How much money does it take to bankroll a comfortable retirement?
 

If you ask Americans, the average answer is an astounding $1.46 million.

That’s per a recent Northwestern Mutual survey of 4,500 U.S. adults, which found retirement cost expectations have spiked since 2020. This year’s average estimate is 53% higher than it was four years ago, when people said they’d need $951,000 to retire.

When it comes to their actual savings, though, Americans are far from achieving their expected retirement needs: Survey respondents reported their average retirement savings is just $88,400 in 2024.

That’s a $10,000 decrease from the average retirement savings recorded by Northwestern Mutual in 2021, when the metric hit its five-year peak of $98,800.

IMO, having $100,000 in your savings when you retire is pretty sad. I know many people the made good money throughout their careers but always seemed to spend more than they made. I think $1.5M is a little low too to retire on especially if you are fully invested. That $1.5M could become $800,000 if another 2008 happens and you might not have to years for your money to come back, all the while taking distributions out of it.

“Comfortable “ is a relative term. Some are only “comfortable” if they are dining out three nights a week, golfing championship courses twice weekly …..several nice vacations a year.
Others are “comfortable” with burgers on the grill, executive golfing, free entertainment nightly on the squares.
It’s not money that makes you comfortable. It’s the relationships you build in life.

People sell their homes before moving to the Villages. Pay cash for their new home and live on their social security and pensions. They have a little nest egg that earns interest. Some start a profitable work-at-home business. Unless you are a big spender, most can retire to the Villages.

Precisely. You can be "comfortable" in an off-the-grid cabin in Northern Minnesota or Aroostook County Maine if that is your thing. It is all subjective. But that $1.46 million to retire, IMO, is total bee ess. There is a huge difference between "comfortable" and conspicuous consumption.

Shhhh....your kids may be reading this!

Comfortable is a bunch of factors.

Owe money on house or cars?
Have a pension?
How much are you getting in SS?

NW only part of the equation

I believe comfort in relation to TV has become more expensive over the last few years, housing, insurance both auto and home, taxes, amenity fees and bonds. A pension, social security and tax deferred savings around a million with zero debt stress free? I think so.

The published number is meaningless to any individual, as its a survey of average peoples' feelings with no published background on annual spending rate. Hard financial data is not present or known to be present.

Example
our house costs $30K annually and add in food and vacations. .
Say $60-70K max annually at the moment.

current social security for both of us is $72K at FRA, so at the moment no savings is needed.

I saw one CFP touting planning services say $3M is not enough in savings. (Scare tactic)
He was using $200K in annual costs and saying money runs out in less than 7 years. (That's like living in NYC!)

The determining factor is "sufficing expenses" and how you structure your spending.
Renting money with a mortgage sucks money away. .
best to pay it off to free up cash flow and reduce cost of living and dependence on any investment offset.
(maintaining a mortgage and keeping investments earning as much or more will work until it doesn't, ie you have to use the money for a huge unplanned black swan event, or the returns stop returning.)

So there's a lot of numbers in the world, a lot are not relevant or useful to any individual's circumstance. This is one of them

According to the Villages, the basic costs including taxes and bond is between $858 and $1390 a month.

The Villages - Florida's Friendliest Active Adult 55+ Retirement Community

This does not include a mortgage.

That doesn’t include a lot of expenses such as food and medical care but even if you quadruple the numbers, you should be able to live comfortably (but not extravagantly) for around $60,000 a year.

This will change if a person has medical problems or has to go into a nursing home.

Agree with most of what you said. However, when interest rates are high, paying cash for a home is not always the best solution. You are throwing away the possibility of earning good interest. Interest rates go back down? Then you pay cash for your home. Hopefully, the period of time you were able to make a good return on your investment will pay for the bulk of your home purchase. In the interim, you enjoy maintenance free living while renting.

will always disagree for two reasons:
Tax on your income, which is variable
mortgage money rental rate,

therefore it works until is doesn't, there is a measure of risk which I don't care to pay for
and see no need to have to monitor and pay for.

good luck

I like that phrase, "the returns stop returning", have to borrow it.:BigApplause:

(a)well, opinions are like ..................

