How much will I need to retire on?

Question

We want retire in 15 years. Wife will have around $2000
in her teachers retirement, and a small SS payment, I will get $1800 from SS (they say), we expect to have around $750k in our IRA (roth) in 15 years!

How am I'm looking?

(BTW) her 2k is Monthly

OH...and our house will be paid for in 11 years

Answer 1

There's a lot of information missing here, but I'll assume, given about a 3.5% inflation rate, you'll probably want about $40K annually in addition to your social security and wife's retirement. At a 6% annual return, $750k will last you about 27 years. You'll also want to factor in if there's any reduction in her monthly payment should she pass away (some teachers' retirement plans are annuitized with various survivor options).


Addendum regarding Josh's note: He would've been correct with no inflation, but I adjusted for an estimated rate of 3.5%. I should have clarified.


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Answer 2

You'll have more money than 99% of all retirees, even in 15 years at that level.

Market growth and inflation are the two main variables that will have the biggest impacts on you at the time you retire. Just keep putting your maximum allowable contributions into your 401(k) and her 403(b), keep a good balance of fixed interest and variable investments (100 minus age=variable investments as a percentage is a good rule of thumb to follow so you don't get clobbered in correction years). Spread your variable investments around between 5 or 6 mutual funds that don't overlap too much - small-cap, mid-cap, international/global, growth, income and a REIT if your plans have them.

The guy who answered calling himself a financial planner and told you your $750K would last 27 years at 6% growth assuming a $40K pull each year either missed something or is not too swift. $750K will not only last indefinitely @ 6%/year with $40/K annual withdrawals, the principal would actually increase in value each year, as 6% interest would generate $45K/year in the first year alone, and slightly more every year assuming withdrawals were held steady at $40K and interest was a constant 6%.

Answer 3

Yours is the problem that I have. If I think back 18 years ago when I started my career, then entry level job paid $17,800 per year, now that same entry level job pays 41k. So 18 years from now the money I have will be worth about 40% of what it is today. So that 40k per year will be worth 16k per year in todays dollars. While our pensions will be indexed to inflation so your wife's will be more than 2k month in 15 years, the 750k will be worth lots less in today's dollars. I have the same delimena you do and really need about 40k in todays dollars on top of pensions. So according to my thinking I would a million in todays dollars with a 4% withdrawal rate. This allows for me to index my withdrawals to inflation so if I am alive 15 years after retirement that I can draw 60k a year. So to make this work assuming the formula, I will need about 90k a year in 15 years so I will have 40k in todays dollars. 4% of 2.2 million will do the trick. Problem is I won't have that much in 15 years, so I'm staying about 20 more.

Answer 4

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Answer 5

it looks ok if your kids are done with college and moved out. it won't hurt you if you save more