Gross Yearly Income needed in Retirement (Speculation)

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nelson1015
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Gross Yearly Income needed in Retirement (Speculation)

Postby nelson1015 » Tue Oct 21, 2014 3:30 pm

How much gross yearly income before taxes do you think you need in retirement? I'm looking to get a bunch of different viewpoints on this. Here are the parameters.

-You own a house and it's paid for free and clear
-You own cars outright
-You have no debt of any kind whatsoever
-You want to live a middle to upper middle class lifestyle in retirement
-You'd like to be able to travel several times a year
-You'd like to be able to enjoy life, eat out on occasion and generally not worry about the bills.

What gross yearly income do you need a year to accomplish the above in retirement. We aren't counting SS, Pension, Passive Income. I'm looking for one total yearly number.

60k? 80k? 100k? more? (in today's dollars)

I would be nice to hear from some Retirees.
Last edited by nelson1015 on Tue Oct 21, 2014 3:40 pm, edited 1 time in total.

flyingbison
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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby flyingbison » Tue Oct 21, 2014 3:32 pm

I'm not a retiree, but if you are asking about the "average" person in the US, it's nowhere near that much.

nelson1015
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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby nelson1015 » Tue Oct 21, 2014 3:39 pm

flyingbison wrote:I'm not a retiree, but if you are asking about the "average" person in the US, it's nowhere near that much.


I said average in my post but I suppose I'm looking for what each poster feels like "they" would need personally to achieve the parameters given. I edited my original post to take out the word "average".

sport
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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby sport » Tue Oct 21, 2014 3:42 pm

nelson1015 wrote:What gross yearly income do you need a year to accomplish the above in retirement. We aren't counting SS, Pension, Passive Income. I'm looking for one total yearly number.

IMO, you are asking the wrong question. The question should be how much net income do you need, after taxes, and including SS, pension, etc. What is important is how much money you have to spend vs. how much money you want/need to spend. The answer will vary with location and personal desires.
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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby Grt2bOutdoors » Tue Oct 21, 2014 3:51 pm

nelson1015 wrote:How much gross yearly income before taxes do you think you need in retirement? I'm looking to get a bunch of different viewpoints on this. Here are the parameters.

-You own a house and it's paid for free and clear
-You own cars outright
-You have no debt of any kind whatsoever
-You want to live a middle to upper middle class lifestyle in retirement
-You'd like to be able to travel several times a year
-You'd like to be able to enjoy life, eat out on occasion and generally not worry about the bills.

What gross yearly income do you need a year to accomplish the above in retirement. We aren't counting SS, Pension, Passive Income. I'm looking for one total yearly number.

60k? 80k? 100k? more? (in today's dollars)

I would be nice to hear from some Retirees.


HCOL area - that means high property taxes, high auto insurance rates, high services cost.
Traveling several times a year, I assume that means taking a trip to Europe once every 2 years.

Using the above, a minimum of $80K gross in today's dollars. Seeing as many folks don't have that retirement income, many retirees I know are "home body's" - they don't travel, they don't eat outside of the home or they move to LCOL geographic locations to "increase" their spending ability. The only retirees I know staying "in-situ" are those who retired from government occupations at earlier than expected ages - like early 50's. This is from personal observations. I am not retired, yet!
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technovelist
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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby technovelist » Tue Oct 21, 2014 3:53 pm

"One million dollars."
Adjusted for inflation, of course. :greedy
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nelson1015
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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby nelson1015 » Tue Oct 21, 2014 3:58 pm

Grt2bOutdoors wrote:
nelson1015 wrote:How much gross yearly income before taxes do you think you need in retirement? I'm looking to get a bunch of different viewpoints on this. Here are the parameters.

-You own a house and it's paid for free and clear
-You own cars outright
-You have no debt of any kind whatsoever
-You want to live a middle to upper middle class lifestyle in retirement
-You'd like to be able to travel several times a year
-You'd like to be able to enjoy life, eat out on occasion and generally not worry about the bills.

What gross yearly income do you need a year to accomplish the above in retirement. We aren't counting SS, Pension, Passive Income. I'm looking for one total yearly number.

60k? 80k? 100k? more? (in today's dollars)

I would be nice to hear from some Retirees.


HCOL area - that means high property taxes, high auto insurance rates, high services cost.
Traveling several times a year, I assume that means taking a trip to Europe once every 2 years.

