How Much Do You Need to Retire?

I retired last October and just turned 65 with right at 1M in my portfolio, no credit card debt, no mortgage, it's paid off in full. We are pulling out $4000 after taxes a month and living very comfortably. Even with the current economic environment my mixed portfolio is doing very well. I don't plan on pulling my social security until I reach my FRA. My wife and I meet with our financial adviser/planner every 2 months just to stay on track and make any adjustment if needed.

It's been my experience that people estimate that they'll live far longer than they actually do. People should be realistic in their expectations - those that are 65+ thinking they have 20 - 25 years of retirement to plan for are borderline delusional. I'm in perfect health and don't think I'll live much past mid 70 (twenty years) - and I have planned that way. I have never heard someone say that they "out-lived" their retirement - but, I have heard countless stories of people dying long before they even started to enjoy retirement. Retire now - not later.

Bottom up approach will bring peace of mind. Track everything, we use Quicken and have for 20+ years. This allows us to know where every penny goes. I don't have to guess at my retirement expenses, I know exactly what I spend to live and created a retirement budget based on that number.

People with the top 1% of net worth in the U.S. in 2022 had $10,815,000 in net worth. The top 2% had a net worth of $2,472,000. The top 5% had $1,030,000. The top 10% had $854,900. The top 50% had $522,210.

Good video. People miss the planning part of other income like SS or pensions sometimes. We do a bottom up approach. We track all our expenses so we know what we spend today and then looking forward we have to estimate some things like health care costs in early retirement and then again when we turn on medicare. We realized years ago our portfolio really has to cover all our income needs for about 6 years. That's it ! Then when my SS gets turned on ( a little early mind you ), that covers all our base household expenses. When my wife turns hers on, it will cover most our travel expense as well ! Sweet ! So income from portfolio in our mid to late 60s will only be for extended travel, new car, fix a roof, major medical event or something like that. Really gives us peace of mind knowing that.

Doesn't matter what you think you are doing for retirement. I became disabled at 58, had to live on savings 4 yrs til disability came through. Totally upended the course of life.

I've math'd out my retirement for several scenarios. With the 4% rule, my portfolio "should" increase through retirement. However, if I let the market-based portfolio sit untouched for 6 or 7 years, I can actually go to 5% or more. Reality is, it will be fluid, year to year, based on my retirement needs, retirement streams, and market value. I don't have a specific retirement dollar amount I have to reach, I have retirement streams (pension, SS, 401k, PERA, etc.) that will vary in value over time.

Always helpful. Thank you.

Positive advice for a young one....thanks to you....

great video as always James!

I did the bottom up approach in planning to be as close as possible to what retirement costs may be. We will be people who need more in retirement then while we are/were working. I also think people leave out things that may pop up and don't plan for it. Car Repairs, car payments, house repairs and pet expenses may be things people don't plan for. Our budget already includes possible pet expenses, possible car payment, taxes and medicare expenses along with emergency money. I have our budget planned to need $8-$9K a month which should give us extra money for either expensive things that pop up or "fun" things. But as was said here, not all of that comes from our portfolio, most come from SS and my modest pension. I estimate that I will need about $20K a year to withdraw from our retirement funds, so a 30 year retirement is $600K which we have more than that saved already. When I first was budgeting for our retirement didn't take into account that planning for future events such as long term care needs to be done but by dumb luck I have those covered as well. I also planned for what happens when one of us dies as far as budgeting. It's not perfect but we're going in with at least an idea.

Dynamics are what makes these calculations difficult. I'm stunned some computer programmer hasn't written the ultimate retirement calculator to include options like mortgages or cars being paid off in different years of retirement or collecting Social Security at different ages. When I retired at 56-1/2 I was withdrawing $6k per month. At 61 I was able to reduce that down to $3k per month. In 7 years, at 70, I will begin to draw Social Security (currently forecasted @ $4k/month). Even in those numbers, there are gray areas. For example, that 3k withdrawl, I withold 20% federal taxes because I'm converting $80 - $100k per year to Roths. When I get to Social Security, I will be paying very low taxes so I will have a much bigger "paycheck", even considering inflation. My point is, people need to be able to do calculations and financial planning ...or trust a stranger with their money.

I have a military retirement, VA disability now….I work for a state corrections…if I retire now I’ll have $3800 monthly and I have $1200 state retirement and $600 SS deferred until 62….I’ll also have $1000 a month for 15 years (deferred comp). I’m still afraid to retire

The big one that comes out FICA

Just multiply what you plan to spend per year by 25.

I'll be 66 when I retire in The Philippines 4/2024, with (starting) assets of $220,000 savings, $1,800 monthly SSI, $900 monthly interest income, about $1,500 monthly income from (about) 50 hrs. of work and NO DEBT. I'll have a $2,000 (or less) monthly budget (which includes a top, private health plan) and this plan will enable me to live VERY well and SAVE about $30,000 yearly, so in 5 years my savings will increase to about $400,000 which will continue to grow. I think my plan will do the trick for the rest of my life, and living in The Philippines is the key to my successful retirement/savings plan, as the cost of living is (overall) about 50% LESS than The U.S.

I feel that we need minimum three buckets for retirement. One is income to cover minimum of your expenses Second to have a home to live in fully paid for Third is cash savings for emergency fund Fourth is investments that grows at market rate…,

I have an answer to both how much I need and want to retire. I want 1.1 million at 64 but I could retire at say 60 with about 800k

We need $1,750,000. Not including real estate asset.

i need $840,000 to retire at 63 - $540,000 for normal retirement age to live comfortably for a single and as retiring pre 67 an additional $200k for the additional 5 years