Retirement is a Lie!

It’s time to be honest about it.

Photo by Aaron Burden on Unsplash

Are you ready for retirement? Are you on track for being ready for retirement? Sounds like a pitch from a shuckster “financial advisor”.

I’ve seen several articles in the last few weeks that point out that a majority of Americans have less than $50K saved for retirement. Most people (even in their 50s) have less than $25K saved.

How much do you have saved? How much do you need?

It depends on your lifestyle. And where you are at when you retire.

Are you *really* depending on Social Security?

If you make a really good amount of money, like $75–100K a year, you will get something like $2500/month in Social Security. And that is taxed. And if you are retiring now, the retirement age is like 67. And that minimum retirement age creeps up every year.

That’s not a lot of money a month.

Do you/will you have your house paid off?

This is the number 1 driver of your retirement. There’s a reason why Reverse Mortgages are popular. Because people never paid their houses off — they kept trading up, or refinanced to fund their lifestyle. Or they overall don’t have enough saved for retirement.

If you do not have your house paid off by retirement you may not be able to retire, or at least retire well. Why?

If you do not have your house paid off you will need at least $40K, probably $50K per year or more to pay your house payment, tax, insurance and live (very) modestly.

Retirement advisors say that you should have enough to live off the average 6% gains per year, so your money doesn’t just go “poof” in a year or two. (You break even with the same left in savings at the end of the year)

Let’s be modest and say 5%. So let’s do the math:

So if you need $40K per year. This is your 5% gain. Using middle school math:

40 is the 5%. cross multiply:

40 times 100, divided by 5 = x.

x = 800, i.e. $800K.

(Double check your work. 800 x 0.05 = 40)

So you need to have $800K saved when you retire, just to have a measly $40K a year during retirement.

Face it, you are screwed.

More on Retirement in my next article.