I was reading RB40's post about $1million not being enough for retirement. I got to thinking, what if that was enough? Where and how would I live if that was what I had? Maybe I sure plan for that. Let's take a look at what retirement would be like in about 25 yrs:
1) kids would be out of the house - I really hope so!!!
2) house would be paid off and downsized
3) investment/rentals would be paid off or sold - hopefully paid off so it just generates some income
4) cars - will probably only need 1 and would be paid off
5) smaller house = smaller utility expenses
6) health and other insurance will rise
7) food cost will be the same per person, but only 2 people in the household.
8) more money spent on hobbies
9 taxes will still be about the same
Over all, the expense is dramatically lower in 25 years than now. So if I am in the habit of living frugally will $1 million be enough? If I get 1% interest like the current saving rate, that's $10k /yr, and $600 after tax. My rentals/investments will have to generate additional 2-3x that for me to live where I am living currently, which is a pretty expensive area. However, if I am living in a lower cost of living area, my rentals will only have generate another $600 net for me to live well. So the aim should probably to pay off all debt first, which include mortgages of personal use and investment. Then comes savings. And I should choose a lifestyle that will fit my then earnings, and not my earns to chase after a life style. But isn't that what we started with anyways with frugal living?
P.S. I am also not counting Social Security because 1) I don't know if I will get to see it 2) if I do, it would just be travel money.