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How much do you need to retire?

Accepted estimates are by age 65, you should have saved 10 times the amount of annual income you will need.  An example is if you would like $100,000 a year – you will need $1 million in savings or assets that produce income.  Life expectancy in the U.S. is 78 – but advisers recommend planning to live well into your 90s.

Current estimates are that one third of 401(k) and IRA accounts have a $1 million balance.  And only about half of all American families even have retirement accounts.  The commonly cited 4% rule says if you have $1 million, you can withdraw 4% every year and not run out of money.  With $1 million in retirement savings, that gives you $40,000 a year – before taxes – plus hopefully you will be receiving Social Security – possibly another $30,000 annually.

Is $40,000 a year enough?  It depends on many factors.  Your $1 million retirement account has a different life span depending on the city you retire.  The lifespan for your $1 million account is determined by multiplying the annual costs for a person 65+ by each city’s overall cost of living index.  The annual cost estimate is lowered by the average annual Social Security benefits a retiree would receive.  This estimate is divided it into one million to get the number of years that $1 million would last in retirement for each city.  We included a few cities that people are moving to when they cash in from the sale of their Orange County home.

Long Beach, Orange County, San Diego, California

  • How long $1 million would last: 15.3 years
  • Cost-of-living index: 160.4
  • Annual expenditures, after using annual Social Security: $64,969

Portland, Ore.

  • How long $1 million would last: 20.0 years
  • Cost-of-living index: 130.8
  • Annual expenditures, after using annual Social Security: $49,914

Denver

  • How long $1 million would last: 20.4 years
  • Cost-of-living index: 128.7
  • Annual expenditures, after using annual Social Security: $48,846

Austin, Texas

  • How long $1 million would last: 22.7 years
  • Cost-of-living index: 119.3
  • Annual expenditures, after using annual Social Security: $44,065

Las Vegas

  • How long $1 million would last: 24.8 years
  • Cost-of-living index: 111.6
  • Annual expenditures, after using annual Social Security: $40,149

Phoenix

  • How long $1 million would last: 27.6 years
  • Cost-of-living index: 103.7
  • Annual expenditures, after using annual Social Security: $36,131

Raleigh, N.C.

  • How long $1 million would last: 28.2 years
  • Cost-of-living index: 102.3
  • Annual expenditures, after using annual Social Security: $35,419

Dallas

  • How long $1 million would last: 28.4 years
  • Cost-of-living index: 101.6
  • Annual expenditures, after using annual Social Security: $35,063

Nashville, Tenn.

  • How long $1 million would last: 28.5 years
  • Cost-of-living index: 101.4
  • Annual expenditures, after using annual Social Security: $34,961

Jacksonville, Fla.

  • How long $1 million would last: 32.3 years
  • Cost-of-living index: 93.5
  • Annual expenditures, after using annual Social Security: $30,943

Kansas City, Mo.

  • How long $1 million would last: 36.7 years
  • Cost-of-living index: 86.2
  • Annual expenditures, after using annual Social Security: $27,231

Wichita, Kan.

  • How long $1 million would last: 39.7 years
  • Cost-of-living index: 82.1
  • Annual expenditures, after using annual Social Security: $25,145

Memphis, Tenn.

  • How long $1 million would last: 45.3 years
  • Cost-of-living index: 76
  • Annual expenditures, after using annual Social Security: $22,043

This summer may be the best time to take advantage of the nearly 100% rise in home prices since the last market correction ending in 2012.  If you have lived in your home 2 of the past 5 years, you are likely to receive up to the first $500,000 of profit Tax Free when selling your home!  Give me a call, and I can share more information on the current real estate market, and how much cash you can receive when you decide a move is right for you.  You can reach me direct at 800-944-2441, or email: Cary@Cary4Homes.com.