How long will $1 million dollars last in retirement

[@PersonalMoneyTeam]

My folks retired 5 years ago with about $500K in savings. Their monthly income is about $5K (SS and a small pension). They take 2-3 nice vacations every year, drive a nice car, etc. They have never taken a penny from their savings! So essentially their savings is a BIG emergency fund that will keep growing every year. How do they do it! Simple, they have ZERO DEBT! With no mortgage, no car payment, no credit cards, etc. so they have an amazing retirement! BTW, their investments generate about $30k/yr. in dividends which they reinvest! They could start taking their dividends in cash any time they like to increase their monthly income even more!!!

[@jpturner171]

Nice job! I plan to sign up!

[@premchettri7170]

2.5M is a magic number these days, below that it always a risk !! However, most ppl underestimate, when you actually run outta $$, you basically will find a way to make sure your SS will and should be enough coz you will be creative to make sure you will continue. So, be safe at 2.5M but you can def squeeze at 1M + SS

[@RetirementBudgetCalculator]

I think the "magic number" will be driven by how much you spend. This is why we created the Retirement Budget Calculator. I've met a lot of people who have a great retirement and have saved less than 2.5 million.

[@Markrtsoon]

My financial advisor said the average medical expenses including insurance will be $28,000 a year before 65. So, $80K will be really tight with income tax and property tax.

[@wciocco]

Is that an average for you or what the average is for everyone? Our health costs are less than $1000 per year including co pays and prescriptions. Also, ACA insurance is almost free after subsidies for those with less than 60K of income. Depending on where you take the money from, it may or may not count as income. We generally live on 40K per year or less. Inflation may raise that some this year. We are in a low tax state and property tax is just over $1K per year. Because we are coastal, house insurance is a little more than $1k per year also.

[@Markrtsoon]

@@wciocco They said that is the average for everyone based on a national number. Yes, this cost will varies widely depend on each family's situation. Since this example has $80k a year income from SSA plus IRA withdraws. More than likely they will not get much help per ACA. While SSA does not count much for filing tax, they do count as income for ACA, I think. Besides, it takes a consistent 6 figure income to get a social security of $2000 a month at age 62. To randomly grab a $2500 per month SSA at 62 for John in the example is painting a too rose a picture. Bottom line, $1 million is no where near enough for someone to retire at 62, even with very frugal life style.

[@Markrtsoon]

Btw, the max social security for a 62 year old in 2020 was $2265. That $2500 a month is just plainly misleading.

[@wciocco]

@@Markrtsoon I know people who have retired at less than 62 with less than $1 million. It all depends on where one lives and level of debt. Our spend last year was 38k, including two cruises and installing widows on our screen porch.

[@johngill2853]

Your financial advisor is probably a salesman. Do you know how many people don't even make $28,000 a year? Average is meaningless you have to run the numbers for your own situation. Unless something drastically changes there is no way my medical expenses will be $28,000 a year.

[@M22Research]

Handy calculator but didn’t see a Monte Carlo simulation for the returns (running 500, 1,000 market simulations to evaluate a wide range of sequence of returns risk). Also, be very careful planning life span. Do not simply use average lifespan tables which include people dying as babies, from accidents, or disease at earlier ages. Once you turn 60, 65, 70, you’ve already eliminated all those earlier in life death risks - that is, you’ve beat the tables, your lifespan might be much longer. Better to add 5, 10 years to your expected lifespan when planning so you end with money left over, not running out of money. Clearly this was a very simplified scenario, so we wouldn’t expect it to cover things like you spend a lot more the first 10 years of your retirement than the next 10 and then even lower the 10 years after that.

[@RetirementBudgetCalculator]

Hi BB. Good point about life expectancy. We use the social security tables as a starting point but we give you the ability to make a hereditary adjustments based on your health and family history. One of the great things about RBC is that it allows you to model how your spending with change in the future. This way you can take into account higher spending at the onset of retirement and lower spending later in life. On the future view tab we give you the ability to back test different asset allocation strategies so that you can see how different asset mixes have performed historically or you can select bad timing so that you can see how an asset allocation strategy would have performed in more of a bad timing scenario where the negative returns occur at the onset of retirement.

[@bernie9728]

There is no correct answer to your question. The only fair answer would be "it depends". Everybody is different so there can be no correct answer. I've been retired now going on 8 years. So far we have not touched a dime of our retirement savings. I'm guessing at this rate the money will last a long time.

[@mathrocks7591]

Thank you a great tool

[@Sean-jb5gi]

1 Mil in Dividend Kings and Aristocrats should get 40-45Gs and goes UP each year as does their SS and the Million grows with the Stock Market. Damn I should be a Money Manager

[@CarlosAlvarez-sl4px]

80k a year is more than double 4% rule. So yeah you're gonna run out of money fast

[@RetirementBudgetCalculator]

Carlos in this model they have a total budget of $80,000 per year. They will have $48,000 per year of income coming from social security. So the portfolio withdrawals required will only be $32,000 per year which is less than 4% per year.

[@CarlosAlvarez-sl4px]

@@RetirementBudgetCalculator thanks for clarifying

[@HappyPenguin75034]

Doesn’t handle full aspect of rental properties. 🥲

[@RetirementBudgetCalculator]

What aspect of rental properties would you want to model?