Excerpt from the article below:
Bill and Julie, nearly 60 years old, have $1 million. They hope their hard-earned cash will last until the day they die. Is a million enough?
THE BASICS—IS $1 Million Enough to Retire On?
(The Answer May Surprise You.)
Cartoon Intro: www.markfiore.com/animation/econo.html
Bill and Julie Smith, now looking down the barrels of 60, never thought they would be millionaires. But their IRA account is within shouting distance of those magic seven digits. Will that do it? Do they have enough to retire?
Like many corporate executives in their 50s, Bill was downsized out of his job at Bell Atlantic, so he started a handyman business. He'd had enough of the corporate wars. He rolled over his company 401(k) money into an IRA, and put it into mutual funds. During the bull market, the portfolio did very well. But we all know a million bucks isn't what it used to be.
Bill and Julie want the $1 million to do only one thing: finance their retirement. If they retire at age 60, with $1 million in the kitty, will that be enough? It's a very close call.
How much do you need to live on?
If you want to get a good idea of how much you’ll need, we have a retirement budget calculator to help you find out. http://moneycentral.msn.com/investor/calcs/n_retireq/main.asp
Bill and Julie ran the numbers and here are the results:
- Current yearly earnings (both working): $110,000
- Current yearly expenses: $105,000
- Estimated yearly retirement needs: $82,500
That amounts to about 75% of the couple's current income, which is a few points lower than the norm because Bill's ex-employer continues to provide health insurance.
But inflation could be a killer.
Economists like to say that "in the long run" the stock market will outperform other investments and beat inflation. But as retirees always say, "In the long run, we'll all be dead.
(End of Excerpt)
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G
I nearly had a heart attack at the grocery store today.
I wonder how those who retired 20-30 years ago manage.
~Elizabeth