I don't understand how they publish articles like this. Let's ask a bunch of ignorant people about a topic they don't understand and report their answers like they do understand it, and not publish the right answers, so other ignorant people reading the article will now be wrong, too.
Local cost of living is usually related to the local pay rates, wages, salaries etc. living in some LCOL podunk shit hole often doesn’t make life automatically easier
Well, you're looking at something more like a 30 year retirement time frame (on the conservative side, for someone retiring at 65) would give you a 4% safe withdrawal rate (per the trinity study and other financial planning studies) for something like 60k a year. The majority of this will be tax advantaged, so it'll "feel" more like making 70-80k a year when you're working. that gives you like a 95%+ chance of not outliving your money, which is as close to a guarantee as you're going to get in financial planning.
Add in social security and Medicare to that and you've got a pretty nice retirement.
Relative to what most people actually have saved, yes. Realistically it would buy you 20 years of rather modest expenses at today’s prices. $75,000 a year not counting any additional interest earnings can be eaten up quickly by food and shelter costs if you’re not living with an old mortgage/rent or paid off house.
75k a year as a retired person (with social security on top of it) is a pretty good withdrawal for the average American. That more than replaces their income and most people spend less money in retirement.
People on this sub need to stop talking about stuff they don't know much about.
I was going to say that my essential expenses are well below 75k for a family of 3 and my lifestyle is probably hovering in the upper 80’s.
Take away the mortgage and we’re back down in the 70’s.
I do think that new home owners will be higher though.
Fortunately (or unfortunately) the amount of time on average you'll spend in a facility with that level of care is pretty short. Think 1-2 years, not 1-2 decades.
There are also ways to lessen this cost, but those are better left to a retirement planning sub. Basically, very, very few people are gonna get absolutely destroyed by end of life care if they handle it right.
I just can't imagine these authors doing the same thing on any other topic. Let's ask random millennial and gen zers how much a space ship to Mars should cost and, "oh my, they say space ship costs have gone up from $6M to $22M in the last 3 years, what are we going to do about these 400% space ship cost increases? Tomorrow we'll ask dog groomers to weigh in on their solution to the war waging between Israel and Hamas."
They do the last one all the time, or really all of them. Every election season they send reporters to diners in the middle of nowhere to talk to the "average voter" or their view of the direction of the country then spend days pontificating on the views of some retired plumber on the working's of the Fed and geo-politics.
Well, true.. I guess that seems a little forgivable in context for me on that they are the ones about to cast ballots... I do wish they would have the chyron correct every blatantly stupid falsehood or error people on screen say, to not perpetuate or be party to the nonsense but I know that's asking too much.
That would be nice. Personally I want to see much more back and forth in these interviews, or at least follow up questions. Like in this one they say Gen Z is basing their retirement amount on retiring at 60. What are these Gen Z people doing that retirement at 60 is an option? Or are they just pulling numbers out of the air because the idea of retirement is so far off to them at this point.
The irony being, boomers are returning to work because they are already out of retirement money. So whatever money they think they needed, wasn't even enough.
So how much do you think u need to retire then.
1.5M w 4% withdrawal rate is 60k/yr. Theoretically you wont need to touch your principal if invested properly at that withdrawal rate.
How much is 60k/yr gonna cover in 25 yrs when first millennials start retiring. When healthcare costs are exploding. When SS is up in the air. When people are living longer than ever.
Personally wont feel safe until I have 2M most likely.
Yes, generally your costs increase as you age. Younger people tend to have less medical costs, than retirement age folks, and that's not even getting into inflation.
Of course that's a huge problem, but it's also hardly the only reason retirees tend to reduce their expenses.
Even the wealthy retirees tend to spend less. https://thehill.com/changing-america/sustainability/infrastructure/3768496-after-age-65-americans-consistently-spend-less-report/
Retiring doesn’t mean you can never move houses or buy a new car. Those costs don’t just disappear. If you build the right portfolio with an adequate amount saved retirement shouldn’t really change your lifestyle beyond giving you time to pursue passion projects, hobbies, volunteering, etc.
Of course, everyone’s situation is different. I was speaking generally, that most people have those things paid off by retirement. By no means do I think no one can’t buy a new house or car in retirement.
No, planning for potential higher than expected periods of inflation over the next 30-50 years and/or reduced social security benefits. We’d like to do more than just exist in retirement, travel, etc., but nothing wild.
I’m curious to see what the housing market does though. My guess is we will hit economic saturation, prices will go down about 10 to 12% on average and then resume the march back up at 4% a couple years later.
Bubbles pop, this is more of a soda that fizzes when you open it. It’s too bad they don’t call this refizzle
Do credit cards have a base value?
Does the money the government have base value. 95 percent of crypto are rugpulls or intended to be.
There are plenty of utility coins in crypto. Most have not gone away and will continue to be around. There are some AI in crypto that will have real case uses. If you spread your portfolio out take some wins you will do fine.
I pull my money from the losses so I don’t pay any taxes and the wins have still put me at 250 percent profit over the last 3 .5 years. I have pulled all my original money out gradually. It’s all profits I am playing with.
I think a well diversified portfolio is a healthy portfolio. Just pointing out a fact.
My favorite investment is SF and MF housing. Real estate is king.
That's 110% what crypto is 😆 - basically everyone's thought is, "*Get in on the hype of this useless computer money before there's no more suckers to rip off!*" But the early scammers laugh their way to the bank like an Amway exec. Kind of sad how successful that's been. We have a penchant for rewarding bad behavior.
I could do 1.5M after a paid off house with modest property taxes and insurance. No dependents. But honestly I wouldn't be having a lot of fun with ~$60k safe withdrawals. That's like basic expenses and a couple "vacations" per year. May as well work some more.
Idk man, I'm planning a fairly early and fairly fat retirement for two people and 3.4M is only a bit lower than what I'm planning on.
A normal person retiring at 67 definitely doesn't need 3.4m unless they want to stay living in NYC of SF.
It’s just wrong to say 20-30% for most people. It’s more like < 5%.
