It was being retarded… I don’t know why, but here is the post:
Lots of variables. But no, $200k is probably not enough. Assuming you’re talking about picking a date and never working again.
You have to figure out what you could afford to live on each year, based on where you live, your expenses now, and whether you want to live lavishly or not. Let’s say it’s $50k (for easy numbers’ sake).
Now you have to pick a safe rate of interest. Depends how good of an investor you are, but you also want minimal risk. So let’s call it 5%.
Well, $50k is 5% of $1M, so in this example, to live off the interest (and the interest ALONE, never touching the principal), you would need $1M invested.
Now, if you’re young, this really isn’t that hard to achieve, since you’ve got the time to allow compounding interest to work for you. But if you’ve got 500 dollars in the bank and want to retire next year, well, it may be a little tough.
There are tons of beginning investing websites and books out there.
It depends on what you mean by “comfortably”. You can live pretty well on $50K a year if you’re single and aren’t interested in spending wildly. If you have a wife and kids and want to live in relative luxury (big house, nice cars, college, plenty of money to travel) you probably need more like $250K a year.
You can earn about 5% a year on fairly conservative investments. That means that you need between somewhere between 1 million to 5 million dollars before you can start thinking about quitting work for good and just laying around all day.
Business Week had an article on this subject a few months ago. As I recall, they referred to a $2,000,000 investable nest egg as “beef and beer” retirement, because you could assume a 5% return and comfortably (but not elegantly) live off of the resulting $100,000 a year return. A $4,000,000 investable nest egg took you to their next category (whose nickname I promptly forgot, as it obviously had nothing to do with me).
There are other factors as well.
You boiled it down to amount of “money in the bank.” Very few people have no other property. If you own your home and plan to live out the rest of your life there your expenses will drop dramatically.
Where you live factors in as well. You hear stories about how cheap it is to live out your life in Latin America. Ideally you would like a place with low expenses in the things you would like to do (golf, restaurants, or whatever) and low taxes.
Finally, you never really know. If the economy goes haywire and your nest egg isn’t built right, a few years of double-digit inflation could easily force you out of retirement.
Social security varies all over the map, but retiring at 65 from a reasonable career should get $1000 a month.
Your home should be paid for, leaving taxes of maybe $1000/yr.
Your kids are on their own.
A person can live comfortably on $30K/yr, but we’d rather have $50K. Take the aforementioned million at 5% and you’re there
(with SS as a bonus). Plan it better than most everyone, and you’ll be retired at 55, clipping coupons and collecting rent from your apartments.
A “beef and beer” retirement income of 100K would be about three times what I make right now, raising a family of 3. That’s champagne and caviar to me.
I think the word you are looking for is Luxurious. I don’t know anybody that makes 250k a year, most families join incomes I know are closer to 80k-100k and those are the better off ones. (3 or 4 vacations a year, New cars (2) every couple years, 130-150k house, and money to spare), and me and my single friends all only make about 30k and we all live pretty easily with a vacation a year or so. Mid priced apartment, new or newer model car. Of course living expenses vary across the country, but I don’t know of anywhere that families have to have 250k a year to be comfortable. That is Upper class, not comfortable.