Retire with Less Than $1 million?

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bck63
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Retire with Less Than $1 million?

Post by bck63 »

I see a lot of big numbers on this site. I'm wondering -- is anyone expecting to retire with *less* than one million dollars? Is it doable? I expect to have somewhere between 650K-800K when I retire. My expenses are about $33,000 per year with ten years to go. House will be paid off. No other debt. I see the large numbers here and get worried. But I do the math and think I'll be fine.

My current asset allocation is 54/46. SS should be about $2,500 per month.

I'd love to hear from the non-millionaires for some comfort, as well as anyone who has any thoughts on whether this will be enough.
123
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Re: Retire with Less Than $1 million?

Post by 123 »

You should be fine. Lots of people retire with less than $1 million (some with nothing). It all depends on your withdrawal rate and your annual expenses. A 3% withdrawal rate is conservative. A lot can happen in 10 years, your portfolio could double (or more) with additional contributions and growth (hopefully).
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Re: Retire with Less Than $1 million?

Post by Wiggums »

It all depends on your withdrawal rate (3-4%) and your annual expenses. A 3% withdrawal rate is conservative.

It does look like you need to draw much 33k minus 30k ss

How old are you?

Do your anticipated retirement expenses (33k) include medical, state and local taxes?

Will you have a pension?

Have you used a tool like firecalc?
Last edited by Wiggums on Thu Jul 25, 2019 4:41 pm, edited 1 time in total.
delamer
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Re: Retire with Less Than $1 million?

Post by delamer »

The only thing that matters is how much you need to withdraw from your portfolio annually.

And that is based on the difference between your expenses and your income from Social Security/pensions.

If you only need $3,000/year from your portfolio, then you’re fine.
Miriam2
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Re: Retire with Less Than $1 million?

Post by Miriam2 »

bck63 wrote: I see a lot of big numbers on this site. I'm wondering -- is anyone expecting to retire with *less* than one million dollars? Is it doable?
Yes, listen to this presentation from the Bogleheads Virtual On-Line Chapter from Feb 25, 2019

"Can I Retire? A simple evaluation with Stages of Retirement"

https://vimeo.com/333815126?cjevent=042 ... 820a24060d

Virtual On-Line chapter presentation links - https://virtualbogleheads.wordpress.com ... ion-links/
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Re: Retire with Less Than $1 million?

Post by Grt2bOutdoors »

bck63 wrote: Thu Jul 25, 2019 4:16 pm I see a lot of big numbers on this site. I'm wondering -- is anyone expecting to retire with *less* than one million dollars? Is it doable? I expect to have somewhere between 650K-800K when I retire. My expenses are about $33,000 per year with ten years to go. House will be paid off. No other debt. I see the large numbers here and get worried. But I do the math and think I'll be fine.

My current asset allocation is 54/46. SS should be about $2,500 per month.

I'd love to hear from the non-millionaires for some comfort, as well as anyone who has any thoughts on whether this will be enough.
$33,000-$30,000 = $3,000
$650,000 *.04 = $26,000 each additional year (real).

Enjoy your retirement!!
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Tdubs
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Re: Retire with Less Than $1 million?

Post by Tdubs »

Overwhelming majority of retirees have less than $1 million, most have no pension, lots have less than $30k annual, and still they manage to die at home in bed. Don't know about fun, but you will be fine.
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Re: Retire with Less Than $1 million?

Post by tennisplyr »

Retired 8 years with less than a million and no pensions. It's really more about your expenses and the income to cover them. Don't fall for the scare tactic....life can actually be very good with less than a million :wink: PS, I got lucky and retired during the current bull market.
Last edited by tennisplyr on Thu Jul 25, 2019 6:52 pm, edited 1 time in total.
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willthrill81
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Re: Retire with Less Than $1 million?

Post by willthrill81 »

My in-laws retired more than 20 years ago with around $300k and gave most of that way. After my FiL's passing, my MiL has lived almost exclusively on her $1k monthly SS benefit; she's frugal and lives in a very low cost of living area with a paid-off home.

I have other family members who retired to a MCOL area with $40k of SS benefits, a paid-off home, and a $600k portfolio, and they'll be just fine too.

You don't necessarily need millions and millions of dollars to retire.

In your situation, it sounds like almost all of your spending needs will be covered by SS benefits. As such, your portfolio is mostly 'gravy', and you're in fine shape. :D
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Re: Retire with Less Than $1 million?

Post by Smoke »

bck63 wrote: Thu Jul 25, 2019 4:16 pm I see a lot of big numbers on this site. I'm wondering -- is anyone expecting to retire with *less* than one million dollars? Is it doable? I expect to have somewhere between 650K-800K when I retire. My expenses are about $33,000 per year with ten years to go. House will be paid off. No other debt. I see the large numbers here and get worried. But I do the math and think I'll be fine.

My current asset allocation is 54/46. SS should be about $2,500 per month.

