Someone started the whole retirement discussion this week. Younger generation here, find the topic interesting even though I’m not retiring soon. I want to hear what others have in mind about the amount they need before retiring. Will help my wife and I to work towards that goal.
Obviously it depends on what lifestyle you want to have and at what age you plan to retire.
Ok Dave
Rice and beans, beans and rice. Sell so much that your kids will think they’re next.
30x’s your annual expenses, invested in 70% equities and 30% debt will do. If you throw in a bit of rental income, then it’s all good!
Move somewhere else?...Tried that...The second you declare your non residence status to the institution/bank that has your investments , they will suspend your ability to trade or highly penalize your ability to invest. The country you go to will also do the same to you . As an American abroad you will also have to file US tax returns as well as the country you move to. You will also find out that the social problems you face here are also present in most every other country, perhaps even worse. I walked into a socialized government that spent most of its money on Covid stimulus, Opi--d crisis, homeless crisis, etc. Left no money for a working medical system... Had no access to primary medical care for three years. No social net for the paying taxpayer. Cost of living(gas,food,housing) was much higher and access to common goods and services was limited. Moving is not the answer to a financial shortfall. Spending wisely, saving $$ and having a retirement strategy is the way forward. Good Luck.
Either have a lot of money, work into your 70s, or revise your lifestyle. Concentrate on the non-material things in life like spending quality time with friends and family(not at a 5 star resort) , helping a grandchild grow, and maintaining your cognitive abilities through hobbies. Don’t get hung up on needing to volunteer or give back to society. That bit is overrated.
Most of you finding the grease are used to spending your six figure salaries and have a minimum level of comfort required to exist. Throw into the mix that financial planners model men's mortality into the 90's and women into the early 100's. You retire at 62, you need to bankroll your lifestyle 40 more years. Even if you budget for $120,000/yr (low!) that is still $5,000,000 you need to wisely invest. And...Medical insurance premiums for a couple run ~$25,000/year. Always a little surprising to do the financial modelling and see what retirement costs. I did not see large herds of staff over 60 at my last job. You may need to have a substantial warchest set aside in your 50's. Good Luck.
30 x Living expenses = amount needed to retire.
Agree with the poster below on maxing out the Roth IRA when you are eligible. Then, when you aren’t eligible, contribute to a traditional non-deductible IRA and to a back door conversion as soon as possible to a Roth IRA each year. Exactly the same as contributing to a Roth IRA.
Get rid of the Corporate Socialism and you'll be fine.
Figure on annual expenses that are 4% of your gross net worth. Then you can calculate how much money you need. Generally speaking your retirement age, the average rate of return on your investments, age of death, and the medical costs and long term care costs leading up to death are the leveraging parameters. If you do a probabilistic analysis some cases are a real bummer which lead you to occupy a Medicaid bed and have a roommate in your last years. Other cases have you living like royalty in your last days. Good luck.
Thing is I don't think Medicare covers you if you are out of the country. It would cost a fortune for Health Insurance. Plus, many of the doctors overseas are not as good as the ones here in the US. I am seeing where a lot of retirees get locked into their doctors and tend to stay around them in retirement. The medical coverage is key in retirement. I would suggest looking at your cost for Medicare. What I have found out is that Medicare Part A is the free one and covers hospitals. Plan B Medicare cost around 200.00 a month, and that covers 80% of charges. One bad health issue could eat up a lot of your savings paying the 20%. That is why they have Medicare Advantage Plans (PPO), and Medicare Supplemental Plans or Medigap which cover more then the Advantge Plans. Then you need Medicare Part D to cover the RX. I found a Medicare Supplemental like AARP United Health Care covers almost everything with no copay. It runs about 200.00 a month as well. The supplemental plan is better than the Oxy Retiree PPO plan. With the supplemental you can see any doctor you want, and with the PPO you have to stay in the network. If you have a younger spouse their insurance can run a 1,000.00 a month, and in that case the Oxy Retiree insurance is best for them. My cost for me are Medicare Part A 0.00, Medicare Part B 200.00, Medicare Supplemental (AARP) 200.00, and Medicare Part D 40.00. That does not include dental, vision, hearing and I just pay cash for those. So I am at 440.00 a month just for me, and then my wife is younger than me, and we will have to get her something. Insurance is going to be our largest expense. Also, with Medicare you can't be in an HSA, so there is no savings there. If you retire between 55 and 65 it would be best if you had Oxy Retiree insurance to cover you and your spouse and any dependents.
Move to a cheaper country. Plenty of Americans live off only social security in Philippines or Mexico. With 401k and a real retirement, you can go somewhere much nicer.
First thing I did once I figured it out was max out the 401K and build up other cash as mush as possible. The one thing I wish I had of done is put more into the ROTH IRA instead of the traditional 401K. To have that money tax free would have been a lot better than paying taxes as I pull it out of the traditional 401K now. Payoff your house so you can be mortgage free is another thing I suggest. When you get ready for retirement pick out where you want to live and setup house there before you go into retirement. Again, either pay cash or pay it off as soon as possible before retiring. If you are free to move around find a state where the taxes are reasonbale for real estate. Right now in Texas we are getting hit hard with the appraisals that are being put on our homes. It just drives up your yearly tax bill plus insurance and other home expenses. In many states with high proerty taxes you are basically just renting the home you own from the government. Never live above you means and it will help you learn discipline for financial responsibilty in retirement.
You are right, it does depend on your age and lifestyle. Start saving and investing early. For my own plans, on track to retire with 6 million in mid-50s. I think I could get by 3 million, but better to save more just in case.