Posted on 02/09/2023 7:30:30 AM PST by mikelets456
Spoiler---worst state Hawaii:
Hawaii Annual groceries cost: $6,419.51 Annual housing cost: $31,797.41 Annual utilities cost: $5,470.22 Annual transportation cost: $4,461.26 Annual healthcare cost: $8,008.27 Total annual expenditures: $91,684.73 How long $1 million will last in savings: 10 years, 10 months, 24 days
Where does PA stand?(because I'm from PA) Near the best---for now:
Pennsylvania Annual groceries cost: $4,452.04 Annual housing cost: $8,477.33 Annual utilities cost: $4,127.25 Annual transportation cost: $3,785.97 Annual healthcare cost: $6,434.62 Total annual expenditures: $46,389.53 How long $1 million will last in savings: 21 years, 6 months, 16 days
Best state?
Mississippi Annual groceries cost: $3,880.29 Annual housing cost: $6,325.77 Annual utilities cost: $3,404.70 Annual transportation cost: $3,200.47 Annual healthcare cost: $6,494.63 Total annual expenditures: $39,538.15 How long $1 million will last in savings: 25 years, 3 months, 9 days
(Excerpt) Read more at gobankingrates.com ...
Check out their "partners" to understand that they are trolling for people to essentially pay -- directly or indirectly -- for their services and advice. It's a clever game, because those who have a million in liquidity will self-select for them as potential new customers.
Their "about" page with their "partners."
https://www.gobankingrates.com/about/
Simple. Pay off any debts. Acquire no debts if you have none. You will be fine until the whole mess caves in on the massive federal debt and unsupported promises. In the meantime, pay NO ONE for financial advice, and research for yourself.
Or go with Sam Bankman-Fried and/or perhaps Bernie Madoff.....
“pay NO ONE for financial advice, and research for yourself.”
That is priceless advice.
“Financial advisers” are toxic for most seniors.
What state do you live in, may I ask?
For PA:
$92 per week for food.
$706 per month for rent/mortgage/insurance
$343 per month for utilities
$315 per month for car payment/insurance/inspections/maintenance/gas
$536 per month for health care
I think there is some opportunity for tweaking this budget.
The Million not invested in anything? Just spending it like the proverbial drunken sailor? That’s stupidity! Properly invested and living off of the annual return, the money will outlast a sensible retiree and the kids can fight over it.
These "scare" articles, trying to tell you $1m is not enough to retire on, or will only last you 10-20 years depending on what state you live in, always make me laugh.
Having a million dollars of retirement savings is plenty to retire on, in any state you want to live in, if you take a few simple steps to manage it properly and you overall have decent money managing skills.
These articles never mention that most people are going to be able to draw Social Security. That alone, will allow you to retire without draining your nest egg that quickly.
Let's take an example of somebody retiring at age 65 with exactly one million in retirement savings (i.e. IRA/401k).
The average Social Security check for somebody retiring today at age 65 in 2023 is $2,559/mo (just over $30k annually). I realize that FRA is 67 for most and that some will wait until 70 to get the very max they can get from Social Security, but most people actually retire around 65. (It is also a good idea to have all your debt paid off, otherwise you might want to consider retiring a little later.)
You then setup a distribution from your retirement account of $40,000 a year (the four percent rule) for the first year of retirement. Each year after that, you will want to slightly increase that to keep up with inflation.
So this yields a guaranteed base of $70,000/yr in your first year of retirement. Each year, that should rise with inflation. Now some people may have to reduce their lifestyle to get by on $70K a year. But it can be done and no, you will never starve on $70K a year or lack for any essentials. You're pretty much assured of being financially independent the rest of your life so long as you stay within budget.
Yes, your nest egg will decrease to $960,000 after first year but even if you were to get just a 5% yield on that, you would be back up to $1,008,000 before you withdraw your next chunk of money.
Sure, you will have years where your portfolio loses money but over time, you will make that up as better years offset that. Using Monte Carlo simulations, somebody in this position (A million dollars at 65 withdrawing 4% a year) has over a 95% chance of never running out of money. As for the scenarios of the 5% that do run out of money, this is due to "sequence of returns risk" in that you retire at the worst possible time where your portfolio takes a huge hit in your first few years of retirement. People who retired last year for example. But in these cases, you are usually young enough to return to the workforce for a few extra years to restore those losses.
