How much in savings would you need to comfortably retire?

You have to work backwards. What is the minimum amount you will need to live comfortably for one year?

Let’s be conservative, assume that you are not a spend thrift and have decent Medicare and Medigap health insurance.

Where are you living now that you have sold your home? Are you renting or did you purchase?

How about $40,000 before taxes?

At today’s market of 4% interest or dividends, you will earn $9000 on the $225,000. That means you will need to take 31,000 from your principal in year one.

That leaves you with $194,000 as your nest egg. In year two, 4% is $7760. You then take $32,240 from your nest egg, leaving you with $161,760.

In year three your principal shrinks to $128,230

In year four, $93,360

And in year five, $57,100

This also does not factor in the yearly cost of living increase.

In two more years, you will be broke.

I have done the math very hastily and may be a bit off, but you get the point.

225K may be enough, just barely, for one person to save for long-term health care alone.

Luckily , my daughter insists I’ll be living with them. I’ll believe it when it happens.

THat is a completely different issue.

It used to be considered safe to have $1,000,000 per person, but with inflation, longer life expectancy, and low interest rates, those days are long gone.

Yes; each person needs two million dollars at retirement to live comfortably. lol

I thought you said thet 225K would be enough.

I changed my mind after what you said. I don’t know what to do. I don’t have over a million dollars yet.

Plan ahead. Do a yearly budget. See where you can spend less and save more.

Where can you cut the fat? One place where many retired couples start is with a much smaller home. Downsizing can put more pennies in your piggy bank.

Don’t use me as an authority, please. Google for retirement principal and income information.

Will you be getting any retirement of Social Security income?

Yes; both and health insurance. My husband says if a person wants a European vacation every year they need a million dollars.

As with everything, it depends. What countries are you visiting, how long is your stay, what are your choices for hotels, B and B’s, gîtes, or hostels, how much do you have budgeted for meals, entertainment, local travel, air fare, etc.

You can do Europe on the traditional $5.00 a day (almost) or stay at the five star Georges Cinq and eat pate, xavier, beef Wellington and champagne.

We stay home . Does that reduce the 1M needed for a “comfortable” not luxurious retirement? Besides; I detest pate and have champagne in our bar fridge.

Enjoy your retirement.

@Aster You can come stay with me! Seriously though I bought this house because of the two extra bedrooms for the mom’s, just in case. :)

@Aster part of the problem is that you’re assuming you have 80 years to live, you don’t want to hit 81 and be on the street, so you have to be conservative in your estimates. $1 million doesn’t go nearly as far as you’d think it might. If you burn through $50K/year starting at age 60 you’ll be on the street by age 80 (This ignores interest income, but also inflation—which is admittedly ridiculous, but you get the idea). Medical care is crazy expensive (especially medication), not to mention full-time care.

It would take over 100 years, at my current salary, and spending not a single penny of it to earn two million.

@gorillapaws that is one grim prognostication. I don’t think I’ll ever be living under a bridge. I have too many family members and 99% of them are doing quite well w/their homes also paid for. And who on earth spends that much per year? We certainly don’t even come close.
@downtide , you won’t need 2M if you don’t have to go on lavish vacations and keep a new car in the garage.

I expect to live over 100 years, so my model is quite different from yours. Visit several financial planning sites online and follow their guides.

In Australia it is now said that one million in superannuation is no longer adequate to provide most people with an adequate retirement. I find that amusing since the pension for people who may not have been able to save a million is about 1,000 per month. Keep the nembutal handy!

I’d like to know what percentage of Americans have 1M by the time they retire.

@Aster A quick search turned up an article from 2011 that showed 3.1 million people. You could probably find something more recent.