Key Takeaways
- A 55-year-old renter on r/personalfinance has $884,000 in a 403(b) and a Roth IRA and plans to retire in 10 years.
- At a 4% withdrawal rate, that pays $2,743.77 a month after this year’s Medicare Part B premium, before tax, rent and Social Security.
- The poster looks to be in good shape for a renter, and the cost to watch is how much of that check the rent takes.
- From 60 through 63, the workplace catch-up rises to $11,250 at this year’s limits, so the poster can save the most in their last working years.
If you rent, most retirement advice probably wasn’t written for you. It tends to count on a paid-off house, and a renter’s biggest bill never gets paid off.
A 55-year-old posting over the weekend in r/personalfinance put it plainly: “Everything I read is geared toward homeowners.” But that post’s numbers look a lot better than its worry.
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No house, no debt and $884,000 saved
The poster, writing in Reddit’s r/personalfinance, is single, with no kids, no debt and no pension, and has rented the same apartment in the Northeast for many years. They earn $114,000 and save 38% of their income each year, and their employer adds 6% of their salary to their 403(b). That 403(b) holds $817,000 and a Roth IRA holds $67,000, for $884,000 in retirement accounts, plus $30,000 in a high-yield savings account. The plan is to retire in 10 years and stay in the Northeast to keep their social network. Their question: “Any smart advice on how to plan for paying rent in retirement?”
$2,743.77 a month after Part B
So let’s say the poster takes out 4% of that $884,000 each year. That’s $35,360 a year, or $2,946.67 a month before tax. Most people with Medicare Part B pay a standard premium of $202.90 a month this year. That comes straight out of the check and leaves $2,743.77 a month, plus a $283 deductible each year before Part B pays anything. And unless the 403(b) is a Roth account, withdrawals from it are taxed as income, so the money left to spend will be lower than that.
Then the rent comes out of what’s left, every month, for as long as the poster rents. That’s why they’re thinking about buying a condo, to make housing costs more predictable. All of this is before Social Security, which would come on top.
The best saving years are still ahead
And $884,000 is only where the poster stands today. This year, at 55, they can put up to $32,500 of their own pay into the 403(b): the $24,500 limit plus an $8,000 catch-up for savers 50 and older. In the calendar years they turn 60, 61, 62 and 63, that catch-up rises to $11,250 at this year’s limits. That lifts the most they can put in to $35,750, or $3,250 more a year. The poster already saves 38% of $114,000, which is $43,320 a year and more than either limit, so maxing out the 403(b) looks well within reach.
Say they max it out every year for the next 10 at this year’s limits and today’s salary, with the employer’s 6% on top and no growth at all. That’s six years at $32,500 and four at $35,750, or $338,000, plus $68,400 from the employer, for $406,400 of new money. At 4%, that adds about $1,355 a month, before any growth on the new money or on the $884,000 already saved.
A renter in better shape than they think
Frankly, this poster looks to be in great shape for a renter, with the biggest catch-up years still ahead. Rent is a cost for life, but they’ve managed it for many years on a budget that still saves 38% of their pay. A condo would make housing costs more predictable, but the money to buy it would come out of the same savings that pay the monthly check.
The Part B premium the poster pays at 65 will be set years from now. CMS is due to publish 2027’s premium later this month (last year it published this year’s on Nov. 14), so we’ll soon see what next year’s bill looks like.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
