How much money is enough ?

[Kevin]

In thinking about the stock market thread, I got to thinking about the WHY people would invest. Either in stocks or real estate I suppose.

We have an account set up for retirement. But how much is enough? I always read about saving for retirement in the news, how if you don’t start in your 20’s you won’t have enough. Using your 401k as the primary savings method etc.

I don’t think I started in my 20’s. I guess I was in my 30’s when I started investing in the stock market. Now I’m 51….so 20 some years of investing.

But how much do you need to retire? Is that something you can put a number on? Like the promise of a “lifetime guarantee” The question being “How healthy are you?”

But say you don’t need custom made shoes, then how much is enough?

AND !!!!

Would you stop working when you reached that number? The interesting quote being from the investing thread: “If stock brokers knew so much, why are they still working?” Which begs the question, why are they still working.

Side note: Esquire magazine had an article perhaps 10 years ago about custom made shoes… they cost about as much as a custom revolver.

 

[hittman]

Cost of living varies greatly from one region to another.

Living BELOW your means in your 30s, 40s, 50s, etc. will go a long way towards building that retirement nest egg for sure. Many just don’t do that.

We live in a fairly rural area. A local guy graduated high school, went to medical school and by the time he was about 50 he owned half a dozen medical clinics in California. When he sold those (based on CA pricing) in the “a couple million dollars” neighborhood he moved right back home, paid cash for the nicest home in the area, a few acres and won’t have to work again if he lives another 50 years.

He didn’t get all wrapped up in a certain lifestyle, etc. He had a plan and worked it to great success.

So .... how much depends on how needy people continue to be.

 

[turd]

How much you will need is as individual as you are. We are not people that need to travel or spend money to make us happy. we have a small newer home on a small lot in a decent area of a very nice city to live in. If our house is paid for and our cars are paid for and good enough, we don't need much more than SS to be very happy.

As the saying goes, the truly wealthy person is the one who is happy with what he has. If you plan to travel and "live it up" you would need a whole lot more. Each person is different, so are their retirement needs......

 

[blume357]

I'm one of those nay sayers, so don't pay attention to me....

My wife, who does have investments, took me to one of here investment club meetings years ago and the presentation was by some investment company like Charles Swab.... the two guys said if you became one of their preferred investors then they could guarantee you a at least a 17% yearly return on your investment... minimum investment to become preferred was 75K..... I know people love to play the investment game... but when we walked out of that presentation all I could think was: "Jesus protect me from the money changers."

I have started investing in stocks over the past couple of years... but my stocks are on and in steel and some lead.....

 

[woodsy]

Mutual funds, without any fees. But no matter what you plan, health tragedies can undo anything in the blink of an eye.

 

[Heliman]

Well, I didn't start my 401k until I was 40. After a few years I was maxed out on my contribution.

I retired at 64 and rolled the 401k into an annuity account which I have been drawing from monthly. My risk level is about 6 on a scale of 1-10.

Bottom line, I have been drawing out about $15k annually for 7 years to supplement SS. My balance still has grown about 20% since retirement. I think I can make it..... cross the old gnarled fingers.

 

[JFB]

the 4% rule.

what you need per year should be about 4% of what you have in investments.

thus if want 20K/year, the starting investment would be (20,000 / 0.04 = ) ~$500,000

 

[protoolman]

I also subscribe to the 4% rule. I have saved enough that I hope to be able to draw approximately the same amount as my social security check effectively doubling it. I also plan to pay cash for a newer car prior to retirement. A new car usually lasts us 10-12 years reliably. Our mortgage was paid off years ago. Like I told my kids years ago when we were noticing a Maserati on the highway. " His air conditioning isn't any colder than ours and his car may not be as reliable". It's easy to live within your means and still be happy. Money's got very little to do with my satisfaction and happiness in life.

 

[Bear Paw Jack]

I like the Dave Ramsey saying. "Retirement isn't an age, it's a financial position." Just remember at what ever age you decide, your expenses will be higher in 20 years. You need to consider that. Years ago I went to a seminar by a guy named Bob Proctor. One of the things he said, was to create as many streams of income you can. At some point SS won't be an option, but even if it is, it will be reduced. Think of it as the frosting on the cake if you get any. I like the idea of 15% savings from every pay check from whenever you can start, until you retire. Be totally out of debt, including (especially) your home(s), and cars. Any monthly payments besides utilities, property taxes, insurance, etc that you can get rid of gives you an edge. Investing right really helps build the wealth it takes to retire. One of my favorite books on the topic is "RETIRE INSPIRED", by Chris Hogan. Personally I went the real estate route. Only because, I knew what to look for and managed to take of advantage of it when I saw it. Who knows if it will ever come around again. Down size as soon as you can, and hopefully when you sell, you can pay cash for the next (downsized) house and possibly have cash left over. A home is a place to lay your head, and enjoy the spouse. It's not an extension of your ego. The house I live in is smaller than my 2 rentals. At some point, you need to figure out how much you have to live on if that works for you (the 4% rule), or figure it the other way around this is how much you have coming in, can you live on that? Get out of debt as quickly as possible, and save all you can. Live below your means. Make a budget and live by it. Even retiring at 60, you may live for another 25 years or more. That's why I went with multiple streams of income approach.