Using the above, a minimum of $80K gross in today's dollars. Seeing as many folks don't have that retirement income, many retirees I know are "home body's" - they don't travel, they don't eat outside of the home or they move to LCOL geographic locations to "increase" their spending ability. The only retirees I know staying "in-situ" are those who retired from government occupations at earlier than expected ages - like early 50's. This is from personal observations. I am not retired, yet!


This is exactly the type of response that I was looking for and very interesting. Pensions aren't available in my line of work. Virtually non-existent.

uncaD
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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby uncaD » Tue Oct 21, 2014 3:58 pm

$84k.

The Wizard
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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby The Wizard » Tue Oct 21, 2014 4:03 pm

$110K...
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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby The Wizard » Tue Oct 21, 2014 4:13 pm

I'm a retiree, and the bigger question should be: what is your DESIRED income in retirement?
Point being, it costs money to go to this Kruger Park in South Africa for a couple weeks; I've not been, but other Bogleheads apparently have.

Depending on your ratio of tax-sheltered to taxable investments, you can go through an exercise to find out what it takes to cover your basic EXPENSES in retirement, based on the last few years prior, but for me, that misses the point...
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munemaker
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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby munemaker » Tue Oct 21, 2014 4:14 pm

I do meet your assumptions and live in a very low COL area. I am not retired, but am thinking pre-tax in the area of $100K - $120K for my wife and me. This would be from IRAs, 401Ks, taxable accounts, Social Security and a couple small pensions.

I did not determine this through any analysis, so it is just a conservative guesstimate.

One significant item that could possibly increase this is either renting or buying a place located in the sun belt to spend some of the winter. Like I said, I have not done any analysis.

I am there now and just work because I like to.

nelson1015
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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby nelson1015 » Tue Oct 21, 2014 4:25 pm

The Wizard wrote:I'm a retiree, and the bigger question should be: what is your DESIRED income in retirement?
Point being, it costs money to go to this Kruger Park in South Africa for a couple weeks; I've not been, but other Bogleheads apparently have.

Depending on your ratio of tax-sheltered to taxable investments, you can go through an exercise to find out what it takes to cover your basic EXPENSES in retirement, based on the last few years prior, but for me, that misses the point...


Good point. The premise of my post is DESIRED income and not required.

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JDCarpenter
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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby JDCarpenter » Tue Oct 21, 2014 4:27 pm

nelson1015 wrote:How much gross yearly income before taxes do you think you need in retirement? I'm looking to get a bunch of different viewpoints on this. Here are the parameters.

-You want to live a middle to upper middle class lifestyle in retirement
-You'd like to be able to travel several times a year
-You'd like to be able to enjoy life, eat out on occasion and generally not worry about the bills.

What gross yearly income do you need a year to accomplish the above in retirement. We aren't counting SS, Pension, Passive Income. I'm looking for one total yearly number.



Travel where, and what is "several times a year"? We plan on Indonesia for a month or more with a lot of diving, Australia with a lot of diving and doing the big drive around, New Zealand and SE Asia both require a lot of time, there are numerous dive destinations and liveaboards we've not done yet, we want to buy a nice RV to follow the seasons and our whims around North America, and eventually, we'd like to fly across the Atlantic to Europe and Africa (after Galapagos and Machu Picchu). And yeah, Michelin starred restaurants (and white castle!) are nice......

I've budgeted it out and believe that, with prudent planning, we can "make it" @ $150,000 to 180,000 annually post tax, which arguably counts as "upper middle class," but it is a lot of money--more than we've ever spent in a year post taxes (and ignoring the private college costs for kids). Luckily, the vast majority of spending can be slashed to fit into a highly variable withdraw rate--and by ignoring any inheritances and social security we get more cushion for 20-45 years out.

Tough question to answer in a general manner. Each person/couple has to work from budget on this stuff.
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nelson1015
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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby nelson1015 » Tue Oct 21, 2014 4:30 pm

JDCarpenter wrote:
nelson1015 wrote:How much gross yearly income before taxes do you think you need in retirement? I'm looking to get a bunch of different viewpoints on this. Here are the parameters.

-You want to live a middle to upper middle class lifestyle in retirement
-You'd like to be able to travel several times a year
-You'd like to be able to enjoy life, eat out on occasion and generally not worry about the bills.

What gross yearly income do you need a year to accomplish the above in retirement. We aren't counting SS, Pension, Passive Income. I'm looking for one total yearly number.



