Our income needed will be 70% lower in retirement?
- fundtalker123
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Our income needed will be 70% lower in retirement?
I analyzed our current "expenses", defined as where our income currently goes. I then made guesses of what our expenses might be in retirement. I think they will be about 70% lower. Mainly because our biggest expenses are saving for retirement, kids/childcare expenses, and paying the mortgage, and these will be zero in retirement. I think only a few spending categories will be higher in retirement. Below are my estimates. Am I missing something?
Last edited by fundtalker123 on Sat Jul 21, 2012 9:36 am, edited 1 time in total.
- FrugalInvestor
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Re: Our expenses will be 70% lower in retirement?
I don't think you're missing much if anything. The scenario you present is fairly common for high income people who live well beneath their means. Living costs are never ramped up to match income and the savings rate is high so spending needs in retirement fall precipitously after the transition from accumulation to de-cumulation occurs.
Have a plan, stay the course and simplify. Then ignore the noise!
Re: Our expenses will be 70% lower in retirement?
That is not an expense schedule but a cashflow schedule. Retirement plan contributions, 529 plan contributions, mortgage principal, and ibond purchases are savings not expenses. Subtract out those categories and you will see a much different picture.
- fundtalker123
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Re: Our expenses will be 70% lower in retirement?
Re: cashflow - seems like just semantics, as my point was those are categories our income goes now that it wont have to go in retirement, so I think its safe to conclude we'll need far less income to cover our expenses in retirement than now
Re: Our expenses will be 70% lower in retirement?
Let me get this straight: you make nearly $400K a year, squirreling away over half of it in savings, while spending absolutely nothing on travel? Even though you like to travel (given $25K/year budget in retirement)? I mean this is off your original topic but there is something to be said for enjoying life all along the way... and there's an awful lot of over-workers who didn't live long enough to enjoy that planned retirement travel.
Re: Our expenses will be 70% lower in retirement?
One item you have not fully allowed for in retirement is medical/dental/prescription/medical insurance costs. Since these costs involve law changes, future insurance coverage, costs for items not even discovered yet, medical inflation, and the state of your health, they are very difficult to estimate far in advance. However, for many current retirees, I believe that these costs are large items in their retirement budget.
Jeff
Jeff
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Re: Our expenses will be 70% lower in retirement?
Health and long-term care expenses are a wild card that could cost you a lot.
Plus as someone earlier I said, I don't consider investments to be an expense.
Plus as someone earlier I said, I don't consider investments to be an expense.
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Re: Our expenses will be 70% lower in retirement?
Very nice....but it doesn't appear you are accounting for inflation. Property tax, homeowners dues, utilities, & misc. expenses will all be quite a bit more 20 years from now than they are today.
- fundtalker123
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Re: Our expenses will be 70% lower in retirement?
We don't really like travel right now, with small kids. We just like spending time at home and around town. When the kids are older I think we will probably like to travel more.freebeer wrote:Let me get this straight: you make nearly $400K a year, squirreling away over half of it in savings, while spending absolutely nothing on travel? Even though you like to travel (given $25K/year budget in retirement)? I mean this is off your original topic but there is something to be said for enjoying life all along the way... and there's an awful lot of over-workers who didn't live long enough to enjoy that planned retirement travel.
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Re: Our expenses will be 70% lower in retirement?
Good point. We pay about $500/month now, part for covering the kids. My retirement benefits state 100% of medical insurance will be covered by my employer in retirement, though that wouldn't include copays or deductibles, but the fine print says the % covered "may change or stop altogether" (ha, ha, nothing like a completely non guaranteed retirement "benefit"... the brochure should just say "and we may or may not provide you medical insurance").jsl11 wrote:One item you have not fully allowed for in retirement is medical/dental/prescription/medical insurance costs. Since these costs involve law changes, future insurance coverage, costs for items not even discovered yet, medical inflation, and the state of your health, they are very difficult to estimate far in advance. However, for many current retirees, I believe that these costs are large items in their retirement budget.
Jeff
Any suggestions on how to estimate potential future health care expenses? Perhaps multiply current health care expenses by 10?
Last edited by fundtalker123 on Sat Jul 21, 2012 12:49 am, edited 1 time in total.
