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I came across the following Kiplinger article recently:
https://www.kiplinger.com/retirement/social-security/minimum-savings-to-retire-by-state
It postulates that you would need to save a minimum of 1.6 M to retire comfortably in California, the third most expensive state in which to retire. There are a lot of unknowns in how they calculate this, but alarmingly the median savings of people 65-74 in $200,000 the average is $609,230. On social media sites, people ask if they can retire on social security alone. I know this is preaching to the choir, but what do people do if they fall short? Do you feel prepared to retire?
I agree, people must be retiring all the time without the golden nest egg that this form and other media suggest. It must be that way, if the median is $200,000, the average is meaningless. What I don’t see discussed is that half the people who save 1.6M saved too much. Actually more than that. It all depends on how old you live. The majority of people on this form are very risk adverse. Also many people on this form enjoyed their jobs. Great for them, but they are only about half of American workers.
For those of us who have to work, we are trying to figure out when we can retire. In this case, there is risk, the risk that you worked longer than you had to. It’s not as simple as income vs expenses, as a person can slowly withdraw their retirement savings. Again, for those who don’t mind working, what I’m saying doesn’t apply. For about half of Americans, it’s risk of running out of money vs the risk of running out of life.
By the time one runs out of money, they likely are too old to return to work. Though many people will not experience this as they will die first..For those who live longer then the average, it would be interesting to know what people do. I think most of them downsize their life until they are living in a trailer park.
Jacknak, great points. You can always earn more money but you can’t get more time. I’d like to retire before I get too tired to travel. I want to stay active in retirement.
To me, it’s a very simple answer: you need more income than expenses. Pensions, annuities, social security, other monthly streams of income, and investment proceeds would need to exceed your expenses. Each of those that a person or couple has is quantifiable and, when compared to expenses, would define when you have “enough” to retire. Paper and pen, spreadsheet, or packaged financial software can each do the math.
The great unknown is how the stock market and economy will do. People are telling me now is not a good time to retire given the uncertainty–tariffs, inflation. SS and so on. That’s unless you have a substantial pension.