't need to save any more, just watch our spending.

I don't know why so many people consistently underestimate what they should save for retirement. There are plenty of online calculators that will take all the heavy lifting out of the math. Maybe it's just denial. But I've seen too many people I know who found themselves having to scrimp majorly because they simply did not prepare adequately.

I agree. Right now we're literally living off of 50% of my pretax pay. Everything else goes to taxes, retirement and long term savings (we want to save for a bigger house and a car). We've got enough to cover everything we need and still do some fun stuff. People of almost any income can get in the habit of saving, it's mostly about figuring out what actually matters to you and what is just nice to have.

 

[illusion88]

I do often as well, but I also save $800+/month so when I spend more on food (good food from the grocery store or farmers market), I don't feel bad. There are people that spend $400-500/month on food alone because they eat out a lot yet save only a few hundred a month.

$100 is the target number where you can comfortably eat healthy if you shop intelligently and prepare your own food.

Man, I don't know what you guys are preparing or eating, but $100 a month on food is hard for me. I don't even go out for food. I might order pizza once a month, but that's it.

$100 a month is a little more than a $1 a meal. Let's look at the cost of an omelet, to prepare it at home.

$0.40 3 eggs
$0.80 1 Tomato
$0.45 (ish) half an onion
$0.05 chives

Negligable cost is butter (to coat the pan) and salt and pepper. This doesn't include any drink besides water and toast. If coffee and toast, you need to add about another $0.10. That Omelet is %110 over budget and you didn't even get toast with it! What do you eat on $100 a month?

 

[kranky]

A girl I know who's in high school took a class where they had to find a car with certain criteria (leather seats and other cushy features) for no more than a $450/month lease payment, and determine what it would cost them a month to buy a $180K house, including budgeted amounts for insurance, utilities, maintenance and a 10% down payment.

The catch was that the house and car were ones that high school kids figure are barely adequate for their champagne tastes. After they had done all the figuring, the teacher had them add monthly costs for cell phones, gas, clothing, cable, internet, entertainment, etc., then told them they had an income of $50K after taxes. And then the teacher had them calculate the difference between everything they "needed" and the actual income, and put that on a credit card at 18%, and carry their calculations out for 5 years. Result: pile of debt and zero savings.

That was a real eye opener for the kids and I could see it had a big impact on her understanding of personal finance.

 

[Vic Vega]

The wife and I have a retirement goal of 5 million dollars. The real trick is being responsible enough to leave the money alone and let it grow. Currently 15% of our annual income goes to retirement and once our house it paid off we'd like to jump to about 35%.

5 million seems like a lot but considering what goods and services will cost at retirement (we're planning for 60) and the fact that those costs will only continue to grow over the next 30-40 years after retirement it's really not that much money. We are hoping to live off the interest which if we're lucky will come to about $75k/year and when we pass leave the rest to our children.

I intend to enjoy my retirement. All these years of work won't be for nothing. I can't understand people who work their entire lives, strain and sacrifice and in the end have nothing to show for it and live in poverty their last 30 years on the planet - oh, and expect big brother to take care of them.

 

[kranky]

I agree. Right now we're literally living off of 50% of my pretax pay. Everything else goes to taxes, retirement and long term savings (we want to save for a bigger house and a car). We've got enough to cover everything we need and still do some fun stuff. People of almost any income can get in the habit of saving, it's mostly about figuring out what actually matters to you and what is just nice to have.

Outstanding plan. Kudos!

 

[ponyo]

I'm not worried about the money, only health. If my family can stay healthy, the money will be there. Health is an unknown variable that can ruin the best plans.

 

[rcpratt]

My goal for my 401k is to have $100k by 28, $500k by 38, $1M by 43, $3M by 54, and $5M by 59. I also have a modest pension that, if I continued to work at the same company for my whole career, would be worth about $42k/year at age 60.

That will allow me to live more than comfortably, any more than that and I probably wouldn't even be able spend it all. With 401k withdrawals, my pension, and social security, that comes to something like $275k/year, which is about $115k/year in today's dollars.

Beyond that I'd rather just save and invest in personal accounts so that I can enjoy my money before I'm all wrinkly.

 

[Corporate Thug]

the average savings of 50-somethings is only $29,000 is pathetic. I have that saved @ 26 (and that's after purchasing a condo this years, which costs me $30k for down payment, furnishing, etc.).

 

[boomerang]

A girl I know who's in high school took a class where they had to find a car with certain criteria (leather seats and other cushy features) for no more than a $450/month lease payment, and determine what it would cost them a month to buy a $180K house, including budgeted amounts for insurance, utilities, maintenance and a 10% down payment.

The catch was that the house and car were ones that high school kids figure are barely adequate for their champagne tastes. After they had done all the figuring, the teacher had them add monthly costs for cell phones, gas, clothing, cable, internet, entertainment, etc., then told them they had an income of $50K after taxes. And then the teacher had them calculate the difference between everything they "needed" and the actual income, and put that on a credit card at 18%, and carry their calculations out for 5 years. Result: pile of debt and zero savings.

That was a real eye opener for the kids and I could see it had a big impact on her understanding of personal finance.

This course should be taught in every school in the country. Mandatory.