How Much Do You Need To Retire?

It is amazing how many people share a single vision of the perfect post-career lifestyle: waking up late, playing golf or tennis, enjoying a nice lunch, and spending the afternoon in much the same way.

Guess what? It’s probably not in your future. Why? Well, even if you work long and hard enough to afford it, you will almost certainly be bored by leisure. (I know you don’'t believe me, but I can show you plenty of evidence: testimonials by dozens of businessmen I’'ve known who retired, found themselves bored, and went back to work.)

Maybe you will be the exception. Maybe you can walk away from a lifetime of creative, challenging work and be happy to idle away the rest of your life.

Which brings me to the question of money: the second big reason your retirement will probably be different than you imagine.

Living the Fantasy Lifestyle Is Expensive

Even if you find a relatively cheap place to do it in, playing golf or tennis all day and dining at fine restaurants costs a lot of money. And the mandatory first-class travel? As they say in Little Italy, “Fahgedaboutit.”

That kind of living will cost you approximately a quarter million dollars a year.

What Would It Take to Have That Kind of Money?

Let’s see what kind of retirement nest egg you will need to fund a quarter-million-dollar retirement lifestyle.

Assuming your retirement fund can earn 9% a year (which is about equal to the long-term stock market return), you’'d need $2.8 million.

If you go for a safer yield, let’s say US Treasuries, your retirement fund would have to be about $4.2 million.

And that'’s liquid. I’'m not counting the value of your house, your furniture, your collectibles, etc. Since you can’'t earn income from those “illiquid” investments, you can’'t really count on them for your retirement planning.

To have $2.8 million to $4.2 million liquid, you would probably need to acquire a net worth of about twice that, all other things being equal.

Not too many people are worth between $5 million and $10 million when they retire. Yet many, many fantasize about a retirement lifestyle that requires that kind of net worth.

If Your Current Financial Situation Is Meager, Don’'t Despair

Accumulating wealth is just another goal...like learning to ski or play the piano. It will take you time (1,000 hours to become competent at it and 5,000 hours to master it), but you can definitely do it. And I'’ll be happy to help you along the way.

In the meantime, there are ways to bring the target a little closer. The best way, by far, is to find a retirement paradise that is less expensive than the USA. If you can enjoy living in some other part of the world, you can definitely get that great retirement lifestyle for a lot less money.

The Good News Is This: There Are Places Where Living Well Doesn'’t Cost As Much Money

Top Ten List

Why retiring outside the U.S. is appealing.

#10) The people are friendly, engaging and emotionally reachable, less pretentious.

#9) There are new celebrations and festivals constantly. Every day is an adventure.

#8) There are plenty of volunteer opportunities and your expertise is both needed and valued.

#7) The weather is better than back home.

#6) You can afford a gardener, a maid and a cook. In your "old life" this was out of your financial reach.

#5) You might not need a car. #4) The cost of living is better than at home and quality of life is higher.  #3)  The healthcare is better, easier to access and more affordable.   #2)  You won't have to work through your Golden Years.

#1)  More freedom, more choice, less government regulation, less taxes.

My personal favorite is Panama. My goal is to have a winter residence there. Living abroad is definitely worth looking into and there are many resources to help you in determing what the best situation is for you.$


Get updates on financial and retirement planning delivered to your inbox.