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> It's not like $1MM in retirement money means "set for life" anymore. It absolutely does, unless you are planning on living in a mansion eating nothing but ca

by Closi 6y ago

> It's not like $1MM in retirement money means "set for life" anymore. It absolutely does, unless you are planning on living in a mansion eating nothing but caviar.

hcknwscommenter 6y ago
??? I think that is highly dependent on housing costs and how early you retire. If you have kids who are not in college (and live where college is not free) and have not paid off your house, 1MM in retirement is a woefully small amount of money (I think?). At 5% withdrawal (risky), you are living on 50K a year, 30K post-tax. That's not even going to cover your mortgage in many cases, much less other living costs.
- valuearb 6y ago
  Uh, if you have kids not yet in college, how are you retiring?
- Closi 6y ago
  1 million is a woefully small amount of money to retire with? HN needs to live in the real world and learn what most people retire with
  - itsoktocry 6y ago
    >HN needs to live in the real world and learn what most people retire with Most people retire with barely anything, I don't think that's disputed. Doesn't mean that $1M is a lot of money to retire on.
lbotos 6y ago
I've seen that inflation adjusted numbers put it closer to $2.5MM or $3MM now.
- valuearb 6y ago
  All depends on where you want to live.
  - Closi 6y ago
    Of course, $100 million isn’t enough money to retire if you want to live on a super yacht. I just mean for the vast majority of the world, retiring with that sort of wealth is an unattainable goal. I’m sure most people can arrange their life to live incredibly comfortably with $1m.
    - valuearb 6y ago
      Just read great article in American retiree in Mexico living near beach for $1,000/month. When you retire you can move to the place that best fits your budget and interests.
      - Closi 6y ago
        100% agree :) You can have an incredibly rich and easy life which others can only dream of for $1m. That's not to say you can live any life in any location, but assuming you use money wisely you can live with an amazing standard of living!
DennisP 6y ago
Historically, withdrawing 4% of your initial portfolio annually gives you a good but not perfect success rate with a 30-year retirement. I wouldn't say a $40K annual income is just shy of mansion/caviar territory. Further, if you believe the historical data enough to rely on that, you should also believe the same data which says when CAPE ratios are high, the safe withdrawal rate goes to 3% or less.
- Closi 6y ago
  Mansion & caviar is an exaggeration, but you can probably live the rest of your days being looked after on a perpetual cruise ship for $40k if that’s your sort of thing. And if you can perpetually have the type of holiday most people only dream of, I would say you are doing ok!
  - DennisP 6y ago
    A quick google shows that's probably not the case at all. Assuming longer cruises are more cost-efficient, here's a 180-day cruise that costs $38K, and that's assuming you share a small stateroom with another passenger. https://www.cruisecritic.com/news/3762/ https://www.cruisecritic.com/news/3762/
    - Closi 6y ago
      This link does a fairly in depth calculation and finds it’s possible: https://www.investopedia.com/articles/retirement/101416/how-retire-cruise-ship-less-1-million.asp https://www.investopedia.com/articles/retirement/101416/how-...
      - DennisP 6y ago
        > Princess Cruise Lines, for example, offers last-minute deals from less than $100 a day per person.[5] Booking back-to-back cruises at low rates could help keep your retirement spending under $40,000 a year, which can help your retirement dollars go further. So to fit that budget you'd be constantly hustling for last-minute cruise deals, and for a cheap place to stay when you can't find a cheap cruise ready to go at your current port. That's not exactly what I'd call "set for life." Also note their estimate is "per person." Cruise lines price rooms for at least double occupancy so they're actually saying you'll need $200/day, unless you're splitting with someone who has their own money. On top of cruise fees, you'll need some budget to just buy stuff now and then. You might even want health insurance.
eloff 6y ago
That depends entirely where you live, how you live, and how long you live. A million doesn't go that far. It won't even buy a tiny fixer upper from the early half of the last century where I live (Vancouver). People can live 30 years from retirement. A million doesn't go far like that. There's no safe returns on that money anymore.
- Closi 6y ago
  I think a million dollar house counts as a mansion in relative terms for most of the world. I just mean on a world scale I’m hot feeling pity for someone that “only” retires with a million and will have to try so so hard to make ends meet. You won’t struggle to live on a million dollars (in the real meaning of the word struggle).
  - eloff 6y ago
    Given low-interest rates and very high prices in both bonds and stocks, you could withdraw safely only about 3%, not the usual 5%. And that's not counting on any improvements in longevity over the next 30 years. You'll also have to deal with very high inflation rates in health care costs, which will dominate larger and larger chunks of your spending over the years in many countries - even those with free public healthcare. 3% of 1M is $30,000, before taxes on any investment gains. That's basically a little less or a little more than a minimum wage job, depending on where you live. Most likely both you and your spouse will need to live off of that. I don't think 1M is enough to retire in any manner of comfort. 2-3M would be a lot safer. And that's if you move to a cheaper locale and avoid any of the first-tier cities.
    - Closi 6y ago
      Withdrawing 3% is not high risk - You can get an inflation adjusted annuity that provides 3% if you retire at 65.
      - eloff 6y ago
        I didn't say it was high risk, I said it was a safe withdrawal rate to plan for. I don't think market conditions allow for a 5% rate anymore, which used to be the recommended level. Also you've ignored everything else I said just to harp on one thing - which is rude considering the time I took to reply to you.

