Is $1.5 Million Enough to Retire?

As you get older, it’s natural to start thinking about retirement. But how much do you need for your retirement nest egg? Some people reading this may say, “No way, man — $1.5 million isn’t enough!” Others may nod their head in agreement with me. 

Let’s discuss the retirement number of $1.5 million and draw conclusions on whether it’s enough to have a comfortable retirement lifestyle.

If you live in a low-cost living area

When saving for retirement, it’s essential to consider where you’ll live when you stop working. The average person in the United States spends about $30,000 on housing and transportation annually. If you can find an area where those costs are lower, that means more money for your savings account. 

The rule of thumb is that your rent should be no more than 30% of your income if you’re living in a low-cost area. If you’re making $50,000 yearly, your rent shouldn’t be more than $15,000. The cost of living is an important guideline when finding a new place to live. 

If you can’t afford to live within this range, it’s time to consider moving somewhere else—it doesn’t matter how much you love the city or what kind of perks are available there if it isn’t financially possible for you to live there. 

Living in a low-cost area, like the Midwest or South, saves a lot of money. You could easily be able to retire on $1.5 million if you live conservatively. Fewer expenses require careful planning and monitoring if you live in a low-cost area. The cost of living can be just as crucial to your bottom line as your salary. 

If the expenses in that community don’t require you to spend a lot, your savings will go much further than living somewhere like New York City or San Francisco, where the cost of living is expensive. 

You may also be able to save more if your medical costs are lower than average. It’s good news some areas have better public health care than others or offer cheaper alternatives like community clinics or even medical tourism options that can save you thousands per year on healthcare alone. 

For example, if you have a mortgage on your home, it may take more than $1.5 million to pay it off before retiring. But if you have no debts or mortgages and don’t want to worry about debt while retired, then $1.5 million could be enough if you live a conservative retirement lifestyle.

If you have a pension

You might think that the amount of money you need to retire will vary depending on how long you plan to live, but it’s more complicated. There are many factors at play here—the most important being your age and how much money you earn. 

The Social Security Administration (SSA) has a handy retirement calculator that can help you figure out how much of a monthly benefit you’ll receive at different ages based on your earnings over the past 35 years. 

If you’re considering retiring early, knowing how much of your benefits will be impacted by a decision to take them earlier than the full retirement age (FRA) is essential. If you turn 62 in 2021 and earn $1,000 per month, you’ll reach full retirement age at 66 years and ten months. You may also be eligible for Social Security benefits. 

If you opt to receive benefits at age 62, you will reduce your monthly use by 29.2%, to $708, to account for a long time. This decrease is usually permanent. If you wait until age 70 to start collecting Social Security benefits, that’s the best way to maximize your payout. 

However, only high earners can get the full help—those who earn the most will get more benefits than those who earn less. 

Your pension is a promise from your employer that you will receive a monthly payment once you retire. While not as large as you would like, it is still essential to your financial planning. 

Social Security can be your cash flow in your retirement years. Your monthly pension can help you maintain your lifestyle and provide enough income to survive. 

However, pensions are not guaranteed to be around forever, so you cannot depend on them for the rest of your life. Thinking about how your living expenses will impact your future finances is essential.

If your expenses are less than $30,000 per year

We all have our ideas about how much money is enough to retire. Some people think it’s a million dollars; others believe it’s $20,000. But the truth is, it doesn’t matter how much you have—it matters what you do with it. 

1.5 million dollars will be enough for you to live if your expenses are for the basic needs of everyday life such as food, utilities such as electricity and water, clothing, credit cards, car payments and maintenance, groceries, and transportation costs like gas and tolls. 

There are many ways to spend less than $30K every year.

For examples:

You can rent an apartment instead of buying a house in the suburbs.

You can buy a used car instead of a new one.

You can buy groceries at Aldi instead of Whole Foods.

You can eat out less often or not at all.

However, if you want to live a comfortable life and have an expensive taste in living, retirement money will not be enough for you. There are several ways to increase your income when you retire: Rent out your home or vacation property, get a part-time job or freelance work on the side, or invest in multifamily real estate or stocks.

If you are paid for your hobbies

We all know that retirement is a goal many of us are working towards, but it can be hard to get there. If you’re one of the lucky few with enough money in your 401k or IRA to retire early on, that is great! 

