How Much is Enough for LIA ?

sunnyr · Post by **sunnyr** » Sat Nov 19, 2011 12:11 pm

Guys,

We have very good threads on the topic of "How Much is Enough for R2I ?" but not any on how much is needed to retire for LIA.

What are your thoughts about this.

Sid · Post by **Sid** » Sat Nov 19, 2011 12:40 pm

Which city?

sunnyr · Post by **sunnyr** » Sun Nov 20, 2011 8:22 pm

Let's say NY/NJ for example.

Sid · Post by **Sid** » Mon Nov 21, 2011 1:36 am

sunnyr;424153Let's say NY/NJ for example.

In NYC, 2M+ would be a good start.

Old-Spice2 · Post by **Old-Spice2** » Mon Nov 21, 2011 8:29 am

sid_earth;424185In NYC, 2M+ would be a good start.

Bay Area - fully paid home + $2M.
In other areas - FPH + $1.5M

This is only between age 55-65. After that it becomes lower as you can get SS and Medicare. If someone gets laid off at 55, it will be better to r2i and then r2a at 65. Then you need FPH+$500K as desipardesi said.

vizagbabu · Post by **vizagbabu** » Tue Nov 22, 2011 6:05 am

What do you think would suffice for a 43 year old LIA to retire in say Texas with a fairly conservative portfolio?

sunnyr · Post by **sunnyr** » Tue Nov 22, 2011 10:09 am

Old-Spice2;424215Bay Area - fully paid home + $2M.
In other areas - FPH + $1.5M

This is only between age 55-65. After that it becomes lower as you can get SS and Medicare. If someone gets laid off at 55, it will be better to r2i and then r2a at 65. Then you need FPH+$500K as desipardesi said.

old-spice2,

Can you please break up the cost estimates for example - "In other areas - FPH + $1.5M" I would also agree that if one has to lose job at 55 it will be almost impossible to get a new one with rampant age discrimination. Also on a side note I think you can start getting your early ss from 62.5 years even though the amount is less then what you would get at 65.

suyog · Post by **suyog** » Tue Nov 22, 2011 11:28 am

Can you change title to How much is Enough to retire in America (RIA??). The title is misleading.

My rough estimate is minimum $3M would be needed to generate an income of around 3K per month to live in America without any earned income. It would depend on retirement age, living place, expected life style etc

Old-Spice2 · Post by **Old-Spice2** » Tue Nov 22, 2011 3:24 pm

sunnyr;424427old-spice2,

Can you please break up the cost estimates for example - "In other areas - FPH + $1.5M" I would also agree that if one has to lose job at 55 it will be almost impossible to get a new one with rampant age discrimination. Also on a side note I think you can start getting your early ss from 62.5 years even though the amount is less then what you would get at 65.

If you have $1.5M cash, you can withdraw 4% every year without exhausting the principal. That gives you $60K before taxes and $50K in hand (rough estimate). Assuming single income family, guy lost his job at 55 then for two adults the medical coverage equivalent to employer paid insurance will take away $24K. You are left with $26K.

Prop Tax -- $10K/year (include home insurance and HOA fees)
That leaves approx $1350 per month. Two persons can live with that money easily. I did not include any discretionary expense like eating out, vacation and college fees.

You can save some $$ by downsizing to two bed condo and reducing coverage on private health insurance. It gets easier once you reach 62 due to SS payments and by 65 Medicare will take care of health insurance.

sunnyr · Post by **sunnyr** » Wed Nov 23, 2011 11:24 am

Old-Spice2;424446If you have $1.5M cash, you can withdraw 4% every year without exhausting the principal. That gives you $60K before taxes and $50K in hand (rough estimate). Assuming single income family, guy lost his job at 55 then for two adults the medical coverage equivalent to employer paid insurance will take away $24K. You are left with $26K.

Prop Tax -- $10K/year (include home insurance and HOA fees)
That leaves approx $1350 per month. Two persons can live with that money easily. I did not include any discretionary expense like eating out, vacation and college fees.

You can save some $$ by downsizing to two bed condo and reducing coverage on private health insurance. It gets easier once you reach 62 due to SS payments and by 65 Medicare will take care of health insurance.

Thanks for the detailed info, your plan is realistic and it makes sense. I have one question if you are saying 1.5m cash I am assuming this is in your bank account after paying taxes and not in 401K. So when you say 60K before tax and 50K in hand I am confused. If it is in 401K then we are talking about early penalty at the age of 55.

Just to add you can also have 700K in NRE account which can give 2.5% return per year (with 3 to 5 year fixed fd). That will give you $17500 anually minus the taxes you may have to pay on the interest to uncle sam.

Yes agree it would be more comfortable after the age of 65.