How much money to retire ???

[foolslife]

Our story is not great. I lost several hundred thousand 401 dollars and most of our home equity due to a bad business investment.

However we are 70 and retired with a $1100 mortgage and utilities. My pension pays the mortgage so we basically live on SS alone which turns out to be more than enough for us. Actually we have more money left over after bill than when I worked. I do play in a band which provides a little more spending money. But that's it.

Wait there's more. We bought a condo for $52k with some inheritance money. Three years later we sold it for $129k and bought a rental cabin.
The cabin has a small mortgage and utilities but pays for itself. The idea here is to sell it when there is enough equity to pay off both the rental and our home. Right now we make no money from it as it breaks even with expenses and it's a bit of a pain but it's what we have going for our future.

It's not hard we already have more than we need.

 

[Wyandot Jim]

Again, this is all very helpful. Thank you everyone who commented.

I think Texas gives breaks to retired people for property tax. That is our biggest expense right now. Since Texas doesn't have state income tax, they make up for it with property taxes.

Kevin,
You might want to check that. I believe that at 65 and after your school tax stays the same amount BUT the county tax keeps increasing along with property values.
When people say they are dept free. I don't think so when you consider property taxes, insurance both home, hospitalization and auto along with utilities.
I retired in 2005 at 61, and wife did in 2003 after teaching for 25 years. We didn't have a house, car, or kid payment but still have expenses. We have enjoyed our modest lifestyle over the last 20 years.

 

[Dan in MI]

Math is your friend. Excel is an awesome tool for this type of planning.

A couple ways it can help. (I use Excel for all these)

1) Take your nest egg. (or projected if you can) with just simple math subtract one years needs, then take that number and multiply it by a reasonable expected growth rate. Repeat for forty years.
Nest egg - annual need *1.04 (4%) repeat --- this will show you how far your nest will go all by itself.

1A) same as above but at your chosen age to take SSA. Subtract the SS amount from the withdrawal rate.

Do this in as many scenarios as you wish. taking into account whatever you think will apply.

*** I did this for rates from 1% to 5% with various annual withdrawal rates and interest rates. That showed with zero interest I was broke at 88, with 1% at 92, and 2% got me to 101. All I needed to know.

Here's a complete version with numbers similar to the example above, just larger nest egg.

 

[jav]

One last thing Kevin we have a mortgage on both houses not much rental 90 thousand and the house we live in we 200 thousand not that I don't agree with retire with no mortgage but it works got us payments are low we got on both loans at 2% so that's cool . We bought a new jeep grand Cherokee we paid cash every we buy we pay cash no payments except the houses we can easy pay it off both house but our moneys lady's is against that so there you have it good luck Kevin

 

[Jack Ryan]

All of it.

 

[Hvymax]

The real question is "how long do you plan on living?".

Day ain't over yet!!!

 

[epags]

I've asked before about home much money is enough. But I'm also curious how much do you need to retire?

Well, that, and my wife is going through a pretty substantial job change. I'm a stay at home dad because sweetie travels for her job and if I worked we would have to have a part time nanny. What's the point in that?

Question: But I'm mostly curious how much you need to retire? I know everyone is in a different situation, but for those of you who are retired, Do you have a pension? Do o you rely on your 401k? Do o you just have social security? I'm not even asking about dollar amounts; but is it paycheck to paycheck or do you dip into savings for extra-ordinary expenses, like a new revolver? Do you have money set aside you don't touch ever?

But If we start talking dollars and cents someone will say it's more than enough and someone else will say it isn't close to being enough.

My parents who are still kicking it, (dad=92 mom=86) have a pension (state teachers) and some savings. Not a lot though. And I know they pay a lot for medical insurance.

I've thought about this post for a long while now, and I don't want to say too much about my wife's job. Just to say we did manage to save a year or so worth of expenses. We are both in our 50's.

I know you have read all the above comments. You are in your 50's. Everyone has a different set of circumstances so any one's situtation is not yours.

IMO....My spouse and my rules:

Save. Do not buy the latest and greatest of anything...cars, appliances, clothes. But do not save to the point of suffering. OTOH, you do not have to keep up with the Joneses.

The stock market is not your enemy given your relatively young age. It goes up and down but has historically always gone up. Your decision to use an advisor is dependent upon your willingness to learn how to do it your self. We used advisors for some 10 years and realised we could do as well and save their commissions.

As almost everyone else said....get out of debt. Use a credit card but pay it off each month. Keep your automobile for as long as it will run. Who cares what the neighbors think. Read the book....The Millionaire Next Door. It is free at your local library.

Love your spouse and make allowances for your differences. Get counseling if needed. Don't get a divorce. Speaking from experience, it will cost you the equivelent of a million over time. Ask me how I know.

If you do divorce, marry a spouse who has the values described in all the comments above. You will not have to worry about how much is enough. Ask me how I know.

 

[davevabch]

You will not need money to retire. The Government will supply everything you need.

 

[txramfan]

Again, this is all very helpful. Thank you everyone who commented.

I think Texas gives breaks to retired people for property tax. That is our biggest expense right now. Since Texas doesn't have state income tax, they make up for it with property taxes.

