How much do we need to retire?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:4K Health Insurance is a funny joke. You do know the subsidy for most of that is going away in 2026. I say $2,000 a month is a better amount for insurance plus out of pockets. And that is light. A root canal, Implant, crown Colonoscopy, MRI and some Physical Therapy plus insurance premium could pop that number to 30K pretty easy.

And home insurance will soon be $6,000 a year most people with nice homes by 2030.

And where is home repairs? My water heater just broke and my roof is near end of life. I spend on average $1,000 a month on home maint and repairs. Heck my roof is near end of life that will be $30,000.

You are also years away from Social Security and when you do get it will be a big h

You say $4k/month is a "funny joke" and then suggest $2k/month? WTF?

She put 4k per year.

OP clearly said 4K/month for health insurance and 1k total/month for cars.

[Anonymous]

Both of you should work part time making that $8k each and put your money into Roth IRAs from age 55-70.
My retirement will not be taxed to death. Why should yours.

[Anonymous]

Anonymous wrote:Let's break it down:

$12,000 food - groceries/eating out
$12,000 property tax
$12,000 car payments
$4,000 auto insurance
$2,000 auto repair
$3,000 auto fuel
$1,000 mobile phones
$2,500 gas & electric bills
$3,500 household items
$4,000 water, sewer, trash, internet
$3,000 clothing
$2,500 entertainment
$2,000 gifts
$30,000 travel
= $93,500

No pets, no support for adult children, fairly modest but not tight lifestyle. Simple gifts to close family at holidays. Travel is economy with moderate lodgings. This does not include health costs or insurance. At 3% withdrawal at age 55 counting no pensions or SS, a reasonable person needs $3.2M for this.

You said to budget $4k for health insurance, but that is extremely low. A decent ACA plan plus out of pocket expenses is going to run $15k or more. That will increase as you age. I would say $3.6-3.8M is a good target.

You will get social security. You will get your pensions so $3.5M is a good round, safe number in today's dollars.

Way too low for food/groceries unless their eating out 1-2x per week is almost exclusively fast food/fast casual.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Let's break it down:

$12,000 food - groceries/eating out
$12,000 property tax
$12,000 car payments
$4,000 auto insurance
$2,000 auto repair
$3,000 auto fuel
$1,000 mobile phones
$2,500 gas & electric bills
$3,500 household items
$4,000 water, sewer, trash, internet
$3,000 clothing
$2,500 entertainment
$2,000 gifts
$30,000 travel
= $93,500

No pets, no support for adult children, fairly modest but not tight lifestyle. Simple gifts to close family at holidays. Travel is economy with moderate lodgings. This does not include health costs or insurance. At 3% withdrawal at age 55 counting no pensions or SS, a reasonable person needs $3.2M for this.

You said to budget $4k for health insurance, but that is extremely low. A decent ACA plan plus out of pocket expenses is going to run $15k or more. That will increase as you age. I would say $3.6-3.8M is a good target.

You will get social security. You will get your pensions so $3.5M is a good round, safe number in today's dollars.

Way too low for food/groceries unless their eating out 1-2x per week is almost exclusively fast food/fast casual.

As another pp mentioned you should also add another 500-1000/month to set aside for home repairs and maintenance, depending on the size and age of your home

[Anonymous]

Anonymous wrote:Are you prepared to be worthless at such a young age?

My sister and BIL retired younger and their oldest son is marrying. The soon to be daughter in law parents are same age but he is a Managing Director on Wall Street and Wife is a Realtor who sells multimillion dollar homes. They are all around 62-64.

My sister and BIL has downsized, have little to talk about as no jobs and seem meaningless.

Their son is slowly disowning them. Her parents paying most of wedding, Wedding at Dads Fancy Country club, Her church of course and brunch next day after wedding at their 6,000 sf two million dollar home.

My sister and BIL at 62/64 are now at the old people table lumped in the fixed income crowd at their downsized home. The other couple pulling in tons of income each month with tons of spending money and great stories about work and stuff are exciting.

Was not something they anticipated how meaningless they would become and how quickly it happend. .

Most people retiring young don’t have jobs they love. Hence the drive to acquire funds to retire early. They would probably be sitting on the fixed income table even if they worked.

[Anonymous]

Selling homes and working on Wall Street hardly make you interesting.

[Anonymous]

Anonymous wrote:If we have the following expectations and want to retire at 55 in the DC area, how much do we need to have saved by then? Assume we will budget extra for health issues/long term care separately.

- no mortgage, only real estate taxes on a 900k house
- car payments totaling 1k each month.
- assume 1k for household/yard he’ll
- budget 4K for health insurance
- no pension or SS until we hit appropriate ages, so first decade+ would just be from savings. Pension would only be $30k per year; let’s not count on any SS
- kids will be out of college.
- we would like to make 2 international trips a year plus a couple in the US
- we like to eat out once or twice a week.
- we don’t spend a lot but don’t want to feel tight in our spending.

Sometimes it feels like no amount saved will be enough and others like we have plenty and can ramp down now.

One of us retired with $3 million in the bank (mixture of retirement and brokerage funds), and a $1.3 million dollar paid off house. And, we have health care covered for life (both of us amd kids until 26) through the former employer. The other one of us works a hobby job (will stay working until the retired partner draws social security at age 70). All 3 kids are out of college, weddings for them as well as new cars for us every 10-12 years are planned for

[Anonymous]

Anonymous wrote:

Anonymous wrote:If we have the following expectations and want to retire at 55 in the DC area, how much do we need to have saved by then? Assume we will budget extra for health issues/long term care separately.

