Comments on: Will a million dollars be enough when I retire?

By: Are you a Money Hacker? I am!- 7million7years

Are you a Money Hacker? I am!- 7million7years — Tue, 15 Dec 2009 15:18:09 +0000

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By: How much interest do you earn on one million dollars?- 7million7years

How much interest do you earn on one million dollars?- 7million7years — Tue, 08 Dec 2009 03:25:57 +0000

[...] If $1 million will be enough to retire on, then click here, [...]

By: Chino Hills Homes

Chino Hills Homes — Sun, 29 Nov 2009 17:03:42 +0000

There are so many factors that come into play here it’s hard to say. But I will say no 25K is not enough or one million in spending power adjusted for inflation is not enough. I think in the next few years in the state we will see inflation like we have not seen in 20 years.

By: Adrian

Adrian — Sat, 08 Aug 2009 06:56:26 +0000

@ Jeff – The fault is mine; my example can be read either way, so I have now removed the ambiguity . Thanks for pointing it out …

By: Jeff

Jeff — Fri, 07 Aug 2009 16:07:27 +0000

@Adrian,

Thanks for the clarification…I didn’t realize that you were attempting to show two different examples–one where you had $1M today and one where you had $1M in 20 years.

By: Adrian

Adrian — Fri, 07 Aug 2009 07:55:12 +0000

@ TraineeInvestor – You cheated! “US$1million (adjusted for inflation)” is the same as saying “No, I need TWO $1 mill. bills in 20 years, please”

@ Steve – Read Phil Town’s next book “Ceilings and Floors” … people ‘in the know’ feel that the market will move between today’s price (ceiling) and some lower price (floor) for some time to come. Whether they are right or wrong could be the subject of a future post …

By: Steve

Steve — Fri, 07 Aug 2009 01:43:45 +0000

I am wondering here.Watching stocks closely(I.E.) insider buying of late. I have noticed that insider buying has dropped off quite a bit this year. Does anyone have any ideas that would fit this situation? The way I see it, prices are about half what they were in the past few years, so you would think insiders would be buying with a frenzy.

What gives???

By: traineeinvestor

traineeinvestor — Fri, 07 Aug 2009 01:36:59 +0000

Even after taxes, US$1million (adjusted for inflation) would be more than enough for most people because:

1. as Rick has pointed out it will generate a income which is reasonably close to the US average income (and a person who has saved his way to US$1m would have been living off less than their full income);

2. social security will supplement that income (although the real value of social security will fall due to demographic factors and the inability of the government to restrian their spending);

3. most retirement plans provide for draw down of principal to meet expenses in retirement.

For me? US$1 million is way short of what I need. I’m assuming no state welfare in my old age (which is about right in Hong Kong) and, with the intention of living 40+ years post retirement, I cannot afford to draw down principal at all.

By: Rick Francis

Rick Francis — Thu, 06 Aug 2009 23:51:47 +0000

According to the census (http://www.census.gov/Press-Release/www/releases/archives/income_wealth/012528.html) the median salary in the US is above $50,000.

I would be a bit more conservative and start taking just 40K out and adjust for inflation each year.

So to keep that median income from only your investments you would need $1.25M today.

If you reduced your expenses by $10K- $1M would work. That is doable- for example if your mortgage was paid off, or your kids finally move out, or you no longer save 20% of your income for retirement.

Poverty level for 2 people is currently $14,000 so I guess a couple could survive on as little as $350,000, but that would be a pretty meager existence.

-Rick Francis

By: Adrian

Adrian — Thu, 06 Aug 2009 23:28:54 +0000

You nearly had me, Jeff

IF you have $1 Mill. today, then you would be right: 9% return gives you $50k a year to spend AFTER 4% inflation. BUT, you don’t have $1,000,000 TODAY … you WILL have it (in this post’s example) in 20 years, so you will only have the equivalent of $500k (in today’s dollars) in the bank when you retire … so, just halve all the numbers in your example and you’re back to $25k (which WILL be adjusted for inflation going forward).

Makes sense?