What's a MINIMUM amount you'd consider to be more than enough to live out the rest of your life?

In My Humble Opinion
41

I retire in less than 4 months (age 63), so you can bet I’ve been doing that calculation a lot. Figure I need about $50,000/yr (after taxes and health insurance) to continue life as I know it. Since I am planning for age 90 (Dad and several uncles/aunts made it to there), that would be $1.35M. Fortunately, between my retirement pension (36 years of more or less dedicated service) and some investments, I should be closer to $2M income over that time period, so I should be OK. House is paid off, no outstanding debts, so I think I’m ready.

As for what I’d really like, maybe an extra $50,000/yr so I could really travel as I want to. But I’ve got travel budgeted already, so not a big deal.

42

It’s refreshing to see that so many people have a good idea of their financial status, and reasonable plans for living out their lives.

43

3% safe withdrawal rate for an indefinite time horizon (can do a long discussion of the Trinity Study as well as why the early retirement community shoots lower if you’re really interested!); expenses are also significantly lower because I’m not going to work every day (gas, tolls, wardrobe requirements, can spend more time cooking, all sorts of other stuff) and because I’m not saving a huge chunk of my cash flow for retirement. If we’re talking about “live for the rest of my life”, as the question is phrased, $2 million after taxes probably keeps me at around my current standard of living. If we’re talking about the more common “what amount of money would it take for me to stop working tomorrow” (a much different question!), then it’s more like $5 million after taxes, and even then I’d probably look at some part-time consulting.

44

Only if the principal earns 4% or more per year. If it’s earning, say, 2%, your principal will be smaller after each year.

45

Only if the principal earns 4% or more per year. If it’s earning, say, 2%, your principal will be smaller after each year.

Back to the original question: 5M would probably do it. Say, 2M to pay off the mortgage, set up some funds for the kids to live off while we’re gone (I don’t expect either of them to do a good job of self-supporting - some special needs at play). Health insurance, 12K a year; other health expenses another 20K a year (on average; assuming we need assisted living in a few years); food/clothing/shelter another 55K a year - let’s round that up to 100K a year to account for car and travel and entertainment. Then assuming inflation… let’s make it 125K a year, and assuming we’ll live another 20ish years. That brings it up to 2.5 million, plus the 2 million up front, and 500K to handle things I haven’t thought of.

46

0
Right now I have enough money living in my means. However if someone offered to pay off my mortgage (which is very small but not financial worth paying off early from my saving) I would really be sitting pretty.:slight_smile: And able to get extras I do not allow myself to have.

47

1 Million to support my modest lifestyle (I’m a couple month shy of 60) and and add’l 1/2 Million to defray the costs associated with my RA (possible joint replacements as I go down the road) for a total of $1.5 Million.

48

The original 4% withdrawal rule was for drawing down your savings while coping with inflation. The draw down period was 30 years.

It is a bit different world now and in any case it wasn’t intended for people who were planning on living more than 30 years.

Which is also why people need to think differently about the minimum amount based on their current age, etc. Younger people are going to usually need more.

Having a paid off house (whose value should be included in the total) is a major factor in how much more money you will need. Unfortunately, housing costs varies a lot in different places. So that’s another variable.

49

I did some calculations, I only need about $6.9 million

50

Yes, there are two numbers. One is the amount of money you’d need to get an annual return large enough to support your lifestyle without touching the principle. That is, you die with the same inflation-adjusted amount in your portfolio.

But dying with your principle intact is inefficient. The most efficient is to die with zero in your bank account, having spent it down to zero on the last day of your life. Unless the object is to leave a nest egg to your heirs large enough that they can live the rest of their lives on that nest egg. So the other number is just your current annual expenses multiplied by the number of years you expect to live.

The problem with spending your principle down to zero is that life is unpredictable, you don’t know the exact day you’re going to die, you might get hit by a bus tomorrow, or you could live to 120. So any time you’re dipping into the principle to support your current lifestyle you’re taking a gamble and betting on an early death.

