Fun Time........What would YOU need to retire????

[redgtxdi]

Originally posted by: PowerEngineer

One missing piece of information in most posts is how long you really expect to live on that nest egg. I don't see that many are making enough allowance for inflation either. If you'd really be comfortable with what $40k-$50k buys today, then a 3%-4% inflation rate will require you to double that in about twenty years. For me, the "magic number" would be $3,000,000 within the next five years.

Not likely to happen...

So you're eigh 64.5 years old or maybe an over-zealous 40yr old lookin' to retire at 45???



As for the inflationary thing.........in my OP, I'm just kinda' tossin' around the idea of *right now*. So seeing as that eliminates the inflation factor, we can think in *current* terms. Now, inflation will definitely be something to deal with in the future, but I'm sure some on this board are in their teens looking at this question & some are in their 50's or 60's so obviously the time tables will be much different.


I, myself, *may* stand to inherit a good chunk of change when I'm older (provided my old man doesn't do something reeeally foolish between now & whenever he dies) but I try to think *outside* that box 'cuz nobody ever knows. I also don't bank on social security or medicare/medical. (For us California folks). I just wanna know what it'll take for me to rely on nobody else but myself......(well, and the wife......I hope!)

 

[dullard]

Originally posted by: redgtxdi
As for the inflationary thing.........in my OP, I'm just kinda' tossin' around the idea of *right now*. So seeing as that eliminates the inflation factor, we can think in *current* terms.

But that is the problem in this thread. Sure you can say what you need right now, but what will you need next year? What will you need in 5, 10, 20, 50 years?

Simply stating that you need $22,000 now, is meaningless. Are you going to retire now and then start working in one year? That is a really silly discussion to have.

Thus, inflation must be considered. If you need $22,000 now, then you'll need $26,000 in five years, $31,000 in 10 years, $123,000 in fifty years, etc. Then add up those amounts, subtract your interest rate gains, adjust for taxes, and you finally have your answer to your question. You'll know what you need NOW to retire for life.

 

[b0mbrman]

Originally posted by: dullard

Originally posted by: BurnItDwn
I am realistic here, I do not expect a positive cash flow from one rental property in the first few years of renting as I know there will be problems, and I'll still be making some pretty good sized payments on the mortgage myself. However, once the RE market starts to bounce back, property values will go up again, rent will go up, and I'll probably start being able to make a positive cash flow ater 2 or 3 slightly difficult years in the beginning. After that I just would try to purchase 1 new rental property every several years.

I don't want to burst your buble, but instead I want to tweak one flaw in it. When property values go up, rents are steady. When property values go down (or steady) rents go up. The two go in opposite trends. Your post said that they go hand-in-hand which is false.

Not always false.

For example, if there's new hot jobs in the area, then the two will go up hand-in-hand

 

[axnff]

I've only seen a couple of people mention the fact that 40k at the end of retirement is not worth as much as 40k now. So making the following assumptions, here's what it takes to retire based on a single lump sum now, invested entirely within a money market account (per OP question):
Assumptions:
5% fixed annual growth
3.5% fixed annual inflation
30% of growth will be lost to federal / state / fica taxes
Death at age 85
$0 remaining at the time of death
50k per year after taxes
No taxes on the initial investment

Retirement at 65: US$1380800
Retirement at 55: US$2596409 (+50% time during retirement, requires 88% more money up front)
Retirement at 45: US$4289968 (+100% time during retirement, requires 211% more money up front)
Retirement at 35: US$6708362 (+150% time during retirement, requires 386% more money up front)
Retirement at 27: US$9369368 (+190% time during retirement, requires 579% more money up front)

(I'm 27, if you're wondering why I stopped there)

Basically, doubling your time in retirement requires more than triple the funds, if you try it this way. Which is one reason why people don't rely on a money market savings account to retire....

Remember that 58 years from now, to live a lifestyle of 50k / year today, you're going to need 368k per year....

 

[b0mbrman]

Originally posted by: axnff
I've only seen a couple of people mention the fact that 40k at the end of retirement is not worth as much as 40k now. So making the following assumptions, here's what it takes to retire based on a single lump sum now, invested entirely within a money market account (per OP question):
Assumptions:
5% fixed annual growth
3.5% fixed annual inflation
30% of growth will be lost to federal / state / fica taxes
Death at age 85
$0 remaining at the time of death

Retirement at 65: US$1380800
Retirement at 55: US$2596409 (+50% time during retirement, requires 88% more money up front)
Retirement at 45: US$4289968 (+100% time during retirement, requires 211% more money up front)
Retirement at 35: US$6708362 (+150% time during retirement, requires 386% more money up front)
Retirement at 27: US$9369368 (+190% time during retirement, requires 579% more money up front)

(I'm 27, if you're wondering why I stopped there)

Basically, doubling your time in retirement requires more than triple the funds, if you try it this way. Which is one reason why people don't rely on a money market savings account to retire....

Remember that 58 years from now, to live a lifestyle of 50k / year today, you're going to need 368k per year....

So put some into a well-diversified portfolio of stock mutual funds where you'd get an expected, annualized return of 8% after inflation or 6% after taxes.

