How much money do you want to retire?

[marcopolo]

California is the only one that can claim beautiful weather to go with it's high cost of living, but again, if you're not working, you can get the same weather moving 20-80 miles up/down the coast, and save a ton of money.

Hawaii

[HomerJ]

Have you actually tracked your current "regular expenses"? Because in my experience, they don't add up very quickly. Utilities and food and car/home insurance don't cost that much... let's say $2000 a month, which is high for most people.

Now, property taxes are hugely variable, as is health-care.

But let's say $2000 a month for health-care, and $1000 a month for property taxes. Again, too high for most people... but let's use those numbers.

Then another $500 a month for an occasional new car and gas. Then another $500 a month for occasional house repairs.

That puts you at $6000 a month... Which requires $2 million or so if you're pulling 3.5% in your 50s. So the next $3 million in your $5 million goal is purely for hobbies and vacations and fun. That's $9000 a month for fun.

Totally understandable if that's what you want... but I have no idea how you "don't know how the numbers work for them".

You can't understand how some people don't require $9000 a month every month for hobbies and vacations?

(And we ignored Social Security... A couple, especially on these boards, can easily get $2000-$5000 a month from SS. That makes that base $6000/month expenses pretty easy to achieve... I expect my wife and I will get $4000 a month from SS, which means we really only need $2000 a month from our investments - $700k would be enough).

What about various income taxes? You are not counting that, and it's a lot of money. Your $1K/mo for property taxes is too low for many areas. $500/mo for cars is too low if you and your spouse own cars. $500/mo for house repairs is too low unless you're just looking at the minor stuff. A house renovation is a lot of money, and the time comes sooner or later. Long-term care is not included in your analysis. I could go on...

I'm not saying you can't live on $6K a month (many obviously make do on less than that), just that it would entail risks and compromises that I wouldn't be comfortable with. It wouldn't cover my expenses (even ignoring travel/hobbies), and I don't live an extravagant lifestyle.

One nice thing about living on 6k a month is your income taxes are low.

$1k month for property taxes is too high for 95% of areas.... If you must live in the 5% HCOL areas then yes you'll need more.

Look, you live in San Fran or somewhere. Your costs are higher. That's fine, you can legitimately say "I need $15,000 a month to live in this exact spot on Earth comfortably", but you shouldn't say "I don't see how anyone could live on less!"

Track your actual expenses. There's probably 1-2 really high ticket items, which you could reduce if you wanted to, probably by moving. All the stuff you mention like food and utilities and insurance just really isn't that expensive.

We own TWO homes, two cars, a boat, a jetski, still have a kid at home, we took a cruise last winter, we're going to Europe for two weeks this summer, and we spend less than $6000 a month.

[HomerJ]

California is the only one that can claim beautiful weather to go with it's high cost of living, but again, if you're not working, you can get the same weather moving 20-80 miles up/down the coast, and save a ton of money.

Hawaii

Okay you got me there.

[HomerJ]

(And we ignored Social Security... A couple, especially on these boards, can easily get $2000-$5000 a month from SS. That makes that base $6000/month expenses pretty easy to achieve... I expect my wife and I will get $4000 a month from SS, which means we really only need $2000 a month from our investments - $700k would be enough).

Doesn't that only work if you assume taking SS at 70? There is huge difference between taking it at earliest vs taking it as late as possible.

I think even if we take it at 63, we get like $1800 a month. Each.

[wrongfunds]

Does it almost double if you wait until 70? But I do get the principle behind what you are saying and I agree wholeheartedly that it is possible to have minimal fixed expenses in retirement provided the house is paid for and you are not living in a mansion with servants quarter, a gardener, a pool boy and country club membership. Day to day living should be substantially less in retirement than during the working years. AND if you are indeed saving for retirement generously, then you are already used to living on lot less than your income.

HOWEVER, it is still true that your variable and discretionary spending has essentially no upper bound in retirement because you are no longer artificially limited by the amount of available vacation time.

This is why I answer "bazillion dollars" when question such as "how much money do you want to retire with" comes up.

[visualguy]

One nice thing about living on 6k a month is your income taxes are low.

$1k month for property taxes is too high for 95% of areas.... If you must live in the 5% HCOL areas then yes you'll need more.

Look, you live in San Fran or somewhere. Your costs are higher. That's fine, you can legitimately say "I need $15,000 a month to live in this exact spot on Earth comfortably", but you shouldn't say "I don't see how anyone could live on less!"

Track your actual expenses. There's probably 1-2 really high ticket items, which you could reduce if you wanted to, probably by moving. All the stuff you mention like food and utilities and insurance just really isn't that expensive.

We own TWO homes, two cars, a boat, a jetski, still have a kid at home, we took a cruise last winter, we're going to Europe for two weeks this summer, and we spend less than $6000 a month.

5% HCOL is not correct - it's much higher than that. Look at a population map of the US to see where the population is concentrated. Much (>50%) of it is in expensive coastal areas and some other fairly expensive metro areas.

Yes, it's possible to move to a cheaper area (which is a radical change), drive clunkers, rely on Medicaid for long-term care, etc. However, that goes back to compromises, risks, and the kind of life and environment you want to have.

[cockersx3]

My wife and I are mid-40's and are hoping to be retired in the next 4-5 years, hopefully before 50 if the market cooperates. We'd like to have $2MM in investments and a paid-off house before retiring (excluding college savings).

That said, we feel that we could live with $1.5MM if we had to do so - still far more than enough to "keep the lights on," but just with a reduced amount of discretionary spend relative to what we currently use. We are getting close to this and are hoping to hit this in the next two years barring a major market event (knock on wood).

