What a $1M Retirement Looks Like in America

The average just got whalloped by a deadly pandemic, so the average today is probably not representative of how long a person should expect to live in the future.

The 4% rule paper was written in 1994, when most retirees would expect to live 15.3 (male) to 19.4 (female) more years. People retiring now can expect to live 18.1 to 20.7 years, make and female respectively.

The % rules are calculated using joint actuarial tables and a given percentage chance of going broke before death (I believe it is 5%).

Not exactly because the 4% rule allows you to increase your withdrawals throughout time to track inflation. That would it be true if the treasuries.

Also worth noting that the 4% rule is not designed for principle preservation. So you end up with zero after 30 years.

I’m contrast, your approach would preserve the principle.

The 4% rule is inflation-adjusted, so no.

Many countries have been above 100% for a while now without any apparent issues

Only if you assume that the US economy will stop growing, and with it the tax base. The US government’s ability to pay debt isn’t just its ability to print money. It’s also the ability to collect tax revenues and given how stable economic growth in the US has been for hundreds of years, it’s reasonable to assume that it can easily pay debts well over 100% of gdp.

If you invest in real assets, such as stocks or real estate, your savings should be more or less safe from inflation.

Inflation is headed down. It's not a completely clear picture yet, but I think this is the only reasonable conclusion from the current statistics. Things could change, but right now the arrows all point in the right direction.

That’s why it’s better to have a mix of assets, some that can be easily liquidated, than cash.

$1m in the right assets could become $4m in youre scenario with the same purchasing power of the $1m before inflation.

In reality, you’ll probably lose some value though because the people holding cash that now have far less purchasing power, which torpedoes demand. Still better to be in assets than cash though.

If the US's debtors wish to have their debts converted into a 2nd rate (i.e. non-reserve) currency, then by all means, let's see it happen. It will be easier to pay off the debt if that happens (just harder to accumulate more).

I was mostly frustrated with the "100% VTSAX" mantra, especially across 2020-2021, as every possible valuation measurement was screaming how overvalued things were. And any attempt at pointing these things out received a harsh reply of "4% rule!" and "Stick to your allocations!" and pictures of 10-yr charts.

4% of 1M is $40k, not 50.

The idea is you withdraw $40k/year and invest in low risk income funds that yield 2-3%/year.

So withdrawing $40k gives you about 40-50 years and that’s safe for most 65 year olds.

You can set your withdrawal rate in the mix of your assets. It does much more than confirm or not the 4% rule.

There's also firecalc which is similar but has a weird user interface.

>I have health insurance provided by my employer, but when not employed, I skip it and just pay for anything out of pocket.

This is a fantastic way to lose everything from something as simple as missing a step and breaking your foot in the US.

Ah, that makes sense. FWIW I'm one state over in PA, philly suburbs, and the per capita income here I think is the highest in the state or close to it. My SALT alone is $5K. Marketplace health plan is nearly $4.5K just for premiums and the government is kicking in even more than what I pay, but its a PPO so more of a "luxury" plan. The HMO plans here, which I used for a while, are just too much red tape to actually use effectively and they limit you to some, shall we say, budget providers.

I had noted before that WV seems cheaper, though I think if I move out of PA I'll head someplace warmer.

Ah, you play game of life on easy mode, you have no kids.

I was living on sub-10k$/year in the heart of the most expensive city on planet - Zurich (back then), while owning nothing. That was rather trivial, hiking and walking in the forests is for free, great public swimming pools are cheap and lake was for free in the summer so staying happy and fit was easy to achieve.

But like with all games, playing games on easiest modes aint the idea of most rewarding fun for most folks, and this metaphor is also true for life itself.

Probably saved a couple thousand dollars.

> She had 15 years of saving 26% of $250k to only have $250k???

But that part is just... wrong.

We don't know what the savings rate was before her "mid 50s" - clearly it was LESS than 26% of $250k, and yes, that is bananas. But GGP's text does not match what the article says.

In reality, she started with $250k around 55, and then saved (up to) 26% of $250k for 10 years, retiring at 65 with about $1 million saved.

Since it wasn't clear, I was responding to this part of their comment:

> She had 15 years of saving 26% of $250k to only have $250k??? Yikes.

Which was a gross misinterpretation of the text they had just quoted. Yes, it's bananas that making that much she only had $250k in savings for retirement. But that's not what I was responding to. She did not save 26% of $250k for a decade and only end up with $250k in savings.

no.

Medicare covers a lot, but excludes a lot (glasses, hearing aids, long-term care, for example). Add in Medicare premiums, supplemental premiums, and co-pays, and it's not inexpensive.

Most but depending on how healthy you are it can be very expensive.

You will pay $170 a month for Medicare Part B premium and then IIRC my mom pays around $400 a month for Medicare supplement because Medicare often pays like 80% of the bill until you hit deductable.

https://www.medicare.gov/basics/get-started-with-medicare/me...

You’re entitled to your Social Security benefits regardless of where you reside globally. You don’t have Medicare coverage outside of the US though.

Typically, your Social Security is your passive/pension/monthly income that qualifies you for a long term retirement visa.

A hack you can do if you can work remotely is collect Social Security out of the country while working remote; this increases your income and if your annual income replaces previous lower income years on your Social Security wage record, your monthly benefit will go up over time as the SSA re-evaluates your benefit annually (not to mention cost of living adjustments).

It's a lengthy discussion topic to say the least. High level, pension coverage and associated healthcare plans have declined over the decades, 401ks (they were initially designed as a tax shelter for the wealthy) were parroted as the solution when they weren’t, and with the healthcare arrangement in the US, what might have been sustainable previously no longer is. Hence, people bouncing from an extraction economy to enjoy higher standard of living during the last chapter of their life (because it ain’t getting fixed in the US in a timeframe that matters to them). Florida was the default for a lot of retirees because of no state income tax, warm weather, and low cost of living, but those days are long gone with the residential insurance market collapsing, the price of real estate at all time highs, and the extreme shortage of doctors, RNs, CNAs, and care home aides.

Similar to college costs, the amount of total capital required to retire comfortably is accelerating away (due to underlying cost inflation, compressed future capital market returns, and longer expected lifetimes) from the capability of the mean worker to accomplish the necessary level of wealth accumulation during a work lifetime. Very few levers to pull besides earning more or finding somewhere to live that costs less.

The past several decades saw a massively booming economy that allowed for big pensions and huge gains on real estate.