Is a million really the benchmark for retirement

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Calico
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Is a million really the benchmark for retirement

Post by Calico » Mon Aug 20, 2018 12:27 pm

Hello all. I see so many posts here from people with a million dollars (some by their 30s or even multi-millions before then) that I start to feel a bit sub-par and worry if I have enough. My estimates put me at $800k (assuming I keep saving at my current rate of and count on 3% a year until retire at 65). I can get to a million if I assume 5%, but I wonder if that's too aggressive to consider as I plan to get more bonds as I age.

It doesn't help my worry that that seems to be some sort of benchmark I read about in financial articles as well: you need a million to retire. And, on top of that, the women in my family live long into their 90s on average and I seem to be as healthy as any of them were at my age. Yikes!

Is having a million before retirement really the norm? I mean, I look at my past and I did most things, "right" including saving early and often, right from when I was out of college, but I am just not going to get there at my current pace. I can see where I did two things "wrong." The first is I was buying into mutual funds with high costs until a few year back. And I let myself get talked in to an annuity. All this before I knew about Boglehead strategy. But even with that, I did pretty good with investment--just not the best.

I also wonder, when people have million, is it a two income household? If so, perhaps I am really not too far off as I am only one person. If I were part of a couple and whatever man in my life was earning the same amount, we would have well more than $1million by retirement because as a hypothetical couple, we could save more of the second income since some expenses such as the mortgage wouldn't go up (other expenses would of course).

gips
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Re: Is a million really the benchmark for retirement

Post by gips » Mon Aug 20, 2018 12:30 pm

A million, or any amount, isn't a meaningful litmus test. Instead, look at savings/retirement income through the lenses of anticipated expenses, life expectancy, and portfolio growth.

try a tool like i-orp to see if you've saved enough.
Last edited by gips on Mon Aug 20, 2018 12:35 pm, edited 1 time in total.

WhiteMaxima
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Re: Is a million really the benchmark for retirement

Post by WhiteMaxima » Mon Aug 20, 2018 12:34 pm

1 mil doesn't buy you a lot recent years. Inflation eats purchasing power. That's why we have to invest more aggressive to try to beat the inflation.

jehovasfitness
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Re: Is a million really the benchmark for retirement

Post by jehovasfitness » Mon Aug 20, 2018 12:36 pm

1. the #s on this site are skewed given the subject of the site

2. many people retire with little to no savings, and rely on SS and family... not saying this is optimal or even what one should shoot for

PVW
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Re: Is a million really the benchmark for retirement

Post by PVW » Mon Aug 20, 2018 12:39 pm

It's all relative. You should look at your individual retirement spending goals and then decide if $1 million is enough. For many people, $1 million in savings plus social security benefits would provide a comfortable retirement. In rough numbers, you could expect to spend about $40,000 per year from your $1 million retirement fund and add $20,000-$30,000 per year in social security benefits. That puts you above the median household income in the US.

chevca
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Re: Is a million really the benchmark for retirement

Post by chevca » Mon Aug 20, 2018 12:40 pm

It would be plenty for me, but DW and I probably won't get there. We also have pensions and social security to add in though. We also have average to low expenses. It's really such a case by case thing. There is no "benchmark" that applies to everyone, IMO.

flyingaway
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Re: Is a million really the benchmark for retirement

Post by flyingaway » Mon Aug 20, 2018 12:40 pm

$1MM, plus $50,000 per year from the blog work.

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HomerJ
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Re: Is a million really the benchmark for retirement

Post by HomerJ » Mon Aug 20, 2018 12:46 pm

What matters is your expenses in retirement.

If you plan to spend $100k a year, and have no pension, and $20k coming from Social Security, $1 million will not be enough.

If you plan to spend $50k a year, have a $40k pension, and $20k coming from Social Security, you don't need to save a cent.


Start with your planed expenses. Subtract what you will get from Social Security and/or pensions. Whatever is left multiply by 25x. That's how much you need.

If you want to go the other direction, since you think you'll have $800,000... Divide by 25, and that's $32,000 a year. If you're also getting $25,000 a year from Social Security at 65, that's $57,000 a year you can use.

Is that enough to maintain your planned retirement lifestyle?

The reason people say $1 million is because it's a nice round number, and it generates $40,000 a year. Which, along with SS, is a very nice lifestyle in most of the country.

But one could certainly have a very nice life with less, especially if the house is paid off. The vast majority of people retire with far less than $1 million.
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WhiteMaxima
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Re: Is a million really the benchmark for retirement

Post by WhiteMaxima » Mon Aug 20, 2018 12:57 pm

you can set 1 mil as a milestone target. with 1 mil and proper investment to beat the inflation assuming you withdraw 3% , it would last 30 years of your retirement. Assuming you would also get 20k from SS, so the total $50k would get you some sort of "decent" retirement cost covered. But would think 2 mil for a couple plus 2 x 20k SS income would be a decent retirement with 100k annual expense covered. I would still believe 100% investment in equity to beat the inflation is the key towards a successful retirement.

jalbert
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Re: Is a million really the benchmark for retirement

Post by jalbert » Mon Aug 20, 2018 1:06 pm

Most of the work on how much you can sustainably withdraw from a nest egg concludes around 4% the first year, and then correcting for inflation thereafter. With real interest rates very low, many people believe 4% is a bit optimistic, and maybe 3% or 3.3% is more appropriate.

If you have 800K when you retire, then the part of your expenses not met by social security or any pensions should not exceed $24K-$32K depending on how conservative you want to be in your withdrawal estimates. If the savings is in a tax-deferred IRA or 401K, be sure to include taxes on withdrawals in your expense calculation.

Delaying SS to age 70 even if you retire before then is a very cost effective way to get the equivalent of buying an annuity, likely a big win if you have good reason to expect to live a long time.
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soccerrules
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Re: Is a million really the benchmark for retirement

Post by soccerrules » Mon Aug 20, 2018 1:07 pm

calico-
+1 to the other comments so far. It is what YOU need is what matters, not anyone else.

