Author Topic: "Need" $2.5M for retirement  (Read 5494 times)

Exflyboy

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"Need" $2.5M for retirement
« on: April 30, 2015, 12:03:57 PM »
"Its a good start" she says...:)

http://www.cnbc.com/id/102489894

AM43

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Re: "Need" $2.5M for retirement
« Reply #1 on: April 30, 2015, 12:16:20 PM »
I think this topic has been covered in other posts, but to sum it all up every person is different when it comes to retirement.
Some can happily live on much less, others need much more.
I personally shoot for $2m because of certain things I would like to do, but can easely live on 1m or less.
I am half way there BTW.

MgoSam

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Re: "Need" $2.5M for retirement
« Reply #2 on: April 30, 2015, 12:36:48 PM »
She very well may based on her expenses, what she plans to do with her money, and where she plans to keep it. Someone that stashes their 2.5M in the bank collecting nothing likely will need far more than someone that invests it in an index fund. Someone that is going to be taking care of their children and grandkids will have more expenses than someone that is childfree.

dycker1978

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Re: "Need" $2.5M for retirement
« Reply #3 on: April 30, 2015, 12:38:39 PM »
from the comments:
"Try to save as much as you can but spend your time on health and family rather than worrying about your retirement goal.
When you get to your retirement age 55 or 65, then plan accordingly your next step based on your savings..

If I have $2.5 M, then I will buy a class M or nice sports car, a beach house, and travel internationally

If I have $1.5, then I might go with Honda or Toyota, rent a 3 BR apartment, and travel within US/Canada

If I have 500K, then I will go for a 2nd hand car, rent a 1 BR apartment, and travel locally.

If I have nothing, then I will continue to work until SS starts

With all above options, I want to make sure to stay healthy and close to the family"

What do you think they will end up with

nereo

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Re: "Need" $2.5M for retirement
« Reply #4 on: April 30, 2015, 12:40:24 PM »
I stopped listening as soon as she said "traditionally workers relied upon a pension, social-security, and savings".  She hasn't done her homework.  It's simply not true that most workers had a pension at any point in history. 

... but yeah - $2.5MM is a good start if you want to spend $100k/year.

MgoSam

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Re: "Need" $2.5M for retirement
« Reply #5 on: April 30, 2015, 01:10:53 PM »

... but yeah - $2.5MM is a good start if you want to spend $100k/year.

That's assuming a 4% withdrawal rate, which assumes that she is investing the money. If it is sitting in the bank collecting nothing, then she is losing around 3% annually in inflation, and still needing to live off that money. I don't know how old she is, but would need to spend far less than 100k a year unless she other sources of money coming in.

Travis

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Re: "Need" $2.5M for retirement
« Reply #6 on: April 30, 2015, 01:15:55 PM »

... but yeah - $2.5MM is a good start if you want to spend $100k/year.

That's assuming a 4% withdrawal rate, which assumes that she is investing the money. If it is sitting in the bank collecting nothing, then she is losing around 3% annually in inflation, and still needing to live off that money. I don't know how old she is, but would need to spend far less than 100k a year unless she other sources of money coming in.

Most of the "retirement" calculators I've seen pretty much assume you have your entire nest egg sitting in cash which is why they say you should have 70-80% of your working age income in the bank.  That $2.5 million is probably meant to represent $70k/year for a 30-40 year retirement with no investments, just spending it down from a money market.

boarder42

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Re: "Need" $2.5M for retirement
« Reply #7 on: April 30, 2015, 01:37:10 PM »
yeah i'll probably have around 2.5MM in future dollars when we call it quits.  i'm gonna fall into the OMY syndrome

nereo

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Re: "Need" $2.5M for retirement
« Reply #8 on: April 30, 2015, 01:58:56 PM »

... but yeah - $2.5MM is a good start if you want to spend $100k/year.

That's assuming a 4% withdrawal rate, which assumes that she is investing the money. If it is sitting in the bank collecting nothing, then she is losing around 3% annually in inflation, and still needing to live off that money. I don't know how old she is, but would need to spend far less than 100k a year unless she other sources of money coming in.
yeah... hence the key phrase "is a good start".  That's what the article said and that's what I was reiterating. If you follow that misaligned advice you probably should have a < 4% WR.

