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Retirement - What would it take?

Discussion in 'BBS Hangout' started by DaDakota, Jan 13, 2005.

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How much money is needed to retire at 40

  1. $1 million

    19 vote(s)
    25.3%
  2. $2 million

    23 vote(s)
    30.7%
  3. $5 milliion

    18 vote(s)
    24.0%
  4. $10 million

    15 vote(s)
    20.0%
  1. DaDakota

    DaDakota Balance wins
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    Well, you really don't need to take out all of that money every year.....but good point.

    And it is not taking into account that you will be withdrawing SS at 60.

    DD
     
  2. 3814

    3814 Member

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    i consider myself retired for life...and i'm in college...and i don't have a million dollars, probably more like 60g's assets.

    but by retired...i mean, do whatever the hell i wanna do. i don't wanna be stagnant all of my life - i wanna do things. start up "projects."

    pretty much be self employed. right now i have 2 more years until i have my English Major/Business Minor. I'll probably go teach English overseas for the experience.

    Then maybe start up a business, not sure, thinking of a motel overseas, maybe on the beach or something.

    i am also working on a book, a couple movie ideas - and stuff like that.

    i can live off of a pretty low budget, but honestly think i'll be fine if i just do whatever projects come along.

    i think one could retire with 1 million if they were still willing to work on personal projects that could bring in money...but definately need at least 2 million if you're wanting to retire in the sense of the word - but you'd still have to make a few bucks here and there and smart financial decisions.
     
  3. No Worries

    No Worries Member

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    62 is early retirment age and 67 is likely your normal retirement age. I think the max you can get from SS per year is topped out at ~$22,000.
     
  4. Fatty FatBastard

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    True, but some due, as well as having any investment advisor to run a COLA for you and averaging it out for the allotted avg.

    But there are SPIA's that have COLA's as well as one SPIA that will adjust to current interest rates.

    New stuff comes on the horizon as demand requires.:p
     
  5. droxford

    droxford Member

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    There's a really huge variable missing here...

    I are you saying, "How much is needed to retire today at age 40" ... or
    Are you saying "How much is needed to retire in 20 years at age 40"

    In either scenario, you will need at least $2 mil. (just to get bills paid without an exotic lifestyle).

    If you want to retire at age 40 twenty years from now, you're going to need a LOT more than that.

    -- droxford
     
  6. DaDakota

    DaDakota Balance wins
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    I am saying that if you are 40 today, and wanted to retire..TODAY...how much would you need to have in the bank if you lived a normal middle class lifestyle.

    I think if you had 2 million in cash, you could retire and live comfortably.

    That is around $160,000-$200,000 per year in investment income.

    So if you only spend $100,000 a year, you could live for the rest of your life on the interest and never touch the principal.

    DD
     
  7. RIET

    RIET Member

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    That's very simplistic.

    How are you going to get that 8% guaranteed per year?

    There are no guaranteed investments that will offer that - and if there are guaranteed products that offer that, inflation will be as high if not higher.

    If youre looking at a diversified portfolio, a lot will depend on the timing of the return. For example, if you have a -20% in year 1 and go from $2,000,000 to $1,600,000, you will now need a 25% return the next year just to break even in real dollars (ignoring inflation).

    Also, a lot will depend on taxes that change all the time. If you have to liquidate $100,000, will that be at ordinary income or capital gain rates which is a big difference.
     
  8. DaDakota

    DaDakota Balance wins
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    Ok,

    Assume it is capital gains...and yes you are correct if it goes down -20% in year one it cocks up the plan.

    Average rate of return on the stock market for the last 50+ years is around 10%, so I am assuming you get into some fairly solid mutal funds and go from there.

    DD
     
  9. Fatty FatBastard

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    Avg return on the market over the past 50 years is about 7%.
     
  10. Deckard

    Deckard Blade Runner
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    I'm over 50, so I missed my window. Damn.
     
  11. DaDakota

    DaDakota Balance wins
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    Well, what do you think it would take at 50?

