Million-Dollar Question: How Much Do You Need to Retire?

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Lisa Werner/Alamy
By Sharon Epperson | @sharon_epperson

The good news is there are now more millionaires than ever. But when it comes to retirement, is a million dollars enough?

"If they want to be financially independent, retire at 65 and be able to have an income of $40,000 a year in retirement for 30 years, then it's likely that they're going to need a million dollars to retire to generate that lifestyle," said Bruce Allen, an independent wealth adviser.

Living comfortably on $40,000 a year in retirement, which would require a $1 million nest egg by the time you reach the retirement age, will depend on your expenses, investment returns and health care costs. This figure doesn't factor in other benefits, like pensions and Social Security, which can greatly boost your retirement income.

For retirees Ralph and Karen Jones, making the most out of their money meant making a big move.

"I didn't think that we could maintain the lifestyle that we wanted if we stayed in New York after retiring. Coming to Myrtle Beach was just amazing, to see the difference in what your money would buy, how much you can get for your money," Karen Jones said.

The Joneses bought their new home in South Carolina and now pay a fraction of the property taxes they once did -- freeing up funds to vacation frequently, and make big ticket purchases when they want.

The Joneses aren't your typical retirees. U.S. Census data show less than 8 percent of the U.S. population has a million dollars. Yet, many financial advisers warn even a seven-figure sum may not be enough.

Many retirees make it work with less. According to Census data, the median household income for those 65 and older is $34,000, but that's almost half the $66,000 for ages 55 to 64. In order to preserve that preretirement standard of living, financial experts say you'll need more than a million dollars.

"A million dollars could be enough, it might not be enough. It really depends upon ... what you anticipate your retirement to be and what you were earning before retirement," said Jeanne Thompson of Fidelity Investments.

That's the million dollar question.


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155 Comments

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Sparky5229

my house is payed for,my cars are payed for,i have no credit card bills ,i started a long time ago to save my money and invest ( and some time it was not easy to live on what i had ) but it has payed off.

June 12 2014 at 7:21 AM Report abuse rate up rate down Reply
Reico Robichaux

A million seems to be the starting point when thinking about retirement. The divide between a "comfortable" lifestyle and a "tolerable" one is steadily growing. On the other hand, the opportunities to make more money are also increasing. I look at my retirement period as a time to redirect my interests while still bringing in multiple streams of income built during the course of my life. A millionaire once told me, "You need at least 4 streams of income to live comfortably."

June 11 2014 at 6:11 PM Report abuse rate up rate down Reply
joeb.mrtaxfree

Don't forget about taxes in retirement. We have some of the lowest tax rates in history right now and with the huge $17 trillion plus national debt taxes are likely to increase in the future. Make sure and have some tax diversification in your retirement income sources. If you would like to know all the different types of tax-free arrangements that you can use checkout www.mrtaxfree.com. Learn how you can position your money so you can retire tax-free and truly wealthy.

June 10 2014 at 5:41 PM Report abuse -1 rate up rate down Reply
mac2jr

Mrsperlosi , tell you what, go to my website PhiliContractorsMall and read a few pages, you may even enjoy what you see.

June 08 2014 at 11:46 PM Report abuse rate up rate down Reply
mrsperlosi

mac2jr

School teacher at college level, published author of Construction Books and such, trip person for three senior clubs, website developer for those that cannot afford to hire one, commenter on these boards to try to help people understand his or her environment, and political supporter of one state governor, one state representative, and one local representative; how about you, what have you done lately to earn your keep?

+++++++++++++++++++++++++++++

So you say dear. But I doubt you did any of those things doll. There is one thing that I know you have done and that is post bigoted comments darling. How unfortunate for you.

June 08 2014 at 10:15 PM Report abuse -3 rate up rate down Reply
mrsperlosi

mac2jr

Again I ask of you, what have you got to contribute to any conversation on these comment boards, other than you negative and hostile comments?