Do the math suggested from previous posts. If it looks close or you are behind a little, you either decrease your expenses (now and projected for retirement) or increase your future income(now and savings)

Best of luck
Don't let your outflow exceed your income or your upkeep will be your downfall.

LiterallyIronic
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Re: Is a million really the benchmark for retirement

Post by LiterallyIronic » Mon Aug 20, 2018 1:11 pm

The only "benchmark" per se is to save 25 times your annual expenses (an even this is contested if that 4% withdrawal rate is too high). If your annual expenses are $40,000 or more, then yeah, you'll need $1 million (assuming no social security), at least. If your annual expenses are $32,000, then you'll only need that $800,000 you speak of.

Don't feel "a bit sub-par." There are a lot of people on this board with high incomes, high saving rates, and high-valued portfolios. Spoiler alert: I am not one of them. I'm not going to even hit $800,000, let alone $1 million.

HEDGEFUNDIE
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Re: Is a million really the benchmark for retirement

Post by HEDGEFUNDIE » Mon Aug 20, 2018 1:12 pm

$1M at age 65 buys you an annuity that pays $60k/yr for life.

Sounds like a good rule of thumb to me.

H-Town
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Re: Is a million really the benchmark for retirement

Post by H-Town » Mon Aug 20, 2018 1:17 pm

Calico wrote:
Mon Aug 20, 2018 12:27 pm
Hello all. I see so many posts here from people with a million dollars (some by their 30s or even multi-millions before then) that I start to feel a bit sub-par and worry if I have enough. My estimates put me at $800k (assuming I keep saving at my current rate of and count on 3% a year until retire at 65). I can get to a million if I assume 5%, but I wonder if that's too aggressive to consider as I plan to get more bonds as I age.

It doesn't help my worry that that seems to be some sort of benchmark I read about in financial articles as well: you need a million to retire. And, on top of that, the women in my family live long into their 90s on average and I seem to be as healthy as any of them were at my age. Yikes!

Is having a million before retirement really the norm? I mean, I look at my past and I did most things, "right" including saving early and often, right from when I was out of college, but I am just not going to get there at my current pace. I can see where I did two things "wrong." The first is I was buying into mutual funds with high costs until a few year back. And I let myself get talked in to an annuity. All this before I knew about Boglehead strategy. But even with that, I did pretty good with investment--just not the best.

I also wonder, when people have million, is it a two income household? If so, perhaps I am really not too far off as I am only one person. If I were part of a couple and whatever man in my life was earning the same amount, we would have well more than $1million by retirement because as a hypothetical couple, we could save more of the second income since some expenses such as the mortgage wouldn't go up (other expenses would of course).
$1M is not enough, at least not for me. $1M times 4% gets you 40k a year. When I plan for retirement, I immediately change that figure. I start with my annual expense 50k plus 100k for healthcare and discretionary expense. I got to 150k per year. Divide 150k by 4% gets me 3,750,000. So I round up to 4 million as a goal for retirement (probably late 40, early 50).

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camillus
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Re: Is a million really the benchmark for retirement

Post by camillus » Mon Aug 20, 2018 1:19 pm

:oops: I wrote a long post but somehow deleted it.

I'll just add - you will be fine, OP!

Set up an online account with social security to see what you can expect: https://www.ssa.gov/myaccount/

Some other things:
1) A paid off house would be great
2) Part time work might even be fun
3) If you want to vacation, try credit card / travel hacking for free points for flights and hotel stays
4) A *good* annuity might provide some peace of mind

Enjoy your career's victory lap! :happy
Last edited by camillus on Mon Aug 20, 2018 4:15 pm, edited 3 times in total.

deltaneutral83
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Re: Is a million really the benchmark for retirement

Post by deltaneutral83 » Mon Aug 20, 2018 1:20 pm

Pensions and where you live are some of the other variables that matter a lot I would think. Pensions aside, a million saved by age 65 in LCOL with $40k in annual expenses with social security is risking very little. A high earner with $4M net worth at age 58 and $250k in expenses and 7 year gap to medicare/SS in HCOL is substantially more risk however to the common person's eye the latter seems to be "wealthy."

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lthenderson
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Re: Is a million really the benchmark for retirement

Post by lthenderson » Mon Aug 20, 2018 1:49 pm

Calico wrote:
Mon Aug 20, 2018 12:27 pm
Is having a million before retirement really the norm?
For retiring at age 65, having 25 times your annual expenses is the norm. If your annual expenses are less than $32,000, $800,000 can be your magic number to retire at age 65.

ResearchMed
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Re: Is a million really the benchmark for retirement

Post by ResearchMed » Mon Aug 20, 2018 1:57 pm

HomerJ wrote:
Mon Aug 20, 2018 12:46 pm
What matters is your expenses in retirement.

If you plan to spend $100k a year, and have no pension, and $20k coming from Social Security, $1 million will not be enough.

If you plan to spend $50k a year, have a $40k pension, and $20k coming from Social Security, you don't need to save a cent.


Start with your planed expenses. Subtract what you will get from Social Security and/or pensions. Whatever is left multiply by 25x. That's how much you need.

If you want to go the other direction, since you think you'll have $800,000... Divide by 25, and that's $32,000 a year. If you're also getting $25,000 a year from Social Security at 65, that's $57,000 a year you can use.

Is that enough to maintain your planned retirement lifestyle?

The reason people say $1 million is because it's a nice round number, and it generates $40,000 a year. Which, along with SS, is a very nice lifestyle in most of the country.

But one could certainly have a very nice life with less, especially if the house is paid off. The vast majority of people retire with far less than $1 million.
This ^^

What (approximately) will YOUR retirement costs be, at a minimum, or perhaps a bit "extra"?
It also depends upon where you live, the cost of living in the area, of course.