The short answer to your question, is, you can't ever have too much. I've never met anyone in their retirement say, I wish I had saved less money. If you decide you saved too much, it gives you opportunities to be generous to those who need it, somewhere down the line. Maybe even several times through your life.

 

[Rick Courtright]

Like I told my kids years ago when we were noticing a Maserati on the highway. " His air conditioning isn't any colder than ours and his car may not be as reliable". It's easy to live within your means and still be happy. Money's got very little to do with my satisfaction and happiness in life.

Hi,

Sounds like the story a kid who worked for me in the early '70s told on his Dad. Mom and Dad were members of a local yacht club, and they had a very popular model sailboat. They took it out and raced it several times a year, and most weekends the weather allowed in addition. Dad drove an old VW Bug.

The two kids had grown up around the yacht club crowd with a lot of folks who had a lot more money, drove fancy cars and such. So they asked Dad when he was going to get a nicer car. Dad answered, "You guys can go sailing whenever you want, and we'll drive to the club in the VW. Or we can get a nicer car to drive to the club, and the boat won't be there any more. Take your choice." The son bought his Dad's old Bug when Dad finally bought a new car. Another Bug! And 50 years later, I wouldn't be surprised if the boat is still in the family, too.

Rick C

 

[Pat-inCO]

I think the first question should be "how soon can you have your house paid for"?

Once your house is paid for, you can then decide how much you need.
Until then it is only a guess.
I tried to be a good corporate citizen and took the early out (over 25 years but under
the 30 year "full retirement"). - - - I made a good decision and paid off my house.
Things were REALLY tight for a few years until the retirement kicked in.

Since then I have been relatively comfortable. NOT in luxury, but still doing well
enough to not worry.

When I moved to AZ I sold the house in CO, which had been paid for since '92,
and paid cash for the one I'm in now. In the 26 years after paying off the house,
I bought four new cars, paying cash for each. My opinion is that once the house
is paid for and the car(s?) are paid for, you then buy what ever you want, as long
as you pay cash for it.

That's my definition of having enough. No house payment, no car payment, and
ALL credit cards paid off each month. - - - Doing that, you can usually have steak
on Saturdays, and eat out once or twice per week.


P.S. I'm on 3.2 acres. Nearest house is to my East (about 75 feet),
and it is 75 YARDS to my mail box (back fence is about twice that far. :wink:


Get the house paid for, then make . . your . . decisions.

 

[kramden]

As stated above. Start saving early and consistently. Live below your means in your working years. Your aim should be to retire debt free. My mother used to preach that to my brother and I growing up. For some reason even as teenagers we both listened to her advice. I've been retired 13 years now and can't tell you how often I've thought to myself "Thanks Mom". Retirement has truly been GOLDEN.

 

[Dan in MI]

If you are not on a budget get on one. Knowing what you spend goes a long way towards being able to calculate what you’ll need.

Your savings percentage target (10-15%) will sound high but remember that number includes company match and other sources not paid by you.

 

[Mobuck]

At a time when I had a good job and good health, I was investing. I was investing in my kids' futures, paying for land, and upgrading equipment. My kids worked with me on the farm, had their own herd of cows, and went to college w/o having to sponge or borrow money. The land is paid for and appreciating in value every day. When older Son wanted to get back into farming, the high dollar part of our equipment needs was sitting in the barn ready to go.
I could have built up a valuable "portfolio" back in the 90's but it wouldn't have been nearly as valuable as seeing the kids prosper w/o being overwhelmed with debt and seeing them go out into the real world with a set of skills and knowledge that has put them on a successful path.
I'm still working a part-time job to fund my shooting and hunting addiction and to have a slush fund for those times when things go wrong and cash is needed. I'm not the sort of guy to sit in a chair and watch the few remaining years of my life swirl around the bowl.

 

[The Norseman]

Mutual funds, without any fees. But no matter
what you plan, health tragedies can undo anything in the
blink of an eye.

Having enough money for Retirement isn’t the problem
it’s the Cost of Long Term Health Care, when this occurs.

LTHC will cost more than $300/day. This will Financially
Ruin most people and families.

A LTHC policy has to be considered also.