- fundtalker123
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Re: Our expenses will be 70% lower in retirement?
My analysis is in "2012 dollars", which I think is the right way to look at it since the question is related to understanding what income level compared to present income level will be needed in retirement. That assumes investment of retirement savings can at least keep pace with inflation so as to generate income to keep pace with inflation. My pension will also be (at least partly) inflation adjustedKuota Rider wrote:Very nice....but it doesn't appear you are accounting for inflation. Property tax, homeowners dues, utilities, & misc. expenses will all be quite a bit more 20 years from now than they are today.
- fundtalker123
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Re: Our expenses will be 70% lower in retirement?
I suppose the right terminology would be to say "Our income needed will be 70% lower in retirement"?ilmartello wrote:Health and long-term care expenses are a wild card that could cost you a lot.
Plus as someone earlier I said, I don't consider investments to be an expense.
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Re: Our expenses will be 70% lower in retirement?
Not everyone wants to spend all their free time traveling. There are plenty of things to enjoy in life apart from travel.freebeer wrote:Let me get this straight: you make nearly $400K a year, squirreling away over half of it in savings, while spending absolutely nothing on travel? Even though you like to travel (given $25K/year budget in retirement)? I mean this is off your original topic but there is something to be said for enjoying life all along the way... and there's an awful lot of over-workers who didn't live long enough to enjoy that planned retirement travel.
Re: Our expenses will be 70% lower in retirement?
I believe this is unkowable. For example, there may be a government insurance program that covers all medical care at little cost and/or you may be very healthy and have little need for medical/dental expense. On the other hand, medical care could get so expensive that the government cannot offer insurance, and you may acquire medical conditions that are very expensive. It is possible for medical expenses to run to 7 or 8 figures. Then there is long term care which I understand is presently on the order of 6k per month per person. In addition, your retiree medical insurance could also disappear. These are serious considerations, and I believe that not only are they unpredictable, but it is impossible to even roughly estimate what will happen in this area. Of course, the further in the future your retirement will occur, the more opportunity there is for changes to happen.fundtalker123 wrote:Any suggestions on how to estimate potential future health care expenses? Perhaps multiply current health care expenses by 10?
Jeff
Re: Our expenses will be 70% lower in retirement?
"Income goes" toward many different goals - that is called cashflow. In your table, you have savings, mortgage payments (that include reduction of debt), and I-Bond purchases all of which account for $239K of $394K listed. Ignore that mortgage payments include interest (expense), and some other items listed, for the sake of a simplified discussion without nitpicking numbers to death.fundtalker123 wrote:I analyzed our current "expenses", defined as where our income currently goes. I then made guesses of what our expenses might be in retirement. I think they will be about 70% lower.
So, your "expenses are not 70% lower in retirement" unless you define expenses as you choose. And, whatever this benchmark is supposed to represent, I find that it is not very useful in looking at "retirement expenses."
Landy |
Be yourself, everyone else is already taken -- Oscar Wilde
Re: Our expenses will be 70% lower in retirement?
Prepare for backlash in this forum for spending north of $50,000/year for child care and preschool. Few of them will suggest, it could be easily done with $600/month
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Re: Our expenses will be 70% lower in retirement?
For medical insurance: if you want to plug in the roughest of rough numbers, rounding from our personal numbers, per person, $100/month for Medicare part B, $50/month for the total of Medicare part D premiums and out-of-pocket prescription drug costs, $150/month for a Medicare supplemental policy ("Medigap"), and you say "our" so times two = $7,200 and maybe round up to $10,000/year.
Out-of-pocket prescription drug costs can be quite noticeable (and hard to estimate), whether it's the Medicare Part D deductibles and doughnut hole or whether it's very non-negligible co-pays for higher drug tiers on an HMO or Medicare Advantage plan.
If you are not yet at Medicare age, again just to get the roughest sort of number, find out what percentage of your medical insurance your employer pays, calculate the total premium for your employer provided medical insurance, and... in our case, in our sixties, private insurance was around 1.5 to 2 times the actual total premium for work-provided insurance.
If you can make a better estimate, use it it. If not, oh, $10-$20,000/year.