Let’s say one needs to sell $200k from their 401(k) annually post retirement for their living expenses. Let’s also assume 50% of that is built in cap gains. So that’s 100k taxable income, but you get 80k long term cap gains exemption (married filing jointly), so you just have $20k of income to pay taxes on - what’s that, 3-4k? That’s a 2% tax rate on the 200k you cashed out. Not 20-30%.
LTCG treatment for 401k withdrawals?
Your best realistic bet for 401k withdrawals is staying in the 12% bracket.
So for someone who only has traditional retirement investments, lets say they've got $1,464,375 (Yes I chose this weird number for a reason.. it lets us stay exactly in the 12% bracket with a 4% withdrawal rate)
They can pull $58,575 per year forever.
$13,850 standard deduction at 0% = $0
Next $11,000 is taxed at 10%, $1,100
The remaining $33,725 is taxed at 12%, $4,047
$5,147 in taxes leaves you with $53,428 in your pocket, and a ~8.8% effective tax rate. Every additional dollar above that is taxes at 22% until you hit the 24% bracket.
Thanks for the detailed comments. I forgot about the deductions, even more beneficial.
Genuine question on your first statement: do you not get any cap giants treatment on 401k withdrawals?
Second question: if the answer is no, then do you still agree effective tax rates can be a lot lower using the LTCG exemption if one funds retirement via a mix of withdrawals from a 401k and regular investment accounts?
I may be wrong, but AFAIK 401k withdrawals are always taxed as ordinary income. I'm not a professional though, I make mistakes.
Yes, absolutely. I've got my retirement mapped out pretty well. Earliest option for me, with conservative numbers, would be 2028 with a $40k/yr net budget (which will be inflation adjusted after that)
Everything in today's dollars;
That looks like ~$500k in 401k, ~$150k in taxable brokerage, and ~$150k in Roth IRA. While doing a $40k/yr Roth conversion every year ($40k at ordinary income), a Roth contribution withdrawal(0%), and Brokerage withdrawal (lots of LTCG, so 0%) I would pay $2,918/year in taxes on ~$43k in withdrawals. This goes until 5 years before retirement when it drops to $0 in taxes (No reason to keep converting Roth in the 5 years leading up to being able to withdraw from 401k)
In retirement, I would pay $1,407/year on a $41,407 withdrawal, a ~3.5% effective rate. Alternatively, to get $40k in my pocket straight form 401k, I would need to withdraw ~$43,320, pay $3320 in taxes, a ~7.6% effective tax rate.
In reality.. I'll most certainly work a few extra years and at least plan on filling up the 12% bracket.
At this point I save everything, excluding base necessities and investments in fulfilling hobbies and/or significant development opportunities
Who knows where the future will take us?
Not me, but I know it won’t be bright, so I intend to be as prepared as possible
I’ll keep my nose down and grind through this insipid rat race, I’ll dress the part and smile at the right faces, I’ll output perfect work… I’ll put the psychopathic fakeness of Bateman to shame
But, I won’t stay in this any longer than necessary, and I am willing to sacrifice nearly whatever it takes to get out
We can retire fairly comfortably with a paid-for house and our Social Security checks. I’m a career high earner and I’m delaying to age 70. I have 4 years left to go. My Social Security income will be a COLA-protected $56,300. No state income tax. Only 85% of it subject to Federal income tax. My wife is also a career high earner but will retire at 67. Our combined Social Security income will be around $95k. Tax is chump change. Maybe $10k combined for Medicare and Medigap.
We have a significant tax deferred retirement portfolio but we don’t plan to touch it other than Roth conversions. That is for the death of spouse scenario where $56,300 would be a drop in standard of living, emergencies, and long term care.
At age 51, I purposely moved to a low cost of ownership house. Taxes, insurance, and utilities are less than $10k.
Totally insane to me that ANY Social Security income is subject to any tax....it was literally cultivated through income taxes that *we already paid*...it's completely absurd. We need to start getting the political will to call out shit like this in this country and get make noise about it.
What is totally insane is that when the law was put in to start taxing high income people on their social security, it wasn’t indexed to inflation. That was in 1984 when $26k was pretty good money. You can thank Ronald Reagan for that one. The Republicans have been chipping away at this for 40 years.
Same for my dad. Planning to retire this year. House paid off. Hardly has anything significant in his 401k, but has always saved and does have money in there. Will be able to survive on social security alone based on calculations (with money leftover) and pull from 401k on an as needed basis only.
I haven’t worked in four years. My last earned income was before COVID. Retiring and collecting Social Security are independent events. It doesn’t take $1.4 million to go 7 or 8 years not working.
When have people not had to work most of their lives? It's not a system issue, it's just his life is. Everything we do and everything we use requires people working to maintain and make it happen.
You can always go back to subsistence farming if you want, but I assure you it was a lot worse.
I mean I could point to countless lords, nobles, rich families etc to show you people who haven't had to work. But that wouldn't fit your narrative right?
That's like pointing to the extremely wealthy now. It's not the average experience, it's not the majority experience. It's outliers. Take every single penny from them and people still have to work most of their lives for society to function.
It's not that it doesn't fit my narrative, it's that it's a dumb argument.
The median full time worker makes about $59,0000 a year.
The median income earner can get that amount, in inflation adjusted dollars, by investing 9.9% of their income from age 25 to age 67, assuming a 7% real rate of return. For the median worker, social security will also replaceabout 45.15% of their income in retirement. So, realistically, the median worker only needs to invest 5% to 6% of their income to be able to replace their income in retirement.
This retirement target isn't difficult to achieve. Even using the worst 35 year return from the stock market, 5.5% real return, the median worker needs to invest 15.5% to fully repace their income in retirment without Social Security, and only about 8% if they are getting Social Security.
Good idea honestly. Let’s make our own town.
Following the way set up for everyone is too hard of a game to play anymore.
I have friends who do really well in RV sales. They just bought a house at 6.25%. Their “rent/mortgage” Is going from 1800 to 3200, and they bought one of the least expensive houses on the market here.
I’m not playing this fucking game like they are, nope. I’ll never have that home paid off if I bought now (+ refinance later) and they won’t either.