I'd love to hear from the non-millionaires for some comfort, as well as anyone who has any thoughts on whether this will be enough.
I retired at 50 (15 yrs ago this Oct.) with half of your savings, my expenses are also 33k per yr. No Debt.
Which includes LTH ins, and 3k per yr for a condo rental for one month vac gettaway.
My SS and My wife's are equal to what "you" will be getting.
I get a 16k pension no cola. which I just bank, and have not touched my savings except for a new roof, and a new car.
You have 10 yrs t go, fix/repair everything before retiring and get a new car if needed.

EDIT... I do have a great health ins plan (company trust paid) in conjunction with medicare.

Smooth sailing so far. No regrets. :sharebeer
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Watty
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Re: Retire with Less Than $1 million?

Post by Watty »

Here is the "Can I retire?" post that I did a few years ago before I retired.

My financial situation was similar to yours but it was not clear how old you would be when you retire.

viewtopic.php?f=1&t=167664

Everything is going great but at least for the last four years I have gotten lucky with the sequence of returns risk an my portfolio is about the same as when I retired despite four years of spending.
bck63 wrote: Thu Jul 25, 2019 4:16 pm My expenses are about $33,000 per year.....
People do live on that but even with a paid off house that is a pretty frugal budget. Medicare premiums and supplements can run several hundred dollars a month per person depending on what you select. There will also be things like car repairs or replacements, dental bills(ouch!), home repairs and remodeling, etc.

It would be good to target a higher level of income. I don't have a firm number yet but my target is somewhere around $40k combined Social Security when I start it at 70 and $25K in spending of investment income. I live in a medium to low cost of living area so with a paid off house that will support an above average middle class lifestyle here.
Wakefield1
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Re: Retire with Less Than $1 million?

Post by Wakefield1 »

A paid up house would certainly help. Especially if not counted towards that "less than $1 million".
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Re: Retire with Less Than $1 million?

Post by AlohaJoe »

bck63 wrote: Thu Jul 25, 2019 4:16 pm I'm wondering -- is anyone expecting to retire with *less* than one million dollars? Is it doable?
I'll be a slightly contrarian voice.

No, it isn't especially doable. However, most people do have something close to $1 million. Bogleheads (and most everyone else) tend to ignore the value of Social Security and their home. Using fairly conservative assumptions:
the value of Social Security amounts to about $572,000 for men and $683,000 for women!
For a couple, your Social Security alone can be worth close to $1 million.
Take a couple who were both born in 1950. They each worked and earned decent wages. His benefit at full retirement age will be $2,668 a month. Hers will be $1,659 a month at full retirement age. If they each claim their own benefit at their full retirement age and he lives to age 85 and she lives to age 90, the present value of their lifetime benefits works out to about $941,000.
Throw in the value of your paid off house -- probably another $150,000 or so -- and I'd guess that most people who have retirements without part-time jobs & stressing about prescription costs have $1 million or something awfully close to it.

So your question is really "Is it possible to retire with less than $2 million?"

Yes, it is possible to retire with less than $2 million.
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Re: Retire with Less Than $1 million?

Post by Tdubs »

AlohaJoe wrote: Thu Jul 25, 2019 7:54 pm
bck63 wrote: Thu Jul 25, 2019 4:16 pm I'm wondering -- is anyone expecting to retire with *less* than one million dollars? Is it doable?
I'll be a slightly contrarian voice.

No, it isn't especially doable. However, most people do have something close to $1 million. Bogleheads (and most everyone else) tend to ignore the value of Social Security and their home. Using fairly conservative assumptions:
the value of Social Security amounts to about $572,000 for men and $683,000 for women!
For a couple, your Social Security alone can be worth close to $1 million.
Take a couple who were both born in 1950. They each worked and earned decent wages. His benefit at full retirement age will be $2,668 a month. Hers will be $1,659 a month at full retirement age. If they each claim their own benefit at their full retirement age and he lives to age 85 and she lives to age 90, the present value of their lifetime benefits works out to about $941,000.
Throw in the value of your paid off house -- probably another $150,000 or so -- and I'd guess that most people who have retirements without part-time jobs & stressing about prescription costs have $1 million or something awfully close to it.

So your question is really "Is it possible to retire with less than $2 million?"

Yes, it is possible to retire with less than $2 million.
The OP was asking about retirement savings only. SS was presented as an assumed stream of income with a shortfall that his retirement savings had to cover.
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Re: Retire with Less Than $1 million?

Post by stoptothink »

The huge majority of people retire with less than 7-figures in liquid assets. I don't plan to, but I know that I easily could.
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Re: Retire with Less Than $1 million?

Post by Ged »

My retired brother has about $1000 per month SS and a modest paid off condo. Less than $50K in savings. That really isn't enough.

Fortunately for him he has a couple of brothers who can and do help out once in a while.
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Re: Retire with Less Than $1 million?