I have a very high paying job that, quite frankly, I am not very excited about anymore. This causes me to struggle sometimes to balance being a prudent steward of this income stream, vs how much past that $1.5MM number my family truly needs. Once we hit the $1.5MM number, I'll quit - or maybe go into independent contracting in my field - either when I hit 50 OR when my tolerance of work BS is finally exceeded...

[HomerJ]

Does it almost double if you wait until 70?

Yes, it would be around $3000 or more if we waited to 70. That would cover our entire $6000/month. So the smart thing would probably to spend a bigger chunk of our money up until 70 and wait to file. But there's the whole bird in the hand thing. We'll see.

HOWEVER, it is still true that your variable and discretionary spending has essentially no upper bound in retirement because you are no longer artificially limited by the amount of available vacation time.

This is why I answer "bazillion dollars" when question such as "how much money do you want to retire with" comes up.

Your answer is probably the correct one. If asking what we WANT, then me too... I want a bazillion dollars.

[TheTimeLord]

Does it almost double if you wait until 70?

Yes, it would be around $3000 or more if we waited to 70. That would cover our entire $6000/month. So the smart thing would probably to spend a bigger chunk of our money up until 70 and wait to file. But there's the whole bird in the hand thing. We'll see.

Does what double if you wait until 70?

[wrongfunds]

SS claiming at 62 vs claiming at 70

[TheTimeLord]

SS claiming at 62 vs claiming at 70

Thank you.

[HomerJ]

One nice thing about living on 6k a month is your income taxes are low.

$1k month for property taxes is too high for 95% of areas.... If you must live in the 5% HCOL areas then yes you'll need more.

Look, you live in San Fran or somewhere. Your costs are higher. That's fine, you can legitimately say "I need $15,000 a month to live in this exact spot on Earth comfortably", but you shouldn't say "I don't see how anyone could live on less!"

Track your actual expenses. There's probably 1-2 really high ticket items, which you could reduce if you wanted to, probably by moving. All the stuff you mention like food and utilities and insurance just really isn't that expensive.

We own TWO homes, two cars, a boat, a jetski, still have a kid at home, we took a cruise last winter, we're going to Europe for two weeks this summer, and we spend less than $6000 a month.

5% HCOL is not correct - it's much higher than that. Look at a population map of the US to see where the population is concentrated. Much (>50%) of it is in expensive coastal areas and some other fairly expensive metro areas.

No I'm correct... Huge swathes of the coast are not HCOL.

The average ANNUAL property tax in America is $2,197.

https://wallethub.com/edu/states-with-t ... xes/11585/

You might think the 8 million people in New York City all pay high property taxes, but you'd be wrong. The average property tax in New York City is around $5000-$7500. My $1000/month was ridiculously high to prove a point.

https://cbcny.org/research/new-york-city-property-taxes

Yes, it's possible to move to a cheaper area (which is a radical change), drive clunkers, rely on Medicaid for long-term care, etc. However, that goes back to compromises, risks, and the kind of life and environment you want to have.

A brand-new Honda Civic costs $20,000, will easily last a retiree 10 years with very little maintenance and is not a clunker.

The $2000/month I budgeted for health care before Medicare at 65 would continue to be saved for long-term care after 65. There is no plan to be on Medicaid.

$6000 a month with a paid-off house is a TON of money. Again, I spend that much with TWO paid-off houses, and live quite well. But in the Mid-west, of course. You may indeed be correct that that would be too radical a change to contemplate. Continue to work an extra 10-15 years to save your $5 million. It's a good choice. I'm serious about that. If you love where you live, then it's worth it to work longer to afford it.

But it's really not a dirt farm here... You'd probably find my lake house to be quite nice.

[visualguy]

No I'm correct... Huge swathes of the coast are not HCOL.

The average ANNUAL property tax in America is $2,197. You might think the 8 million people in New York City all pay high property taxes, but you'd be wrong. The average property tax in New York City is $4,738. My $1000/month was ridiculously high to prove a point.

https://wallethub.com/edu/states-with-t ... xes/11585/

Yes, it's possible to move to a cheaper area (which is a radical change), drive clunkers, rely on Medicaid for long-term care, etc. However, that goes back to compromises, risks, and the kind of life and environment you want to have.

A brand-new Honda Civic costs $20,000, will easily last a retiree (who doesn't drive that much) 10 years and is not a clunker.

The $2000/month I budgeted for health care before Medicare at 65 would continue to be saved for long-term care after 65. There is no plan to be on Medicaid.

$6000 a month with a paid-off house is a TON of money.... Again, I spend that much with TWO paid-off houses, and live quite well... But in the Mid-west, of course... You may indeed be correct that that would be too radical a change to contemplate. Continue to work an extra 10-15 years to save your $5 million. It's a good choice... I'm serious about that... If you love where you live, then you need to work longer to afford it.

But it's really not a dirt farm here... You'd probably find my lake house to be quite nice.

The large population centers on the coasts are mostly HCOL to VVHCOL (more the latter than the former...)

The average property tax in NYC is not the number your cited. That's the property tax on a median-priced home in NY State. Good luck with that in NYC...

Medicare with all the supplements isn't free - you need to budget for that. Your health-care money doesn't become all available for LTC savings - much will be consumed. The remainder isn't enough for LTC, particularly not for a couple.

I think it's great when people can retire on less somehow, but that's not the situation for many of us.

[HomerJ]

The average property tax in NYC is not the number your cited. That's the property tax on a median-priced home in NY State. Good luck with that in NYC...

