UCivan
UCivan
Joined: Sep 3, 2011
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March 26th, 2012 at 9:03:43 AM permalink
Has there been any discussions on the subject of retirement here? I am 60 and plan to retire soon. But, I am not sure if I have enough money to last another 20 years. I plan to by a house in Vegas, all cash. Then all I need are medical care, food, entertainment, etc. How much more cash at least do I need to retire at the age of 62, $500 K, $800 K or $1M? Is there a calculator on WoO? Thanks. I know one answer already, "depends on your life style."
Ayecarumba
Ayecarumba
Joined: Nov 17, 2009
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March 26th, 2012 at 10:32:22 AM permalink
Quote: UCivan

Has there been any discussions on the subject of retirement here? I am 60 and plan to retire soon. But, I am not sure if I have enough money to last another 20 years. I plan to by a house in Vegas, all cash. Then all I need are medical care, food, entertainment, etc. How much more cash at least do I need to retire at the age of 62, $500 K, $800 K or $1M? Is there a calculator on WoO? Thanks. I know one answer already, "depends on your life style."



Why buy? Rates are so low on mortages now, it makes more sense to borrow than to tie up your cash.
Simplicity is the ultimate sophistication - Leonardo da Vinci
UCivan
UCivan
Joined: Sep 3, 2011
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March 26th, 2012 at 10:43:46 AM permalink
Foreclosed one house, bad credit. -:((
cardshark
cardshark
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March 26th, 2012 at 10:54:29 AM permalink
How much money do you think you will need to live off of per month? Think not just about normal living expenses like electricity and food, but also other additional "luxury" expenses, like travel, restaurants and gambling.

Also consider the need for an estate. Do you need to have money in the bank in case you predecease your spouse? Do you need money to support any children (college bills, etc.)?

A 62 year old male in 2014 will live, on average 22.489 more years, according to the 1994 Uninsured Pensioners mortality table, with generational projections.

>If you can earn 3.25% on your money (1% real assuming inflation of 2.25%), then $1,000 a month will require $184,000 in savings.

>If your investments can only match inflation at 2.25%, then $1,000 a month will require $205,000 in savings.

>If you will not be investing your money, $1,000 a month will require $270,000 in savings.
cardshark
cardshark
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March 26th, 2012 at 11:06:14 AM permalink
One more thing, the above are non-indexed amounts. There is a very important concept in retirement planning called the "time value of money". In simple terms, $1 today is worth more than $1 a year from now. Why? Because inflation eats away at the purchasing power of a $1 year after year. Think about the price of a coke today vs. 20 years ago.

You will probably need more money as you age as a result of inflation. Your electricity bill will go up, the cost of food will go up, even table minimums at the casino will go up over time! As a result, you may want to know what it might cost to "index" the $1,000/month I illustrated in the post above. This preserves the purchasing power of your monthly payment. So a stream of payments might look like this: $1,000/month for the first year, $1,022.50/month for the second year, etc.

Indexing the above amounts @ 2.25% inflation under the above scenarios would cost:

>If you can earn 3.25% on your savings: $241,000
>If you can earn 2.25% on your savings: $270,000 (the more mathematically astute here will notice this is just $12,000 times 22.5 years life expectancy)
>If you do not invest your savings: $374,000

--I've given you maybe too much to think about. If you have questions, just post.
progrocker
progrocker
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March 26th, 2012 at 11:18:25 AM permalink
cardshark has done a good job scratching the surface of a simple question with a complex answer, but I would probably get professional help. Call whoever has your 401ks or IRAs and ask if they have any retirement income planning specialists.
Solo venimos, solo nos vamos. Y aqui nos juntamos, juntos que estamos.
odiousgambit
odiousgambit
Joined: Nov 9, 2009
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March 26th, 2012 at 12:34:42 PM permalink
One rule of thumb going around is that if you have a well balanced portfolio you can count on withdrawing 4% per year for decades. You don't count equity in your house or SS, etc. If super conservative or going risky with your investments, figure less. The portion coming from your portfolio, this 4%, will be able to be increased for inflation.

You might object that surely 4% is too low, but, to repeat, like your SS portion it allows an adjustment for inflation.

One thing notable is that a $1 million will yield $40k/yr by this formula. Thus it is clear that young people with a million should not retire and also that just about everybody should want to put away more than a million... or work until 70+ yrs old at least.
the next time Dame Fortune toys with your heart, your soul and your wallet, raise your glass and praise her thus: “Thanks for nothing, you cold-hearted, evil, damnable, nefarious, low-life, malicious monster from Hell!” She is, after all, stone deaf. ... Arnold Snyder
whatme
whatme
Joined: Apr 28, 2011
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March 26th, 2012 at 1:58:53 PM permalink
While you may seek professional guidance keep in mind they just want to sell you products, so please don't sign any papers on the spot.

To figure how much you need saved first you need to know what you will spend every month. To calculate this make a budget, then throw it out. People find out that they tend to spend the same or more in retirement. You may spend less on the house but a lot more on gambling, food, entertainment, etc..

Simple rule of thumb is to plan on spending the same amount you currently do. As for how long you should plan for in imho at least 5yrs past expected life span. This will give some leeway for the future.

Inflation will be a factor that no one can tell you what it will be. While some will plan for a 2% year over year rate others will expect it to be higher. This effects how much you need in savings. Keep in mind whatever you plan for be flexible, life changes.
TomG
TomG
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March 26th, 2012 at 5:29:13 PM permalink
Everything is a tradeoff

More is always better -- but anyone can drop out of the workforce anytime they want

Once that conclusion hit me I decided it would be best for me to retire early

Total assets weren't very high -- but I do what is necessary to avoid going bust

Budget is tight -- make an effort to avoid buying stuff -- but everything is so much more comfortable without those 40 hours dominating the week
EvenBob
EvenBob
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March 26th, 2012 at 5:53:09 PM permalink
How much is needed for retirement? What does it
matter, whatever number you arrive at, it won't
be enough. It never is.
"It's not enough to succeed, your friends must fail." Gore Vidal

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