 

[Kevin]

Very, very interesting. Seriously, thank you for all the replies. It’s great to read stuff like this. I’ll have to show it to sweetie.

 

[gramps]

My second wife and I were worth $850,000 back in 2008. That quickly changed, we lost our second stream of income as a business we had stopped producing $22k/year. Part of that business was a houseboat we did massages, spa parties etc. I started travel nursing to make up the lost income, then the wife divorced me in 2010. Her stock portfolio tanked from 500k to 100k. I had plead with her to pay off our debt of $300k, but nooo! Consequently, my 401k paid off the credit card debt, and my only income now is SOC SEC half of that goes to a house loan I no longer have. I can’t wait for March of 2024, when the loan is paid off. Back in Dec I closed my 401k as I drew out the last 2k. Because of a unilateral decision by my ex wife, instead of having an houseboat, a Lake house, and easy living, we have a lot less! I live on my farm in a 16x80 trailer. I do hunter, forager activities. This AM I had raspberries, in a week or so I will start reaping blackberries. I live within the means I have, work when it is available. Don’t worry be happy! So, how much should you save? My only hope is to win the lottery. I play $1/week. If you aren’t playing you can’t win. If I had one million in the 401k the ex would have found a way to get it. Sound financial decisions, and a wife who is committed for the long term, is how you get ahead. Good luck Kevin.
gramps

 

[Dave P.]

I'd like to live in good health right up to the day I die.
Ideally having about eighteen cents left in my name.
Trick of course is knowing when that day will be.
If I could answer that I'd know how much money was
enough.
Dave

 

[hittman]

The greatest destroyer of wealth is divorce and substance abuse.

 

[Dave P.]

The greatest destroyer of wealth is divorce and substance abuse.

Add "health" to your list as well.
Dave

 

[RSIno1]

No crystal ball so no way to tell when there is enough in the kitty.
I knew a guy who was an LAPD Cop. He was born in 1908 and lived to 100. He started being a cop at 21 and retired at 55 with 34 years on the job in 1963. By the late 80s he was lamenting the fact that his retirement had not kept up with inflation and he was broke. There was a 3% annual cap on raises. If inflation was 1% you got a 1% raise if (like thanks to Carter) it was 10% you could only get 3%.
I left a place in 1982 with a vested company paid retirement. I got a letter stating I had just over 1,200 in the fund and at 65 I could expect about $15 per month if I left it in. I took it out and stuck it in my own account.
My city job has it's own retirement and I don't pay social security. I get 2.3% of my base salary for each year of service. I'll have 40 next February and will take my 92% retirement along with 100% health care. The house turned out to be our biggest retirement account. Paid $45,000 for the place and a smaller one 2 doors away just listed for $800,000. I'm going to have to spend more on my NV retirement house than I wanted to just to escape the capital gains tax. Now if the Dems don't crash the economy by early next year I should be ok - a least that's what I see in my crystal ball.
PS - I figure we're about $10,000 ahead on the Lottery - by never having played.

 

[Pat-inCO]

There was a 3% annual cap on raises.

Anyone that gets that much better NOT complain!
My pension is based on what I made in 1991.
I have received ONE pension increase ($35/mo) just before Y2K.
My pension PLUS SS is a thousand less than I made in 1991,
and virtually everything is AT LEAST three times the cost in '91.
(except housing, which is five to ten times what it was - - so far).

 

[Dan in MI]

There are sooooo many things to look at. Even if you have a good handle on your money, find a good financial guy. A FIDUCIARY, not a stock salesman. They can help you with tax tips and other matters. They also have access to investment vehicles we aren't even aware of. Or types you are aware of, but have loopholes the general population doesn't get to use.

I saved as much as I could and lived well within my means so that as soon as I could, I would stop going to work. My plan worked for me.The thought of a pension scared me. Too many ways to get hosed by the government, or the company. I took a lump sum and never looked back. In 2.5 years my nest egg is 40% larger than it was the day I retired, PLUS that does not include what I spent to live on in that same 2.5 years.

A confidence builder is the simple formula. Take your KNOWN budget. Say you spend 50k a year. Your nest egg is 750k. In the simplest terms that means you can live 15 years (750/50=15) at your current budget with no other input. Now say you get 15k a year for SS. For every year you get SS your nest egg withdrawal drops to 35k. Adding a few more years to your plan. Start there. Don't forget some interest, (calculate what rate you need to keep above water, determine if that number is realistic) and remember inflation. Now you can start looking at what you have, what you need, and how to make them meet.

Do the math, do the math, and then do the math again.

