Can you afford to Retire?

What is retirement? The ability to stop giving time for money and live off your investments, pensions or what other source of money you have put up for retirement. Today pensions are few and far between. Most people think of retirement and look at their 401K. Are you accounting for taxes? Taxes will probably increase in the future, so how will that affect your distribution of your account? Lets say you have a Million Dollars in your account, if you do the 4% rule (taking 4% of your account per year) that will leave you about $40,000 per year. Serious question, How much are you living expenses now? Let's make some numbers up, 1. Mortgage: $1200 2. Utilities; $200 3. Cable/Internet: $100 4. Car Insurance: $100 5. Cell Phone: $75 6. Food: $400 7. Gas for car: $100, we will stop here. That is $2,275. So $40,000 a year is equal to $3,333 before taxes. If you factor in a low tax rate of 15%, you will take home $2,833. That leaves you $558 but what about any other bill you may have? Credit Cards, Loans, Car Notes, Eating out, Traveling, Grand Kids, Entertainment, etc. Yes you might be able to get social security (maybe). The average retirement account at age 65 is $374,000. So in order to retire, you have to have more money coming in than going out. If not, you will still be working. What is the solution? You must live below your means now, invest for your future and determine what type of life style you want to live when you turn 65. You CANNOT save and have a healthy retirement, You Must Invest. inflation will be a concern as well. I want to have a car note, utilities, taxes and just daily living expenses. I WILL pay off my house before I retire.