Is a $100k/year retirement doable?

[minority_finance_mo]

http://thechicagofinancialplanner.com/2013/06/10/a-100000-a-year-retirement/

How many people think they actually need 100k/year once they retire... No wonder so few people believe early retirement is possible...

[MDM]

Yes, they missed the biggest opportunity: drop your annual spending from $100K to $80K and (based on the example), you are done.

Other than that, the advice is actually pretty good.  E.g., these links:
http://thechicagofinancialplanner.com/2011/11/27/indexed-annuities-da-coach-likes-them-should-you/
http://thechicagofinancialplanner.com/2013/01/14/3-financial-products-to-consider-avoiding/
http://thechicagofinancialplanner.com/2013/05/30/forget-retirement-seek-financial-independence/

[hodedofome]

Take a look at the name of the website: CHICAGO financial planner...

Most of their clients are probably well-to-do folks in the Chicago area (read: expensive cost of living).

For them to maintain their standard of living in a place like that, yeah $100k may be required. But move to another area of the country and they could comfortably live on half that. Big cities aren't cheap unless you live way out in the suburbs and don't have to commute.

[arebelspy]

You don't need 100k to live in Chicago hoded.  But yes, the authors being financial planners have an incentive to scare people into needing more (as long as it doesn't backfire and the people don't invest at all because they feel it's hopeless).

[bzzzt]

Most of their clients are probably well-to-do folks in the Chicago area (read: extreme lifestyle inflation).

Fixed that for you...

Just like most places, people around here piss money away on trivial things. While $100k income doesn't feel that wealthy here, I know people who piss away almost $200k/year and are more or less check-to-check. The amount of wasted income is staggering.

[capital]

Chicago is nowhere near as high cost-of-living as NYC/SF/LA. A modest house in a nice suburb near mass transit, or a condo right in the middle of downtown, can both be had is the $250,000 range. A modest but lovely 1 bedroom condo in the same nice suburb can be had under $100,000, and would be perfectly suitable for a retired couple. In many other big cities, it's hard to avoid paying a lot in rent/mortgage without making huge compromises like a brutal commute or a very dangerous neighborhood with bad schools, but in Chicago, that just isn't the case.

[minority_finance_mo]

Chicago is nowhere near as high cost-of-living as NYC/SF/LA. A modest house in a nice suburb near mass transit, or a condo right in the middle of downtown, can both be had is the $250,000 range. A modest but lovely 1 bedroom condo in the same nice suburb can be had under $100,000, and would be perfectly suitable for a retired couple. In many other big cities, it's hard to avoid paying a lot in rent/mortgage without making huge compromises like a brutal commute or a very dangerous neighborhood with bad schools, but in Chicago, that just isn't the case.

My family is a family of five living in NYC and spends ~$55k/year and I'm always bitching about what a volcano of wastefulness we are. Even in big cities, there are pockets/boroughs with lower rent prices, where you can benefit from the high salaries without spending the rest of the country's monthly budget on rent alone.

[capital]

Chicago is nowhere near as high cost-of-living as NYC/SF/LA. A modest house in a nice suburb near mass transit, or a condo right in the middle of downtown, can both be had is the $250,000 range. A modest but lovely 1 bedroom condo in the same nice suburb can be had under $100,000, and would be perfectly suitable for a retired couple. In many other big cities, it's hard to avoid paying a lot in rent/mortgage without making huge compromises like a brutal commute or a very dangerous neighborhood with bad schools, but in Chicago, that just isn't the case.

My family is a family of five living in NYC and spends ~$55k/year and I'm always bitching about what a volcano of wastefulness we are. Even in big cities, there are pockets/boroughs with lower rent prices, where you can benefit from the high salaries without spending the rest of the country's monthly budget on rent alone.

NYC can be had for a less-unreasonable price than people insist it demands, especially if you embrace city living and live carfree in a modest apartment. That's how I live, too. But housing is still by far the largest mandatory expense, and it's far larger in NYC than Chicago for the same quality of life. There's just nothing remotely like a nice neighborhood with $250k houses with a half-hour subway commute downtown, or a decent downtown apartment for $200k (perhaps you could find a 150sqft studio in that price range in Manhattan?).

