12 ms·

As a mid-30s software developer who is trying to save as much as possible, with the hopes of retiring before I'm old and deprecate, this really sucks to read.

As a mid-30s software developer who is trying to save as much as possible, with the hopes of retiring before I'm old and deprecate, this really sucks to read. $2 million in investments AND a payed off mortgage and still, it doesn't pencil out to retire? Seems like over the past decade+ the 'value' of even $1 million has become more and more diluted. To support even just a middle class, to upper middle class lifestyle, can get very expensive.

beervirus 5y ago
Inflation is very real, and it’s most apparent in home values right now. Even if you pay off your mortgage, your property taxes keep going up as values increase.
- brianwawok 5y ago
  If your property taxes are indexed to assessed value (which mine are), it also means your property value is going up. So double taxes would mean double value of home. It just means that at some point you may need to sell your home and downsize, pocketing a nice profit on the way out.
  - beervirus 5y ago
    Unless prices fall in the future, in which case you’ve paid a lot in taxes every year and never get any benefit from the temporarily high valuation.
    - brianwawok 5y ago
      Very true
- dasil003 5y ago
  I agree with you in general, although I think the home prices probably overstate the case given the huge value transfer from commercial to residential real estate for work-from-home purposes. Not that I think we'll go back to anything like the pre-pandemic distribution, but it'll be interesting to see where it nets out when the dust settles in 4-5 years.
serverholic 5y ago
More than likely OP suffers from lifestyle inflation. You should definitely be able to retire with that much money.
brianwawok 5y ago
The "Safe withdraw rate" is something like 4%. 1 million saved = 40k per year, adjusting with inflation. 2 million saved = 80k per year, adjusting for inflation. If you can live a life you want for 80k a year, then sure - 2 million can do it. And yes, there will always be a "what if the economy collapses etc. etc", but retiring doesn't mean you can never ever for any reason hold a job again or make money.
- brewdad 5y ago
  Don't forget that safe withdrawal rate assumes a 30 year retirement. If you are looking at a 40+ year retirement, the safe withdrawal rate is probably more like 3-3.5%.
  - brianwawok 5y ago
    According to MMM https://www.mrmoneymustache.com/2012/05/29/how-much-do-i-need-for-retirement/ https://www.mrmoneymustache.com/2012/05/29/how-much-do-i-nee... > Luckily, the math in this case is pretty interesting: there is very little difference between a 30-year period, and an infinite year period, when determining how long your money will last. You should be fine at 4% forever. If you can spend a little less some years, or go make a few dollars somewhere hey, boosts your odds even more.
- nly 5y ago
  Fortunately house wealth can help via equity release / a lifetime mortgage. Of you don't want to pass it on to your kids that is.
tunesmith 5y ago
There's a lot of shorthand advice out there, but at the end of the day, if someone wants to get a better sense of what they need to retire, there's no way around it - they have to start tracking their own expenses by categories. I personally do it every month. I know where every dollar has gone every month, and I also track a 12-month moving average. So I have a sense now of what our yearly expenses are. I compare that with the ever-changing recommendations of what a "Safe Withdrawal Rate" is, and then I try to squint into the future to mix in the effects of: taxes from retirement income; social security (even at the 80% level if no one fixes it); increased retirement expenses from having fun; decreased retirement expenses from not working and getting old; increased retirement expenses from health. But ultimately, it just comes down to the trio of savings, interest rate, and expenses.

beervirus 5y ago

Inflation is very real, and it’s most apparent in home values right now. Even if you pay off your mortgage, your property taxes keep going up as values increase.

brianwawok 5y ago
If your property taxes are indexed to assessed value (which mine are), it also means your property value is going up. So double taxes would mean double value of home. It just means that at some point you may need to sell your home and downsize, pocketing a nice profit on the way out.
- beervirus 5y ago
  Unless prices fall in the future, in which case you’ve paid a lot in taxes every year and never get any benefit from the temporarily high valuation.
  - brianwawok 5y ago
    Very true
dasil003 5y ago
I agree with you in general, although I think the home prices probably overstate the case given the huge value transfer from commercial to residential real estate for work-from-home purposes. Not that I think we'll go back to anything like the pre-pandemic distribution, but it'll be interesting to see where it nets out when the dust settles in 4-5 years.

serverholic 5y ago

More than likely OP suffers from lifestyle inflation. You should definitely be able to retire with that much money.

brianwawok 5y ago

The "Safe withdraw rate" is something like 4%. 1 million saved = 40k per year, adjusting with inflation. 2 million saved = 80k per year, adjusting for inflation. If you can live a life you want for 80k a year, then sure - 2 million can do it. And yes, there will always be a "what if the economy collapses etc. etc", but retiring doesn't mean you can never ever for any reason hold a job again or make money.

brewdad 5y ago
Don't forget that safe withdrawal rate assumes a 30 year retirement. If you are looking at a 40+ year retirement, the safe withdrawal rate is probably more like 3-3.5%.
- brianwawok 5y ago
  According to MMM https://www.mrmoneymustache.com/2012/05/29/how-much-do-i-need-for-retirement/ https://www.mrmoneymustache.com/2012/05/29/how-much-do-i-nee... > Luckily, the math in this case is pretty interesting: there is very little difference between a 30-year period, and an infinite year period, when determining how long your money will last. You should be fine at 4% forever. If you can spend a little less some years, or go make a few dollars somewhere hey, boosts your odds even more.
nly 5y ago
Fortunately house wealth can help via equity release / a lifetime mortgage. Of you don't want to pass it on to your kids that is.

tunesmith 5y ago

There's a lot of shorthand advice out there, but at the end of the day, if someone wants to get a better sense of what they need to retire, there's no way around it - they have to start tracking their own expenses by categories. I personally do it every month. I know where every dollar has gone every month, and I also track a 12-month moving average. So I have a sense now of what our yearly expenses are. I compare that with the ever-changing recommendations of what a "Safe Withdrawal Rate" is, and then I try to squint into the future to mix in the effects of: taxes from retirement income; social security (even at the 80% level if no one fixes it); increased retirement expenses from having fun; decreased retirement expenses from not working and getting old; increased retirement expenses from health. But ultimately, it just comes down to the trio of savings, interest rate, and expenses.