1. I like the 4% rule. I think it’s still reasonable.

    I like that you said you don’t want to HAVE to work until your 65. That’s how I feel. I know I will always love what I do and I’ll probably never stop working, but if I ever decided to, I want to be able to!

  2. But what do you do when you get old and life costs A LOT MORE than before?

    Mr. Money Mustache hasn’t even addressed this (yet?). But long-term care is inevitable if you live long enough. My grandparents would be paying $150/day if they didn’t have LTC insurance. So do you recommend we factor in the LTC premiums into our retirement monthly expenses just the same as any other expense?

    Secretly, I think MMM wants us all to kill ourselves before we get too old. Just a feeling I have. But ultimately, I do really enjoy MMM.

    • Long term care is a must and you should definitely include it as an expense. All types of insurance premiums should be added to the expenses because that is something you can’t go without.

    • Tim

      I am fully funding my HSA and my intentions are after I retire I will draw money from my HSA to cover my LTC insurance needs. That is currently how I have been planning for that future. However, I have never run the numbers to see if that shakes out.. at this point it is a qualitative assessment.

  3. I also feel that LTC is an expense that a lot of people don’t factor into the “retirement” equation. I also started later than I should have but I should be able to step away from working if I wanted to in 12 years; hopefully less!

    • 12 years sound good! I’m shooting for 15 years, but I have to make more money so I can save more money. If I don’t get more money, I’m looking at 25 years… ouch!

  4. 4% is a fair withdrawal rate. I’m in the school of thought that you should have multiple streams to have this equal 4%. Maybe the first 2% is if from your old 401K, 1% if from your rental house income, and the other 1% if from an annuity or dividends. Basing your retirement income off of one income stream is asking for Murphy to kick you in the shin. As far as long term care, it should be calculated into your expenses, but that’s about the only calculation I would use to factor in is expenses.

  5. I love this rule. For one, it focuses on your monthly expenses and not your income. Those are generally easier to control. I am a little obsessive right now and so I am constantly playing around with my number. I think of new scenarios constantly. If everything stays exactly the same as it is now, I’m looking at a good 15 years. That’s a long time – so I think the next time I get bored at work I’ll calculate how long it will take if I take two mini-retirements along the way. It’s a good thing to have a number to work toward – it helps me focus at least.

  6. I have a difficult time believing any of the numbers sites give you about retiring. For me, I am just trying to get my cost of living to the lowest possible number and live there consistently while building my wealth. I am hoping that this plan will mean financial freedom in more like 15 years rather than retirement in 30 years. I really just hope to get to the place where I don’t need my salary and I just work for fun. Working hard to get there as fast as possible.

  7. Good stuff here Aldo! I think what really is setting people on edge now about the “how much?” question is the rising cost of health care. It was difficult enough to fund the post retirement years before…now with the new laws it may just get ridiculous. 5 years in a nursing home (which isn’t unreasonable to expect – happened to my grandmother) could eat up a ton of life savings. So I think the answer to this question is a lot murkier than it seems.

  8. At this point in the game, we simply try to set aside as much as possible for retirement without stretching ourselves too thin. I definitely don’t expect to see a dime of social security.

  9. Since my wife is in grad school and I’m still deciding where I want to go in my career, I don’t think too much about calculating how much I’ll need for retirement. We consistently pay down debt, put money in our retirement and HSA account, and work to increase our income. We’ll get into specifics – such as running retirement calcs – down the road.

  10. I like this rule. I’ve also been wondering how much I should save so that I don’t have to work anymore. We don’t know how long we’re going to live and our health condition when we’re old, so I agree that to have our expenses under control we have to include the cost of insurance too to have better estimation of how much we should save.

  11. I think that it’s one of those questions that: “if you have to ask, you haven’t got enough”.

    I’m a big believer in increasing your income as well as reducing expenses. Sometimes concentrating too much on either will give you tunnel vision and you can miss the opportunity that will catapult you 10 years ahead in your “plan”.

    Earn BIG, spend small.

  12. I also agree with Ivan here that purchasing life insurance is a must nowadays. However, purchasing one is something that consumers should think about especially now that newer insurance products are entering the market. Hybrid policies or combination products are new products that are becoming popular today especially to people who want to protect their assets from the high cost of care. Since long term care insurance cost is expensive, consumers are looking for alternative ways to pay for nursing homes, assisted living facilities and other long-term care services.

    This new product works this way, you’ll purchase life insurance and you choose long term care as your benefit rider. You can use this policy to pay for long term care and give the remaining amount in your pool of money to your beneficiaries when you die. This is only recommended to people who will only need limited coverage and keen in living something behind to their loved ones.

    Some would argue that they have enough retirement income from 401(k), bonds, stocks and mutual funds but with the way the cost of care is increasing, you might exhaust all of these due to your care expenses. It’s best to plan ahead and purchase the necessary insurance products in order to avoid financial woes and to give your family a bright future.

  13. Maybe the question in the title is worth answering a little perversely. Instead of wondering how much money you need to retire, you better consider changing the current way of making money. If in your life you are dealing with things which cause you an authentic pleasure and you are earning on it the question included in the subject is losing the meaning. In addition, people who take pleasure in their work often earn quite good money.

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