How much you think you'll need in order to retire? (1 Viewer)

[DustinLC]

Assuming with or without a social security system still in place, how much do you plan on saving before retiring? Assuming your house is paid off or if you still rent something (specify).

I was thinking and doing the calculation over the weekend.

I calculated how much we need in order to keep our lifestyle the same, without having any house or car loan, it would be 30K/year. That's being conservative. Assuming we will live to 90 and no crazy expenses like 100K surgery, we would need to have 750K (includes retirement fund). So it seems that I won't feel safe unless I have 1 million $. At current rate, being in our early 30's and having one child, I'm having a problem seeing that goal reached.

Hopefully, what's not in consideration will save us: increase in income, social security still in place, and interest earned from savings. Also, selling a Bay Area house making some money and go off somewhere and buy a small cheap house pocketing the profit.

Anyone of you in your 30's have thought this through or those of you whose almost there or there have something to add?

 

[Bryan X]

You need to factor inflation into your numbers and also the interest you'll earn on your retirement nest egg. Realize that if inflation averages 3% a year, when you retire in about 30 years, that to have the same buying power as $30,000 has today, you'll need roughly $73,000 for your first year of retirement. When you are in your 80's you'll need between $115,000 and $148,000 a year to equal what $30,000 buys today. Don't sell yourself short on the $30,000 number either. Remember healthcare will likely be a large burden on you when you are retired.

But anyway, assume you are 35 years old and will retire when you are 65 and want to have the equivalent of $30,000 a year in today's dollars. Assume you will live to 90. Assume inflation will be 3% each year and you will earn 7% on your investments.

In this case you will need to save approximately 1.12 million to last you until you are 90.

Your rate of return on your investments has a big impact on the size of the nest egg you'll need. If you earn only 5% on your investments, you now will need 1.4 million. Over a quarter million more than you needed when you earned 7% on your investments. But on the bright side, if you can swing 9% a year you'll only need a nest egg of $920,000.

But don't assume you'll get a great return on your investments. During retirement and as you age you need to utilize more and more lower-risk investments which generally means lower returns.

 

[DustinLC]

Oh you make me feel so much better Bryan .

 

[Bryan X]

It's depressing isn't it!

The good news is that you are thinking about this while you are realatively young. It's much easier to amass the needed money if you start young than if you wait.

I'm probably about your age too (I'm 34). So I'm right there with ya.

 

[Dave Poehlman]

Or you could push your kids to become professional sports figures earning multi-million dollar salaries. Then you just mooch off of them after retirement. That's what I'm banking on.

 

[Rob Gillespie]

By the time I get to retirement age, retirement will be illegal and everyone will have to work 'till they drop down dead.

Except the politicians.

 

[LewB]

Here's a wildcard to throw into the mix: Healthcare insurance.
I'll assume that since you are in your early 30's, you are working at a job that pays for medical benefits. Lets say you've been working since your 20's and hope to pack it in when you are in your 50's (30 years of working). Assuming that today's crazy health care system is still in place and you don't get meidicare 'till you are in your late 60's, you then have to figure out how to pay for medical insurance for you and the wife for around 10 years ! Let's say $1000K/month for the 2 of you by then. 1000 X 120 months (10 years) = $120,000. Was there 100K or so in the plan for medical insurance ?

 

[Bryan X]

It's definately something that can't be overlooked.

 

[DustinLC]

OK, so you guys are trying to convince me that I need 2 millions and not 1 .

My wife and I combine income is 150K/year. Heck, let's call us average joes. Then half of you isn't going to make it .

 

[Bryan X]

A good place to begin is by putting no less than 10% of your gross income into a retirement fund every year. So with your income, you should be putting atleast $15,000 a year into retirement. As your income grows, so should the amount you are contributing towards your retirement.

 

[Philip_G]

I've always figured a million bucks for some reason. Seems like I'll never get there, my 401k made a 27% return last year, but I'm still a LONG freaking way off from having a million bucks saved up, if I ever do. Course, I'm only 25

 

[Erik.Ha]

This is a reletive question... It all depends on how "Comfortable" you want your retirement to be, and WHERE you want to retire to. A million bucks will go a long way in Wyoming, but won't get you too far in L.A. or New York.

Ted Kaczynski retired to Montana at the age of 27 with barely any savings, but still had enough money to pursue his hobbies....

If you want to retire "in style" Id say 2-3 mil....

 

[Philip_G]

Apparently one of his hobbies included living in a chicken shack

 

[Eric_L]

Sorry to say, but according to most politicians and the IRS with that income you are not "Average Joe's" - you are 'rich' . It isn't fair but it is true.

You have about 30 years of compound interest before you. It may seem insurmountable, but it is not. Saving $1000/month for 30 years at 6% would make you a millionaire. (And that does not include home equity!)
Bump it to 8% and it takes only $674 per month!
Here is a calculator

The thing is, the first ten years will suck - they always do. Your contributions will be more than your returns (for the most part) during that period. Once it it over then it gets interesting. The question is, do you want to start that ten years at 25, 35, 45 or 55?

Most of all, invest prudently (which is not the same as conservativly). Find a good advisor - not any advisor, a good one.

 

[JonZ]

I WILL be gone by the time in 70(even if I have to smoke crack to knock myself off)

Men in my family live into their 90s and I just dont want to be around that long.

When I cant wipe my own ass or walk up a flight of stairs its time to check out.Gout/Arthirtis has been kicking my ass the past 2 years and Im only 34.

Ill probally end up working until the day I die.

 

[Erik.Ha]

But he didn't have to work!!!

Like I said, it all depends on HOW WELL you want to retire...

 

[DustinLC]

Cool, I'll be a millionaire some day because we're saving 2K/mo. Now I can be happy and stop reading this depressing thread .

 

[Alex-C]

now assuming the inflated price of a chicken shack in 30 years is....um, can someone please post the damn chicken shack calculator !!!!

 

[Bryan X]

The secret to an easy retirement:














INVEST IN SILICA!!!!!!!

 

[Todd Hochard]

If you can't become a millionaire on $150k/yr income, well, you're an doofus. I fully intend to become one on less than half that- one income, and two kids. We have sacrificed many "trophy" items over the last eight years, but the sweet taste of financial freedom is worth it.
That seems easier said than done. Seven years, and I'm still looking. Everyone has an ulterior motive, it seems. I've got a guy from MSDW that's been chasing me for two years.
I could have used the 'ole cattle prod in the back on the tech downturn. I'm stubborn like that, but ultimately, it did pay off. Not that I'll do it like that again, though.

Care to trade services, Eric? I'll build you a nice musclecar in the pro-touring motif.

Todd

P.S. Cars aren't my profession, so you may get the short end of the stick.