my retirement date is set: october 1, 2028

[brianmanahan]

Best wishes, I should have put more money into a 401k type savings
too late now for me.

did you have a pension or something like that? i am vested in a pension, it might not end up being worth a whole lot but every little bit helps.

 

[jagec]

You know...1 million isn't that much anymore . You'd need at least $4 million to live middle class the rest of your life.

Assuming 3% returns above inflation, that's $120k a year...and at a tax rate of only 15%, since it would essentially be all dividends and capital gains. Since most people have already paid off their houses in retirement, where would it all be going?

In my opinion, if you're going to have a fully paid-off house and don't live in a high COL area, $1M is still sufficient for a "middle class" retirement if you can live frugally.

 

[brianmanahan]

In my opinion, if you're going to have a fully paid-off house and don't live in a high COL area, $1M is still sufficient for a "middle class" retirement if you can live frugally.

especially now with obamacare rate-limiting health insurance prices based on income

that was one of my biggest concerns and ACA so far has made my plan look more doable

my concern is that they may start factoring in not just your annual income, but your total assets as well

 

[JEDI]

especially now with obamacare rate-limiting health insurance prices based on income

that was one of my biggest concerns and ACA so far has made my plan look more doable

my concern is that they may start factoring in not just your annual income, but your total assets as well

anything can change between now and next decade.

heck this year the surpreme court might rule that ACA subsidies aren't clearly written in the obamacare law.
and that congress needs to pass a new law to allow it. (fat chance while the repubs are in power.)

 

[Carson Dyle]

Assuming 3% returns above inflation, that's $120k a year...and at a tax rate of only 15%, since it would essentially be all dividends and capital gains. Since most people have already paid off their houses in retirement, where would it all be going?

In my opinion, if you're going to have a fully paid-off house and don't live in a high COL area, $1M is still sufficient for a "middle class" retirement if you can live frugally.

Sure... because we'd all have to live frugally off of $120k per year. Probably have to cut out the yacht club membership and start stocking the wine cellar with $100 bottles of wine instead of the expensive stuff. Might even have to let the personal chef go.

 

[brianmanahan]

Sure... because we'd all have to live frugally off of $120k per year. Probably have to cut out the yacht club membership and start stocking the wine cellar with $100 bottles of wine instead of the expensive stuff. Might even have to let the personal chef go.

remember, you're on ATOT

we all make 100$k+ per year and cant imagine living on any less

 

[Engineer]

Assuming 3% returns above inflation, that's $120k a year...and at a tax rate of only 15%, since it would essentially be all dividends and capital gains. Since most people have already paid off their houses in retirement, where would it all be going?

In my opinion, if you're going to have a fully paid-off house and don't live in a high COL area, $1M is still sufficient for a "middle class" retirement if you can live frugally.

Dividends and capital gains are for regular brokerage accounts, not retirements accounts. You will pay full marginal rates for income from IRA's, 401k's, etc. And of course, nothing if from a Roth (other than sales taxes, if any, at the time).

remember, you're on ATOT

we all make 100$k+ per year and cant imagine living on any less

Yea, I received a PM from the new AT leadership stating that I'm going to have to give up my posting here if I don't get up to standards fast!:'(

 

[dullard]

Assuming 3% returns above inflation, that's $120k a year...and at a tax rate of only 15%, since it would essentially be all dividends and capital gains. Since most people have already paid off their houses in retirement, where would it all be going?

In my opinion, if you're going to have a fully paid-off house and don't live in a high COL area, $1M is still sufficient for a "middle class" retirement if you can live frugally.

It doesn't work quite that way.

Lets say you have $1M of net worth. And lets say you have a typical house at $205,000 (Nov 2014 median price of sold homes). So, your retirement account balance is then at $795,000. 3% of $795,000 is $23,850 a year. And like Engineer said, this is at your full tax rate since most people have their retirement balances tied up in pre-tax accounts.

While it is doable, $23,850 pre-income tax just doesn't go very far. You'll have to pay a few thousand a year in real-estate taxes alone since in this scenario you own a house. So lets say after income tax and property tax you are at $20,000 a year. The cheapest Medicare plan is about $1260 a year and prices just go up from there. Typical heath care costs (deductibles, etc.) are about another $3500 in retirement. So you are left with ~$15,280 a year to live on ($1,270 a month).

Sure that is possible, but $1,270 a month is not that much. And that is assuming a pretty generous 3% return over inflation. Many people start getting conservative in retirement investments and probably return closer to 1% to 2% over inflation. Or if the stock market takes a dive, even for a bit, you'll average far less than 3% that can be safely withdrawn. Social security, if you qualify, is your saving grace in this case.

A $2M nest egg goes far, far further than just $1M. And if you are talking an early retirement, $4M is a pretty comfortable amount. $1M is doable, but really is a terrible risk in case something goes wrong.