But for most of us, we have to make some sacrifices and plan if we want to live out our golden years in style. 

One way to ensure you’ll have enough money in retirement is by providing that your cash flow is consistent throughout your working years. And if you enjoy doing something that pays well, this can help ensure that you’ll have enough money in your bank account when it’s time to retire. 

Of course, this doesn’t mean you have to give up on what makes you happy—just because something pays well doesn’t mean it will fulfill all of your interests and passions. 

If you love writing articles about personal finance or hiking up mountains every weekend, don’t let someone tell you not to do those things because they aren’t profitable. The most important thing is finding a way to stay true to yourself while still having enough money at the end of each month. 

When retirement comes around, you can truly enjoy it without worrying about retirement expenses. Whatever it is, there are ways for you to get paid for what you love doing.

If you travel less or don’t travel at all

If you travel less, your expenses will be less. You can use the money that you have for something else. It could be for basic needs or even a passive investment to grow your bank money. Frugal living is a crucial factor achieve your retirement goals. 

The second thing is to save more money if possible, which means cutting unnecessary expenses such as eating out at restaurants and going on vacations now and then. 

If this is not possible for you, make sure you invest in something that will grow your wealth to help you achieve retirement sooner rather than later.

If enough of these conditions apply, you can retire on 1.5 million dollars. 

But if you want to live a comfortable lifestyle instead of a conservative life, you need to make life-changing financial decisions. A tremendous financial decision does not mean you will be rich overnight or even in a short period. It may take months or even years before you start seeing your investment results. 

If you invest wisely, follow tips on saving money, and make smart financial choices, your efforts will eventually pay off and improve your life.

Invest your money so that it grows over time.

“ Never depend on a single income. Make an investment to create a second source.”   – Warren Buffet

Buffet advises planning for the worst-case scenario and investing in a way that will secure your future even if you lose all your money in the process.

Instead of relying on just one source of income, always have multiple sources available so that no matter what happens, you won’t lose everything at once. 

Never depend on one source of income as it can quickly vanish overnight, leaving you penniless. 

If you want to retire with $1.5 million, you must start investing. The best way to start investing is by first deciding how much money you want to invest and then putting it into different investments like shares and properties. 

If you are unsure how to start, and if you need help, seek professional advice from a financial advisor. 

They can help you with your retirement plan and investment plan. With the right investment strategy, you can make your money work for you and grow over time, and in the long run, it will be enough for your entire retirement years. 

You can start by investing in index funds, which will allow you to purchase stocks in many different companies at once. It will help to diversify your portfolio and reduce risk. It is essential to get investment returns; otherwise, it will be difficult for you to meet your retirement saving goals. 

You should also look at investment strategies like dollar-cost averaging and mutual fund timing, increasing your confidence level in the market. There are many asset classes, such as multifamily real estate investment. 

Related: Multifamily Real Estate Investments: An Easy Guide to New Investors

Multifamily investing is an investment strategy that involves purchasing real estate, such as an apartment building or an office building, and then renting out the units to generate rental income while benefiting from the appreciation of your property’s value over time. It is more stable than single-family homes.

Plus, multifamily real estate has higher returns than bonds and is even less volatile than the stock market. It’s also an excellent way to diversify your portfolio by getting exposure to different investments and assets.

Recommended Video: How to Get Into Multifamily Investments:  Tips for New Investors

To be successful at this type of investing, you need to know what kind of properties will yield a good investment return. You also need to know how much capital you have available to purchase enough units at one time to make a profit on your initial investment. 

I understand you might feel like investing is complicated, but it doesn’t have to be! We’ll show you how to make investments to help you build wealth and get closer to your retirement savings goals. 

At Wellthy Capital, we help you build your wealth with passive income through multifamily investments. We work on the ground to find the best opportunities for you. 

We also build relationships with all people involved in our business and actively manage the property while you can continue focusing on your priorities. 

If you want to  start your investing journey, get a copy and read The Path to Wellth. Also, don’t miss the opportunity to get exclusive access to our powerful episodes with renowned speakers and wealth builders every week by join us on our podcast channels on Apple, Stitcher, Spotify  and Youtube.