Is $200,000 enough to retire on?

[iversonyin]

Since you are only 24, you should try throwing every penny in now because of power of compounding interest.

I don't quite understand what you running your regression on? You take the average return of your investment for last 2 years and run it against time?

 

[FelixDeCat]

Originally posted by: kranky

Originally posted by: FelixDeKat
Well it took 15 years to reach $110k and I know $200k is inadequate. I lost a bundle in 2000. Look at the 10 year graph on VWUSX. When a MF declares a massive cap gain get the f out ASAP! That lesson cost $39k. Ive been in/out of VEXMX ever since. Im hoping for $1M by 48.

You wouldnt believe the number of people out there with no savings at all. So anything will definitely help.

I don't see why a large cap gain distribution would be a reason to exit the fund.

You have a point. VWUSX was a stellar performer up to 2000. So maybe my warning might vary from fund to fund. I started 2000 with $61k, took advantage of market volitility and was at $97k by Aug 2000. It started to drift downward and then began to plunge. The huge cap gain disribution was declared and that drove the fund down further as people fled to avoid it (taxable accounts I guess). I hung in there thinking it would be paid in cash but it was paid in shares. My extra earnings were gone and I finished 2000 with just $58k! I sold and by the end of 2002 I was actually down to $48k! I made 28% in 2003, 17.5% in 2004, 19.5% in 2005 and 12.5% since Jan 1st. Viola - $110k. This was by getting in/out of VEXMX.

If I had left it in VWUSX it would only be $70 something (NAV only).

All these figures include company prof sharing contributions on 01/01 of each year.

 

[FelixDeCat]

Originally posted by: kranky

Originally posted by: FelixDeKat
Well it took 15 years to reach $110k and I know $200k is inadequate. I lost a bundle in 2000. Look at the 10 year graph on VWUSX. When a MF declares a massive cap gain get the f out ASAP! That lesson cost $39k. Ive been in/out of VEXMX ever since. Im hoping for $1M by 48.

You wouldnt believe the number of people out there with no savings at all. So anything will definitely help.

I don't see why a large cap gain distribution would be a reason to exit the fund.

You have a point. VWUSX was a stellar performer up to 2000. So maybe my warning might vary from fund to fund. I started 2000 with $61k, took advantage of market volitility and was at $97k by Aug 2000. It started to drift downward and then began to plunge. The huge cap gain disribution was declared and that drove the fund down further as people fled to avoid it (taxable accounts I guess). I hung in there thinking it would be paid in cash but it was paid in shares. My extra earnings were gone and I finished 2000 with just $58k! I sold and by the end of 2002 I was actually down to $53k! I made 28% in 2003, 17.5% in 2004, 19.5% in 2005 and 12.5% since Jan 1st. Viola - $110k. This was by getting in/out of VEXMX.

If I had left it in VWUSX it would only be $70 something (NAV only).

All these figures include company prof sharing contributions on 01/01 of each year.

 

[loic2003]

Where are you planning to retire? You could live like a king in Thailand, but would practicly be on the streets in London with that cash.

 

[MattCo]

Truthfully it depends on too many factors for us to speculate. $200k seems low though.

If you will have assets to sale, and move to locations with lower costs of living, then the extra padding might make the 200 easier to do (ie, sell a house in Cali and move to somewhere much cheaper).

 

[classy]

Truthfully I never plan on retiring. I will fall back on something I can do rather easily and make some living money. I still am saving for retirement, but I honestly don't plan on retiring until I am just too old to work or dead, whichever comes first.

 

[dirtboy]

Originally posted by: radioouman
It is not enough to retire on.
You'll probably live on roughly 10% of your "nest egg" per year.
Calculate inflation of your current salary for when you want to retire.
If that value is more than 10% of the value that you have saved, you'll need more money.

I predict that you'll need about 1,000,000 to retire on. That means that you'll have $100,000 per year.

How is someone going to generate 10% per year of income?

 

[JDrake]

What do retired people do when they run out of money ?

 

[dullard]

Originally posted by: joedrake
What do retired people do when they run out of money ?

Work, live off children, live off the government, live off charity, etc.

