Am I going to end up in the poor house in retirement?

[cantdrv55]

According to the latest issue of Money magazine, less than 1% of all 401Ks right now are in the seven figure bracket. The number though has been increasing since 2012 which is the good news. I don't believe I will get there by the time I turn 65 unless I start stashing away more than the 15% I am putting away now. I maxing out the 401K but I just started too late to catch up. I will have to supplement it with another retirement savings plan.

Anyway, is $1M going to be adequate for retirement in the year 2030?

[biosurfer1]

For 65? $1 million would barely be barely adequate now for retirement, let alone in 15 years. If you're able to spend "only" $50k/year (including big items like health insurance) you better hope you don't live past 85. Put away as much as possible now and take full advantage of "catch up" rules.

Also, that statistic is complete BS. If they really did look at ALL 401k's, then you're talking about how many millions of people who are my age (34) or younger and of course they aren't going to have 7 figure 401k's!

[Porsche-O-Phile]

I mightn't bother. Seriously. One long-ish hospital stay and it's all wiped out. A few months in a nursing home and you're financially dead - they'll seize every asset you have that's not carefully protected.

[aschen]

if you can live off 4-6 % of the gross, you wont need to ever touch the principal. I dont believe 1 million will be enough for most people.


I also dont believe 15% savings for 30 years is quite enough either. The calculation is heavily dependant on expected returns as well as age of retirment and expected life

However I was looking at some gross estimations the other day and it seemed like i needed to save %20+ for 35 years to retire with 100% salary replacement.

[wdfifteen]

I wouldn't rely on $1million in stocks and bonds for my retirement. I would be planning an income producing investment (ie real estate) into my investment mix. It's a dilemma, I know, because you don't get the the employer match with a real estate investment. My strategy would be to put the max in a 401k that will get me the employer match and invest the rest of my savings budget outside the market.

[romad]

"better hope you don't live past 85"....thats friggin hilarious. Million dollars is more then enough to retire on......... Your sending habits at 30 and 60 are world apart,,,,also move out of California

[bpu699]

Money managers will tell you you need 2-3 million to retire. Mine told me I need 5-10 .

Personally, I think its a joke. Very few people will have anywhere near what is "suggested." I figure I will have enough, and am not going to worry. You can always throttle down your expenses, and sell your house... Last resort, become a burden on your kids.

50% of the population has less than $50,000 put away for retirement.

I see some pretty big welfare states and programs coming up...

People don't save. Pensions were not a bad thing...

[mreid]

Yes.

[look 171]

Originally Posted by Porsche-O-Phile

I mightn't bother. Seriously. One long-ish hospital stay and it's all wiped out. A few months in a nursing home and you're financially dead - they'll seize every asset you have that's not carefully protected.

College for two kids will wipe me out then its retirement after that. How would you protect that from them? I have about 15 years to get my siht together and worry sick about it.

[Jim Richards]

If I can help in any small way, Jeff.

[aigel]

I may get there by 65, except that my plan is to stop working full time way before then. The last thing I need is work my ass off til 65 and not see the money due to early departure. Even in good health, by 75 you are toast with most active lifestyle activities.

IMHO you want to own 2 homes, paid off. Live in one, rent the other for supplemental income. Social security and half way decent 401k and you are there. This also assumes that you continue to make some money to supplement with odd jobs, i.e. consulting, flipping cars, online sales like Ebay. This way you will not need a million bucks in 401k, IMHO.

I have a lot of hobbies that are very low cost. Lots of outdoors stuff where the travel to the destination and back is the most expensive part. My retirement plan does not include lavish hotel stay travel or cruises, neither going out 3x/week. Once you have TIME, you can save a lot of money. You can drive beater cars because you have time to fix them, you can cook from scratch because you have time to do so, you can go to the library for books and don't have to buy them on amazon, you can take your time to hunt down a deal on craigslist on whatever you may need ...

G

[ckelly78z]

$1,000,000 is more than enough to retire comfortably if you don't spend like most people do nowadays. The house should be paid off or close, there is NO reason to have new cars, that country club membership, and the lifestyle that goes along with it (expensive dinners, clothes, jewelry, trips) does not buy you happiness.

Millions of people live outside of Southern Calif, and do really well on far less living expenses. So many of us think that the morning starbucks, and the lunchtime Bistro are necessary, but I enjoy talking in the company lunchroom with friends who also pack their lunches, and drink the provided coffee. I'm not in sales or a management position, so I can wear regular street clothes rather than the latest fashions. My wife doesn't need to refurbish the house with new furniture and fixtures every 3 years because it's "out of style", and we drive 10 year old cars. Our idea of fun is to go camping with friends, take our bicycles, cook out over the open fire and swig a few beers......pretty cheap entertainment.

For those who live in the fast, expensive lifestyle of big cities, you may want, or need to look at cheaper alternatives in a different area to make your retirement money last.

