<p>How much income do you think you will need to comfortably retire??</p>
<p>And where is that income going to come from?</p>
<p>I’m just wondering when I can pack it in.</p>
<p>There’s “comfortably retire” (and doesn’t that sound nice!:)), and then there’s “survive into your 10th decade with medical problems.” That second one is really, really expensive.</p>
<p>I’ve read somewhere that we’re all supposed to accumulate a million dollars in savings, retirement accounts, and home equity in order to live comfortably in retirement. Even if this is true, I don’t see it happening for most boomers. </p>
<p>I figure we’ll work until we can’t anymore. Our income in retirement will come from our individual IRAs (no employer-funded pensions for either of us), our humble investments, whatever we’ve got in the bank and stuffed under the mattress, and the eventual sale of our home. We never even think about Social Security when we talk about retirement, though I think it will still be there for our generation at least in some (probably diluted) form. So if it is still there, it will be a nice bonus. :)</p>
<p>And really, how much I think I will need to comfortably retire has no correlation whatsoever on what the Op will need to do the same.
I recommend the Op disclose his full financial details and desires to a trusted financial planner. Then he should be able to get a sound, informed, educated response.
It would certainly not be smart to reveal all here, nor would it be smart for typical people here to give responses without knowing details.</p>
<p>I don’t know the number but I’m tasking the wife to find out. </p>
<p>I know it will take a re-location to one of our many Texas tiny towns on life support where a nice country house is under $100K. I’m constantly on the look-out for candidates. Thankfully my W’s service with a major corp gives us health insurance and a small pension.</p>
<p>Depends, what’s the powerball jackpot?</p>
<p>Well, I’m asking because I’m struggling with an incredibly bizarre work situation. I’ve lasted six months, and I’m not sure how long I can keep this up.</p>
<p>So, whenever I get into a difficult situation, I start dreaming of packing it up!</p>
<p>I only buy lottery tickets when I truly HATE my job. Which isn’t too often, I probably have purchased 3 Powerball tickets in the past 5 years. 
Yes, I know it is a waste of money. But it makes me feel better. </p>
<p>I have a “Powerball” number. I only by when the jackpot is over $4 million (which it usually is). That is what I need to chuck it all for the rest of my life and live exactly as I want to live.</p>
<p>VeryHappy, I had a job I hated, so in 2008, I decided we did have enough money that I could afford to retire. Several months later the stock market crashed and our savings took a huge nose-dive. Then H was downsized to a job paying him 25% less. I no longer felt comfortable, as least psychologically. My retirement lasted about six months. I was lucky to be able to start my own business, which allows me to work part-time, exclusively from the home. It is a huge improvement over my prior work situation. While I don’t earn nearly the same amount of money, it is enough to live on frugally without dipping into savings and I am totally happy. </p>
<p>I don’t believe there is any such thing as a number. Even if we were 100% invested in fixed income securities, run-away inflation could take its toll. As others have pointed out, unexpected health challenges or any number of other financial needs (parents, children) could change the equation. </p>
<p>If you dislike your job, I would try to find a new job or a career, recognizing that it isn’t easy. H continues to look (two years after being downsized), with no luck. But he hasn’t given up.</p>
<p>A lot of it depends on what you are use to living on. A lot of folks believe that they can live off a lot less once they retire and that may be true, if certain conditions are met - particularly if your house is paid off and you don’t have any debt. But it does require a certain amount of ‘scaling back’ if you are the type of family that is use to buying the latest technology and new cars every 5 years. If you are planning to travel extensively ( a common goal) you are not going to be able to scale back as much as you thought - international travel isn’t cheap.</p>
<p>A family that is use to living off $80,000 a year needs about $1.5 million saved. According to my husband, who is a CPA and financial planner, if you live off $200,000 per year you need roughly $4 million. Of course, you may not be paying tax on all of your retirement income. But remember that people live a lot longer than we use to - it’s not unrealistic to live into your late eighties and the return on investment has fallen significantly.</p>
<p>Unfortunately, a lot of people planned to use the equity in their homes as a retirement nest egg…well, we all know how well that has worked out :(</p>