Post by almostretired1965 »

So long as you are frugal and remain in decent health, it is more than doable if you've worked enough to get decent social security. My parents retired with a paid for house and approximately $200K in savings and have been living on social security of around $32K per year. They live in a HCOL area (Rockville, MD), but managed to go 20 years without drawing down their savings. Recently, we finally convinced them to sell the house and move into a senior independent living apartment, so now their savings are at 600K, but their expenses are actually only a little higher, more than compensated by the earning they now get from reinvesting the proceeds in a target date mutual fund.

My sister and I are prepared to help if and when it becomes necessary, but they have never asked.
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Re: Retire with Less Than $1 million?

Post by OnTrack2020 »

My late mother-in-law had no retirement savings. She had a small paid off house, an old car, social security, and her late husband's pension. I'm pretty sure she didn't receive over $1,000 per month--very low cost area in a state with no state income tax. It wasn't much, but she managed. There were some things that needed replacing on occasion, and we helped her with that--such as washer/dryer, new carpet, etc.

I should also add that she qualified for some government program that came in and did updates to her home, such as better insulation, etc. as long as she stayed living in her home for 5 years after the work was done. She did that program and it worked out wonderfully. I also think she had some reduction on her fuel/propane bill.
Last edited by OnTrack2020 on Fri Jul 26, 2019 11:55 am, edited 1 time in total.
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Re: Retire with Less Than $1 million?

Post by Christine_NM »

Wakefield1 wrote: Thu Jul 25, 2019 7:22 pm A paid up house would certainly help. Especially if not counted towards that "less than $1 million".
It really depends on your expenses. If 33k are your actual expenses, I'd up the estimate to 45-50k for most of retirement. I spend more now than when I worked, but not much and only because it's there. I could reduce expenses if I had to.

I retired at 61 with $2600/month in pension, $1100 in SS at 62, paid-up house and $800k portfolio. Now, 15 years later, I have same pension and SS, plus a significant annuity, a newer paid-up house, and $2.75m portfolio. (The missing piece there is an inheritance, but I'd be OK without that too.) I don't have any expensive hobbies, don't care for travel. Found a neighborhood where I can tool around and be happy and safe.

Agree with Wakefield about the house. Home ownership was high on my priority list and done by paying off 30 year mortgage in 15 years. I didn't realize it was a part of retirement planning too, I just wanted it because it served my parents well as financial security. The traps to avoid are too much house and too much refinancing to take cash out of home equity.
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Re: Retire with Less Than $1 million?

Post by furnace »

You can always return to work if retirement is "unaffordable." Doesn't have to be a one way street.
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Re: Retire with Less Than $1 million?

Post by SmileyFace »

furnace wrote: Fri Jul 26, 2019 12:32 pm You can always return to work if retirement is "unaffordable." Doesn't have to be a one way street.
Not sure about the "always" part. If the economy changes direction finding work could be difficult - especially for someone older.
Also - some end up with health issues that make going back to work hard.

OP: As others have stated - your numbers look fine!
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Re: Retire with Less Than $1 million?

Post by stocknoob4111 »

your house is paid off and you're barely withdrawing anything from your portfolio, easily doable IMO. With a $650k portfolio your withdrawal rate is 0.46%, at that rate your portfolio is just going to get bigger over time, MUCH bigger, not smaller.

I did a Monte Carlo simulation on a $650k 80/20 portfolio with $3k annual inflation adjusted withdrawals, a 15 year median nominal ending balance is $2.4 MILLION DOLLARS! Even a BAD outcome (10th percentile) was $1.2 million after 15 years.
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Re: Retire with Less Than $1 million?

Post by bhsince87 »

Retire at what age?

At age 65-67+, then that seems doable. You can do a reverse mortgage if need be, too.

At less than age 60, I don't think it would work, unless you go with the idea that "retirement" includes part time work.
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Re: Retire with Less Than $1 million?

Post by HomerJ »

bhsince87 wrote: Fri Jul 26, 2019 12:43 pm Retire at what age?

At age 65-67+, then that seems doable. You can do a reverse mortgage if need be, too.

At less than age 60, I don't think it would work, unless you go with the idea that "retirement" includes part time work.
He only has to make it to 65. With $33,000 a year expenses, and $30,000 Social Security, he only has a short-fall of $3000 a year after 65.

Let's round that up to $10,000 a year... That means he needs $250,000 to generate $10,000 a year.

If he retires at 55, he will need the full $33,000 a year for 10 years. That's $330,000. Heck, let's round it up to $400,000 as well.

So $650,000 looks to be enough... And that's with increasing his expenses estimate by a good 20%, and completely ignoring ANY growth at all for the 10 years from 55-65.
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JoMoney
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Re: Retire with Less Than $1 million?

Post by JoMoney »

People do.

Among elderly Social Security beneficiaries, 21% of married couples and about 44% of unmarried persons rely on Social Security for 90% or more of their income.
Average monthly benefit: $1,461

https://www.ssa.gov/news/press/factshee ... ct-alt.pdf
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Re: Retire with Less Than $1 million?

Post by HomerJ »

With a paid off house, I could easily live a basic, but good, lifestyle on $3000 a month. Food and Utilities just don't cost that much. Sure, I'm not taking European cruises on that income, but those are not required in retirement.

