$3 million the new rule of thumb?

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tjtv
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Re: $3 million the new rule of thumb?

Post by tjtv »

smitcat wrote: Wed Jan 29, 2020 4:08 pm
chipperd wrote: Wed Jan 29, 2020 3:15 pm
"Wife's hazard duty retirement, which includes a COLA pension, 100% beneficiary and 100% healthcare coverage for life for both of us, covers about 60% of our needed spending."
So when the net present value of SS and hazard duty and your portfolio and whatever else is totaled what is the number?
LOL, I was thinking the same thing. My guess is it's probably around ~$3M :)
mnnice
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Re: $3 million the new rule of thumb?

Post by mnnice »

Amadis_of_Gaul wrote: Tue Jan 28, 2020 4:44 pm
CyclingDuo wrote: Tue Jan 28, 2020 2:53 pm
:mrgreen:

Obviously, if one is accounting for SS benefits, pension benefits, or other streams of income away from the risk portfolio that would require a SWR of the suggested Trinity Study 4% in the graphic above - then one would adjust their numbers accordingly in terms of risk portfolio size. If one was getting $65K - $95K per year in pension and SS benefits, then you wouldn't need $3M. In that scenario, and if one had the need for $120K, then $1M - $1.4M should be adequate.

Not to mention, cost of living dictates one's target numbers. Retiring in NYC, San Francisco or Seattle would be an entirely different scenario cost wise than Toledo, Bozeman, or Jackson...
I'd love to retire to Bozeman. It's beautiful there! Well, for half the year, it's beautiful there. . .
I wouldn’t consider Bozeman LCOL either with 460k median home price. I do get cyclingduo’s point though.
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snackdog
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Re: $3 million the new rule of thumb?

Post by snackdog »

Back in the day, before the dot-com bust everyone said the Silicon Valley rule of thumb for retirement was $40 million: $10 for the tax man, $10 for a place to live, and $20 walking around money the rest of your life.

But that was 20 years ago.
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Re: $3 million the new rule of thumb?

Post by abuss368 »

chipperd wrote: Wed Jan 29, 2020 3:11 pm
abuss368 wrote: Wed Jan 29, 2020 12:33 pm
chipperd wrote: Wed Jan 29, 2020 12:17 pm Utter hogwash. My wife and I became F.I. at $650k in savings at age 50 and will need need negative savings once SS kicks in.
Congrats! :beer
Thanks! Couldn't do it without the wife's hazard duty pension and health insurance!
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Re: $3 million the new rule of thumb?

Post by LadyGeek »

In the previous page, several off-topic posts regarding teachers' salary have been removed. The discussion is starting to derail.

Please stay focused on the financial aspects.
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PDX_Traveler
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Re: $3 million the new rule of thumb?

Post by PDX_Traveler »

DB2 wrote: Wed Jan 29, 2020 4:13 pm
PDX_Traveler wrote: Wed Jan 29, 2020 3:55 pm
DB2 wrote: Tue Jan 28, 2020 1:38 pm
22twain wrote: Tue Jan 28, 2020 1:02 pm
Amadis_of_Gaul wrote: Tue Jan 28, 2020 12:48 pmretirees should expect to need $120K a year from their retirement savings
Absolute BS, unless maybe you're living an upper-middle-class lifestyle in a coastal bubble area (Boswash or Sansan).
Agreed. Not to mention technology advances are going to lower the cost on a number of things.
But, also to note that technology advances are going to increase the cost (or create new cost categories) on a number of things...
Technology has been contributing to lower inflation.
Not to stress the point too much - yes, that is the usual headline statement. I'm pointing out that 'technology' also drives greater (and newer forms of) consumption. How much did a family in 1980 spend on audio-visual entertainment at home? On communications/connectivity? Or, for that matter, 'personalized medicine' based on genotype characterization? or any number of such examples..
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willthrill81
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Re: $3 million the new rule of thumb?

Post by willthrill81 »

wrongfunds wrote: Wed Jan 29, 2020 12:06 pm
willthrill81 wrote: Wed Jan 29, 2020 11:51 am To be fair, the mean, median, and mode are all considered by statisticians to be measures of 'average'. In common parlance, use of 'average' means 'mean', but not always. For that reason, nearly all scientific papers avoid use of the term 'average' and more clearly specify what they are referring to.

That said, FRED is very clearly reporting that the median household income for 2018 was $63,179. That's an 11% inflation-adjusted increase since 2014, when it was $56,969.
Thanks WillThrill; you will agree that it most likely still won't be 7% between 2017 vs 2018 for the FRED stats?

What is your comment about only expense shown in quintiles but NOT the income? Can there be any innocent explanation for that oddity?

Guess what, I found the information on the corresponding pdf file. Here it is:-
Pretax income rose 6.9 percent in 2018, after dropping 1.5 percent in 2017. (See chart 2.) All income quintiles with the exception of the lowest income quintile had increases in pretax income. The highest quintile increased by 9.0 percent in 2018. Income quintile is defined based on the pretax income reported by the consumer unit. Consumer units are divided into five equal groups. In 2018, the lower bounds for each quintile were $21,293 for the second quintile, $41,490 for the third quintile, $70,367 for the fourth quintile, and $116,625 for the highest quintile.
Here is the percentage change in pretax income by quintile which I had to manually extract from the bar chart.
-1% 4.7% 4.7% 4.8% 9%

Ha, ha!! The drop of 1% for lowest quantile vs 9% increase for highest quantile paints a whole different picture than showing the mean increase of 6.9% overall.

As a professor in related field, I would love to get WillThrill's take on it. May be he wants to wait until we can share a beer together? :sharebeer
As you've discovered, there is often a lot of insight to be had in taking a granular look at such data.

I agree that it would have been insightful for them to include income as well as expenses across the quintiles. I don't see anything nefarious in their not doing so though.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
student
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Re: $3 million the new rule of thumb?

Post by student »

wrongfunds wrote: Wed Jan 29, 2020 3:26 pm
student wrote: Wed Jan 29, 2020 3:23 pm
wrongfunds wrote: Wed Jan 29, 2020 3:01 pm Anybody touts average data in any social context, insists on getting median numbers. ALWAYS.
One popular joke is someone was computing the average net worth of people in the room. Then Bill Gates walked in.
I was told that when I walk out of the room, the average IQ of the room shoots up.
lol
visualguy
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Re: $3 million the new rule of thumb?

Post by visualguy »

I never know how seriously to take studies about incomes, net worth, retirement savings, etc. The thing that bothers me is that I don't see how much of that data could be collected with any accuracy. Does the IRS share income statistics? There is no wealth tax in the US, so how are statistics about net worth collected? Similarly, how do we know what people's retirement savings are? Who collects these things and how? Seems like it would be extremely difficult.
michaeljc70
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Re: $3 million the new rule of thumb?

