How much cash to retire?

[Dockhead]

Originally Posted by JanetGroene

The question should be, what cash? Are you talking U.S. dollars. Swiss francs, Euros, pounds sterling, gold coins? These are uncertain times.

Always match the currency of your savings and investments, to the currency of your expenses. Otherwise, you are speculating with currency, which is a very dangerous game. It's a fundamental rule of investment.



So if you live half in Europe and half in the U.S., 50% dollars and 50% euros.

[DeValency]

Originally Posted by Trimaran Ken

The biggest expense is health care insurance. Many people have health care through their employers. Even if you have your own now, the yearly rates keep going up and up based on you age.


The closer you get to Medicare age the higher your premiums will go. Rates are somewhat lower if you go with a plan that requires you to go to doctors who are in their plan, but this doesn't work if you are traveling on a boat.


You can risk it all and go with no insurance, but one serious illness or accident will bankrupt you.


Ken
===

Good point. I have seen a Medicare supplement plan from AARP/United Healthcare offering a global coverage. Didn’t go to the details as I’m still far from it, but this could be valuable for a retired cruiser.

As for the financial planning, there are well known models where personal data and preferences on the living style can determine how much one may need to retire. A liveaboard boat ownership just adds a significant uncertainty and financial risks for anyone using a significant proportion of the available funds and incoming cashflow for purchase, refit and ongoing costs.

Not tested personally - but that’s just the basic economics for any business and personal planning.

[Boat Guy]

I do enjoy this question as it's more philosophical than simply objective...I appreciate all the perspectives and advice I've seen in the posts....


It's the unanswerable question, right? When is enough, enough?


So let me take take this in two parts.


First, to the OPs question. We've all concluded that it's subjective based on many variables and risk tolerance. I think risk tolerance is often overlooked, but it matters...Some people never think enough is enough...It's just in their brain.


But you need to consider inheritance also, do you want to leave anything to anyone, and /or do you expect to receive anything...It's a huge undisclosed bit of info people are reluctant to share....I mean how did that neighbor buy that boat? Well....


Anyway, as pointed out, there are other good sites and calculators to help people get an idea of what will work for them. But, as mentioned here, I'm highly concerned about our massive debt in the US and the QE and the USD potentially falling as the reserve currency....You can go about your day like the US will always be on top and forget about 12.7.41 and what's going on in the world and think you've "planned", but things have a way of changing....My point is, the best plan is planning for every and any eventuality as best you are capable of.... Long term healthcare? Lawsuits? Family member in need? Serious inflation?

Second, let's take the question a step further and have some fun. Let's ask a different question...What amount of money is basically assuring you don't need to look at any calculator to figure it all out...Not ** money, but when say, 90% of people would say, "that's definitely enough"

Me? I'm never going to "retire"... I hope I continue on a path in control of what I do and my time...That's my litmus test...But I enjoy doing things, and I want to continue...The freedom to decide where and what that is, is my "retirement".... I caution people that when the body and mind go idle, we wither...So keep that in mind.


So to finally answer the OP's question, I'm guessing that $3-5M would put 90% of people at ease...Most would do it for a lot less.

[Floatinghome]

Check out a book by Wes Moss "You can retire sooner than you think". The short version is this; it is about cash flow. If you can't make more, spend less. The book is full of strategies and ways to create different buckets so as to diversify your retirement income. Maybe the best suggestion is to never think of fully stopping work. Just change it to part time or selling the knowledge you gained over your work life as a consultant. Broaden your mind and do things you love and it will come back to you in the form of satisfaction and maybe a little cash too!

[BlackHeron]

Originally Posted by DeValency

liveaboard boat ownership just adds a significant uncertainty and financial risks for anyone using a significant proportion of the available funds and incoming cashflow for purchase, refit and ongoing costs.

If someone spent that much on the boat and refitting then they are already broke, although they probably don't know enough to realize that fact.

[barnakiel]

Originally Posted by Floatinghome

The short version is this; it is about cash flow.

Doh. It always is. But a cash flow can come from eating out from the pile.


When the pile is high enough, you need no coupons nor dividends. You are just drawing from the pile. What you are drawing is a cash flow.



b.

[DeValency]

Originally Posted by BlackHeron

If someone spent that much on the boat and refitting then they are already broke, although they probably don't know enough to realize that fact.

I was surprised to realize how many young and old cruisers do just that. The younger has the advantage in mitigating risk by going home to parents, get a job or another job, do something else to build some financial independence etc...

For most retirees, this isn’t such a viable option. I’m all for following dreams, big time(!), yet, maintain a logical reality check all the time.

[Sailor 99]

Originally Posted by DeValency

An accurate answer: As much as possible.

That is the answer of someone who does not know when enough is enough and is not helpful to the OP. You can't take it with you.

Here is a real answer although it may not be the answer for you.

I figure I need about 1.5 million bucks invested in blue chip dividend paying stocks that grow their dividends every year. You could do with less or more. It depends on your plans. Of course any pensions add to your income and subtract from your needed personal capital.

You don't need a CPA for this. You need a spread sheet. That is good enough for me but you may want an CPA.

As for where to invest or how to go about it, that is up to you. But if your planning to be sailing around you want this in a secure platform where your being out of touch for 2 months is not important....EVER! That means no investing in weed stocks.

We have almost all our money in the stock market. In banks and utilities. If you need secure banks to invest in a good bet is Canadian Banks. Always raise their dividend and they never drop it.