(b)if you are retired, you get what you deserve.

:oops::oops:

When wife and I retired 27 years ago, we had what we would considered a comfortable retirement ahead of us, and so far it has worked out rather well.
We would not consider retiring on that amount now.
It is fifteen to twenty years down the line you have to look at, not your present comfort zone.
We have had a ball, but would need three or four times our original amount today for same experience.
I do not think that amount recommended is over thought.

Why would 1.5 million be surprising when the average household income today is close to $80k? I thought I was a rich man the day I built my $130K dream home. I was making $30K/year at the time, as a Computer Programmer with three degrees. I thought I was really something, making my age. That's minimum-wage burger-flipper money today! And yet I somehow retired comfortably, despite three stock market crashes, my employer's bankruptcy in the Enron debacle, and a forced move and job hunt 500 miles away in my 50's.

Any fool can retire a millionaire. All it takes it a savings account and a lick of common sense. $80K, with a 3% inflation adjustment per year, and enough sense to save 10% a year at a 5% return, is $2,081,365 by age 65.

Somebody ought to tell the kids to quit begging for government handouts and just get a damned job!

In a perfect world what you say makes sense. Just one part i would offer a different view....in the 50's my grandparents bought their house for 17k, my sibling bought theirs in the early 80's for 56K. Boston mind you. Both sold recently for 1.1 mil and 1.3 mil respectively. You just dont see that kind of appreciation (at least in that region) anymore. A million up north is the starting point and its a bidding war, usually for a postage stamp property. So does that mean in 60, 40 years using that standard....those same homes will appreciate to 15, 20 mil? Of course not. There will be a huge bubble burst. Much harder road for young people...doesnt mean we worked any harder, or less....its just a different playing field. imo

Exactly. My middle daughter and her husband both have good jobs (both 6 figures +), save like crazy and have a very nice nest egg set aside to buy a home. No student debt for either of them, both funding their 401Ks for retirement...

Unfortunately, they are looking in Arlington, VA, where a "fixer upper" is $750-$1 million...

Yes, they could afford the low end of that, but their mortgage payments would be $6K/month... And that doesn't include remodeling of the very dated homes...

Our daughter and son in law live in DC where a house that would go for 750 would be considered a slum and the buyer would tear it down and build new.

This is a tough question. Many variables need to be considered. One's expected life span, current health, proposed standard of living, inflation's effect over one's remaining life span and the relative cost of living where one expects to retire come to mind for starters. Each case will differ. Some will be able to get by on $1M - $2M; others may need $1M or more a year.

In 1967 I bought a house in Alexandria, VA in a nice neighborhood I believe called Rose Hill off Franconia Road on a street named Chevell Court for $27,000. Just checked. Homes on that street now are in the $750K+ range.

A year later I bought a four unit apartment building at 321 C St SE in the Capitol Hill area of DC for $28,000. I wonder what it would go for today? Zillow shows it at about $1.5M.

I have fortunately been able to assist my adult children with housing but my grandchildren aged 15 - 20 are facing very high housing costs in their future.

Yup, plenty of those around... I've worked in DC for close to 40 years and the changes in housing prices are staggering. It's also the same in MD, where live. Yet, they sell within a few weeks. Go figure...

Yes, and my $130K house in the 80's was just as incomprehensible to my grandfather.

I agree that a thing that can't go on forever, won't. But inflation has no bearing on my point. If you want a comfortable retirement, all you have to do is save for it. Whether or not there will be a functional America for our kids to retire in, is a different subject.

But if I was a 30-something faced with a million-dollar mortgage to live in a dungheap like NY, Boston or DC, I hope I'd have sense enough to move to someplace where they don't confiscate half your income before you get a chance to pay your $5,000 mortgage payment, and then try to save $500 for your retirement after you feed your kids. Choosing where to live has just as much to do with common sense as saving 10% of your income.