That kind of retirement would be mostly be covered by Social Security. $500,000 in CDs to throw off an extra $10,000-$15,000 a year for medical stuff/other unexpected expenses (plus the security of having the $500,000 there to tap if needed).

I could easily retire at 65 with a less than a million (and a paid-off house in LCOL area).

But I'm working to save more because

(1) I don't want to work until Social Security age
(1a) It's not even 100% my decision to work until I reach Social Security age - could become unemployable before that
(2) My wife wants more than a basic, but good, lifestyle.
(2a) We like traveling.
(3) I might need to help my parents
(4) I might need to help my kids

But it absolutely is true that one can easily retire with less than $1 million and a paid-off house.
Last edited by HomerJ on Fri Jul 26, 2019 1:01 pm, edited 2 times in total.
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Re: Retire with Less Than $1 million?

Post by sergio »

Retiring at 65 with decent SS + medicare + paid off house/no debts is probably already enough for most people to "live" (ie subsist) a spartan but not terrible lifestyle. Any pensions and savings beyond that is gravy.
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Re: Retire with Less Than $1 million?

Post by soccerrules »

"ten years to go" , SS $2500/mo
These 2 statements may need to be re-calibrated. Your current age, age to retire and SS taxed income will make a difference.
If you are using the SS projection provided by SSA on your statement or online, please read the fine print. The assumption is that you will continue to earn the same amount as the most recent logged year, until retirement. If you stop working sooner or earn less SS taxed income (or both)--your number will change for age 62 and anytime afterwards. find a good calculator and play with the variables to get your PIA.

How many years will you not have earned income before taking SS? These GAP years can eat up your nest egg of $650-800K. a WR of 5% and $4.125% respectively. If you have GAP years to cover and then hit a patch of poor sequence of returns, it could have a bigger impact on your nest egg.

Have you run any monte carlo simualtions ?
Don't let your outflow exceed your income or your upkeep will be your downfall.
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bck63
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Re: Retire with Less Than $1 million?

Post by bck63 »

Thanks to everyone for their responses. Many of them made my day.

Some clarification. I will be 56 next month. I'm married. My wife and I share expenses equally. So in actuality our expenses are about 66,000, but that includes everything, including savings for vacations, other fun, new car, home repairs. She will have a pension. I will not. We view our money as all one but we are a second marriage and I still feel that I want to bring a decent amount to the retirement table.

When doing estimates with simple calculators (savings growth factoring in taxes and "how long will my money last calculators." I use a nominal return of 2% when making my estimates. Hopefully my nest egg will be much bigger than I currently calculate, but I want to keep my feet on the ground.

Really interesting replies for me to take in and absorb. Thanks again.
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Re: Retire with Less Than $1 million?

Post by jsprag »

bck63 wrote: Fri Jul 26, 2019 3:01 pm Some clarification. I will be 56 next month. I'm married. My wife and I share expenses equally. So in actuality our expenses are about 66,000, but that includes everything, including savings for vacations, other fun, new car, home repairs. She will have a pension. I will not. We view our money as all one but we are a second marriage and I still feel that I want to bring a decent amount to the retirement table.
Make sure you think through what happens if one of you dies substantially earlier than the other. Suppose your wife dies first and her pension ends. How would her "share" of the current $66K in annual household expenses be paid?

Answers might be:
- Expenses would reduce from $66K to $____
- Life insurance
- SS survivor benefit
- Other / combination

You don't owe us answers, but I recommend stress-testing your plan by considering reasonable scenarios that could dramatically shift the income/expense calculation.

As others have pointed out, many comfortably retire with much less of a financial foundation than you've built. Good luck!
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Re: Retire with Less Than $1 million?

Post by Sandtrap »

bck63 wrote: Thu Jul 25, 2019 4:16 pm I see a lot of big numbers on this site. I'm wondering -- is anyone expecting to retire with *less* than one million dollars? Is it doable? I expect to have somewhere between 650K-800K when I retire. My expenses are about $33,000 per year with ten years to go. House will be paid off. No other debt. I see the large numbers here and get worried. But I do the math and think I'll be fine.

My current asset allocation is 54/46. SS should be about $2,500 per month.

I'd love to hear from the non-millionaires for some comfort, as well as anyone who has any thoughts on whether this will be enough.
It depends on the number and size of income streams outside of portfolio earnings. IE: if SS, pension, etc, covers baseline retirement expenses then perhaps, a 1 million portfolio in the proper allocation would be more than enough. But, If there's no or limited SS, Pension, etc (other income streams) and the retiree is solely dependent on portfolio earnings, then the size of the portfolio is very very important.

This is why at age 65, there's the vague "rule of thumb" of 25X annual retirement expenses as the target size of one's portfolio. From there, adjust up or down according to the size of income stream and outside assets beyond the portfolio.

j
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Re: Retire with Less Than $1 million?

Post by lws »

Yes you can. Many of us did.
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Re: Retire with Less Than $1 million?