- no mortgage, only real estate taxes on a 900k house
- car payments totaling 1k each month.
- assume 1k for household/yard he’ll
- budget 4K for health insurance
- no pension or SS until we hit appropriate ages, so first decade+ would just be from savings. Pension would only be $30k per year; let’s not count on any SS
- kids will be out of college.
- we would like to make 2 international trips a year plus a couple in the US
- we like to eat out once or twice a week.
- we don’t spend a lot but don’t want to feel tight in our spending.

Sometimes it feels like no amount saved will be enough and others like we have plenty and can ramp down now.

One of us retired with $3 million in the bank (mixture of retirement and brokerage funds), and a $1.3 million dollar paid off house. And, we have health care covered for life (both of us amd kids until 26) through the former employer. The other one of us works a hobby job (will stay working until the retired partner draws social security at age 70). All 3 kids are out of college, weddings for them as well as new cars for us every 10-12 years are planned for

So your point is…

[Anonymous]

The OP also said they spend $1000/month on cleaning and landscaping help so that’s 12k a year additional.

[Anonymous]

I retired at 53 in the DMV about a decade ago with a net worth of around 4 million. We’re now worth about $8 million because of market gains, watching spending etc. $6.5 million of that is in retirement and brokerage accounts; the rest is home equity in our primary residence in DC and a second home in the country. We still have a mortgage of about $600k but the interest rate is below 2 percent and the monthly payment is covered by the rent we get from renting our basement apartment so it’s a wash. We collect about $45k a year in social security, which we started collecting when I was 62, and that and the rent we get from the basement combines to about $75k a year in income. No pension. Our kids launched before I retired.

Our “wish list” is/was remarkably similar to OP’s. A year or two ago we met with a financial advisor to see how we were doing — only because it was offered for free by our brokerage firm and despite having already been retired for years — and we were told we had more than enough money to keep living how we are. We were also told we could expect to have money left over for the kids and could self-fund long term care if necessary. We were advised not to bother with long term care insurance.

Our annual budget is $240k, so we need to generate about $165k a year from our investments outside of income from SS and rent to cover this. This includes taxes. It also includes $40k a year for travel, which we have trouble hitting because it’s a lot. This is about 2.5 percent of the current value of our investments, which is just fine. But of course we only had half what we had at 55 then what we have now.

OP doesn’t need this much probably and there are of course differences between our situation and the one they contemplate. We have the mortgage for one, and while it’s covered by the rent we still pay it and it’s in the budget. Many of our other expenses are probably higher than OP’s because we have two homes and not one. One thing that jumps out at me is that $1000 a month for groceries and eating out once or twice a week is far too low, as others have said. You can easily spent that just on the eating out part. Another thing that jumps out is $1000 a month in car payments. Why wouldn’t you just plan on buying good but inexpensive used cars in cash? How much driving do you plan to do? In the last decade we have only bought one car . . .

My bottom line number for OP would be $4 million in the income generating part of your portfolio for a reasonable early retirement. Anything lower than that and you’re watching your pennies too much, which is no fun. That’s one thing that we have not had to do pretty much at all.

One final note. I am always puzzled by posters who say that you couldn’t retire this early without either going crazy or becoming boring and useless and worthless or whatever. That could happen, I suppose, if you have defined yourself by your job or if you find out too late that you don’t have enough saved to enjoy yourself after all, but if you do, as we do, early retirement is an absolute joy. I don’t regret it for a millisecond. We are doing everything and anything that we want, we are always around to help out with our kids and grandkids, we travel, we go out, we have friends, we putz
around sometimes and do nothing, etc. It’s all pretty great.

[Anonymous]

Anonymous wrote:Are you prepared to be worthless at such a young age?

My sister and BIL retired younger and their oldest son is marrying. The soon to be daughter in law parents are same age but he is a Managing Director on Wall Street and Wife is a Realtor who sells multimillion dollar homes. They are all around 62-64.

My sister and BIL has downsized, have little to talk about as no jobs and seem meaningless.

Their son is slowly disowning them. Her parents paying most of wedding, Wedding at Dads Fancy Country club, Her church of course and brunch next day after wedding at their 6,000 sf two million dollar home.

My sister and BIL at 62/64 are now at the old people table lumped in the fixed income crowd at their downsized home. The other couple pulling in tons of income each month with tons of spending money and great stories about work and stuff are exciting.

Was not something they anticipated how meaningless they would become and how quickly it happend. .

Your nephew sounds like a horrific person so they have much bigger problems than retirement

[Anonymous]

Anonymous wrote:

Anonymous wrote:Are you prepared to be worthless at such a young age?

My sister and BIL retired younger and their oldest son is marrying. The soon to be daughter in law parents are same age but he is a Managing Director on Wall Street and Wife is a Realtor who sells multimillion dollar homes. They are all around 62-64.

My sister and BIL has downsized, have little to talk about as no jobs and seem meaningless.

Their son is slowly disowning them. Her parents paying most of wedding, Wedding at Dads Fancy Country club, Her church of course and brunch next day after wedding at their 6,000 sf two million dollar home.

My sister and BIL at 62/64 are now at the old people table lumped in the fixed income crowd at their downsized home. The other couple pulling in tons of income each month with tons of spending money and great stories about work and stuff are exciting.

Was not something they anticipated how meaningless they would become and how quickly it happend. .

Your nephew sounds like a horrific person so they have much bigger problems than retirement

+1, as does the PP, who gets very excited by stories of work and extravagant spending.

[Anonymous]

Geez what kind of car cost $500k/month. I'm pissed I am paying $350/month and think it's an insane amount to pay.

[Anonymous]

I think it's highly unlikely that predicting your future expenses will be accurate in any way. Even when calculating current expenses, it's very easy to overlook many small expenses that can really add up.

Prior to retiring a could years ago, I started with my current income and subtracted things like 401k contributions, FICA, etc. I then added expenses like international travel that I knew would increase in retirement. The final number was off by only a couple thousand.