Comments on: How Much is Enough?

By: Todd Tresidder

Todd Tresidder — Sat, 30 May 2009 03:52:25 +0000

@Foobarista - I disagree. The numbers are the numbers. Money doesn't care about emotions. As discussed above the fantasy million dollar goal is what I refer to as "The Millionaire Myth." It is rarely enough to retire. You can get all fancy with Monte Carlo retirement calculators to figure your number but it is unnecessary. Nearly every approach agrees you can spend roughly 4% (there is solid math behind why this true that is too complex for a comment but is explained in How Much Is Enough To Retire Since you can spend 4% the "Rule of 25" suffices as a simple approximation where you multiply first year spending in retirement by 25 to figure your savings goal. Of course, as stated above, that must be adjusted for inflation. Finally, make sure to not get caught in focusing exclusively on savings, but rather build your assets for spendable cash flow. This is necessary to deal with the growing life expectancy problem not discussed in this post. Hope that helps.

By: Foobarista

Foobarista — Fri, 18 Nov 2005 09:17:58 +0000

The problem with the “you need a gazillion dollars to retire” argument is that many people see it, figure it’s impossible, and buy a new SUV instead of working on their savings. (This is particularly bad in those articles in the financial press that say “you need X% – where X is large – of your current income to retire”, instead of more conservative amounts which are more managable – and take into account the fact that a good saver is actually setting aside a decent percentage of their current income, which presumably isn’t needed in retirement.)

While I’m a huge fan of caution and conservatism, I can also see how OVERestimating retirement expenses can verge on being irresponsible, particularly if it dispirits people and causes them to ignore retirement planning altogether because they’re completely daunted.

By: Loi Tran

Loi Tran — Fri, 18 Nov 2005 00:47:39 +0000

That’s true, from my calculations, you would need a lot more to save than 1 million dollars if you have many
years before retirement. You need to calculate the future cost of money you need for retirement. I think I
will need about 3 million before I can retire comfortably. People need to be careful about setting their safe
withdrawl rate too high or else they will run out of money.