How much to retire at age 55? We are 50

[Anonymous]

Anonymous wrote:

Anonymous wrote:I think you should pay for college and grad school for the kids. I would allocate a million for that and then be pleasantly surprised if it’s not that much. Harvard Law and Med is $100,000 a year or more already.

I think you should also pay for your child if they decide to run for high political office. I would allocate $100 million for the Presidency and then be pleasantly surprised if you have some change left over.

I can't believe how shortsighted you all are. What if their children want to participate in intergalactic travel? They need to set aside at least $1B for that.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I'm 60. I retired at 53 with almost exactly $4 million in assets outside of home equity. I've been living off of about $200k a year ever since. I now have almost exactly $7 million in assets outside of home equity thanks to market and real estate appreciation.

I'm having trouble understanding how OP calculates having $100 million to leave their kids when they die. How is that possible given the amount that they have now, at their age, unless they don't plan on spending anything at all for 30 or 40 years?

I'd like to see the math, please, because that's not my reality.

Go to fidelity calculator and use 50 as age and 5M as current assets and 10k per month as expenses in 4 years. Use average model that’s what I got.

There are so many Fidelity calculators; not sure which one you're talking about. But I just can't imagine the $100 million number being right.

I'm obviously not as well positioned as OP in terms of age, assets, and anticipated spending. And I understand the tremendous effect of compounded investment gains, etc. Still, I've been at this (retired) for more than seven years so I can offer some numbers based on actual experience for readers to chew on.

For starters, I downloaded the Personal Capital app several years ago. It does a great job of tracking income, expenses, your budget, investment gains/losses, etc., and updating your net worth. Really useful. It also has a retirement planner.

I'm already retired, as I said. But, for example, looking at the app right now it says that if I were to retire today, at aged 60, I'd have a 99 percent chance of "meeting my retirement goal." This is based on my current retirement assets ($5.8 million) my average annual spending based on what the app has been tracking for years now ($194k annually), and taking social security at aged 67. But it also calculates that, in an average market, I'd (choke) die with $7.8 million left over or, in a consistently poor market, I'd only die with $2.8 million.

Again, I realize that I'm disadvantaged over OP in significant ways and also have been spending more, but still . . . $7.8 million versus $100 million? The number just seems entirely unrealistic to me. $100 million is a LOT of money.

[Anonymous]

Anonymous wrote:

Anonymous wrote:What's with all the doom and gloom?

I think you're fine OP. We plan on retiring before 60 with $3.3 to $3.5 mil. We spoke to our financial advisor, who said we are on track and should be fine based on our expenses. We meet with our advisor every quarter to make sure that we are on track.

Right now, we can live off of $160K, gross. This includes private health insurance which we have now.

Social security will provide about $60k to $70k, and then of course when we hit 65, we will be eligible for medicare.

May I ask your expense total (net)? How much of that is travel? Any specific insight is much appreciated. Thanks!

Right now, monthly expenses (excludes contributions to savings, retirement) is about $9K to 10K. It does not include big travel expenses. We anticipate paying off our mortgage in about three to five years, saving us $1300/mo.

[Anonymous]

OP, use firecalc. It's better than fidelity calculator.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My husband and I make 300k combined and have close to 5M saved. Our house is worth 700k and we have 500k in college savings for 2 kids.

Fidelity’s retirement investment calculator calculates that we’ll only be able to spend about 10k a month to weather a significantly below average market.m but an average market would give our kids 100M when we die. Planning for the significantly below average scenario seems crazy conservative. I’d like to retire before age 55 with hopefully 6M.

Is 6M too low? The 4 percent rule would suggest that we would be able to spend 240k per year which would be more than enough.

Thoughts?
TIA

Surely you mean 10 million lol.

DP. I'm sure they mean 100mil. Compound interest is a wonderful thing.

How could they possibly get from $5 million to $100 million by the time they die if they're also planning to start spending their savings? Compound interest is wonderful but it doesn't get you 20x your starting point in 30 years if you're taking out 4 percent a year. Or if it does, I'm saving too much money myself, as our net worth is nearly $3 million and we have no plans to retire for another 20-25 years.

[Anonymous]

Anonymous wrote:Is this a joke? Are you seriously wondering if you can retire on $5 million+ ? Sometimes I really hate this board.

I have $10 million and will not be able to retire quite yet. All depends on level of anticipated spend.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My husband and I make 300k combined and have close to 5M saved. Our house is worth 700k and we have 500k in college savings for 2 kids.

