You're going to be retired for a very long time
“The good news is: we’re living longer. The bad news is: we’re living longer.”
That’s a central theme in author Terry Savage’s new book The New Savage Number: How Much Money Do You Really Need to Retire – a handy guide that walks you through the process of deciding how much more you need to save each month to reach your “magic number.”It's a sobering read, particularly when you look at how long your money has to last – the top priority for investors, according to a recent J.P. Morgan study.
Consider a $300,000 portfolio earning a 6 per cent return -- I know, I know, hard to find these days but not an unreasonable assumption longer term.
Scenario No. 1: withdrawing $20,000 pre-taxes a year from age 55 to age 90 leaves you with $61,757 at age 90.
Scenario No. 2: delaying withdrawal by five years, then withdrawing $20,000 pre-taxes a year from age 60 to age 90 will leave you with $130,395 at age 90.
Scenario No. 3: withdrawing $25,000 pre-taxes a year from age 55 to 64 and reducing withdrawals to $20,000 a year from age 65 onward will result in your money running out by age 81.
Scenario No. 4: withdrawing $30,000 a year from age 55 to 64, then reducing withdrawals to $20,000 a year will result in the money disappearing by age 74.
All these “what-if’s” ignore inflation though. And the impact of even the modest inflation we’ve experienced recently can cut a portfolio’s purchasing power in half over 20 to 25 years.
To get a feel for this, use the rule of 72. Simply divide 72 by the anticipated inflation rate. So, at an inflation rate of 3 per cent, it would take 24 years (72 divided by 3) to reduce the value of the money you put aside by half.
Once you get there, you’re likely to be retired for quite a long time. Plan accordingly.
By Gordon Powers, MSN Money
Posted by: Don | Oct 26, 2021 12:22:24 PM
Is it even possible for the average person to do this? It is all a crap shoot. By the time you retire
the dollar you saved could be worthless.( it wont buy as much as when it was saved 10 years ago) I have now put more money into the markets than I have in my RRSP account. I have lost money so should I just keep pumping it in? If I put it in a savings account with the nterest rates they are paying now I am not going to have enough either. I have worked my entire life , paid into these plans for years and have no idea of how I will ever retire.
I am disillusioned, pissed off and trust no one anymore.
I realized the risk when I went into the markets but what I did not realize is the amount of people
in these businesses that feel they are entitled to millions in compensation when I see my grocery money for retirement gone down the drain.
Our society has become to money driven. I never wanted much but after years of work I thought I could at least not worry about where my meal would come from.
I have given up. For me it comes down to starve now or starve later.
Posted by: Mike | Oct 28, 2021 8:39:32 AM
I think we all have to accept that we'll die with a mortgage. The $20,000 new house Dad bought in 1969 isn't equivalent to the $500,000 house we're providing for our families now. I used to ask my Dad how the heck he managed on $30,000 a year, Mom at home, and three hungry kids to feed. I understood once I realized his mortgage payment was $75 month in the mid-1980s...
The only way our generation will retire without a employer pension is to move into a condo when the kids are gone.
Posted by: Brent | Oct 28, 2021 9:53:44 AM
Do you remember that movie in which every on over 30 was
put to sleep because they were a drain on society! Huh the future!
Imagince millions and millions of retired people who have run out of
money and are living on the minority trying to support them in some way.
They will be pushed, shoved, treated like excess baggage and eventually
become disposable. Imagine you baby boomers when the younger generation
turns on you and targets you in the streets. Where centres open up for a quick
end. Volunteer at first and then picked up randomly and taken. Happy Retirement!
Posted by: dave jones | Oct 30, 2021 8:08:14 PM
BRENT!, you will be getting near to retirement one day , just be careful what you print , as it can come back to bite you ,lol
im happily divorced, and happily retired and loving it
Posted by: J. Steed | Oct 31, 2021 12:44:45 PM
Mike, I haven't had a mortgage in 20 years and I am now 50. My primary home is worth $400,000 and my second is worth $650,000. I can assure you that I will not retire with a mortgage. I don't know anyone else in my circle who would either. Do not make the statement that "we all have to accept that we'll die with a mortgage".
By the way, I am not even close to being wealthy.
Posted by: Don | Nov 2, 2021 5:44:04 PM
J Steed...you dont move in my circles and how does someone with over a million dollars in real estate assets alone say they are not even close to wealthy. You are deluding yourself that you are another "average" guy