Do you really need 2.5 million to retire well?

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hoops777
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Re: Do you really need 2.5 million to retire well?

Post by hoops777 » Mon Jan 09, 2017 3:35 pm

You said awesome insight like it was so obvious and then you did the same thing,acting as if nobody should have higher expenses than you????
K.I.S.S........so easy to say so difficult to do.

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HomerJ
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Re: Do you really need 2.5 million to retire well?

Post by HomerJ » Mon Jan 09, 2017 3:44 pm

Ged wrote:2.5 MM ? No you don't need that. My wife and I have income from pensions and SS which will be about 80K when we start taking SS.


$80,000 a year from pensions and SS is the same as pulling 4% from $2 million.

Wish I had a pension :(

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TheTimeLord
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Re: Do you really need 2.5 million to retire well?

Post by TheTimeLord » Mon Jan 09, 2017 3:46 pm

harryw wrote:
leonard wrote:Depends on your spending.


awesome insight, this one. Who'd have thought?

This is from an unmarried couple In Santa Clara, CA. We rent, no kids, both over 50. She makes > 200k with a sweet employer paying for... a lot. I make 5k (by choice, 2nd career). Our combined expenses, with no debt, my private health insurance @ 400/month, 2 cars owned, at least 2 yearly trips to Europe, and rent of 2500 for a 2brm is less than 70k. We eat out a lot, and the main expense it rent. If we'd move to an out-of-reach-for-commute community (and we will, once she quits) it would drop by at least 30%. Ask me for details, if you want.

The point: we're in the probably most expensive quasi-urban place in the US, and we lack nothing at all, at 70k a year. If you think you need more, why exactly?


Well at 4% $2.5 MM generate $100K (3.5% generates $87,500) subtract taxes and how far are you from $70K? Definitely helps to emphasize the value of income streams like SS and pensions. Will you be able to maintain your $70K in retirement?
Run, You Clever Boy!

hoops777
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Re: Do you really need 2.5 million to retire well?

Post by hoops777 » Mon Jan 09, 2017 4:48 pm

The point Harryw is that because one lives in a high COL area,it does not necessarily mean they have a high COL.2500 per month for housing with no ownership costs like prop taxes and maintenance is not that high.Very low for where you live.You were implying that because you live in the Bay Area and can get by on 70K that anyone should be able to.It just depends on the individual circumstances which is why I questioned your post.Once you get past the housing,the COL is not that drastically different for most things whatever state you are in.
K.I.S.S........so easy to say so difficult to do.

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scubadiver
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Re: Do you really need 2.5 million to retire well?

Post by scubadiver » Mon Jan 09, 2017 10:18 pm

My own response to this question is neither yes or no. For me, it's not about retiring or retiring well, but about getting to a point where I no longer need to worry about a job loss. I may or may not choose to continue working, but probably will, albeit at a much slower pace.

I don't think $2.5M is needed for me to achieve that even if I still have two kids to put through college.

Scubadiver

Rodc
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Re: Do you really need 2.5 million to retire well?

Post by Rodc » Tue Jan 10, 2017 1:44 pm

HomerJ wrote:
Ged wrote:2.5 MM ? No you don't need that. My wife and I have income from pensions and SS which will be about 80K when we start taking SS.


$80,000 a year from pensions and SS is the same as pulling 4% from $2 million.

Wish I had a pension :(


Hopefully you do have SS. Their $80K from pensions and SS might easily be mostly SS.

But as someone getting a modest but non-trivial pension, with a wife getting a small pension (not trivial but very modest in the general scheme of things) I sympathize. It, along with SS, really does make investing easier because it reduces the consequence of stock and bond risk, thus having a baseline of income takes some of the stress off planning and investing.

But at some point along the journey one can buy a pension, and this option seems underutilized.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

Rodc
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Re: Do you really need 2.5 million to retire well?

Post by Rodc » Tue Jan 10, 2017 1:49 pm

To the opening question:

Need is a strong word.

If one retires at a more or less normal age, that means something like $100K per year. If you saved that (vs inherited) you likely had a very good job (and perhaps a spouse with a pretty good job) and so have decent SS. Maybe $30K to $60K.

That is a lot more than one needs if "needs" does not mean "I really want it". One might not want to, but one can downsize a home, can move to a low cost of living area, one can skip expensive travel and consumer goods. You might get hung up on medical that you truly need.

Conflating "I really want it" with "I need it" opens up a really wide space of so-called needs that makes the question unanswerable.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

bigred77
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Re: Do you really need 2.5 million to retire well?