 

[axnff]

Originally posted by: b0mbrman

Originally posted by: axnff
I've only seen a couple of people mention the fact that 40k at the end of retirement is not worth as much as 40k now. So making the following assumptions, here's what it takes to retire based on a single lump sum now, invested entirely within a money market account (per OP question):
Assumptions:
5% fixed annual growth
3.5% fixed annual inflation
30% of growth will be lost to federal / state / fica taxes
Death at age 85
$0 remaining at the time of death

Retirement at 65: US$1380800
Retirement at 55: US$2596409 (+50% time during retirement, requires 88% more money up front)
Retirement at 45: US$4289968 (+100% time during retirement, requires 211% more money up front)
Retirement at 35: US$6708362 (+150% time during retirement, requires 386% more money up front)
Retirement at 27: US$9369368 (+190% time during retirement, requires 579% more money up front)

(I'm 27, if you're wondering why I stopped there)

Basically, doubling your time in retirement requires more than triple the funds, if you try it this way. Which is one reason why people don't rely on a money market savings account to retire....

Remember that 58 years from now, to live a lifestyle of 50k / year today, you're going to need 368k per year....

So put some into a well-diversified portfolio of stock mutual funds where you'd get an expected, annualized return of 8% after inflation or 6% after taxes.

On the assumption that your numbers are feasible (8% after inflation over the long term sounds a bit high to me but I'm far from expert in the subject), it would be as follows:
65: 860872
55: 1251791
45: 1611481
35: 1945531
27: 2195542

Illustrates quite well how important a sound investing strategy is. Also why a savings account should be more for preventing your money from devaluing....

 

[JeffreyLebowski]

I just need enough for 1 bullet, that way when I'm old and broke I can just go find a secluded area and end it and not be a drain or burden on my kids.

 

[dullard]

Originally posted by: b0mbrman
So put some into a well-diversified portfolio of stock mutual funds where you'd get an expected, annualized return of 8% after inflation or 6% after taxes.

I think I've argued this with you before. But 8% return is barely predicted by experts. Let alone 8% after inflation. We just aren't likely going to see that high of returns in a well-diversified portfolio.

 

[SampSon]

I don't really want to retire.

 

[redgtxdi]

Originally posted by: dullard
I think I've argued this with you before. But 8% return is barely predicted by experts. Let alone 8% after inflation. We just aren't likely going to see that high of returns in a well-diversified portfolio.

Actually most experts go for the 10-12% pre-tax return target. Even the conservative Bogleheads index predicting a target rate of 10% w/ an optimistic 12% pair of future spectacles!

Other experts get a little over-zealous & claim numbers into the teens.....(of which I'm not a follower).......so I think that 8% is definitely a fair #.

But there are other wildcards as well. Someone living in California protected under prop 13 can win a huuuuuuge victory over future property taxes based on the original purchase price of their home, while other states can inflict almost as much reassesment as they care to. (Which can be extremely brutal on future retirees portfolios and projections).

Also, age limits are always a guess. 85 could be optimistic to some.....(I believe statistics for the average human being's lifespan are still somewhere in the low 70's even in 2006)........and yet pessimistic by other's........(some folks just swear modern medicine is gonna have us living well into our 100's). Now, obviously a million dollar portfolio compounding after the age of 64 and a half is gonna look un-freakin' believable at the age of 105, provided the person is still able to work.

Lastly, it's hard for us to predict exactly what the inflation curve will look like in the future. But regardless, a $50K annual income in the future will look & feel no different than $50K now, it'll simply wear a different numeric value. It'll still be the same amount of food, clothes, insurance, entertainment, utilities, taxes and broken water heaters

And by the same token, I also don't think it's as simple as saying, "Well my income will just go up right along with inflation!". (Tell that to the engineers of the early 90's!) Sometimes incomes match inflation, sometimes they lag behind. It's all a toss of the dart, but I *do* still think it's safe to say that if $50K now equals twice that in 10 years, then incomes will be somewhere around that mark.........lest everyone be living in a cardboard box out back, behind the local grocery store.

 

[Jadow]

By the time I retire, I'll have my house paid for. I figure I'd NEED an income of $1500 minimum to survive.

To be comfortable, around $3000 a month would be good.

I figure $1000 / month would come from Social Security, so that leaves $2000 a month to come up with. To generate $2000 a month w/o touching the principal, and maintaining buying power, I figure Il'll need 500,000.

This is all in today's dollars. If I stay on track with 401k and IRA contributions, I should surpass that easily.

The tricky part will be paying for healthcare, I want to retire before 65 at 62, but there is a 3 year health care gap before Medicare kicks in. I'll need to figure out a workaround for that.

 

[Slew Foot]

Im planning on retiring at 45 with about 5 mill in the bank. Probably more than I need, but better to have too much than too little.

 

[Dritnul]

way i figure is after college if put away 10K into a retirement account for first 5 years and then put nothing else in and let it grow for 40 years b4 i retire ill have 2 million and hopefully thats enough although ill probly have more than that

 

[bennylong]

Originally posted by: Dritnul
way i figure is after college if put away 10K into a retirement account for first 5 years and then put nothing else in and let it grow for 40 years b4 i retire ill have 2 million and hopefully thats enough although ill probly have more than that

If you put in 10k every year for 5 years, you should have at least about $70k by then.

$70k for the next 40 years at a 10% annual return would give you $3,700,000.00, not factoring inflation.

I have $120k in a my 401k now, so if I didn't contribute another dime, I would still end up with almost $4 millions. If I was to continue to save, it would be about $15 millions.

I'm going to be a sugar daddy!

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