Good amount for a 401K?

[Tarheel Tink]

I know that there are a lot of variables to this but what would some of you consider a good amount in a retirement account if you were in your early fifties and planned to work another ten years, have a working spouse of the same age and own your home, no children? What goal amount would you aim for aside from as much as possible to maintain comfort with a modest lifestyle?

 

[bdcp]

No one can answer that for you without a lot of specifics. You need to talk to a certified financial planner. We're in our early 50's also and we've been using our planner for almost 10 years. We're on our way to a great retirement, but really, everyone's needs are different. It's dependent on where you live, what you currently live on and a lot of other variables. A Disney message board isn't the place to get that info.

 

[Pigeon]

I agree with the pp. It depends on so many things. You should get professional advice.

Having said that, there are sites that can give you some basic info to think about. Google retirement planning calculator.

 

[DVCconvert]

A Disney message board isn't the place to get that info.

Oh now that's just crazy talk!

 

[Pigeon]

I agree with the pp. It depends on so many things. You should get professional advice.

Having said that, there are sites that can give you some basic info to think about. Google retirement planning calculator.

 

[andrews_dad]

I'd think between 1-1.5 million would be a nice ballpark.

 

[chicagodisneyfan]

At 50 I would expect 750,000-1,000,000 in 401k to be a good number.

 

[walkdmc]

One meeeelion dollars....

 

[Tarheel Tink]

Thank you everyone for your responses. Apparently I lost the bet and my aunt is confirming the fact that she does know everything.
She lives for part of the year in Arizona in a retirement age community and was telling me the now necessary amount to retire with in our area here back home. I was doubtful but sounds like she is correct.

 

[lisaross]

well i think it also depends if u are getting a pension as well...what other savings u have..

 

[crisi]

I'd think between 1-1.5 million would be a nice ballpark.

I'd agree. I wouldn't want to reach 50 with much less than $750k.

 

[Marionnette]

I know that there are a lot of variables to this but what would some of you consider a good amount in a retirement account if you were in your early fifties and planned to work another ten years, have a working spouse of the same age and own your home, no children? What goal amount would you aim for aside from as much as possible to maintain comfort with a modest lifestyle?

At least $750K sounds to be about right if you're planning to retire at 65. You will need much more if you're in your early fifties and want to retire 10 years from now. You will not be able to collect social security during those initial years of retirement. You will also be draining your retirement account while others who wait until 65 (or later) would not only still be adding to it, but will be enjoying the benefits of compound interest on their investment. I wouldn't plan to retire before 65 if I had less than $1M in my retirement at <55 years of age.

BTW - No guarantees out there that the age of eligibility for SS won't be raised to 67yo or even older for those of us under 55 right now. Which could put retirement plans into jeopardy for the baby boomlet generation. Not much time to readjust if they do raise the retirement age.

 

[amcnj]

Your best bet is to try and project what your expenses might be in retirement. Then from that amount (monthly or yearly) subtract out any other sources of income like social security, other savings and pensions. The balance you need has to then be provided by your 401 K. A broad rule of thumb is that you want to withdraw around 4% a year from your 401K (lately this has been modified to allow more in "good years" and less in "bad), but as a rough guideline, taking the amount you still need the 401 K to provide by .04will give you the balance in the fund you will need to accomplish this.

 

[QVCshopper]

I don't think I saw IRAs mentioned. They are a great investment vehicle, especially Roths with their tax benefits. We're planning on closer to 2-3 million in retirement because we're in our 30s and don't think there will be much SS left for our generation, and neither of us have pensions (but I doubt there will be any of those left either). My plan is to save TONS now, let it grow, and move it to more secure investments in my 50s.

 

[moongirl]

Your best bet is to try and project what your expenses might be in retirement. Then from that amount (monthly or yearly) subtract out any other sources of income like social security, other savings and pensions. The balance you need has to then be provided by your 401 K. A broad rule of thumb is that you want to withdraw around 4% a year from your 401K (lately this has been modified to allow more in "good years" and less in "bad), but as a rough guideline, taking the amount you still need the 401 K to provide by .04will give you the balance in the fund you will need to accomplish this.

This. To calculate the amount you need, you need to multiply your projected annual living expenses by 25. This number will keep you in a perpetual state as it assumes that you will withdraw 4% per year and will be making a net gain of 4% per year (amount earned on money minus inflation rate).

 

[crisi]

This. To calculate the amount you need, you need to multiply your projected annual living expenses by 25. This number will keep you in a perpetual state as it assumes that you will withdraw 4% per year and will be making a net gain of 4% per year (amount earned on money minus inflation rate).

You can do it backwards as well. Take what you have and divide it by 25. That will give you an idea of what your income would be. Remember that's what you have today in today's dollars, so if you are projecting out, you want to let your money grow, and also account for inflation.

Its nice to set a goal for what you will need and work to it, its your best chance for having enough....the reality for most people though is that in the end, we'll figure out a way to make it work with what we have.

 

[ccgirl]

I would say enough money to maintain your current lifestyle for another 20 years. As you can imagine, that number can be very subjective.

 

[2TxAgs]

I heard a number the other day that I hadn't heard before. Basically, when you retire, you should have $100,000 for every $5000 of income you want. So, if you want to withdraw and live on $50k/yr (5000 x 10) then you need $1M (100,000 x 10) saved at retirement.

Take it for what it's worth, because there are many variables, but it is a convenient way to think about what you need.

 

[Tarheel Tink]

Thank you everyone for your input. It gives me a ballpark to look at before gathering my information for our planner. I don't want to be totally clueless going in.

 

[brerrabbit]

As many have said this varies a lot by your specific situation however, the two most commonly used methods of determining what you need are:

Experts say you should shoot for 80 to 85% of your current income in your retirement. This is a good method if you have a 401K along with a pension and possibly SS. If you currently make $8,000 a month then you would need $6.800 a month in retirement. To determine this look at all your month income sources add them up and see what it comes to. Then look to your 401K to make up the shortfall to the monthly number. This assumes a straight line withdrawl from the 401K but obviously it will continue to earn as you get older.

The second method and more applicable if you don't have any other retirement other than a 401K and SS is to look at the cost of an annuity that would pay you the $6,800 a month for life. You can buy an annuity that will guareentee that income level through financial institutes and brokers. Price one out and see if you have that amount in your 401K. If you want you can buy it, or feel relatively good that your 401K savings level is adequate.

Again these are standard industry measures and will vary for each individual based on home ownership, health care expenses, lifestyle, where you retire and what your expectations are. Also what is your housing situation because you could also look at a reverse mortgage if you own your home and don't plan on leaving it as part of your estate.