How much do we really need for retirement?

[Chreeto]

My grandparents are 90. They spend virtually no money at all. Groceries, house expenses, property tax. If they do go into assisted living it’s 8k a month so 96k/yr. You aren’t traveling and spending money at 90 like you are in 60s-70s. I’ve been thinking about it and wondering if we should change our savings goals (When to consist FI) bc we’ve seen them spend no money - pretty much since 80ish. I do not want to end up with a large inheritance or leaving tons to charity. I want to give to charity while I’m alive. And enjoy the money while alive and moving.

I really like this point. Most of us are likely to be spending less on ourselves as we age and either saving the rest or giving it away. Ideally I'd like to to do most of my spending early on in my retirement but this clearly would affect my sequence of returns if I was trying to front load my spending. "Save more" is likely the solution to this problem and, interestingly, seems to be the universal solution to lots of the other concerns around having enough money in retirement. Also, inflation is very important in these discussions. The spending power of $100k in 2022 vs 2042 is quite different, but this could be tempered by the notion that we tend to spend less as we age.

[JBME]

I don't know, especially with kids, having the chance to create generational wealth seems pretty appealing to me. I'm sure the wealth gap will only increase as we age, I'd like to ensure my family is on the correct side of that when I'm gone.

obviously it depends on how many kids you have but you can really ruin kids if you give them too much money. You want to give them anything they want but not everything they want. As for generational wealth, there are studies that suggest it's exceedingly unlikely that wealth built by generation 1, no matter what the amount, would be gone by generation 3 or 4. The main reasons are lots of offspring and then some/most of those offspring won't appreciate the work it took to get that wealth and they will squander it, and then some

[outdoordoc]

Dying with $50M would make me really sad. It would mean that I worked a lot longer than I should have.

I don't know, especially with kids, having the chance to create generational wealth seems pretty appealing to me. I'm sure the wealth gap will only increase as we age, I'd like to ensure my family is on the correct side of that when I'm gone.

[Tim]

These Politicians ..….,.. just can’t say more here
not just student loans, we will pay much more

School district with 50,000 kids just passed $1Billon bond issue which will be paid for by homeowners. FYI, this is not a “new” development nor run down. Typical suburban development from the 80’s to 2000.

[Jenn]

(TL, DR all replies) 50-80% of income is inaccurate: you need enough for expenses, and if you spend all your income with 20% or so total savings then 80% is all that's needed when you are done saving. So really what you need is 100% your expenses at age now +10-15 years onward. As noted hard to project that out. But socking away tons and tons- live like a resident and when you're grossing $1M spend under $200K- and not buying the home, cars, vacations, and kids' schooling that takes both of you continuing to earn that much for 30 years to pay for, will set you up to decide if you want to FIRE and be able to cut back if work at that tempo isn't tolerable any more.

[uksho]

Or just be like the sucker that I am. I paid off my own student loans, I paid for my kids college educations, and now I’m going to pay higher taxes to pay for other’s student loans.

These Politicians ..….,.. just can’t say more here
not just student loans, we will pay much more

[AR]

Or just be like the sucker that I am. I paid off my own student loans, I paid for my kids college educations, and now I’m going to pay higher taxes to pay for other’s student loans.

Well, that's pretty much everyone here.

[HikingDO]

News flash! College costs don't need to be repaid. Let them take out loans. Save your money for the taxes!

Or just be like the sucker that I am. I paid off my own student loans, I paid for my kids college educations, and now I’m going to pay higher taxes to pay for other’s student loans.

[Tim]

True, but for a lot of us, we will have a retirement account that continues to outgrow our needs (ie, May have millions left over when we die).

The grandparents didn’t quit spending money in their 60s. They really enjoyed life until their late 70s. And, to be honest, I did pay attention to them because I always told my wife that I’m glad my grandparents enjoyed their lives (vacations, pampering grandchildren, helping to pay for grandchildren expenses, etc….) while they were “young enough” to do so. The only reason they stopped is because their advanced age made it too uncomfortable to drive long distances, or take long flights (even first class). At that stage, their expenses dramatically decreased as all their activities were very much local (cards with friends, church, at home eating vs going out a lot).

At one time, I was a little concerned about their spending because it seemed my grandmother was a “free spender”. As they aged, and we grew more concerned about the possibility of need assisted living, we decided to visit an elder care lawyer for advice. They were going to be fine if they needed that level of care, and I would not have to support them financially

I had a relative have a stroke and needed a lot of home healthcare for 5 years. Much more expensive than anticipated. FIL passed at 96. Fast and sweet, a heart attack sitting on the porch with his morning coffee. MIL is 95.
The point is that a ton of money can need to be repurposed.

[Lordosis]

News flash! College costs don't need to be repaid. Let them take out loans. Save your money for the taxes!

[FIREshrink]

Don't agree to that.
There are tons of state school where your kid can go for a much better degree for much less. Examples: UCLA, U Mich, UNC, UVA, G Tech, U wash etc etc.
But you have to live in of these states.
Don't be over cautious to save $1million for college expenses. In state tuition in one of these top schools still costs below $10,000 a year compared to some crappy private schools in the $50-60k range. I am not sure its even worth it to spend so much in undergraduate education.

This family's location, current expenses, and friends and social circle are probably not consistent with what you describe. They also mentioned grad school, and you're ignoring room and board. Barring an epiphany involving a move to a much LCOLA, or kids that don't cut the mustard for more than community college, they'll end up spending hundreds of thousands of dollars on schooling.

[FireFox]

For a long retirement, 30-33* expenses. $120k per year so $4 million in today's dollars.

But you have enormous upcoming child expenses. Daycare, private school, undergrad and grad school. Probably a part time nanny given your busy lives. I think your expenses will be $200k per year for a while.

Undergrad plus grad school, $1 million in today's dollars for 2 kids.

Don't agree to that.
There are tons of state school where your kid can go for a much better degree for much less. Examples: UCLA, U Mich, UNC, UVA, G Tech, U wash etc etc.
But you have to live in of these states.
Don't be over cautious to save $1million for college expenses. In state tuition in one of these top schools still costs below $10,000 a year compared to some crappy private schools in the $50-60k range. I am not sure its even worth it to spend so much in undergraduate education.

Save a ton for retirement. if needed your kids can take a loan for education but you can't for retirement.

[Tim]

“even on gifts and philanthropy - was too low for you to derive any benefit from it at all. ”

The choice of when and deriving benefits is up to the individual.

[FIREshrink]

Usually $50m savings is the result of two things:
Reveue-expenses= savings
There are plenty of ways people up there spending and can ruin their lives. Just because you make it, doesn’t make it wise to spend it.
Smoothing is a concept.
I agree that expense cutting for a goal if $50m is a poor choice.

Every dollar will get used in three ways
It will get spent
It will pay taxes
It will be given away/bequeathed

This is true whether it happens while you are alive or after you're dead.

Doing it at death in the form of estate taxes and an inheritance or philanthropy means spending during life - even on gifts and philanthropy - was too low for you to derive any benefit from it at all.

Only a little more complicated if you are married, as spouse will face the same problem.

[Tim]

This really does seem like a colossal failure of consumption smoothing.

Usually $50m savings is the result of two things:
Reveue-expenses= savings
There are plenty of ways people up there spending and can ruin their lives. Just because you make it, doesn’t make it wise to spend it.
Smoothing is a concept.
I agree that expense cutting for a goal if $50m is a poor choice.