But some who start with a much higher income want to keep some similar lifestyle, and for them, 1M isn't nearly enough.
For others, much less than 1M would be quite fine.

Don't forget to include SS and pensions. (If spouse doesn't work, there will still be SS from your work history, so don't forget that if applicable.)

What you need that "pot" for is to provide the ongoing income needed beyond SS/pensions/etc.

RM
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DaftInvestor
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Re: Is a million really the benchmark for retirement

Post by DaftInvestor » Mon Aug 20, 2018 3:16 pm

Focus on your expenses and goals. If you get to $800K and withdrawl at 4% you will be getting $32,000 a year - is this enough for you IN ADDITION TO SOCIAL SECURITY to cover all your expenses? If you don't know what you will be getting for social security then you should check. If you don't know your yearly expenses you should figure them out.
Do you have a pension or any other post-retirement income?

Another key thing to remember is the higher your income, the lower the percentage/amount of that income that will be replaced by social security. So those bogleheads on this site with very high incomes are typically trying to save multi-millions in retirement so as not to sacrifice their high-income lifestyle when they retire.

JoeRetire
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Re: Is a million really the benchmark for retirement

Post by JoeRetire » Mon Aug 20, 2018 3:24 pm

Calico wrote:
Mon Aug 20, 2018 12:27 pm
Hello all. I see so many posts here from people with a million dollars (some by their 30s or even multi-millions before then) that I start to feel a bit sub-par and worry if I have enough.
Stop worrying.

Nobody needs $1M. You only need "enough". And "enough" varies widely from person to person.

Begin thinking about what "enough" means for you. Start by looking at your current level of expenses, then project that forward to what you expect to spend while in retirement. Remember to consider any other income streams (pensions, social security, etc) that will last through retirement. That will lead you to your personal "enough" amount.

And if you are on track to achieving that, then you are doing just fine.

bradshaw1965
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Re: Is a million really the benchmark for retirement

Post by bradshaw1965 » Mon Aug 20, 2018 3:25 pm

WhiteMaxima wrote:
Mon Aug 20, 2018 12:57 pm
you can set 1 mil as a milestone target. with 1 mil and proper investment to beat the inflation assuming you withdraw 3% , it would last 30 years of your retirement. Assuming you would also get 20k from SS, so the total $50k would get you some sort of "decent" retirement cost covered. But would think 2 mil for a couple plus 2 x 20k SS income would be a decent retirement with 100k annual expense covered. I would still believe 100% investment in equity to beat the inflation is the key towards a successful retirement.
My wife and I have never spent anywhere close to $100k over many years in metro Atlanta and I think we have a really nice lifestyle.

bradshaw1965
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Re: Is a million really the benchmark for retirement

Post by bradshaw1965 » Mon Aug 20, 2018 3:37 pm

thangngo wrote:
Mon Aug 20, 2018 1:17 pm
Calico wrote:
Mon Aug 20, 2018 12:27 pm
Hello all. I see so many posts here from people with a million dollars (some by their 30s or even multi-millions before then) that I start to feel a bit sub-par and worry if I have enough. My estimates put me at $800k (assuming I keep saving at my current rate of and count on 3% a year until retire at 65). I can get to a million if I assume 5%, but I wonder if that's too aggressive to consider as I plan to get more bonds as I age.

It doesn't help my worry that that seems to be some sort of benchmark I read about in financial articles as well: you need a million to retire. And, on top of that, the women in my family live long into their 90s on average and I seem to be as healthy as any of them were at my age. Yikes!

Is having a million before retirement really the norm? I mean, I look at my past and I did most things, "right" including saving early and often, right from when I was out of college, but I am just not going to get there at my current pace. I can see where I did two things "wrong." The first is I was buying into mutual funds with high costs until a few year back. And I let myself get talked in to an annuity. All this before I knew about Boglehead strategy. But even with that, I did pretty good with investment--just not the best.

I also wonder, when people have million, is it a two income household? If so, perhaps I am really not too far off as I am only one person. If I were part of a couple and whatever man in my life was earning the same amount, we would have well more than $1million by retirement because as a hypothetical couple, we could save more of the second income since some expenses such as the mortgage wouldn't go up (other expenses would of course).
$1M is not enough, at least not for me. $1M times 4% gets you 40k a year. When I plan for retirement, I immediately change that figure. I start with my annual expense 50k plus 100k for healthcare and discretionary expense. I got to 150k per year. Divide 150k by 4% gets me 3,750,000. So I round up to 4 million as a goal for retirement (probably late 40, early 50).
This is the fundamental disconnect with Bogleheads, a really early retirement and budgeting for healthcare that I can only assume significant breakthroughs in medical technology or really high discretionary expenses is a lot different then just trying to get your head around what a nice comfortable retirement will cost.

A million bucks in a low to moderate cost area with 2 social security payments assuming retirement at 62 with health care bridge funding to get to Medicare is going to be pretty pleasant for most folks.

If you end up lower, it's going to take some solving, especially with health care being so volatile at the moment but that's what Bogleheads forum should be all about, creative problem solving for peoples actual lives.

WhyNotUs
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Re: Is a million really the benchmark for retirement

Post by WhyNotUs » Mon Aug 20, 2018 3:58 pm

The advice about focusing on expenses and accounting for SS and pensions is sound. Maybe 15% of households have saved $1M at 65. 5% had more than $3M in 2013. Median was about $200k.

