On a scale of 1 to 10, how likely are you to be a millionaire?

[QuarterMillionMan]

At 58 years old having attained $1 million in net worth, I am at the point where I will now try to spend down more than trying to save like a madman. The reason being that if I die today what is the point of saving like a maniac and never enjoying the fruits of my labor. There also has to be a balance where I may live another 30 years and I will need the money to survive another 30 years. Is there a specific amount where you say to yourselves forget about it I'm not saving any more and committed to spending it?

[disneysteve]

Is there a specific amount where you say to yourselves forget about it I'm not saving any more and committed to spending it?

Yes. That point is called retirement. When you determine that you have enough saved to support you for the rest of your life so you can quit working and stop adding to the pile and begin drawing from it instead.

[myrdale]

$1,082,000 today.

You need to have you user name updated to match =D

WTG!!

[bjl584]

At 58 years old having attained $1 million in net worth, I am at the point where I will now try to spend down more than trying to save like a madman. The reason being that if I die today what is the point of saving like a maniac and never enjoying the fruits of my labor. There also has to be a balance where I may live another 30 years and I will need the money to survive another 30 years. Is there a specific amount where you say to yourselves forget about it I'm not saving any more and committed to spending it?

congrats

[QuarterMillionMan]

Yes. That point is called retirement. When you determine that you have enough saved to support you for the rest of your life so you can quit working and stop adding to the pile and begin drawing from it instead.

That's all good in theory but life doesn't work like that. I may never make it to retirement which at 58 is 7 years away for me. If I die tomorrow that's $1 million that I left on the table. My plan is to start spending down today and not in 7 years which I may never get to see. I'm a realist, not a theorist but if I live to 85 that'll be great.

[disneysteve]

That's all good in theory but life doesn't work like that. I may never make it to retirement which at 58 is 7 years away for me. If I die tomorrow that's $1 million that I left on the table. My plan is to start spending down today and not in 7 years which I may never get to see. I'm a realist, not a theorist but if I live to 85 that'll be great.

So what happens if you spend down your million over the next 10 years and you live to be 95? Then what?

None of us know how long we've got. I've already outlived my father-in-law. My dad died at 69 and I hope to surpass that but who knows? And then there's my mom who turned 94 last month and still lives independently. We all have to find balance. We have to save for an uncertain future but also enjoy the present. I'd also point out that the mythical 65 year old retirement age doesn't really exist for most people. Most leave the workforce before that for one reason or another. I believe the average is 62 so you may be closer to retirement than you think. I retired at 59 myself, though I know you have a pension in your future.

I think you also said your NW was $1M, not your investable assets. The number I gave for us is our portfolio, not our NW which I never calculate or look at but is definitely well over $4M at this point.

Anyway, you need to enjoy life while saving and planning for the future. Only you can decide what that balance looks like.

[james.hendrickson]

QMM - if you don't know something, often your best guess is the average.

Think about it like the stock market - nobody knows what the returns of the stock market are going to be. So your best guess is the average return of the market from historical data.

You could treat how long you have to live the same way. If you don't know how long you have to live, your best guess is the statistical average.

So, what I did is pull some life table data from the US Census bureau.

According to the Census bureau, if you're 51, you've got 33 years leff to live.

Here are the actual tables- you can just check the left hand side for your age, and then look at their estimates for how long you have left to live.

https://www.census.gov/content/dam/Census/library/publications/2020/demo/p25-1145-supplemental-tables.pdf

[disneysteve]

According to the Census bureau, if you're 51, you've got 33 years leff to live.

That's for women. For men it's 29.98 years at 51.

I've got 22.6 statistically.

[myrdale]

Does that include artificial deaths, or is it natural deaths only?

[james.hendrickson]

Does that include artificial deaths, or is it natural deaths only?

I believe it is all deaths.

[james.hendrickson]

That's for women. For men it's 29.98 years at 51.

I've got 22.6 statistically.

Disneysteve, you don't object to the logic though, yes? The logic being "your best bet is the statistical average".

[disneysteve]

Disneysteve, you don't object to the logic though, yes? The logic being "your best bet is the statistical average".

Agreed. I can't stand the "I might get hit by a bus tomorrow" mindset of people who spend every penny and then some and refuse to prepare for the future (which is not what QMM is talking about here).

[QuarterMillionMan]

My plan is not to spend all of the $1 million in as disneysteve says 10 years but on the flip side not to keep saving like a maniac and die at let's say 62. Also yes disneysteve recalled correctly that I will be getting a pension so that will help even if I spend the $1 million in 10 years. At 62, I would get 100% medical premiums paid and about 50% of my salary currently $8000 a month. At 65, I would get 60% which is not a lot. Also, social security at $1250/month at 65 but WEP (windfall elimination provision) would apply.

[disneysteve]

My plan is not to spend all of the $1 million in as disneysteve says 10 years but on the flip side not to keep saving like a maniac and die at let's say 62. Also yes disneysteve recalled correctly that I will be getting a pension so that will help even if I spend the $1 million in 10 years. At 62, I would get 100% medical premiums paid and about 50% of my salary currently $8000 a month. At 65, I would get 60% which is not a lot. Also, social security at $1250/month at 65 but WEP (windfall elimination provision) would apply.

Retirement math is definitely different when there's a pension involved. For the 90+% of private sector workers who don't have a pension, we need to plan very differently since we will be responsible for 100% of our expenses (other than SS). In your case, knowing that you'll have full medical and at least $4,000/month at age 62 means you don't need to save nearly as much as the rest of us. To generate that $4,000/month, I'd need at least $1.2 million in savings. You don't.

You need to sit down and run your numbers through a few good retirement calculators like Firecalc, for example, and see how much you actually need to save to reach your goals.

[QuarterMillionMan]

If I retired today at 58 my pension would be 36% of my $8000 monthly salary, at 62 it'd be 52%, at 65 it'd be 68%. As for retirement medical insurance premiums each year of service big government pays 4% up to 100% with 25 years of service. At 21 years of service x 4% (if I go today), big government pays 84%, then I'd pay 16%. So, for United Health at $1000 a month, if I retired today I'd pay $160 a month for my retirement medical insurance premiums. But I'm aiming for age 62, God willing. At the front end (ie, 50 - 60 years old) the pension percentages increases 1% or 2%. But at the back end 60's to 65 the percentage increases significantly 2% to 6% each year. It pays to keep working to 65. But after 65 there are no incentives to keep working.