One Million Dollars Only

Can You Retire On 1 Million Dollars?

You can actually retire on 1 million dollars depending on the structure of your monthly income as well as your current and future expenditures. In the poor countries of the world,  1 million dollars could be too much to earn in a lifetime but in advanced countries where standard of living and bills are ever-increasing a million dollar may not be enough. For you to calculate how well 1 million dollars can sustain you after retirement then you need to work out some basic expenditure from your total generated income. But this depends on where you stay and what you think you need when you retire. For some of us, one million dollars may not be sufficient.

Financial experts suggested that deducting around 4% of your retirement account annually without compromising on your principal account and when you retire on 1 million dollars, this means with a retirement account of 1 million dollars, you can spend $48,000 annually. However when you live in a city like New York, depending on $48,000 from your retirement account of 1 million dollars may not be well enough and that shows how some factors may affect your chances of retiring on 1 million dollars. If you live in a smaller apartment unit, you may not even spend up to that on yearly basis and live more comfortably on your retirement account.

Budgeting is such an important factor that determines if you can comfortably retire on 1 million dollars or not. Getting expensive gifts and living large will probably increase your annual expenditure and if you don’t re-invest part of your 1 million dollars you might probably spend more than you ought to spend.

Travelling and vacation expenses must also be cut to a reasonable size if you really want to retire on 1 million dollars. Shopping sprees should also be reduced just get the basic things you need and that will help you spend less from your retirement account. This does not mean you cannot live a good life after retirement-you deserve a good life too and its ideal to enjoy what you have labored for but try invest from such a retirement account so that a monthly streams of income will still be flowing while you are retired.

Retiring on 1 million dollars is all about Prudency and being able to save a substantial amount of money at your early stage of working days. Those who start to save early can retire early and start their own home based business or even invest a substantial part of their retirement income in Annuity plan to generate a constant income for life.

Since people differ in their way of living, therefore it will be pretty difficult to have a standard rules for determining whether they will be able to rely on 1 million dollars retirement account. If you will have to retire on 1 million dollars, financial experts suggest that you re-invest around 40% of the 1 million dollars in annuity and then spend around $40,000 a year to balance up your regular annuity income with the rest of your 1 million dollars retirement account.

Look at your expenses and determine whether $40,000 per year will be sufficient for your city and your expectation of standards of living. I would suggest that if you are still young and active, to shoot for more than 1 million dollars. It used to be enough for our parents but in today’s context, I would need about 2 million dollars to retire comfortably…

How much is one million dollars worth nowadays?

Actually how much is one million dollars worth nowadays? And with that, I mean how much is one million Benjamins or US dollars worth anyway? With prices of goods, services, properties and even basic amenities rising faster than our wages, that one million dollars that we so desire may not be worth as much as during our grandfathers’ time, when having a million dollars meant that you are not only set for life, you have basically laid the foundation for the next three generations.

I am not saying that one million dollars is worthless, far from it, many Americans still do not have their first million, and may not see it in their life time. However the amount of goods or security that one million dollars can buy has definitely and visibly dwindled. Take for example, the price of our homes. Home prices have risen about 300% over the last 20 years. That would mean that a million dollars used to be able to buy a home three times as big 20 years ago versus today. Taking that as a prime example would mean that one million dollars today is only worth three hundred thousand 20 years ago.

But the more important question that we should ask, when we ponder the worth of our money is whether we are able to grow our money as fast as the annual inflation so as to maintain the value of our cash. If you do not grow your value by the amount of inflation, you are effectively losing the value of your wealth. And in twenty years, the one million dollars underneath your bed would only be worth one third as much. So dun leave your money to fend for itself, it cannot do so within the confines of your cookie jar or even that of your saving accounts.

Invest your money into the stock market would help you grow your money fast but this also comes with lots of risk. The safer bet in the stock market would be to buy the index or others would call indexing. That would mean that you would need to buy into the stock market index. This would be relatively “safe” as the stock market tend to perform well over the long term.

To hedge against inflation, you could also procure real estate. As mentioned above, property prices had risen over 300% over the last 20 years. Buying a good piece real estate can mean staying in line with price increases and maintaining the value of your wealth. Do not let your cash sit idling; make sure your cash is working just as hard as you.

At the end of the day, many people will be asking whether they can retire with just 1 million dollars. It is definitely possible but the standards of living that one million dollars can buy will fall with each passing year. I would bet that one million dollars would not be sufficient in another 10 years time. So be prepared and do your sums right.