Yes, another mega millions thread.
Lots of talk about the 900 million Powerball, but, really…what’s the least amount you’d (personally) need to still be able to live well off for the rest of your life?
I honestly think even just one or two million would easily cover it for me and would last until the day I died.
A million is the standard answer, but I’m pretty low-maintenance. Half a megabuck would probably be enough for me.
Before or after taxes?
Both of my parents died at age 73 from disease.
I’m 66 and already have two progressive diseases: one will kill, the other just make you wish it would.
I could coast on through for a fraction of what you whippersnappers would need.
Do you mean we can invest it, or is it like a checkings account?
If the former, $1 million; if the latter; $3 million.
I figure 1.5M if I live conservatively.
1% annual interest on $10 million is 100,000 per year. I could live with that.
$0. I will live until I die with or without money. Live “well”? I have no expectations of living well, so I don’t know how to answer. I might live longer with more money, as I’ll be able to afford more time as a vegetable on life support – if you call that living.
I probably have 20 years tops left. If I get 12 of those I’m fine with it. I’ve done pretty well for myself already. Half a million would carry me through the way I was planning without earning any more money. But it wouldn’t be that much of boon then either.
I’m 55 and not in the greatest health. 20 years left, tops. 1 million would likely take me till the end comfortably.
Wife and I are 48. Our retirement income calculator says we need about $4M at age 65 to maintain our current spending level adjusted for inflation (assumes we will live to age 85, will get social security and Medicare, etc).
I thnk some of the assumptions are overly conservative, especially on medical inflation. Once we no longer have school age children, our income requirements will be much more flexible. We will not NEED to live in a big house in a top school district.
But that’s the number we are working toward. The job market and the stock/bond markets need to be reasonably kind to us ge the next ten years for us to get there.
The general rule (from an historical stock market analysis called the Trinity Study) is that it’s safe to withdraw approximately 4% of your current investments each year, adjusting for inflation (assuming your investments are split I think 80/20 between low fee stock index funds and bond index funds).
When I say adjusted based on inflation, I mean for example, if you have USD 1 million, in year 1 you could withdraw USD 40 thousand. Next year, assuming inflation was 1%, you could withdraw USD 40.4 thousand, etc. So that you would maintain the year 1 standard of living.
Knowing that, calculating how much money you need is simple: you multiply your current spending by 25, and that’s how much money you’d need to maintain your current standard of living.
Not sure if I understand this, granted I’ve had a few glasses of wine tonight. But if you multiple current spending by 25, how many years will that get you? Because a flat number multiplier will result in the same amount for a 20 year old as it would a 50 year old.
Because if you’re only taking out 4% of your money every year, the principle will remain, so you can keep taking out that 4% until you die.
I believe the analysis was done for 65-year-olds, and was trying to determine how much money they needed to have saved at retirement age. However, a large fraction of the time the people would die with more money in their portfolio then they had when they retired, due to stock market increases. (The Trinity Study wanted to find a “safe” withdrawal rate, so dying with more money than you started with would be a success). Therefore the same savings rate would also apply to 20-year-olds.
There’s a large community of people who want to retire early, and I think many of them use 3.5% as their safe withdrawal rate to account for the fact that they’d be retiring younger than 65. However, for message board discussion, a 25x multiplier is probably good enough.
Close. The principal will increase at a rate that will compensate for inflation. You can’t go very long living at a constant expense rate; inflation will pile up faster than you think.
If you retired at precisely the wrong time (e.g. right before the Great Depression), you’d end up running down your principal. However, with a 4% withdrawal rate your money would still last long enough for you to die before it all ran out.
There have been studies trying to increase the withdrawal rate, where you could e.g., get your spending up to 6%, provided you cut back in bad years. And of course the study was done on historical US information, and the past is no guarantee of the future, etc.
Still, good enough rule for this kind of discussion.
I plan to live for 60 years. At that time, $100,000 would feel roughly like $30,000 feels today.
$100,000
Yes, you read that right!
My needs are few, ours is a small and simple life. My house is near to paid for, our government pensions will cover our utility costs and food. Nothing extravagant, of course. We have some small savings and investments to fill any gaps that should crop up. Plus, we live where universal health care keeps us from being bankrupted by illness or medical treatment.
So, with an extra 100k, we could be living large!
Since I’m writing this from a lounger on a beautiful Cambodian beach, I’m not sure we really need to live any larger, but with extra money we could take fewer buses and trains, fly everywhere. No more $25 a night beach bungalows, we’ll be staying where the ‘swells’ congregate! (actually it’s just up the beach, can see it from here!) Take a holiday every year, instead of every other.
Truth is we like the life we’ve built and wouldn’t change much even if we won a lottery, so even a small amount would surely see us through, in style, I should think!
Unless something unfortunate and unforeseen happens, I’m looking at being around another 45 to 50 years which is quite a long time for inflation to occur over. So I’d say 5 million ought to be the goal.
I’ve tried using the “safe” withdrawal rate in my predictions, and it doesn’t hold up as well as I’d hoped. I wrote my own retirement calculators using a combination of Monte Carlo simulations and min-max return ranges to vary around, but with filtering effects applied to reduce the randomness (a given time-period’s returns are affected by the previous period). I’m assuming a worse than average market for the next decade, as I believe the current problems with drought and (unprepared) retiring boomers will drag it down quite a lot. I don’t think there will any long bull markets like followed the last two recessions.
I let the program run a lot of simulations to get probabilities of my nest-egg surviving until I’m 92 (my guess), and it seems I’ll need to hold withdrawals to slightly above 3%.
To (finally) answer the OP’s question: Taking into account the annuities already in place, and both our SS incomes, we’ll need a little over a million to get us to through retirement at the current lifestyle.
The problem as I see it, is how much we can rely on the SS portion of our income. I’m sensing a growing resentment towards old folks, and especially towards those with money. Hearing the words “means testing” in discussions about the SS system is worrisome, given the government’s penchant for punishing the frugal to reward the improvident.