Fidelity’s retirement investment calculator calculates that we’ll only be able to spend about 10k a month to weather a significantly below average market.m but an average market would give our kids 100M when we die. Planning for the significantly below average scenario seems crazy conservative. I’d like to retire before age 55 with hopefully 6M.

Is 6M too low? The 4 percent rule would suggest that we would be able to spend 240k per year which would be more than enough.

Thoughts?
TIA

Surely you mean 10 million lol.

DP. I'm sure they mean 100mil. Compound interest is a wonderful thing.

How could they possibly get from $5 million to $100 million by the time they die if they're also planning to start spending their savings? Compound interest is wonderful but it doesn't get you 20x your starting point in 30 years if you're taking out 4 percent a year. Or if it does, I'm saving too much money myself, as our net worth is nearly $3 million and we have no plans to retire for another 20-25 years.

In 30 years ---- $5 should be at least $80. In addition they are adding each year when only pulling out $120. So they are continuing to save and that compounds. $100 million sounds right.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My husband and I make 300k combined and have close to 5M saved. Our house is worth 700k and we have 500k in college savings for 2 kids.

Fidelity’s retirement investment calculator calculates that we’ll only be able to spend about 10k a month to weather a significantly below average market.m but an average market would give our kids 100M when we die. Planning for the significantly below average scenario seems crazy conservative. I’d like to retire before age 55 with hopefully 6M.

Is 6M too low? The 4 percent rule would suggest that we would be able to spend 240k per year which would be more than enough.

Thoughts?
TIA

Surely you mean 10 million lol.

DP. I'm sure they mean 100mil. Compound interest is a wonderful thing.

How could they possibly get from $5 million to $100 million by the time they die if they're also planning to start spending their savings? Compound interest is wonderful but it doesn't get you 20x your starting point in 30 years if you're taking out 4 percent a year. Or if it does, I'm saving too much money myself, as our net worth is nearly $3 million and we have no plans to retire for another 20-25 years.

They are not spending their savings! They are continuing to save.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My husband and I make 300k combined and have close to 5M saved. Our house is worth 700k and we have 500k in college savings for 2 kids.

Fidelity’s retirement investment calculator calculates that we’ll only be able to spend about 10k a month to weather a significantly below average market.m but an average market would give our kids 100M when we die. Planning for the significantly below average scenario seems crazy conservative. I’d like to retire before age 55 with hopefully 6M.

Is 6M too low? The 4 percent rule would suggest that we would be able to spend 240k per year which would be more than enough.

Thoughts?
TIA

Surely you mean 10 million lol.

DP. I'm sure they mean 100mil. Compound interest is a wonderful thing.

How could they possibly get from $5 million to $100 million by the time they die if they're also planning to start spending their savings? Compound interest is wonderful but it doesn't get you 20x your starting point in 30 years if you're taking out 4 percent a year. Or if it does, I'm saving too much money myself, as our net worth is nearly $3 million and we have no plans to retire for another 20-25 years.

They are not spending their savings! They are continuing to save.

Don't they plan on spending any money, ever? Where will the 10k a month come from?

Yes, if you invest $5 million in a solid market and never spend a cent of it for 40 years this is a theoretically reachable amount. But that's not what they'll be doing.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Two thoughts. First retirement is not a one way street but if you decide to reenter the labor market you will take a hit. Second, what’s your return assumption? Have you processed the fact that real interest rates are negative? What do you think that means?

Of course. If we retire , it would be very difficult to find jobs in our field again as we are very specialized unless we are willing to move etc. We are right now invested very aggressively for our age and have most in equities. Obviously if the stock market takes a big hit in the next few years we’ll be singing a different tune. My plan is before we retire to move 1M into safe assets. In 2008, our portfolio dropped by half and as traumatic as that was it was only 400k or so at that time- now it would be a much different story.

Yeah.. Tell me about it. We prob. had close to $1.5m at that time and it dropped to less than $1M. Now at $7.5, a 50% drop would be terrible. In my spreadsheet model, I assume a 50% drop sometime during the current year so the projected beginning balance for the next year is adjusted down 50% (if it doesn't happen this year, I just push it out to next year in my model on Jan 1). I just got to the point where things don't turn negative over the next 50 years even with the 50% drop in the next year. I also assume 5% investment growth, 3% expenditure growth and try to model in all known large expenses - college, home remodel, car purchase every 10 years, etc.

NP. So what is your plan if the market drops by 50%? Will you keep enough in cash for expenses to ride out the drop or plan your retirement based on 50% drop or just plan to live in less? Are there any other mitigation strategies?