Out-of-pocket prescription drug costs can be quite noticeable (and hard to estimate), whether it's the Medicare Part D deductibles and doughnut hole or whether it's very non-negligible co-pays for higher drug tiers on an HMO or Medicare Advantage plan.
If you are not yet at Medicare age, again just to get the roughest sort of number, find out what percentage of your medical insurance your employer pays, calculate the total premium for your employer provided medical insurance, and... in our case, in our sixties, private insurance was around 1.5 to 2 times the actual total premium for work-provided insurance.
If you can make a better estimate, use it it. If not, oh, $10-$20,000/year.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
Re: Our expenses will be 70% lower in retirement?
Is it correct that you are paying only $6,000 per year in income taxes ?
1210
1210
Re: Our expenses will be 70% lower in retirement?
No, he's paying $6000 NOT withheld taxes (over/above withheld).1210sda wrote:Is it correct that you are paying only $6,000 per year in income taxes ?
Nisi, Medicare age people I know don't spend $43,200 in child care and $12,700 Preschool.nisiprius wrote:If you are not yet at Medicare age,....
Landy |
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Re: Our expenses will be 70% lower in retirement?
Kudos you have done a great job saving AND LBYM. I would suggest throwing future "unknowns" and health care as additional 20% and make it 50% lower in retirement.
Good luck.
Good luck.
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Re: Our expenses will be 70% lower in retirement?
+1billern wrote:That is not an expense schedule but a cashflow schedule. Retirement plan contributions, 529 plan contributions, mortgage principal, and ibond purchases are savings not expenses. Subtract out those categories and you will see a much different picture.
Did you forget FICA expense?
Since we both primarily use debit cards, online bill pay and checks, from a spending perspective, the vast majority of our monthly expenses appear in our bank transaction statements. Our bank (a credit union) provides a nice tool "FinanceWorks" for presenting this info on a range of reporting periods.
To the extent retirement and aging change our expenses and spending, current numbers dont' tell the whole story but rather offer some representative baseline.
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Re: Our expenses will be 70% lower in retirement?
A couple of things came to mind as I was looking at your list. You have car payments going to zero but I assume you will still buy a car or cars sometime in retirement. Also I didn't see health care related expenses. Maybe you have these bundled in categories. I retired at 63 (currently 64) and health care is our biggest expense. Even when Medicare kicks in I still expect that to be our biggest expense.
Ed
Ed
Re: Our expenses will be 70% lower in retirement?
"According to a new study by Fidelity Investments, a 65-year-old couple retiring in 2012 is estimated to need about $240,000 to cover medical expenses during their retirement years. " source...
http://www.cbsnews.com/8301-505146_162- ... a-shocker/
http://www.cbsnews.com/8301-505146_162- ... a-shocker/
Re: Our expenses will be 70% lower in retirement?
+2billern wrote:That is not an expense schedule but a cashflow schedule. Retirement plan contributions, 529 plan contributions, mortgage principal, and ibond purchases are savings not expenses. Subtract out those categories and you will see a much different picture.
Here are some expenses that you may have missed or not considered.
(1) College Tuition. (I am not sure if the Student loan payments are for you/spouse or future for the kids.)
(2) Gifts (Charitable and Non-Charitable). Gifts for grandchildren/DIL/SIL can get expensive.
(3) Unanticipated support for your adult children and relatives. I didn't plan for this but it happened to me with sister and son.
(4) Gas and Electric. Even with no kids at home, over the years, inflation may drive up the cost to at least what you pay now.
Also, my property tax seems to go up every year whereas you list the same 12K you have now.
Other than those, I think your list is pretty good.
Re: Our expenses will be 70% lower in retirement?
I work with seniors and some of the expenses that should be estimated for retirement are:
-hearing aids
-higher car insurance and more car related expenses (often more accidents)
-dental bills (these can easily account for $20K or more with implants, etc.)
-weddings
-money needs for kids and others
-divorces
-investment losses
-kids moving in
-purchase of cars
-at home services such as things one cannot do any longer and also the gap for care between Medicare (after a hospital stay) and before long term care ins. kicks in
Nispirius' figures for insurance and health care seem low, but that is probably due to smart shopping and wise decisions. Seniors in their 80s seem to spend over 10K on health care expenses. Although there are some wonderful senior discounts available (such as for property tax), due to the economy, many are being phased out, and may not be applicable to your income category. It is also a good idea to look at future income separately and not as a couple.
