401(k)s Will be Unthinkable in 50 Years

[Monoriu]

The general rule of thumb is you need $25 in savings for every $1 that you want to spend every year.  Or the 4% rule.  So if you want to spend $40,000 a year, you need $1 million in savings. 

I think with bond yields at historic lows, 4% may not be as secure as it once was.  I think 3.5% may be a better bet.  Because you don't want to be wrong on these things. 

[Admiral Yi]

I've seen that "1 million is not enough" line thrown around a lot and just figured it was a financial industry pitch line.

[Monoriu]

I've seen that "1 million is not enough" line thrown around a lot and just figured it was a financial industry pitch line.

If you want to spend more than $40,000 per year in retirement, then $1 million is not enough. 

[Admiral Yi]

If you want to spend more than $40,000 per year in retirement, then $1 million is not enough.

I'm the one who taught you about the rule of 25 you doofus.

[Monoriu]

If you want to spend more than $40,000 per year in retirement, then $1 million is not enough.

I'm the one who taught you about the rule of 25 you doofus.

No, I read about it here 

http://www.early-retirement.org/forums/f28/

[Habbaku]

I've seen that "1 million is not enough" line thrown around a lot and just figured it was a financial industry pitch line.

If you want to spend more than $40,000 per year in retirement, then $1 million is not enough.

That's not necessarily true, though. The most common result of adhering to the 4% rule has been to leave behind a significant nest egg to the heirs. Spending could go slightly up (to, say, 4.5-5%) and not radically alter that.

[Monoriu]

That's not necessarily true, though. The most common result of adhering to the 4% rule has been to leave behind a significant nest egg to the heirs. Spending could go slightly up (to, say, 4.5-5%) and not radically alter that.

The perfect result is to spend the last dollars in my last day and die in comfort.  But life isn't perfect and there are far too many unknowns.  So given that the estimate is going to be far from precise, leaving money behind is a much better outcome than dying in destitution.  As I said, it is better to be on the safe side. 

[PDH]

"So my grandfather died penniless."
"Wow, that's awful."
"No, it was perfect timing."

[DGuller]

That's not necessarily true, though. The most common result of adhering to the 4% rule has been to leave behind a significant nest egg to the heirs. Spending could go slightly up (to, say, 4.5-5%) and not radically alter that.

The perfect result is to spend the last dollars in my last day and die in comfort.  But life isn't perfect and there are far too many unknowns.  So given that the estimate is going to be far from precise, leaving money behind is a much better outcome than dying in destitution.  As I said, it is better to be on the safe side.

If only there were a financial product that could use the law of large numbers to insure you against spending too much or too little...

[Habbaku]

Annuities tend to be a pretty raw deal for the purchaser, but...

[Monoriu]

I think annuities are only worth it if you absolutely can't reach the savings goal.  Otherwise you are much better off building your own portfolio.

[mongers]

I think annuities are only worth it if you absolutely can't reach the savings goal.  Otherwise you are much better off building your own portfolio.

[CdM]

Whatever, the world going to crash and burn in the flames of Trump's dying ego.

[/CdM]

[Habbaku]

I think annuities are only worth it if you absolutely can't reach the savings goal.  Otherwise you are much better off building your own portfolio.

In an ideal situation, sure. But many don't have the acumen to do so, or might arrange their portfolio incorrectly. In addition, the likelihood they'll be able to manage their portfolio perfectly as they near end of life is unlikely, unless their heirs are doing the legwork for them. An annuity makes sense for plenty of people.

[Habbaku]

I think annuities are only worth it if you absolutely can't reach the savings goal.  Otherwise you are much better off building your own portfolio.

[CdM]

Whatever, the world going to crash and burn in the flames of Trump's dying ego.

[/CdM]

[Tyr]

I'll never retire, so might as well make sure I'll never retire.

[/Tyr]

[Eddie Teach]

I think annuities are only worth it if you absolutely can't reach the savings goal.  Otherwise you are much better off building your own portfolio.

[CdM]

Whatever, the world going to crash and burn in the flames of Trump's dying ego.

[/CdM]

We're a year and a half behind schedule.