Keep these things in mind when reading comments from posters here. More focused on investment than most households.
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fortfun
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Re: Is a million really the benchmark for retirement

Post by fortfun » Mon Aug 20, 2018 4:10 pm

Mr Money Mustache has a slightly different set of customers than Bogleheads. You might read through some of his info. I think people there generally retire with a bit less and a bit earlier.

https://www.mrmoneymustache.com/

furikake
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Re: Is a million really the benchmark for retirement

Post by furikake » Mon Aug 20, 2018 4:20 pm

fortfun wrote:
Mon Aug 20, 2018 4:10 pm
Mr Money Mustache has a slightly different set of customers than Bogleheads. You might read through some of his info. I think people there generally retire with a bit less and a bit earlier.

https://www.mrmoneymustache.com/
Also note that they don't really retire retire, they still work, like part time, or whatever they want, they just don't call it work. So some choose to work forever til hey die, but they are ok living that way, so they consider themselves retired also.

passiveTiger
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Re: Is a million really the benchmark for retirement

Post by passiveTiger » Mon Aug 20, 2018 4:21 pm

Calico wrote:
Mon Aug 20, 2018 12:27 pm
Hello all. I see so many posts here from people with a million dollars (some by their 30s or even multi-millions before then) that I start to feel a bit sub-par and worry if I have enough. My estimates put me at $800k (assuming I keep saving at my current rate of and count on 3% a year until retire at 65). I can get to a million if I assume 5%, but I wonder if that's too aggressive to consider as I plan to get more bonds as I age.

It doesn't help my worry that that seems to be some sort of benchmark I read about in financial articles as well: you need a million to retire. And, on top of that, the women in my family live long into their 90s on average and I seem to be as healthy as any of them were at my age. Yikes!

Is having a million before retirement really the norm? I mean, I look at my past and I did most things, "right" including saving early and often, right from when I was out of college, but I am just not going to get there at my current pace. I can see where I did two things "wrong." The first is I was buying into mutual funds with high costs until a few year back. And I let myself get talked in to an annuity. All this before I knew about Boglehead strategy. But even with that, I did pretty good with investment--just not the best.

I also wonder, when people have million, is it a two income household? If so, perhaps I am really not too far off as I am only one person. If I were part of a couple and whatever man in my life was earning the same amount, we would have well more than $1million by retirement because as a hypothetical couple, we could save more of the second income since some expenses such as the mortgage wouldn't go up (other expenses would of course).
Here is one measurement suggestion: 10x salary by age 67.

https://www.fidelity.com/viewpoints/ret ... -to-retire

Lots of assumptions in that calculation are stated in the footnotes at the bottom of that page. For example, it assumes “a 15% savings rate, a 1.5% constant real wage growth, a retirement age of 67, and a planning age through 92. The replacement annual income target is defined as 45% of preretirement annual income and assumes no pension income.”

hoops777
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Re: Is a million really the benchmark for retirement

Post by hoops777 » Mon Aug 20, 2018 4:36 pm

What other people need or do is meaningless.Focus on yourself and your unique circumstances.I see people post here all of the time needing 3 or 4 million and others who have there expenses covered by SS.The majority of posters on this forum are obviously not the typical American in terms of wealth and financial knowledge.There is also a big difference between what you need and want.A good example is some of the threads discussing how much is spent on food.I see couples saying they spend over 1500 per month vs. families of 4 spending 300.
With that being said,I would add at least 10 pct to what ever number you come up with.
K.I.S.S........so easy to say so difficult to do.

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Re: Is a million really the benchmark for retirement

Post by arcticpineapplecorp. » Mon Aug 20, 2018 5:05 pm

HEDGEFUNDIE wrote:
Mon Aug 20, 2018 1:12 pm
$1M at age 65 buys you an annuity that pays $60k/yr for life.

Sounds like a good rule of thumb to me.
unless you have a large expense that requires a lump sum that $5000 a month from the annuity won't cover.

Also, be aware of your state guidelines for annuity protection in the event of bankruptcy of the insurer:

http://retirementplanningmadeeasy.com/w ... -bankrupt/

While no state offers less than $100,000 protection and NY offers up to $500,000 if the average in your state is $250,000 you would need to purchase 4 annuities with 4 separate companies to annuitize $1,000,000 if you want adequate protection.
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

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Watty
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Re: Is a million really the benchmark for retirement

Post by Watty » Mon Aug 20, 2018 5:25 pm

WhiteMaxima wrote:
Mon Aug 20, 2018 12:34 pm
1 mil doesn't buy you a lot recent years. Inflation eats purchasing power. That's why we have to invest more aggressive to try to beat the inflation.
It depends on what you are at.

The median household income is about $59K and in most of the country that is enough to live a modest but adequate lifestyle.

In most of the country you can also get modest house in a decent area for $250K, and often much less.

In a reasonably priced area with a paid off house, maybe $24,000 a year in Social Security and a 4% safe withdraw on a good size next egg that will be enough to live a well above average lifestyle.

Tdubs
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Re: Is a million really the benchmark for retirement

Post by Tdubs » Mon Aug 20, 2018 5:35 pm

Lots of smart, successful people on Bogleheads. I'm always impressed and thankful for those willing to teach, but I am amused by the "Is $2 million enough for retirement?" threads.

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tennisplyr
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Re: Is a million really the benchmark for retirement

Post by tennisplyr » Mon Aug 20, 2018 5:55 pm

It's a nice "marketing" number. Most Americans have no where near that (like me). Relax, you'll figure what you personally need and do it.
Those who move forward with a happy spirit will find that things always work out.

DarthSage
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Re: Is a million really the benchmark for retirement

Post by DarthSage » Mon Aug 20, 2018 6:09 pm

I agree with the PP's who said you need to look at you--your expenses, your retirement needs, etc.

I just wanted to add that DH and I achieved a $1M net worth, and I've been a SAHM for 23 years. Just like there's no one perfect "number", there's no one perfect path.

WhiteMaxima
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Re: Is a million really the benchmark for retirement

Post by WhiteMaxima » Mon Aug 20, 2018 6:45 pm

bradshaw1965 wrote:
Mon Aug 20, 2018 3:25 pm
WhiteMaxima wrote:
Mon Aug 20, 2018 12:57 pm
you can set 1 mil as a milestone target. with 1 mil and proper investment to beat the inflation assuming you withdraw 3% , it would last 30 years of your retirement. Assuming you would also get 20k from SS, so the total $50k would get you some sort of "decent" retirement cost covered. But would think 2 mil for a couple plus 2 x 20k SS income would be a decent retirement with 100k annual expense covered. I would still believe 100% investment in equity to beat the inflation is the key towards a successful retirement.
My wife and I have never spent anywhere close to $100k over many years in metro Atlanta and I think we have a really nice lifestyle.
100k is a must to have a decent living for two people even if in LCOA.

