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How Much to Retire

Old 11-13-2015, 07:03 AM
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Default How Much to Retire

Guys,

I know this is like saying what color blue is the sky but I was talking with a buddy the other day who is 57. He plans to retire at 62. He has about $900k in his 401k. His house is paid off and he lives a fairly simple life.

He fishes a little, golfs once a week or so, very rarely eats out (unless I pay) and takes a few trips to see the grand kids. He has no plans to work, for money anyway.

He said his financial guys figured, with a life expectancy of 92 he should be good to go.

$900k to last for 30 years seems light to me?

I would say he needs close to double that even with a good rate of return?
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Old 11-13-2015, 07:07 AM
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Too many factors. Don't forget social security @ 62.
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Old 11-13-2015, 07:08 AM
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A 5% return on his investments gets him $45k a year. With no major bills, a person could live comfortably on that.
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Old 11-13-2015, 07:08 AM
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Does he have a pension in addition to Social Security?
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Old 11-13-2015, 07:12 AM
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92 ? Average male lives to 80.

45k would be gross - take out 25% in taxes
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Old 11-13-2015, 07:12 AM
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Originally Posted by astm216 View Post
Guys,

I know this is like saying what color blue is the sky but I was talking with a buddy the other day who is 57. He plans to retire at 62. He has about $900k in his 401k. His house is paid off and he lives a fairly simple life.

He fishes a little, golfs once a week or so, very rarely eats out (unless I pay) and takes a few trips to see the grand kids. He has no plans to work, for money anyway.

He said his financial guys figured, with a life expectancy of 92 he should be good to go.

$900k to last for 30 years seems light to me?

I would say he needs close to double that even with a good rate of return?
What makes you think it seems light?
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Old 11-13-2015, 07:15 AM
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The old rule was you can take out 4%/annum. That is when bonds paid a lot more than they do now. I would say 3% is closer to reality. You can put more in stocks but even blue chip dividend payers will have a choppy return. If he can keep his spending real low he should be OK. Not sure how he will be able to pay for health care until he is 65. That is going to cut into hid nest egg.
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Old 11-13-2015, 07:26 AM
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Depends on where he lives and cost of living but I see clients retire on a LOT less than that and do well.

All depends on how well you manage funds and if no debt he should be fine

I assume if he has that much in 401K he has made a pretty good living all these years and SS will be fairly decent as well


I have seen folks retire and have 2-300K in retirement in it is GONE in few years, they try to help out kids, remodel a damn house, new vehicles and etc. THEN IT IS GONE, Then I have seen others that do very well on couple hundred K but they prepared and spent well


Had client in my offie other day that had a $16K distribution from his 401 K, retired at 57-58 and was making decent money for our area(60-70K yr) . He told me that was the last distribution he would have since his money is ALL GONE 68 Yrs old


Basically it all depends on the person
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Old 11-13-2015, 07:27 AM
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With only a 5% yield, 2% inflation and no contributions.
900k grows to 1,150k by 62.

With the same 5% yield and 2% inflation, 1,150,000 would allow $56,000/year to 92. The $56k is adjusted for inflation and would increase every year to $100k the last year.
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Old 11-13-2015, 07:38 AM
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Originally Posted by Esuomm1 View Post
What makes you think it seems light?
See below

Originally Posted by aubv View Post
With only a 5% yield, 2% inflation and no contributions.
900k grows to 1,150k by 62.

With the same 5% yield and 2% inflation, 1,150,000 would allow $56,000/year to 92. The $56k is adjusted for inflation and would increase every year to $100k the last year.
This along with having to provide his own health insurance. He said his guy said about $38k from SS is what he should expect, his wife never really worked. Maybe its not so crazt if he counts on SS. $58k plus $38k in SS puts him at a gross yearly of $96k right out of the gate. Maybe he can buy dinner more often after he hangs it up!
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Old 11-13-2015, 07:42 AM
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Originally Posted by astm216 View Post
See below



This along with having to provide his own health insurance. He said his guy said about $38k from SS is what he should expect, his wife never really worked. Maybe its not so crazt if he counts on SS. $58k plus $38k in SS puts him at a gross yearly of $96k right out of the gate. Maybe he can buy dinner more often after he hangs it up!
That would probably be his personal SS benefit plus his wife's spousal benefit. Sounds reasonable and none of the SS benefit would be subject to federal income tax.
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Old 11-13-2015, 07:44 AM
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Amazing is a sad sort of way the difference in a what a "million bucks" meant in 1980 compared to what it is today.

Sobering how many hard working Americans, with defined contribution pensions, who are dweling in a state of denial that the fantasy of "retirement" exists (likely a member of this group myself)...

Last edited by Mpellet; 11-13-2015 at 07:57 AM.
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Old 11-13-2015, 07:56 AM
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6x's salary by the time you're 60 years old. Unless he makes more than 150k/year salary, he might be good. I believe that is assuming retirement age of 67 though not 62. He's only 57 so he's got three more years to go still.
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Old 11-13-2015, 07:56 AM
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My Dad retired this year, he said he can see how people can go overboard with spending. He has lots of free time.
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Old 11-13-2015, 07:58 AM
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how much does he spend?

That's a big determiner.
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Old 11-13-2015, 08:00 AM
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I figure health costs are going to be a major long term screwing for most who are currently working. And at some point the grim reaper is going to come calling for the national debt. Then we are all going to be screwed.,

I enjoy my work but starting to think about retirement just so I won't have to deal with aggravating ass f--ing people any more.
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Old 11-13-2015, 08:01 AM
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This is interesting, getting some other views on this subject. I have a 401k and a pension, but at 47 have a long ways to go. One option on the pension is to take it lump sum upon retirement, about 1.3 so it seems like a pile of money from this distance but I can see where I may just take it monthly, along with 401k (will only have about 350k in it) and claim SS at 67. Any thoughts?
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Old 11-13-2015, 08:02 AM
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Originally Posted by richeerich View Post
6x's salary by the time you're 60 years old. Unless he makes more than 150k/year salary, he might be good. I believe that is assuming retirement age of 67 though not 62. He's only 57 so he's got three more years to go still.
Yikes, I'm 50 and not even close to half of 6X Sal...
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Old 11-13-2015, 08:10 AM
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Originally Posted by raystein View Post
I figure health costs are going to be a major long term screwing for most who are currently working. And at some point the grim reaper is going to come calling for the national debt. Then we are all going to be screwed.,

I enjoy my work but starting to think about retirement just so I won't have to deal with aggravating ass f--ing people any more.
This should worry us all. The obvious answer is for the Fed to look at all the Baby Boomers and their accumulated wealth and see an opportunity to knock down the debt by greatly increasing Federal estate taxes. After all, the Boomers didn't make that money by themselves, the government made it possible for them to do that and now their estates need to pay their "fair share".
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Old 11-13-2015, 08:11 AM
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The 5% number is the best way to think about this. 900k produces a taxable income of 45k....add social security and you will have your Annual income. Let's say Social Security is $1,200 a month so we are talkiing $59,400 Annual income - before tax....Can he live on that?
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