Can I live on a 10 million retirement?

[joekingcorvette]

I also believe it takes a full calendar year to decide where you want to be in your new life. For instance I previously went fishing and hunting on the weekends because I had weekends off on Friday at 1:00. Now I go during the week and pick the best day as far as weather and wind etc are concerned. I can ride my Honda Monkey in very low traffic and enjoy the roads in the Corvette much more. I have time to help my kids almost whenever they call for a hand. I go to more funeral visitations and can go to the gun range any time I want to. I take my 93 old mom to the doctor or grocery store or little errands. When it snows I can get right out there and take my time to remove it. The lawn has never looked better and I can smoke meats anytime I want to. In other words the list goes on and on. If you are working 40 hours per week these items need to be completed after you drove to work and back, made dinner/supper, and worked 8 hours per day. Why suffer unless you have to.

 

[KrisZ]

10mil? Could you even call it “living”?

 

[Vil_Riker]

Watch out, just found out the IRS lumps in certain tax-exempt income in the calculation of the taxable portion of your Social security income. This surprisingly includes tax exempt Muni Bonds.

Roth distributions are NOT counted as income or in the RMD.

Taxes on social security recorded on your 1040SR thankfully do not go in to the general fund bucket rather they go back to fund the Social Security engine.

I Just found this gem of a retirement tax calculator:

1040 Calculator Estimates Your Federal Taxes

Use this calculator to estimate your total taxes as well as your tax refund or the amount you will owe in taxes.

www.aarp.org

- Ken

Income tax and FICA taxes have different base, rates and cap.

 

[zzyzzx]

Now back to reality, do you think 1 million is still enough to live comfortably in retirement when you include SS?

Too many variables here:
Any debt?
How old are you when you collect SS?
What's your life expectancy?
Does our recent current inflation rate continue? (obligatory In before the lock if this is discussed further)

Clearly the younger you are (I.E. - too young for Medicare, but old enough to collect SS as the criteria above suggests a minimum age of 62 to retire scenarios to consider)

1M isn't going to be enough who don't have some sort of defined benefit pension, unless you want to live frugally..
Some people really hate going to work, or have medical conditions and would be content to go fishing, watch TV, or putter around the house all day. Others see no point in retiring unless they can do it in Caligulan splendor.

I also suspect that a lot of people retire when they are already old-ish and suffer a medical condition or layoff, so don't necessarily mark your calendar. The stock market might make you delay as well.

 

[zzyzzx]

Our financial planner - my wife's actually - He ran a montecarlo analysis given income and predicted expenses accounting for cost of living and the results were yes ( less than 1m in the IRA) There was no erosion of principal.

Does your Montecarlo analysis software allow you to input an 18% inflation rate?

 

[zzyzzx]

You won't have much earned income to be taxed after you retire.

Capital gains distributions from mutual funds in taxable accounts can cause a huge tax bill. Now if you are taking the distributions in cash, that's another story.

 

[zzyzzx]

Don't laugh, there are some 60 and 70 year olds still living in their parents basement waiting it out.

I have a cousin that's in his early 50's that still lives in my Aunt's basement (literally).

 

[4WD]

I have a cousin that's in his early 50's that still lives in my Aunt's basement (literally).

Almost happened where Adam lives - but he got a sponsorship from Carhartt in his 40’s and got a place for $1

 

[ZZman]

Too many variables here:
Any debt?
How old are you when you collect SS?
What's your life expectancy?
Does our recent current inflation rate continue? (obligatory In before the lock if this is discussed further)

Clearly the younger you are (I.E. - too young for Medicare, but old enough to collect SS as the criteria above suggests a minimum age of 62 to retire scenarios to consider)

1M isn't going to be enough who don't have some sort of defined benefit pension, unless you want to live frugally..
Some people really hate going to work, or have medical conditions and would be content to go fishing, watch TV, or putter around the house all day. Others see no point in retiring unless they can do it in Caligulan splendor.

I also suspect that a lot of people retire when they are already old-ish and suffer a medical condition or layoff, so don't necessarily mark your calendar. The stock market might make you delay as well.

If the average person makes about 50,000 a year I think 10 million is easy street in retirement.

 

[atikovi]

If the average person makes about 50,000 a year I think 10 million is easy street in retirement.

Unlikely anyone making 50,000 a year is going accumulate 10 million in one lifetime unless they hit the lottery.

 

[Dave Hess]

Unlikely anyone making 50,000 a year is going accumulate 10 million in one lifetime unless they hit the lottery.

$10M is a very unrealistic number unless you inherited the money , married into big $$$ or got a job in Silicon Valley.

 

[JeffKeryk]

$10M is a very unrealistic number unless you inherited the money , married into big $$$ or got a job in Silicon Valley.

It's not the salary. It's what you do with it. I know a bunch of people who made the salary, are in (or close to) retirement, and are struggling.
But boy did they drive nice German cars, shop at Nordy's, regularly vacation in HI, spend spend spend! And then pulled equity outta their property.
I've had many discussions with co-workers, "I'll save for retirement when I'm older." STUPID!

By the way, the $$ is in the options. Long term; let it grow!
But I agree, $10M is a big number. I could easily retire on $1M + SSI, given the situation I worked to get into.