That is correct. I made a mistake and quoted NY STATE instead of NY City... I edited my post above but not fast enough

Anyway it's $5000-$7500 for NYC... Still well below the $1000/month I budgeted.

Medicare with all the supplements isn't free - you need to budget for that. Your health-care money doesn't become all available for LTC savings - much will be consumed. The remainder isn't enough for LTC, particularly not for a couple.

You make good points, but supplements are pretty cheap... Like $200/month for Part B and Part D. And all the years you are healthy you can save a good chunk of that $24,000 you budgeted for health care...

But I will give you that health care is the big unknown...

I think it's great when people can retire on less somehow, but that's not the situation for many of us.

Dude, it's totally fine that you have large expenses. There's absolutely nothing wrong with your lifestyle.

All I want from you is an acknowledgment that you are NOT the "many". Heck, I'm in the top 7%-10%, since I plan to retire with $2 million.

You needing $5 million to retire does NOT put you in the "many of us" camp. You are firmly in the top 2%.

It really isn't that hard to retire with less... Us 10% people are not driving clunkers and living in trailers you know.

[AlphaLess]

I am really surprised at how many say "just one more million"

It's the curse of being a boglehead.

7 digits is so 1980s.

Just do use any Monte-Carlo retirement scenario analysis tool, with these types of numbers:
- $5-8MM in assets,
- 2-3% W/D,
- 40-50 year horizon.

Just take a note of the size of the assets in the top 50% of the scenarios, say, in 30, 40, 50 years.

[visualguy]

The average property tax in NYC is not the number your cited. That's the property tax on a median-priced home in NY State. Good luck with that in NYC...

That is correct. I made a mistake and quoted NY STATE instead of NY City... I edited my post above but not fast enough

Anyway it's $5000-$7500 for NYC... Still well below the $1000/month I budgeted.

Medicare with all the supplements isn't free - you need to budget for that. Your health-care money doesn't become all available for LTC savings - much will be consumed. The remainder isn't enough for LTC, particularly not for a couple.

You make good points, but supplements are pretty cheap... Like $200/month for Part B and Part D. And all the years you are healthy you can save a good chunk of that $24,000 you budgeted for health care...

But I will give you that health care is the big unknown...

I think it's great when people can retire on less somehow, but that's not the situation for many of us.

Dude, it's totally fine that you have large expenses. There's absolutely nothing wrong with your lifestyle.

All I want from you is an acknowledgment that you are NOT the "many". Heck, I'm in the top 7%-10%, since I plan to retire with $2 million.

You needing $5 million to retire does NOT put you in the "many of us" camp. You are firmly in the top 2%.

It really isn't that hard to retire with less... Us 10% people are not driving clunkers and living in trailers you know.

Again, I agree that it's possible to retire on less in some parts of the country with some compromises and risks, and most people do just that.

Also, if we moved to an inexpensive part of the country, we could probably retire on less than $5M, but not as low as $2M. I like to have more money for LTC and better medical, such as Medicare Advantage PPO, and being able to pay out-of-pocket for things if needed. I have quite a lot of experience with medical and LTC, and realize how much difference it makes to be able to pay for the best and for multiple opinions regardless of insurance limitations.

As to many vs few - yes, I agree that it's maybe 2% if you look at the whole country, but it's higher than that in the areas around the major economic centers of the US: NYC, Boston, DC, LA, SF, Seattle, etc. The money you're talking about for retirement is less than what a nice place to live costs in those areas... Also, remember that even 2% is millions of people, so it still is many people. Even on this thread, you see quite a few targeting that ball park in retirement funds.

If I wanted to live it up, I would actually need more... Say, frequent travels abroad in business class, sports car, yacht, light plane, vacation home, etc. I'm not talking about that kind of lifestyle.

[TxInjun]

Just do use any Monte-Carlo retirement scenario analysis tool, with these types of numbers:
- $5-8MM in assets,
- 2-3% W/D,
- 40-50 year horizon.

Just take a note of the size of the assets in the top 50% of the scenarios, say, in 30, 40, 50 years.

Monte-Carlo sims assume each year is a completely random one, uncorrelated to the previous year or the past few years: so the extreme cases (good or bad) can string together a number of same-direction years without a regression to the mean type of behavior that happens in the real world: so I believe MC results are too optimistic on the top end, and too pessimistic on the bottom end. It's my view that if a MC sim says you have (say) a 95% success rate, then your actual success rate is likely much better.

A sim like cfireSim, which simulates actual sequence of annual return, allows your money to "live through the past". I find that a more believable result.

Cheers

TxInjun

[moneywise3]

$20 M by 2025.

[wander]

What I want is too much, I cannot get it.

[Grt2bOutdoors]

One nice thing about living on 6k a month is your income taxes are low.

$1k month for property taxes is too high for 95% of areas.... If you must live in the 5% HCOL areas then yes you'll need more.

Look, you live in San Fran or somewhere. Your costs are higher. That's fine, you can legitimately say "I need $15,000 a month to live in this exact spot on Earth comfortably", but you shouldn't say "I don't see how anyone could live on less!"

Track your actual expenses. There's probably 1-2 really high ticket items, which you could reduce if you wanted to, probably by moving. All the stuff you mention like food and utilities and insurance just really isn't that expensive.

We own TWO homes, two cars, a boat, a jetski, still have a kid at home, we took a cruise last winter, we're going to Europe for two weeks this summer, and we spend less than $6000 a month.

5% HCOL is not correct - it's much higher than that. Look at a population map of the US to see where the population is concentrated. Much (>50%) of it is in expensive coastal areas and some other fairly expensive metro areas.

