Is $1 Million Enough to Retire?

A senior financial adviser at Ameriprise says it's enough for only a modest retirement

June 16, 2009 RSS Feed Print

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What should a baby boomer who wants to retire soon do to get back on track?
You have to think about what is more important, retiring soon or retiring well. It may not be realistic for you to retire at 58 with the lifestyle that you want and make it to 95. Now you have less money than you thought and maybe not even much job security. Some of us baby boomers all grew up with really unrealistic expectations of when we were going to retire, and we planned in a way that didn't bear fruit. But what if I told you, you could still go to Hawaii, but you can't stay at a luxury hotel? Most people say, "I can do that." You have to adjust your expectations. Or you may have to work until 62 even though we planned for 57. Let's reframe what we are going to do. Everyone around you is also going to be spending less money. The day of the $14 cosmopolitan is over. And who felt comfortable doing that anyway?

Tags:: Ameriprise Financial,; retirement

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I have made it to the 1 Million saved benchmark, and the cost of Heath insurance and up front deductions make it hard to consider retirement, It seems difficult to retire and carry large health insurance cost. We need to get medical costs in the U.S. under control. Or we will all be flying to india, or thailand for major health care
needs. This is the one issue that prevents individuals from being able to retire on less money.

stillworking of CO 5:23PM April 19, 2012

The funny thing is that a "modest" retirement will be just fine for most Americans.
In 2007, the median annual household income was about $50,000 according to the Census Bureau. That's figure is "household income." The average household size in America is about 2.5 persons. So let's do some math. First, let's assume that your household in retirement will be only 2 persons (that .5 of a person in your average household has gone off your payroll). That means an average household perhaps would have spent spent only 80% of the $50,000 annual household income on themselves (this number is probably less). That would be only $40,000 per year. Now, many "experts" say you'll need 80% of your pre-retirement income in retirement (a number which I think is way too high). But let's assume these "experts" are correct. Perhaps then, the average retired couple would need only 80% of the $40,000 to maintain the same standard of living in retirement. That, would be $32,000 a year. Then you get to subtract from that figure all the expenses you won't have after you're retired, like income taxes, FICA deductions, retirement savings, work related expenses, etc. Sure, some things will cost more, health insurance for one, and you'll need a lot more if you're retiring in an expensive place like New York City or San Francisco. But you get the picture.
So it's true that you can retire with "only" a million. And the good news is that many folks will be able to retire on a lot less.
Jonathan D. Edelfelt, author of Who Said You Need Millions? Retirement Strategies for the Rest of Us.
www.whosaidyouneedmillions.com

Jonathan D. Edelfelt of TX 6:58PM September 21, 2009

I think the writer is correct. Purchasing power and cost of living dictate that you need more to retire since people are living longer. Can't depend on interest and SS (for the common folk)anymore. And thats without a mercedes or a beemer. Those that disagree have not given serious enough thought to their future. Probably some "Carpe Diem" hippy b.s., but they're in for a rude awakening in the distant future.

ELI of CA 6:33PM August 19, 2009