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Thread: Suzie says you need 5 mil to RE

  1. #41
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    I remember the crash of '89, and I get what you are saying, Terry, but for most of us, 5 million is absurdly out of reach, and I thought she was talking about people my age, 60's and up. For most of us, 5 million is not happening. I'm happy for those who do have 5 million, but it does most of us a real disservice to throw that number out there and say a successful retirement needs 5 million. For most Americans, 500,000 to 1 million is not happening, either. So we need realistic retirement figures and retirement strategies for the rest of us. Just my personal opinion, y'alls mileage may vary. I agree with Catherine on this re Suze.

  2. #42
    Senior Member Teacher Terry's Avatar
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    Tybee, I totally agree. I don’t know anyone with 5 million. I thought she was talking about young retirees in their 30-40’s. Most people I know have either a pension or SS with a 100 or 200k. Some have a paid off house. If you get a pension in NV SS only gives you 40% of your SS due to WEP. Our lifestyle would change if I decided to not work because it brings in 22k/year. I love the work but the money is nice too.

  3. #43
    Senior Member jp1's Avatar
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    Quote Originally Posted by LDAHL View Post
    The much-referenced, often misunderstood 4% rule was aimed at a relatively “safe” risk level over thirty years. It was never intended to cover the length of time a retirement in one’s early thirties would involve. Two or three percent would probably be more realistic for twice that long. And in many parts of the country $100,000 - $200,000 isn’t all that outrageous for a family income, especially if you have no employer provided benefits like health insurance.

    For the scenario she was talking about, I don’t think she was all that far off. I know many people live on less, but they are probably not retiring after a ten year career either.
    Honestly, if someone is hoping to retire for 50-60 years even $5m might be low. Plugging $175k into the BLS inflation calculator and working back 60 years I came up with $20,474. In other words, the person retiring today who expects to live off of $175k per year would be equivalent to someone retiring in 1958 with $20,474 per year income. It would have seemed like a good chunk of money at the time but inflation would have taken a toll over time if the person wasn't able to reinvest at least some of the income every year.

  4. #44
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    Quote Originally Posted by jp1 View Post
    Honestly, if someone is hoping to retire for 50-60 years even $5m might be low. Plugging $175k into the BLS inflation calculator and working back 60 years I came up with $20,474. In other words, the person retiring today who expects to live off of $175k per year would be equivalent to someone retiring in 1958 with $20,474 per year income. It would have seemed like a good chunk of money at the time but inflation would have taken a toll over time if the person wasn't able to reinvest at least some of the income every year.
    People talk today about a past golden age of pensions, but most weren’t adjusted for inflation. I remember back in the seventies when people said “I’m on a fixed income” it generally meant “broke”.

  5. #45
    Senior Member jp1's Avatar
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    Thinking further about my $20,474 example, if one reinvested the inflation rate amount of their income they would theoretically increase their annual income at the same rate as inflation. Also, if we have another 70's style burst of inflation it'll be easy to grow one's "retired" income because even safe investments would pay more than 3-4%. But, yeah, life involves risk no matter what. Unless one wins the megamillions jackpot or whatever.

  6. #46
    Senior Member Teacher Terry's Avatar
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    Thankfully we get yearly raises on our pensions.

  7. #47
    Senior Member JaneV2.0's Avatar
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    I've never gotten a raise in my pension; the company that issues it apparently really needs the money...Kidding, it's the most successful it's ever been.

    I don't feel poor, and if I ever get out from under Chez Decay, I'll feel positively wealthy. I don't need much.

  8. #48
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    I have read that about 6% of American adults have net worths (excluding primary residence) of a million dollars or more. So I would think many of us ordinary folk can aspire to something at that level or have already quietly achieved it.

  9. #49
    Senior Member catherine's Avatar
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    Quote Originally Posted by LDAHL View Post
    I have read that about 6% of American adults have net worths (excluding primary residence) of a million dollars or more. So I would think many of us ordinary folk can aspire to something at that level or have already quietly achieved it.
    Maybe because I'm not in the million dollar club (far from it) I have an instinct to push back on this wisdom. I'm not arguing that people shouldn't save, and if you can live off of interest without touching principal, great. But to me, it's a bit of fear mongering to suggest that we HAVE to have that to have a decent quality of life. My MIL slaved away at Macy's for decades after she became a widow. When she retired she had no debt. She had $160k in annuities, and $60k in another Chase account and a monthly $3k/month income based on Social Security, her Macy pension and a small British pension. In my mind, she didn't lack for anything, and I never heard her complaining about not enough money.

    My mother lost everything at age 50, and after she lost everything she was the most cheerful, peaceful version of herself I had ever seen.

    I guess one thing for sure: it's great for the beneficiaries of those who have managed to save and leave behind 1-5M dollars in untouched principal.
    "Do any human beings ever realize life while they live it--every, every minute?" Emily Webb, Our Town
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  10. #50
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    I don’t think its necessarily fear-mongering to say that if you want a standard middle class lifestyle for half a century or do without working, you need a tidy sum to finance it. A million bucks is probably not enough for a youthful FIRE family. It’s just math.

    Of course you can live on less and be fine. But if you aspire to more, I think you need to be realistic. It is possible, however.

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