    I am just curious to see if anyone has done it.

    Personally, I think it would drive me crazy but more importantly it would drive my wife crazy, but I would have 10 years to make it to the senior tour in golf.

    :)

    DD
     
  12. Dubious

    Dubious Member

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    The best thing about not going to work everyday is 'no alarm clock'. This alone is priceless.

    The next best thing is no 'employee evaluations'.
    (yeah yeah, how am I doing you worthless prick)



    So yes, I am doing it but, I have no ambition...whatsoever.
    Also, I don't seem to require much human interaction outside of posting on the BBS.

    Trust me though you will not get good enough to play on the Senior Tour.
     
    #32 Dubious, Jan 13, 2005
    Last edited: Jan 13, 2005
  13. El_Conquistador

    El_Conquistador King of the D&D, The Legend, #1 Ranking

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    The period from 1926 through 2003 had an average return on the S&P 500 of 10.42% according to Ibbotson.
     
  14. Dubious

    Dubious Member

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    The problem with using the long term averages for projecting your future returns is the cyclic nature of the market. You can never say where you are in any cycle till you can look back at it.

    What would your long term returns be looking like if you had invested all of your two million dollars on March 10 2000? You might be back about even today, five years later, and that's if you weren't taking your 10% out each of those 5 years to live on.

    What if your retirement period looked like the 17 year period from1966 through 1983? The stock market was negative when adjusted for inflation.

    Conversely, I got invlolved in the stock market in 1991. For 9 years any crap I threw at the wall stuck. I thought I was smart, but I was just lucky to at the right place at the right time (though I got smacked down hard when things changed)

    I know I post links to Lance Robert's Streetalk all the time but it's free information and I can tell you from experience he knows what he is talking about.
     
  15. Deckard

    Deckard Blade Runner
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    Beats me. :)
    I can tell you that Social Security is part of our retirement income stream. Not a big part, but it will help. I would say more, but that would take this to D&D! :D
     
  16. Davidoff

    Davidoff Member

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    My goal is 50, but I would say 3 million for stoping at 40.. I think I can get away with 3 million for me and a wife by 50 for retirement and be safe..
     
  17. powerchuter

    powerchuter Member

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    I would jump into the camp of "retirement isn't all its cracked up to be".

    I tried the retire at 40 bit last year - traveled to lots of tropical beaches, took the rv out and about the country, started some new hobbies etc....

    After about 10 months I was jumping out of my skin and ready to start some new business projects.

    The new PLAN is to never retire - just take off for a couple of weeks adventure somewhere a few times a year as long as we can stay healthy enough to enjoy them.

    The one key that we looked at (which doesn't always jive with the experts) was having our house paid off, having our vacation home (or rv in our case) paid off, and having some passive income from real estate to cover expenses and taxes on our properties so it didn't eat into the $ we were living off of.
     
  18. DaDakota

    DaDakota Balance wins
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    A great post, so you did not like being retired then.

    Another question is for those that ARE retired....how do you like it?

    What do you fill your days with?

    DD
     
  19. powerchuter

    powerchuter Member

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    the biggest problem was not knowing what to say to folks that asked "so what do you do"

    it probably ties into the problem of having your self worth be based on a job title or career but I think after a while you also want to feel productive

    i took up chainsaw carving but since i still suck at it i felt stupid saying "chainsaw carver" although I would prefer that to "corporate smuck"

    it is also hard to get up at a reasonable hour if you don't have to be anywhere....
     
  20. Isabel

    Isabel Member

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    You people make me sick, no offense. People in my family pretty much don't retire. We keep working as long as we can. Retiring at 40? Ferdinand's past that and his career, whatever that's going to be, hasn't even really gotten started yet. None of us will ever be able to afford it. Of course, not really fitting in with the corporate world and wanting to be poor educators instead probably doesn't help...

    in other words, just realize how fortunate you are to even be able to afford such a thing. :)
     

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