A recent poll by Northwestern Mutual revealed that most Americans believe they will need $1.46 million to retire comfortably. However, for those considering early retirement in pricey areas like Coastal California, the financial requirements can be significantly higher. A recent discussion on the Bogleheads forum highlighted this issue, with one member questioning if $5 million would be enough for a modest life in such an expensive location.
Participants in the forum provided diverse responses, with some suggesting that $5 million would be adequate for a comfortable life in high-cost areas, while others pointed out that expenses like housing costs in places like Manhattan Beach could quickly deplete that budget. Additional income sources or a spouse’s earnings were suggested as ways to ease financial pressure.
Financial expert Suze Orman advised against retiring early unless you have saved $5 million or more, as expenses tend to increase as you and your family members age. The discussion also delved into the definition of ‘frugality’ and how it can vary depending on location. In high-cost areas like Coastal California, being frugal might mean cutting back on dining out, housing, and entertainment expenses.
Overall, determining the ideal retirement nest egg requires a personalized approach that considers factors like the cost of living in your desired location, potential healthcare expenses, and lifestyle choices. Researching and planning for these factors can help retirees make informed decisions to ensure a comfortable and financially secure retirement.
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