3 ms·

It actually is a lot for the average worker. If you're in the US and you've been paying full Social Security, and on top of that you have two million in the ban

It actually is a lot for the average worker. If you're in the US and you've been paying full Social Security, and on top of that you have two million in the bank and you've paid off your mortgage, you can easily plan for a $120,000/year income. Just picking a state at random, that would be nearly twice the median household income in North Carolina, and you wouldn't be paying a mortgage or rent. You wouldn't be rich, but you'd be living quite well.

seanmcdirmid 2y ago
2 million to retire isn’t going to do it even for an average worker. That’s not enough, I don’t think any sane retirement plans say it’s enough in the USA (maybe if you move to Central America or Southeast Asia?). It is nowhere close to FU money in tech, if you don’t adjust your lifestyle by a lot it’s only going to last a few years, and that’s not even talking about covering your own healthcare premiums if you aren’t old enough for Medicare yet. People underestimate the costs of life in the USA and use median incomes as evidence, but that really just means it’s harder for those making median to get by, it’s tough out there these days.
- thunky 2y ago
  > That’s not enough 2 million at a conservative 3.5% withdrawal rate pays for 70k expenses a year. Not counting social security. With no mortgage and no rent in a lcol area that's probably enough. Odds are the 2 million grows rather than shrinks.
  - BillSaysThis 2y ago
    You're not counting income tax which, unless it's coming from a 401k, is a meaningful amount.
    - Thorrez 2y ago
      If you're withdrawing from a traditional (pre-tax) 401k or traditional IRA, you have to pay income tax on it. If you're withdrawing from a roth 401k or roth IRA, you don't have to pay any tax on it. If you're withdrawing from a taxable stock market account, you have to pay capital gains tax on the gains. If you're withdrawing from a bank account, you don't have to pay any tax on it (you pay tax on the interest as you get interest). In the worst case scenario (traditional), $70k of withdrawals would be taxed the same as $70k of income. So this would be enough savings for someone who was making $70k before retirement. Probably actually better, because the person wouldn't have to save some of the withdrawals for retirement, and would get social security.
      - deleted 2y ago
        [deleted]
    - thunky 2y ago
      Long term capital gains and qualified dividends are taxed lower than regular income, if at all. And this should be most of their income.
      - seanmcdirmid 2y ago
        Normal 401K is taxed as income because the contributions aren’t taxed on the way in. Your investments that are based on principal that has already been taxed will be taxed as capital gains.
        thunky 2y ago
        Yeah good point, this will make a dent if most/all of their $ is coming from a 401k. Hopefully they have other sources to pull from to lower their taxable income (and tax bracket). And at least there is the standard deduction. And maybe no state income tax.
- bachmeier 2y ago
  > That’s not enough, I don’t think any sane retirement plans say it’s enough in the USA Not for Seattle or Los Angeles. But for most of the US, you will have a retirement income way above what you need. And that's a good thing, because according to the Federal Reserve, the average retirement savings of people 65-74 is about $600,000. Of course retirement plans are going to tell you it's not enough. That's like ranchers telling you you're not eating enough beef. > People underestimate the costs of life in the USA and use median incomes as evidence, but that really just means it’s harder for those making median to get by, it’s tough out there these days. Clearly you're not thinking about all of the US. There are families of four leading happy, healthy lives on $80K out here. They don't use DoorDash three times a week, and they don't buy $8 cups of coffee, but they're doing just fine.
  - johnisgood 2y ago
    Buying anything from Starbucks, or buying a $8 worth of cup of coffee is just insane to me. Buy an espresso machine for 150 USD, jeez. I live in Eastern Europe and the majority of people who drink coffee have a coffee maker.
  - seanmcdirmid 2y ago
    I've lived in really cheap places in the US (think Mississippi, but at least not the Delta), and I still don't see it. Yes, you could get a trailer in the middle of the boonies and burn your trash in a barrel, I had friends living like that, BUT is that really living? Let's forget about Doordash and $8 cups of coffee when even going to the grocery store is going to set you back one or two hundred a week. And that's not even counting future inflation, that has to be offset on gains in the $2 million nest egg, and if you are retiring at 40 and have kids...uhm, you won't be able to pay for their college.

