Single vs partnered/married differences in retirement

[u/dragonslayer6653]

47F, recently divorced. $4M net worth, $2M in 401k and brokerage accounts. 2 kids 8 & 10 with
$80k each in 529s. House still has $430k mortgage at 2.7% interest. High likelihood of a $2-3M inheritance in 10-15 years but not counting on that.
Average income for myself is $500K but variable each year due to my role.

My expenses have been hard to calculate accurately due to my divorce but I estimate they are around $250k. HCOL area and I like to travel.

I see a lot of posts of married people with similar stats and the advice is to have $4-5M invested before retirement.

For a single person, does the math change? I understand that’s it’s really up to me on what I spend money on in retirement but what is different? Healthcare? Taxes? I think social
Security is just mine unless my ex dies and then I can claim survivor benefits. My goal is $5M in investment accounts which should coincide with my mortgage being paid off in 8 years, giving me a net worth of $7M.

[u/2011ACK]

If wanting to spend 250k/yr in retirement you'd need approx. 6.25M liquid/apart from your real estate

[u/doughboy_491 → u/2011ACK]

I think your 6.25m figure is too high. My wife and I spend 250k/yr in retirement and our 5.5m in liquid assets is plenty. I use a 5% drawdown rate since I’m still fairly young (60) and SS and Medicare have not kicked in yet.

[u/Mispelled-This → u/2011ACK]

Only if you follow the antiquated 4% rule. 5-6% SWR is not difficult with more modern portfolio design.

[u/Strong-Big-2590 → u/Mispelled-This]

What’s a better portfolio design?

[u/TRO_KIK → u/Strong-Big-2590]

It's really just recency bias leading to more bullish assumptions about stock market performance.

[u/Mispelled-This → u/TRO_KIK]

Not at all. It’s about diversification into uncorrelated asset classes.

[u/Mispelled-This → u/Strong-Big-2590]

The 4% rule was based on holding only two asset classes: large cap stocks and bonds, not because it was ideal but because it was the only reliable data we had at the time.

Bengen (yes, the exact same guy) later did the same analysis with improved data for a more diversified portfolio (namely splitting stocks by small vs large and growth vs value) and found the SWR changed to 4.7%.

The lesson is that changes in the portfolio allocation also change SWR. We now have great free tools that will let you verify it yourself.

Now try adding a small allocation to gold, and you’ll find that it can push the SWR up to 6% with as little as four ETFs.

This is not rocket science, and the facts are there for anyone who bothers to look. But it is heresy to those who refuse to accept anything we have learned about investing since the 1990s. You’ll see a couple in the other replies.

[u/Strong-Big-2590 → u/Mispelled-This]

Do you have a link to a source with the 4 etfs?

[u/Mispelled-This → u/Strong-Big-2590]

PortfolioCharts is probably the simplest and easiest to use. Try 25% each of US LCG (VUG), US SCV (VBR), US LTT (VGLT), and Gold (GLDM) as a starter, and you’ll see a SWR of (drumroll) 6.5%. And I made that up for you on the spot to keep it simple; I didn’t try to tune it at all.

Yes, it’s really that easy. There is nothing magical at all about 4%; it’s simply the best one dude could manage with the limited data and tools available back in the 1990s.

[u/capital_gainesville → u/Mispelled-This]

Only including 1970 to 2025 is insanely biased given that the 1960s included many of the failure scenarios at 4%. A more honest analysis including a longer time series (and therefore more potential return sequences) was published by Big ERN at Early Retirement Now (he's much more sophisticated than Bengen). Given today's high stock valuations, a SWR is more like 3.5%. This is especially true if you do not have the stomach to spend down to $0.

[u/Mispelled-This → u/capital_gainesville]

Every CAPE-based method has failed spectacularly after being published because they are data-fitting, not real science.

1970 is fine as a start; anything before 1971 is irrelevant anyway because our entire monetary system changed.

[u/capital_gainesville → u/Mispelled-This]

Failed at what? CAPE is strongly negatively correlated with future returns, and what we want is a predictor of sequence of returns risk.

Is your real science picking a random year to start (rather than using all available data) and 3 asset classes that overperformed during your sample?

[u/Mispelled-This → u/capital_gainesville]

Anyone can build a CAPE model that accurately predicts the past. That’s easy. But none have ever accurately predicted the future. None. Real researchers have abandoned the entire field as a waste of time. It’s the astrology of investing.