Let's say
Rent $2000 a month (or $1000 mortgage, 500 property tax + 500 insurance and repair)
Food $1000 a mohth (include eat out)
Transportation (auto payment, gas , insurance) $500
Medical expense $1000 (insurance, copay, prescription)
Travel $500 (airfare, hotel)
Must have $250 (telephone, cable, internet)
Utility $250 (water sewer, electricity gas, garbage)
Clothes $250
Gift $250
Tax $500
Misc item (gift, donation) $500

Total $7000/month

Total Year: $84000

Not far from $100k a year. This is a very typical expense a retired couple might need.

Ok let's say you can live at a very thrifty life style. A 60k USD is barely minimum.

Let say you have $30k from SS (for a couple), you still need $30k to cover the gap. 1 mil at 3% withdraw rate would still be required.

InMyDreams
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Re: Is a million really the benchmark for retirement

Post by InMyDreams » Mon Aug 20, 2018 6:57 pm

furikake wrote:
Mon Aug 20, 2018 4:20 pm
Also note that they don't really retire retire, they still work, like part time, or whatever they want, they just don't call it work. So some choose to work forever til hey die,
You don't know my neighbor. Says she will consider going back to work for healthcare insurance if the ACA falls apart. Otherwise, she thinks she's got enough and hasn't worked for 1.5 years. Latter forties, I think.
Last edited by InMyDreams on Mon Aug 20, 2018 7:11 pm, edited 1 time in total.

bradshaw1965
Posts: 715
Joined: Tue Jul 31, 2007 9:36 pm

Re: Is a million really the benchmark for retirement

Post by bradshaw1965 » Mon Aug 20, 2018 7:05 pm

WhiteMaxima wrote:
Mon Aug 20, 2018 6:45 pm
bradshaw1965 wrote:
Mon Aug 20, 2018 3:25 pm
WhiteMaxima wrote:
Mon Aug 20, 2018 12:57 pm
you can set 1 mil as a milestone target. with 1 mil and proper investment to beat the inflation assuming you withdraw 3% , it would last 30 years of your retirement. Assuming you would also get 20k from SS, so the total $50k would get you some sort of "decent" retirement cost covered. But would think 2 mil for a couple plus 2 x 20k SS income would be a decent retirement with 100k annual expense covered. I would still believe 100% investment in equity to beat the inflation is the key towards a successful retirement.
My wife and I have never spent anywhere close to $100k over many years in metro Atlanta and I think we have a really nice lifestyle.
100k is a must to have a decent living for two people even if in LCOA.

Let's say
Rent $2000 a month (or $1000 mortgage, 500 property tax + 500 insurance and repair)
Food $1000 a mohth (include eat out)
Transportation (auto payment, gas , insurance) $500
Medical expense $1000 (insurance, copay, prescription)
Travel $500 (airfare, hotel)
Must have $250 (telephone, cable, internet)
Utility $250 (water sewer, electricity gas, garbage)
Clothes $250
Gift $250
Tax $500
Misc item (gift, donation) $500

Total $7000/month

Total Year: $84000

Not far from $100k a year. This is a very typical expense a retired couple might need.

Ok let's say you can live at a very thrifty life style. A 60k USD is barely minimum.

Let say you have $30k from SS (for a couple), you still need $30k to cover the gap. 1 mil at 3% withdraw rate would still be required.
The average spend for a retiree household is $40,938

https://money.usnews.com/money/retireme ... ment-dream

The average spend for a US pre-retirement household in 2014 is $53,495

https://www.fool.com/retirement/general ... -like.aspx

I spend maybe $10k more in metro Atlanta, want for nothing and save a bunch and will pay off the mortgage by retirement. I get it that people have lifestyles they want to maintain but there have been a lot of threads of people plainly asking if they are going to be ok with a modest retirement and I just don't see the point of posting on a thread that, well actually, I'm going to need $4 million.

sambb
Posts: 2162
Joined: Sun Mar 10, 2013 3:31 pm

Re: Is a million really the benchmark for retirement

Post by sambb » Mon Aug 20, 2018 7:09 pm

1M = ~40k a year in expenses
Unknown healthcare expenses are a confounder, along with unknown social security and unknown markets, and unknown inflation
I'm not sure im comfy with 1M, but many are, and I wish them good luck. I choose to put in a little more work to get little more salary over the long term. I could be wrong, and my heirs will benefit then.

jalbert
Posts: 3814
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Re: Is a million really the benchmark for retirement

Post by jalbert » Mon Aug 20, 2018 7:11 pm

sambb wrote:
Mon Aug 20, 2018 7:09 pm
1M = ~40k a year in expenses
~$40K above and beyond what is covered by SS.
Risk is not a guarantor of return.

Calico
Posts: 157
Joined: Thu Jan 01, 2015 5:45 pm

Re: Is a million really the benchmark for retirement

Post by Calico » Mon Aug 20, 2018 7:25 pm

So much advice in this thread... Thank you all!

I currently spend $68k a year. However, $23k of that is my mortgage. I currently live in a high cost of living area and plan to move after my daughter goes off to college. When I move, I plan to buy another house in a low cost of living area (back home) for cash. If I sold my house today, I could do it (I've been watching sale prices in my current neighborhood and where I want to live in four years).

Take away the mortgage and puts my expenses at $45k a year (but that is still in a high cost of living area and that also includes having a teenager living with me and and me paying all her expenses). I have to check social security later (can't log in right now). I want to say last time I checked it was going to be about $17k a year. So based on what others said here. With $800k, I pull out $32k annually from my retirement investments plus $17k social security is $49k a year. Maybe I will be okay.