[aigel]

^ This

And my plan also involves moving out of state. Not far, but not CA. Instant 10% savings ...

G

[jyl]

I made a simple spreadsheet, as follows:

Beginning balance at age 65 = $1,000,000
Income earned on beg bal = 4%
Inflation = 2%
Regular annual withdraw = $60,000/yr at age 65, then for all future years increases at inflation rate
Special withdrawals = $0 for all years
Social Security benefit = $24,000/yr at age 65, then for all future years increases at indexing rate
Social Security benefit indexing rate = 0%
IRS tax brackets as of 2015 (need to add state/local taxes, if any)

Each year, take beginning balance, add income on beginning balance, add soc sec benefit, subtract tax on income and benefit, subtract regular withdrawal, subtract any special withdrawal, result is ending balance for that year which carries to beginning balance for the next year.

Under assumptions above, the balance goes to zero at age 92.

You can play with the assumptions. PM your email, I'll send you the spreadsheet. Please let me know if you find any errors. And I'd be interested in everyone's comments about how reasonable any of these assumptions are. You can go to a Social Security website and check on your projected benefit at an assumed age of retirement. Note: I'm not your or anyone's financial adviser, this is not investment advice, and the spreadsheet could be riddled with errors.

A lot depends on your planned retirement lifestyle. If you have a paid off house, moderate upkeep and property taxes, reasonable habits, and no big medical bills, does the assumed budget of $84K/yr in total spending ($7K/mo) make sense? One of my close friends is retired, living like that, and is very content. But she isn't trying to impress anyone with her lifestyle either.

Also, a lot depends on your health. Plug in an uninsured $250K medical bill at age 70 in the Special Withdraw column, and see what happens . . .

And, just to keep pointing out risks, if you retired with $1MM in 2005 but left it in stocks and lost 40% then panicked and sold at the bottom in 2009 . . .

[ckelly78z]

Originally Posted by aigel

I
IMHO you want to own 2 homes, paid off. Live in one, rent the other for supplemental income. Social security and half way decent 401k and you are there. This also assumes that you continue to make some money to supplement with odd jobs, i.e. consulting, flipping cars, online sales like Ebay. This way you will not need a million bucks in 401k, IMHO.

G

Yep, it's not rocket science, most people live beyond their means and don't plan well for retirement, and have the stubborn opinion that they need 100% of their current salary to make it.

I am currently stuffing 20% into my 401k, and have been for 5 years now, and closing in on 1/2 way there $$$ wise, with 10 more years until I would like to retire at 60 years old. I also will have a 25 year pension and my wife and I both should get SOMETHING from SS. The house was paid off 2 years ago, and my daily driver is a 96 Saturn, an 86 944, and a 99 Ford truck. My wife drives the "new to us" 2003 BMW 325CI cabrio.

[aschen]

Y'all keep mentioning huge medical bills. THe way I have experienced healthcare billing lately, almost NOBODY can afford healthcare outside of insurance at least at the billed retail rates.

Im 38 so I have a while to retire. Anyways shouldent long term supplimental health insurance be part of retirment planning? Im not really sure how that works with medicare and it will likely be completely different in 30 years, but I am budgeting for 25-35 of my income to be spent on insurance in 25 years.

[dheinz]

Originally Posted by bpu699

Money managers will tell you you need 2-3 million to retire. Mine told me I need 5-10 .

Personally, I think its a joke. Very few people will have anywhere near what is "suggested." I figure I will have enough, and am not going to worry. You can always throttle down your expenses, and sell your house... Last resort, become a burden on your kids.



I see some pretty big welfare states and programs coming up...

People don't save. Pensions were not a bad thing...

Money managers suggesting you need 5 -10 mil to retire? The more you invest the more the manager makes. Call me Captain Obvious...

[aschen]

Well if he spends 250k yr and wants a saefty net he might need that much

Few people save enough, but then again few people have the pleasure of fine things like old german cars and worse yet lots of senior people are still working these days.

Im hoping to just make it to my 70s in reasonable health, I dang sure dont want to be worried about money or being a walmart greeter.

[Skillet83]

A believer in real estate. Nothing else has the returns. Started 3 years ago, buying 150k properties with 25% down, 10 year notes. After the price of entry, renter is paying the note plus some. Getting $1300-$1400 per month, netting on average $1100 after taxes and insurance. Building equity every month, no renter headaches. Out of the slum lord range where I live. No renter turn over, very little headache.

Have thought about putting together an investment group locally. In retirement, figure 15 of these paid for with some traditional investments, should be gold. Great thing is, follow the market, rent keeps going up, $200 per month in 2 years so far.

[Hugh R]

Based on your OP you're 50 or so, pack it away. Cut out the lattes, put it away. Those "toys" won't look so attractive when you're deciding between wet and dry Kibble at 65.

I'm 61 and plan to retire pretty comfortably in 2-3 years.