Post by Tdubs »

Sandtrap wrote: Sat Jul 27, 2019 9:06 am
bck63 wrote: Thu Jul 25, 2019 4:16 pm I see a lot of big numbers on this site. I'm wondering -- is anyone expecting to retire with *less* than one million dollars? Is it doable? I expect to have somewhere between 650K-800K when I retire. My expenses are about $33,000 per year with ten years to go. House will be paid off. No other debt. I see the large numbers here and get worried. But I do the math and think I'll be fine.

My current asset allocation is 54/46. SS should be about $2,500 per month.

I'd love to hear from the non-millionaires for some comfort, as well as anyone who has any thoughts on whether this will be enough.
It depends on the number and size of income streams outside of portfolio earnings. IE: if SS, pension, etc, covers baseline retirement expenses then perhaps, a 1 million portfolio in the proper allocation would be more than enough. But, If there's no or limited SS, Pension, etc (other income streams) and the retiree is solely dependent on portfolio earnings, then the size of the portfolio is very very important.

This is why at age 65, there's the vague "rule of thumb" of 25X annual retirement expenses as the target size of one's portfolio. From there, adjust up or down according to the size of income stream and outside assets beyond the portfolio.

j
Though I still think there is an unreality about 25x--thumb rule and all. There are so many retirees who eke it out on SS taken early, a $150k "portfolio", and a paid off home (Dad). It strikes me as a number financial planners throw out to scare the crap out of potential clients nearing retirement.

I really don't see many studies that show how much it takes to "get by" in retirement, except some work by Wade Pfau.
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Re: Retire with Less Than $1 million?

Post by Sandtrap »

Tdubs wrote: Sat Jul 27, 2019 2:02 pm
Sandtrap wrote: Sat Jul 27, 2019 9:06 am
bck63 wrote: Thu Jul 25, 2019 4:16 pm I see a lot of big numbers on this site. I'm wondering -- is anyone expecting to retire with *less* than one million dollars? Is it doable? I expect to have somewhere between 650K-800K when I retire. My expenses are about $33,000 per year with ten years to go. House will be paid off. No other debt. I see the large numbers here and get worried. But I do the math and think I'll be fine.

My current asset allocation is 54/46. SS should be about $2,500 per month.

I'd love to hear from the non-millionaires for some comfort, as well as anyone who has any thoughts on whether this will be enough.
It depends on the number and size of income streams outside of portfolio earnings. IE: if SS, pension, etc, covers baseline retirement expenses then perhaps, a 1 million portfolio in the proper allocation would be more than enough. But, If there's no or limited SS, Pension, etc (other income streams) and the retiree is solely dependent on portfolio earnings, then the size of the portfolio is very very important.

This is why at age 65, there's the vague "rule of thumb" of 25X annual retirement expenses as the target size of one's portfolio. From there, adjust up or down according to the size of income stream and outside assets beyond the portfolio.

j
Though I still think there is an unreality about 25x--thumb rule and all. There are so many retirees who eke it out on SS taken early, a $150k "portfolio", and a paid off home (Dad). It strikes me as a number financial planners throw out to scare the crap out of potential clients nearing retirement.

I really don't see many studies that show how much it takes to "get by" in retirement, except some work by Wade Pfau.
try this
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Re: Retire with Less Than $1 million?

Post by Tdubs »

Sandtrap wrote: Sat Jul 27, 2019 2:44 pm
Tdubs wrote: Sat Jul 27, 2019 2:02 pm
Sandtrap wrote: Sat Jul 27, 2019 9:06 am
bck63 wrote: Thu Jul 25, 2019 4:16 pm I see a lot of big numbers on this site. I'm wondering -- is anyone expecting to retire with *less* than one million dollars? Is it doable? I expect to have somewhere between 650K-800K when I retire. My expenses are about $33,000 per year with ten years to go. House will be paid off. No other debt. I see the large numbers here and get worried. But I do the math and think I'll be fine.

My current asset allocation is 54/46. SS should be about $2,500 per month.

I'd love to hear from the non-millionaires for some comfort, as well as anyone who has any thoughts on whether this will be enough.
It depends on the number and size of income streams outside of portfolio earnings. IE: if SS, pension, etc, covers baseline retirement expenses then perhaps, a 1 million portfolio in the proper allocation would be more than enough. But, If there's no or limited SS, Pension, etc (other income streams) and the retiree is solely dependent on portfolio earnings, then the size of the portfolio is very very important.

This is why at age 65, there's the vague "rule of thumb" of 25X annual retirement expenses as the target size of one's portfolio. From there, adjust up or down according to the size of income stream and outside assets beyond the portfolio.

j
Though I still think there is an unreality about 25x--thumb rule and all. There are so many retirees who eke it out on SS taken early, a $150k "portfolio", and a paid off home (Dad). It strikes me as a number financial planners throw out to scare the crap out of potential clients nearing retirement.

I really don't see many studies that show how much it takes to "get by" in retirement, except some work by Wade Pfau.
try this
"Bobcat2" Funded Ratio Thread
https://www.bogleheads.org/forum/viewt ... 0&t=219878
Whoa, much to read. Thanks.
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JoeRetire
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Re: Retire with Less Than $1 million?