[minority_finance_mo]

Chicago is nowhere near as high cost-of-living as NYC/SF/LA. A modest house in a nice suburb near mass transit, or a condo right in the middle of downtown, can both be had is the $250,000 range. A modest but lovely 1 bedroom condo in the same nice suburb can be had under $100,000, and would be perfectly suitable for a retired couple. In many other big cities, it's hard to avoid paying a lot in rent/mortgage without making huge compromises like a brutal commute or a very dangerous neighborhood with bad schools, but in Chicago, that just isn't the case.

My family is a family of five living in NYC and spends ~$55k/year and I'm always bitching about what a volcano of wastefulness we are. Even in big cities, there are pockets/boroughs with lower rent prices, where you can benefit from the high salaries without spending the rest of the country's monthly budget on rent alone.

NYC can be had for a less-unreasonable price than people insist it demands, especially if you embrace city living and live carfree in a modest apartment. That's how I live, too. But housing is still by far the largest mandatory expense, and it's far larger in NYC than Chicago for the same quality of life. There's just nothing remotely like a nice neighborhood with $250k houses with a half-hour subway commute downtown, or a decent downtown apartment for $200k (perhaps you could find a 150sqft studio in that price range in Manhattan?).

There are trade-offs for sure. We live in one of the outer boroughs (Staten Island), so our rent is cheaper, but that also means my commute is an hour both ways by public transportation. Then again, being in NYC means I don't need a car, so...

We're paying $1250/month for a 2br. While it's a bit snug with 5 people, it definitely isn't the craziness that is sometimes quoted as a "necessity" in New York. Similarly, I have some friends living in Spanish Harlem, sharing a $2000/month 2br between two people. That comes out to $1,000/month and they each still get their own rooms. Again, their commute is a bit longer than optimal at ~45 minutes one way each.

High rent, even in cities like NYC, is not mandatory. You just have to be aware of the trade-offs.

[Pooperman]

My mother is going to outdo this. $100k is for suckers! When she and my stepfather eventually take SS, they will get like $100k/yr together. It's dumb. Add to that a nest egg of $5 million, and they've got a retirement of $300k before taxes (~$250k post tax) every freaking year! She says she wants to travel, but she can spend $5k every week for the rest of her life and never run out of money!

[boarder42]

it really doesnt take too much to get to that level.  we plan to be between 60-70k in today's dollars right now.  Would only take us a couple more years still Pre 40 to get to 100k a year if we wanted to. 

[dude]

it really doesnt take too much to get to that level.  we plan to be between 60-70k in today's dollars right now.  Would only take us a couple more years still Pre 40 to get to 100k a year if we wanted to.

Yeah, between pension and 4% 401k w/d, I'll likely be able to take close to $100,000 about 5 years from now. When SS kicks in (provided they don't start means-testing!), it will be significantly more.  I am definitely very fortunate in that regard. 

[boarder42]

it really doesnt take too much to get to that level.  we plan to be between 60-70k in today's dollars right now.  Would only take us a couple more years still Pre 40 to get to 100k a year if we wanted to.

Yeah, between pension and 4% 401k w/d, I'll likely be able to take close to $100,000 about 5 years from now. When SS kicks in (provided they don't start means-testing!), it will be significantly more.  I am definitely very fortunate in that regard.

what is means testing... If the federal govt has been taking money from me all these years and will be giving it to those who didnt save... I'm going to be pissed.

[MDM]

what is means testing... If the federal govt has been taking money from me all these years and will be giving it to those who didnt save... I'm going to be pissed.

For the short version, see http://www.ssa.gov/planners/taxes.htm:

If you:
    file a federal tax return as an "individual" and your combined income* is
        between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits.
        more than $34,000, up to 85 percent of your benefits may be taxable.
    file a joint return, and you and your spouse have a combined income* that is
        between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits
        more than $44,000, up to 85 percent of your benefits may be taxable.

*Note: Your adjusted gross income + Nontaxable interest + ½ of your Social Security benefits = Your "combined income"

For the long version, see page 7 of http://www.irs.gov/pub/irs-pdf/p915.pdf