| This blog post says as a Software Engineer working in the US you should have $4 Million in savings to have the same income, in retirement, as a fresh software engineer Fidelity is always telling me I need some ungodly amount of money saved in order to continue the lifestyle to which I've become accustomed. I don't need that much. Here's what my current income pays for that won't be an issue in retirement: 1. Maxed out 401K at $18K/year. The wife's doing the same. 2. $3K a month paid to mortgage principal, in addition to the house payment. (It is financially unwise to pay down a 2.5% loan quickly, but I'm not retiring with a house payment.) 3. Commuting expenses. 4. A hell of a lot more eating out than I plan to do in retirement. 5. My current tax rate. A lower tax rate in retirement is the whole basis of the appeal of tax-deferred accounts. And let me give you some anecdata to work with as you ponder your starvation in retirement: my parents. Mom just bought a brand new Corvette last year. Dad is talking about a new $65K truck to replace the one they bought just a few years ago. The just bought a new $35K fifth wheel camper this year. A large, long-paid-off house on six acres in Florida. Lots of camping trips, which means feeding that hungry diesel truck that's pulling that fifth wheel, and camp spots with hook-ups ain't cheap. Maybe it's not how kings live, but I'd have no problem with the lifestyle. They're in their 70s now, I don't see the money running out any time soon. And they retired in their 50s with about a million dollars. You'll need $4 million if you still hold a mortgage in the Bay Area and you're stilling hitting the $EXPENSIVE_NIGHT_SPOT thrice a week, while having Uber Eats delivery your dinner every night. Which you won't be doing when you're 55 or 65 if you have any sense. Which means you don't need anywhere near $4 million. To get to answering your question, I plan a minimum of $1 million, and a max of $2 million, when we retire. We're not going to continue to live in Redmond, WA, I don't think. Taxes are pretty good, IMO, but we'll sell the Redmond house and buy something in, say, Bellingham and pocket the difference. I have absolutely no reason to believe we'll be anything other than just fine and dandy. Especially considering that the median person of our mid-50s age has less than a tenth of our current savings, and you don't see masses of retired people starving in the streets, do you? |
My approach is to actually contemplate what retirement looks like and develop a budget based on that to determine what our expenses will be, and subsequently how much income will be required to support that lifestyle.