Travel where, and what is "several times a year"? We plan on Indonesia for a month or more with a lot of diving, Australia with a lot of diving and doing the big drive around, New Zealand and SE Asia both require a lot of time, there are numerous dive destinations and liveaboards we've not done yet, we want to buy a nice RV to follow the seasons and our whims around North America, and eventually, we'd like to fly across the Atlantic to Europe and Africa (after Galapagos and Machu Picchu). And yeah, Michelin starred restaurants (and white castle!) are nice......

I've budgeted it out and believe that, with prudent planning, we can "make it" @ $150,000 to 180,000 annually post tax, which arguably counts as "upper middle class," but it is a lot of money--more than we've ever spent in a year post taxes (and ignoring the private college costs for kids). Luckily, the vast majority of spending can be slashed to fit into a highly variable withdraw rate--and by ignoring any inheritances and social security we get more cushion for 20-45 years out.

Tough question to answer in a general manner. Each person/couple has to work from budget on this stuff.


150-180k post tax would be one swanky retirement.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby fposte » Tue Oct 21, 2014 4:33 pm

I'm in a LCOL area. I'm aiming for $80k but could probably achieve what you're describing on $60k.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby JDCarpenter » Tue Oct 21, 2014 4:37 pm

nelson1015 wrote:
****

150-180k post tax would be one swanky retirement.


I don't disagree with that, and hope that I didn't come across as complaining about it....

Will be far swankier than our lives to date, which have involved early retirement planning/dreaming--and juggling the careers of a dedicated OBG in private practice and an obsessive commercial litigator while raising three kids. :-) (In perspective, it will be about equal to our annual tax bill, which easily exceeds all other spending that we do.)

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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby Lynette » Tue Oct 21, 2014 5:07 pm

I got YNAB budgeting tool to see how much I'm spending. I really like it and it is giving me a good idea of my expenses. In my calculations, I'm also including spending on charity, saving for car replacement, car repairs, home maintenance etc, gym and personal trainer. I think I could quite do this on $50,000 - $60,000 p.a. including health care cost (have some company contributions.) The remainder will be for travel - won't even divulge how much I'm spending on this! This is post-tax.
Last edited by Lynette on Mon Nov 10, 2014 9:59 pm, edited 1 time in total.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby DFrank » Tue Oct 21, 2014 5:11 pm

We will be living in a relatively LCOL area, but not rock bottom. We have no aspirations for international travel, but would like to continue to travel around the American west for as long as we are healthy enough to enjoy our outdoor recreational pursuits. We are targeting $150-160k pre-tax per year. That's a big step down from what we earn today, but we do save 35% of our gross income today, and still have a house payment that will disappear when we retire. When you net those out we are targeting an income level that is not too far off of what we spend today.
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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby irishbear99 » Tue Oct 21, 2014 5:26 pm

I'm way too far from retirement (20-30 years) to really know how much we'll need. For planning purposes, we guesstimate needing 100% of our current salary. We plan on having no mortgage in retirement and may or may not move from our very high COL area to a lower one, so we'll likely need less but we figure it doesn't hurt at this stage in the game to aim high.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby ubermax » Tue Oct 21, 2014 5:27 pm

technovelist wrote:"One million dollars."
Adjusted for inflation, of course. :greedy


+1

Good answer since there is no general answer; the answer is entirely case specific and I'm sure OP knows that ; we based it on our average expenses over the 3 years before retirement , we go to the well for any additional expenses like travel , etc. that require us to exceed the aforementioned average :happy

dad2000
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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby dad2000 » Tue Oct 21, 2014 5:35 pm

Will likely settle in a high cost of living area because we like the ocean.

Post tax:
$70K essentials
$50K discretionary

HornedToad
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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby HornedToad » Tue Oct 21, 2014 5:39 pm

Somewhere between $75-100k after tax.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby Gnirk » Tue Oct 21, 2014 5:42 pm

We are retired and maintain a regular home and a modest snowbird home. Travel internationally maybe once every three years, but probably won't do more of that because of developing mobility issues. We fly across country to visit kids/grandkids every other year. And DH plays golf twice a week. Pretax income needed is around $90,000--from SS, my small pension, and a good chunk of investment income.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby Ged » Tue Oct 21, 2014 5:52 pm

I live in a HCOL area and it looks like about 70-80K for a comfortable upper middle class lifestyle, another 20K or so for travel - some US plus one-two international trips a year.

