According to the financial adviser, the happiest retirees have at least $ 500,000. This is what the reader had to say about it.


A recent Next Avenue article and episode of the “Friends Talk Money” podcast is one of the principles of my new book, “What the Happiest Retirees Know: 10 Habits for a Healthy, Safe, and Enjoyable Life.” I shared it. In particular, They emphasized my finding that the happiest retirees generally have at least $ 500,000 in liquid assets. — Money for things that can be sold quickly and easily, such as accounts, stocks, bonds, and investment trusts.

Some Next Avenue readers are particularly concerned about this, Next Store Venue Facebook Page.. So I would like to explain what I meant.

This $ 500,000 inflection is a fusion of my extensive research on retirees and nearly retirees. It’s also related to my 1,000-Bucks-a-Month rule. The rule states that for every $ 1,000 of monthly income you retire, you need to save $ 240,000.

The calculation behind that formula: $ 240,000 x 5% (annual withdrawal rate from retirement savings) = $ 12,000. Then divide it by 12 months to get $ 1,000 for that month. If you doubled it for the breathing room and gave people $ 2,000 a month, the total was about $ 500,000.

read: 75% of Americans believe the government should help them save for retirement

What the readers of Next Avenue said

Judging by some of Facebook’s comments, quite a few people felt that $ 500,000 was too high a goal.

Juliet posted (ironically I guess): “Great advice: if you want to be happy, get 500,000 people.”

Mary didn’t have it either. Who isn’t happy with $ 500,000? “

Delores was rebelliously confident, “I’m going to find happiness in my retired life without having $ 500,000 in my hands … wow.”

Instead of objecting, I would like to use this as an opportunity to tell Juliet, Mary, and Delores what they are saying. I know it’s not easy to save $ 500,000.With about half of all US workers Thirty-six percent of retirees have household savings and investments of less than $ 10,000.According to the Employee Welfare Institute. But I believe $ 500,000 is more achievable than some people think.

Run numbers

The first step in achieving this goal is to create a pre-retirement budget.

Be very careful about tracking your spending for three months. I recommend what you call the TSL (Taxes, Savings, Living) Budget. With this method, about 30% of income is allocated to taxes, 20% to savings and investments, and 50% to life (all necessities and fun!).

To get the numbers, it’s important to understand what I call them. Rich ratio: My system to make sure you live within your means.Rich ratio is an easy way to measure your amount Have got In relation to your amount spend..

To get this number, first calculate your total monthly income. If you are still working and looking for the percentage you are likely to have while retiring, use the forecast values. Remember to consider all possible retirement income streams, including salaries from part-time jobs, social security, pension benefits, rental income, other sources of income, and the amount your investment should generate. .. Be sure to adjust this number to your tax so that you have a “net income”.

See also below. Your severance pay system can’t bring financial certainty — here’s a way to think about the big risk factors

Then use the projected one-month retirement budget to calculate your needs. Using these two numbers, the equation looks like this: ÷ Necessary = Rich ratio. Rich ratios greater than 1 are great. Below that means there is room for improvement.

For example, let’s say you generate $ 4,000 a month (after tax), you only need $ 2,000 to meet your obligations, and you get a rich ratio of 2.

Conversely, if Jeff Bezos generates $ 80 million a month (after tax) and needs $ 160 million to pay the invoice, his rich ratio would be 0.5. Wow!Forgetting the joy of running through space, he may not even be able to afford Amazon

Prime membership.

Another convenient way is to fill the gap (FTG) strategy. Here you calculate your income and your monthly spending to find your gap. Then use the 1,000-Bucks-a-Month rule to fill that gap.

How much do you need?

$ 500,000 is a huge amount when you retire, but its importance depends on what you actually need. For example, if you can continue to work part-time after retirement, you don’t have to save too much to get there.

According to my research, the happiest retirees find ways to turn part-time jobs into additional sources of income and the activities they are passionate about.

Think of money as a river, not a reservoir. The more tributaries, the stronger the flow.

In the same article and podcast that bothered me, financial adviser and writer Tony Hixon told Next Store Venue Managing Editor Richard Eisenberg that retirement isn’t just about checking quantitative boxes. .. It also said, “To ensure that they (retired people) not only have enough money to sleep at night, but also have enough purpose to get up in the morning.”

Related: The 4% rule is being discussed — again — but this is what you need to do

I accept. In my research and books, note that the happiest retirees have a lot of liquid wealth over $ 500,000: the pursuit of core (a hobby of steroids), a healthy marriage. (If you are married), faith, commitment to charity, social ties, good physical health, wise housing decisions, gentle investor behavior, wise consumption habits. All of this creates the purpose for which Hixon speaks.

Spoiler attention, no one checks all the boxes when retiring. I agree with Tony Hixson that the ultimate goal is happiness. I’m just saying that the less money you have, the more you may have to work to get there.

look: The couple retired two years ago for about $ 27,000 a year.What’s going on with this

The majority of the happiest retirees I have studied do not have millions of post-retirement savings. However, they were still able to stop working full-time and live a happy and fulfilling life. I hope you can do it too.

If you haven’t started saving yet, don’t let it down. We don’t have the time we have now, so start small and start. That’s how you build a healthy retirement account with time, patience, and intent.

Disclosure: This information in this article is strictly an opinion and is provided for informational purposes. It should not be considered investment advice or recommendations. Always consult your legal, tax, or investment adviser before making any investment / tax / real estate / financial planning considerations or decisions.

Wesmos is a certified financial planner and author of “What the Happiest Retirees Know”. 10 habits for a healthy, safe and enjoyable life. He is the Managing Partner and Chief Investment Strategist of Capital Investment Advisors in Atlanta.

This article is reprinted with permission from, © 2021 Twin Cities Public Television, Inc. all rights reserved.

Other works at Next Avenue:

According to the financial adviser, the happiest retirees have at least $ 500,000. This is what the reader had to say about it.

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