Although you seem to be in an income category where the above are incidentals.... it is good to consider.
-hearing aids
-higher car insurance and more car related expenses (often more accidents)
-dental bills (these can easily account for $20K or more with implants, etc.)
-weddings
-money needs for kids and others
-divorces
-investment losses
-kids moving in
-purchase of cars
-at home services such as things one cannot do any longer and also the gap for care between Medicare (after a hospital stay) and before long term care ins. kicks in
Nispirius' figures for insurance and health care seem low, but that is probably due to smart shopping and wise decisions. Seniors in their 80s seem to spend over 10K on health care expenses. Although there are some wonderful senior discounts available (such as for property tax), due to the economy, many are being phased out, and may not be applicable to your income category. It is also a good idea to look at future income separately and not as a couple.
Although you seem to be in an income category where the above are incidentals.... it is good to consider.
- fundtalker123
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Re: Our expenses will be 70% lower in retirement?
Ok, I have changed thread title to "income needed" - now vs retirement - why do you think that is not useful to estimate?YDNAL wrote:"Income goes" toward many different goals - that is called cashflow. In your table, you have savings, mortgage payments (that include reduction of debt), and I-Bond purchases all of which account for $239K of $394K listed. Ignore that mortgage payments include interest (expense), and some other items listed, for the sake of a simplified discussion without nitpicking numbers to death.fundtalker123 wrote:I analyzed our current "expenses", defined as where our income currently goes. I then made guesses of what our expenses might be in retirement. I think they will be about 70% lower.
So, your "expenses are not 70% lower in retirement" unless you define expenses as you choose. And, whatever this benchmark is supposed to represent, I find that it is not very useful in looking at "retirement expenses."
Re: Our income needed will be 70% lower in retirement?
FWIW - My grandfather still "saves" for retirement and he has been mostly retired for over a decade. He didn't touch his 401k and once he hit 70 1/2 he had to start taking 401k withdrawls and has a small consulting business so he started putting the max into a Roth IRA.
You also listed 529 contributions as 0, but what about grandchildren's college contributions? I know these are all small peanuts, but when you add a bunch of small things up....
You also listed 529 contributions as 0, but what about grandchildren's college contributions? I know these are all small peanuts, but when you add a bunch of small things up....
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Re: Our expenses will be 70% lower in retirement?
It would be good to lower this. But I think even the cheapest daycare around here costs >$1000/mo per kid. Right now we have a nanny, but probably only will for a couple years, so expense should dropRanger wrote:Prepare for backlash in this forum for spending north of $50,000/year for child care and preschool. Few of them will suggest, it could be easily done with $600/month
Re: Our income needed will be 70% lower in retirement?
From my perspective your travel and entertainment budget is way too low. I spend more than what you budget now while I am working, and I plan on spending much more on travel and entertainment items when I retire, especially in the first few years. I predict that when I stop working, I will find lots of different places to go and ways to spend my free time.
By the way, you are saving over $200,000 per year! Congratulations! Do you realize that you are saving more than 4 times what the average household earns in a year? Wow. If you take a step back and look at the big picture, you really are very fortunate, and really, you don't have to worry about anything.
By the way, you are saving over $200,000 per year! Congratulations! Do you realize that you are saving more than 4 times what the average household earns in a year? Wow. If you take a step back and look at the big picture, you really are very fortunate, and really, you don't have to worry about anything.
Last edited by mptfan on Sat Jul 21, 2012 10:20 am, edited 1 time in total.
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Re: Our expenses will be 70% lower in retirement?
Good point. Estimating $20,000 taxes was very rough, probably too low.gofigure wrote: Did you forget FICA expense?
- fundtalker123
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Re: Our income needed will be 70% lower in retirement?
Sounds good, and good to know!mptfan wrote:From my perspective your travel and entertainment budget is way too low. I spend more than what you budget now while I am working, and I plan on spending much more on travel and entertainment items when I retire, especially in the first few years. I predict that when I stop working, I will find lots of different places to go and ways to spend my free time.
