What is the minimum you would have to be given to retire today and not work another day in your life?
I am young (mid-30s), have young kids, live in a high cost of living area, and am pretty conservative about risk.
I did the spreadsheet math and my figure would be $3.3 million.
My Assumptions:
The investment will grow (on average) 4% a year
For the first year I get to withdraw $102,300 (~3% of investment)
Because of inflation, each subsequent year, the withdraw amount is increased by 2%, until age 65 where the increase will be only 1%, until age 75 where the increase will stop (at $189K).
$3 million is kind of chump-change in terms of long-term retirement money- it’s a great starting point, but not enough to quit your day job over, unless you’re already old. I mean, serious illness or some kind of major catastrophe could wipe that out pretty quickly, as could investment downturns, etc…
My guess is somewhere in the $20 million range for me.
That would give me enough to spend a couple on some fun stuff like a vacation home, as well as leave enough to live very comfortably AND hopefully not dip into the principal, even with inflation.
I hit 66 in January. My husband and I have worked with a financial planner for a few years, and I think we’re good. But if we had another $250K in the bank, I could really enjoy my pending re-retirement.
As it stands now, we won’t go hungry or have to move into a refrigerator box. But I still worry about silly little things like replacing the roof or the HVAC system or having to dig another well - all 3 major expenses we’ve dealt with in the last 15 years or so. Theoretically, the HVAC is the most likely issue, considering our ages, but ya never know…
Isn’t that what insurance is for? You should factor the cost of your insurance for how much you need yearly.
True, but if you distribute your investments and take a long view, I would think something like 4% a year is not hard to keep up. That includes downturns.
Keep in mind I said this is the MINIMUM that you would need to be persuaded to quit your job, not your dream retirement package.
If $20M is really your minimum, then I am guessing you are used to a slightly more expensive lifestyle than most. That’s fine, all data points are interesting.
I’ve been un- or under-employed the majority of my life. I can’t even work full time anymore due to health problems. $20,000 per annum would be luxury by the standards I’ve grown used to.
Assuming what I have now I will still have after the magical appearance ---------- we’re just talking cash on hand in the bank from some sort of windfall. Two answers:
a) $300,000 or around that. I’m in my 60s, no kids, and for various reasons I don’t expect to go past 70 by much. Given that much I could pack it in.
b) No amount; I bore too easily. I have retired several times. I could live fine off what I have, selling it down a little at a time, but I still work part time in a warehouse of all things. It is my version of a gym and I just enjoy doing crap like that too much.
Yeah, but let’s face it, if you suddenly had a multi-million windfall, it would be hard to keep your spending habits EXACTLY the same. When it comes time to say, buy a new car, you’re not going to be super thrifty knowing you have a million dollars burning a hole in your pocket.
I like what I do. It’d probably take like $100 million for me to check out totally, and in any case I’d be so tempted to put that money to better use than buying myself shit. (Like starting a charitable foundation or investing in research of general importance to society, both of which I’d of course have to be active in doing so that sort of violates the “never work another day in my life” part of it.)
I still maintain that single-digit millions isn’t enough. I mean, insurance only pays so much- if you get some diseases, it’s really easy to blow past your coverage. And then it’s out of your own pocket.
And I wouldn’t want to just make my current salary and quit working. I’d rather make significantly more and quit- otherwise I could just use that as an adjunct to my current salary and have the reassurance that with a few million in the bank, I wouldn’t have to put up with any bullshit that I didn’t choose to.
But to quit my job? That would pretty much, by my definition, be the dream retirement package- that’s the point of the question, as I see it.
I’m 46, with a wife and two kids under 8. So I’m looking at the necessity of providing a good life for them, with wiggle room for contingencies, as well as providing for our retirements and hopefully leaving a lot for my kids.
If you’re in your mid-30s, you’ve (hopefully) got a long time left to live. That’s a lot of time in which catastrophes can happen, including major market collapses. Can you arrange your nest egg and spending to weather something like the Great Depression?
I’ll assume you’re married, and that someday your kids will want to go to college. Is $102K per year enough to live a comfortable life while also socking away for the kids’ education? Most people hope to enjoy a rising standard of living as they grow older, e.g. recent college grads may be fine driving rust-bucket cars and eating instant ramen on a regular basis, but they look forward to driving nicer cars and taking their families to upscale restaurants when they are middle-aged, and maybe enjoying regular international travel when they’re even older. Does your plan account for this?
Once you start getting a lot of gray hair, you may also find that you want someone else to take care of various household chores - shoveling the driveway, mowing the lawn, fixing the car, and so on. Hopefully you have budgeted for that.
Also, if you quit now, you won’t get much in the way of Social Security when you finally become eligible, which means your nest egg will have to cover pretty much the entire cost of your retirement. This includes paying for supplemental health insurance, because Medicare doesn’t cover everything. If you and your spouse end up spending significant time in assisted-living, the price tag could be pretty steep (if you’re broke, Medicare will keep you off of the street, but from what I’ve seen and heard, you do NOT want to spend your final few years in a place where Medicare is footing the bill).
If my wife and I hit $4M by the time we’re 55, we’ll probably leave our jobs. That will provide for an acceptably lavish retirement, along with an acceptable degree of long-term financial security.
To retire today and maintain my current net income and lifestyle, like other have said, $2,000,000 would be my number.
Then take Social Security at the full amount when I hit that age (hopefully those fine people in DC don’t keep bumping the age up), and I’m doing even better.
All good points, and maybe I would bump it up a little, but I am also unlikely to live to 97 as well!
Keep in mind this is a cost/benefit consideration. I don’t HATE my job, but I sure wish I didn’t have to do it. Not to mention the soul-sucking commute. Being able to spend the next 40+ years of my life with my family instead of my coworkers is a lot of benefit. I would be willing to trade a rung down on luxury living to do that. Others may disagree. To each his own.
50 years old. I get the $2-3M comments but should I get that windfall I would keep working. For me the “walk away now” number would be $5-10M, preferably $10M.
