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Need One Million Dollars To Retire?

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I was reading an article today where various people were surveyed on how much money they believe that they would have to save in order to be able to retire comfortably and the figure was close to $1,000,000. Unless I read it wrong, from what I gathered that didn’t account the current assets that people would have such as a house which made me think that everyone must have some pretty high standards when it comes to retirement.

I would think the average person would need about $300,000 or so to live comfortable with anything over that being more of a luxury lifestyle. While I usually try to avoid the borderline way of planning finances to avoid the just getting by mentality, one million in pure savings seems like a lot to consider as a type of necessity to retire.

6 Comments to Need One Million Dollars To Retire?

  • Assuming a 4% SWR (safe withdrawal rate), $300,000 would only give you $12,000 a year before taxes. Yes, I’ve lived on less than that when I was single, but going above $12,000 is hardly “a luxury lifestyle”, especially now that I’m married.

    No One Special 2/20/2008 7:26 pm
  • Forgot to mention that the article was based on one person. So, if it is a couple imagine both of them saying they needed that amount each.

    Maybe I’m just thinking outside the scope of the original article, but with $300,000 in pure cash even a non investment/business person usually has a savings account at minimum. Even if it’s say only 2% for that large amount of money that is an extra $6000 a year. Obviously will be less as you spend, but you get the picture.

    I know here in particular that keeps you under the tax bracket which would work well for a retired person too. Well, that is assuming there are no pensions or anything in play.

    Alan Yu 2/20/2008 8:05 pm
  • One of the challenges in retirement planning is of course not to say, ‘based on one person’ when there’s two of you. Not to exclude pensions etc. Not to assume there is a savings account and so on.

    I think it’s a really good question you raise and an excellent exercise we should all be doing. Counting absolutely everything, I would say that 1 Million is closer than $300K, even for one person.

    Can you provide a link to the article you were reading ? or quote it – I’d be interested in reading it

    Stewart Marshall 2/20/2008 11:00 pm
  • It was an offline article based on some polls, but I found these link that are the closest as it seems to use the same sources/data:

    National Post 1
    National Post 2

    Alan Yu 2/21/2008 2:32 pm
  • Finally another voice of opposition 🙂

    It is mostly people who are not good at using their money efficiently that need a million. Those who cook their own food, research before they buy, do comparison shopping and don’t buy more than they need only to store it in their garage don’t need a million. Of course those are the ones more likely to accumulate it, so … well.

    Early Retirement Extreme 2/24/2008 12:01 pm
  • Don’t forget to factor in medical and prescription costs, caregivers, and the fact that as you age, you will have to pay people to do just about everything for you that you used to do yourself – transportation, home maintenance and repairs, laundry, housekeeping, yard work. The list can get really long – especially if you live a long time.
    Retirement can be fun in the beginning – as long as you have your health. Aging is not for sissies, and the less money you have, the fewer choices you will be able to make for yourself. Where you can live, what you will eat, where you will go for healthcare if you break a hip.

    Cinda H 3/13/2008 6:51 am

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