
Ask HN: How much wealth do I need to retire at 65? - VikingCoder
Are there some rules of thumb that can reach a plurality of consensus here?<p>I&#x27;m hoping for some simple phrasing like &quot;20x your current annual income&quot;.<p>Or do I need to be a legislative-prognosticating actuarial economist to even guess?
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davewiner
Your money, properly invested, should grow, even if you invest conservatively.

So you don't need to draw down your principal to pay your living costs.

Let's say you spend $100K per year, and you can earn 10 percent per year, then
you need $1 million.

But you don't even need that much, because there's no reason to die with $1
million in the bank.

So it's probably some kind of calculus problem, an integral or a derivative,
or something.

And maybe you can do better than 10 percent! ;-)

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VikingCoder
I thought this article was interesting:

[http://awealthofcommonsense.com/worlds-worst-market-
timer/](http://awealthofcommonsense.com/worlds-worst-market-timer/)

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dcstultz
One kicker that no one seems to address: 401(k) disbursements are treated as
ordinary income for taxes. Up to 86% of Social Security is taxable depending
on income. Therefore, you get a double whammy tax-wise from taking out money
from your 401(k)... you pay tax on it and it triggers tax on your Social
Security income. It quickly puts you up into the higher tax brackets too.

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icedchai
25x your annual expenses.

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GFK_of_xmaspast
Why don't you find a financial advisor and ask them.

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VikingCoder
I found that financial advisors help you ask yourself questions - they don't
give answers. It's almost like psychotherapy.

"Do you think Social Security will exist? We can model your retirement both
ways..."

"How much risk do you want to take?"

"How much do you think you'll want to spend in retirement?"

"How much do you want to help your kids go to college, and how much do you
think that will cost?"

Yeah, great, thanks for costing me money and just asking me fairly obvious
questions - that are almost impossible to answer.

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jeffmould
Because all these questions make an enormous difference in determining what
your X number will be:

1\. If you believe you can live on $5000 a month then you need to know there
is $5000 a month available to you. If you believe social security will exist
and you believe you will get about $1000 a month from that, then you really
only need to come up with $4000.

2\. Would you like to have just X in the bank at age 65 or do you prefer to
have X + Y, just in case of emergency? If X is your maximum what is your
minimum number you would take? That's your risk.

3\. Are you looking to travel extensively, buy a nice home on the water, give
to your kids, grandkids, etc...? These all again impact X. And while you may
not know the answer for certain, you should at least have a general idea of
what you would like to do since you are obviously trying to plan for
retirement.

4\. Simple question, are you going to help your kids with their education or
not. Nothing wrong with either answer, but knowing the answer will impact your
X number.

So going back to your original question of how much wealth do you need to
retire at 65, it really depends on what you plan to do when you turn 65. Do
you plan to live in a small home that is paid off or purchase a new home, do
you plan to have kids or grandkids, will you drive a car, do you plan on being
married, do you want to travel at all, I can go on. The point is there is no
single answer to your question. I could probably easily retire with $1M in the
bank and never look back. But a friend with 5 kids will probably need a whole
lot more.

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VikingCoder
1\. But my belief in social security has zero impact on whether I will
actually have social security. Which is why I asked in my question if I need
prognostication skills in order to plan my retirement. That would seem to be
an unreal expectation - that I can accurately predict whether or not I will
have social security available to me, at which age, and with what payouts. I
would need to predict multiple federal elections, would I not?

We're not discussing that I must also predict inflation, health care costs (or
socialization), and the likelihood of various markets crashing or exploding...
including housing or renting...

2\. That's not a REAL question. The real question there is, can we come up
with ways to save more now, while maintaining my current comfort at adequate
levels, with an expectation of future happiness? Because OF COURSE I'd like to
have X + Y. The ways to try to achieve that are to save more, or risk more.
BUT, you're asking me to establish my risk level, given my GOAL of reward.
That's like starting by asking me how much money I want to win in Vegas as the
first question. The FIRST question!

3\. Again, those are not real questions. The closest to a real question there
is, do I want my percentage of pleasurable spending to increase or decrease,
relative to my current spending. Sure, I can TRY to consider the things you've
brought up - but again, as I complained, I would need prognostication skills
to come up with remotely accurate answers to any one of those questions, let
alone a slew of them.

4\. Okay, I'll pay for my daughter's education 100%. Can you tell me how much
that will cost? Oh, you need to know what school she's going to? Well, hmm, I
can try to estimate her SAT scores, but she's currently in DAY CARE. Again,
this is not a real question. I would need prognostication skills to know
whether college costs will quadruple, in CONSTANT DOLLARS, or maybe college
will be socialized and my daughter will get a STIPEND!