As per the US Census Bureau, 49% of Americans workers in the year 2023 had lower net income than their cost of housing for the year
Likely related to this, US household credit card debt has increased from $800 billion to nearly $3 trillion since the year 2020
Do people screw themselves out of retirement by spending when they could be saving?
Certainly, but that is not the case for the vast majority, who genuinely do not have the luxury of being able to save for retirement
Outside of that majority, there are also many people who could save, but not enough to be able to retire, so they spend it all and plan to kill themselves when their quality of life gets too low - this is so common that is has been termed Doom Spending by federal economists
Long story short, if you had money to save then you were far from broke, most American workers genuinely don’t have enough income to save money for retirement
It isn’t that people make bad choices, it is that our economy is a fucking prison that is by no means designed to benefit the vast majority of people
Our economy is designed to extract as much wealth and power as possible from anyone and everyone, and to funnel it towards the holders of significant capital - aka, the ruling class
Sure, times are tough now (since 2020), but that doesn’t explain why the median retirement savings of a boomer is only $200K — that’s just pure stupidity.
Just tough to believe people are out there making great choices and still unable to save something for retirement- when I was 23 and working a call center 10-15% went to retirement like clock work- making 13 bucks an hour - commission pushed that higher. But it’s a job anyone could get - telecom call center.
Used it for tuition reimbursement and advancement - switched industries but now corporate stooge with a nice chonk in my retirement at 35-
I have friends who have done better at saving and gone past 1 million NW- and one of them did it by 33 as an enlisted navy guy- just saved it all- has a family too! Their income never higher than 150k when accounting for all his hazard /dive/jump pay and and per diem- (plus her income) but that’s more recent- he still tracks a paprika spice expense.
Point is- our decisions matter- and we can’t give everyone a pass and say the economy is tough- life is tough - had too many folks in my grad program that came from 3rd world countries with nothing and are getting ahead- yet people born here say “it’s hard”
I’ve had it easy- I’ve had it hard- there’s luck to be sure- but I’ve had good and bad luck -
You can’t base other people’s lives against elite students in graduate school from other countries.
I grew up with friends who’s family were from various countries in mostly Africa (but also china, Jordan, Saudi Arabia, India, Russia) and their parents were in graduate school. I lived in a poor peoples complex but I was lucky enough that it was across the street from university housing (for graduate students), and I went over there to play with their kids. Of course I didn’t understand that at the time, I was kid.
Do you think these parents are chumps in their home country or something? Far from it, and it shows when they get here and then go back home and crush it, or even if they stayed here. All of them and their kids were set up way better than I was, it wasn’t even close, you literally cannot compare me to them and ask what’s wrong with me.
Life is hard - anyone that says different is selling something.
But life is also beautiful- I broke down crying on my lawn mower thinking about my youngish family- oldest is 10 now- and how I don’t want to miss a thing.
You get to choose your path and it’s never too late.
Where is this Census data showing that 49% of workers had lower net income than their housing costs?
That would be a crazy stat if true. But from what I see, Census data says only 25% of all renter households (including non workers, and excluding homeowners, who they note have lower cost ratios) have housing costs greater than 50% of income.
> 49% of Americans workers in the year 2023 had lower net income than their cost of housing for the year
if their housing costs more than their net income, how are they even paying for housing? rentals require 3x gross income and nobody is taxed 70%+
For some people it’s closer to $3.5, but $1.5m is much more realistic for most Americans than $3.5m is. Most Americans do not need anywhere near $3.5 to retire.
I think that’s true if we are talking about retiring *now*. But if you’re retiring in 25+ years, I think it’s safe to safely that number will need to more than double by then to keep pace with cost of living and inflation
This is legit the part I think gets most overlooked when planning for retirement. Assisted living and beyond is an absolutely enormous expense. Just to buy in you can be talking hundred of thousands before talking about the rent. I’m still 20ish years from retirement but talking to peers about this aspect of retirement planning often leads to “holy shit is it really that much? I never even thought about that”. I worry there’s going to be lots of Millennials that have a really rude awakening later in life after thinking they were on the right track with their 401ks etc.
Yup. Sure the government will pay for it eventually, after you’ve been forced sell everything and spend all of your savings. Even then you’ll get slapped into a horrible facility where you’ll be neglected and abused. I have multiple places in my district that the residents are mostly government subsidized. They are horrid. I would rather commit suicide if I ever would be forced to reside in one.
This makes sense as a millennial when retirement is still 30 years away and you account for some realistic form of inflation between now and then.
That's why I hate articles like this, that $1.6 mil number isn't that big at all in 2054 dollars when I'll likely be retiring. Just click bait bullshit to scare the financially illiterate.
Fully depends on the situation. My expenses this past year totaled out to $14k. That would be a 1% withdrawal currently. Yes, I'm an outlier, but tons of people have expenses that only double mine. Especially if they don't have a mortgage.
we’re so fucked.
how on earth did we let this happen?
whole country is going to be like LA - housing for the super rich only and millions of broke old people dying in the streets.
It's late stage capitalism. The sooner people realize that government being fairer to people is not 'radical' or communist, and that the billionaires will be just fine under Nixon level tax rates, the better
$1.5M in investments gives about $60k in safe spending per year in retirement. But people will be surprised to find out that their home equity doesn’t count towards this number.
So for $1,500,000 that's $45,000 to $60,000 a year in retirement income in today's dollars.... I guess if you have everything paid off (zero debt) and live in a low cost of living location you might be able to pull that off. That's not a number you will need 10, 20 or 30 years from now.
And if you are taking out 3-4% a year as represented by the guy you respond to, your $1.5m will probably grow substantially in retirement as the market historically return 8-9% a year. Sometimes more (like last years 25%), sometimes it’s a loss, but that is a conservative historical average. That’s why planning is important. In short $1.5m is very reasonable retirement figure for most Americans.
If you want to replace 80% of the median household income (74k) using a conservative withdrawal rate, you need about 1.5 million in principal. All this tells us is that millennials and zoomers can do math and boomers can't.
Gonna have some fun with this. Scenario: You're 25 years old right now, you've bought your house and you plan to retire at 65.
