Posted on 10/29/2019 8:32:13 AM PDT by SeekAndFind
I'd subtract, SSI and Medicare (7.15%). State and Fed. income tax (18%), Savings (15%), reduced travel and clothing expense.
Then add back State and Fed tax when you've determined that you're "needed" net income is $75K.
Now you're only needing about $88K gross, and about $24K of that is coming from SSI.
So, your $1 Million in retirement only needs to generate about $64K/yr, or about 6.4%.
I find this annoying. What you spend isn't the major problem. The major problem is that you can't count on money to remain of the same value with each passing year.
Since that silly fool got elected in 2008, the price of most of what I buy, doubled. Virtually everything I purchase in my day to day life costs twice what it did in 2008.
What good does it do you if you calculate you will need X dollars per year for 20 years when the real life costs of everything become 2X?
I don't see many people discussing the problem of rampant inflation of money, and no matter how you calculate your retirement, when the cost of things double or triple, most people will not be able to weather it without serious reductions in their standard of living.
We do Lake Front every year up the mountains.This year our place sleeps 24.Lot’s of FUN.
My husband retired,we had too many bills so we told the kids that the first one who bought a house with an in-law-swite that we liked we would move in.Sold our house-got full price,kept our shore place and we have fun.
Of course her opinion is that it is the constant use of my bass boat and the cost of all the various lures and boxes of Twinkies that are eating up our retirement...
Fortunately, for us, many years ago Rush talked about old people eating canned dog food... So we are getting by fine...
suite
Any good projection should take into account the value of inflation. Your point is valid, but to ignore it while doing a forecast is folly.
If you assume three things in retirement: 1) That your mortgage will be gone, 2) that your grocery bill will be significantly less and 3) that your property taxes will be significantly less,
then it is reasonable to assume that your costs of living will be a lot less. Yes, you will factor in Healthcare costs unless you are very lucky/healthy. But those are the major costs that I mention above and I can tell you, when I retire and we leave New Jersey, those three items will be reduced by almost 100% compared to what they are now.
That’s a big deal.
“Sustainable withdraw rate is 3% to 4% a year and you should be mostly in bonds.”
This withdrawal rate may be appropriate if you are “mostly” in bonds, but that plus SS won’t generate enough income out of $1,000,000 for most people used to a $115,000 pre-retirement income to live on comfortably in retirement.
Indeed, I bought the S&P in 2016 at $195 per share and it's now over $300. My original home (without mortgage) has almost doubled in value since I moved and is returning nice rental income. I bought a 2nd home in Florida at the bottom of the market and that has doubled. Other stock purchases concentrated on dividend payers which ring the cash register every quarter. K. A. G.!
I suppose I must live in some impoverished backwater where $70K is a pretty good living.
Nice to know there are folks making that kind of money. To me that's the upper end of what could be considered any sort of "average". BTW, according to the WIKI article HERE, (which uses US gov't figures) over 90 % of American's income is UNDER 100K, so while "elitist" might be a trigger word for some, it's not wholly inaccurate.
That is so great. Too many people make excuses not to have family outings and then wonder why families are falling apart. So glad you make family gatherings important. Big dividends in that.
If you have a million dollars and it earns 6% a year, that’s $60,000 you can live on without having to touch the principal.
“Don’t use that word, it’s off-limits to you. Only those in this house who understand it might use it. And don’t use any part of it either. Don’t use nest, don’t use egg. You’re out in the forest, you can point. The bird lives in a round stick. And you have ‘things’ over easy with toast.”
A retiree with a net worth of $1 million is in the "wealthiest 10%" of the nation. Still, using a conservative 4% safe withdrawal rate, the $1 million nest egg only generates a 30-year annual income of $40,000 (plus inflation). Social Security should supplement this by about $30,000/yr, giving the retiree an annual income in the $70K range.
| Net Worth Percentile |
Net Worth |
| 10.0% | -$950 |
| 20.0% | $4,800 |
| 30.0% | $18,900 |
| 40.0% | $49,100 |
| 50.0% | $97,300 |
| 60.0% | $170,000 |
| 70.0% | $279,000 |
| 80.0% | $499,350 |
| 90.0% | $1,186,570 |
| 91.0% | $1,317,500 |
| 92.0% | $1,445,700 |
| 93.0% | $1,686,700 |
| 94.0% | $2,044,300 |
| 95.0% | $2,387,250 |
| 96.0% | $2,838,000 |
| 97.0% | $3,693,600 |
| 98.0% | $5,794,500 |
| 99.0% | $10,400,000 |
-PJ
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