seanmcdirmid 2y ago

2 million to retire isn’t going to do it even for an average worker. That’s not enough, I don’t think any sane retirement plans say it’s enough in the USA (maybe if you move to Central America or Southeast Asia?). It is nowhere close to FU money in tech, if you don’t adjust your lifestyle by a lot it’s only going to last a few years, and that’s not even talking about covering your own healthcare premiums if you aren’t old enough for Medicare yet. People underestimate the costs of life in the USA and use median incomes as evidence, but that really just means it’s harder for those making median to get by, it’s tough out there these days.

thunky 2y ago
> That’s not enough 2 million at a conservative 3.5% withdrawal rate pays for 70k expenses a year. Not counting social security. With no mortgage and no rent in a lcol area that's probably enough. Odds are the 2 million grows rather than shrinks.
- BillSaysThis 2y ago
  You're not counting income tax which, unless it's coming from a 401k, is a meaningful amount.
  - Thorrez 2y ago
    If you're withdrawing from a traditional (pre-tax) 401k or traditional IRA, you have to pay income tax on it. If you're withdrawing from a roth 401k or roth IRA, you don't have to pay any tax on it. If you're withdrawing from a taxable stock market account, you have to pay capital gains tax on the gains. If you're withdrawing from a bank account, you don't have to pay any tax on it (you pay tax on the interest as you get interest). In the worst case scenario (traditional), $70k of withdrawals would be taxed the same as $70k of income. So this would be enough savings for someone who was making $70k before retirement. Probably actually better, because the person wouldn't have to save some of the withdrawals for retirement, and would get social security.
    - deleted 2y ago
      [deleted]
  - thunky 2y ago
    Long term capital gains and qualified dividends are taxed lower than regular income, if at all. And this should be most of their income.
    - seanmcdirmid 2y ago
      Normal 401K is taxed as income because the contributions aren’t taxed on the way in. Your investments that are based on principal that has already been taxed will be taxed as capital gains.
      - thunky 2y ago
        Yeah good point, this will make a dent if most/all of their $ is coming from a 401k. Hopefully they have other sources to pull from to lower their taxable income (and tax bracket). And at least there is the standard deduction. And maybe no state income tax.
bachmeier 2y ago
> That’s not enough, I don’t think any sane retirement plans say it’s enough in the USA Not for Seattle or Los Angeles. But for most of the US, you will have a retirement income way above what you need. And that's a good thing, because according to the Federal Reserve, the average retirement savings of people 65-74 is about $600,000. Of course retirement plans are going to tell you it's not enough. That's like ranchers telling you you're not eating enough beef. > People underestimate the costs of life in the USA and use median incomes as evidence, but that really just means it’s harder for those making median to get by, it’s tough out there these days. Clearly you're not thinking about all of the US. There are families of four leading happy, healthy lives on $80K out here. They don't use DoorDash three times a week, and they don't buy $8 cups of coffee, but they're doing just fine.
- johnisgood 2y ago
  Buying anything from Starbucks, or buying a $8 worth of cup of coffee is just insane to me. Buy an espresso machine for 150 USD, jeez. I live in Eastern Europe and the majority of people who drink coffee have a coffee maker.
- seanmcdirmid 2y ago
  I've lived in really cheap places in the US (think Mississippi, but at least not the Delta), and I still don't see it. Yes, you could get a trailer in the middle of the boonies and burn your trash in a barrel, I had friends living like that, BUT is that really living? Let's forget about Doordash and $8 cups of coffee when even going to the grocery store is going to set you back one or two hundred a week. And that's not even counting future inflation, that has to be offset on gains in the $2 million nest egg, and if you are retiring at 40 and have kids...uhm, you won't be able to pay for their college.