DW and I both have SS and some pension income plus low 7 figure investments so we are in pretty good shape.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby blueblock » Tue Oct 21, 2014 6:36 pm

I live in a semi-rural, moderately LCOL area and am retiring in a few months. I've tracked my actual expenses for a long time and will do just fine on $60K, which will allow for occasional dining out, travel, etc. (I have a $100K+ cushion for unanticipated extraordinary expenses.)

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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby Professor Emeritus » Tue Oct 21, 2014 7:05 pm

dad2000 wrote:Will likely settle in a high cost of living area because we like the ocean.

Post tax:
$70K essentials
$50K discretionary


Almost exactly the same.
We also self insure for long term care.
Last edited by Professor Emeritus on Tue Oct 21, 2014 7:58 pm, edited 1 time in total.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby avalpert » Tue Oct 21, 2014 7:36 pm

The Wizard wrote:Point being, it costs money to go to this Kruger Park in South Africa for a couple weeks; I've not been, but other Bogleheads apparently have.

It doesn't have to cost much at all to go to Kruger Park for a couple of weeks - rent a car (don't even need 4x4 there) and a tent, self drive around the park. It is probably the most cost effective world class safari destination you can find.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby avalpert » Tue Oct 21, 2014 7:38 pm

I'm targeting $150k a year which is in line with our current spending (though we would be trading spending on kids, including private school, for spending on us). I'm 15 years from my target early retirement date and am quite certain much will change but that is my current SWAG.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby The Wizard » Tue Oct 21, 2014 7:45 pm

avalpert wrote:
The Wizard wrote:Point being, it costs money to go to this Kruger Park in South Africa for a couple weeks; I've not been, but other Bogleheads apparently have.

It doesn't have to cost much at all to go to Kruger Park for a couple of weeks - rent a car (don't even need 4x4 there) and a tent, self drive around the park. It is probably the most cost effective world class safari destination you can find.

Ah, good to know.
But the airfare. It's probably more than from Boston to Cleveland, right?
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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby bhsince87 » Tue Oct 21, 2014 7:48 pm

Hmm, apparently my previous post attempt got lost in the ether....

My wife and I are pretty sure we can live a good life on $50k (current after tax dollars). That would include a couple long vacations a year, some major increases in our hobby spending, and ACA health insurance. We could get by on <40k, if need be.

That seems to be pretty typical. http://www.caniretireyet.com/how-much-w ... etirement/


We could do $60k per year at a 3% withdraw rate now, but we're shooting for early retirement at 55 (6 years away).

If we hit the point where $72k per year is possible at 3%, we'll probably retire earlier than 55.
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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby avalpert » Tue Oct 21, 2014 7:53 pm

The Wizard wrote:
avalpert wrote:
The Wizard wrote:Point being, it costs money to go to this Kruger Park in South Africa for a couple weeks; I've not been, but other Bogleheads apparently have.

It doesn't have to cost much at all to go to Kruger Park for a couple of weeks - rent a car (don't even need 4x4 there) and a tent, self drive around the park. It is probably the most cost effective world class safari destination you can find.

Ah, good to know.
But the airfare. It's probably more than from Boston to Cleveland, right?

Probably, but not sure you could pay me enough to spend a couple of weeks in Cleveland. For Johannesburg, with the right planning you could get flights (direct from JFK) for under ~$1,000

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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby letsgobobby » Tue Oct 21, 2014 8:28 pm

$10k per month for two in real dollars. This allows for spoiling grandkids, helping kids, travel, charity, health care, etc. Obviously the push comes to shove budget could easily be half that assuming house is paid off. On the other hand, this doesn't include long term care.

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anonforthis
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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby anonforthis » Tue Oct 21, 2014 8:47 pm

Wow, so many people are such spenders. I think 40k after taxes is plenty to do all those things you listed with no debt for us.