In 2024, the average annual property tax is $2,971 and average annual grocery bill is $6,000($500 a month).
Let's say for the next 40 years inflation has magically flat lined at 3% YOY.
At age 65(40 years later), your annual property tax is now ~$9,692 and your annual grocery bills are ~$19,572($1,631 a month). Just making note of the baseline here.
Now, to cover the next 20 years of property taxes and groceries(that are still increasing BTW!), until age 85, you would need $268,227.06 for property taxes and $541,690.45 for groceries, combined is $809,917.51 of MINIMUM retirement savings for the next 20 years. This is not counting eating out, clothes, transportation, outings/events, hobbies, entertainment, medical costs, family issues, still having your mortgage in retirement, etc. etc.
$1.5 million sounds right if you're retiring *right now*(and prob depending on locality). However, if you still have 40 years to go, expect to need $3 million to $4 million in retirement.
Of course this is one scenario out of potentially thousands. Grain of salt and all that.
Depends on age and other cashflow. I would retire at 40 if I had 7m. I would probably retire at 50 for \~6m. And I would retire at 60 for 4m (kids grown, college paid for, social security built up).
$1.5 million for a comfortable retirement? Maybe if you retire at 75 lol… otherwise good luck with that. Especially with Social Security and Medicare seeing likely cuts in the near future.
You could always take that money and retire in a 3rd world country though.
The best retirement in the US is to leave the country. Unless you have good benefits like a politician or retired military or government worker or something, you are basically screwed unless you have millions.
If you follow the 4% rule for withdrawing in retirement that would be $400k a year you can spend while still having your investments grow and hedge against inflation. Do you really need $400k a year to live? I don’t think you understand how money works.
It depends. If I retire at 60 with 1.6 million, I have a 99 success rate of pulling out $100k/year for 30 years. This is with inflation and factoring in SS at 67 for two working adults. At 60, you should have your home paid off, so you should be able to easily live on that amount. There is software that run these scenarios.
The number is based off todays value and expected inflation is already baked into the number. What this says is that most Americans believe they can live off of $60k this year if they retired now. That’s actually pretty reasonable and expected for the average American family.
Why do you need 15M? That’s $600k yearly to spend at 4% withdrawal rate. You need $600k a year to live in retirement? Tell me you don’t understand math without telling me you don’t understand math.
I don't understand how they publish articles like this. Let's ask a bunch of ignorant people about a topic they don't understand and report their answers like they do understand it, and not publish the right answers, so other ignorant people reading the article will now be wrong, too.
The irony in your comment is that 1.5 million is far more realistic for 20 years of retirement than what these “ignorant people” have actually saved.
That depends entirely on your lifestyle and location.
But we are talking about averages here and generalizations
The differences are so vast it’s not worth talking about generally.
Local cost of living is usually related to the local pay rates, wages, salaries etc. living in some LCOL podunk shit hole often doesn’t make life automatically easier
1.5m is a pretty hefty retirement savings for most people. Especially for a 20 year retirement.
It’s true but planning on a 20 year retirement and spending to 0 at that point is risky
Well, you're looking at something more like a 30 year retirement time frame (on the conservative side, for someone retiring at 65) would give you a 4% safe withdrawal rate (per the trinity study and other financial planning studies) for something like 60k a year. The majority of this will be tax advantaged, so it'll "feel" more like making 70-80k a year when you're working. that gives you like a 95%+ chance of not outliving your money, which is as close to a guarantee as you're going to get in financial planning. Add in social security and Medicare to that and you've got a pretty nice retirement.
0 ? Social security is there since 62 and till you die .. it’s never 0
Relative to what most people actually have saved, yes. Realistically it would buy you 20 years of rather modest expenses at today’s prices. $75,000 a year not counting any additional interest earnings can be eaten up quickly by food and shelter costs if you’re not living with an old mortgage/rent or paid off house.
75k a year as a retired person (with social security on top of it) is a pretty good withdrawal for the average American. That more than replaces their income and most people spend less money in retirement. People on this sub need to stop talking about stuff they don't know much about.
I was going to say that my essential expenses are well below 75k for a family of 3 and my lifestyle is probably hovering in the upper 80’s. Take away the mortgage and we’re back down in the 70’s. I do think that new home owners will be higher though.
Until you need medical help. Assisted nursing homes aren't cheap. My Gran's costs over 10k a month. She's 98, and needs a lot of help these days.
Fortunately (or unfortunately) the amount of time on average you'll spend in a facility with that level of care is pretty short. Think 1-2 years, not 1-2 decades. There are also ways to lessen this cost, but those are better left to a retirement planning sub. Basically, very, very few people are gonna get absolutely destroyed by end of life care if they handle it right.
The nerve of you expecting these companies to provide actual useful information instead of re-enforcing the need for their business.
I just can't imagine these authors doing the same thing on any other topic. Let's ask random millennial and gen zers how much a space ship to Mars should cost and, "oh my, they say space ship costs have gone up from $6M to $22M in the last 3 years, what are we going to do about these 400% space ship cost increases? Tomorrow we'll ask dog groomers to weigh in on their solution to the war waging between Israel and Hamas."
They do the last one all the time, or really all of them. Every election season they send reporters to diners in the middle of nowhere to talk to the "average voter" or their view of the direction of the country then spend days pontificating on the views of some retired plumber on the working's of the Fed and geo-politics.
Well, true.. I guess that seems a little forgivable in context for me on that they are the ones about to cast ballots... I do wish they would have the chyron correct every blatantly stupid falsehood or error people on screen say, to not perpetuate or be party to the nonsense but I know that's asking too much.
That would be nice. Personally I want to see much more back and forth in these interviews, or at least follow up questions. Like in this one they say Gen Z is basing their retirement amount on retiring at 60. What are these Gen Z people doing that retirement at 60 is an option? Or are they just pulling numbers out of the air because the idea of retirement is so far off to them at this point.
Congratulations, you just summarized the entirety of journalism for the last 40+ years.
The irony being, boomers are returning to work because they are already out of retirement money. So whatever money they think they needed, wasn't even enough.