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Re: Our expenses will be 70% lower in retirement?
Saving in 529 is to pay for college later. True about gifts - maybe that fits already under "shopping". Our property tax is based on purchase price, but could go up if we moved.buzz4 wrote: Here are some expenses that you may have missed or not considered.
(1) College Tuition. (I am not sure if the Student loan payments are for you/spouse or future for the kids.)
(2) Gifts (Charitable and Non-Charitable). Gifts for grandchildren/DIL/SIL can get expensive.
(3) Unanticipated support for your adult children and relatives. I didn't plan for this but it happened to me with sister and son.
(4) Gas and Electric. Even with no kids at home, over the years, inflation may drive up the cost to at least what you pay now.
Also, my property tax seems to go up every year whereas you list the same 12K you have now.
Other than those, I think your list is pretty good.
- fundtalker123
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Re: Our expenses will be 70% lower in retirement?
You're right - while we will have one fewer car, and wouldn't use a loan as we did for that one, we will still have to occasionally buy new cars.salecat0709 wrote:A couple of things came to mind as I was looking at your list. You have car payments going to zero but I assume you will still buy a car or cars sometime in retirement. Also I didn't see health care related expenses. Maybe you have these bundled in categories. I retired at 63 (currently 64) and health care is our biggest expense. Even when Medicare kicks in I still expect that to be our biggest expense.
Ed
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Re: Our expenses will be 70% lower in retirement?
donall wrote:I work with seniors and some of the expenses that should be estimated for retirement are:
-hearing aids
-higher car insurance and more car related expenses (often more accidents)
-dental bills (these can easily account for $20K or more with implants, etc.)
-weddings
-money needs for kids and others
-divorces
-investment losses
-kids moving in
-purchase of cars
-at home services such as things one cannot do any longer and also the gap for care between Medicare (after a hospital stay) and before long term care ins. kicks in
Nispirius' figures for insurance and health care seem low, but that is probably due to smart shopping and wise decisions. Seniors in their 80s seem to spend over 10K on health care expenses. Although there are some wonderful senior discounts available (such as for property tax), due to the economy, many are being phased out, and may not be applicable to your income category. It is also a good idea to look at future income separately and not as a couple.
Although you seem to be in an income category where the above are incidentals.... it is good to consider.
Too much! Who budgets for divorce(s!) in their retirement? Why not budget for a total loss of your home after your insurer happens to fold? An accident leading to partial paralysis? The future is inherently unknowable, but one cannot (and should not) plan a budget based on all sorts of worst-case scenarios and pure risk. It makes the planning worthless.
Re: Our income needed will be 70% lower in retirement?
I said "is not useful in looking at retirement expenses."fundtalker123 wrote:Ok, I have changed thread title to "income needed" - now vs retirement - why do you think that is not useful to estimate?YDNAL wrote:"Income goes" toward many different goals - that is called cashflow. In your table, you have savings, mortgage payments (that include reduction of debt), and I-Bond purchases all of which account for $239K of $394K listed. Ignore that mortgage payments include interest (expense), and some other items listed, for the sake of a simplified discussion without nitpicking numbers to death.fundtalker123 wrote:I analyzed our current "expenses", defined as where our income currently goes. I then made guesses of what our expenses might be in retirement. I think they will be about 70% lower.
So, your "expenses are not 70% lower in retirement" unless you define expenses as you choose. And, whatever this benchmark is supposed to represent, I find that it is not very useful in looking at "retirement expenses."
With regards to "expenses," the only useful numbers are reasonable projections of retirement needs - and that includes Inflation, other increases, and other expenses which you failed to account in your list in the OP.
Landy |
Be yourself, everyone else is already taken -- Oscar Wilde
Re: Our income needed will be 70% lower in retirement?
Have you seen the wiki article series on retirement spending? Retirement spending
- FrugalInvestor
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Re: Our income needed will be 70% lower in retirement?
YDNAL,YDNAL wrote: With regards to "expenses," the only useful numbers are reasonable projections of retirement needs - and that includes Inflation, other increases, and other expenses which you failed to account in your list in the OP.