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You have a lot of nerve to call anyone out for hostile comments dear. I have read many of your bigoted comments darling. You do think you are a know it all. You would be better suited doing something useful with your time doll. Try doing some volunteer work in your community. It couldn't hurt. I see it was difficult for you accepting the truth about yourself, and that is why you lashed out and had difficulty composing yourself, but really dearest no one likes a know it all.

June 08 2014 at 10:13 PM Report abuse -2 rate up rate down Reply
asronce

Retirement's overrated and not my idea of a satisfying goal in life..I will keep working at a reasonable pace my entire life...nothing will put you in the grave faster than quitting work. Still working, spending and finishing strong.

June 08 2014 at 9:12 PM Report abuse +2 rate up rate down Reply
lnm3921

Since when does an income of $40K enable you to retire let alone live comfortably? Who can live on $40K today and not struggle? Then inflation overtime erodes the buying power of that $40K. You had better do everything you want before you retire because you won't be able to do much afterwards.

June 08 2014 at 8:39 PM Report abuse -2 rate up rate down Reply
thefacts22

I have enough to live and travel, I worked hard and took investment chances.People is now getting Government retirement,and most do not deserve it,as they were all their lives lazy,incompetent loosers,never putting a real day,s work in their entire lives.I do not think 1 million is enough,if you want to keep your life style.I do not trust the future of this Nation under this "regime",i think USA is in decline in everything,from economy to work ethics

June 08 2014 at 7:08 PM Report abuse -3 rate up rate down Reply
1 reply to thefacts22's comment
mac2jr

You are speaking of what experiences?

June 08 2014 at 8:43 PM Report abuse rate up rate down Reply
mac2jr

The answer to the question "how much do you need to retire?" is simple... ENOUGH...

For a single person this can be $10 or $10 million, it depends on what a person wants out of life, his or her lifestyle, his or her expectations of longevity, his or her retirement date, his or her social status, his or her economic security, his or her social activities, his or her travel plans, his or her living conditions, his or her savings or investments, his or her mental and physical attributes, his or her level of enjoyment.

People live off the land, people live off of relatives, people live off of their savings, people live off of the government, and people live off of con'ing others, thus retirement depends on the person, period.

And that is the Truth.....

June 08 2014 at 4:13 PM Report abuse +1 rate up rate down Reply
2 replies to mac2jr's comment
mrsperlosi

Oh my, it is the know it all again. No one likes a know it all darling. Perhaps you would be better off doing some volunteer work in your community dear.

June 08 2014 at 4:36 PM Report abuse -3 rate up rate down Reply
2 replies to mrsperlosi's comment
mac2jr

Again I ask of you, what have you got to contribute to any conversation on these comment boards, other than you negative and hostile comments?

June 08 2014 at 8:36 PM Report abuse rate up rate down
mac2jr

School teacher at college level, published author of Construction Books and such, trip person for three senior clubs, website developer for those that cannot afford to hire one, commenter on these boards to try to help people understand his or her environment, and political supporter of one state governor, one state representative, and one local representative; how about you, what have you done lately to earn your keep?

June 08 2014 at 8:42 PM Report abuse rate up rate down
thejrd

You are correct. I retired at 58 this year with $80000 left in my 401K after paying all my debts. I now have $80000 in my 401K and a monthly pension after taxes of $1751 for the rest of my life. I am married and my wife worked minimum wage jobs her whole life and doesn't get a pension or any other benefits. The pension I receive is a level income option and includes what I will draw from Social Security starting at 62 so the only increase in income will come from what my wife will get from Social Security when she gets to draw it. The trick for me to retire was to have all my debts paid off and to stay in the same house we bought 35 years ago and we paid $26000 for it in 1980 and it's worth about $60000 now. My property taxes and homeowners insurance run just under $100 a month. I live in Evansville,IN for those wondering . I have a son that pays for all household expenses(gas/electric, water, Directv, internet and phones). I guess what I am trying to say is if you want to retire early or at all don't buy $200000 houses and be nice to your kids.

June 08 2014 at 5:41 PM Report abuse rate up rate down Reply