What would one do if all you had at retirement age is $1 million? Would you have to keep working? Or could you invest it and somehow stretch it?
bad advice.
you shouldn’t be taking ANY of your principal during retirement... you should be living off the interest or the cash flow generated by the funds.
YES! I’m living proof. Try $200k
Invest the million $ in utilities, municipal bonds and dividend paying stock funds.
Given that our Federal Reserve is strip-mining the middle class and savers with zero nominal interest rates (and negative real rates) $1 million in a “safe” investment, like a year-long CD, will earn you approx. $5000 per year.
Our financial masters, in a bid to keep their member banks afloat and profitable, and keep massive-government’s social-engineering schemes viable - have made it impossible for anyone who earns wages to retire.
Kill the Federal Reserve - it is an evil organization.
LOL, BS!! A million bucks at a meager 4% return (low risk 80@ bonds, cash and 20 equities is easily attainable. That’s $40, 000 without touching your principal. Add to that SS which in my case comes to a bit over $33,000 annually and you have a net income of $73,000 and that is without additional dividends thrown off from various holdings.
That’s about $6000 monthly. I have two homes, one in NJ (highest or close to the highest tax wise) and a vacation home on Cape Cod. I even have a mortgage (3.5%-30 yr) on that one costing me $810 monthly (other than that we have zero debt). I have NO problem paying the bills except for what I am forced to take from our IRS accts, some of which I don’t use and reinvest.
Even if I upped the withdrawal from IRA’s another $1000 per month my money would last 25 years or more and I am $74 yrs old now. Even if I live that long I still have the homes which collectively today are worth about $775,000 (less approx $150,000 mtg) so there is another $625,000 equity for us to live on.
The secret is to be as debt free as possible and to live realistically.
The answer depends on several major questions:
How much are you going to earn each year on that money?
How is it structured? (tax free or taxed)
What are your expenses monthly
What are you getting from Social Security
Is the house paid off?
I contend that a person who is receiving a upper end SSN payment ($3,000 / month) and has their house paid off, modest bills, and a $1M in a ROTH IRA will do just fine.
Someone who is receiving less SSN ($1,500 / month) is still paying off their house, has significant bills (medical?) and $1M in a bank savings account is not going to do so well.
66% of adults in this country have less than $1000 saved for retirement. About 50% haven’t saved a dime.
If I can knock over an occasional gas station and keep my meth lab hidden I’ll be fine. /s
Here’s the key point to remember about retirement:
You build up principle throughout an entire working lifetime ...
to live off the “income” generated by that principle, not to live off the principle.
Any plan that involves living off the principle puts you in the unenviable position of needing to die before you run out of money.
Most Americans aren’t prepared for retirement; many retire to foreign locations (Ecuador for example) to stretch their limited funds.
This is a great article on spending your principal.
If the pay wall blocks you try googling “retirement spending WSJ” and follow a google link to the article. The WSJ allows you several free hits using Google.
Having money for your retirement is better than not having any. The time to think about this should be the first day you get a job but we all know those first years until established it is difficult to save.
But certainly by the time you are in your 30s you should be planning on your retirement.
Money is only one aspect of any retirement.
Where you are going to live after you retire. Where you must live to earn money might not be where you would want to live if given a choice. Use your vacation time to visit areas you think you might want to live (reality and a dream may not be the same).
What are you going to do once you retire. You would be surprised at the number of people who are not mentally prepared for the end of their working life. If your job describes who you are, you really need to think about what you are going to do once you no longer work. Think of a hobby you can start now, and enjoy more later.
Stay healthy. If you find it difficult to stay in shape while young, you will find it almost impossible to get in shape when you are in your 60s and a life time of abuse begins to take its toll on your body.
Get and stay out of debt. Pay off your home. As you get closer to retirement begin replacing major appliances as well as a new roof. Paying for these repairs while still working is better than using your retirement funds later.
Stupid premise.
I'm 59. Not ready to retire. But I've far exceded my dreams already.
Don't wait till retirement to begin your dreams. Do it now. Today.
I then went to a wealth advisor that took into account retirement annuities, home equity, house and car payments and various other sources of income including the 401K and IRA accounts. He also factored in health liabilities and health insurance premiums.
The wealth management advisor told me I was 175% funded to maintain the level of comfort we enjoyed before retirement.
That was 10 years ago and we have more discretionary funds after paying the bills now that we did when we were both working. We haven't touched the 401K yet and are still putting money into savings monthly.
Shop around for advice and pay attention to your own situation instead of buying into some industry formula that may or may not fit you. The annuity sellers base their business on your fear to take the retirement leap.
It depends on Where you Live....if your House is PAID OFF...whether you go out to dinner 4-5 times a week...etc. Of COURSE you can retire with one Million Dollars.
That was a plan a few years ago. Now, my focus is turning to working at a wine bar, where my gift of gab and knowledge of wine will keep me occupied.
I'm not a wine expert, just an enthusiast...and I know more about Mosel Rieslings than your average person behind the counter, thanks to my tour in Germany many moons ago.
For some yes, for some no.
In my case what about ZERO dollars?
No
Retirement will kill you
Way overrated