No I'm correct... Huge swathes of the coast are not HCOL.

The average ANNUAL property tax in America is $2,197.

https://wallethub.com/edu/states-with-t ... xes/11585/

You might think the 8 million people in New York City all pay high property taxes, but you'd be wrong. The average property tax in New York City is around $5000-$7500. My $1000/month was ridiculously high to prove a point.

https://cbcny.org/research/new-york-city-property-taxes

Yes, it's possible to move to a cheaper area (which is a radical change), drive clunkers, rely on Medicaid for long-term care, etc. However, that goes back to compromises, risks, and the kind of life and environment you want to have.

A brand-new Honda Civic costs $20,000, will easily last a retiree 10 years with very little maintenance and is not a clunker.

The $2000/month I budgeted for health care before Medicare at 65 would continue to be saved for long-term care after 65. There is no plan to be on Medicaid.

$6000 a month with a paid-off house is a TON of money. Again, I spend that much with TWO paid-off houses, and live quite well. But in the Mid-west, of course. You may indeed be correct that that would be too radical a change to contemplate. Continue to work an extra 10-15 years to save your $5 million. It's a good choice. I'm serious about that. If you love where you live, then it's worth it to work longer to afford it.

But it's really not a dirt farm here... You'd probably find my lake house to be quite nice.

The property tax may be true at $2,000 but you receive little in the way of services, no real transportation other than your car or legs or umber (which can get expensive quickly).
My taxes are 7x the number you quoted and expected to rise, even the lowest taxed home in my town is paying at least 5x the number you quoted.

[SQRT]

Most of the discussion on this thread assumes that people save while working until they hit their “magic number” then they retire. This may describe the process for many or even most people, but there are many people who retire at times not within their control. Their savings would not likely be at a desired level when they retire. These people will “make do” and have a lifestyle in retirement dependant on whatever savings they have, pensions if any, and SS. In most cases they will adapt just fine and have a reasonable retirement.

There is another group, which I belong to, who have also reversed the cause/effect relationship between saving and retirement lifestyle. For these people they save whatever they can, realize they can retire on these savings, then set their spending in retirement to match their savings/pensions/SS.

In my case, my assets once I retired could support spending quite a bit higher than when I was working. I didn’t need or even necessarily want this level of spending in retirement, but now that it’s sitting there, I can easily deal with it. Lots of choices. Life is very good. I am very lucky.

I see little reason to debate what a “satisfactory” or even “”necessary” level of spending should be in retirement. Each person will make their own spending decisions based on their personal spending utility and available resources. Many people get quite comfortable with their own choices and start to consider these as “optimal” for other people. To think otherwise may invite feelings of regret and is understandable. However, I think trying to judge others’ spending decisions is a mistake. Everybody is different. Many have very different means than the norm and spend accordingly.

[wrongfunds]

A typical suburban house with 2500 sqft and 4 bedrooms will have taxes around $12K in Bostom Metrowest area *WITH* good school system. I live about 40 miles from Boston and my taxes for that house are over $13K. The assessed price is around $700K. My RE portion had been always higher than PI since the day we purchased the house 20 years ago!

[HomerJ]

A typical suburban house with 2500 sqft and 4 bedrooms will have taxes around $12K in Bostom Metrowest area *WITH* good school system. I live about 40 miles from Boston and my taxes for that house are over $13K. The assessed price is around $700K. My RE portion had been always higher than PI since the day we purchased the house 20 years ago!

Interesting article on property tax rates in Massachusetts, with a cool interactive map.

https://www.bostonglobe.com/metro/regio ... story.html

Looks to me like a budget of $1k a month ($12,000 a year) is perfectly reasonable for large parts of that HCOL area.

Twenty-three of the 151 municipalities analyzed now have average tax bills that surpass $10,000, up from 20 communities last year. All but six — Manchester-by-the Sea ($12,208), Winchester ($11,946), Cohasset ($11,902), Wenham ($10,990), Westwood ($10,596), and Sharon ($10,378) — are in the western suburbs.

Not surprisingly, the highest average tax bills in fiscal 2017 (July 1, 2016, to June 30, 2017) are in towns where homes often command prices well over $1 million, including the three towns where the average single-family tax bill surpasses $15,000. Weston, where the average bill is $19,380 (the highest in the state), tops the list, followed by Sherborn ($15,425) and Lincoln ($15,185).

When you retire, you don't need to pay for a good school system anymore.

Edit: But of course, those are just average prices.. Property taxes are indeed a large budget item for many of the people on this board. I still say moving and/or downsizing is a legitimate option. You don't have to care about the commute or school districts anymore. You don't have to completely move out of the area and abandon family.

But obviously, my experience in the Mid-west is very different from the people on the coasts. I will defer to your judgement. My apologies if I sounded preachy. Just be aware there are options if you dislike your extremely high housing costs and property taxes.

[Exafchick]

Since I have a pension (retired from active duty in 2007), I estimate I could do nicely with a portfolio of around $650k (withdraw $2000/month should last over 30 years). I am estimated to get around $1675 at age 67. So between pension (which includes health care), investments and SS I'll have almost $6000/mo (which is more than I'm living on now!)

[AlphaLess]

Just do use any Monte-Carlo retirement scenario analysis tool, with these types of numbers:
- $5-8MM in assets,
- 2-3% W/D,
- 40-50 year horizon.

Just take a note of the size of the assets in the top 50% of the scenarios, say, in 30, 40, 50 years.

