How much do you need for an UMC retirement?

[Anonymous]

Anonymous wrote:You’ll get such a wide range of answers here. For example, 250k is a lot.

I’m part of a financial forum and most who have been retired a while say they spend less than they planned. Some do choose to pay a lot for health insurance plans. Those on the ACA are paying low costs for good care.

I’d consider:
Any deferred maintenance (roof, etc)
Mortgage and property taxes
Travel
Utilities
Groceries
Cars
Etc

I added ours up and could barely get past $50k / year and that included traveling.

If you don’t calculate correctly, you might end up thinking you have to work longer than you do. No problem working longer if that’s your life goal but most want to have more time for other pursuits.

Guess it just depends on how you live. Our property taxes on one house are over $20k, and we need a new fridge which is north of $20k. One vacation is $10k at least. Our car tax is over $7k for the year and insurance is over $10k, not including health insurance.

[Anonymous]

I make estimates of expenses and see where it lands in 10 years when I plan to retire. I make 265 and currently saving $35k in 529s, $15k for kids camps, $25k in 401k, $10k in kids sports and have two mortgages of $48k that will be paid off. Yes, some of those expenses will replaced by healthcare costs. But it seems like I could live pretty well on $150k. That lands me at just about $3m.

[Anonymous]

As others have said, the cost of care is exorbitant. My mother in law is paying $15k a month for my father in law’s nursing home (technically a rehab, but he cannot do physical therapy anymore and is just in bed for the past year.) they are Umc but not very rich.

[Anonymous]

Anonymous wrote:I know the answer will depend on a lot of factors, but how much invested do you think would be enough in the DMV area for a couple? When I was given a presentation by a financial advisor in 2010, the answer was $2M, presumably to generate $80k of income per year in retirement at a 4% withdrawal rate. So is it $3M now, or more?

80k per year. This poverty level, not UMC. Your financial advisor doesn’t know DCUM.

$2M isn’t enough to retire. The consensus here is that you need at least $20M.
You need that much to continue to support your adult kids and the grandchildren.

After spending lavishly on your kids, fully funding top private colleges, spoiling them, you realize you have raised entitled kids who still need you to provide for them. They have underachieved. You need to buy them a car, pay for their wedding, buy them a house, pay for their children education.

That’s why you need more money in retirement.
The secret is to not raise entitled children. Set you kids for success and you won’t need to support them in your retirement.

[Anonymous]

Anonymous wrote:

Anonymous wrote:You’ll get such a wide range of answers here. For example, 250k is a lot.

I’m part of a financial forum and most who have been retired a while say they spend less than they planned. Some do choose to pay a lot for health insurance plans. Those on the ACA are paying low costs for good care.

I’d consider:
Any deferred maintenance (roof, etc)
Mortgage and property taxes
Travel
Utilities
Groceries
Cars
Etc

I added ours up and could barely get past $50k / year and that included traveling.

If you don’t calculate correctly, you might end up thinking you have to work longer than you do. No problem working longer if that’s your life goal but most want to have more time for other pursuits.

Guess it just depends on how you live. Our property taxes on one house are over $20k, and we need a new fridge which is north of $20k. One vacation is $10k at least. Our car tax is over $7k for the year and insurance is over $10k, not including health insurance.

Yes it does obviously depends on how you live. OP said UMC lifestyle which I take to mean a read only nice home in a good neighborhood, 1-2 cars (nice but not necessarily luxury) and ability to replace in cash when needed, 2-3 nice (but not necessarily first class) vacations a year, ability to send money for grandkids college fund and buy gifts for kids and grandkids when you want (but not necessarily extravagant gifts), good healthcare, ability to eat out a couple times a week and shop at noon very grocery store, and a decent discretionary income on top of this for clothes or plants for the yard, etc.

But even all of that wouldn't cost more than 150k per year, if you own your home (and it's not a mansion). What you are talking about --with multiple huge homes and the very highest end appliances -- is not UMC. It's just wealthy.

[Anonymous]

So the real question here is: What is your magic number?

For us it is $4M. We’re budgeting for slightly less than 4% withdrawal rate (150K per year). We also expect our investments to continue growing. We also did calculations with and without social security. We did some over simplified calculations on what would happen if our investments earned 4%, 5% and %6. In each case, we hit life expectancy with a lot of money left over. A good buffer for us and even better consolation prize for our kids.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I know the answer will depend on a lot of factors, but how much invested do you think would be enough in the DMV area for a couple? When I was given a presentation by a financial advisor in 2010, the answer was $2M, presumably to generate $80k of income per year in retirement at a 4% withdrawal rate. So is it $3M now, or more?

80k per year. This poverty level, not UMC. Your financial advisor doesn’t know DCUM.

$2M isn’t enough to retire. The consensus here is that you need at least $20M.
You need that much to continue to support your adult kids and the grandchildren.

After spending lavishly on your kids, fully funding top private colleges, spoiling them, you realize you have raised entitled kids who still need you to provide for them. They have underachieved. You need to buy them a car, pay for their wedding, buy them a house, pay for their children education.