Post by michaeljc70 »

PDX_Traveler wrote: Wed Jan 29, 2020 6:06 pm
DB2 wrote: Wed Jan 29, 2020 4:13 pm
PDX_Traveler wrote: Wed Jan 29, 2020 3:55 pm
DB2 wrote: Tue Jan 28, 2020 1:38 pm
22twain wrote: Tue Jan 28, 2020 1:02 pm

Absolute BS, unless maybe you're living an upper-middle-class lifestyle in a coastal bubble area (Boswash or Sansan).
Agreed. Not to mention technology advances are going to lower the cost on a number of things.
But, also to note that technology advances are going to increase the cost (or create new cost categories) on a number of things...
Technology has been contributing to lower inflation.
Not to stress the point too much - yes, that is the usual headline statement. I'm pointing out that 'technology' also drives greater (and newer forms of) consumption. How much did a family in 1980 spend on audio-visual entertainment at home? On communications/connectivity? Or, for that matter, 'personalized medicine' based on genotype characterization? or any number of such examples..
I didn't see this pointed out, but the way inflation for tech devices is computed is somewhat controversial. They adjust for the "quality" as well as the price (this is not limited to just high tech items). So, an iPhone may cost twice what you paid 8 years ago but they may deem it 3 times as powerful/valuable/useful and therefore deflationary (this is just an example). IANAE (I am not an economist) but think I have this right.
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Re: $3 million the new rule of thumb?

Post by H-Town »

visualguy wrote: Wed Jan 29, 2020 6:33 pm I never know how seriously to take studies about incomes, net worth, retirement savings, etc. The thing that bothers me is that I don't see how much of that data could be collected with any accuracy. Does the IRS share income statistics? There is no wealth tax in the US, so how are statistics about net worth collected? Similarly, how do we know what people's retirement savings are? Who collects these things and how? Seems like it would be extremely difficult.
Each study should describe their method of collecting and analyzing data. They don't print those on marketwatch or forbes website. But if you pull those studies from academic sources, you will be able to find the sources.
michaeljc70
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Re: $3 million the new rule of thumb?

Post by michaeljc70 »

Trader Joe wrote: Wed Jan 29, 2020 6:56 pm
Amadis_of_Gaul wrote: Tue Jan 28, 2020 12:48 pm I have a bad habit of clicking on financial clickbait. This one is worse than normal:

https://www.msn.com/en-us/news/other/re ... ar-BBZnv6v

Essentially, the financial planner quoted in the article says that retirees should expect to need $120K a year from their retirement savings, so using the good ole 4 percent rule, you'd better have $3 million saved up by the time you retire.

That may be true for some (maybe true for many on here), but it isn't true for the vast majority of Americans. More than 75 percent of American households don't bring in $120K a year, period, and so hardly would need to replace an amount of income they don't have. It ignores the impact of Social Security, which is significant for higher-earning households. It ignores the decline in expenses that most older folks see once the house is paid off and the kids move out. Realistically, a household would have to have a standard of living around $200K to need that much in savings, which is less than 10 percent of the population.

In short, one-size-fits-all retirement numbers are silly, and this one is particularly ridiculous. For most workers, achieving such a goal is impossible, and setting it up can only lead to discouragement for them. Instead, the only way to determine what your needs will be in retirement is to look at your budget.

Thoughts?
My thoughts are that for many retirees, $3,000,000 is at the low end of being just enough. As long as they have a created a budget and watch their spending very, very closely.

For myself, no. I could never survive on this amount in retirement.
What do you consider "many"? There are 330 million people in the US. The vast majority live on way less than $120k. $120k income puts you in the top 10% regardless of age. Bogleheads are very smart, frugal, educated, high earning and/or big savers but I wonder if they are all totally in touch with the rest of America which is not most of those. My 93 year old grandma lives on $13k in a MCOL area (she owns her home).
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Re: $3 million the new rule of thumb?

Post by stoptothink »

Trader Joe wrote: Wed Jan 29, 2020 6:56 pm
Amadis_of_Gaul wrote: Tue Jan 28, 2020 12:48 pm I have a bad habit of clicking on financial clickbait. This one is worse than normal:

https://www.msn.com/en-us/news/other/re ... ar-BBZnv6v

Essentially, the financial planner quoted in the article says that retirees should expect to need $120K a year from their retirement savings, so using the good ole 4 percent rule, you'd better have $3 million saved up by the time you retire.

That may be true for some (maybe true for many on here), but it isn't true for the vast majority of Americans. More than 75 percent of American households don't bring in $120K a year, period, and so hardly would need to replace an amount of income they don't have. It ignores the impact of Social Security, which is significant for higher-earning households. It ignores the decline in expenses that most older folks see once the house is paid off and the kids move out. Realistically, a household would have to have a standard of living around $200K to need that much in savings, which is less than 10 percent of the population.

In short, one-size-fits-all retirement numbers are silly, and this one is particularly ridiculous. For most workers, achieving such a goal is impossible, and setting it up can only lead to discouragement for them. Instead, the only way to determine what your needs will be in retirement is to look at your budget.

Thoughts?
My thoughts are that for many retirees, $3,000,000 is at the low end of being just enough. As long as they have a created a budget and watch their spending very, very closely.

For myself, no. I could never survive on this amount in retirement.
:shock: How are we going to deal with 95% of the retired population being in need of serious financial help? My parents have $0 in retirement coming up on age 60, I bet they will be fine on SS...now my in-laws...
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Re: $3 million the new rule of thumb?

Post by AerialWombat »

visualguy wrote: Wed Jan 29, 2020 6:33 pm Does the IRS share income statistics?
Yes, they do:

https://www.irs.gov/statistics/soi-tax- ... statistics
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willthrill81
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Re: $3 million the new rule of thumb?

Post by willthrill81 »

michaeljc70 wrote: Wed Jan 29, 2020 7:05 pm
Trader Joe wrote: Wed Jan 29, 2020 6:56 pm
Amadis_of_Gaul wrote: Tue Jan 28, 2020 12:48 pm I have a bad habit of clicking on financial clickbait. This one is worse than normal:

https://www.msn.com/en-us/news/other/re ... ar-BBZnv6v

Essentially, the financial planner quoted in the article says that retirees should expect to need $120K a year from their retirement savings, so using the good ole 4 percent rule, you'd better have $3 million saved up by the time you retire.