Monte-Carlo sims assume each year is a completely random one, uncorrelated to the previous year or the past few years: so the extreme cases (good or bad) can string together a number of same-direction years without a regression to the mean type of behavior that happens in the real world: so I believe MC results are too optimistic on the top end, and too pessimistic on the bottom end. It's my view that if a MC sim says you have (say) a 95% success rate, then your actual success rate is likely much better.

A sim like cfireSim, which simulates actual sequence of annual return, allows your money to "live through the past". I find that a more believable result.

Cheers

TxInjun

Thank you for the comment. However, I do believe that the point I was making would not be affected by the type of simulation.

If you are shooting for 99% chance of success over 45 years, with $5MM in assets, then in the top 10,20% of the time you are shooting to have hundreds of millions in assets.

[HornedToad]

A typical suburban house with 2500 sqft and 4 bedrooms will have taxes around $12K in Bostom Metrowest area *WITH* good school system. I live about 40 miles from Boston and my taxes for that house are over $13K. The assessed price is around $700K. My RE portion had been always higher than PI since the day we purchased the house 20 years ago!

I live in SF Bay Area with an assessed value of ~$1.5mil and property taxes are around $1500/mo. $1k a month is a reasonable estimate in the vast majority of cases. Most of California pays less than $1k/mo, and it's only select parts of SF Bay area, LA, Santa Barbara, etc on the coastline that is much more.

For me $4-5mil + paid off house would be give a good lifestyle.

[Maverick3320]

Sorry, guys, those days are gone for today's wannabe retirees. Seems like everything that advances a person now first sets you back way too much, so the gain is minimized.

What do you mean by this?

Mainly I was thinking of educational opportunities and the rise of student debt. Also, the loss of employer pensions to help fund retirement. Professional education is the basis of work and saving for retirement.

The poll question could be rephrased as "How much education do you need to retire?". Low-skilled (or underappreciated skilled) workers are rarely fully employed and will never fully retire until disabled.

There are dozens, if not hundreds, of trade positions that require little formal schooling beyond high school. Oftentimes these trades come with paid apprenticeships that require no debt. A plumber where I live can easily clear $50/hour. The problem is that generally those same "underappreciated" workers don't want to take these positions, for a variety of reasons.

An apprenticeship IS formal schooling.

The point was that apprenticeships rarely incur the amounts of student debt that traditional college/university paths do.

[TxInjun]

Thank you for the comment. However, I do believe that the point I was making would not be affected by the type of simulation.

If you are shooting for 99% chance of success over 45 years, with $5MM in assets, then in the top 10,20% of the time you are shooting to have hundreds of millions in assets.

Let me give you an example of my point: I ran the following comparison on Monte Carlo on Portfoliovisualizer.com, and real-world sequences on cfiresim.com:

$4M portfolio in a 60/40 split,$100K inflation-adjusted expense, 50 year period. I think even conservative Bogleheads would agree that is a pretty low withdrawal rate. Here is the comparison of the results (all numbers inflation adjusted):

Portfolio Visualizer results: 90th percentile result is $81M, and has a 98.4% chance of success (i.e. 1.6% of the sims failed). 10th percentile was $6.3M

cfiresim: Highest value seen: $61M. No failures at all: lowest number at any time is $1.6M. These extremes clearly would be more extreme than 90th and 10th percentile respectively (IMHO)

For me, this illustrates the point I was making: that MC sims will be more extreme than real world sequences.

My apologies if I missed your point in all this.

TxInjun

[ks289]

A typical suburban house with 2500 sqft and 4 bedrooms will have taxes around $12K in Bostom Metrowest area *WITH* good school system. I live about 40 miles from Boston and my taxes for that house are over $13K. The assessed price is around $700K. My RE portion had been always higher than PI since the day we purchased the house 20 years ago!

Interesting article on property tax rates in Massachusetts, with a cool interactive map.

https://www.bostonglobe.com/metro/regio ... story.html

Looks to me like a budget of $1k a month ($12,000 a year) is perfectly reasonable for large parts of that HCOL area.

Twenty-three of the 151 municipalities analyzed now have average tax bills that surpass $10,000, up from 20 communities last year. All but six — Manchester-by-the Sea ($12,208), Winchester ($11,946), Cohasset ($11,902), Wenham ($10,990), Westwood ($10,596), and Sharon ($10,378) — are in the western suburbs.

Not surprisingly, the highest average tax bills in fiscal 2017 (July 1, 2016, to June 30, 2017) are in towns where homes often command prices well over $1 million, including the three towns where the average single-family tax bill surpasses $15,000. Weston, where the average bill is $19,380 (the highest in the state), tops the list, followed by Sherborn ($15,425) and Lincoln ($15,185).

When you retire, you don't need to pay for a good school system anymore.

Edit: But of course, those are just average prices.. Property taxes are indeed a large budget item for many of the people on this board. I still say moving and/or downsizing is a legitimate option. You don't have to care about the commute or school districts anymore. You don't have to completely move out of the area and abandon family.

But obviously, my experience in the Mid-west is very different from the people on the coasts. I will defer to your judgement. My apologies if I sounded preachy. Just be aware there are options if you dislike your extremely high housing costs and property taxes.

I agree with you. We currently live in a high cost coastal area for numerous reasons (close to family, important amenities, diversity), but we have lived in the Midwest also (close to your neck of the woods I believe). I could easily imagine moving back to the Midwest if circumstances allowed for it, especially as our kids grow up. We were blown away by the low cost, convenience, and quality of housing, entertainment, culture, dining, travel, and most importantly sports. A few things have changed though with consolidations in the airline industry. No mountains also, but I’m getting more careful about skiing as I get older anyway.

[AlphaLess]

Thank you for the comment. However, I do believe that the point I was making would not be affected by the type of simulation.