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market timer
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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby market timer » Tue Oct 21, 2014 9:27 pm

The average retired household in 2011 spent $38K, of which $26K came from Social Security and other pensions. Note that only $3K came from passive income sources, listed as "interest, dividends, rental income, other property income."

http://www.bls.gov/cex/2011/Standard/occup.pdf

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market timer
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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby market timer » Tue Oct 21, 2014 9:41 pm

My own budget in retirement looks something like this (annual numbers):

$2K housing (condo fees + utilities)
$5K childcare
$12K food + toiletries
$0.5K transportation
$0.5K clothes
$5K travel + entertainment + gifts

It's a nice, simple life for me. My wife spends another $25K at the mall on things like Chanel bags and cosmetics, so I guess that makes us upper middle class. :)

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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby IPer » Tue Oct 21, 2014 9:47 pm

My current budget (not retired) is slightly under $18K/year. There are a few changes I could make to increase it slightly but most likely will not do so before or after "retirement" time. ps - this is not gross but what I spend, to get gross you just need to adjust back for your taxes which is different for many folk so IMHO it is
unreasonable for you to pose the question in gross terms, don't be gross! :wink:
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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby sport » Tue Oct 21, 2014 10:28 pm

avalpert wrote:Probably, but not sure you could pay me enough to spend a couple of weeks in Cleveland.

If you did spend some time in Cleveland, you might be surprised at all the good things Cleveland has to offer. :o
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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby Professor Emeritus » Tue Oct 21, 2014 10:31 pm

avalpert wrote:
The Wizard wrote:Point being, it costs money to go to this Kruger Park in South Africa for a couple weeks; I've not been, but other Bogleheads apparently have.

It doesn't have to cost much at all to go to Kruger Park for a couple of weeks - rent a car (don't even need 4x4 there) and a tent, self drive around the park. It is probably the most cost effective world class safari destination you can find.


Even if, as we do, you stay in the nicest bungalows in the park , it is still cheap. We spent more on the airfare to get there than for 3 weeks in the park and the rental car.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby BigFoot48 » Tue Oct 21, 2014 11:19 pm

nelson1015 wrote:-You own a house and it's paid for free and clear - CHECK
-You own cars outright - CHECK
-You have no debt of any kind whatsoever - CHECK
-You want to live a middle to upper middle class lifestyle in retirement - CHECK
-You'd like to be able to travel several times a year - CHECK
-You'd like to be able to enjoy life, eat out on occasion and generally not worry about the bills. - CHECK

What gross yearly income do you need a year to accomplish the above in retirement. We aren't counting SS, Pension, Passive Income. I'm looking for one total yearly number.

Having now been retired for some 16 years since age 50 I would put the yearly number to meet all of those items at, drum roll please, $50-$60,000, easy, with another $10,000 if you're flying overseas a few times a year. (We're at $48k average, incl taxes, over the past 10 years, with no flying, but lots of RV trailer travel.)
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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby curmudgeon » Tue Oct 21, 2014 11:27 pm

I've been penciling in roughly $80k per year as our baseline expenses. Gross to get there would depend on taxes. This includes about $20k/yr for travel, and some provision for auto replacement. It presumes moving from our current HCOL area to something more moderate, but not super low. It's doing some averaging across pre and post medicare medical costs, but that is one of the big unknowns depending on whether ACA and it's subsidies hold up.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby Dale_G » Tue Oct 21, 2014 11:35 pm

Over 12 years of full retirement our personal expenses averaged $41,500 in a reasonably low cost of living area. Livesoft's tax planning doesn't work very well in this household, our federal taxes averaged $26,500. So total expenditures averaged $71,000.

We visited 86 countries, but the travelling is done now. Spending more money involves more work than I am willing to put into it. Mostly just puttering around now. I expect our personal expenditures to decrease slightly in the future. Not so for federal taxes.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby Pizzasteve510 » Tue Oct 21, 2014 11:47 pm

I think it depends on what you spent when earning. I am targeting $120k per year, $10k per month, but I wish to live in a high COLA area. We actually spend quite a bit less, but want the option for either expensive travel or to continue to grow assets, if we wish, or if there is a market downturn. It is an interesting question since we have likely over saved and underspent our whole married life and likely will have a hard time changing habits. My goal was to be fine even if SS was bankrupt.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby littlebird » Tue Oct 21, 2014 11:54 pm

market timer wrote:The average retired household in 2011 spent $38K, of which $26K came from Social Security and other pensions. Note that only $3K came from passive income sources, listed as "interest, dividends, rental income, other property income."

http://www.bls.gov/cex/2011/Standard/occup.pdf


That sounds about right to me. Many people in my archetypal senior community HAVE more than that available to spend, but other than on travel, which some do and many don't or don't any more, that's about what folks spend, some a little more, some a little less.