Here is a spread sheet to help you. It shows 100K of spending every year. Obviously your not going to spend as much every single year and your not likely going to need 100K a year at 80.

The spread sheet is a nothing special and easy to follow. Much more complexity is available.

Change numbers in the green and yellow squares and you see what you end up with at what age.

Remember that this is a simple calculator nothing more. What you do in the real world changes what these numbers really are.

Cheers. Hopefully some find this helpful.

[chriskilmer]

I’m 59, solo. Not getting into politics, or what my portfolio looks like. However, sold EVERYTHING. Have a
one vehicle temporarily to help get and outfit a capable liveaboard. Cobra insurance (ok, Medicare at 60 would be nice). Survey, haulout, temporary slipspace until am comfortable casting off the lines.

Have budgeted 3k/mo. So far, so good. Could be that cruising will actually extend my retirement “portfolio”. On the other hand, who was it that said....it will cost whatever you have, and then some.

[Luv2Sail2020]

Originally Posted by Clipper4730

So question, how much cash do think you want/need to retire and be comfortable. We have several friends in our age bracket 49 me and 39 admiral who have retired completely however they are quite hazy on how much they have in the bank etc. we know their budget but we are curious to know how much is enough.
Cheers

Lots of savvy people on this site. Many, many people ask the same question. Your question should be asked by everyone!
Sadly many do not ask the question "Where will my money come from when my paycheck stops?" early in life. All of a sudden they see retirement looming and panic.

$1 million can generate ~ $40k a year almost forever figuring the 4% withdrawal rate (market does normal). There is always the possibility of sequence of returns risk. Google that. Bad market early in retirement can threaten your nest egg.

So, for an example say you have $1 million in your nest egg. You and your wife worked enough years to earn Social Security. Average SS income is ~ $19K per year. If you both pulled in average then you have almost another $40K per year.
With just SS and nest egg earnings you are looking at an income of ~$80K.

Now you ask yourself can you live on that? If not, better save more. Or make changes so you can live on that.

Then when you want to retire comes into play as well as when to start drawing Social Security. Longer you wait past your full retirement age, more you get (up to age 70). 8% more per year past full retirement age.

Our plan is to wait until 70 to draw SS. Pull from our Nest egg earnings and a small pension until drawing SS.

Every person's plan will be different.

[Sailor 99]

Originally Posted by Wallaby

The discussion above addresses rates of return, both expected and market. No one has mentioned the prolonged decline of real interest rates. It is global in nature. The long term effect has been to energize stock and bond prices. The resulting bubble, enhanced by vast debt and derivatives is close to bursting. It has been for that way for 10 years. Real interest rates are now significantly negative. How much longer will lenders subsidize borrowers is anyone's guess, but I suspect it will not be more than a few years.

To be honest I think it will last as long as globalization does.

When our politicians decided to let all our manufacturing go away and then our IT knowledge too via the internet they unknowingly ,or otherwise , set up a system were wages went completely stagnant and raises are not even remotely in line with cost of living increases.

There is tons of debt out there and last year in Canada they said most people were within 200 a month of not making their payments.

Raises are for the most part not possible because the companies can simply take their business off shore.

The politicians know this now. They know if they raise interest rates then people will start to default. It will be come a never ending cascade of failures that will ripple though the western economies and destroy them.

I might very well be wrong and there will be others who have different ideas but I really don't see interest rates going up for decades and so I make my financial decisions with that in mind.

[Sailor 99]

Originally Posted by Rucksta

Three Million Dollars

More is better if you plan on being here for a long time.

That number is meaningless without figuring in what your going to spend, what your investment income is and how long your going to live.



I know cruisers that spend 600 a month. I know cruisers who spend 5k a month.

[Giro]

This bizarre question is only overshadowed by some of the responses.

[beerster69]

I'm going to try to live on $60K per year.

[DeValency]

Originally Posted by Dark Horse

That is the answer of someone who does not know when enough is enough and is not helpful to the OP. You can't take it with you.

Here is a real answer although it may not be the answer for you.

I figure I need about 1.5 million bucks invested in blue chip dividend paying stocks that grow their dividends every year. You could do with less or more. It depends on your plans. Of course any pensions add to your income and subtract from your needed personal capital.

You don't need a CPA for this. You need a spread sheet. That is good enough for me but you may want an CPA.

As for where to invest or how to go about it, that is up to you. But if your planning to be sailing around you want this in a secure platform where your being out of touch for 2 months is not important....EVER! That means no investing in weed stocks.

We have almost all our money in the stock market. In banks and utilities. If you need secure banks to invest in a good bet is Canadian Banks. Always raise their dividend and they never drop it.

Here is a spread sheet to help you. It shows 100K of spending every year. Obviously your not going to spend as much every single year and your not likely going to need 100K a year at 80.

The spread sheet is a nothing special and easy to follow. Much more complexity is available.

Change numbers in the green and yellow squares and you see what you end up with at what age.

Remember that this is a simple calculator nothing more. What you do in the real world changes what these numbers really are.

Cheers. Hopefully some find this helpful.

Good to know you know me so well! Or more accurately, can't read between lines, or worse, lack a sense of humor

If you look at the vague question of the OP, you might understand it. - to be blunt; "stupid questions get stupid answers".

BTW - he never even bothered to respond to the many good suggestions, including your own here.

That's ok - trolls are an endless source of amusement to bored cruisers at the era of pandemic.