My fear is outliving my money. Like I said, women on both sides of my family live long lives (into their late 90s). They all had/have pensions to fall back on. I never had an employer with a pension. And I am healthy as any of them ever were. And my frustration is I've always saved as much as I could (I am current saving $18k a year for retirement. I also save for other things, but that $18k is retirement alone and doesn't include my employer matching on my 401k. With that, I am at $22,200k a year towards retirement).

Someone mentioned the idea of working during retirement. I actually want to do that, part time. I believe in use it or lose it and think it will be fun to work somehow that includes a hobby of mine (even if it's just working in something like being a clerk in a garden center). When my grandparents worked into old age, they stayed mentally sharp and healthy until their health gave out. So I see it as a health benefit with a side benefit of money. But I can't count on it since I might not always work.
Last edited by Calico on Mon Aug 20, 2018 7:29 pm, edited 1 time in total.

tacticalretreat
Posts: 8
Joined: Mon Apr 02, 2018 9:58 am

Re: Is a million really the benchmark for retirement

Post by tacticalretreat » Mon Aug 20, 2018 7:27 pm

WhiteMaxima wrote:
Mon Aug 20, 2018 6:45 pm
bradshaw1965 wrote:
Mon Aug 20, 2018 3:25 pm
WhiteMaxima wrote:
Mon Aug 20, 2018 12:57 pm
you can set 1 mil as a milestone target. with 1 mil and proper investment to beat the inflation assuming you withdraw 3% , it would last 30 years of your retirement. Assuming you would also get 20k from SS, so the total $50k would get you some sort of "decent" retirement cost covered. But would think 2 mil for a couple plus 2 x 20k SS income would be a decent retirement with 100k annual expense covered. I would still believe 100% investment in equity to beat the inflation is the key towards a successful retirement.
My wife and I have never spent anywhere close to $100k over many years in metro Atlanta and I think we have a really nice lifestyle.
100k is a must to have a decent living for two people even if in LCOA.

Let's say
Rent $2000 a month (or $1000 mortgage, 500 property tax + 500 insurance and repair)
Food $1000 a mohth (include eat out)
Transportation (auto payment, gas , insurance) $500
Medical expense $1000 (insurance, copay, prescription)
Travel $500 (airfare, hotel)
Must have $250 (telephone, cable, internet)
Utility $250 (water sewer, electricity gas, garbage)
Clothes $250
Gift $250
Tax $500
Misc item (gift, donation) $500

Total $7000/month

Total Year: $84000

Not far from $100k a year. This is a very typical expense a retired couple might need.

Ok let's say you can live at a very thrifty life style. A 60k USD is barely minimum.

Let say you have $30k from SS (for a couple), you still need $30k to cover the gap. 1 mil at 3% withdraw rate would still be required.
Posts like this crack me up. My family of three lives on about $36,000 per year (take home). That is with a mortgage on a waterfront house in Florida, flood insurance, property tax, a boat, eating out whenever we feel like it (which admittedly isn't usually that often), etc.

We have certainly made and spent more in the past but then we figured out what we actually needed vs what we thought we needed. Now my wife stays home with the kiddo and I work a lot less than I used to.

Anyway, just wanted to give a different perspective.

You have to figure out what works for you and how much you want to be able to spend per year, then work to save at least 25x that number.

User avatar
camillus
Posts: 526
Joined: Thu Feb 28, 2013 9:55 pm

Re: Is a million really the benchmark for retirement

Post by camillus » Mon Aug 20, 2018 7:32 pm

My family of four can live quite well on $4-5k a month.

tacticalretreat
Posts: 8
Joined: Mon Apr 02, 2018 9:58 am

Re: Is a million really the benchmark for retirement

Post by tacticalretreat » Mon Aug 20, 2018 7:33 pm

Calico wrote:
Mon Aug 20, 2018 7:25 pm
So much advice in this thread... Thank you all!

I currently spend $68k a year. However, $23k of that is my mortgage. I currently live in a high cost of living area and plan to move after my daughter goes off to college. When I move, I plan to buy another house in a low cost of living area (back home) for cash. If I sold my house today, I could do it (I've been watching sale prices in my current neighborhood and where I want to live in four years).

Take away the mortgage and puts my expenses at $45k a year (but that is still in a high cost of living area and that also includes having a teenager living with me and and me paying all her expenses). I have to check social security later (can't log in right now). I want to say last time I checked it was going to be about $17k a year. So based on what others said here. With $800k, I pull out $32k annually from my retirement investments plus $17k social security is $49k a year. Maybe I will be okay.

My fear is outliving my money. Like I said, women on both sides of my family live long lives (into their late 90s). They all had/have pensions to fall back on. I never had an employer with a pension. And I am healthy as any of them ever were. And my frustration is I've always saved as much as I could (I am current saving $18k a year for retirement. I also save for other things, but that $18k is retirement alone and doesn't include my employer matching on my 401k. With that, I am at $22,200k a year towards retirement).

Someone mentioned the idea of working during retirement. I actually want to do that, part time. I believe in use it or lose it and think it will be fun to work somehow that includes a hobby of mine (even if it's just working in something like being a clerk in a garden center). When my grandparents worked into old age, they stayed mentally sharp and healthy until their health gave out. So I see it as a health benefit with a side benefit of money. But I can't count on it since I might not always work.
I think you have a great plan and are on the right track. Working part time in retirement doing something you love is a huge factor both financially and for quality of life. I would just caution to not plan on making money during retirement (hope for the best, plan for the worst).

Calico
Posts: 157
Joined: Thu Jan 01, 2015 5:45 pm

Re: Is a million really the benchmark for retirement

Post by Calico » Mon Aug 20, 2018 7:39 pm

tacticalretreat wrote:
Mon Aug 20, 2018 7:33 pm


I think you have a great plan and are on the right track. Working part time in retirement doing something you love is a huge factor both financially and for quality of life. I would just caution to not plan on making money during retirement (hope for the best, plan for the worst).
My idea is to treat it as "fun money." I figure, if I am still healthy enough to work, I will be healthy enough to travel. I will just save any part time job money for trips. When I get too old to work, even part time, my guess is I won't be up for long trips anymore either.

