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All this talk about stocks and investing has me questioning my retirement plan. I know everyone is different, but how did you determine how much money you needed to have before you pulled the ripcord?
 

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It depends on your circumstances and where you live. Qestions you need to ask yourself: Will you be debt free? Do you like to travel? Any major expenses coming up? What lifestyle do you hope to lead? Is your spouse staying till the end? Are you? Will there be a guaranteed income from pension(s)? or just your savings?
Will the sale of a home supplement the high cost of long term care toward the end? Will you earn income from a rental property or part time work?

Our advisor says a monthly net (after tax) income of 4k is barely enough, 5k is pretty good, and 6k is generally lots for most couples. If you have no debt. Seems about right 8 months into my retirement, but I wish my boat was bigger.

I'm in BC, so basic medical (appointments,surgeries, and hospital care) are free. Extended medical (physio, glasses, etc.), jumping the queu for quicker private care, and dental are not.
 

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There isn’t a right answer. Nobody knows how much you want to spend. I’m not a proponent of being debt free with respect to a house. I am a proponent of having enough in savings/retirement that you can pay your bills. Interest rates for mortgages are some of the lowest out there. One of the issues being retired is coming up with cash. It’s much easier to sell investments than your house to come up with short term cash. Unless you are really bad at it, you can easily make more money in investments than you will pay in interest on a mortgage especially as low as the interest rates are.
 

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When my retirement income per month exceeded what I was getting per month working. That included SSI as well as my annuities. And yes we have a very nice nest egg to lean on if and when it is required. All that being said it has been easy to change our spending habits so I frankly should have retired at least three years sooner if not more. Like you say, we are all different. My needs to be content vs. yours are likely differing.
 

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Are you still adding to your Savings account, even after you retire?
Had 5 different sources of retirement income when I pulled the pin. Lived on 1, banked the other 4. After 15 yrs of retirement, I now live on 3, and still bank 2. I now know inflation will catch me, and I may have to downsize my living style.

Also don't forget that if your wife is working, when she retires, you will lose that income. Is her retirement going to cover her contributions that are made to the household? I under estimated this, but wouldn't trade it for the world. 52 years and still going.

Good luck on finding you answer. Everyone is different.
 

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I have a different take on retirement income as our investments continue to grow we have elected to donate a portion of our income to local food bank programs. I know inflation will erode our income but when it starts impacting us my plan is offset that by reducing what we donate. Maybe a weird plan but it feels good to us.
 

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Lots of good advice from folks already. Make sure you look hard at your lifestyle too. Do you know exactly how much money you spend a month and on what? Not just eating out but mortgage, gas, food, gear, cell phone, vacations, etc and are you able to sustain that spending rate once you don’t have income and are living off your retirement savings? Is your mortgage paid off or are you going sell and move to a condo or smaller house that you can pay cash for and be debt free? Don’t forget about medical, depending where you plan to retire (US or abroad) costs will vary. If you map out your current monthly spending and don’t plan on any reductions in spending then you have a baseline for how much you need per year (adding a few percent for inflation each year) multiple that by how many years of retirement and you have ballpark target number. But you may want to round up some for extra buffer.


Conservative estimates that you read on most early retirement blogs recommend withdrawing 4% a year to live on.


-Shane


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All this talk about stocks and investing has me questioning my retirement plan. I know everyone is different, but how did you determine how much money you needed to have before you pulled the ripcord?
Depends a lot on what state you retire to.
 

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Re: How much do *I* need for retirement?

I've kept a budget for years and years. I took the time to add up my dollars from 2020 and found that I lived on $38k for the year, which was kind of surprising to me. My housing payment is moderate and my vehicle is paid off. As a rule, I don't "budget" my spending; I buy what I want and go write down the transactions after the fact. I'm rather frugal overall though. I haven't spent any significant monies traveling in recent years.

Where your money comes from in retirement is somewhat important. Some of your retirement income will end up being taxable and you need to account for that in your planning. That will also factor into your decisions about housing. As someone else pointed out, mortgage interest is somewhat lower than the average rate of return for investments and it comes with a tax deduction at the end of the year. Having a home that is paid off is one option but not the only option.

Where you'll live and what you'll do in retirement will drive your spending decisions.

It's never too soon to plan and/or revisit your plan to ensure that you're on track.
 

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I've already informed my current girlfriend that she either needs to make more money or we'll have to add a couple more girlfriends to the heard when we retire officially...

Healthcare costs are my biggest concern, next to $40/hr minimum wages which would turn my savings into peanuts.

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All good stuff mentioned. The nature of your investments is somewhat more important that the total dollar amount. Some investments actually provide useful income while others fall miserably short. Annuities and certificates of deposit are the worst. Social Security should never be relied on for retirement, think of it as play money. Avoid applying for it.

Setting yourself up for retirement makes the money go lots farther. You don’t want to be paying interest on anything, that’s money down the toilet. Debt is the enemy. A cash existence should start long before your last day of work.
 