Isn't inflation typically assumed to be taken care of by portfolio growth? This would be under the assumption that the bulk of retirement income resources stem from that source of course. Wouldn't this be the reason for including annual inflation increases when calculating portfolio sustainable withdrawal rates? Adding inflation expenses in today's dollars would be double counting inflation.
I suppose one might need to add inflation to expenses up to the point of retirement.
Have a plan, stay the course and simplify. Then ignore the noise!
Re: Our income needed will be 70% lower in retirement?
Yes, you supposed right. For instance, OP considers $12K in property taxes today to be $12K tomorrow, $7,000 Auto & Transport today, the same tomorrow.FrugalInvestor wrote:YDNAL,YDNAL wrote: With regards to "expenses," the only useful numbers are reasonable projections of retirement needs - and that includes Inflation, other increases, and other expenses which you failed to account in your list in the OP.
Isn't inflation typically assumed to be taken care of by portfolio growth? This would be under the assumption that the bulk of retirement income resources stem from that source of course. Wouldn't this be the reason for including annual inflation increases when calculating portfolio sustainable withdrawal rates? Adding inflation expenses in today's dollars would be double counting inflation.
I suppose one might need to add inflation to expenses up to the point of retirement.
Landy |
Be yourself, everyone else is already taken -- Oscar Wilde
Re: Our income needed will be 70% lower in retirement?
It would be good to project your retirement income needs at different ages.
One of the things I have seen with older relatives was by the time they got into their mid 70's they naturally slowed down a lot even though their health remained realatively good. Having slowed down they didn't spend much on things like travel, shopping, or even eating out even though they could have easily aforded to spend a lot more. They lived in a paid off house in an area with moderate property taxes so in many months they didn't even spend all of their social security checks. Once their heath started failing then their budget of course completely changed again.
One of the things I have seen with older relatives was by the time they got into their mid 70's they naturally slowed down a lot even though their health remained realatively good. Having slowed down they didn't spend much on things like travel, shopping, or even eating out even though they could have easily aforded to spend a lot more. They lived in a paid off house in an area with moderate property taxes so in many months they didn't even spend all of their social security checks. Once their heath started failing then their budget of course completely changed again.
Re: Our income needed will be 70% lower in retirement?
Two categories that I think you forgot to budget for are home repair expenses and replacement of vehicles.
Bud Hebeler has some simple, but thorough spreadsheets for retirement budgeting at:
http://analyzenow.com/Free%20Programs/free_programs.htm
Look at Free Budgeting Planner and Free Program for Replacement Budgeting.
Bud Hebeler has some simple, but thorough spreadsheets for retirement budgeting at:
http://analyzenow.com/Free%20Programs/free_programs.htm
Look at Free Budgeting Planner and Free Program for Replacement Budgeting.
Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees. – Warren Buffett
Re: Our income needed will be 70% lower in retirement?
I think how he spends his money is his lifestyle choice. Clearly his family has chosen to prioritize saving for children's education and their retirement over other spending money on other pursuits. His family should be lauded for being independent minded, and not mindlessly succumbing to the materialist culture in which our society is drenched. I also quibble with his being called "fortunate" and that they "don't have to worry about anything". While I certainly acknowledge that luck can improve or deteriorate someone's well-being, the absence of bad luck does not imply that their good circumstances are a accident of fortune. Quite likely, it reflects a lot of effort and discipline (as evidenced by the high savings rate). It is also not the case that a family earning 400K with kids has "nothing to worry about anything". If they had > $10MM in the bank, maybe, but $400K is simply not a high enough income level to ensure continued well being in the face of any conceivable disaster (illness, disability, commitments to extended family). The reason I am sensistive to such characterizations as "fortunate" is that this individual and their family is doing something which 95% of American's likely don't have the self-discipline to do. In our current discourse it is all too common to assume that families like these have received a stroke of good luck and somehow owe it to society to contribute to the better fortune of those who are unwilling to exhibit the same traits of hard work, discipline and self-abnegnation.mptfan wrote:From my perspective your travel and entertainment budget is way too low. I spend more than what you budget now while I am working, and I plan on spending much more on travel and entertainment items when I retire, especially in the first few years. I predict that when I stop working, I will find lots of different places to go and ways to spend my free time.
