How much $ to retire and how to fund your lifestyle in retirement

[dl003]

Regarding retirement, in the sense that you can do anything you want, how much money/how many years of expenses do we feel like a good place to start if we hate/love our job?

 

[juanmedina]

Regarding retirement, in the sense that you can do anything you want, how much money/how many years of expenses do we feel like a good place to start if we hate/love our job?

This article came out today and it made me depressed

The new savings target for a modest retirement: $8 million?

4% withdrawal or 25X expenses is the most accepted rule.

 

[M|S|M MYP]

This article came out today and it made me depressed

The new savings target for a modest retirement: $8 million?

4% withdrawal or 25X expenses is the most accepted rule.

If it was $8 million....less than 5 - 8% would be able to retire modestly. I guess if you are heavily invested in $TSLA...$8 million is somewhat attainable.

 

[Favguy]

This article came out today and it made me depressed

The new savings target for a modest retirement: $8 million?

4% withdrawal or 25X expenses is the most accepted rule.

I can have a luxurious retirement here in the UK for half of that.

 

[juanmedina]

If it was $8 million....less than 5 - 8% would be able to retire modestly. I guess if you are heavily invested in $TSLA...$8 million is somewhat attainable.

The article says $8M to pull out $40k a year for retirement safely lol.

 

[Green Pete]

This article came out today and it made me depressed

The new savings target for a modest retirement: $8 million?

4% withdrawal or 25X expenses is the most accepted rule.

I've always heard of the 4% rule being used when compared to things like the major indexes, not bond yields. This seems like fairly faulty logic.

If you invest in indexes and get an average of 10% - the s and p historical performance - 3M would last you like 60 years at an 100k annual withdrawl rate.

Also 8M divided by the average American wage of 55k annually works out to 145 years. And at 110k annually is still 72.5 years. I realize that doesn't account for inflation, but if you are investing and growing at less than inflation.... I mean just open a marcus savings account with g sachs, they give like 2.2% even now.

 

[dl003]

This article came out today and it made me depressed

The new savings target for a modest retirement: $8 million?

4% withdrawal or 25X expenses is the most accepted rule.

That blog (Financial Samurai) always made me feel inadequate with sky high "averages" but then I invested in TSLA and quickly joined the top 5% of my age bracket
But 0.5% withdrawal rate though? That can't be reasonable for most people, especially those of us who still want to and can earn money while doing things we love, right?
Looking at 4%, I can probably quit next year to take an unpaid intern job at Giga Austin

 

[StarFoxisDown!]

I see I irritated a lot of people, haha. Did not want that. My point is, you do not need x or xx, or xxx number in millions to start living your life. Those numbers may never come, and there is still no definite conclusion if we have a second life or not.

You absolutely do need to have X number of money to start living the life you want to live. Investing and work is a means to an end. People that do not figure out that number for themselves in terms of what they want their life to be like without needing a paycheck, are doing themselves a huge disservice and in a lot of ways.....guaranteeing that they will work more years in a job they're forced to/need to.

Everyone has to be flexible with their retirement goals because obviously, you cannot control the future. But to say doing the work to figure out that number is not worth it is very undermining. I've mentioned before, I know a lot of people in the tech community here, including the big companies(many close friends at Microsoft, Occulus, and Amazon) and the percentage of people in their 30's and 40's that have not put in one ounce of thought into a retirement number is alarming and sadly, less than 5% at least. Their usual response when I ask questions or when we talk investments is almost always "I figured I'll be doing this job into my 50's at least".....and they don't say that in an enthusiastic way

Sorry this my last post on retirement talk because I know I'm off topic

 

[M|S|M MYP]

I've always heard of the 4% rule being used when compared to things like the major indexes, not bond yields. This seems like fairly faulty logic.

If you invest in indexes and get an average of 10% - the s and p historical performance - 3M would last you like 60 years at an 100k annual withdrawl rate.

Also 8M divided by the average American wage of 55k annually works out to 145 years. And at 110k annually is still 72.5 years. I realize that doesn't account for inflation, but if you are investing and growing at less than inflation.... I mean just open a marcus savings account with g sachs, they give like 2.2% even now.

I mean just open a marcus savings account with g sachs, they give like 2.2% even now - Please show me 'any' savings account that is paying you 2.2%.

 

[Nocturnal]

I've been meaning to start a thread on this and I expect some posts will be moved here soon.

4% rule seems crazy conservative, even though some say it's not conservative enough.

And once you retire, how do you move money into safer investments, or do you?

 

[Green Pete]

I mean just open a marcus savings account with g sachs, they give like 2.2% even now - Please show me 'any' savings account that is paying you 2.2%.

I guess it too has dropped over the last 6 months https://www.marcus.com/us/en

but only recently changed
So much for 'high yield': Goldman Sachs cuts rate to 1.05% on Marcus accounts

 

[gavine]

Great idea for a thread. Forgive my ignorance, but please explain the 4% rule.

