Calculating a Secure Post-Retirement Budget with $1.2M in 401(k) and $2,800 from Social Security requires considering various factors such as required Minimum Distributions (RMDs), personal goals, location, housing, inflation, health, and long-term care costs. A financial advisor can help sort out income estimates and create a comprehensive retirement budget.
Retirement Budget Analysis
Income Estimate
Using the 4% rule of thumb, withdrawals from the 401(k) account would be approximately $48,000 per year, assuming a 7% annual return on investment. Adding the Social Security benefit, total income would be around $81,600 per year.
Expenses and Considerations
-
Required Minimum Distributions (RMDs) start at age 73, which may impact the retirement budget.
-
Personal goals, location, housing, inflation, health, and long-term care costs should be considered when estimating expenses.
-
Taxes and investment fees are not accounted for in this estimate.
Retirement Abroad
One couple in their 60s relocated to Mexico, where they found a lower cost of living. Their income decreased, but the drop in expenses more than compensated for the reduction.
-
Health insurance costs were significantly lower in Mexico.
-
Taxes were also reduced due to the Foreign Earned Income Exclusion.
-
Daily expenses, such as food and gasoline, were lower than in NYC.
Concerns and Uncertainties
Navigating healthcare challenges may arise in the future. It’s essential to consider various factors, including personal goals, location, housing, inflation, health, and long-term care costs. A financial advisor can help sort out income estimates and create a comprehensive retirement budget.