That may be true for some (maybe true for many on here), but it isn't true for the vast majority of Americans. More than 75 percent of American households don't bring in $120K a year, period, and so hardly would need to replace an amount of income they don't have. It ignores the impact of Social Security, which is significant for higher-earning households. It ignores the decline in expenses that most older folks see once the house is paid off and the kids move out. Realistically, a household would have to have a standard of living around $200K to need that much in savings, which is less than 10 percent of the population.

In short, one-size-fits-all retirement numbers are silly, and this one is particularly ridiculous. For most workers, achieving such a goal is impossible, and setting it up can only lead to discouragement for them. Instead, the only way to determine what your needs will be in retirement is to look at your budget.

Thoughts?
My thoughts are that for many retirees, $3,000,000 is at the low end of being just enough. As long as they have a created a budget and watch their spending very, very closely.

For myself, no. I could never survive on this amount in retirement.
What do you consider "many"? There are 330 million people in the US. The vast majority live on way less than $120k. $120k income puts you in the top 10% regardless of age. Bogleheads are very smart, frugal, educated, high earning and/or big savers but I wonder if they are all totally in touch with the rest of America which is not most of those. My 93 year old grandma lives on $13k in a MCOL area (she owns her home).
My MiL has been living on about $1,200/month for 15 years now. Owning her home outright, being very frugal, and living in a LCOL area have been big factors enabling her to do this.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
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Re: $3 million the new rule of thumb?

Post by sailaway »

Trader Joe wrote: Wed Jan 29, 2020 6:56 pm
Amadis_of_Gaul wrote: Tue Jan 28, 2020 12:48 pm I have a bad habit of clicking on financial clickbait. This one is worse than normal:

https://www.msn.com/en-us/news/other/re ... ar-BBZnv6v

Essentially, the financial planner quoted in the article says that retirees should expect to need $120K a year from their retirement savings, so using the good ole 4 percent rule, you'd better have $3 million saved up by the time you retire.

That may be true for some (maybe true for many on here), but it isn't true for the vast majority of Americans. More than 75 percent of American households don't bring in $120K a year, period, and so hardly would need to replace an amount of income they don't have. It ignores the impact of Social Security, which is significant for higher-earning households. It ignores the decline in expenses that most older folks see once the house is paid off and the kids move out. Realistically, a household would have to have a standard of living around $200K to need that much in savings, which is less than 10 percent of the population.

In short, one-size-fits-all retirement numbers are silly, and this one is particularly ridiculous. For most workers, achieving such a goal is impossible, and setting it up can only lead to discouragement for them. Instead, the only way to determine what your needs will be in retirement is to look at your budget.

Thoughts?
My thoughts are that for many retirees, $3,000,000 is at the low end of being just enough. As long as they have a created a budget and watch their spending very, very closely.

For myself, no. I could never survive on this amount in retirement.
You either have some expensive meds or a melodramatic streak to rival a hormonal teenager.
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willthrill81
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Re: $3 million the new rule of thumb?

Post by willthrill81 »

Trader Joe wrote: Wed Jan 29, 2020 6:56 pm
Amadis_of_Gaul wrote: Tue Jan 28, 2020 12:48 pm I have a bad habit of clicking on financial clickbait. This one is worse than normal:

https://www.msn.com/en-us/news/other/re ... ar-BBZnv6v

Essentially, the financial planner quoted in the article says that retirees should expect to need $120K a year from their retirement savings, so using the good ole 4 percent rule, you'd better have $3 million saved up by the time you retire.

That may be true for some (maybe true for many on here), but it isn't true for the vast majority of Americans. More than 75 percent of American households don't bring in $120K a year, period, and so hardly would need to replace an amount of income they don't have. It ignores the impact of Social Security, which is significant for higher-earning households. It ignores the decline in expenses that most older folks see once the house is paid off and the kids move out. Realistically, a household would have to have a standard of living around $200K to need that much in savings, which is less than 10 percent of the population.

In short, one-size-fits-all retirement numbers are silly, and this one is particularly ridiculous. For most workers, achieving such a goal is impossible, and setting it up can only lead to discouragement for them. Instead, the only way to determine what your needs will be in retirement is to look at your budget.

Thoughts?
My thoughts are that for many retirees, $3,000,000 is at the low end of being just enough. As long as they have a created a budget and watch their spending very, very closely.

For myself, no. I could never survive on this amount in retirement.
How much do you spend now?
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
wrongfunds
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Re: $3 million the new rule of thumb?

Post by wrongfunds »

willthrill81 wrote: Wed Jan 29, 2020 6:08 pm
As you've discovered, there is often a lot of insight to be had in taking a granular look at such data.

I agree that it would have been insightful for them to include income as well as expenses across the quintiles. I don't see anything nefarious in their not doing so though.
I guess we disagree on the nefarious aspect of it. I believe it was done intentionally to make the data look "good". It used to be that one could trust these type of agencies to be above politics but this particular example starkly contrasts that. Are ou suggesting that this just slipped through BLS? I don't see any stupidity involved. These guys do this years in and years out for living for crying out loud. This wasn't somebody's school project for class credit.

I am disappointed that you don't see it that way.

What grade would you give to this report if one of your student had done this? B- or C+?
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Re: $3 million the new rule of thumb?

Post by Unladen_Swallow »

Trader Joe wrote: Wed Jan 29, 2020 6:56 pm

My thoughts are that for many retirees, $3,000,000 is at the low end of being just enough. As long as they have a created a budget and watch their spending very, very closely.

For myself, no. I could never survive on this amount in retirement.
I wish we could all just agree that we have different retirement needs, wants, and lifestyles. Generalizations that don't hold water only invite arguments and an eye roll. Especially loaded words like "can't survive ".

I submit that if we had to survive on $15k a year, we all would (not because we want to). None of us would say "well, this is unacceptable! I'll just perish instead".
Last edited by Unladen_Swallow on Wed Jan 29, 2020 9:54 pm, edited 2 times in total.
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Re: $3 million the new rule of thumb?