 

[ronto]

" How much money does it take to make a man happy? Just one more dollar."
-John D. Rockefeller

 

[bobski]

dont take this wrong and dont draw false conclusions but......i remember a time when men would go hunting and have an accident, and family would find them, cry, and bury them.
eskimo grandmothers would float out on ice and allow the bears to eat them when they were of no use to the family.
granted, usa is a little more civil about aging. but the problem has been around us for as long as history has.
people tend to want to squeek out as much life as they can at any cost. but it was accepted that when that day came, you took it like a man. and dr's like vultures, are all there to take your last penny to give it to you.
so...how much?
eat, pay for your roof, pay for your spouses needs, all the rest is not important.
im learning this currently.
guns are going out.
family treasures are going out.
19 room mansion is going out.
even gardening is going out. grass has killed too many of my peers.
looks like a cabin in mo may be it.
and who cares if the ambulance makes it in time to me...in the future.
amazingly..my military pension covers all the basics and ive lived on it for 25 years so far. God bless the USA. take away s/s, and i'll still be cared for. and so will my family.
modest is my middle name.
socialism wants 2 classes of people, the rich and the real poor. the goal is to eliminate the middle income, forcing rich to care for the poor, then govt can control the rich and eliminate the poor by shutting off care.
once all thats left is the rich...guess what?

the old book is right.......vanity of vanities, all is vanity.

 

[vito]

Its impossible for anyone to give you, or anyone else, a definitive answer to your question. The variables are enormous, and may well change over time. And while you may not believe this, some who really are good at saving and planning for retirement or for that "rainy day" get so accustomed to not spending money and in putting every dollar possible away for that unknown future, that they can never get themselves to actually spend that money no matter how "rainy" it gets in their lives. Years ago I worked with an older man who lived in a tiny, run down apartment in a not so good neighborhood in Milwaukee. He had worked his entire working life for one company, and saved as much as he could for his "old age". He and his wife never had children, at least in part because they were worried about how costly it might be to raise a child. When I knew him he was in his mid 80's, his wife a few years younger, and he told me that he had over $2 million in savings and investments that he never touched (this was in the early 1990's). He lived on the Social Security checks he and his wife received monthly, still worried about his "old age". They never went on vacations, drove an older modest car, and rarely even went out for dinner at a restaurant. Then he suffered a massive stroke and died a few days later. His one accomplishment in his entire life was in leaving his widow well off for her limited future. And if she did not spend the millions that they had accumulated, it would go to several nephews and nieces that he didn't even like or care about. Sad story.

So like everything else, moderation is probably the best answer. Live at a level that you can be reasonably happy, and save what you can for the future when you will not be working. While you are working, try to have the ambition and skills so that you can optimize your income. Don't try to "keep up with the Jones's" since that rarely brings even a little bit of satisfaction. On the other hand, if your personal passion is to, for example, own a nice sports car, don't put it off until you are too old to enjoy driving it.

Personally I was not very good at saving for the future when I was younger. With having five children, and wanting them to graduate college without undue debts I pretty much did not save at all for many of my working years. But part of my working life was in military service so that when I left the Army I had a decent pension which would continue the rest of my life. In my second career I decided not to retire at 65 but to continue since the kids were now all grown and on their own (mostly). I saved a lot in the years between 65 and 70, years in which I was earning a lot of money as a health care executive. So when I left work at 70 I had my pension, Social Security and my wife and I had a significant investment account which continues to grow or shrink as the stock market goes up and down.

My final comment is about home ownership. I agree that its a good idea to pay off your home, but in many if not most parts of this nation, you never REALLY own your home. Real estate taxes might be more than your mortgage payment ever was. A rising value in your community could price you out of your own home as taxes increase with the increased value of your home. (My brother owns a modest home in the suburbs of NYC where his property tax is about $18,000 a year. Fortunately he can afford to pay that amount, but some others had to sell and move to a cheaper part of the country.) So home ownership and paying off the mortgage is a good idea, but is not a panacea.

Good luck with whatever you decide to do for your own future.

 

[bobski]

along that line, because of the internets influence, there are no longer pockets of hope. once again, the goal of socialism is to make all equal.
drive anywhere in the country and you will feel like you just left where you currently are. all that changes is the view and weather.
individual attitudes and cultural pockets are being eliminated with generica.
we are no longer rewarded for hard work. you must share it with everyone else and your town must be like all the others.

 

[Kevin]

Again, thanks for all the comments. They are appreciated. This has turned into an interesting discussion.

 

[JFB]

... it would go to several nephews and nieces that he didn't even like or care about. I
.

I want to draft a will that excludes all blood or through marriage relatives, both mine and Wife's,
ie anyone but. . .

 

[hittman]

then govt can control the rich

No sir, I respectfully disagree.

Then the rich ARE the govt ...... much like TODAY.