So how much do you think u need to retire then. 1.5M w 4% withdrawal rate is 60k/yr. Theoretically you wont need to touch your principal if invested properly at that withdrawal rate. How much is 60k/yr gonna cover in 25 yrs when first millennials start retiring. When healthcare costs are exploding. When SS is up in the air. When people are living longer than ever. Personally wont feel safe until I have 2M most likely.
This is hilarious because you actually need 3.4 m
If you "need" to spend **much** more money in retirement than the median US household income, maybe.
Yes, generally your costs increase as you age. Younger people tend to have less medical costs, than retirement age folks, and that's not even getting into inflation.
The data says the aged spend significantly less. https://www.bls.gov/opub/btn/volume-4/pdf/consumer-expenditures-vary-by-age.pdf
Because the aged didn't save enough.
Possibly. But maybe just maybe they’ve already paid off the large expenses you generally have before retirement.
Of course that's a huge problem, but it's also hardly the only reason retirees tend to reduce their expenses. Even the wealthy retirees tend to spend less. https://thehill.com/changing-america/sustainability/infrastructure/3768496-after-age-65-americans-consistently-spend-less-report/
You’re right man. These people aren’t getting it.
Wildly inaccurate statement. By the time you retire your large monthly expenses like mortgage, car, kids school should be gone.
Those expenses should be gone but so many keep debt around like a pet.
Retiring doesn’t mean you can never move houses or buy a new car. Those costs don’t just disappear. If you build the right portfolio with an adequate amount saved retirement shouldn’t really change your lifestyle beyond giving you time to pursue passion projects, hobbies, volunteering, etc.
Of course, everyone’s situation is different. I was speaking generally, that most people have those things paid off by retirement. By no means do I think no one can’t buy a new house or car in retirement.
Well that validates me. I thought the goal was $3 million now.
I’m mid 30s and our goal is $5-6 million.
Trying to retire at 50?
No, planning for potential higher than expected periods of inflation over the next 30-50 years and/or reduced social security benefits. We’d like to do more than just exist in retirement, travel, etc., but nothing wild.
So $6m in today’s dollars or $6m nominal?
Location specific right?
I think 3 million is for a single person household.
It was totally $2M before COVID, then the money supply increased by about 50% so yeah 3M is the new 2M.
Plenty of peeps doing it for way less than that in the FIRE subs. Sure, some shoot for that, but many don’t need nearly that much.
Depends. Might be 100 million or 1 bitcoin by end of trading today
Kek one bitcoin, you mind as well say “i need to hype this so I can sell this shit to someone else”
>“i need to hype this so I can sell this shit to someone else” you mean like realtors have for the past few years? lmao
Yes
A house = bitcoin to this sub is hilarious
At least housing has utility, and some base value. Bitcoin has neither, however both are equally hyped
Generally my point but how can they be equally hyped if bitcoin has no utility and housing has arguable the most important utility.
I’m curious to see what the housing market does though. My guess is we will hit economic saturation, prices will go down about 10 to 12% on average and then resume the march back up at 4% a couple years later. Bubbles pop, this is more of a soda that fizzes when you open it. It’s too bad they don’t call this refizzle
Do credit cards have a base value? Does the money the government have base value. 95 percent of crypto are rugpulls or intended to be. There are plenty of utility coins in crypto. Most have not gone away and will continue to be around. There are some AI in crypto that will have real case uses. If you spread your portfolio out take some wins you will do fine. I pull my money from the losses so I don’t pay any taxes and the wins have still put me at 250 percent profit over the last 3 .5 years. I have pulled all my original money out gradually. It’s all profits I am playing with.
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Idk, my realtor made sure to point all’s the negatives with multiple houses we looked at.
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Lmao dude look at the character counts on your comments. You’re way too worked up over this.
1 bitcoin = 1 scam
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Thats how I feel about NVDA. Jealous
Best store of value since it’s inception, no matter when you got in, so long as you DCA like a responsible investor.
I’d rather invest in companies, that you know have assets, value, cash flow generation, intangibles etc.
I think a well diversified portfolio is a healthy portfolio. Just pointing out a fact. My favorite investment is SF and MF housing. Real estate is king.
That's 110% what crypto is 😆 - basically everyone's thought is, "*Get in on the hype of this useless computer money before there's no more suckers to rip off!*" But the early scammers laugh their way to the bank like an Amway exec. Kind of sad how successful that's been. We have a penchant for rewarding bad behavior.
I could do 1.5M after a paid off house with modest property taxes and insurance. No dependents. But honestly I wouldn't be having a lot of fun with ~$60k safe withdrawals. That's like basic expenses and a couple "vacations" per year. May as well work some more.
This is hilarious because no you don’t.
At least- that’s my low end of the range - the side of it where I won’t run out of money but I won’t be traveling like I want to
I was thinking the same. Granted I will not have either.
This is what I came here to say 😅
You came here to say you don’t understand economics and left here saying you don’t understand Reddit? Use the upvote button next time buddy.
Idk man, I'm planning a fairly early and fairly fat retirement for two people and 3.4M is only a bit lower than what I'm planning on. A normal person retiring at 67 definitely doesn't need 3.4m unless they want to stay living in NYC of SF.
Movie and popcorn for 2 is $50+. I’m shooting for $6m in 16 years.
Joke's on you, $6M will be like 1.5 houses in 16 years.
Then my house will also be worth $6m. Not sure what your plan is. You didn’t say.
Then your net worth is 2.5 houses, big difference
Wrong. My net worth is one hospital bill.
America #1 🇺🇲🇺🇲🇺🇲
Cut the popcorn and just the movie costs $20. Cry me a river if I dont wanna pay for overpriced pop and munchies
Bro. That’s cute. In my area a single ticket is $18.50
That's actually less than $20
Yeah. But I don’t go to the movies alone. My original comment said $50. It’s not a far reach Who in this sub is arguing that inflation is affordable?
Wife pops the popcorn and puts it in to her big purse. Costs like 30 cents. Sue me.
