That was the number I had initially
come up with for myself last fall when my husband decided to retire at the end
of 2014. The initial plan was for me to
join him in retirement when our total liquid assets reached 1 million. I added the $200,000 to cover taxes on our
401(k) distributions after hearing horror stories from a couple that didn’t
plan for taxes on their 401(k) money.
The 60-year old has been asking this
question to everyone he knows. Most answers
fall between $1 and $2 million. For
himself, he thinks he and his wife need between $3 and $4 million. His plan is
to retire at 63. He recently bought a
condo in Florida on a golf course where he will spend the winters. He will sell
his home in Wisconsin and buy a condo here where he will live in the
summers. His only hobby is golf. He can play for free at his Florida
condo. His company offers retiree health
care and he will receive a pension.
$3 to $4 million! If that is what a couple needs to retire
comfortably I will never be able to retire.
Which is why I am changing my goal from
retiring early to financial independence.
In addition to saving for retirement, I am going to spend the next 5-6
years building an alternative income stream to supplement our retirement funds.
In other news, I had to let my temp go last
week for underperformance and am starting over on Monday with a new
employee. My boss told me not to count
on having much of a summer…
Financial independence is looking very
attractive right now. What steps are you
doing to create financial independence?
Also, how much money do you think the
average couple needs to retire?
What a sCary post. I retired May 31 with about $500,000 and we feel like we will be fine. There's no way we could have doubled or tripled that. Hope you are wrong.
ReplyDeleteI most likely am wrong, since the average retiree will not have that much money. I asked my boss this question and he wouldn't give me an answer. Most likely because he won't have that much. So many factors are involved like how old you are when you retiree and whether or not your home is paid off.
DeleteFinancial independence is something that we are aiming for as well. Doing that by diversifying our income streams and saving money. Luckily we love what we do right now.
ReplyDeleteMichelle,
DeleteI love your site Making Sense of Cents. I am sure it will be useful as I plan my journey to financial independence.
I'm a ways away from retirement, but it's frightening how much money I would need to save in order to retire comfortably...
ReplyDeleteYes it is.
DeleteI am also seeking financial independence and therefore early retirement. I am still working on my plan, but I am determined. Here's to it!
ReplyDeleteYou got that right. I made progress this week. I cancelled my gym membership and explored Jazzercise which is a cheaper alternative, convinced my husband to get a second opinion on expensive dental work, cancelled my Birchbox subscription and made sure I turned in my expense account. Not bad for one week.
DeleteI can't honestly say I ever thought of retirement in terms of one number. Part of me thinks we'll never have enough, no matter what I do...I'm not young but I'm far enough away from retirement that I'm pretty sure the costs of the American health care system will bury us all long before I get there.
ReplyDeleteYeah, I'm an optimist.
As a freelancer my financial plan has always just been to work as long as I can. But I can only survive as a freelancer by being married to someone who has a job that includes health care benefits. Sigh.
CR,
DeleteThanks for sharing your thoughts and experiences. Agree with you on health care costs. My husband had excellent benefits at his job before he retired, we have noticed a huge difference with him on Medicare and me on my company's insurance. It has been painful. I would like to find something I could do well into retirement also - some type of freelance work that would pay a few bills and wouldn't be so stressful, but then I wouldn't have insurance. Sigh.
*screech* I am terrified of this question! I have no idea how much money I'll need and have not at all even thought about it. That's my old 20-year-old self shining through this early 30's mind. How pathetic! Can I tell you what I'm hoping, though? I'm hoping to build my own earth-walled home (cob house) on the western side of the country, grow my own food, use solar electricity, compostable toilets, and raise my own animals. I want to be part of a community of like-minded people...and my daughter is following in my homestead footsteps so possibly we can live near each other and she can learn how to take over when I am (eventually) too old to do it myself.
ReplyDeleteSo in a perfect world? I would like to retire with just enough to pay for repairs and upkeep of my perfect home. I want the kind of life I don't need to vacation from. Who knows if that will ever happen but that is my dream.
As for additional income, I make money freelancing...just picked up a new client recently, in fact ;) I do social media and copywriting for small business owners and bloggers who don't have the time to do this stuff themselves. I'm pretty good at it and I make a decent amount of money (upwards of $50 an hour is what I'm up to since opening my business last October....but more often than not you can reach $75-$100 easy in the copywriting biz). Plus I can still raise my kids. If I didn't have them to worry about I would be attempting to publish books and find a job at a nonprofit org with travel benefits.
I'm not in a couple so I really don't know what a couple would need. But I'm lucky to be a state employee. I learned that I can expect a comfortable pension. Plus I have some other 401's etc.
ReplyDeletei agree there is no number, but about saving what you think will be enough and living within those means.
ReplyDelete