Post by DB2 »

PDX_Traveler wrote: Wed Jan 29, 2020 6:06 pm
DB2 wrote: Wed Jan 29, 2020 4:13 pm
PDX_Traveler wrote: Wed Jan 29, 2020 3:55 pm
DB2 wrote: Tue Jan 28, 2020 1:38 pm
22twain wrote: Tue Jan 28, 2020 1:02 pm

Absolute BS, unless maybe you're living an upper-middle-class lifestyle in a coastal bubble area (Boswash or Sansan).
Agreed. Not to mention technology advances are going to lower the cost on a number of things.
But, also to note that technology advances are going to increase the cost (or create new cost categories) on a number of things...
Technology has been contributing to lower inflation.
Not to stress the point too much - yes, that is the usual headline statement. I'm pointing out that 'technology' also drives greater (and newer forms of) consumption. How much did a family in 1980 spend on audio-visual entertainment at home? On communications/connectivity? Or, for that matter, 'personalized medicine' based on genotype characterization? or any number of such examples..
I remember when our family had $300-400 a month long distance bills in the early 80s. My mother used to talk to her mother and sister quite a bit who only lived an hour away. It almost now seems criminal the charges were that high, but it was what it was. My cell phone (with unlimited texting and internet) is way under $100 a month. My cable bill (yes I still have cable) is cheaper compared to what my parents paid in the 80s factoring in cost of living.

We paid $1000 for our VCR in 1980. We paid $80 for movies on VHS. I can buy a new 4K movie disc for $15-20 an a 4K player for under $100 which worlds better quality. I can buy a 70" 4K LED TV for $600. We paid thousands for a CRT 50" RCA rear protection TV around 1982. Same goes with the cost of computers. I remember buying a $3000 Gateway computer in 1997. Looks ridiculous compared to the $300 Acer laptop I bought not long ago.

And I don't have to upgrade my phone, PC, TV, etc. every year. And I don't. No reason too. But sure, there are plenty of Americans who are consumption-holics. They force themselves to upgrade all of the time, etc. But is it a necessity? No. Too many people just lack self-control.

Now, healthcare is way up, but AI is going to play a big role in healthcare and helping slow down costs and healthcare delivery is going to change. For example, some healthcare plans now have options to contact a doctor online for no charge or for something extremely minimal. Some do FaceTime. This is saving a lot versus going to the doctor's office for every single thing which is not a necessity. That gene therapy you mentioned is going to cut down on costs (and LOTS of waste) as well over time.

Regarding college that was mentioned earlier. It is a bubble, but not sustainable. But still, a kid can go to a community college for two years and only pay ~$100 a credit hour and commute from home to a decent University for the last two years. This would save tens and tens of thousands of dollars. But, no. Too many demand they get the "college experience" (whatever that really is) and must go to a high brand name school. Well, you're going to pay for it. But is it really absolutely necessary? I went to a community college before transferring to a University and eventually went on to get my Masters. I commuted the whole time and turned out fine and work in a good profession.
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Re: $3 million the new rule of thumb?

Post by HomerJ »

Unladen_Swallow wrote: Wed Jan 29, 2020 8:22 pm
Trader Joe wrote: Wed Jan 29, 2020 6:56 pm

My thoughts are that for many retirees, $3,000,000 is at the low end of being just enough. As long as they have a created a budget and watch their spending very, very closely.

For myself, no. I could never survive on this amount in retirement.
I wish we could all just agree that we have different retirement needs, wants, and lifestyles. Generalizations that don't hold water only invite arguments and an eye roll. Especially loaded words like "can't survive ".
This is better than I what I wrote. Good post. We should all agree we have different needs, wants, and lifestyles.
A Goldman Sachs associate provided a variety of detailed explanations, but then offered a caveat, “If I’m being dead-### honest, though, nobody knows what’s really going on.”
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Re: $3 million the new rule of thumb?

Post by student »

Unladen_Swallow wrote: Wed Jan 29, 2020 8:22 pm I submit that if we had to survive on $15k a year, we all would (not because we want to). None of us would say "well, this is unacceptable! I'll just perish instead".
You made it sounds so funny!!!!!!!!!! I was literally laughing. Thank you.......
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Re: $3 million the new rule of thumb?

Post by willthrill81 »

wrongfunds wrote: Wed Jan 29, 2020 7:59 pm
willthrill81 wrote: Wed Jan 29, 2020 6:08 pm
As you've discovered, there is often a lot of insight to be had in taking a granular look at such data.

I agree that it would have been insightful for them to include income as well as expenses across the quintiles. I don't see anything nefarious in their not doing so though.
I guess we disagree on the nefarious aspect of it. I believe it was done intentionally to make the data look "good". It used to be that one could trust these type of agencies to be above politics but this particular example starkly contrasts that. Are ou suggesting that this just slipped through BLS? I don't see any stupidity involved. These guys do this years in and years out for living for crying out loud. This wasn't somebody's school project for class credit.

I am disappointed that you don't see it that way.

What grade would you give to this report if one of your student had done this? B- or C+?
TMK, the BLS has been doing segregating the data by quintiles for a long time. What would you suggest that they do instead?

A good grad student could do better than this, but not an undergrad at most institutions at least except perhaps one majoring in analytics.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
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Re: $3 million the new rule of thumb?

Post by Rowan Oak »

Unladen_Swallow wrote: Wed Jan 29, 2020 8:22 pm
Trader Joe wrote: Wed Jan 29, 2020 6:56 pm

My thoughts are that for many retirees, $3,000,000 is at the low end of being just enough. As long as they have a created a budget and watch their spending very, very closely.

For myself, no. I could never survive on this amount in retirement.
I wish we could all just agree that we have different retirement needs, wants, and lifestyles. Generalizations that don't hold water only invite arguments and an eye roll. Especially loaded words like "can't survive ".
+1
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2pedals
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Re: $3 million the new rule of thumb?

Post by 2pedals »

HomerJ wrote: Wed Jan 29, 2020 10:08 pm
Unladen_Swallow wrote: Wed Jan 29, 2020 8:22 pm
Trader Joe wrote: Wed Jan 29, 2020 6:56 pm

My thoughts are that for many retirees, $3,000,000 is at the low end of being just enough. As long as they have a created a budget and watch their spending very, very closely.

For myself, no. I could never survive on this amount in retirement.
I wish we could all just agree that we have different retirement needs, wants, and lifestyles. Generalizations that don't hold water only invite arguments and an eye roll. Especially loaded words like "can't survive ".
This is better than I what I wrote. Good post. We should all agree we have different needs, wants, and lifestyles.
I agree and discretionary spending can significantly change over time for the same individual.
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Re: $3 million the new rule of thumb?

Post by AlphaLess »

For averages, sure.

The private wealth industry goes by these numbers:
- $5M: starting to be comfortable,
- $10M: they start to target you,
- $20M: you are now a 'wealthy individual', whatever that means, and they are chasing you.

Definitely, $1m is not what it used to be.
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Re: $3 million the new rule of thumb?

Post by 2pedals »

AlphaLess wrote: Wed Jan 29, 2020 11:48 pm For averages, sure.

The private wealth industry goes by these numbers:
- $5M: starting to be comfortable,
- $10M: they start to target you,
- $20M: you are now a 'wealthy individual', whatever that means, and they are chasing you.