 

[everman]

Realistically you'll need 2-3 million to live ok. People are living longer, and someone at 24 today should calculate life expectancy to their 90s. Reason being because it's fine to have too much saved, but very bad to run out of money at 85.

cch has some nice tools: http://www.finance.cch.com/

 

[dullard]

Originally posted by: dirtboy
How is someone going to generate 10% per year of income?

I think you misinterpreted the statement you quoted.

 

[Baked]

Yes, on Ramens.

 

[DaShen]

Originally posted by: everman
Realistically you'll need 2-3 million to live ok. People are living longer, and someone at 24 today should calculate life expectancy to their 90s. Reason being because it's fine to have too much saved, but very bad to run out of money at 85.

cch has some nice tools: http://www.finance.cch.com/

Yup. Only a war or plague would change the numbers around. Save up now.

 

[DaShen]

Originally posted by: everman
Realistically you'll need 2-3 million to live ok. People are living longer, and someone at 24 today should calculate life expectancy to their 90s. Reason being because it's fine to have too much saved, but very bad to run out of money at 85.

cch has some nice tools: http://www.finance.cch.com/

Yup. Only a war or plague would change the numbers around. Save up now.

 

[Cattlegod]

Originally posted by: iversonyin
Since you are only 24, you should try throwing every penny in now because of power of compounding interest.

I don't quite understand what you running your regression on? You take the average return of your investment for last 2 years and run it against time?

they are monthly datapoints spanning the past 2 years.

 

[Elbryn]

200k wont be enough. you figure thats also in future dollars which are worth less than dollars today because of inflation. figure 40k today is enough to live on, projected out 30 years from now, with a 3% inflation rate you'll need just under 100k in future dollars to compare to 40k today. figure a conservative withdrawl rate to maintain as much principal as possible of 4% and you're looking at 2.5 million dollars needed. but the good news is that you're young and have time to prepare for this. start saving and calculating, there are plenty of free calculators on sites like cnn or forbes for estimating what you'll have in the future.

 

[DaiShan]

Originally posted by: Viper GTS
$200K is not anywhere near enough.

$1 mil wouldn't even be enough if you plan on living for a while & living well.

Oh and I just noticed your graph. WTF makes you think it would be linear?

Go use a real investment calculator & see what it turns out.

Viper GTS

Agreed on most points, but I think a lot of people neglect the fact that when they retire their money continues to grow. You don't just clean out your investments and dump them into a checking account, so if you have 1million and you average 8-10% annual return you should be able to live reasonably well off 80-100k a year

/edit OP 200k is not enough to retire on, but you are probably way off with your calculations. It looks to me like you just checked your bank account balance and found out how much you put in per year then extrapolated that out (bad) What are you investing in? For example, say you have 10grand and you get about 10% annual return, you make 1,000 off of the 10k, and the following year you have 11,000 and make 1100 so it isn't a straight line unless by "investing" you meant investing in a checking account (we call this saving not investing)

 

[Dacalo]

Have you taken into consideration promotions and raises?

 

[Howard]

Let's say you want to take out 80K for 30 years. At 8% interest rate and no inflation, you need about $900 700 at the start, assuming I've done my math correctly.

 

[FoBoT]

Originally posted by: classy
Truthfully I never plan on retiring. I will fall back on something I can do rather easily and make some living money. I still am saving for retirement, but I honestly don't plan on retiring until I am just too old to work or dead, whichever comes first.

same

i will change jobs when i get ~60-70 , i'll take up contract work and just work part of the year. and if the contracts involve travel, that will be cool too

 

[dr150]

Originally posted by: Cattlegod
It shows I will only have 200k after 30 years when I'm ready to retire. Currently I'm investing 10% of my salary and the regression line is averaged over the past 2 years of performance. The R squared value is .995, so it is a very good fit. 200k doesn't seem like enough to retire on though.

Thoughts?

finances.JPG

edit: I used a linearl curve fit, if I use polynomial and the R squared is .996, even better than the linear, it shows about 700k at retirement. anyone know the correct one to use?

You're Golden! :thumbsup: .............if you move to Haiti.

 

[dr150]

To bump up you fund returns, invest in Russia, Latin America, Gold, Metals, Energy, Real Estate/REIT funds.