With all due respect, inflation has a great impact on your retirement, sponsored defined benefit retirement plans have become scarce except for ones funded by a government entity and most of them don't look to healthy, SS alone makes for a not very opulent retirement, cost of living adjustments ether from SS or pension plans always seem to fall short of real inflation. Inflation destroys the value of most retirement assets . The stats I have seen look rather dim for a large section of would be retirees, for most it's a failure to plan rather than a failure of plan, but if you plan with a good cushion perhaps at least you hiers will have something to hold on to, and avoid a diet of rice, beans and dog food

You're comparing apples to lifeboats.

Savings isn't income. Most people have social security income in addition to savings. Also, if you don't owe on a mortgage but own your house, you have equity, in addition to savings, and income.

We absolutely don't have $100k saved up. We took what we got for the sale of our house up north and sunk it into a house in The Villages. We owed for around 6 months to a relative and repaid it in full. And then - we had very little in savings to show for it.

I continued to work part time, he got his pension, then he started work part time after the first year, then I quit, and he started collecting social security, and I'm getting social security too now.

So we have two social security checks, a pension check, and not much in the way of savings. This is how millions of people live. We're living much better than many, because we have no outstanding debts, and we're not "one paycheck from homelessness." We enjoy dining out, we enjoy a house that isn't falling apart, a truck, a car, two golf carts, the taxes and insurance obligations covered, health insurance paid for, dancing, watching TV, having cell phones and other assorted technological gadgets and doodads, a decent wardrobe, and an outstanding neighborhood of great people.

You don't need $100,000 savings to get all that. But you DO need a regular income stream to pay the bills, and some padding in case you need a new roof.

If I wanted to live MORE comfortable than I do now, I'd say - having our current income stream, and maybe $250,000 extra kicking around somewhere would be excellent. But I wouldn't turn down the winning powerball ticket.

Inflation has an enormous impact to those of us living off our savings and SS checks. But it does not have any impact on whether a working person, whose income is inflating along with the rest of the economy, can save that scary $1.5m number for retirement -- which, by the way, does NOT include their real estate and SS. I just showed you the math -- which included 3% for inflation -- proving that someone with an average $80K income can easily save over $2M in 45 years. The question is not, is it possible. The question is whether the average wage earner has enough common sense to do it. Given the fact that the average American has less than $1,000 in the bank, obviously, most don't.

My biggest fear is that the generation who refuses to show up at the office to work, and thinks the Gooberment ought to pay for their student loans, is going to look at my nestegg one day and say "gimme".

That seems like a pretty rational fear. Wealth redistribution never turns out well, but they keep trying it anyway.

That should cover the grocery bill.

It doesn't cover the cost of the house, food, dining out, clothing, golf cart, replacement of appliances, furniture, etc. etc.

It's just amenity fee, trash collection, average sewer, water, gas/electric, insurance, taxes, and development district assessment which would be the bond + maintenance + fire.

The numbers they provide are believable.

Like everything else in life, there are innumerable variables. My husband and I took a different path. We were focused on developing multiple income streams, so we worked 9-5 jobs and purchased a few rental properties. Our personal home was a lot less than what we could afford and we never traded up. Over the years we contributed to 401Ks, invested in the stock market and my husband used the IRS 55+ exception to quit his job and begin retirement. We paid off any remaining mortgages with some of the money from his 401K without penalty. We are debt-free and paid cash for a condo in Florida so that we could snowbird. I'm not old enough to withdraw from my retirement accounts yet, but I don't need to. Our properties help our rental income to keep pace with inflation, so we have never needed to have anywhere near a million dollars in investments or cash. I earn a nice bit of cash consulting for a couple of clients and hubby is now old enough to collect social security. We don't live extravagantly, but we do have the luxury of traveling and buying the things that we want without a financial struggle. Ours was just one of the many paths that can lead to retirement.

it all depends on your lifestyle. I don't have a million dollars....or anywhere near it. BUT I am living a very active lifestyle, retired, own my home and car and have a nice nest egg. Managing your money is key.

