Who Wants to be a Millionaire (in Retirement)?

Take, for example, a hypothetical couple about to retire who have assets of just over $1 million. To help them, assume they have no children who are financially dependent on them. Also assume that they will be entitled to maximum Social Security benefits, which are just over $30,000 a year each (this year) for people who start collecting at age 66. (Delaying the start of benefits for up to four years increases the amount to be received but might, for some, require earlier withdrawals of retirement funds that would be subject to income tax.)

On the minus side, assume that this couple has no other pension plans that will provide retirement income — although many people who entered the workplace 40 years ago have significant defined-benefit pension plans from corporate or government employers. Mr. Luxenberg said there was a one-in-four chance that one member of a couple who had reached 65 would live into his or her 90s. So that person will have to plan for 30 years of income, he said. A rule of thumb, he said, was to draw 4 to 6 percent of retirement assets, adjusted for inflation, each year. For a hypothetical millionaire, that would be $40,000 to $60,000 a year, plus Social Security benefits.

The Times has an article this morning about how $1 million isn’t what it used to be, which, yes, we know! I don’t think we need to be told that having $1 million to retire on isn’t going to allow us to jet set around the world or take trips to space on Richard Branson’s Virgin Galactic spaceship. A financial planner concedes that “folks with $1 million in a well-balanced portfolio can be comfortable,” and that’s all I really want, really, to be comfortable in retirement, and if things go according to plan, I’ll have my million saved (but hopefully more). We can do this, you guys.

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