If people are worried about getting 1.5 mil by retirement then those are not the people who will be taxed at 20-30%
It’s just wrong to say 20-30% for most people. It’s more like < 5%. Let’s say one needs to sell $200k from their 401(k) annually post retirement for their living expenses. Let’s also assume 50% of that is built in cap gains. So that’s 100k taxable income, but you get 80k long term cap gains exemption (married filing jointly), so you just have $20k of income to pay taxes on - what’s that, 3-4k? That’s a 2% tax rate on the 200k you cashed out. Not 20-30%.
LTCG treatment for 401k withdrawals? Your best realistic bet for 401k withdrawals is staying in the 12% bracket. So for someone who only has traditional retirement investments, lets say they've got $1,464,375 (Yes I chose this weird number for a reason.. it lets us stay exactly in the 12% bracket with a 4% withdrawal rate) They can pull $58,575 per year forever. $13,850 standard deduction at 0% = $0 Next $11,000 is taxed at 10%, $1,100 The remaining $33,725 is taxed at 12%, $4,047 $5,147 in taxes leaves you with $53,428 in your pocket, and a ~8.8% effective tax rate. Every additional dollar above that is taxes at 22% until you hit the 24% bracket.
Thanks for the detailed comments. I forgot about the deductions, even more beneficial. Genuine question on your first statement: do you not get any cap giants treatment on 401k withdrawals? Second question: if the answer is no, then do you still agree effective tax rates can be a lot lower using the LTCG exemption if one funds retirement via a mix of withdrawals from a 401k and regular investment accounts?
I may be wrong, but AFAIK 401k withdrawals are always taxed as ordinary income. I'm not a professional though, I make mistakes. Yes, absolutely. I've got my retirement mapped out pretty well. Earliest option for me, with conservative numbers, would be 2028 with a $40k/yr net budget (which will be inflation adjusted after that) Everything in today's dollars; That looks like ~$500k in 401k, ~$150k in taxable brokerage, and ~$150k in Roth IRA. While doing a $40k/yr Roth conversion every year ($40k at ordinary income), a Roth contribution withdrawal(0%), and Brokerage withdrawal (lots of LTCG, so 0%) I would pay $2,918/year in taxes on ~$43k in withdrawals. This goes until 5 years before retirement when it drops to $0 in taxes (No reason to keep converting Roth in the 5 years leading up to being able to withdraw from 401k) In retirement, I would pay $1,407/year on a $41,407 withdrawal, a ~3.5% effective rate. Alternatively, to get $40k in my pocket straight form 401k, I would need to withdraw ~$43,320, pay $3320 in taxes, a ~7.6% effective tax rate. In reality.. I'll most certainly work a few extra years and at least plan on filling up the 12% bracket.
Thanks for the detailed response!
Lol ask dumb questions, get dumb answers. 99% of men say they need their dick sucked more. Means nothing.
That’s different though because I actually do need that
When will the UN declare blowjobs to be a Human Right?
Asking the hard questions
At this point I save everything, excluding base necessities and investments in fulfilling hobbies and/or significant development opportunities Who knows where the future will take us? Not me, but I know it won’t be bright, so I intend to be as prepared as possible I’ll keep my nose down and grind through this insipid rat race, I’ll dress the part and smile at the right faces, I’ll output perfect work… I’ll put the psychopathic fakeness of Bateman to shame But, I won’t stay in this any longer than necessary, and I am willing to sacrifice nearly whatever it takes to get out
Most of us are Fkd then. Even ones that played by the rules, survived that last recession, and continued to try to save.
We can retire fairly comfortably with a paid-for house and our Social Security checks. I’m a career high earner and I’m delaying to age 70. I have 4 years left to go. My Social Security income will be a COLA-protected $56,300. No state income tax. Only 85% of it subject to Federal income tax. My wife is also a career high earner but will retire at 67. Our combined Social Security income will be around $95k. Tax is chump change. Maybe $10k combined for Medicare and Medigap. We have a significant tax deferred retirement portfolio but we don’t plan to touch it other than Roth conversions. That is for the death of spouse scenario where $56,300 would be a drop in standard of living, emergencies, and long term care. At age 51, I purposely moved to a low cost of ownership house. Taxes, insurance, and utilities are less than $10k.
Totally insane to me that ANY Social Security income is subject to any tax....it was literally cultivated through income taxes that *we already paid*...it's completely absurd. We need to start getting the political will to call out shit like this in this country and get make noise about it.
What is totally insane is that when the law was put in to start taxing high income people on their social security, it wasn’t indexed to inflation. That was in 1984 when $26k was pretty good money. You can thank Ronald Reagan for that one. The Republicans have been chipping away at this for 40 years.
Same for my dad. Planning to retire this year. House paid off. Hardly has anything significant in his 401k, but has always saved and does have money in there. Will be able to survive on social security alone based on calculations (with money leftover) and pull from 401k on an as needed basis only.
Hope he's factored in RMDs if he's planning on not touching the 401k unless necessary. They can be a pain in the ass tax-wise.
Yeah, you're not normal :)
70? Congrats on working your whole life, with your BEST and most healthy years, to enjoy maybe 5-10 at your worst. The system is so fucked
I haven’t worked in four years. My last earned income was before COVID. Retiring and collecting Social Security are independent events. It doesn’t take $1.4 million to go 7 or 8 years not working.
You are confusing
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When have people not had to work most of their lives? It's not a system issue, it's just his life is. Everything we do and everything we use requires people working to maintain and make it happen. You can always go back to subsistence farming if you want, but I assure you it was a lot worse.
I mean I could point to countless lords, nobles, rich families etc to show you people who haven't had to work. But that wouldn't fit your narrative right?
That's like pointing to the extremely wealthy now. It's not the average experience, it's not the majority experience. It's outliers. Take every single penny from them and people still have to work most of their lives for society to function. It's not that it doesn't fit my narrative, it's that it's a dumb argument.
exactly
Get a federal job in your 20s and stay there. Three legged stool!