That’s why you need more money in retirement.
The secret is to not raise entitled children. Set you kids for success and you won’t need to support them in your retirement.

I only had one kid and she's no entitled so that helps. We told her we can afford to pay for her college education wherever she decides to go and she said, "I don't want you guys to have to do that though-- I'd like to help pay if I can." Just an amazing kid (we explained the money is earmarked in a 529 so it's hers no matter what).

I think a big factor here is being in a community where people aren't constantly trying to one up each other with their vacations and home renovations and kids' weddings and entertaining. The people I know who are spending very lavishly in retirement are often doing things "for the 'gram" or because so-and-so down the street did it. This is so sad to me. The joy of getting older for me is being able to let go of what others think of me and live comfortably the way I want.

[Anonymous]

Anonymous wrote:

Anonymous wrote:UMC income is likely $250,000, so you will need over $6 million in income generating assets.

Do you really need that as a senior citizen? House is paid for. If it’s a large house it’s a good time to downsize. You’d be debt free. Your bills would be taxes, cars, utilities, travel if you want. Not all that much in expenses.

+1

You do not need 6 mil for an umc retirement

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:UMC income is likely $250,000, so you will need over $6 million in income generating assets.

Do you really need that as a senior citizen? House is paid for. If it’s a large house it’s a good time to downsize. You’d be debt free. Your bills would be taxes, cars, utilities, travel if you want. Not all that much in expenses.

If only elder people would downsize. Most don't until there is an emergency.

Ugh…this a harsh fact and it’s a killer on the children who have to deal with it. It’s not even a cost issue…our parents could sell their house and just buy bonds and the interest would easily cover rent on a really nice place (with plenty left over to further build savings). However, you get to an age when change is debilitating.

What’s crazy is our parents complain all the time about the upkeep of the house, but when you mention the alternatives it’s crickets.

[Anonymous]

Yeah, I’ll second the notion that people overestimate how much a good retirement costs. My parents receive a $250,000 pension per year and give $100,000 of that to the kids because they can’t spend it all.

They are still CONSTANTLY traveling (not first-class). They only shop at Whole Foods. They own fairly expensive vehicles. They still have lawn care and a housekeeper. They don’t skimp on home maintenance. It all just doesn’t cost that much.

When you don’t have to put money toward a mortgage, savings, kids’ expenses, or taxes (or at least you have reduced taxes), a good life is not that expensive.

[Anonymous]

Anonymous wrote:From my parents’ recent experience: too many people do not budget in the astronomical costs of assisted living, nursing homes, memory care, etc. $100k/year could be great for a healthy couple in their 60s, but it won’t cover even half the costs of good care.

This!

[Anonymous]

Anonymous wrote:

Anonymous wrote:You’ll get such a wide range of answers here. For example, 250k is a lot.

I’m part of a financial forum and most who have been retired a while say they spend less than they planned. Some do choose to pay a lot for health insurance plans. Those on the ACA are paying low costs for good care.

I’d consider:
Any deferred maintenance (roof, etc)
Mortgage and property taxes
Travel
Utilities
Groceries
Cars
Etc

I added ours up and could barely get past $50k / year and that included traveling.

If you don’t calculate correctly, you might end up thinking you have to work longer than you do. No problem working longer if that’s your life goal but most want to have more time for other pursuits.

Guess it just depends on how you live. Our property taxes on one house are over $20k, and we need a new fridge which is north of $20k. One vacation is $10k at least. Our car tax is over $7k for the year and insurance is over $10k, not including health insurance.

You live an expensive life. At least, you own it.

[Anonymous]

Anonymous wrote:UMC income is likely $250,000, so you will need over $6 million in income generating assets.

Depends. Most people own their home (or close to it) and no longer have kids they are responsible for when they retire. So you likely do Not "need" the same income you had previously.

[Anonymous]

Anonymous wrote:As others have said, the cost of care is exorbitant. My mother in law is paying $15k a month for my father in law’s nursing home (technically a rehab, but he cannot do physical therapy anymore and is just in bed for the past year.) they are Umc but not very rich.

OP here. Thanks for mentioning the cost of nursing home care. $15k a month for 2 people would mean $360k a year. It seems like it would take $10m in investments to pay for that. DH also wants both of us, and our parents, to avoid nursing homes but instead have in-home care. Who knows how much that would run.

[Anonymous]

Our budget (couple with 2 kids)
Total Annual Retirement Spending: approx. $210k (about $5 million in investments)
Home (includes yard, pool, housekeeping, maintenance and renovations): $30k
Real estate taxes: $23k
Auto and transport: $12k
Food and dining: $15k
Kids (support/spoilage): $10k
Health and Fitness (out of plan providers, trainers, etc.): $20k
Utilities: $7k
Shopping: $10k
Travel: $25k
Entertainment: $5k
Gifts and Donations: $10k
Personal Care: $2k
Education (art and other classes): $3k
Misc.: $5k
Income Taxes: $35k

There is a lot of slush so we can expand/contract as needed.

As we get older, other spending (travel, entertainment, shopping) will shift to long-term care expenses.