Post by JoeRetire »

bck63 wrote: Thu Jul 25, 2019 4:16 pm I see a lot of big numbers on this site. I'm wondering -- is anyone expecting to retire with *less* than one million dollars?
I wouldn't.
Is it doable?
Yes. How much you need depends solely on how much you will spend.
I expect to have somewhere between 650K-800K when I retire. My expenses are about $33,000 per year with ten years to go. House will be paid off. No other debt. I see the large numbers here and get worried. But I do the math and think I'll be fine.
Good for you.
SS should be about $2,500 per month.

I'd love to hear from the non-millionaires for some comfort, as well as anyone who has any thoughts on whether this will be enough.
If you have zero debt, and keep your expenses to $33,000 you will likely be fine. The assumption is that you are 56, will wait until 66 to retire, and will start your SS then.

Since you are married, you really should coordinate your SS benefits with your wife. Check out https://opensocialsecurity.com/
Last edited by JoeRetire on Sat Jul 27, 2019 4:32 pm, edited 2 times in total.
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3-20Characters
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Re: Retire with Less Than $1 million?

Post by 3-20Characters »

bck63 wrote: Thu Jul 25, 2019 4:16 pm I see a lot of big numbers on this site. I'm wondering -- is anyone expecting to retire with *less* than one million dollars? Is it doable? I expect to have somewhere between 650K-800K when I retire. My expenses are about $33,000 per year with ten years to go. House will be paid off. No other debt. I see the large numbers here and get worried. But I do the math and think I'll be fine.

My current asset allocation is 54/46. SS should be about $2,500 per month.

I'd love to hear from the non-millionaires for some comfort, as well as anyone who has any thoughts on whether this will be enough.
There are many roads to Dublin and the one you’re taking is a good one. It has served many retirees with considerably less in savings than you expect to have quite well. It is the road of controlling expenses and retiring when SS and/or pension start to pay out. Many FIRE bloggers and Bogleheads plan to retire a decade or more before any such income stream kicks in. This creates many challenges:

— For one, this gap must be funded completely from savings.
— Retirement will be longer, so a more conservative withdrawal rate is advised.
— They have to fund health insurance in a very tumultuous health care/insurance environment—as opposed to someone who is at Medicare age or receiving health insurance from their employer as part of their retirement benefits.
— Lastly, because they are leaving the workforce early, their SS will likely not be as high as it would had they worked up to 65 or FRA.

These are some of the posters here that want to retire with millions at 45 or 50. They sometimes have high lifestyles and don’t have good control of their expenses. All of a sudden, a couple million is not a slam dunk. Surprising unless you run/understand the numbers.

In your case, I’d say you’re sitting pretty. Now, there’s always something to worry about: SS getting cut, severe health problems, long term care costs. Well, only the wealthiest can have a slam dunk for every scenario and even they don’t get out of here alive. What you gonna do? Keep working, saving, and controlling your costs and you have as good or better a chance at a happy and plentiful retirement than most Americans.
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Re: Retire with Less Than $1 million?

Post by Cousin Eddie »

bck63 wrote: Fri Jul 26, 2019 3:01 pm Thanks to everyone for their responses. Many of them made my day.

Some clarification. I will be 56 next month. I'm married. My wife and I share expenses equally. So in actuality our expenses are about 66,000, but that includes everything, including savings for vacations, other fun, new car, home repairs. She will have a pension. I will not. We view our money as all one but we are a second marriage and I still feel that I want to bring a decent amount to the retirement table.

When doing estimates with simple calculators (savings growth factoring in taxes and "how long will my money last calculators." I use a nominal return of 2% when making my estimates. Hopefully my nest egg will be much bigger than I currently calculate, but I want to keep my feet on the ground.

Really interesting replies for me to take in and absorb. Thanks again.
I'm guessing she will be able to fund her $33k and you are wanting to make sure you have your part covered. Since you will retire at SS age with 650-800k, you will easily have enough for your portion. If you had that amount right now you could probably retire today and still cover the $33k for the rest of your life.
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bck63
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Re: Retire with Less Than $1 million?

Post by bck63 »

3-20Characters wrote: Sat Jul 27, 2019 4:19 pm
bck63 wrote: Thu Jul 25, 2019 4:16 pm I see a lot of big numbers on this site. I'm wondering -- is anyone expecting to retire with *less* than one million dollars? Is it doable? I expect to have somewhere between 650K-800K when I retire. My expenses are about $33,000 per year with ten years to go. House will be paid off. No other debt. I see the large numbers here and get worried. But I do the math and think I'll be fine.

My current asset allocation is 54/46. SS should be about $2,500 per month.