Don't forget your property insurance, that one doesn't stop increasing in my personal experience.

If you live to a very old age, mom is 97, in home care adds up quickly. Just another thing to consider.

 

[eveled]

Nobody has an actual pension that pays every month?

I remember when people said if you saved a million dollars you could live off the interest. Funny how things have changed.

 

[GypsmJim]

You will not need money to retire. The Government will supply everything you need.

"I'm from the government and I'm here to help"

 

[Kevin]

Nobody has an actual pension that pays every month?

I remember when people said if you saved a million dollars you could live off the interest. Funny how things have changed.

From what I've read elsewhere, the figure you need to live comfortably is about 2 1/2 million. But I don't think that would be enough.

And @epags i have read everything here, slowly so it can sink in.

The stock market is my friend, I do know this. I've been following it most of my life. When I was a teenager my dad started buying Wal Mart stock. I used to ride my bike down to the Edward Jones office to give them checks every so often.

Then just after college I started investing. We don't use an advisor. Well at first, but they like to play safe.

My wife has a CPA and she also is interested in all things financial. So that helps more than just about anything.

But in all of these posts, the main thing I'm reading is having different income streams coming in. Either pension, or social security or if you have a rental house.

This is something I didn't think about. And it's an eye opener.

 

[Johnnu2]

Kevin, you have a wife who is a CPA and financially astute. The ONLY thing you need to plan for is keeping her happy.

p.s. I NEVER had a car payment either..... I was too embarrassed to admit it until two other guys did..... had some nice cars though.

J.

 

[txramfan]

Nobody has an actual pension that pays every month?

I remember when people said if you saved a million dollars you could live off the interest. Funny how things have changed.

My wife has an annuity now, that was a pension. It pays less than $200 a month. The company replaced the pension with a 401k.

 

[Armybrat]

Nobody has an actual pension that pays every month?

I have been retired for 25+ years, the wife for 20.
We each draw a state pension and SS, which is more than enough for our needs. So we can save some from those each month.
No mortgage, no car payments, no credit card debt.
Just taxes, insurance, utilities, and daily living expenses.

Our windfall oil royalties that kicked in several years ago have almost tripled our gross annual income, but most of that goes into savings.
Of course it helps with my "Gun a Month Club" expenditures.
We haven't traveled hardly at all since the Covid business, so our expenses have run about the same.
Plus being an army brat cured me of extensive travel anyway.
Guess our kids can have fun with that someday soon, but they are all self sufficient and level-headed.

 

[roylt]

I always said I'd retire when I had a million dollars. But not so sure now.

I have gotten away from all the advisers. They are just in your pocket with fees etc. My 401 at work was just "extra" money for me for years and about five ago I got smarter and actually read the fees etc. Ended up putting everything into one investment where the fee was only .04%. Basically the S&P500 mutual fund. Up about 19% this year!
Then I moved everything to Vanguard but keep it simple. Mutual funds for the win. Compound interest is your friend but keep an eye on fees. I think everything I invest in is still under .5% fees total. Where when I went through advisers (ED Jones) it was 4%!!! I typically made money and felt good but guess what I COULD HAVE MADE 3.5% MORE!!! over years!!! I felt real bad about that for a long time but it was my own fault for not learning sooner.

Invest as young as possible and let the compound interest stack up. Even kids can open an IRA if they have income. (I still need to learn more about this for my kids. Daughter started her first job end of last year so I'm late.)

 

[Kevin]

I always said I'd retire when I had a million dollars. But not so sure now.

I have gotten away from all the advisers. They are just in your pocket with fees etc. My 401 at work was just "extra" money for me for years and about five ago I got smarter and actually read the fees etc. Ended up putting everything into one investment where the fee was only .04%. Basically the S&P500 mutual fund. Up about 19% this year!
Then I moved everything to Vanguard but keep it simple. Mutual funds for the win. Compound interest is your friend but keep an eye on fees. I think everything I invest in is still under .5% fees total. Where when I went through advisers (ED Jones) it was 4%!!! I typically made money and felt good but guess what I COULD HAVE MADE 3.5% MORE!!! over years!!! I felt real bad about that for a long time but it was my own fault for not learning sooner.

Invest as young as possible and let the compound interest stack up. Even kids can open an IRA if they have income. (I still need to learn more about this for my kids. Daughter started her first job end of last year so I'm late.)

@roylt You can start a custodial account for your kids. There is also something called a UTMA (Universal Transfer to Minors Act) that you can set up with any brokerage firm. Both are good for getting kids involved with the stock market. I'm not sure how old your kids are though.

 

[v35]

Those Benjamins don't buy nearly as much as they did 25 years ago, and credit card interest will eat your lunch.

In fact the US dollar has lost approximately 50% of its value during that time.

 

[jack black]

My wife and I both started Roths 40 yrs ago pay taxes on the way into the Roth and all the profit is now tax free. After 40 yrs of building ,both are well over 1 Million each and remember NO tax on any of the money we pull out.
I also follow Warren Buffett and we have done very well.
Prepare and learn how to invest.
Best Wishes

 

[Dan in MI]

Nobody has an actual pension that pays every month?

I had that option, but took the lump sum for a whole list of reasons.