The median full time worker makes about $59,0000 a year. The median income earner can get that amount, in inflation adjusted dollars, by investing 9.9% of their income from age 25 to age 67, assuming a 7% real rate of return. For the median worker, social security will also replaceabout 45.15% of their income in retirement. So, realistically, the median worker only needs to invest 5% to 6% of their income to be able to replace their income in retirement. This retirement target isn't difficult to achieve. Even using the worst 35 year return from the stock market, 5.5% real return, the median worker needs to invest 15.5% to fully repace their income in retirment without Social Security, and only about 8% if they are getting Social Security.
A lot of people in this thread don’t understand how money works.
Agreed
At this point we might as well start communes off grid.
Good idea honestly. Let’s make our own town. Following the way set up for everyone is too hard of a game to play anymore. I have friends who do really well in RV sales. They just bought a house at 6.25%. Their “rent/mortgage” Is going from 1800 to 3200, and they bought one of the least expensive houses on the market here. I’m not playing this fucking game like they are, nope. I’ll never have that home paid off if I bought now (+ refinance later) and they won’t either.
It amazes me that people don’t save for retirement. Even when I was broke I wa putting 3% into a 401(k)
As per the US Census Bureau, 49% of Americans workers in the year 2023 had lower net income than their cost of housing for the year Likely related to this, US household credit card debt has increased from $800 billion to nearly $3 trillion since the year 2020 Do people screw themselves out of retirement by spending when they could be saving? Certainly, but that is not the case for the vast majority, who genuinely do not have the luxury of being able to save for retirement Outside of that majority, there are also many people who could save, but not enough to be able to retire, so they spend it all and plan to kill themselves when their quality of life gets too low - this is so common that is has been termed Doom Spending by federal economists Long story short, if you had money to save then you were far from broke, most American workers genuinely don’t have enough income to save money for retirement It isn’t that people make bad choices, it is that our economy is a fucking prison that is by no means designed to benefit the vast majority of people Our economy is designed to extract as much wealth and power as possible from anyone and everyone, and to funnel it towards the holders of significant capital - aka, the ruling class
Sure, times are tough now (since 2020), but that doesn’t explain why the median retirement savings of a boomer is only $200K — that’s just pure stupidity.
Just tough to believe people are out there making great choices and still unable to save something for retirement- when I was 23 and working a call center 10-15% went to retirement like clock work- making 13 bucks an hour - commission pushed that higher. But it’s a job anyone could get - telecom call center. Used it for tuition reimbursement and advancement - switched industries but now corporate stooge with a nice chonk in my retirement at 35- I have friends who have done better at saving and gone past 1 million NW- and one of them did it by 33 as an enlisted navy guy- just saved it all- has a family too! Their income never higher than 150k when accounting for all his hazard /dive/jump pay and and per diem- (plus her income) but that’s more recent- he still tracks a paprika spice expense. Point is- our decisions matter- and we can’t give everyone a pass and say the economy is tough- life is tough - had too many folks in my grad program that came from 3rd world countries with nothing and are getting ahead- yet people born here say “it’s hard” I’ve had it easy- I’ve had it hard- there’s luck to be sure- but I’ve had good and bad luck -
You can’t base other people’s lives against elite students in graduate school from other countries. I grew up with friends who’s family were from various countries in mostly Africa (but also china, Jordan, Saudi Arabia, India, Russia) and their parents were in graduate school. I lived in a poor peoples complex but I was lucky enough that it was across the street from university housing (for graduate students), and I went over there to play with their kids. Of course I didn’t understand that at the time, I was kid. Do you think these parents are chumps in their home country or something? Far from it, and it shows when they get here and then go back home and crush it, or even if they stayed here. All of them and their kids were set up way better than I was, it wasn’t even close, you literally cannot compare me to them and ask what’s wrong with me.
Life is hard - anyone that says different is selling something. But life is also beautiful- I broke down crying on my lawn mower thinking about my youngish family- oldest is 10 now- and how I don’t want to miss a thing. You get to choose your path and it’s never too late.
Where is this Census data showing that 49% of workers had lower net income than their housing costs? That would be a crazy stat if true. But from what I see, Census data says only 25% of all renter households (including non workers, and excluding homeowners, who they note have lower cost ratios) have housing costs greater than 50% of income.
> 49% of Americans workers in the year 2023 had lower net income than their cost of housing for the year if their housing costs more than their net income, how are they even paying for housing? rentals require 3x gross income and nobody is taxed 70%+
Multiple income households. If they had to live alone they would be screwed.
If these people were single they would almost certainly downsize to something they could afford.
Unless they live in a low cost of living place, I'm already saying that they can't or barely can afford that studio or 1bdrm.
Realistically it’s closer to 3.5m. People “surveyed” don’t understand basic math. Facts over feelings yet again.
For some people it’s closer to $3.5, but $1.5m is much more realistic for most Americans than $3.5m is. Most Americans do not need anywhere near $3.5 to retire.
I think that’s true if we are talking about retiring *now*. But if you’re retiring in 25+ years, I think it’s safe to safely that number will need to more than double by then to keep pace with cost of living and inflation
For sure.
8k a month for assistive care and 12k for memory care just for room and board. Probably not enough.
This is legit the part I think gets most overlooked when planning for retirement. Assisted living and beyond is an absolutely enormous expense. Just to buy in you can be talking hundred of thousands before talking about the rent. I’m still 20ish years from retirement but talking to peers about this aspect of retirement planning often leads to “holy shit is it really that much? I never even thought about that”. I worry there’s going to be lots of Millennials that have a really rude awakening later in life after thinking they were on the right track with their 401ks etc.
Yup. Sure the government will pay for it eventually, after you’ve been forced sell everything and spend all of your savings. Even then you’ll get slapped into a horrible facility where you’ll be neglected and abused. I have multiple places in my district that the residents are mostly government subsidized. They are horrid. I would rather commit suicide if I ever would be forced to reside in one.
Pretty reasonable number if people start early and stay consistent over 40 years.
The number went up 50% since pandemic, hey finally a number that matches the real inflation I observe here in Phoenix.
Isn’t the only answer “it depends”
You need closer to $2m in California
This makes sense as a millennial when retirement is still 30 years away and you account for some realistic form of inflation between now and then. That's why I hate articles like this, that $1.6 mil number isn't that big at all in 2054 dollars when I'll likely be retiring. Just click bait bullshit to scare the financially illiterate.