If you are shooting for 99% chance of success over 45 years, with $5MM in assets, then in the top 10,20% of the time you are shooting to have hundreds of millions in assets.

Let me give you an example of my point: I ran the following comparison on Monte Carlo on Portfoliovisualizer.com, and real-world sequences on cfiresim.com:

$4M portfolio in a 60/40 split,$100K inflation-adjusted expense, 50 year period. I think even conservative Bogleheads would agree that is a pretty low withdrawal rate. Here is the comparison of the results (all numbers inflation adjusted):

Portfolio Visualizer results: 90th percentile result is $81M, and has a 98.4% chance of success (i.e. 1.6% of the sims failed). 10th percentile was $6.3M

cfiresim: Highest value seen: $61M. No failures at all: lowest number at any time is $1.6M. These extremes clearly would be more extreme than 90th and 10th percentile respectively (IMHO)

For me, this illustrates the point I was making: that MC sims will be more extreme than real world sequences.

My apologies if I missed your point in all this.

TxInjun

Thanks for sharing that.

To me, those simulations are very similar.

They probably measure the middle well.

They both do a poor job of measuring the extremes.

[HomerJ]

Most of the discussion on this thread assumes that people save while working until they hit their “magic number” then they retire. This may describe the process for many or even most people, but there are many people who retire at times not within their control. Their savings would not likely be at a desired level when they retire. These people will “make do” and have a lifestyle in retirement dependant on whatever savings they have, pensions if any, and SS. In most cases they will adapt just fine and have a reasonable retirement.

There is another group, which I belong to, who have also reversed the cause/effect relationship between saving and retirement lifestyle. For these people they save whatever they can, realize they can retire on these savings, then set their spending in retirement to match their savings/pensions/SS.

That second group is where most of the "2% withdrawal" people on this board come from. They do so well, and make so much, they don't NEED to pull 4% to meet all their needs and wants. They passed by the 4% stage without even noticing.

I see little reason to debate what a “satisfactory” or even “”necessary” level of spending should be in retirement. Each person will make their own spending decisions based on their personal spending utility and available resources. Many people get quite comfortable with their own choices and start to consider these as “optimal” for other people. To think otherwise may invite feelings of regret and is understandable. However, I think trying to judge others’ spending decisions is a mistake. Everybody is different. Many have very different means than the norm and spend accordingly.

I do understand what you are saying, but there is some actual objective reality involved too.

Someone who says "I cannot retire with less than $1 billion" could be considered crazy by most, but still correct inside his own context.

Someone who says "I don't think anyone can retire with less than $1 billion" is just wrong.

[SQRT]

Homer, I agree that in theory some people may be outside the realm of “normal reasonability” when it comes to deciding how much they need to retire. But we don’t seem to have any of these here, ie $billion. Within a reasonable band of wealth, I stand by my statement.

I see your point about the 2% withdrawal people. I guess I could have fallen in this group as I could easily have just retired on my pensions. But I was able to increase my spending into a more “normal” range of 3-4% of my portfolio. I always thought the 2%’ers either had relatively small portfolios and the WR wouldn’t matter much in dollar terms, or they just couldn’t find anything they wanted to spend more on.

[arf1410]

Personally, I think this thread would have been much more interesting, if folks expressed their desired amount as a function of salary, ie 20X, as opposed to a specific dollar amount...

[The Wizard]

Personally, I think this thread would have been much more interesting, if folks expressed their desired amount as a function of salary, ie 20X, as opposed to a specific dollar amount...

I prefer to look at it as an income ratio.
In other words, around 1.2 to 1.3 times my net take-home pay when working full-time.
I think I've achieved basically that...

[wrongfunds]

Either I live in a bubble where I see people retire with few hundred thousand dollars to their name or this thread is a demonstration that people know lot about investing and literally nothing about retiring ...

I hear ya! I'm often baffled by a lot of this kind of talk. I don't feel poor at all. Indeed, I feel quite wealthy and look around me and see that I have more to spend than most of my friends etc. Wealth is relative I suppose. When I semi-retire in 2019 my total accumulation of retirement and taxable accounts will be about 850K in 2018 dollars. This model assumes 2.5% inflation and an average 4% nominal return on my 850K and provides me an even living standard from age 61-100 of 85K per year in inflation-adjusted 2018 dollars, that is, 85K remaining to spend after I've paid federal and state taxes, Medicare B, property tax and insurance (I have not mortgage), and annual premium for health insurance continuation til I hit 65 and enroll in Medicare. I think not having a mortgage helps me a lot, and the extra credits by pushing SS off til 70 for both me and spouse is a huge bonus behind this 85,000 of annual discretionary spending. Granted, 850K is not the "few hundred thousand" you refer to KD2008, but it's not the millions described in the thread above either. I'm counting the total my wife and I have together. Again, I suppose many people would despair if they had to live on 85K of discretionary spending.

I must have missed this reply back in April. Can somebody explain how it is possible to get

that is, 85K remaining to spend [per year] after I've paid federal and state taxes, Medicare B, property tax and insurance (I have not mortgage), and annual premium for health insurance continuation til I hit 65 and enroll in Medicare.

from having $850K in assets.

[Snuffycuts99]

Either I live in a bubble where I see people retire with few hundred thousand dollars to their name or this thread is a demonstration that people know lot about investing and literally nothing about retiring ...

