My grandpa retired happily at 70 with $750K after working as a missionary. I know where most Americans go wrong.

By Quentin Fottrell

 'You could even retire at 55 with $500,000 and be perfectly fine. Am I right?' 

 "Realistically, no one is going to spend $100,000 a year in retirement." (Photo subject is a model.) 

 Dear Quentin, 

 The money people need to save for retirement keeps going up, and I don't like it. I am also very skeptical. Some people say you need $5 million to retire; some say $1 million; others will give a figure anywhere in between. I am highly skeptical about these numbers and wonder what assumptions they're making about how you'll use your money. 

 My grandpa retired at 70 after working as a missionary for most of his life and later at a national laboratory. He hardly earned anything as a missionary. Between his coffeehouse, wife and three kids, it all got spent. He made a lot of money at the lab, but only worked there for about 10 to 15 years before retiring. And now? He's a part-time programmer, landlord and fixes cars. 

 Since the goal of his life was not money, he retired with $750,000 - and he's doing fine. You know why? Because he bought two mobile homes some time ago, and a 2.5-acre lot in the middle of nowhere and started renting them before he retired. In addition to being a landlord, he also had some of his money invested in income stocks. 

 He finds low-effort ways to make money. He buys an underpriced car, fixes it up, and resells it for a $1,000 profit. He used to run a programming company with my dad. They made a little money, but gained experience. That probably helped him get accepted at the laboratory. Some people even still ask him to reprogram things for them and pay him a few thousand dollars. 

 Thrift shopping 

 He also doesn't spend much. He doesn't own a luxury Tesla; he owns a $5,000 Prius. The only reason he spent more on a car was that my grandma really wanted one that actually worked. The rent from their garage covers their property tax. They don't eat out except on special occasions, like birthdays or holidays, and live a comfortable, low-cost life. 

 They take a 30-minute walk every day to stay healthy. My grandma loves shopping a bit too much, but she shops at thrift stores, so their shopping and entertainment expenses remain low. So my grandpa doesn't receive much Social Security, but he makes it work because he uses his money wisely. 

 The American dream is to make six figures and buy a house. If you have $2.5 million in a money-market account with a 4% return, you get $100,000 a year. Realistically, no one is going to spend $100,000 a year in retirement. The average American spends $78,500 per year. That means, with no interest, $1 million would last about 12 years at that spending rate. 

 Is the problem really how much money we have - or how much we spend? I daresay that if you put your money in the right places and you are careful, you could even retire at 55 with $500,000 and be perfectly fine. Am I right? Of course, it's good to enjoy the fruits of our labor and spend some money on leisure. 

 Am I missing something big, or were my suspicions right all along? 

 Skeptical Reader 

 Don't miss: 'I spend $7,500 a month': I'm 47, earn $260K, and have $3 million. Can I retire at 50? 

 You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com. The Moneyist regrets he cannot reply to questions individually. 

 To take your retirement-at-55-with-$500,000 scenario at face value would be tough. 

 Dear Skeptical, 

 I am on #teamgrandpa. He's done a lot right. 

 He achieved three valuable things: He worked until he was 70. He found ways to make extra income, which includes renting his mobile homes for extra cash, and keeping his hand in freelance work for his former company, a job that was born from his willingness to take risks and experiment, and by using his assets to make money. And he keeps his costs low. 

 It would be tough to retire at 55 with $500,000, even though it's a lot of money, although it again depends on your lifestyle and where you live. You would have to take into account healthcare costs, utilities, transportation, rent/mortgage, property tax, and willingness, unless you start a substantially equal periodic payment plan (SEPP) or employ the Rule of 55. 

 It would be tough to retire at 55 with $500,000, even though it's a lot of money, 

 A reminder for readers out there: The "rule of 55" is an IRS provision that allows you to take penalty-free withdrawals from your current employer's 401(k) or 403(b) if you leave your job in the year you turn 55 - or later - without incurring a 10% early-withdrawal 10% penalty. SEPPs are IRS-approved, scheduled withdrawals from retirement accounts like 401(k)s and IRAs. 

 To take your retirement-at-55-with-$500,000 scenario at face value would be tough. That money, all going well with your health, would need to last 35-40 years and inflation would also erode its value over time. Using the 4% rule, that would provide $20,000 per year (or $1,670 per month), especially as Medicare eligibility does not kick in until 65. 

 Your point about whether you need $1 million in retirement, as many surveys suggest - and also point out that $1 million is not enough - is well made. It all depends on your lifestyle, whether your income exceeds your expenses and how much you are willing to cut back in terms of all those extraneous expenses (from coffees and streaming services to eating out). 

 Related: I'm 80 with $1 million. How do I prevent my son from being hit with inheritance tax? 

 Retiring at 65 with $1 million 

 I have wondered in these pages whether people are squandering their retirement on eating out. All that pizza and spaghetti bolognese add up, as do the extras like drinks, side orders and desserts. Research suggests that people spend anywhere between $1,990 and $2,500 a year on restaurant food - and up to $3,640 on takeout. 

 In fact, Americans spend almost as much on dining out ($1.5 trillion) as they owe in student debt ($1.8 trillion), according to the Department of Agriculture. Total spending on food exceeds $2.63 trillion. Taking those dining-out figures at face value, you would spend $123,750 by 80 if you started counting at 25. Or over $200,000, including takeout. 

 Americans spend almost as much on dining out as they owe in student debt. 

 So, yes, I'm with your grandpa on this one. He pivoted from missionary work into the corporate sector and made enough money in the latter part of his working life to balance the books in retirement (otherwise known as "making ends meet"). That takes creativity, intelligence and gumption, and I'm sure your grandfather has those in spades. 

 There are other roadblocks and/or forks in the road people face in retirement, including a gradual decline in health, which could lead to the need to live in an assisted-living facility. That too costs money (up to $100,000 a year or more, depending on the facility and location). Without long-term-care insurance, retirees often tap the equity in their homes. 

 Saving, which requires curtailing your spending, is just as critical for a comfortable retirement as investing in a 401(k), IRA or taxable brokerage account. I'm a big fan of shopping at thrift stores. (I just bought a pair of Dr. Martens boots in New York to get me through the snowstorm.) The freedom to travel after 65, if you have the ability, is also a reward for retirement. 

 A healthy retirement fund rewards you with that. 

 More columns from Quentin Fottrell: 

 Can I stop my kids from using their inheritance to support political causes I vehemently oppose? 

 My wife's credit-card payment is three months overdue. As an authorized user, am I in trouble? 

 My stepmother cheated me out of $500K from my father's estate. What can I do? 

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 -Quentin Fottrell 

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