by Closi 6y ago

> It's not like $1MM in retirement money means "set for life" anymore. It absolutely does, unless you are planning on living in a mansion eating nothing but caviar.

hcknwscommenter 6y ago

??? I think that is highly dependent on housing costs and how early you retire. If you have kids who are not in college (and live where college is not free) and have not paid off your house, 1MM in retirement is a woefully small amount of money (I think?). At 5% withdrawal (risky), you are living on 50K a year, 30K post-tax. That's not even going to cover your mortgage in many cases, much less other living costs.

valuearb 6y ago
Uh, if you have kids not yet in college, how are you retiring?
Closi 6y ago
1 million is a woefully small amount of money to retire with? HN needs to live in the real world and learn what most people retire with
- itsoktocry 6y ago
  >HN needs to live in the real world and learn what most people retire with Most people retire with barely anything, I don't think that's disputed. Doesn't mean that $1M is a lot of money to retire on.

lbotos 6y ago

I've seen that inflation adjusted numbers put it closer to $2.5MM or $3MM now.

valuearb 6y ago
All depends on where you want to live.
- Closi 6y ago
  Of course, $100 million isn’t enough money to retire if you want to live on a super yacht. I just mean for the vast majority of the world, retiring with that sort of wealth is an unattainable goal. I’m sure most people can arrange their life to live incredibly comfortably with $1m.
  - valuearb 6y ago
    Just read great article in American retiree in Mexico living near beach for $1,000/month. When you retire you can move to the place that best fits your budget and interests.
    - Closi 6y ago
      100% agree :) You can have an incredibly rich and easy life which others can only dream of for $1m. That's not to say you can live any life in any location, but assuming you use money wisely you can live with an amazing standard of living!

DennisP 6y ago

Historically, withdrawing 4% of your initial portfolio annually gives you a good but not perfect success rate with a 30-year retirement. I wouldn't say a $40K annual income is just shy of mansion/caviar territory. Further, if you believe the historical data enough to rely on that, you should also believe the same data which says when CAPE ratios are high, the safe withdrawal rate goes to 3% or less.

Closi 6y ago
Mansion & caviar is an exaggeration, but you can probably live the rest of your days being looked after on a perpetual cruise ship for $40k if that’s your sort of thing. And if you can perpetually have the type of holiday most people only dream of, I would say you are doing ok!
- DennisP 6y ago
  A quick google shows that's probably not the case at all. Assuming longer cruises are more cost-efficient, here's a 180-day cruise that costs $38K, and that's assuming you share a small stateroom with another passenger. https://www.cruisecritic.com/news/3762/ https://www.cruisecritic.com/news/3762/
  - Closi 6y ago
    This link does a fairly in depth calculation and finds it’s possible: https://www.investopedia.com/articles/retirement/101416/how-retire-cruise-ship-less-1-million.asp https://www.investopedia.com/articles/retirement/101416/how-...
    - DennisP 6y ago
      > Princess Cruise Lines, for example, offers last-minute deals from less than $100 a day per person.[5] Booking back-to-back cruises at low rates could help keep your retirement spending under $40,000 a year, which can help your retirement dollars go further. So to fit that budget you'd be constantly hustling for last-minute cruise deals, and for a cheap place to stay when you can't find a cheap cruise ready to go at your current port. That's not exactly what I'd call "set for life." Also note their estimate is "per person." Cruise lines price rooms for at least double occupancy so they're actually saying you'll need $200/day, unless you're splitting with someone who has their own money. On top of cruise fees, you'll need some budget to just buy stuff now and then. You might even want health insurance.

eloff 6y ago

That depends entirely where you live, how you live, and how long you live. A million doesn't go that far. It won't even buy a tiny fixer upper from the early half of the last century where I live (Vancouver). People can live 30 years from retirement. A million doesn't go far like that. There's no safe returns on that money anymore.

Closi 6y ago
I think a million dollar house counts as a mansion in relative terms for most of the world. I just mean on a world scale I’m hot feeling pity for someone that “only” retires with a million and will have to try so so hard to make ends meet. You won’t struggle to live on a million dollars (in the real meaning of the word struggle).
- eloff 6y ago
  Given low-interest rates and very high prices in both bonds and stocks, you could withdraw safely only about 3%, not the usual 5%. And that's not counting on any improvements in longevity over the next 30 years. You'll also have to deal with very high inflation rates in health care costs, which will dominate larger and larger chunks of your spending over the years in many countries - even those with free public healthcare. 3% of 1M is $30,000, before taxes on any investment gains. That's basically a little less or a little more than a minimum wage job, depending on where you live. Most likely both you and your spouse will need to live off of that. I don't think 1M is enough to retire in any manner of comfort. 2-3M would be a lot safer. And that's if you move to a cheaper locale and avoid any of the first-tier cities.
  - Closi 6y ago
    Withdrawing 3% is not high risk - You can get an inflation adjusted annuity that provides 3% if you retire at 65.
    - eloff 6y ago
      I didn't say it was high risk, I said it was a safe withdrawal rate to plan for. I don't think market conditions allow for a 5% rate anymore, which used to be the recommended level. Also you've ignored everything else I said just to harp on one thing - which is rude considering the time I took to reply to you.