Definitely, $1m is not what it used to be.
Their goal is extract a profit from a percentage of the assets under management, i.e. more is better. If you are wealthy they are willing to give you a fanny kiss anytime you request one.
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Re: $3 million the new rule of thumb?

Post by willthrill81 »

2pedals wrote: Thu Jan 30, 2020 12:30 am
AlphaLess wrote: Wed Jan 29, 2020 11:48 pm For averages, sure.

The private wealth industry goes by these numbers:
- $5M: starting to be comfortable,
- $10M: they start to target you,
- $20M: you are now a 'wealthy individual', whatever that means, and they are chasing you.

Definitely, $1m is not what it used to be.
Their goal is extract a profit from a percentage of the assets under management, i.e. more is better.
A guy I know is a FA who works under the AUM model, and he's made it clear to me that his goal is to get enough AUM from a small number of clients that he can basically just sit back, call the clients a couple times a year, have an underling take care of rebalancing and such, and leave everything on cruise control the rest of the time. He's told me very clear that his job is primarily sales and not financially planning.
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Re: $3 million the new rule of thumb?

Post by chipperd »

smitcat wrote: Wed Jan 29, 2020 4:08 pm
chipperd wrote: Wed Jan 29, 2020 3:15 pm
Admiral wrote: Wed Jan 29, 2020 12:21 pm
chipperd wrote: Wed Jan 29, 2020 12:17 pm Utter hogwash. My wife and I became F.I. at $650k in savings at age 50 and will need need negative savings once SS kicks in.
Interesting. May I ask what your expenses are? 4% of 650k is $26k per year, which is near-poverty level in the U.S.
Wife's hazard duty retirement, which includes a COLA pension, 100% beneficiary and 100% healthcare coverage for life for both of us, covers about 60% of our needed spending. We could spend more than 4%/year and make it for the next 10 years, but thanks to the market, and the fact that wife and I both work (very) part time, overall nest egg up to 750k. Our savings are basically a bridge to social security, (planning to take at 62 for both), now 10 years out.
"Wife's hazard duty retirement, which includes a COLA pension, 100% beneficiary and 100% healthcare coverage for life for both of us, covers about 60% of our needed spending."
So when the net present value of SS and hazard duty and your portfolio and whatever else is totaled what is the number?
What number are you wanting to know?
We certainly don't have anywhere near 3 million saved, I can assure you. I can say that our part time work since becoming FI (not retirement, it's not the same) covers just about the delta we need to make up the amount the pension doesn't provide to cover our spending. Reminder, we don't college social security yet, so that's not an income stream at this point.
Been going on two years like that, so our plan to drastically reduce work to about 24 hours/week combined, during the academic year, is working. Financial independence is something that is worth wayyy more than 3 million, IMHO.
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Re: $3 million the new rule of thumb?

Post by Admiral »

chipperd wrote: Thu Jan 30, 2020 6:29 am
smitcat wrote: Wed Jan 29, 2020 4:08 pm
chipperd wrote: Wed Jan 29, 2020 3:15 pm
Admiral wrote: Wed Jan 29, 2020 12:21 pm
chipperd wrote: Wed Jan 29, 2020 12:17 pm Utter hogwash. My wife and I became F.I. at $650k in savings at age 50 and will need need negative savings once SS kicks in.
Interesting. May I ask what your expenses are? 4% of 650k is $26k per year, which is near-poverty level in the U.S.
Wife's hazard duty retirement, which includes a COLA pension, 100% beneficiary and 100% healthcare coverage for life for both of us, covers about 60% of our needed spending. We could spend more than 4%/year and make it for the next 10 years, but thanks to the market, and the fact that wife and I both work (very) part time, overall nest egg up to 750k. Our savings are basically a bridge to social security, (planning to take at 62 for both), now 10 years out.
"Wife's hazard duty retirement, which includes a COLA pension, 100% beneficiary and 100% healthcare coverage for life for both of us, covers about 60% of our needed spending."
So when the net present value of SS and hazard duty and your portfolio and whatever else is totaled what is the number?
What number are you wanting to know?
We certainly don't have anywhere near 3 million saved, I can assure you. I can say that our part time work since becoming FI (not retirement, it's not the same) covers just about the delta we need to make up the amount the pension doesn't provide to cover our spending. Reminder, we don't college social security yet, so that's not an income stream at this point.
Been going on two years like that, so our plan to drastically reduce work to about 24 hours/week combined, during the academic year, is working. Financial independence is something that is worth wayyy more than 3 million, IMHO.
smitcat's point was that it's relatively easy to assign a present value to an income stream, and especially when you're already receiving/assured of receiving/about to receive it. A pension is simple to value by pricing an annuity that pays the same monthly income stream.

You say that "We certainly don't have anywhere near 3 million saved, I can assure you" but the point is the VALUE of your income streams may be close to $3 million, so you don't require $3 million to be saved.

That's what many people were pointing out when they noted the fallacy of article posted by the OP.
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Re: $3 million the new rule of thumb?

Post by chipperd »

Ok, assuming that's the case. To purchase an annuity to provide the same income stream as the pension would cost just under 1 million per immediate annuity quote. So I guess, to look at our situation in that manner we have just south of 1.75 million. Still no where near 3 million tho, and we have two in college with a third on the way. We are frugal and don't' buy into the recommendations made by those that would want to make $ off of our savings, nor their sycophants. (I'm looking at you Suze).
Last edited by chipperd on Thu Jan 30, 2020 7:25 am, edited 1 time in total.
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Re: $3 million the new rule of thumb?

Post by Admiral »

chipperd wrote: Thu Jan 30, 2020 7:01 am Ok, assuming that's the case. To purchase an annuity to provide the same income stream as the pension would cost just under 1 million per immediate annuity quote. So I guess, to look at our situation in that manner we have just south of 1.75 million. Still no where near 3 million tho, and we have two in college with a third on the way. We are frugal and don't' buy into the recommendations made by those that would want to make $ off of our savings, not their sycophants. (I'm looking at you Suze).
Add social security and I bet it's $3m. Or close. :D
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Re: $3 million the new rule of thumb?