<p>I will say that in both my husband’s and my family, not one male who reached the age of 65 recently has retired. I think that retiring at 65 is going to be a thing of the past. </p>
<p>One great piece of advice I heard was to start living on what you plan to live on in retirement at least 5 years * before * you retire. It’s a great test to see if you can truly do it and it will allow you to save more money.</p>
<p>More.</p>
<p>Munis. Trading on the side for fun.</p>
<p>No $ number, but 6/1/2014 is my date, 10/1/2014 for H. So looking forward to it.</p>
<p>I really think “retirement” as a concept is over. When 65 was the age to get Social Security, being 65 was really, really, really old…not many folks actually made it to the age to sit on the porch and watch the world go by. I’ve worked all my adult life. I don’t see sitting for 30 years expecting to have an unlimited “retirement lifestyle”…whatever the heck that is. As long as I remain healthy, I will need to work. I don’t have high expectations that Social Security will be there for hubs, nor will the public employees retirement system I am required to subsidize. I may change jobs to something less strenuous – but really – a society that expects to have decades of playtime because it’s “deserved”? Sorry – I’d be bored off my nut!</p>
<p>I expect we will need about the same income that we have now. Our mortgage is paid off and we have no debt. H has been working for the same company for 30 years, and has a traditional pension and retiree medical benefits (which are not free, but still worthwhile). He expects to retire in 2017 when youngest graduates college. </p>
<p>I haven’t worked for 20 years, and am very busy (not bored at all!) so I am sure I will keep up with my volunteer work, just less at the schools and more in other areas. I am looking forward to being able to travel during times school is in session.</p>
<p>You will need A LOT more than you think, that’s for sure.</p>
<p>Recent article from Canada:
</p>
<p>If the recent changes to health care are not reversed, when we are in horrible pain we will all need to have a ton of money saved to either jump the year long line, or fly elsewhere to get relief.</p>
<p>
</p>
<p>So, yeah. Whatever you think you need, save a lot more.</p>
<p><a href=“http://www.theglobeandmail.com/news/national/time-to-lead/healthcare/is-this-private-clinic-surgeon-a-crusader-or-criminal/article1787199/[/url]”>http://www.theglobeandmail.com/news/national/time-to-lead/healthcare/is-this-private-clinic-surgeon-a-crusader-or-criminal/article1787199/</a></p>
<p>What do you mean money for future retirement? I expect my kids to support me, isn’t that why we have paid so much for their education? I have no more left.</p>
<p>According to my financial planner, the short cut way to an answer is:</p>
<p>1) what do you make now - assume that you will need the same level of income at retirement. Call this I (Income)</p>
<p>2) What do you assume the long term rate of return will be on your assets? Call this R (Rate)</p>
<p>3) Assume that how much you need is = N (Number)</p>
<p>Then the formula for calculating this is: N = (I * 100) / R</p>
<p>As an example, many websites say that the most common rate of return is 4%.</p>
<p>So using the example above of a couple making $200,000 (I), the number can be calculated as follows:</p>
<p>N = (200,000 * 100) / 4</p>
<p>N= 20,000,000 / 4</p>
<p>N = $5,000,000 - so a 5 million dollar number if you want 200,000 in income after retirement.</p>
<p>He then said that this kind of analysis is horribly imprecise and that the answer really needs to take other things into account. </p>
<p>1) Do you plan to live in the same house? Or sell it and move to smaller quarters / a cheaper area. If so, what are the expected proceeds from that transaction. </p>
<p>2) How long do you expect to live? How about your spouse?</p>
<p>3) Do you plan to leave any money behind? Analysis above leaves the number as your inheritance.</p>
<p>4) Do you have long term care insurance? If not, a stroke or other crippling illness can wipe your your savings and leave your partner with nothing to live on. As he put it, “Better off dead fast than a long lingering death from a financial point of view” (no he isn’t a cold fish - he presented it very nicely.)</p>
<p>5) Do you really need your current level of income in retirement? When your kids are on their own and you no longer have that burden or the burden of a house payment, how does that change the equation?</p>
<p>6) Inflation and returns on investments are not a straight lines. The 4% number assumes long term rates of inflation and normal - but the US economy has had many decades where that number would be either too high or too low - so the question is are you lucky?</p>
<p>Having shown what other things need to be taken into account, we then spent a couple of hours working through the answer - and got a number I am comfortable with. </p>