HEDGEFUNDIE
Posts: 980
Joined: Sun Oct 22, 2017 2:06 pm

Re: Is a million really the benchmark for retirement

Post by HEDGEFUNDIE » Mon Aug 20, 2018 7:40 pm

arcticpineapplecorp. wrote:
Mon Aug 20, 2018 5:05 pm
HEDGEFUNDIE wrote:
Mon Aug 20, 2018 1:12 pm
$1M at age 65 buys you an annuity that pays $60k/yr for life.

Sounds like a good rule of thumb to me.
unless you have a large expense that requires a lump sum that $5000 a month from the annuity won't cover.
:confused And what if you have a large expense that exceeds your 4% drawdown?

User avatar
StevieG72
Posts: 835
Joined: Wed Feb 05, 2014 9:00 pm

Re: Is a million really the benchmark for retirement

Post by StevieG72 » Mon Aug 20, 2018 7:43 pm

Unfortunately a million is not what it used to be, I am looking at around 2.5 as my goal for retirement. (Divorced with one child)

Do not be discouraged! Just keep at it and it will come around.

You will likely have salary increases, & you will have some double digit growth in equities. (may have double digit losses too) Maybe revisit your asset allocation if you are having mediocre returns. I am 46 and have a 70 / 30 portfolio which I consider conservative. If you are being super conservative with your investments, the returns will reflect that choice.

Keep costs low, no more annuities, and steer clear of whole life insurance.

Maybe take a look at your monthly budget ans see what can be trimmed to boost that savings rate.
Fools think their own way is right, but the wise listen to others.

sailaway
Posts: 408
Joined: Fri May 12, 2017 1:11 pm

Re: Is a million really the benchmark for retirement

Post by sailaway » Mon Aug 20, 2018 7:55 pm

WhiteMaxima wrote:
Mon Aug 20, 2018 6:45 pm
bradshaw1965 wrote:
Mon Aug 20, 2018 3:25 pm
WhiteMaxima wrote:
Mon Aug 20, 2018 12:57 pm
you can set 1 mil as a milestone target. with 1 mil and proper investment to beat the inflation assuming you withdraw 3% , it would last 30 years of your retirement. Assuming you would also get 20k from SS, so the total $50k would get you some sort of "decent" retirement cost covered. But would think 2 mil for a couple plus 2 x 20k SS income would be a decent retirement with 100k annual expense covered. I would still believe 100% investment in equity to beat the inflation is the key towards a successful retirement.
My wife and I have never spent anywhere close to $100k over many years in metro Atlanta and I think we have a really nice lifestyle.
100k is a must to have a decent living for two people even if in LCOA.

Let's say
Rent $2000 a month (or $1000 mortgage, 500 property tax + 500 insurance and repair)
Food $1000 a mohth (include eat out)
Transportation (auto payment, gas , insurance) $500
Medical expense $1000 (insurance, copay, prescription)
Travel $500 (airfare, hotel)
Must have $250 (telephone, cable, internet)
Utility $250 (water sewer, electricity gas, garbage)
Clothes $250
Gift $250
Tax $500
Misc item (gift, donation) $500

Total $7000/month

Total Year: $84000

Not far from $100k a year. This is a very typical expense a retired couple might need.

Ok let's say you can live at a very thrifty life style. A 60k USD is barely minimum.

Let say you have $30k from SS (for a couple), you still need $30k to cover the gap. 1 mil at 3% withdraw rate would still be required.
Funny, we live under $60k in a HCOL. I checked with my parents, since they are retired and live in a LCOL. They manage to live just under $60k WITH HEALTH ISSUES, TRAVEL, EATING OUT A LOT AND A LAKE CABIN WITH A BOAT. That isn't a bare minimum, thrifty lifestyle by any reasonable accounting.

Calico
Posts: 157
Joined: Thu Jan 01, 2015 5:45 pm

Re: Is a million really the benchmark for retirement

Post by Calico » Mon Aug 20, 2018 8:16 pm

sailaway wrote:
Mon Aug 20, 2018 7:55 pm

Funny, we live under $60k in a HCOL. I checked with my parents, since they are retired and live in a LCOL. They manage to live just under $60k WITH HEALTH ISSUES, TRAVEL, EATING OUT A LOT AND A LAKE CABIN WITH A BOAT. That isn't a bare minimum, thrifty lifestyle by any reasonable accounting.
I need to take lessons from you! I ran a Quicken report and I spent $68k in a year's time (the report is "last 12 months") and it's just me and a teen! I try to live as cheap as possible (no cable, home cook almost all meals, etc). When I run a report for "last year" which is all of 2017, I only get a total spending of $46k. Both of those numbers include mortgage. I wonder which year is really a better match. 2017 was a typical year with typical stuff. 2018 I had some added expenses this year with high vet bills for one time surgery for the dog, a roof repair, and my daughter and I went on a nice vacation to Europe (I saved for years for that trip/had a special savings set aside, but Quicken still sees it as just any other expense).

rkhusky
Posts: 5710
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Re: Is a million really the benchmark for retirement

Post by rkhusky » Mon Aug 20, 2018 8:21 pm

You may need to manually adjust the Quicken report to more accurately estimate your retirement expenses. For example, you won't have payroll taxes any more or SS deductions. You might not be taking trips to Europe each year.