Quick story... My co-programmer was a pretty gal from Vietnam who's husband kept cheating. When they split, they sold their gorgeous mansion in Pleasenton. She bought a tiny 2/1 fixer upper with all she had, on a street in Palo Alto. She had 2 neighbors named Steve. Young and Jobs.

 

[wtd]

I have been retired for over five years now and live on way way less than that but I'm debt free which makes a difference and I've not worked a day since retiring.

It depends on a person's debt and the standard of living that they want to have if 10M will be enough. I would say that for the average person, it would be enough because I doubt most people have a retirement portfolio of 10 M. I know that most of the people that I know don't.

 

[Hermann]

House paid off, SS checks and good retirement medical. Yes…

May I add paid off vehicles. That really helps too. Along with investment income you can live quite well.

 

[Hermann]

Ten mill plus Social Security ? No problem for me . I think I could pull it off with far less .

I better be able to

 

[99Saturn]

I agree, $10M is not going to be the average person's number.

Reading through this thread - whether this was unrealistic or not today is got me curious and thinking about the power of compounding, especially with some recent threads going around about maxing out 401ks and catch up contributions. I took a look back through historic 401k contribution limits:

Historical 401(k) Limit: Contibution Limits from 1978 to 2022 - DQYDJ

The 401(k) limit's evolution from 1978 until 2022. We include the key laws changing how the 401(k) works for individuals and employers and 50+ catch-ups.

dqydj.com

If someone maxed out their 401K contribution (not doing catch up contributions at 50+) since 1979 and earned an average return of 8%, 401K savings gets to about $3M (assumed $7,000 as the cap for 1985 and earlier). 10% return get the number up to $5M+. Somebody walking into the work force today at 22 that maxes out their 401K every year (assumed $22,500 through age 65; again, no catch up contributions 50+) at an 8% annual return would be at around $8M at retirement.

Good lesson/reminder of the power of compounding interest IMO.

 

[billt460]

When you grasp the reality of this, ("Can I Retire On $10 Million Dollars"), it's about as productive of a topic as smelling farts in an elevator.

"In a survey of younger and older Americans alike, 50% of all respondents said they have less than $500 in the bank, or no emergency savings fund at all".

50% of Americans Have Under $500 in Emergency Savings. Here's How to Build a Safety Net ASAP

Low on savings? Read on to see how to build an emergency fund as quickly as possible.

www.fool.com

 

[JeffKeryk]

When you grasp the reality of this, ("Can I Retire On $10 Million Dollars"), it's about as productive of a topic as smelling farts in an elevator.

"In a survey of younger and older Americans alike, 50% of all respondents said they have less than $500 in the bank, or no emergency savings fund at all".

50% of Americans Have Under $500 in Emergency Savings. Here's How to Build a Safety Net ASAP

Low on savings? Read on to see how to build an emergency fund as quickly as possible.

www.fool.com

Exactly.

 

[JHZR2]

Some investment advisors were making noises a few years ago about even $1M not being enough for retirement. They claimed you needed at least $2M–3M then.

These articles asking about whether $10M is enough might be looking at today's higher inflation over time. Interest rates for savers are still low, too.

If inflation is near 10% per year for years on end, and your savings are getting under 1% annually, and the stock market and other investments are stagnant as in the 1970s, suddenly that $10M figure looks less ridiculous.

I’ve had $5M+ as the base forever.

My wife and I both have pensions in addition to retirement savings, but I don’t know how to formulate their payout as a monetized equivalent. So I do t count that.

I don’t count SS. I was born in the 80s. The system is broken now, insolvent soon, and they’ll inflate the currency or do something to have my kids and I pay for current recipients, let alone anything I may get. I fear for the current excesses being passed to my kids’ kids.

But at $5M, figuring on average you can make 5%, then you have $250k/yr earning power. That’s a lot of discretionary spending today, and I suspect even with inflation, will be a reasonable amount in the future. So even with no capital growth, and a bit of up/down years, it’s enough to kind of average out. With a bit of frugality so any lean years can be rode through, the far years will make up for it.

One could probably argue less is sufficient, but as a 1980s baby, late 2030s would be an early retirement, so the timeframe is really beyond that.

 

[JHZR2]

When you grasp the reality of this, ("Can I Retire On $10 Million Dollars"), it's about as productive of a topic as smelling farts in an elevator.

"In a survey of younger and older Americans alike, 50% of all respondents said they have less than $500 in the bank, or no emergency savings fund at all".

50% of Americans Have Under $500 in Emergency Savings. Here's How to Build a Safety Net ASAP

Low on savings? Read on to see how to build an emergency fund as quickly as possible.

www.fool.com

Huh? Don’t like the number? Fine. Think it’s excessive? Ok. But who do you think should pay for these folks who made poor decisions and don’t have $500 in the bank?

Did they have iPhones? Eat at restaurants? Buy a low mpg high priced truck? Do other “wasteful” things? One has to know their limitations based upon income and life costs. Don’t mean to sound harsh, but there are mathematical realities to things. I’m not Ebeneezer Scrooge (are there no work houses?), but there is a practical reality to in vs out, and debt.

Some folks may have gotten the short end of the stick. Medical bills, issues (not self induced) that limited their earning potential. But 50% or whatever the figure is, encompasses a LOT of functional Americans. And the next 25-45% probably aren’t a lot better off either.