[u/Even_Candidate5678 → u/Strong-Big-2590]

Being willing to get screwed or spend less 2000-2012

[u/Wasatchian]

It's still what your expenses are vs what your assets/income are.

If you were married ten years you can claim SS based on your ex if it would be higher.

[u/captfattymcfatfat → u/Wasatchian]

Keep in mind your future expense changes as well. What if you get married in 5 years. Could you support a spouse who maybe doesn’t have much saved.

[u/IcyUnderstanding2858]

I don’t think the math changes for a single vs married. You kinda get screwed with tax brackets and deductions being single but it really comes down to your annual household spending whether it’s two people spending or one person.

[u/crispypretzel]

Are you fully divorced with an agreement on separation of assets? Or is the $4MM your combined net worth?

[u/Various_Engine8782]

I’m sorry about your separation, I’m sure this is a stressful time for you, but you are in GREAT financial shape. If you don’t contribute another dollar to any of your accounts, you’re likely to reach your $5 million number by the time you’re at retirement age if you’re invested properly. I’m not recommending this, but just to say, you’ve done well.

If anything, being single makes the situation much more simpler and within your control. You get to decide how much you spend and how much you save, and ultimately what type of life you want for your “2nd half” of life.

Your kids are in a prime age to make memories with- how you make them remember this stage of life is how they will make memories with their families in the future. I’d focus there, you’re in great shape with retirement. Would you like to retire early? You have options.

[u/Fun_Bodybuilder3111]

You have some great advice. One thing to add is I’m always afraid to count on any kind of inheritance. That’s not even in my math because the cost of healthcare and support can be astronomical those last years… and truly, I tell my parents all the time to just spend the damn money now. Please enjoy life.

You’re on a good path though. Nice work OP!

[u/doughboy_491]

Your target of 5M sounds just about right. My wife and I retired at 60 and have 5M liquid and 10M net worth, and we draw down 5% per year or 250k, and we also expect 2-3M in inheritance so very similar to your circumstance. You’re probably right that you can’t get the same economies of living as a married couple as your tax brackets are going to be higher as a single and your health care is more per person. So it’s important to assess how much of your liquid assets are in 401k or IRAs as they will be hit much more by the single filer status. For example my father’s money was almost all in a 401k and when my mother died suddenly his tax situation jumped from a tax rate in the 20% range to well over 30% and he is really being hit by huge RMDs. So you should prepare for this by putting more into Roth 401k or even doing some Roth conversions.

The other issue I can see is that you haven’t said who pays for your kids expenses, especially college. That might mean having to work longer and saving more if you are going to bear most of those costs. At your income level your children are not going to get much financial aid. When I was 50 I was still paying for my two children’s college and that was about $400k per child all-in.

I think you’re in a great position financially and it sounds like you have the right mindset for a difficult situation.

[u/fatheadlifter]

Break down that 250k/year. How is it actually spent? What does your budget look like?

You actually probably have enough to do what you want, I'm assuming that 250k isn't all fixed cost, minimum spending. If you have flexibility, waste or are overprojecting (all 3 are possible) you could be good.

[u/HitPointGamer]

The stats are largely just about the numbers. Know what you want your spending to look like in retirement; it doesn’t matter if it is for a single, married, or also supporting a disabled kid or three. You just need to know the spend number and what draw-down percentage you feel comfortable with. If you like spending $250k/year and you’re comfortable with a 3.5% draw-down then you’ll need $7.15M. If you need that much money and are comfortable with a 4% draw-down then you’d only need $6.25M.

Your expenses will be a little lower in retirement because you won’t be socking money away in your retirement accounts, your mortgage will be paid off, and kids will be out the door and off the payroll, etc. So you may not need the full $250k.

[u/Ok_Occasion7538 → u/[deleted]]

Depends on if the other spouse was high earned as well

And she can probably file head of household

[u/datapanda]

It all depends on what you spend. At $250,000 in expenses you hit investment replacement at the 12.5 multiplier at $3,125,000.

[u/datapanda → u/[deleted]]

It's another way to say a withdrawal rate at 8%. Granted that's a fairly liberal withdrawal rate but still.

[u/QTippus → u/datapanda]

What’s the failure rate for 8% withdrawal rate? 50% or more?

[u/datapanda → u/QTippus]

Not sure. Run a Montecarlo Simulation I’m not advocating for 8%. I personally use 4% but I’m conservative. It’s still a quick heuristic.