Post by chipperd »

Admiral wrote: Thu Jan 30, 2020 7:07 am
chipperd wrote: Thu Jan 30, 2020 7:01 am Ok, assuming that's the case. To purchase an annuity to provide the same income stream as the pension would cost just under 1 million per immediate annuity quote. So I guess, to look at our situation in that manner we have just south of 1.75 million. Still no where near 3 million tho, and we have two in college with a third on the way. We are frugal and don't' buy into the recommendations made by those that would want to make $ off of our savings, not their sycophants. (I'm looking at you Suze).
Add social security and I bet it's $3m. Or close. :D
Actually, just over 2 million if we were to purchase an annuity to cover the amounts of our combined social security.
I didn't re-read original post, but was that 3 million recommendation with or without social security included?
Just re-read original post and the fact the article left out the impact of social security on retirement income was one of the OP's criticisms, which I share.
No need for 3 million in savings, I'm living proof.
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Re: $3 million the new rule of thumb?

Post by smitcat »

chipperd wrote: Thu Jan 30, 2020 6:29 am
smitcat wrote: Wed Jan 29, 2020 4:08 pm
chipperd wrote: Wed Jan 29, 2020 3:15 pm
Admiral wrote: Wed Jan 29, 2020 12:21 pm
chipperd wrote: Wed Jan 29, 2020 12:17 pm Utter hogwash. My wife and I became F.I. at $650k in savings at age 50 and will need need negative savings once SS kicks in.
Interesting. May I ask what your expenses are? 4% of 650k is $26k per year, which is near-poverty level in the U.S.
Wife's hazard duty retirement, which includes a COLA pension, 100% beneficiary and 100% healthcare coverage for life for both of us, covers about 60% of our needed spending. We could spend more than 4%/year and make it for the next 10 years, but thanks to the market, and the fact that wife and I both work (very) part time, overall nest egg up to 750k. Our savings are basically a bridge to social security, (planning to take at 62 for both), now 10 years out.
"Wife's hazard duty retirement, which includes a COLA pension, 100% beneficiary and 100% healthcare coverage for life for both of us, covers about 60% of our needed spending."
So when the net present value of SS and hazard duty and your portfolio and whatever else is totaled what is the number?
What number are you wanting to know?
We certainly don't have anywhere near 3 million saved, I can assure you. I can say that our part time work since becoming FI (not retirement, it's not the same) covers just about the delta we need to make up the amount the pension doesn't provide to cover our spending. Reminder, we don't college social security yet, so that's not an income stream at this point.
Been going on two years like that, so our plan to drastically reduce work to about 24 hours/week combined, during the academic year, is working. Financial independence is something that is worth wayyy more than 3 million, IMHO.
"What number are you wanting to know?"
Having fixed incomes would replace parts or all of the stated $3 million in the article.
So $3 million is the new rule of thumb would need to be modified for any fixed income.
The more fixed income that folks have the less they need of the $3 million reducing it proportionally.
Some types of Fixed income are these:
- Social Security
- Pensions
- annuities
- Inherited 401K's
Etc
Any or all of these could also have various COLA's attached making them more valuable when calculating the NPV.
So the question was - how much of the $3 million do you have based on the NPV of the benefits and portfolio you are planning on?
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Re: $3 million the new rule of thumb?

Post by smitcat »

chipperd wrote: Thu Jan 30, 2020 7:27 am
Admiral wrote: Thu Jan 30, 2020 7:07 am
chipperd wrote: Thu Jan 30, 2020 7:01 am Ok, assuming that's the case. To purchase an annuity to provide the same income stream as the pension would cost just under 1 million per immediate annuity quote. So I guess, to look at our situation in that manner we have just south of 1.75 million. Still no where near 3 million tho, and we have two in college with a third on the way. We are frugal and don't' buy into the recommendations made by those that would want to make $ off of our savings, not their sycophants. (I'm looking at you Suze).
Add social security and I bet it's $3m. Or close. :D
Actually, just over 2 million if we were to purchase an annuity to cover the amounts of our combined social security.
I didn't re-read original post, but was that 3 million recommendation with or without social security included?
Just re-read original post and the fact the article left out the impact of social security on retirement income was one of the OP's criticisms, which I share.
No need for 3 million in savings, I'm living proof.
"No need for 3 million in savings, I'm living proof"
The 3 million was an example of how much you would need to generate a desired cash flow.
Your fixed incomes , plus you part time jobs , plus your portfolio is what replaces part or all of the $3 million.
There are numerous folks who do not need any portfolio due to their fixed income being high.
The article does clearly say how much this 3 million would yield each year to live on so that would need to be adjusted for any fixed incomes received.
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Re: $3 million the new rule of thumb?

Post by wrongfunds »

willthrill81 wrote: Wed Jan 29, 2020 11:01 pm
wrongfunds wrote: Wed Jan 29, 2020 7:59 pm
willthrill81 wrote: Wed Jan 29, 2020 6:08 pm
As you've discovered, there is often a lot of insight to be had in taking a granular look at such data.

I agree that it would have been insightful for them to include income as well as expenses across the quintiles. I don't see anything nefarious in their not doing so though.
I guess we disagree on the nefarious aspect of it. I believe it was done intentionally to make the data look "good". It used to be that one could trust these type of agencies to be above politics but this particular example starkly contrasts that. Are ou suggesting that this just slipped through BLS? I don't see any stupidity involved. These guys do this years in and years out for living for crying out loud. This wasn't somebody's school project for class credit.

I am disappointed that you don't see it that way.

What grade would you give to this report if one of your student had done this? B- or C+?
TMK, the BLS has been doing segregating the data by quintiles for a long time. What would you suggest that they do instead?

A good grad student could do better than this, but not an undergrad at most institutions at least except perhaps one majoring in analytics.
My complaint was about the quintiles for income being difficult to find but quintiles for expenses were prominently shown. I believe that was done deliberately, you believe that was just an innocent mistake. There was latent insinuation that poor people have no control over expenses. I don't have desire but it is highly likely that in the past both information would have been shown.

My second complaint is about mean vs median. I can not imagine how that would have slipped through the report.

The following is from the Net Worth calculator previously posted makes it crystal clear why mean is NOT be used in these type of reports. Let me refresh for rest of the audience.
In the United States, the average net worth per household is $692,100. The median net worth per household is $97,300.
Anybody using mean has nefarious intent. The 7x difference in those two "averages" tell you how important it is to understand how income, spending and net worth are intrinsically linked. BLS knows this and still used mean instead of median. No; guilty as charged.
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Re: $3 million the new rule of thumb?

