Would you quit your job today for a fixed income of $60,500 per year?  According to John Csiszar, of GoBankingRates, a comfortable Arizona Retirement costs $60,503 per year.

See our hypothetical budget of a retired couple with a mortgage-free $350,000 home and a paid-for vehicle.  The expenses outlined below are very modest baseline costs.

After covering basic essential needs for the 21st century, we have $2524.50 left-over to enjoy life’s greatest pleasures.  This number does not excite me after working for 40 years to get here…

How much gross income do you need to support this lifestyle? At a 25% combined federal and state tax rate, $80,667 is the magic number.  How do you finance this? Do you have a rental income property? Do you have a pension? What is your social security payment? See the rough example below that shows a maximum SS benefit + portfolio withdrawals to satisfy this retirement.

Here are some take-aways.

  • If you are in your 60’s and you are unsure of the optimal social security distribution strategy or the proper investment mix to survive the markets, we can help.
  • If you are in your 50’s and you do not have at least $500,000 saved and a mortgage paydown in sight, WAKE UP!! Better start making some life changes. You can either grow your income to increase savings or reduce your spending.  Do you have a plan to get there? Does someone hold you accountable?
  • If you are 40 or under and you currently spend more than this retirement hypothetical in excess of your mortgage payment, this means you like to indulge in life’s luxuries and experiences. If you do not have a formal plan to follow, to generate and replace your existing income without working, you should consider one today.  Studies show people with a plan are 3X as likely to achieve their life dreams.

My personal take — I do not want to be on a tight budget when I am older.  The reality is two choices:

  1. Never quit working. (the risky, procrastinating, denial path)
    • Pray you do not get hurt enough to stop you from earning high wages
    • Hope your professional ability can always earn you a high level of income as technology and the world changes
    • Find ways to work on your time and on your terms while still earning a high level of income
  2. Grow your income to $400,000 so that you can save $100,000+ per year, invest it in tax-efficient compound growth investments and rinse and repeat until you accumulate over $5 million

 

 

 

*Athanassios Panagiotakopoulos is an Investment Advisor Representative with Dynamic Wealth Advisors dba Life Managed. All investment advisory services are offered through Dynamic Wealth Advisors.

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