I hear ya! I'm often baffled by a lot of this kind of talk. I don't feel poor at all. Indeed, I feel quite wealthy and look around me and see that I have more to spend than most of my friends etc. Wealth is relative I suppose. When I semi-retire in 2019 my total accumulation of retirement and taxable accounts will be about 850K in 2018 dollars. This model assumes 2.5% inflation and an average 4% nominal return on my 850K and provides me an even living standard from age 61-100 of 85K per year in inflation-adjusted 2018 dollars, that is, 85K remaining to spend after I've paid federal and state taxes, Medicare B, property tax and insurance (I have not mortgage), and annual premium for health insurance continuation til I hit 65 and enroll in Medicare. I think not having a mortgage helps me a lot, and the extra credits by pushing SS off til 70 for both me and spouse is a huge bonus behind this 85,000 of annual discretionary spending. Granted, 850K is not the "few hundred thousand" you refer to KD2008, but it's not the millions described in the thread above either. I'm counting the total my wife and I have together. Again, I suppose many people would despair if they had to live on 85K of discretionary spending.

I must have missed this reply back in April. Can somebody explain how it is possible to get

that is, 85K remaining to spend [per year] after I've paid federal and state taxes, Medicare B, property tax and insurance (I have not mortgage), and annual premium for health insurance continuation til I hit 65 and enroll in Medicare.

from having $850K in assets.

Yea, I'm not following that. He'd be looking at over 2 mil to pull 85k per year. Pension not mentioned?

[brennok]

Low 40s and 5m today to retire

My SS will always be low and even their projections don't cover half my current salary if I delay to 70 and keep working. Based off some of the current calculators my SS would be worth a fifth of my current income if I retired today.

Currently though I don't have a set age and number in mind though maybe around 75x my current salary. I think it all depends on when I get to the point I can't take my job anymore which sometimes feels like this will be sooner rather than later.

[snowblinded]

We're retired late 60s.

I realized about 15 years ago that once the house was paid off, kids here on their own, and retirement accounts were funded, we could live on about 1/3 our original income. So it is not a matter of having a lot of money, but rather having decreased expenses that makes it possible to retire.

This is a great point. Retirement is as much or more about expenses as it is about assets.

All you 30-somethings thinking you're retiring in 20 years on $1 million, make sure your spreadsheet adjusts your expenses up to account for inflation (as well as health care expenses) and taxes against your expected annual gains. And don't mistake historical returns for "real" inflation-adjusted returns. Then plot out those increases until you're 80 or so and see if you're still solvent.

When I was in my twenties, $1M seemed enough. At 40, I thought $4M would do. At 50, it started looking like $10M to retire early, or keep working to hold health insurance to avoid catastrophe. But I'm the kind of person who needs a buffer...

[HEDGEFUNDIE]

We're retired late 60s.

I realized about 15 years ago that once the house was paid off, kids here on their own, and retirement accounts were funded, we could live on about 1/3 our original income. So it is not a matter of having a lot of money, but rather having decreased expenses that makes it possible to retire.

This is a great point. Retirement is as much or more about expenses as it is about assets.

All you 30-somethings thinking you're retiring in 20 years on $1 million, make sure your spreadsheet adjusts your expenses up to account for inflation (as well as health care expenses) and taxes against your expected annual gains. And don't mistake historical returns for "real" inflation-adjusted returns. Then plot out those increases until you're 80 or so and see if you're still solvent.

When I was in my twenties, $1M seemed enough. At 40, I thought $4M would do. At 50, it started looking like $10M to retire early, or keep working to hold health insurance to avoid catastrophe. But I'm the kind of person who needs a buffer...

Is insuring against the catastrophic case worth giving up additional years of your life to work that you’ll never get back? Assuming your job is not intrinsically fulfilling...

[wander]

For me, it is not about how much money I do have but how many times the expense I want in retirement. The number is 25 (It is just a normal goal).

[Momus]

We're retired late 60s.

I realized about 15 years ago that once the house was paid off, kids here on their own, and retirement accounts were funded, we could live on about 1/3 our original income. So it is not a matter of having a lot of money, but rather having decreased expenses that makes it possible to retire.

This is a great point. Retirement is as much or more about expenses as it is about assets.

All you 30-somethings thinking you're retiring in 20 years on $1 million, make sure your spreadsheet adjusts your expenses up to account for inflation (as well as health care expenses) and taxes against your expected annual gains. And don't mistake historical returns for "real" inflation-adjusted returns. Then plot out those increases until you're 80 or so and see if you're still solvent.

When I was in my twenties, $1M seemed enough. At 40, I thought $4M would do. At 50, it started looking like $10M to retire early, or keep working to hold health insurance to avoid catastrophe. But I'm the kind of person who needs a buffer...

Can't retire on $4M, 10M lmao!? Clearly you are spending way too much imo. Nice to be balling hard.

$3M in investment for me to RE.

[Lieutenant.Columbo]

in my twenties, $1M seemed enough. At 40, I thought $4M would do. At 50, it started looking like $10M to retire early, or keep working to hold health insurance to avoid catastrophe. But I'm the kind of person who needs a buffer...

Can't retire on $4M, 10M lmao!? Clearly you are spending way too much imo. Nice to be balling hard.

He's the kind of person who needs a buffer...

[mmcmonster]

How much money do you want to retire? Please also state your age. Also assume your pensions will be zero.

My wife and I are 47y/o. My kids are 11 and 14.

My goal is 5M *and* have my kids be financially independent (meaning out of college without loans, good careers, settled down, and married). Which means I've got a way to go, regardless of how much money I've got.

[jehovasfitness]

I am really surprised at how many say "just one more million"

It's the curse of being a boglehead.

For a board that seems to hate spending money it seems quite odd need so much when annual expenses should be quite low relatively speaking

[Grt2bOutdoors]

I am really surprised at how many say "just one more million"

It's the curse of being a boglehead.