By the way, you are saving over $200,000 per year! Congratulations! Do you realize that you are saving more than 4 times what the average household earns in a year? Wow. If you take a step back and look at the big picture, you really are very fortunate, and really, you don't have to worry about anything.
Re: Our income needed will be 70% lower in retirement?
Wow!saurabhec wrote:It is also not the case that a family earning 400K with kids has "nothing to worry about anything". If they had > $10MM in the bank, maybe, but $400K is simply not a high enough income level to ensure continued well being in the face of any conceivable disaster (illness, disability, commitments to extended family). The reason I am sensistive to such characterizations as "fortunate" is that this individual and their family is doing something which 95% of American's likely don't have the self-discipline to do. In our current discourse it is all too common to assume that families like these have received a stroke of good luck and somehow owe it to society to contribute to the better fortune of those who are unwilling to exhibit the same traits of hard work, discipline and self-abnegnation.
The median household income in the U.S. (2006-2010) is $52K. Then, 14% of the population lives below the proverty level.
http://quickfacts.census.gov/qfd/states/00000.html
If 95% of Americans this/that, also only 1% of Americans make $400K or more annually. It is just too easy in this forum to throw around $400K and too easy to be "sensitive" regarding one casual (and innocent IMO) comment about high(er) earners. I don't know who made this one comment and it doesn't really matter.
Landy |
Be yourself, everyone else is already taken -- Oscar Wilde
Re: Our income needed will be 70% lower in retirement?
It is a fact that most American's are incapable of showing the same commitment to educational and retirement savings as this family. How much you make has little to do with it. I guarantee you that most American's at this income level don't save as much. Once income for a family is above a certain minimum threshold amount of savings (as a % of income) that is possible and that will be realized will reflect lifestyles and values.YDNAL wrote:Wow!saurabhec wrote:It is also not the case that a family earning 400K with kids has "nothing to worry about anything". If they had > $10MM in the bank, maybe, but $400K is simply not a high enough income level to ensure continued well being in the face of any conceivable disaster (illness, disability, commitments to extended family). The reason I am sensistive to such characterizations as "fortunate" is that this individual and their family is doing something which 95% of American's likely don't have the self-discipline to do. In our current discourse it is all too common to assume that families like these have received a stroke of good luck and somehow owe it to society to contribute to the better fortune of those who are unwilling to exhibit the same traits of hard work, discipline and self-abnegnation.
The median household income in the U.S. (2006-2010) is $52K. Then, 14% of the population lives below the proverty level.
http://quickfacts.census.gov/qfd/states/00000.html
If 95% of Americans this/that, also only 1% of Americans make $400K or more annually. It is just too easy in this forum to throw around $400K and too easy to be "sensitive" regarding one casual (and innocent IMO) comment about high(er) earners. I don't know who made this one comment and it doesn't really matter.
Re: Our income needed will be 70% lower in retirement?
Very well said.saurabhec wrote:His family should be lauded for being independent minded, and not mindlessly succumbing to the materialist culture in which our society is drenched. I also quibble with his being called "fortunate" and that they "don't have to worry about anything". While I certainly acknowledge that luck can improve or deteriorate someone's well-being, the absence of bad luck does not imply that their good circumstances are a accident of fortune. Quite likely, it reflects a lot of effort and discipline (as evidenced by the high savings rate). It is also not the case that a family earning 400K with kids has "nothing to worry about anything". If they had > $10MM in the bank, maybe, but $400K is simply not a high enough income level to ensure continued well being in the face of any conceivable disaster (illness, disability, commitments to extended family). The reason I am sensistive to such characterizations as "fortunate" is that this individual and their family is doing something which 95% of American's likely don't have the self-discipline to do. In our current discourse it is all too common to assume that families like these have received a stroke of good luck and somehow owe it to society to contribute to the better fortune of those who are unwilling to exhibit the same traits of hard work, discipline and self-abnegnation.
Instead of trying to tear this guy down by calling him lucky...or calling some aspect of his spending unwise....let's applaud his discipline, hard work and balanced spending.
Anybody - no matter what income level - can demonstrate discipline and a balanced budget with appropriate retirement savings.
Best wishes.
Andy