According to a recent poll by Northwestern Mutual, most Americans believe they will need around $1.46 million to retire comfortably. However, early retirement in expensive areas like Coastal California may require much more. A recent discussion on the Bogleheads forum saw a 44-year-old asking if retiring early with $5 million would be enough for a modest life in a high-cost location. Forum members debated the financial implications, with some pointing out that even a large sum like $5 million may not be sufficient for areas with expensive housing and other costs. Suggestions included considering additional income sources or a spouse’s earnings to alleviate financial pressure. The conversation also delved into the definition of ‘frugality’ in different locations and individual perspectives on money.
Financial expert Suze Orman advises against early retirement unless you have millions saved due to the unforeseen expenses that can arise as you age. Researching the cost of living in your desired retirement location and factoring in various expenses like housing, groceries, utilities, travel, and health care is crucial. Ultimately, determining the ideal retirement nest egg requires a personalized approach that considers your lifestyle preferences and financial goals. While locations like Coastal California may be pricier, adopting a “frugal” lifestyle can help balance expenses in high-cost areas and make early retirement a possibility.
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