TheGrimSqueaker

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Re: "Need" $2.5M for retirement
« Reply #9 on: April 30, 2015, 02:54:43 PM »
I stopped listening as soon as she said "traditionally workers relied upon a pension, social-security, and savings".  She hasn't done her homework.  It's simply not true that most workers had a pension at any point in history. 

... but yeah - $2.5MM is a good start if you want to spend $100k/year.

It's kind of sad how quickly people adapt and decide that something is "traditional" when in reality it's only been in existence a few decades (relative to thousands of years' worth of recorded human history). Also annoying is the mistaken notion that what's traditional is what's best.

Annuities (dating back to Roman times) are actually older than stock investments (very early 1600s), which are older than pensions (1630s). All of these are far older than Social Security. Pensions were originally for elder relatives of wealthy families, and the working or military-enlisted class didn't get within sniffing distance of them until the 1800s.

"Traditionally", workers didn't retire. The only people who could afford to stop working and live off their investments or their business were business owners, wealthy landowners, and people who made their fortune in trade. These generally weren't the people pushing the brooms; those poor folks just worked until they were too sick or old to continue, then went home to die.

nereo

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Re: "Need" $2.5M for retirement
« Reply #10 on: April 30, 2015, 03:19:27 PM »

Annuities (dating back to Roman times) are actually older than stock investments (very early 1600s), which are older than pensions (1630s). All of these are far older than Social Security. Pensions were originally for elder relatives of wealthy families, and the working or military-enlisted class didn't get within sniffing distance of them until the 1800s.

I never realized that annuities had such a long history. My complaint with pensions is how they are discussed; people talk about them wistfully and perpetuate the same falsehood every time; that the majority of workers had pensions a few decades ago which allowed for a full and happy retirement.  Simply not true.  Also, if asked which better serves workers, having a 401(k) that you can rollover and vests immediately (or at least within a year), or a pension that requires you to work for the same company for 20+ years in order for it to have any value, I'd argue strongly that the 401(k) is the better option.  Pensions lock you into a single employer, and if the company goes belly up.... well, you're screwed.  Sorry!


galliver

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Re: "Need" $2.5M for retirement
« Reply #11 on: April 30, 2015, 05:04:40 PM »
I stopped listening as soon as she said "traditionally workers relied upon a pension, social-security, and savings".  She hasn't done her homework.  It's simply not true that most workers had a pension at any point in history. 

... but yeah - $2.5MM is a good start if you want to spend $100k/year.

It's kind of sad how quickly people adapt and decide that something is "traditional" when in reality it's only been in existence a few decades (relative to thousands of years' worth of recorded human history). Also annoying is the mistaken notion that what's traditional is what's best.

Annuities (dating back to Roman times) are actually older than stock investments (very early 1600s), which are older than pensions (1630s). All of these are far older than Social Security. Pensions were originally for elder relatives of wealthy families, and the working or military-enlisted class didn't get within sniffing distance of them until the 1800s.

"Traditionally", workers didn't retire. The only people who could afford to stop working and live off their investments or their business were business owners, wealthy landowners, and people who made their fortune in trade. These generally weren't the people pushing the brooms; those poor folks just worked until they were too sick or old to continue, then went home to die.

Traditionally, most people were peasants and lived in extended family groups and sort-of-tribal villages. Grandma and Grandpa probably didn't do the heavy labor so much anymore. They cooked the food, cleaned the house, made and mended the clothes and shoes and tools, and gave sage advice. I say this as someone one generation away from a subsistence-farming household. i.e. my mom's family grew/foraged a large portion of their food when she was growing up. Her grandma certainly wasn't digging up potatoes or splitting wood. I know she baked, though. So, the elders probably retired by being supported by their progeny, and pulling their weight in lower-impact tasks as they were able.

ender

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Re: "Need" $2.5M for retirement
« Reply #12 on: May 04, 2015, 04:33:38 PM »
yeah i'll probably have around 2.5MM in future dollars when we call it quits.  i'm gonna fall into the OMY syndrome

I try not to think about it or how much I agree with this statement :)

But I try to find ways to enjoy my job, too, and if I love my job all OMY means is more money to give away, so that's not the worse thing ever.