But if you have a nest egg that’s your annual expenses multiplied by your expected lifespan, you can still earn money on the unspent principal every year, even if you’re spending down your capital you still have a cushion that will extend the retirement if disaster happens and you don’t die as soon as you expect.

51

I think the big question that the OP left open was whether or not we’re talking about having enough cash to essentially retire at whatever age you are, and live off it (interest and principal) for the remainder of your days, or whether it’s how much supplemental cash you’d need to enable you to work out the remainder of your career with your current lifestyle, and have enough for you to retire on in your intended retirement lifestyle. (or somewhere between the two extremes, really)

The first is a LOT more money than the second. The first is probably somewhere between 5 and 10 million, while the second could be as low as a half-million dollars if you’re reasonably well paid, middle-aged, and have been saving for retirement your entire career.

52

Two million and I can quit my job and not work again. One million and I can quit my job but I’ll still have to do something, but it can be something fun.

53

Unless, of course, people with no idea how they’ll pay for their futures are for some reason reluctant to post about it.

The safe Monte Carlo approaches say I should have 2.5 million, and I have about 1.5 currently, with about 8 years to work before retiring – as plans stand today. This summer I’ll finish paying for the house (my only debt) and can increase my savings rate.

54

After being marginally employed over a decade of my prime earning years, I’m behind the curve on about every financial metric, so I’ll settle for joe average.

According to this Motley Fool online article, I should aim for a net worth of about $200,000 by retirement age*.

*to attain my goal of being joe average. Motley Fool recommends more than that.

55

Yeah, I can’t look at it in terms of lottery winnings, I can only view it in terms of net worth.

Assuming I live to 85 (I think my pension expires after 20 years, not 100% sure though), I’ve got 42 years to go. I’m not really worried about the number of years, though.

I’m working towards a $2M net worth, counting the sale value of the house, the lifetime value of the pension, and investments and savings, but not including Social Security since I pretty much expect that to be a declining benefit whose lifetime value I cannot predict. Assuming I don’t get somehow knocked out of my job involuntarily, retiring at 65 (though perhaps retiring from this demanding job sometime after 50), my pension + Social Security should add up to about $50k/yr.

I am making good progress paying off my 30-year mortgage ahead of time, so I should have the house paid off by the time I retire. With that out of the way, living off of $50k/yr really ought to be do-able by itself. While this place is not a palace, it is beautiful and sufficient, and also in a high value-growth area. The first place I bought could be the last.

If I stay in this house until age 65, it will probably be worth $1M-$1.5M, possibly a lot more. The lifetime value of the pension could top $750,000 or more (paid out one month at a time for 20 years). Right there, I am already at my $2M mark. Hopefully I will not be forced to sell my house and move some place cheaper to get by, and I could always take out home-equity loans to drag out my time here if it came down to it, but exercising that option would cover my expenses for a long, long time.

Ok. I get to add the rest of my working life income to the $2M+ I will achieve if I just don’t die young, for a total of $4-$5M, or more (though I am going to be spending a lot of it on mortgage and bills…). So far anyway I have displayed a knack for investing. A $500k portfolio could easily yield $15k+ in dividends alone. If the principal grows, as it is wont to do under my management, I can trim it periodically for probably another $15k per year, maybe more in some years. Now we are looking at $80k/yr income, no mortgage and no absolute capital curtailment on a very conservative estimate of the cash value of my portfolio 22 years from now. My 401k alone should achieve that, not counting my separate ‘liquid’ stock portfolio.

Looks like a defensive game to me at this point. If I live past 86, I just draw it down or become a ward of the state, I may not know the difference at that point anyway. OTOH, I have proven to be a rather sturdy if not pretty physical specimen- when I catch a cold I blow my nose twice and then my immune system takes care of it (knock on wood)- so I would not discount the possibility of living to 100, in which case I hope my expectations are too conservative.