There's very little "keeping up with the Joneses". Maybe there was some in the beginning when all the houses were new and everyone was furnishing and landscaping at the same time, and I suspect there's some of that in certain communities in South Florida which I probably need not name, and in Scottsdale, but here in the heart of "active senior living", drawing mainly, but not exclusively retirees from the upper mid-west, most people are past that. Everyone dresses simply (even unfashionably), and with the substitution of jeans in what passes for winter for khaki shorts, pretty much the same year-round. Little or no yard care, abundant free and low cost entertainment, activities and recreation of all kinds, no pricey restaurants nearby ( seniors are notoriously poor tippers), low taxes ( my community is not in a school district. I believe that to be unique in the country). In fact when I moved here 21 years ago there was a tag-line popular with residents and outsiders alike ( but with different curls of the lip): "Name of Archetypal Senior Community": where millionaires live like millionaires on less than $30,000 a year". Add a little for inflation, and subtract something for hyperbole -we're not all millionaires - but things are still about the same.

So sure, you can easily spend six figures a year in retirement, but you sure don't have to in order to have a really great one.

Off my topic, but I just read in another post above of someone paying $26K/year in federal income taxes ??? Here's my experience: except for the year in which I sold enough appreciated shares of TSM to buy a new house for cash, I've averaged less than $400/year in federal income taxes. Less in state income tax.

beachlover
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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby beachlover » Wed Oct 22, 2014 12:19 am

nelson1015 wrote: ...Here are the parameters.

-You own a house and it's paid for free and clear
-You own cars outright
-You have no debt of any kind whatsoever
-You want to live a middle to upper middle class lifestyle in retirement
-You'd like to be able to travel several times a year
-You'd like to be able to enjoy life, eat out on occasion and generally not worry about the bills.

What gross yearly income do you need a year to accomplish the above in retirement.


We live essentially as you describe, in an area with neither particularly high nor particularly low COL. Except for one lowball year at around $75K, the last six years have all come in between $80K and $90K annual household expenses for two - all in - all taxes included. Current year 7 is on track to fall within that range as well. The only caveat I'd add is that we benefit from reduced retiree medical premiums. If we had to buy that on the open market, I'm guessing it could add around another $10K (not considering ACA subsidies, if they'd even be applicable).

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Sheepdog
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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby Sheepdog » Wed Oct 22, 2014 2:56 am

I live in a low cost of living midwest area, have a paid for 4 BR suburban home on well landscaped 1/2 acre property, and 2 late model cars. Spent $5.5K annual average for vacations the last 5 years. Spent $5K annually for entertainment (sports, symphonies, theater, etc.); $4K annually for restaurants. Other high expenses are medical insurance..including Medicare, medical, dental and hearing costs, groceries, pet care and gifting. Income taxes are very low though. Don't forget to include house upkeep and remodeling and periodic auto purchases. The last 5 years we have done very well with an average spending of $68K. In that time period the low was $55K and the high was $79K. Our expenses averaged $61K over our 15 years in retirement ($45K low, $79K high). Yes, annual spending varied that much.
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Lynette
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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby Lynette » Wed Oct 22, 2014 4:58 am

It also depends on whether the calculation is for a "we" or "me" :D :D

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Christine_NM
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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby Christine_NM » Wed Oct 22, 2014 5:02 am

First year of retirement I spent $36000 gross.
This year, the 9th, it will be about $54000 gross.
The prices go up a little each year. And each year I feel freer to spend/give more, because I have not touched my own savings yet. I have $53000 in pension, SS, and annuity. So next year maybe I'll start to spend some dividends.

I'm a "me". Theoretically a working "we" should have saved more than a "me". But I gather most couples don't save as much as I did.
10% cash 45% stock 45% bond. Retired, w/d rate 1.5%

carolinaman
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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby carolinaman » Wed Oct 22, 2014 6:36 am

The Wizard wrote:$110K...


+1. This seems like a good number to me.

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Tyrobi
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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby Tyrobi » Wed Oct 22, 2014 7:03 am

45k/year minimum in today's dollars before we're thinking about retirement, then it's onto OMY syndrome.
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Re: Gross Yearly Income needed in Retirement (Speculation)

Postby flyingaway » Wed Oct 22, 2014 7:10 am

I am not retired yet, but I did my planning many times. In today's dollars, we would be OK with $65K before taxes for a modest life style with one international travel each year. For a higher level of travels, we are targeting $100K before tax in today's dollars.


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