Post by chipperd »

smitcat wrote: Thu Jan 30, 2020 8:17 am
chipperd wrote: Thu Jan 30, 2020 7:27 am
Admiral wrote: Thu Jan 30, 2020 7:07 am
chipperd wrote: Thu Jan 30, 2020 7:01 am Ok, assuming that's the case. To purchase an annuity to provide the same income stream as the pension would cost just under 1 million per immediate annuity quote. So I guess, to look at our situation in that manner we have just south of 1.75 million. Still no where near 3 million tho, and we have two in college with a third on the way. We are frugal and don't' buy into the recommendations made by those that would want to make $ off of our savings, not their sycophants. (I'm looking at you Suze).
Add social security and I bet it's $3m. Or close. :D
Actually, just over 2 million if we were to purchase an annuity to cover the amounts of our combined social security.
I didn't re-read original post, but was that 3 million recommendation with or without social security included?
Just re-read original post and the fact the article left out the impact of social security on retirement income was one of the OP's criticisms, which I share.
No need for 3 million in savings, I'm living proof.
"No need for 3 million in savings, I'm living proof"
The 3 million was an example of how much you would need to generate a desired cash flow.
Your fixed incomes , plus you part time jobs , plus your portfolio is what replaces part or all of the $3 million.
There are numerous folks who do not need any portfolio due to their fixed income being high.
The article does clearly say how much this 3 million would yield each year to live on so that would need to be adjusted for any fixed incomes received.
To answer you in the manner you are asking "So the question was - how much of the $3 million do you have based on the NPV of the benefits and portfolio you are planning on?" as to make it an apples to apples comparison (so not including social security), 58.3% of the 3 million recommended. Not even close to 3 million.
If you want to include social security in that equation (although the article does not, that was one of the OP's criticisms of the article), Our NPV would be 68.3% of the recommended 3 million. Still not close to the 3 million recommended.
Believe me, I'm fortunate and not complaining about what we have now and available to us in the future. We are very fortunate.
My criticism is with the article stating that 120k/year is needed to retire. That's a fascicle number.
Last edited by chipperd on Thu Jan 30, 2020 8:29 am, edited 1 time in total.
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Re: $3 million the new rule of thumb?

Post by smitcat »

chipperd wrote: Thu Jan 30, 2020 8:25 am
smitcat wrote: Thu Jan 30, 2020 8:17 am
chipperd wrote: Thu Jan 30, 2020 7:27 am
Admiral wrote: Thu Jan 30, 2020 7:07 am
chipperd wrote: Thu Jan 30, 2020 7:01 am Ok, assuming that's the case. To purchase an annuity to provide the same income stream as the pension would cost just under 1 million per immediate annuity quote. So I guess, to look at our situation in that manner we have just south of 1.75 million. Still no where near 3 million tho, and we have two in college with a third on the way. We are frugal and don't' buy into the recommendations made by those that would want to make $ off of our savings, not their sycophants. (I'm looking at you Suze).
Add social security and I bet it's $3m. Or close. :D
Actually, just over 2 million if we were to purchase an annuity to cover the amounts of our combined social security.
I didn't re-read original post, but was that 3 million recommendation with or without social security included?
Just re-read original post and the fact the article left out the impact of social security on retirement income was one of the OP's criticisms, which I share.
No need for 3 million in savings, I'm living proof.
"No need for 3 million in savings, I'm living proof"
The 3 million was an example of how much you would need to generate a desired cash flow.
Your fixed incomes , plus you part time jobs , plus your portfolio is what replaces part or all of the $3 million.
There are numerous folks who do not need any portfolio due to their fixed income being high.
The article does clearly say how much this 3 million would yield each year to live on so that would need to be adjusted for any fixed incomes received.
To answer you in the manner you are asking "So the question was - how much of the $3 million do you have based on the NPV of the benefits and portfolio you are planning on?" as to make it an apples to apples comparison (so not including social security), 58.3% of the 3 million recommended. Not even close to 3 million
Thank you - that is great.
You have the equivalent of $1.75 million for use in retirement.
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Post by grayfox »

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Last edited by grayfox on Wed Jul 15, 2020 6:25 pm, edited 2 times in total.
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Re: $3 million the new rule of thumb?

Post by wrongfunds »

Here it is always difficult to know who is serious and who is yanking our chain. But I think that is what makes this forum so interesting.
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Re: $3 million the new rule of thumb?

Post by smitcat »

grayfox wrote: Thu Jan 30, 2020 8:56 am $3 million? Assuming 4% rule and no other source of income, e.g. pensions or social security, more like $4 million.
How do I figure that?

In 1984 I bought a new truck for 15.87% of my gross annual wages.
In Jan-2020 the same model truck costs $26,050.
I would need annual draw of $164,115 for the new truck to cost 15.87%.
:arrow: At 4% SWR that would require $4.1 million

If I assume $3,000 per month social security and pensions, $36,000 per year, I only need to draw $128,115
Then with 4% SWR I only need $3.2 million.

:idea: I think someone saving for retirement should shoot for at least $3 million, in today's dollars.
By the time you retire decades from now, it may require be 5 or 6 million.
In other words, a middle-class lifestyle in 2050 maybe require $200K -$240K per year gross income.
Using your 1984 comparison to 2019 as a guide:
One million dollars in 1984 has about the same buying power as $2.5 million now.
This calculator will solve for various periods of time and amounts to compare:
https://smartasset.com/investing/inflat ... vdygdXjZqb

Of course you do not need to have $4.1 million saved to buy that truck unless you buy a new one every year.
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Post by grayfox »

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smitcat
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Re: $3 million the new rule of thumb?

Post by smitcat »

grayfox wrote: Thu Jan 30, 2020 9:23 am
smitcat wrote: Thu Jan 30, 2020 9:15 am
Using your 1984 comparison to 2019 as a guide:
One million dollars in 1984 has about the same buying power as $2.5 million now.
This calculator will solve for various periods of time and amounts to compare:
https://smartasset.com/investing/inflat ... vdygdXjZqb

Of course you do not need to have $4.1 million saved to buy that truck unless you buy a new one every year.
You can't use CPI inflation because it doesn't include the quality improvements from 1984 to 2020.
If I use CPI calculator, I can not buy a new truck. I can only buy a 2013 truck with high mileage.

I want to stay middle class and be able to buy the new truck.
With CPI-only COLA you get poorer and poorer
Of course if you only single out one item your results will vary.
There are many items that will fall over time as well....YMMV
EddyB
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Re: $3 million the new rule of thumb?

Post by EddyB »

grayfox wrote: Thu Jan 30, 2020 9:23 am
smitcat wrote: Thu Jan 30, 2020 9:15 am
Using your 1984 comparison to 2019 as a guide:
One million dollars in 1984 has about the same buying power as $2.5 million now.
This calculator will solve for various periods of time and amounts to compare:
https://smartasset.com/investing/inflat ... vdygdXjZqb

Of course you do not need to have $4.1 million saved to buy that truck unless you buy a new one every year.
You can't use CPI inflation because it doesn't include the quality improvements from 1984 to 2020.
If I use CPI calculator, I can not buy a new truck. I can only buy a 2013 truck with high mileage.

