How much cash to retire?

[Clipper4730]

So question, how much cash do think you want/need to retire and be comfortable. We have several friends in our age bracket 49 me and 39 admiral who have retired completely however they are quite hazy on how much they have in the bank etc. we know their budget but we are curious to know how much is enough. Given the current state of things we are seriously thinking of bailing out and enjoying life. Assume no mortgages or other major debts a million enough 2 million just not sure. Mine is not a job you could leave and come back to at the same pay so the decision would be final. Thoughts? Just spitballing and since we can’t discuss it on the cruisers beach though I would throw it out here.

Cheers

[ArmySailor]

My answer is less based on total cash I need, but more focused on cash flow. With a small pension and withdrawals from a brokerage, I'll net a little over 6K a month after taxes, from age 40-60. Pension increases with CPI. My withdrawals I plan to increase 1% per year.

None of that needs to be saved or invested for retirement, so it's a decent amount of disposable income.

At age 60, I plan to spend my brokerage down to zero. Or nearly. Then my cash flow will come from the same pension and withdrawals from Roth and 401k. Should be about 6K again. Per month. Again, inflation baked in.


I have exactly $100K. Set aside for savings. Not included in cash flow plan. Things I can't cover with 6k per month.

The boat has her own savings account. 10K. So I don't dip into my regular savings.


My investments are fiercely conservative. March stock market was a great stress test. When the market loses 10%, I go down about 2%. The drawback is that my upside is limited. The big comfort is that I don't need much up side. I only need my investments to grow about 2% per year, over the next 4 decades as an average.

I don't own a home. I don't want to. I'm fine with renting. No, I'm not "throwing away money'... Let's not go there. I'm paying for a service. Housing. My funds that would otherwise be tied up in real estate are invested in the stock market. I can't eat the value of my home. I can, however, continue to draw money to enjoy retirement from my accounts.

That's a lot. But you asked!

[Mike OReilly]

Multiply what you spend each year X how many years you have to live. That will tell you how much cash you need to retire.

But this assumes all money is flowing out, with nothing coming in. Few of us in the developed countries live like this. Most have pensions or investments or, at very least, some sort of government-supported income (social security in the USA, Canada Pension Plan etc. in Canada).

If you're really asking what income does one need, then that depends entirely on your needs and wants. Again, look at what you spend now each year. Now, what size of an investment nest-egg do you need, in combination with other incomes sources, to match your current spending?

That will begin to answer your question.

[ArmySailor]

The real answer for you of course is go see a CFP. A fee only advisor, with disclosure of your fiduciary interest first. Anything else has profit motive and your interests and secondary.

[NaClyDog]

Originally Posted by Clipper4730

So question, how much cash do think you want/need to retire and be comfortable. We have several friends in our age bracket 49 me and 39 admiral who have retired completely however they are quite hazy on how much they have in the bank etc. we know their budget but we are curious to know how much is enough. Given the current state of things we are seriously thinking of bailing out and enjoying life. Assume no mortgages or other major debts a million enough 2 million just not sure. Mine is not a job you could leave and come back to at the same pay so the decision would be final. Thoughts? Just spitballing and since we can’t discuss it on the cruisers beach though I would throw it out here.

Cheers

What I recommend people do is take the amount they need to live on for one year and multiply that by 25. That is your "target".



Once you hit that magic number, you can generate what you need every year by investing conservatively while shooting for a target of 6% (getting a 6% average per year over 10 years isn't difficult). You take 4% of that every year as your living expenses. That leaves 2% to account for inflation which you add to your total for the following years.


If you have money coming in from other sources, you should reduce the target by that amount.

[S/V Illusion]

Originally Posted by ArmySailor

The real answer for you of course is go see a CFP. A fee only advisor, with disclosure of your fiduciary interest first. Anything else has profit motive and your interests and secondary.

This is the only sound advice. Asking a bunch of strangers for financial advice on an Internet forum is silly as are most of the answers they will provide.

[Mike OReilly]

Originally Posted by S/V Illusion

This is the only sound advice. Asking a bunch of strangers for financial advice on an Internet forum is silly as are most of the answers they will provide.

I agree.