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camillus
Posts: 526
Joined: Thu Feb 28, 2013 9:55 pm

Re: Is a million really the benchmark for retirement

Post by camillus » Mon Aug 20, 2018 8:22 pm

Calico wrote:
Mon Aug 20, 2018 7:25 pm
My fear is outliving my money
A high quality annuity in this situation could potentially alleviate some fear :happy

For edification, see: https://investor.vanguard.com/annuity/immediate

Traveler
Posts: 644
Joined: Fri Aug 30, 2013 9:07 pm

Re: Is a million really the benchmark for retirement

Post by Traveler » Mon Aug 20, 2018 8:29 pm

bradshaw1965 wrote:
Mon Aug 20, 2018 7:05 pm
WhiteMaxima wrote:
Mon Aug 20, 2018 6:45 pm
bradshaw1965 wrote:
Mon Aug 20, 2018 3:25 pm
WhiteMaxima wrote:
Mon Aug 20, 2018 12:57 pm
you can set 1 mil as a milestone target. with 1 mil and proper investment to beat the inflation assuming you withdraw 3% , it would last 30 years of your retirement. Assuming you would also get 20k from SS, so the total $50k would get you some sort of "decent" retirement cost covered. But would think 2 mil for a couple plus 2 x 20k SS income would be a decent retirement with 100k annual expense covered. I would still believe 100% investment in equity to beat the inflation is the key towards a successful retirement.
My wife and I have never spent anywhere close to $100k over many years in metro Atlanta and I think we have a really nice lifestyle.
100k is a must to have a decent living for two people even if in LCOA.

Let's say
Rent $2000 a month (or $1000 mortgage, 500 property tax + 500 insurance and repair)
Food $1000 a mohth (include eat out)
Transportation (auto payment, gas , insurance) $500
Medical expense $1000 (insurance, copay, prescription)
Travel $500 (airfare, hotel)
Must have $250 (telephone, cable, internet)
Utility $250 (water sewer, electricity gas, garbage)
Clothes $250
Gift $250
Tax $500
Misc item (gift, donation) $500

Total $7000/month

Total Year: $84000

Not far from $100k a year. This is a very typical expense a retired couple might need.

Ok let's say you can live at a very thrifty life style. A 60k USD is barely minimum.

Let say you have $30k from SS (for a couple), you still need $30k to cover the gap. 1 mil at 3% withdraw rate would still be required.
The average spend for a retiree household is $40,938

https://money.usnews.com/money/retireme ... ment-dream

The average spend for a US pre-retirement household in 2014 is $53,495

https://www.fool.com/retirement/general ... -like.aspx

I spend maybe $10k more in metro Atlanta, want for nothing and save a bunch and will pay off the mortgage by retirement. I get it that people have lifestyles they want to maintain but there have been a lot of threads of people plainly asking if they are going to be ok with a modest retirement and I just don't see the point of posting on a thread that, well actually, I'm going to need $4 million.

I'm in Atlanta too, which I consider a MCOL city, and can't fathom spending $2000 on a home. However, I do/will spend >$1000 a month on travel. In total I spend about $4000 per month, own a townhouse and no car payment. In retirement I'll likely add another $2000 for health insurance (hopefully it won't cost that much).

User avatar
GoldStar
Posts: 601
Joined: Wed May 23, 2018 10:59 am

Re: Is a million really the benchmark for retirement

Post by GoldStar » Mon Aug 20, 2018 8:36 pm

Traveler wrote:
Mon Aug 20, 2018 8:29 pm
bradshaw1965 wrote:
Mon Aug 20, 2018 7:05 pm
WhiteMaxima wrote:
Mon Aug 20, 2018 6:45 pm
bradshaw1965 wrote:
Mon Aug 20, 2018 3:25 pm
WhiteMaxima wrote:
Mon Aug 20, 2018 12:57 pm
you can set 1 mil as a milestone target. with 1 mil and proper investment to beat the inflation assuming you withdraw 3% , it would last 30 years of your retirement. Assuming you would also get 20k from SS, so the total $50k would get you some sort of "decent" retirement cost covered. But would think 2 mil for a couple plus 2 x 20k SS income would be a decent retirement with 100k annual expense covered. I would still believe 100% investment in equity to beat the inflation is the key towards a successful retirement.
My wife and I have never spent anywhere close to $100k over many years in metro Atlanta and I think we have a really nice lifestyle.
100k is a must to have a decent living for two people even if in LCOA.

Let's say
Rent $2000 a month (or $1000 mortgage, 500 property tax + 500 insurance and repair)
Food $1000 a mohth (include eat out)
Transportation (auto payment, gas , insurance) $500
Medical expense $1000 (insurance, copay, prescription)
Travel $500 (airfare, hotel)
Must have $250 (telephone, cable, internet)
Utility $250 (water sewer, electricity gas, garbage)
Clothes $250
Gift $250
Tax $500
Misc item (gift, donation) $500

Total $7000/month

Total Year: $84000

Not far from $100k a year. This is a very typical expense a retired couple might need.

Ok let's say you can live at a very thrifty life style. A 60k USD is barely minimum.

Let say you have $30k from SS (for a couple), you still need $30k to cover the gap. 1 mil at 3% withdraw rate would still be required.
The average spend for a retiree household is $40,938

https://money.usnews.com/money/retireme ... ment-dream

The average spend for a US pre-retirement household in 2014 is $53,495

https://www.fool.com/retirement/general ... -like.aspx

I spend maybe $10k more in metro Atlanta, want for nothing and save a bunch and will pay off the mortgage by retirement. I get it that people have lifestyles they want to maintain but there have been a lot of threads of people plainly asking if they are going to be ok with a modest retirement and I just don't see the point of posting on a thread that, well actually, I'm going to need $4 million.

I'm in Atlanta too, which I consider a MCOL city, and can't fathom spending $2000 on a home. However, I do/will spend >$1000 a month on travel. In total I spend about $4000 per month, own a townhouse and no car payment. In retirement I'll likely add another $2000 for health insurance (hopefully it won't cost that much).
I agree that WhiteMaxima's numbers don't ring true for many - my parents are retired in a MCOL area and are spending less per month on each and every category cited. Categories like food and housing cited above are double what they spend.

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