You Need at Least $3M in Savings to Live Comfortably in Retirement

Re:You Need at Least $3M in Savings to Live Comfortably in R... by jacquesm on Tuesday February 21, 2023 @01:21AM (#34877415)

Inflation reduces the purchasing power of your remaining savings with the same degree that it reduces the purchasing power of what you've already withdrawn.

In other words: you'll be withdrawing more and more over time to keep up with the compound effect of inflation on your savings. And there is no law that says inflation should be between 0 and 3%, as the last couple of years have amply demonstrated.

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Re:You Need at Least $3M in Savings to Live Comfortably in R... by bushbaba on Tuesday February 21, 2023 @01:33AM (#34877503)

The idea is that if broader stock market returns 7% on average per year. Your 4% withdrawals include compounding inflationary adjustment without dipping into the capital (over many decades)

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Re:You Need at Least $3M in Savings to Live Comfortably in R... by jacquesm on Tuesday February 21, 2023 @01:36AM (#34877520)

That's effectively 'timing the market' though. Because the broader stockmarket may well not realize those returns when you need them most.

But sure, if you see having your funds in the stockmarket as risk free and guaranteeing you that 7% then you can base your retirement strategy on that.

Savings = Cash in the bank

Stocks = an asset class, so an investment

The bulk of the people that have this kind of money will have the majority of it in the form of home equity, not in the form of savings in the bank or stocks.

Depending on where you live your first healthcare crisis can wipe out that million easily.

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Re:You Need at Least $3M in Savings to Live Comfortably in R... by nighthawk454 on Tuesday February 21, 2023 @02:29PM (#34885758)

GP is also not quite right. The point of the 4% rule is it's the historically maximum safe withdrawal rate. You're not assuming a 7% return here. You're assuming that there's not been a time ever where 4% wasn't indefinitely sustainable.

https://www.mrmoneymustache.com/2012/05/29/how-much-do-i-nee...

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