I'd love to hear from the non-millionaires for some comfort, as well as anyone who has any thoughts on whether this will be enough.
There are many roads to Dublin and the one you’re taking is a good one. It has served many retirees with considerably less in savings than you expect to have quite well. It is the road of controlling expenses and retiring when SS and/or pension start to pay out. Many FIRE bloggers and Bogleheads plan to retire a decade or more before any such income stream kicks in. This creates many challenges:

— For one, this gap must be funded completely from savings.
— Retirement will be longer, so a more conservative withdrawal rate is advised.
— They have to fund health insurance in a very tumultuous health care/insurance environment—as opposed to someone who is at Medicare age or receiving health insurance from their employer as part of their retirement benefits.
— Lastly, because they are leaving the workforce early, their SS will likely not be as high as it would had they worked up to 65 or FRA.

These are some of the posters here that want to retire with millions at 45 or 50. They sometimes have high lifestyles and don’t have good control of their expenses. All of a sudden, a couple million is not a slam dunk. Surprising unless you run/understand the numbers.

In your case, I’d say you’re sitting pretty. Now, there’s always something to worry about: SS getting cut, severe health problems, long term care costs. Well, only the wealthiest can have a slam dunk for every scenario and even they don’t get out of here alive. What you gonna do? Keep working, saving, and controlling your costs and you have as good or better a chance at a happy and plentiful retirement than most Americans.
So many helpful responses, but this was really, really encouraging. Thanks very much for taking the time to respond.
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Re: Retire with Less Than $1 million?

Post by Trader Joe »

bck63 wrote: Thu Jul 25, 2019 4:16 pm I see a lot of big numbers on this site. I'm wondering -- is anyone expecting to retire with *less* than one million dollars? Is it doable? I expect to have somewhere between 650K-800K when I retire. My expenses are about $33,000 per year with ten years to go. House will be paid off. No other debt. I see the large numbers here and get worried. But I do the math and think I'll be fine.

My current asset allocation is 54/46. SS should be about $2,500 per month.

I'd love to hear from the non-millionaires for some comfort, as well as anyone who has any thoughts on whether this will be enough.
No, I could never retire on less than $1 million. It is simply not possible. Best of luck.
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Re: Retire with Less Than $1 million?

Post by stoptothink »

Trader Joe wrote: Sat Jul 27, 2019 6:32 pm
bck63 wrote: Thu Jul 25, 2019 4:16 pm I see a lot of big numbers on this site. I'm wondering -- is anyone expecting to retire with *less* than one million dollars? Is it doable? I expect to have somewhere between 650K-800K when I retire. My expenses are about $33,000 per year with ten years to go. House will be paid off. No other debt. I see the large numbers here and get worried. But I do the math and think I'll be fine.

My current asset allocation is 54/46. SS should be about $2,500 per month.

I'd love to hear from the non-millionaires for some comfort, as well as anyone who has any thoughts on whether this will be enough.
No, I could never retire on less than $1 million. It is simply not possible. Best of luck.
The HUGE majority of current retirees never had $1M+ in liquid assets, how is this possible?
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Re: Retire with Less Than $1 million?

Post by BogleBoogie »

stoptothink wrote: Sat Jul 27, 2019 6:47 pm
Trader Joe wrote: Sat Jul 27, 2019 6:32 pm
bck63 wrote: Thu Jul 25, 2019 4:16 pm I see a lot of big numbers on this site. I'm wondering -- is anyone expecting to retire with *less* than one million dollars? Is it doable? I expect to have somewhere between 650K-800K when I retire. My expenses are about $33,000 per year with ten years to go. House will be paid off. No other debt. I see the large numbers here and get worried. But I do the math and think I'll be fine.

My current asset allocation is 54/46. SS should be about $2,500 per month.

I'd love to hear from the non-millionaires for some comfort, as well as anyone who has any thoughts on whether this will be enough.
No, I could never retire on less than $1 million. It is simply not possible. Best of luck.
The HUGE majority of current retirees never had $1M+ in liquid assets, how is this possible?
He could. Would just need to scale back his lifestyle and possibly relocate to a LCOL area.
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David Jay
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Re: Retire with Less Than $1 million?

Post by David Jay »

Cost of living is hugely variable. Small town living with a paid off home can be very economical.

With $33,000 in expenses and a $30,000 SS benefit you will be just fine with a over a half million.
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Re: Retire with Less Than $1 million?

Post by scrabbler1 »

I retired in late 2008 (when the markets were crashing) at age 45 with about $850k. Only $600k of it was in a taxable account, so that is what I have been living off the whole time, and living just fine with expenses in the $23k-$27k range. The rest is in an IRA, and it, along with SS and my frozen company pension, are my "reinforcements" awaiting me starting when I turn ~60.

In the last ~11 years, both the taxable and IRA accounts have grown nicely. The taxable part, majority bonds, has grown 50% while providing a steady income stream. The IRA part, around 50/50, has more than doubled.
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Re: Retire with Less Than $1 million?