No debt....retire with no debt that is the key. No house payment No car payment
Whatever you charge on credit card ...pay it off every two weeks. Get Airline Credit cards use the points earned for your flights....example round trip to Cincinnati for two. $22 with our points. Savings great...stocks great...other investments great...however no debt is the key.

Thank you. Not much more need to be said!

And you lose the possibility of appreciation which has been quite significant down here.

Living off savings is one thing living off income from savings another, SS is more like a government run ponzi scheme kept afloat with taxes at worst, a transfer of wealth at best, for the most part its that people do not plan ahead with any reasonable expectations, will all to often accept the best possible outcome as what they can expect, make excuses for their poor judgments , blame a failure of plan when in fact it was a failure to plan ,, Taxes ? of course the middle class will bear the brunt , that's where the money is, the most consumers , consumers always pay the taxes in the end , taxes are built in every item we use, economic demagoguery sounds good , your a victim so we will take from the people who took it from you, you deserve it , its your right,, in so doing kill the goose that has given you the golden egg

Just the opposite. Right now, interest rates are in the 7% range or higher. If you want a longer term safe investment like money market funds, you are getting 5% which is good, but you are losing 2%, and that is today, it could go higher but it could go lower to < 1% like it was for a decade. If you invest in stocks/funds, a good average of earnings over a 30 year span is 8-10% if you do it right, don’t have high expenses, no finance fees, and you don’t time the market. For example, all of my investments have gone up from 12% to 30% and some stocks have doubled this past 8 months, and I sold everything last week. When you look at the market late last week and tomorrow morning, you will know why.
During the past 20-30 years, I had home loans at 2-3% and got a loan for the max amount possible (80%), and was making triple times on an annual basis during this same time.
As for cash to buy a home, cash is king. I’ve had 2 custom homes built during the past 11 years and I was the bank, I didn’t get a builders loan nor an end loan which saved me over 4% just in loan fees.
In normal years and in most places, when a recession hits, house values go down and interest rates go up. Prime time for somebody with cash to go in and get a great deal, 2008 and the last 2 years are an example of this.

I also think $1.5M is low to have financial independence, this doesn’t take in account if you have a nice pension or 2. My reasoning is the golden rule of taking 4% of your money out of your portfolio to live on so you don’t live past your mooney. $1.5M x 4% is $60k a year which isn’t that much. Somebody mentioned that their expenses are $70k a year and they make $72k. What happens if you want to go on a $10k vacation a couple times a year? Say you need a new car? A new golf cart? Do some renovation? Have a medical issue or you want to help you kids with a big expense? $2k extra isn’t going to cut it. Then what happens when the market goes down for 18-24 months while you are still taking 4% out each year? Next year you might be taking 4%out of $1.2M. Having $2M-$3M gives you breathing room to pay for expenses or luxury items that you want. No reason to cut back on doing things in retirement.

A lot of figures have been tossed out and also different lifestyles.
If you have a pension, social security, investments and debt free all these factors must be included into this calculation.
The question should be after you tally your position what type of income will permit you to have the lifestyle you want.
After you considered all normal annual expenses, taxes, food, HOA fees, cable, insurance, what is a decent income to cover that and still let you have a comfortable life here in The Villages?
Is it $100K, $200K, more or somewhere in between, that is the real question.

I'm comfy with a nice cabin and some beefaroni LOL

I think INCOME of 100k, 200k or more, is way more than enough for the Villages. What do others think would be approximate normal annual expenses? This question excludes the extras that change people's lifestyles dramatically. So just as Cuervo said: taxes, food, amenity fees, TV/Internet, insurance (health, property, & vehicles), electricity, landscaping, house maintenance. Isn't it around 50, 55?

Are our monthly social security and pension payments included in your retirement figures

I retired early up north and had just enough pension income to get by. When I moved to FL and got additional income from Social Security, my income exceeded my expenses by a lot. I am comfortable with much less than other people who like to travel the world. I will soon be forced to draw from my retirement account which I have not needed. Recently I have been going to a Naturopath doctor to get as healthy as possible. Staying healthy with a modest lifestyle is the easy way to not need a huge nest egg.