For a board that seems to hate spending money it seems quite odd need so much when annual expenses should be quite low relatively speaking

It’s those unpredictable expenses that leads one to accumulate or want to accumulate more. Think healthcare and end of life nursing care. You think insurance picks up everything or is without substantial cost? You can purchase a lower benefit if you wish but given choice many will not opt for it.

[Hyperborea]

A typical suburban house with 2500 sqft and 4 bedrooms will have taxes around $12K in Bostom Metrowest area *WITH* good school system. I live about 40 miles from Boston and my taxes for that house are over $13K. The assessed price is around $700K. My RE portion had been always higher than PI since the day we purchased the house 20 years ago!

I live in SF Bay Area with an assessed value of ~$1.5mil and property taxes are around $1500/mo. $1k a month is a reasonable estimate in the vast majority of cases. Most of California pays less than $1k/mo, and it's only select parts of SF Bay area, LA, Santa Barbara, etc on the coastline that is much more.

For me $4-5mil + paid off house would be give a good lifestyle.

Most of those retiring in the Bay Area and other expensive parts of California will likely have been in their home for quite a number of years. With California's property tax system (Prop 13), tax is ~1.2% of the purchase price and only inflated at a maximum of 2% per year. So, those retirees will have a low yearly tax bill. If they want to move there are even ways to carry their cost basis to a new house. I'm out of the Bay Area as of earlier this year but my property tax on a 7 figure home was easily within the above assumed high expense amount.

For me the real killer cost to retiring early in the US (not just California or the Bay Area) is the health insurance.

Personally, I think this thread would have been much more interesting, if folks expressed their desired amount as a function of salary, ie 20X, as opposed to a specific dollar amount...

I prefer to look at it as an income ratio.
In other words, around 1.2 to 1.3 times my net take-home pay when working full-time.
I think I've achieved basically that...

That metric doesn't work so well if you have an upward trajectory on your income. My take home grew quite a lot over the last 20 years before retiring but my spending grew at a much lower pace. What would I compare against?

[The Wizard]

Personally, I think this thread would have been much more interesting, if folks expressed their desired amount as a function of salary, ie 20X, as opposed to a specific dollar amount...

I prefer to look at it as an income ratio.
In other words, around 1.2 to 1.3 times my net take-home pay when working full-time.
I think I've achieved basically that...

That metric doesn't work so well if you have an upward trajectory on your income. My take home grew quite a lot over the last 20 years before retiring but my spending grew at a much lower pace. What would I compare against?

Wfhen I said "net", I meant after max 403(b) contributions and $6500 Roth IRA contribution, among other things.
I didn't have enough additional income beyond that to put significant amounts into my very modest taxable account.
Or maybe I did but chose to spend it on riotous pre-retirement living instead.

Bottom line was that I wanted to be able to spend more discretionary money in retirement, so I needed a chunk more hitting my checking account each month...

[smitcat]

Either I live in a bubble where I see people retire with few hundred thousand dollars to their name or this thread is a demonstration that people know lot about investing and literally nothing about retiring ...

I hear ya! I'm often baffled by a lot of this kind of talk. I don't feel poor at all. Indeed, I feel quite wealthy and look around me and see that I have more to spend than most of my friends etc. Wealth is relative I suppose. When I semi-retire in 2019 my total accumulation of retirement and taxable accounts will be about 850K in 2018 dollars. This model assumes 2.5% inflation and an average 4% nominal return on my 850K and provides me an even living standard from age 61-100 of 85K per year in inflation-adjusted 2018 dollars, that is, 85K remaining to spend after I've paid federal and state taxes, Medicare B, property tax and insurance (I have not mortgage), and annual premium for health insurance continuation til I hit 65 and enroll in Medicare. I think not having a mortgage helps me a lot, and the extra credits by pushing SS off til 70 for both me and spouse is a huge bonus behind this 85,000 of annual discretionary spending. Granted, 850K is not the "few hundred thousand" you refer to KD2008, but it's not the millions described in the thread above either. I'm counting the total my wife and I have together. Again, I suppose many people would despair if they had to live on 85K of discretionary spending.

I must have missed this reply back in April. Can somebody explain how it is possible to get

that is, 85K remaining to spend [per year] after I've paid federal and state taxes, Medicare B, property tax and insurance (I have not mortgage), and annual premium for health insurance continuation til I hit 65 and enroll in Medicare.

from having $850K in assets.

Yea, I'm not following that. He'd be looking at over 2 mil to pull 85k per year. Pension not mentioned?

I am pretty sure he is filling in the difference with SS. Dependent upon their ages and work history this would be quite doable.

[AlphaLess]

I am really surprised at how many say "just one more million"

It's the curse of being a boglehead.

For a board that seems to hate spending money it seems quite odd need so much when annual expenses should be quite low relatively speaking

But the quality of needing little money also comes with the quality of being conservative.
Most people might punt on the problem of running out of money in 3,5,7, or 10% of the scenarios.
Bogleheads hate it. They want to know that they won't run out of money in ALL BUT 0.3% of the scenarios.

[bradshaw1965]

Think healthcare and end of life nursing care. You think insurance picks up everything or is without substantial cost? You can purchase a lower benefit if you wish but given choice many will not opt for it.

Having dealt with a little too much end of life care for parents and loved ones recently, money doesn't seem to be the real difference maker but direct human interaction with caregivers and the associated network makes a huge difference. I know there are really bad outcomes and situations but I'd put my chips in with a caring group of friends and family over the best and most expensive CCRC any day.