Post by jmk »

bck63 wrote: Thu Jul 25, 2019 4:16 pm I see a lot of big numbers on this site. I'm wondering -- is anyone expecting to retire with *less* than one million dollars? Is it doable? I expect to have somewhere between 650K-800K when I retire. My expenses are about $33,000 per year with ten years to go. House will be paid off. No other debt. I see the large numbers here and get worried. But I do the math and think I'll be fine.
My current asset allocation is 54/46. SS should be about $2,500 per month.
I'd love to hear from the non-millionaires for some comfort, as well as anyone who has any thoughts on whether this will be enough.
If you work in your social security and any pension, it is very possible. But the devil is in the details: health care costs, children, college costs, etc. How many years will you be retired? Are you only calculating till average longevity or till the 25th percentile?
Also, with a 54/46 portfolio you do need to take into account that your total portfolio could drop about 35% if the market had a big correction-- so you might want to save 1.2 times what you think you'll need before retiring just in case.
With no wiggle room you should stress test your plans (suppose inflation were 3% instead of 2%... suppose I got cancer.... suppose stock returns are -2% for a 10 year cagr, etc.).
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HomerJ
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Re: Retire with Less Than $1 million?

Post by HomerJ »

stoptothink wrote: Sat Jul 27, 2019 6:47 pm
Trader Joe wrote: Sat Jul 27, 2019 6:32 pm
bck63 wrote: Thu Jul 25, 2019 4:16 pm I see a lot of big numbers on this site. I'm wondering -- is anyone expecting to retire with *less* than one million dollars? Is it doable? I expect to have somewhere between 650K-800K when I retire. My expenses are about $33,000 per year with ten years to go. House will be paid off. No other debt. I see the large numbers here and get worried. But I do the math and think I'll be fine.

My current asset allocation is 54/46. SS should be about $2,500 per month.

I'd love to hear from the non-millionaires for some comfort, as well as anyone who has any thoughts on whether this will be enough.
No, I could never retire on less than $1 million. It is simply not possible. Best of luck.
The HUGE majority of current retirees never had $1M+ in liquid assets, how is this possible?
It's simply not possible for Trader Joe. He cannot possibly live without his caviar and his Chateau Lafite Rothschild. This is undisputed.
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Re: Retire with Less Than $1 million?

Post by AlohaJoe »

Tdubs wrote: Sat Jul 27, 2019 2:02 pm I really don't see many studies that show how much it takes to "get by" in retirement, except some work by Wade Pfau.
There are hundreds, possibly thousands, of such studies. Where are you looking that you don't see them? The Journal of Retirement publishes quarterly. The Journal of Financial Planning publishes monthly. The Journal of Investing carries articles on retirement sometimes. As does the Journal of Asset Management, the Journal of Personal Finance, the Journal of Investment Consulting, AAII Journal, the Journal of Portfolio Management, Retirement Management Journal, Journal of Wealth Management, Journal of Pension Benefits, and more.

And, of course, nowadays most everything seems to be on SSRN before it gets published in a journal.
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Re: Retire with Less Than $1 million?

Post by Tdubs »

AlohaJoe wrote: Sat Jul 27, 2019 11:23 pm
Tdubs wrote: Sat Jul 27, 2019 2:02 pm I really don't see many studies that show how much it takes to "get by" in retirement, except some work by Wade Pfau.
There are hundreds, possibly thousands, of such studies. Where are you looking that you don't see them? The Journal of Retirement publishes quarterly. The Journal of Financial Planning publishes monthly. The Journal of Investing carries articles on retirement sometimes. As does the Journal of Asset Management, the Journal of Personal Finance, the Journal of Investment Consulting, AAII Journal, the Journal of Portfolio Management, Retirement Management Journal, Journal of Wealth Management, Journal of Pension Benefits, and more.

And, of course, nowadays most everything seems to be on SSRN before it gets published in a journal.
I think we have different views of "get by." I'm looking for a study that says, "Nevertheless, as long someone owns their own home or has access to inexpensive housing, a large portion of the population manages to make ends meet with just their SS income and less than $200k in savings."

The one decent version I've seen is this one. It takes retirees as they are.

http://longevity.stanford.edu/wp-conten ... ersion.pdf
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Re: Retire with Less Than $1 million?

Post by ofcmetz »

Wiggums wrote: Thu Jul 25, 2019 4:24 pm It all depends on your withdrawal rate (3-4%) and your annual expenses. A 3% withdrawal rate is conservative.

It does look like you need to draw much 33k minus 30k ss

How old are you?

Do your anticipated retirement expenses (33k) include medical, state and local taxes?

Will you have a pension?

Have you used a tool like firecalc?
Nice avatar!

I think it's perfectly fine to retire with less than 7 figures. My father did this a few years ago. He has high 6 figures and about 40K a month in social security and is richer today than when he retired. It's all about covering your living expenses whatever they may be.
Never underestimate the power of the force of low cost index funds.
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Re: Retire with Less Than $1 million?

Post by 02nz »

HomerJ wrote: Sat Jul 27, 2019 10:20 pm It's simply not possible for Trader Joe. He cannot possibly live without his caviar and his Chateau Lafite Rothschild. This is undisputed.
I would've thought he was more of a two-buck-Chuck kinda guy.
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