Post by bigred77 » Tue Jan 10, 2017 1:58 pm

Rodc wrote:
But at some point along the journey one can buy a pension, and this option seems underutilized.


Incredibly underutilized. It can be a great tool for increasing one's income floor as well as allowing for a higher withdrawal rate.

flyingbison
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Re: Do you really need 2.5 million to retire well?

Post by flyingbison » Tue Jan 10, 2017 2:01 pm

HomerJ wrote:
Ged wrote:2.5 MM ? No you don't need that. My wife and I have income from pensions and SS which will be about 80K when we start taking SS.


$80,000 a year from pensions and SS is the same as pulling 4% from $2 million.

Wish I had a pension :(


I'd rather have $2M

munemaker
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Re: Do you really need 2.5 million to retire well?

Post by munemaker » Tue Jan 10, 2017 2:09 pm

mikegerard wrote:
invst65 wrote:According to CNN Money there are only 1.8 million Americans in the U.S. with a net worth over 2 million and the median family net worth of those age 65-74 is $206k.

So if it really takes 2.5 million to retire well I guess not very many will be doing it.


Almost no retired people have 2.5 million...somehow they are getting by.

I agree it's a good goal and it's close to my target but the average person gets by on far less. It all depends on what your definition of retire "well" is.


The question was about "retiring well", not just "getting by."

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Re: Do you really need 2.5 million to retire well?

Post by hicabob » Tue Jan 10, 2017 2:12 pm

flyingbison wrote:
HomerJ wrote:
Ged wrote:2.5 MM ? No you don't need that. My wife and I have income from pensions and SS which will be about 80K when we start taking SS.


$80,000 a year from pensions and SS is the same as pulling 4% from $2 million.

Wish I had a pension :(


I'd rather have $2M



Agreed - I would say 80k/yr from pensions is more like pulling 6% from a 1.34 million spia

mattshwink
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Re: Do you really need 2.5 million to retire well?

Post by mattshwink » Tue Jan 10, 2017 2:14 pm

it certainly depends on where you live, and what you want to do in retirement. We want to travel (nicely) quite a bit and retire early (55 is my goal). So our target number is currently 3.3 million. We are 1/3 of the way there.

LarryAllen
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Re: Do you really need 2.5 million to retire well?

Post by LarryAllen » Tue Jan 10, 2017 2:31 pm

It's simply all about your lifestyle and what you spend and want to continue spending. For us $2.5m is not really close. For others they wouldn't know what to do with all the surplus. To each his own.

SQRT
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Re: Do you really need 2.5 million to retire well?

Post by SQRT » Tue Jan 10, 2017 2:44 pm

LarryAllen wrote:It's simply all about your lifestyle and what you spend and want to continue spending. For us $2.5m is not really close. For others they wouldn't know what to do with all the surplus. To each his own.

Absolutely true. Depends on your desired lifestyle and lifestyle choices are all over the map. There is a lot of wealth in the US and many people would need a lot more than $2.5 million to support the lifestyle they want.

dcabler
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Re: Do you really need 2.5 million to retire well?

Post by dcabler » Tue Jan 10, 2017 3:06 pm

Could it just be that 4% (the so-called 4% rule and a nice round number) of $2.5M (also a nice round number) = $100K (likewise a nice round number)?
Nah. :D

itstoomuch
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Re: Do you really need 2.5 million to retire well?

Post by itstoomuch » Tue Jan 10, 2017 3:36 pm

HomerJ wrote:
Ged wrote:2.5 MM ? No you don't need that. My wife and I have income from pensions and SS which will be about 80K when we start taking SS.


$80,000 a year from pensions and SS is the same as pulling 4% from $2 million.

Wish I had a pension :(

we bought a series of "pensions" with remainders, paying 3.5% annually in fees.
One nice thing about buying a pension, I can do this money rather than time in a job. :D
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Sandtrap
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Re: Do you really need 2.5 million to retire well?

Post by Sandtrap » Tue Jan 10, 2017 3:54 pm

Retirement with 3 pensions, 1 mil home paid off, and with a frugal lifestyle, in an extreme HCOL area ie: Hawaii = surviving. :confused

Retirement with 1 pension, 400k home paid off, and with a frugal lifestyle, in a very low LCOL area ie: Southwest = thriving. :sharebeer

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Re: Do you really need 2.5 million to retire well?

Post by LadyGeek » Tue Jan 10, 2017 4:27 pm

I removed some off-topic posts and replies. This thread has run its course and is locked (topic exhausted, getting contentious). See: Locked Topics

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It's also not actionable and should have been locked sooner. See: A reminder that non-investing general comment threads are OT
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