How much do you need for retirement?

[Gonio5]

How much money does one need for retirement if one retires at 45 and lives to 100 years old? There should be enough money for:
1. out of pocket for an expensive medication not covered by insurance or not yet FDA approved? (Maybe allow $500,000)
2. full time nursing home or home health aides for maybe 12 years. (guessing that might be $1.2 million)
3. 2 children with expensive college and medical school education without scholarships (maybe allow $600,000)
4. one legal battle with attorney fees of $200,000.
5. die with at least $2 million left over
subtotal for above = $4.5 million
6. middle class lifestyle.
7. Property tax on house of approximately $25,000 per year
subtotal for above might be $100,000 per year or $5.5 million

I think these criteria would mean that one needs a lot of money. If there is no inflation and no appreciation of investments then one needs $10 million. If there is a period of uncontrolled inflation, one would probably need more money that $10 million.

Ugh.

Things can be really variable. If one doesn't need that medication, nursing home, or a $200k legal bill, that would mean $1.9 million extra for retirement.

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[ThoracicGuy]

I don't think retiring at 45 is likely to be very feasible and it's going to be a bit difficult to get $10 million by that time in just being a surgeon.

 

[anonperson]

How much money does one need for retirement if one retires at 45 and lives to 100 years old? There should be enough money for:
1. out of pocket for an expensive medication not covered by insurance or not yet FDA approved? (Maybe allow $500,000)
2. full time nursing home or home health aides for maybe 12 years. (guessing that might be $1.2 million)
3. 2 children with expensive college and medical school education without scholarships (maybe allow $600,000)
4. one legal battle with attorney fees of $200,000.
5. die with at least $2 million left over
subtotal for above = $4.5 million
6. middle class lifestyle.
7. Property tax on house of approximately $25,000 per year
subtotal for above might be $100,000 per year or $5.5 million

I think these criteria would mean that one needs a lot of money. If there is no inflation and no appreciation of investments then one needs $10 million. If there is a period of uncontrolled inflation, one would probably need more money that $10 million.

Ugh.

Things can be really variable. If one doesn't need that medication, nursing home, or a $200k legal bill, that would mean $1.9 million extra for retirement.

Typically the estimate is 25x your yearly expenses if you retire at 65.

Higher if you retire earlier.

But you are correct, if you want to retire at the age of 45 and fund the above lifestyle, that is expensive. Hence why the majority of humans don't retire at 45.

 

[Gonio5]

Typically the estimate is 25x your yearly expenses if you retire at 65.

Higher if you retire earlier.

But you are correct, if you want to retire at the age of 45 and fund the above lifestyle, that is expensive. Hence why the majority of humans don't retire at 45.

25x, that's a figure to consider while trying to find out my answer. 25x might be $2.5 million. That would last to age 90 and longer if there is appreciation over inflation. Adding one's social security check also relieves some pressure off the $2.5 million.

I don't intend to retire at 45 but was thinking what if I had an accident resulting in inability to work but not needing a nursing home or home health aide. In reality, most people cannot accumulate $10 million by age 45. If one reached $10 million, if one were a good investor, that could allow withdrawing 1% per year or $100,000 and having the $10 million keep up with inflation. If that were to happen, the money would last well beyond one's lifetime.

 

[anonperson]

25x, that's a figure to consider while trying to find out my answer. 25x might be $2.5 million. That would last to age 90 and longer if there is appreciation over inflation. Adding one's social security check also relieves some pressure off the $2.5 million.

I don't intend to retire at 45 but was thinking what if I had an accident resulting in inability to work but not needing a nursing home or home health aide. In reality, most people cannot accumulate $10 million by age 45. If one reached $10 million, if one were a good investor, that could allow withdrawing 1% per year or $100,000 and having the $10 million keep up with inflation. If that were to happen, the money would last well beyond one's lifetime.

If you have an accident and can't work, that's where disability insurance comes into play.

Get a good policy and then you should be fine

 

[Gonio5]

I wonder how much a wife and 2 kids need to live comfortably if the husband physician dies suddenly? The $10 million figure above is sufficient but how low can one go? $3 million if the wife is 40 and expects to live to 100?

 

[Pir8DeacDoc]

You should be able to live off of 4% of your investments. Plan accordingly.

 

[Gonio5]

You should be able to live off of 4% of your investments. Plan accordingly.

That I disagree. 4% only works if there is moderate to low inflation and you retire at 65-70 but die in your mid to late 80's. If you live to be 100, you may run out of money.

 

[anonperson]

I wonder how much a wife and 2 kids need to live comfortably if the husband physician dies suddenly? The $10 million figure above is sufficient but how low can one go? $3 million if the wife is 40 and expects to live to 100?

What are the expenses?

If housing is taken care of, that is a huge burden taken off the table.

I have $4 million dollars in term life insurance.
Current investments total ~900k including retirement and taxable accounts.

Our only debt is the mortgage with about $600k left. Cars are paid off.

If I died tomorrow, spouse would have over $4 million in cash after paying off the house.

With housing taken off the table, yearly expenses should be relatively low.

She may eventually need to get a job but wouldn't have to rush into the workforce or anything.

You don't need $10 million. You may want it but plenty of people live comfortable lives on much less.