[Dogscout]

How much is entirely up to you. I walked at 52 with a number that I felt was good. Others I know with more are still working.

Only you have the answer. A good financial advisor will help.

[sailorboy1]

I retired at 56 and had about $550,000 in assets, around $200k was in cash. Four years later i have around $425k

Becsides the amount you need to consider the mix and strategies for income, taxes and health care,

Also you have to put your asset totals into a “how much you will spend”.

So if you search my threads you can see how my spending has been.

I always wonder why people post on threads like his if they atent going to answer the question

[leboyd]

As a fee based planner/advisor there's a lot of confusion over fiduciary duty. In my day-to-day activities, some have fiduciary duty and some do not. Pure "planning" does not have fiduciary duty.

Likewise, I run my business to make a profit and I hope everyone I do business with have some profit motive. Without profit I will be out of business and this would be worse for my clients than if I do make a profit.

But the point is this is way too complicated of a question, unless as was previously stated - x years times expenses and that's how much cash you need. Most people don't have that amount in cash. Just converting an account to cash can be complicated.

Find two or three advisors (there are many excellent certifications and advanced degrees including CFP, so don't focus on one) to have a first meeting. Select the one you like and think you can trust the most. These are very important for a long-term relationship.

[DeValency]

An accurate answer: As much as possible.

[daletournier]

Originally Posted by sailorboy1

I retired at 56 and had about $550,000 in assets, around $200k was in cash. Four years later i have around $425k

Becsides the amount you need to consider the mix and strategies for income, taxes and health care,

Also you have to put your asset totals into a “how much you will spend”.

So if you search my threads you can see how my spending has been.

I always wonder why people post on threads like his if they atent going to answer the question

You supply the best answer to this question anywhere on the internet, real numbers.

The only thing I'd add is "where are you going to cruise"?

I'm back home now, I expect my boat costs to go way down. Ocean cruising and big miles means more money, there's no way out of that. Coastal sailing and less miles is less wear and tear.

[Svsumurun]

Originally Posted by sailorboy1

I retired at 56 and had about $550,000 in assets, around $200k was in cash. Four years later i have around $425k

Becsides the amount you need to consider the mix and strategies for income, taxes and health care,

Also you have to put your asset totals into a “how much you will spend”.

So if you search my threads you can see how my spending has been.

I always wonder why people post on threads like his if they atent going to answer the question

We haven't left yet , but are on about the same trajectory as SB1. First is the budget, which we spent a lot of time on , this forum is a great resource, using threads like SB1's and several others ( all the way back to the $500 a month one) . You have to be honest with yourself - about boat condition, about what will work for you lifestyle wise, etc.
Then there is the cash flow vs what I can access without penalties,etc.. do you have enough cash to get to the retirement accounts?
The 4% return is a good gauge - can that support your budget from above? If so, then you could ( in theory) be retired for ever... if it can't; then keep building the nest egg !
Not sure if it applies, but remember, things change- for example , I can start pulling a small pension this Dec, but due to a change in the plan, if I wait until I turn 56, it is cut in half until I hit 65 ( when it would be approx 1 1/2 times what I can get now, but is that worth 10 years?)
BTW, an accountant - good idea, a financial advisor-maybe; my wife is that and I can tell you that most ( not all ) of them won't get this - they don't even retire themselves, so the concept of not building wealth but pulling it down would send most of them into a tailspin.

[Stu Jackson]

Originally Posted by Dogscout

How much is entirely up to you. I walked at 52 with a number that I felt was good. Others I know with more are still working.

Only you have the answer. A good financial advisor will help.

Man,. I just find these kind of questions on any forum to be, frankly, ridiculous.


How can anyone else know?


My answer? When I got married for the second time in 1984 (auspicious? maybe...) I just gave my wife everything I made.


By 2016 we were flat broke and had to move to Canada to live with my father-in-law. He died, at 99, just last month.


I think it's dawning on me that my wife's retirement plan was her inheritance!



Glad she lets me tag along.


So far, so good...


I won't let her see this post.


Nor will I offer YOU any advice.

[Rucksta]

Three Million Dollars

More is better if you plan on being here for a long time.