 

[jerry33]

The article says $8M to pull out $40k a year for retirement safely lol.

I guess if you invested in oil or legacy auto, that would be about right.

 

[Nocturnal]

Great idea for a thread. Forgive my ignorance, but please explain the 4% rule.

The idea is that you can withdraw 4% of your principle each year and not run out of money (or at least not run out before you die). Supposedly it is based on a lot of investment simulations that account for recessions, inflation etc.

Four Percent Rule.

 

[M|S|M MYP]

I guess it too has dropped over the last 6 months https://www.marcus.com/us/en

but only recently changed
So much for 'high yield': Goldman Sachs cuts rate to 1.05% on Marcus accounts

No worries man...i thought you had some 'secret' site that was paying you 2.2% Interest rates have been below 1% for a while now. That is why people are figuring out you are better off investing your $$ in the stock market, as you are technically 'losing' $$ leaving it in savings. As always, keep a 3-6 month cash reserve, but anything above that, should be invested. (Not financial advice)

 

[M|S|M MYP]

I guess it too has dropped over the last 6 months https://www.marcus.com/us/en

but only recently changed
So much for 'high yield': Goldman Sachs cuts rate to 1.05% on Marcus accounts

It's actually at:

 

[Christine69420]

I have been playing a little with this site:

FIRECalc: A different kind of retirement calculator

Thinking of chucking it all and retiring early, long before you start getting a pension or Social Security, and before you have ready access to your 401k and IRA?

The big question:
"With what you have today, and what it costs you to live, can you retire and maintain the same lifestyle?"

 

[MR-MY]

Here are the places that I recommend that you start to answer the question "how much do I need to retire?"

• Your Complete Guide to a Successful and Secure Retirement by Larry Swedroe
  
• How Much Can I Spend in Retirement?: A Guide to Investment-Based Retirement Income Strategies (The Retirement Researcher's Guide Series) by Dr. Wade Pfau

In general the "4% rule, developed by William Bengen is no longer safe. The research that produced this result was based on a few assumptions that are often no longer valid. These include

1. retirement will last 30 years. (now it's generally longer).
2. That you will maintain a 50-50 portfolio of US Large Cap stocks and US Government bonds. (The US is only 50% of the world stock market today, and 35% of the world bond market. Small and Mid cap stocks, international stocks and corporate bonds would normally be included in a global asset allocation today.)
3. That you will achieve returns similar to the historical returns that Bengen's research was based on. (Today's very low interest rates mean that bond yields are almost zero. Stocks are also at historically high values which means that expected returns on stocks will likely be lower than historical returns.)

Having said that, there are ways in which you can use an initial safe withdrawal rate that is higher than 4% IF you are willing to be flexible with your spending in retirement and follow some predefined rules for how you adjust withdrawals over time. The research on this was published by Guyton & Klinger in 2006. You can find a copy of it on Guyton's website here.

In case you are wondering, I am a financial advisor. I hold the CFP®, & RICP® designations. Developing retirement plans is my full time job.

 

[MABMAB]

Bogleheads is a good forum to explore minutiae of retirement methods.

Withdrawal methods - Bogleheads

they have a forum to discuss ad nauseam

I favor the variable percentage withdrawal method with 100% stocks. At our age that will start around 5%. For safety margin we aimed to have 2 yrs expenses in cash.

 

[juanmedina]

Here are the places that I recommend that you start to answer the question "how much do I need to retire?"

• Your Complete Guide to a Successful and Secure Retirement by Larry Swedroe
  
• How Much Can I Spend in Retirement?: A Guide to Investment-Based Retirement Income Strategies (The Retirement Researcher's Guide Series) by Dr. Wade Pfau

In general the "4% rule, developed by William Bengen is no longer safe. The research that produced this result was based on a few assumptions that are often no longer valid. These include

1. retirement will last 30 years. (now it's generally longer).
2. That you will maintain a 50-50 portfolio of US Large Cap stocks and US Government bonds. (The US is only 50% of the world stock market today, and 35% of the world bond market. Small and Mid cap stocks, international stocks and corporate bonds would normally be included in a global asset allocation today.)
3. That you will achieve returns similar to the historical returns that Bengen's research was based on. (Today's very low interest rates mean that bond yields are almost zero. Stocks are also at historically high values which means that expected returns on stocks will likely be lower than historical returns.)

Having said that, there are ways in which you can use an initial safe withdrawal rate that is higher than 4% IF you are willing to be flexible with your spending in retirement and follow some predefined rules for how you adjust withdrawals over time. The research on this was published by Guyton & Klinger in 2006. You can find a copy of it on Guyton's website here.

In case you are wondering, I am a financial advisor. I hold the CFP®, & RICP® designations. Developing retirement plans is my full time job.

Boglehead rule #1 no financial advisors jk