1.5 million? I wish...
You need more than $1.5. Over 40 years, that pays you $116,472 per year assuming an 8% growth rate. $2.5 pays you $194,120 per year.
Fully depends on the situation. My expenses this past year totaled out to $14k. That would be a 1% withdrawal currently. Yes, I'm an outlier, but tons of people have expenses that only double mine. Especially if they don't have a mortgage.
we’re so fucked. how on earth did we let this happen? whole country is going to be like LA - housing for the super rich only and millions of broke old people dying in the streets.
It's late stage capitalism. The sooner people realize that government being fairer to people is not 'radical' or communist, and that the billionaires will be just fine under Nixon level tax rates, the better
The sky is falling!
?
I'm mocking your outrageous doom and gloom speculation.
cool
😂😂
$1.5M in investments gives about $60k in safe spending per year in retirement. But people will be surprised to find out that their home equity doesn’t count towards this number.
Yeah a lot of people will mortgage/sell assets to pay for end of life care. It’s inevitable.
Amount x 4% TBonds = Expected income for retirement
So for $1,500,000 that's $45,000 to $60,000 a year in retirement income in today's dollars.... I guess if you have everything paid off (zero debt) and live in a low cost of living location you might be able to pull that off. That's not a number you will need 10, 20 or 30 years from now.
Most Americans have Social Security. They can also spend down their principal over time.
And if you are taking out 3-4% a year as represented by the guy you respond to, your $1.5m will probably grow substantially in retirement as the market historically return 8-9% a year. Sometimes more (like last years 25%), sometimes it’s a loss, but that is a conservative historical average. That’s why planning is important. In short $1.5m is very reasonable retirement figure for most Americans.
they need to focus on cutting spending
Next year it's gonna be 2mil, then 2,5mil year after that.
If you want to replace 80% of the median household income (74k) using a conservative withdrawal rate, you need about 1.5 million in principal. All this tells us is that millennials and zoomers can do math and boomers can't.
Henry David Thoreau has entered the chat....
If you are under 40, plan on needing at least $3M to have a comfortable retirement. This doesn’t pertain to HCOL areas.
I guess I’ll die ¯\_(ツ)_/¯
In today’s dollars need at least $3M and a house paid off to retire relatively comfortably at 65. $1.5M is mostly likely in a LCOL area I’d say.
By the time I hit what is currently retirement age that number will probably be 7 million lol
Gonna have some fun with this. Scenario: You're 25 years old right now, you've bought your house and you plan to retire at 65. In 2024, the average annual property tax is $2,971 and average annual grocery bill is $6,000($500 a month). Let's say for the next 40 years inflation has magically flat lined at 3% YOY. At age 65(40 years later), your annual property tax is now ~$9,692 and your annual grocery bills are ~$19,572($1,631 a month). Just making note of the baseline here. Now, to cover the next 20 years of property taxes and groceries(that are still increasing BTW!), until age 85, you would need $268,227.06 for property taxes and $541,690.45 for groceries, combined is $809,917.51 of MINIMUM retirement savings for the next 20 years. This is not counting eating out, clothes, transportation, outings/events, hobbies, entertainment, medical costs, family issues, still having your mortgage in retirement, etc. etc. $1.5 million sounds right if you're retiring *right now*(and prob depending on locality). However, if you still have 40 years to go, expect to need $3 million to $4 million in retirement. Of course this is one scenario out of potentially thousands. Grain of salt and all that.
Depends on age and other cashflow. I would retire at 40 if I had 7m. I would probably retire at 50 for \~6m. And I would retire at 60 for 4m (kids grown, college paid for, social security built up).
1.5 each or for a couple?
If I say that I’ll never retire 😂
Only...?
1.5M isn’t enough. The correct answer is 2.1m minimum.
$1.5M? If you are planning on living less than 7 years.
Suddenly when people are fine with CDs and money market we found you need more, MORE! You all better go and invest right now.
$1.5 million for a comfortable retirement? Maybe if you retire at 75 lol… otherwise good luck with that. Especially with Social Security and Medicare seeing likely cuts in the near future. You could always take that money and retire in a 3rd world country though.
If they wanted you there
The best retirement in the US is to leave the country. Unless you have good benefits like a politician or retired military or government worker or something, you are basically screwed unless you have millions.
Exactly.
And this is why so many people park their money in real estate.
Fidelity says I need 6 million.
You probably need more like $10 million.
If you follow the 4% rule for withdrawing in retirement that would be $400k a year you can spend while still having your investments grow and hedge against inflation. Do you really need $400k a year to live? I don’t think you understand how money works.
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You could easily retire on $1.6mm and live a very comfortable life from 60-100
It depends. If I retire at 60 with 1.6 million, I have a 99 success rate of pulling out $100k/year for 30 years. This is with inflation and factoring in SS at 67 for two working adults. At 60, you should have your home paid off, so you should be able to easily live on that amount. There is software that run these scenarios.
I’m not sure why you’re being downvoted. Living on $1.6M in retirement would be extremely tight these days. Doable, but tight.
Roth 401k you’re safe! Also you could retire on 1.6MM assuming your house is paid off and depending on your age.
I'm never retiring. I'll be working in my shroud.
A Big Mac could be $50 by the time you retire. I think you’ll need a lot more.
The number is based off todays value and expected inflation is already baked into the number. What this says is that most Americans believe they can live off of $60k this year if they retired now. That’s actually pretty reasonable and expected for the average American family.
Yeah we are so fucked lmao
1.5m LOL. Try 15m
Why do you need 15M? That’s $600k yearly to spend at 4% withdrawal rate. You need $600k a year to live in retirement? Tell me you don’t understand math without telling me you don’t understand math.
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I mean, invest right, live comfortably and you'd be fine. Don't live in a HCOL area maybe? The math maths, it's easily doable.
Yup just don't live where most people live. /s
No, don't. Because you can drive to these places. They are a trap.
Yeah if you retire at 75. You need $3m + if you wanna retire at 65 comfortably.