In theory under the 4% plan you do not need to do anything. Your portfolio is fully invested and will increase back. If you took a 50% loss in 2008/2009 you have a hefty gain as of year end 2021. In my accounts -- they were down by 40% or so. They were back to break even by 2013 up more than 25% (on original) by 2016 and up 140% on original as of year end last year.

[Anonymous]

Anonymous wrote:I think you should pay for college and grad school for the kids. I would allocate a million for that and then be pleasantly surprised if it’s not that much. Harvard Law and Med is $100,000 a year or more already.

DP, but I am definitely not planning to save to pay for grad school for my kids. I intend to pay for all of college; if there's money left over (which there may be, as we have $350,000 saved up now for a 10-year-old and a 7-year-old and we're still funding their 529s), they can use that for grad school as far as it goes. I didn't go to grad school and my spouse got a master's paid for by their then-employer, and we managed OK despite not having our parents paying an additional $80,000 or whatever for advanced degrees.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My husband and I make 300k combined and have close to 5M saved. Our house is worth 700k and we have 500k in college savings for 2 kids.

Fidelity’s retirement investment calculator calculates that we’ll only be able to spend about 10k a month to weather a significantly below average market.m but an average market would give our kids 100M when we die. Planning for the significantly below average scenario seems crazy conservative. I’d like to retire before age 55 with hopefully 6M.

Is 6M too low? The 4 percent rule would suggest that we would be able to spend 240k per year which would be more than enough.

Thoughts?
TIA

Surely you mean 10 million lol.

DP. I'm sure they mean 100mil. Compound interest is a wonderful thing.

How could they possibly get from $5 million to $100 million by the time they die if they're also planning to start spending their savings? Compound interest is wonderful but it doesn't get you 20x your starting point in 30 years if you're taking out 4 percent a year. Or if it does, I'm saving too much money myself, as our net worth is nearly $3 million and we have no plans to retire for another 20-25 years.

In 30 years ---- $5 should be at least $80. In addition they are adding each year when only pulling out $120. So they are continuing to save and that compounds. $100 million sounds right.

So perhaps my $3 million net worth means I should stop saving, after all!

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I think you should pay for college and grad school for the kids. I would allocate a million for that and then be pleasantly surprised if it’s not that much. Harvard Law and Med is $100,000 a year or more already.

I think you should also pay for your child if they decide to run for high political office. I would allocate $100 million for the Presidency and then be pleasantly surprised if you have some change left over.

I can't believe how shortsighted you all are. What if their children want to participate in intergalactic travel? They need to set aside at least $1B for that.

This is where it gets to be expensive. OP, are you prepared for intergalactic travel?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Is this a joke? Are you seriously wondering if you can retire on $5 million+ ? Sometimes I really hate this board.

I have $10 million and will not be able to retire quite yet. All depends on level of anticipated spend.

I just hit $10m, and am not retiring yet either. But I am moving up my timetable a few years. Our health care expenses are still crazy high (self insured), and we have a few expensive renovation projects on the books that I want to complete before we retire. I will be done paying off the mortgages on one house in a few months, and the other in 2-3 years, so that's what I am aiming for.

I am surprised how many people in my age group (60ish) have retired in the last year or plan to this year. So that is factoring in to my thinking too.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My husband and I make 300k combined and have close to 5M saved. Our house is worth 700k and we have 500k in college savings for 2 kids.

Fidelity’s retirement investment calculator calculates that we’ll only be able to spend about 10k a month to weather a significantly below average market.m but an average market would give our kids 100M when we die. Planning for the significantly below average scenario seems crazy conservative. I’d like to retire before age 55 with hopefully 6M.

Is 6M too low? The 4 percent rule would suggest that we would be able to spend 240k per year which would be more than enough.

Thoughts?
TIA

Surely you mean 10 million lol.

DP. I'm sure they mean 100mil. Compound interest is a wonderful thing.

How could they possibly get from $5 million to $100 million by the time they die if they're also planning to start spending their savings? Compound interest is wonderful but it doesn't get you 20x your starting point in 30 years if you're taking out 4 percent a year. Or if it does, I'm saving too much money myself, as our net worth is nearly $3 million and we have no plans to retire for another 20-25 years.

They are not spending their savings! They are continuing to save.

Don't they plan on spending any money, ever? Where will the 10k a month come from?

Yes, if you invest $5 million in a solid market and never spend a cent of it for 40 years this is a theoretically reachable amount. But that's not what they'll be doing.

They only need 120k. Their portfolio (earnings and gains) will produce more than 120k. So they will be running a surplus every single year. They will not have to touch their $6 million stash.