I want to stay middle class and be able to buy the new truck.
With CPI-only COLA you get poorer and poorer
Except that the 2013 truck today is likely an improvement over the 1984 truck when it was new.
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Re: $3 million the new rule of thumb?

Post by Admiral »

grayfox wrote: Thu Jan 30, 2020 9:23 am
smitcat wrote: Thu Jan 30, 2020 9:15 am
Using your 1984 comparison to 2019 as a guide:
One million dollars in 1984 has about the same buying power as $2.5 million now.
This calculator will solve for various periods of time and amounts to compare:
https://smartasset.com/investing/inflat ... vdygdXjZqb

Of course you do not need to have $4.1 million saved to buy that truck unless you buy a new one every year.
You can't use CPI inflation because it doesn't include the quality improvements from 1984 to 2020.
If I use CPI calculator, I can not buy a new truck. I can only buy a 2013 truck with high mileage.

I want to stay middle class and be able to buy the new truck.
With CPI-only COLA you get poorer and poorer
I think it depends whether your personal expenses will rise at the CPI inflation rate, or some other rate. A mortgage is (typically) the largest expense in the budget. That is fixed. If that goes away, you have eliminated your largest expense. (Yes, taxes also go up.) Food, yes, but--assuming one has kids--that expenditure, too, should also go down. No kids at home, utilities should go down.

Cars in the future are likely to be mostly electric. Those may cost more up front but cost less to maintain and last longer. And electricity costs less than gas. The main driver of rising expenses in retirement, it seems to me, is healthcare.
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Post by grayfox »

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EddyB
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Re: $3 million the new rule of thumb?

Post by EddyB »

grayfox wrote: Thu Jan 30, 2020 9:41 am
smitcat wrote: Thu Jan 30, 2020 9:27 am
Of course if you only single out one item your results will vary.
There are many items that will fall over time as well....YMMV
I used a new vehicle because it is the second most expensive item I buy and i remember the exact price I paid and when.

What about the most expensive item, a house?
In Dec-1979 I paid $47,500 for a 3BR house.
According the CPI calculator, in Dec-2019 that is $159,142.96.
The house sold in 2019 for $296,6000

For $159K today, in the same area, I can only buy a 1 bedroom condo, i.e. downgrade.

If you want to stay middle class, your income has to grow faster than CPI.
If it just grows at CPI, you get poorer.

So, yeah, I think you need $3 million today to live middle class in retirement.
I’m one of those people who is ok with the idea that people who make $120,000/year may be middle class, but once we get to the claim that it’s really the floor for being middle class, it’s a bit hard to reconcile even for me.
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Re: $3 million the new rule of thumb?

Post by Admiral »

EddyB wrote: Thu Jan 30, 2020 9:58 am
grayfox wrote: Thu Jan 30, 2020 9:41 am
smitcat wrote: Thu Jan 30, 2020 9:27 am
Of course if you only single out one item your results will vary.
There are many items that will fall over time as well....YMMV
I used a new vehicle because it is the second most expensive item I buy and i remember the exact price I paid and when.

What about the most expensive item, a house?
In Dec-1979 I paid $47,500 for a 3BR house.
According the CPI calculator, in Dec-2019 that is $159,142.96.
The house sold in 2019 for $296,6000

For $159K today, in the same area, I can only buy a 1 bedroom condo, i.e. downgrade.

If you want to stay middle class, your income has to grow faster than CPI.
If it just grows at CPI, you get poorer.

So, yeah, I think you need $3 million today to live middle class in retirement.
I’m one of those people who is ok with the idea that people who make $120,000/year may be middle class, but once we get to the claim that it’s really the floor for being middle class, it’s a bit hard to reconcile even for me.
Agree. And anyway since there's no universally accepted definition of what "middle class" actually includes or refers to, it's all relative. If you make $120k in some states (or even in some areas of some other states) you're likely in the top 1% of earners. Does that make you "upper class" when someone with that same salary in NY or SF can't make ends meet?
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HomerJ
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Re: $3 million the new rule of thumb?

Post by HomerJ »

grayfox wrote: Thu Jan 30, 2020 8:56 amI think someone saving for retirement should shoot for at least $3 million, in today's dollars.
By the time you retire decades from now, it may require 5 or 6 million.
In other words, a middle-class lifestyle in 2050 maybe require $200K -$250K per year gross income.
Looks guys, it's fine that people want $120,000 a year in today's dollars to retire (PLUS Social Security).

But it's not middle-class. I think maybe people here are confusing income while working and expenses during retirement. Even an INCOME of $120,000 is not middle-class, but definitely EXPENSES of $120,000 is fairly high-end.

I don't know if you guys actually track your expenses. We do.

When the mortgage is gone, and you're no longer saving, and the kids are out of the house, you probably don't need as much as you think.

Someone who can save $3 million is going to get a pretty good amount in Social Security too.

$120,000 plus another $40,000 in Social Security in today's dollars is not middle-class.
Last edited by HomerJ on Thu Jan 30, 2020 10:20 am, edited 2 times in total.
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Admiral
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Re: $3 million the new rule of thumb?

Post by Admiral »

HomerJ wrote: Thu Jan 30, 2020 10:06 am
grayfox wrote: Thu Jan 30, 2020 8:56 amI think someone saving for retirement should shoot for at least $3 million, in today's dollars.
By the time you retire decades from now, it may require 5 or 6 million.
In other words, a middle-class lifestyle in 2050 maybe require $200K -$250K per year gross income.
Looks guys, it's fine that people want $120,000 a year in today's dollars to retire (PLUS Social Security).

But it's not middle-class. I think maybe people here are confusing income while working and expenses during retirement. Even an INCOME of $120,000 is not middle-class, but definitely EXPENSES of $120,000 is fairly high-end.

I don't know if you guys actually track your expenses. We do.

When the mortgage is gone, and you're no longer saving, and the kids are out of the house, you probably don't need as much as you think.

Someone who can save $3 million is going to get a pretty good amount in Social Security too.

$120,000 plus another $40,000 in Social Security in today's dollars is not middle-class.
Everyone thinks they are middle class.
According to a 2015 poll by Pew Research Center, people who self-identify as the middle class span from those who make less than $30,000 a year (household income) to those who make over $100,000.

For example, 34 percent of respondents with household income below $30,000 identify themselves as the middle class, whereas 51 percent of those earning more than $100,000 said they are the middle class. (Only six percent of the $100,000+ group self-identify as upper class.)
https://observer.com/2018/05/everyone-i ... plain-why/
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