You also need to consider if you have a living spouse also collecting Social Security. That will bring your total initial income to around $100K.
Part time work adds additional cushion. My wife retired a few years ago and she continues to pull in about $20k a year almost effortlessly, just by doing odd jobs here and there. These are all things she likes doing so doesn't even consider them work.
Finally, you will have those with $1.5m or $2.0m (or more) in their retirements savings. So the 4% annual withdrawal becomes $60K and $80K respectively, on top of your Social Security and whatever part time work you do.
So a million dollars, properly managed, is more than adequate to retire on. Many, many people successfully retire on much less than that. You simply adjust your lifestyle to what you can afford.
So have a great retirement. Try not to leave too much behind for your kids!
From the article (at bottom):
Methodology: GOBankingRates determined the number of years and months that $1,000,000 will last during retirement by multiplying the annual expenditures for someone 65 and older, sourced from [...]
Though you're right: This could have been stated more clearly, right from the start.
Regards,
In florida that’s 9600 a yeaR for me. Taxes and insurance only.
You are correct to point this out, of course!
But regardless as to how you invest your $1 million and what your return you achieve, the relative rankings are nonetheless interesting.
Wish they had included Guam and the Northern Marianas, though.
Regards,
Interesting summary, but it doesn’t take taxes into account. South Dakota, Florida, Tennessee are probably the best places to retire. Also, if you retire to a rural area, you can avoid high property taxes that are levied in suburban school districts.
It’s also dependent on income. We have 3 pensions and a spouse on early Social Security. I’m postponing my Social Security. I will retire at the end of 2023 and go back to work somewhere just to pile up cash while I can.
My banker told me that every person he works with(clients with a net worth over $1M) had invested money in their 20’s and never stopped. My wife and I both did that.
“if you retire to a rural area, you can avoid high property taxes that are levied in suburban school districts.”
Yup—folks thinking about retirement should spend the time to create a budget—even if they don’t think they need to—just to understand what their expenses look like.
Property tax is a big one—if you can keep that reasonable you need a lot less income.
The higher income you need to pay high property taxes is taxed by the income tax—so you are being double taxed.
Likewise if you are driving less once retired you do not need a fancy new car—and that saves on property tax on the vehicle.
That was one reason we did not move to Texas—the property tax would be a big hit—and could get a lot worse.
State income tax was less of an issue because our taxed income was not going to need to be that high.
Biggest problem with TN for retirees is that pesky sky high sales tax on everything.
If your retired, a no-income tax state really doesn’t matter unless you are really withdrawing big bucks.
BKMK
If you put the $1million in gold coins...should be OK.
At age 62 I live very frugally.
Maine
Annual groceries cost: $4,435.22 Seems low at $12.15 per day, but I eat out almost daily. $3,000 per year.
Annual housing cost: $12,512.73 My housing is $840 + $35 for internet = $10,500
Annual utilities cost: $4,108.34 Electic, water and heat are included above.
Annual transportation cost: $3,918.87 I don’t own a car. Current Uber costs about $500 per year (would probalby use it more as I get older.)
Annual healthcare cost: $7,041.41 Current healthcare cost are Zero. CMS Fact sheet says Part A will be free, Part B will be $165 per month, plus $20 per month for Part D (the plan charts are confusing and lack significant information) = $2,220
Total annual expenditures: $54,763.43
Not shown: Restaurant meals: 320 x $25 = $8,000.
Phone: $55 per month = $660.
My real nut: $24,860
How long $1 million will last in savings: 18 years, 2 months, 31 days
At $25,000 per year, If I had $1 million and did not invest it and had no other income, it would take me 40 years to spend it to zero.
That’s where I’m headed! Just have to visit again and narrow it down to exactly where. Loved our trip last year.
One million dollars invested with a return of just 6.5% annually, with inflation at 3.5% and you make an annual withdraw of 4% of the year end balance, this first million will last over 100 years.
Keep in mind that you pull any funds in 401k/403b/IRA at your income tax rate. Basically, you may lose 20% taking it out. All our money now goes to savings or a Roth.
All I need is a low stress PT job after I retire to postpone Social Security for as long as possible. My pension and SS will be about the same.
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