 

[Gonio5]

Thanks for the calculations and ideas. There could be some uncertain expenditures such as 2 children's college and medical school ($450,000 each), 5 years of 24 hour home health care ($1.1 million), and maybe $100,000 of unforeseen expensives for a total of $2.1 million plus regular living expenses. That might leave about $2 million to last 50-60 years, which is $33,000 per year not including appreciation of investments or inflation. If the wife can work 10 years after the children are a little older, that could generate $600,000, which can come in handy. Maybe later if one of children is successful, they can house the parent and sell the house, yielding anywhere from $300,000 to $1 million, if the house is regular sized.

My main concern is that I have experienced some rare events so I would like to know what figure would be enough to cover rare events. (For example, without trying, I met a presidential candidate. Another time, I was on an airplane flight flown by a captain that I know. Still another time, I bought 2 lottery tickets and both of them were winners, albeit small prizes of less than $500. My lifetime lottery spending has been 3 tickets, not a weekly buyer)

 

[voxveritatisetlucis]

why not just take every other year off or maybe every third

 

[dienekes88]

Don't forget own occupation disability insurance.

 

[cpants]

How much money does one need for retirement if one retires at 45 and lives to 100 years old? There should be enough money for:
1. out of pocket for an expensive medication not covered by insurance or not yet FDA approved? (Maybe allow $500,000)
2. full time nursing home or home health aides for maybe 12 years. (guessing that might be $1.2 million)
3. 2 children with expensive college and medical school education without scholarships (maybe allow $600,000)
4. one legal battle with attorney fees of $200,000.
5. die with at least $2 million left over
subtotal for above = $4.5 million
6. middle class lifestyle.
7. Property tax on house of approximately $25,000 per year
subtotal for above might be $100,000 per year or $5.5 million

I think these criteria would mean that one needs a lot of money. If there is no inflation and no appreciation of investments then one needs $10 million. If there is a period of uncontrolled inflation, one would probably need more money that $10 million.

Ugh.

Things can be really variable. If one doesn't need that medication, nursing home, or a $200k legal bill, that would mean $1.9 million extra for retirement.

Why would you want to retire at age 45? What are you going to do all day? Hobbies, travel, etc are expensive and not factored in to your calculations.

What does "middle class lifestyle" mean? The number you are looking for is your yearly expenses and then you can work backward from there. I suspect even 10 million is a bit light to support what the average doctor considers a 'middle class' lifestyle for 40+ years.

If you are that burned out at this young an age, maybe consider making a professional change. Live on less and do something you enjoy more. Cut down to part time? Change your practice? Go back for subspecialty training? Work for industry and step back from clinical stuff? If you truly would be content living on a middle class income, there should be many diverse opportunities for someone with your training.

 

[Gonio5]

Why would you want to retire at age 45? What are you going to do all day? Hobbies, travel, etc are expensive and not factored in to your calculations.

What does "middle class lifestyle" mean? The number you are looking for is your yearly expenses and then you can work backward from there. I suspect even 10 million is a bit light to support what the average doctor considers a 'middle class' lifestyle for 40+ years.

Actually, I was planning whether it's feasible for a non-profit practice where patients had all the time for an office visit that they desired, uninsured and Medicaid accepted, private pay's copay would be donated to the charity of the patient's choice. Such practice would make zero profit and actually would be a loss if a doctor collected salary.

 

[cpants]

Actually, I was planning whether it's feasible for a non-profit practice where patients had all the time for an office visit that they desired, uninsured and Medicaid accepted, private pay's copay would be donated to the charity of the patient's choice. Such practice would make zero profit and actually would be a loss if a doctor collected salary.

Should be plenty of options to work for a nonprofit or community health center and still make a few bucks. Working for the VA could be a great option too that isn't so productivity-driven and you could do a lot of good for the vets while still making a salary.

 

[DoctwoB]

Actually, I was planning whether it's feasible for a non-profit practice where patients had all the time for an office visit that they desired, uninsured and Medicaid accepted, private pay's copay would be donated to the charity of the patient's choice. Such practice would make zero profit and actually would be a loss if a doctor collected salary.

I commend you on your charity.

One problem with that model is that practices have pretty high expenses. Taking some made up numbers, a typical practice may have expenses of 400k and revenue of 800k for a take home of 400k.

It would be tough to calibrate your revenue to make it match expenses. You might find you make money (though you could always choose to put it back into the practice). More likely you'll find that even without a salary, the practice will still lose money due to expenses and you may need to seek philanthropic support.

 

[Gonio5]

The real question is "how much do you need for retirement". One article suggested that for many people, it's $1.5 million but they cautioned that the figure wouldn't be safe for everyone. Another article was on a completely different subject, home health care. That article mentioned a family that spent $300,000 per year on 24 hour home health care. If one uses the $300,000 figure x 15 years, that could mean a need for $4.5 million on top of retirement savings. That could mean needing $8 million ($4.5M + $2.5M + 1M house). If one's spouse needed the same care, that might mean needing $13-15 million.

So, I think it is really a question of statistics and probability. With $15 million, I believe that you have enough retirement for virtually all possibilities. With $4.5 million, you have enough for most scenarios in life, just not where both husband and wife (or, in this modern age, same sex marriage) need 24 hour home health care. With $1.5M + house, you have enough money for most scenarios but not all the common ones.