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I'm a proponent of being debt free at retirement. Own your home, vehicles, boats etc. before you retire. In other words, have all the toys you think you'll need or want before you pull the trigger. Have a REALISTIC plan for how you'll spend your time and what that will cost and budget for it. You'll still buy toys after the fact (for me it's been a tractor with implements and an equipment trailer to haul it on), but having the basics goes a long way. Hopefully you've put away money in an IRA or TSA all your working life, and it's built into the kind of nest egg which is going to supplement social security. Retirement is amazingly inexpensive if you are debt free AND if you've budgeted. If you're doing what you should to protect yourself from covid19 it's really inexpensive...almost no gasoline/diesel expenses. No travel or dining out expenses. Vehicle maintenance consists of keeping batteries charged. Lots of opportunity to do the things around the home place that you never had the time or inclination to do before (basically free labor...because what else do you have to do?). I've been retired for 12 years and never looked back, and keeping ourselves safe from the pandemic has been relatively easy compared to people who have to work.

Oh, and if you don't already have one, get a "retirement" dog. He/she is your conscience, to get yourself off your butt and outside for good long walks to stay healthy. I got my current lab 6 months after I retired and we're inseparable, no matter the weather, no matter where we are, we do a 5 mile walk every other day. Because the thing you can't afford is ill health. (Tart on the rim trail at East Lake above cinder hill campground)
 

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My goal is to have 10 paid off rentals by 65 and a couple million buffer on retirement, hoping to have that heavily weighted towards roth, only taking the employer match and if required to make the 6k match, taking it from my 401k, Short term costs are far outweighed by the long term benefits of a roth over a traditional.
 

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Why would you not apply for Social Security? Only reason I can see, is if your family history shows you will live to a hundred. I think you have to live to 79-81 now to be behind on SS money if you start collecting at 62. I look at the money I paid in to SS and the employer and employee portions are above a third of a million dollars. I get about $2300 a month from that. I retired at almost 60. I liked working as an engineer, but the local to me company screwed up and pretty much folded. Bioengineering. And did not want to spend 3 hours a day commuting back to the Silicon Valley. I always lived within my means, so saved at least 15% each year. My income now is higher than when I retired in 2002, but the purchase power is probably the same. With the new Congress talking about lots more stimulus, I worry we are going to have Carter type inflation.
 

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Why would you not apply for Social Security? Only reason I can see, is if your family history shows you will live to a hundred. I think you have to live to 79-81 now to be behind on SS money if you start collecting at 62. I look at the money I paid in to SS and the employer and employee portions are above a third of a million dollars. I get about $2300 a month from that. I retired at almost 60. I liked working as an engineer, but the local to me company screwed up and pretty much folded. Bioengineering. And did not want to spend 3 hours a day commuting back to the Silicon Valley. I always lived within my means, so saved at least 15% each year. My income now is higher than when I retired in 2002, but the purchase power is probably the same. With the new Congress talking about lots more stimulus, I worry we are going to have Carter type inflation.
Answering as someone in their late-40's...If SS is still available when I turn 65 or whatever age it kicks in, sure I'd apply for it. But I am also not willing to trust that SS will be there when I'm eligible. I'd rather have my own nest egg money secured and anything that SS kicks in is just an extra bonus.
 

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I have contemplated this at age 55. My minimum figure is 2- 3 million cash and 100 % debt free with all your toys and home paid off. Rent in the form of property taxes never goes away.
 

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Depends on whether you ask a husband or a wife. Different visions typically.

Good rules in general, have no debt and don't plan to have any. Cash is king. Never buy anything on credit that is going to go down in value.

Generally when a couple first retires is when they are best able to travel and do things they have been planning or looking forward to doing. You got 10-20 years probably for that phase of your life before medical/family issues reduce your ability to travel and play. I always advised planning on needing 100% of your pre-retirement expense for those first 10 years or so. What you save on some post-retirement things you will spend on travel/playing. After that a reduced amount. 70-80%. You must, must, must have your medical taken care of from the day you retire.

I used to have husbands and wives write a paragraph of what they wanted or envisioned for retirement. 90% did not agree since they had never had the conversation. Vacation homes, where to live, travel, new toys are all factors. Have the conversation and then just do the math so you have a plan and goals to shoot for.

We decided to take social security just after eligible since we want to use that cash to do things now while we are able. I can make a better return on my investments than the government can and you risk not getting anything.

It is a different retirement amount for everyone but you are doing good to start your planning and thought process now.
 

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My window closed long, long ago. Just want to throw out there a lesson I learned the hard way. My wife was the one with all the income properties, and she urged me to retire early. I took my SS at 62. I thought our marriage was secure. That turned out not to be the case, and I ended up with a very small 401K and working part-time to supplement SS. The lesson here is to consider the possibility that a family structure that seems secure into retirement can turn to ash, as all things human eventually do.
 

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All good stuff mentioned. The nature of your investments is somewhat more important that the total dollar amount. Some investments actually provide useful income while others fall miserably short. Annuities and certificates of deposit are the worst. Social Security should never be relied on for retirement, think of it as play money. Avoid applying for it.

Setting yourself up for retirement makes the money go lots farther. You don’t want to be paying interest on anything, that’s money down the toilet. Debt is the enemy. A cash existence should start long before your last day of work.

That's flat out wonderful that u don't need SS but why wudn't u take it no matter what yer statis is? It's all some folks have. U can always donate it somewhere but it is yer monies.

Think that DEBT word is key, shud have a "PELIGRO" danger sign attached to it.
 
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