I don't mean to sound arrogant, insulting, and condescending. I really don't.
Sorry. Sincerely, sorry.

But I reject the premise of why you're asking the questions. "How much will
you spend on socks?" "How much will you spend on hats?" ... "Okay, let's sum
all those things up! TADA, you'd need to make twice as much as you currently
make, and save 100% of it to achieve that goal!"

The first rule of data is to know how it's going to be used. Yes?

I do not believe you have a formula, where you can punch in my answers to your
questions, and then achieve a measurably correct confidence level in my
future, self-reported happiness with the outcome.

Since you don't have that formula, why are we gathering individual numbers
that we will pretend to plug into it?

And yes, they're all great things to consider. But I do not believe you that
considering each of them carefully will allow me to come up with a plan that
is remotely likely to succeed. "Everybody has a plan until they get punched in
the face." -Mike Tyson

...

Instead, I think it makes much more sense to look at the past. Let me filter
huge amounts of data, by my known demographics... And see the histogram of
self-reported happiness, for people who had given amounts of wealth at
retirement.

1\. $X of income at Y age

2\. Spouse at retirement or not

3\. X kids, at Y age

4\. Retire at age X

5\. Live and retire in the Mid-West...

Allow me to see confidence intervals. High and low graphs, based on recessions
or booms... Constant dollars only, please.

I mean, isn't AARP capable of collecting this data, and distributing it in
meaningful ways to pre-retirement people?!?

...

And again, really, honestly - the three biggest things that are going to
affect my retirement, in rough order are:

1\. Life expectancy for me and spouse (My grandfather died before reaching
retirement. My great-grandmother died at 101y 6m.)

2\. The economy

3\. Percentage rate of our saving, relative to our income

To really predict 1 and 2, I would need to be a legislative-prognosticating
actuarial economist. And 3 is going to be determined by me, limiting my
current happiness, with the hope of future happiness.

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jeffmould
The point of my post was that in order to answer your original question you
need to at least consider what you want out of retirement including the type
of lifestyle you intend to live. It doesn't matter the questions asked (i.e.
whether social security exists, whether you want to travel, etc), the point is
to consider what YOU want out of retirement. Nobody can answer your original
question specifically as there is no one specific X dollar answer to the
question. What my definition of living comfortably in retirement is and what I
could retire on is most likely going to be completely different than yours.

You don't sound "arrogant, insulting, or condescending", but the way you come
off in your answer is that you want someone to give you a specific number
(let's say X) without providing any context as to what you expect out of your
retirement. You come off sounding as if you don't want to take anyone's advice
or answer anyone's questions yet you want them to answer your question.

You don't have to predict anything or know the specific answer to any
question, and I think that is where you are misinterpreting the questions.
There is no right or wrong answer to the questions, they are only asked to
gather details about your perceptions. Your answers are then used to compare
to known financial data to determine a good retirement amount. They are "real"
questions. If you have no intention of having kids or being married, that is
significantly going to impact the amount of money you need to retire. If you
plan to sell your belongings and live in an RV and travel the country till you
die that is going to impact the number. While these may change down the road,
you plan for the future on what you know now. You say you plan to live/retire
in the mid-west. How do you know that is not going to change in a year.

From my own personal perspective I plan for my retirement based on what I
foresee my future holding. I work with a financial planner to determine a good
investment strategy based on those plans. However, I am consistently
reevaluating those plans on an annual basis. My adviser asks me similar
questions. But he also uses freely available data on what current retirees are
doing based on the economy. He evaluates my strategy against the pros/cons of
what current retirees are seeing in their retirement. I don't know how much my
kid's education will cost, but I do know I want to pay, or at least help pay,
for that. I base my planning number on current costs and add a cost increase
for each year based on previous history of cost increases. The questions are
not meant to be answered specifically, they are simply meant to get you
thinking about your future and where you see yourself. You are right no one
knows what it will cost in the future and you are right you can make
assumptions based on past numbers. However, in order to use the numbers from
the past you need to know what numbers to use. Thus the point of the
questions.

With all that said, I am not going to go back and forth with you here. I am
not a financial planner. I can't answer your question specifically. I'll leave
you with this: [http://money.usnews.com/money/blogs/on-
retirement/2015/06/25...](http://money.usnews.com/money/blogs/on-
retirement/2015/06/25/5-retirement-lessons-from-warren-buffett)

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arisAlexis
given that you may live forever according to some futurologists?

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golergka
How much do you spend?

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VikingCoder
Let's call it X, shall we?

