Will a million dollars be enough to retire on in 2038?
- Thread starter 4pack
- Start date
Depends on a number of factors but I would say it is possible but would be tight. That Million dollars in 2038 would be about $775K in today's dollars. I am assuming 1.5% inflation. It would be necessary to have paid off your Mortgage and do not have high fixed costs such as condo fees. It also depends on how savy an investor you or your investment advisor is. You can easily get 2% in dividends in a diversified portfolio, so that is $20K a year from that alone. You should get another 20K from CPP and OAS. If any of the dividends come from a TFSA that is even better as you get every dollar since no tax is payable. If you draw down another 20K from $1MM then you should have plenty. It will likely be tight to live on $60K in a city like Toronto but it is possible. It is possible to draw even more a year from your million but it also depends how long you live which is unpredictable.
I am a believer that there are only two camps when it comes to Retirement savings, you either have too much or not enough saved.
I am a believer that there are only two camps when it comes to Retirement savings, you either have too much or not enough saved.
I say it'll depend on your spending. 1mill should easily get you 60k dividend income. Plus cpp and oas and whatever RSP, TFSA and other saving. Should be enough if you are not trying to keep up with the Jones. I think the 3 or 4 mil rule is based on living from the income and not touching the principle amount.
Keep the condo. It will continue to appreciate, and is a good insurance policy to guarantee you will never be homeless. If you lose your cash in a financial crisis with a depression like stock crash (which is completely possible in the next 50 years due to climate crisis, war, dwindling resources, disease, other unforseeable catastrophes). You don't want to end up relying on renting. Look at San Francisco, where tenants who have rented for decades have nothing now, and are being kicked out and have nowhere to go because the landlords want to rent raise the rent to maximize profits.
Invest all of your money and live on a budget! Dont' spend money on unnecessary things. Live frugally. A penny saved is a penny earned. Take $300 cash out, and that is all you can use for food. Have a monthly savings goal, and transfer the money to your investment account automatically so that you cannot spend it.
Invest 70% of your money in index mutual funds to get the best diversification and lowest costs. The other 20% can be in stocks, primarily pharmaceutical companies and health-related companies, as well as some tech companies such as Google and Amazon. The other 10% can be invested in tangible physical assests such as gold and silver, and bonds. These are safe, and will appreciate to hold their value, and the metals will always have instrinsic worth. Particularly, silver is underavalued relative to gold right now.
Assuming you dont' sell your condo, and have $500,000, you can expect an 8% return on your invsestments. That's $40,000 a year. Try to maintain your investments total value, adjusting for 2% inflation. So,the first year, you want to have $510,000, to maintain the $500,000 value the next year. This means that you can spend $30,000.
You will also have OAS, pension, and it's a good idea to have a side hustle to keep you active and bring in some extra cash. Assuming, you pull in another $15,000 a year, that's $45,000 total to spend. Taxes will be low, as most of the income will be capital gains. Assuming you keep $35,000, that's about $3,000 a month.
$500 condo fee
$500 food
$200 utilties (internet/cable/cell)
$150 insurance for car
$200 gas
$200 health/medication
$250 clothes/household items
$1000 entertainment
That should be a pretty comfortable lifestyle, so yest, it can be done if you are careful and dont' spend reckless, and invest wisely.
Invest all of your money and live on a budget! Dont' spend money on unnecessary things. Live frugally. A penny saved is a penny earned. Take $300 cash out, and that is all you can use for food. Have a monthly savings goal, and transfer the money to your investment account automatically so that you cannot spend it.
Invest 70% of your money in index mutual funds to get the best diversification and lowest costs. The other 20% can be in stocks, primarily pharmaceutical companies and health-related companies, as well as some tech companies such as Google and Amazon. The other 10% can be invested in tangible physical assests such as gold and silver, and bonds. These are safe, and will appreciate to hold their value, and the metals will always have instrinsic worth. Particularly, silver is underavalued relative to gold right now.
Assuming you dont' sell your condo, and have $500,000, you can expect an 8% return on your invsestments. That's $40,000 a year. Try to maintain your investments total value, adjusting for 2% inflation. So,the first year, you want to have $510,000, to maintain the $500,000 value the next year. This means that you can spend $30,000.
You will also have OAS, pension, and it's a good idea to have a side hustle to keep you active and bring in some extra cash. Assuming, you pull in another $15,000 a year, that's $45,000 total to spend. Taxes will be low, as most of the income will be capital gains. Assuming you keep $35,000, that's about $3,000 a month.
$500 condo fee
$500 food
$200 utilties (internet/cable/cell)
$150 insurance for car
$200 gas
$200 health/medication
$250 clothes/household items
$1000 entertainment
That should be a pretty comfortable lifestyle, so yest, it can be done if you are careful and dont' spend reckless, and invest wisely.
I think those are already in the $1M total that you are giving him a (generous?) 6% dividend. And that is assuming no economic downturns in a more than 20 year period. That is not realistic.
Vacations? Dining? Gifting for friends and family for B'days and Xmas? Home repairs? Any contingency funds for emergencies? Property taxes can easily be $3,000 and you can be sure that in 2038 they will be more. AT LEAST one (probably 2) new car by 2038. If buying used, probably 3 or more vehicle purchases.
You are painting too pretty of a picture.
Longest economic downturn in current years is about 2 years. I'm sure he can get through it. Now if he had to support his adult children, then definitely not enough.
However his projection did not take any downturn into consideration. And if OP loses 20-40% in that two years, how many years of 6-8% /yr growth does it take afterwards to get back to even?
So he is at 600k if there is a downturn. At 80k spending a year. He's good for 7.5 yrs from just spending what is left. He'll still be getting his cpp and oas. Unless he has kids or family members or friends or his favourite provider(s) he want to leave some money to, then he can hope the mkt will recover some of his losses before he kicks the bucket. If not, spend it all. Can't take it with you.
No mortgage and you can't live on 60 grand a year? What are you banging a hooker every day?
3 or 4 mil rule? Must be nice to have that chunk of change burning in your pocket.
Unless you have a good private pension or a generous public pension, I doubt that $1 million will be adequate for retirement in 2038. You might consider moving to a smaller cheaper town.