<p>He used a monte carlo simulator to calculate a probability of success - e.g. where I die with money still in the bank. A few thousand runs to see what chance I had. </p>
<p>Some of the individual lines were really interesting and thought provoking:</p>
<p>1) both my wife and I die within 5 years of retirement - tons of money left over (I decided to call that the “went to paris and the eiffel tower collapsed” scenario) </p>
<p>2) we both live to 100+ option - and run out of money at 98 (The curse of good genes)</p>
<p>3) Most commonly, one or the other of us made it into our 90s with the other partner going in their 80s. Life expectancies are really up over our parents…</p>
<p>Anyway, I agree with the advice - see a CFP - well worth the investment.</p>
<p>Great question, Very Happy. </p>
<p>We have lived carefully all of our lives. I am sure many of our dd’s friends thought we were poor. They all lived in very lovely homes, we live in a little townhouse (translation, row home) condo. We always have close to 200,000 miles on a car before trade-in. </p>
<p>We would be very comfortable now with neither one of us working if we didn’t have to pay for healthcare. DH retired a couple of years ago from his job to take a position with a non-profit that pays little but has excellent benefits. Unfortunately, the main grant that funded the position runs out this year and it is questionable whether the other sources of income will be enough to continue. </p>
<p>I continue to do some counseling, consulting and workshops and I suspect I will do them until people stop hiring me. It is perfect. I make a little money and I keep my mind active. There is nothing like doing stand-up for high school gifted students to keep you on your toes!!</p>
<p>If, however, DH’s gig with the non-profit is over, we will have to work to cover healthcare expenses and I might entertain a new career. I have always wanted to be in real estate - it is one field where being older wouldn’t be a detriment. As long as I continue “dressing young.”</p>
<p>It usually works out something like this:</p>
<ul>
<li><p>The “number” is typically much bigger than people think. Unless you have a nice cushy pension most people will need to retire as multi-millionares to maintain a comfortable middle class lifestyle . </p></li>
<li><p>What it takes to get there is often not as bad as people think, assuming they start early enough. </p></li>
</ul>
<p>Someone who starts saving just $500 per month every month from their first job through to retirement at 67 would have just shy of $2 million available for tax free income at retirement assuming modest annual returns of 7%. Assuming that $500 contribution is increased with inflation moving forward then they would comfortably be a multi-millionaire at retirement. </p>
<p>Yes, $500 per month can be a stretch to start with but most people can find that level of savings with a few simple cutbacks (pack your own lunch, brew your own vs daily Starbucks pit stops, …). </p>
<p>If someone at 40 starts with the same plan they would only have about $500k at retirement. Those early years make a huge difference. </p>
<p>I’ve had this conversation with friends of mine who say they don’t have $500 per month in their budget for retirement savings… which I then point “well, you had enough for that new car in your driveway, the new pool in your backyard and those three vacations you took last year…”</p>
<p>The issue is that, even after the previous downturn, many still just don’t get it. It’s important to reward oneself and have a nice lifestyle but it’s also important to save for the future. If you’re simply doing the former at the expense of the latter then all you’re building for the future is a house of cards.</p>
<p>I take some consolation in the fact that I will not have tuition payments (private school or college) to make during retirement! 
That right there will make my income requirements a lot lower than they are today.</p>
<p>Spidey, you are not wrong about point #2 in your comment on health care. New treatments are more and more expensive… it seems impossible to predict my health care costs in retirement. I suppose maybe I should assume they equal that tuition bill I will be so happy to kick to the curb. :(</p>
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<p>I agree, but for different reasons. I don’t know one male relative in our families who worked until they reached 65. The reasons include early death, layoffs, and opportunity for early retirement in the case of those with union jobs w/good retirement benefits.</p>
<p>I’ll have to gently ask my dad (one of the layoffs) how much they get per month from their various income sources. He and his wife are as frugal as they come, live in a small house in an inexpensive area, rarely go out, and no longer travel. He recently cashed out an IRA and mentioned it along with the lack of SS COLA increases as sources of concern.</p>
<p>I honestly don’t know how most baby boomers are going to swing retirement.</p>