Gross Yearly Income needed in Retirement (Speculation)

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
BahamaMan
Posts: 896
Joined: Wed Oct 01, 2014 5:52 pm

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby BahamaMan » Sat Oct 25, 2014 5:47 pm

As much as Possible!! ----- $120K is what I'm currently spending.

Lynette
Posts: 1158
Joined: Sun Jul 27, 2014 9:47 am

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby Lynette » Sat Oct 25, 2014 5:56 pm

TomatoTomahto wrote:
staythecourse wrote:I don't mean to steal the thread, but just wondering for those who are in the "I can spend >120k per year with <3% withdrawal" or better why did you not retire earlier?


I thought that my wife would have retired by now, but here's a shocker: she gets satisfaction from her job. She does not do it for the money.


Saving for old age problems and to leave money for charity in my estate. I get a feeling of being useful and connected with the world. Bad parenting I guess - I was expected to contribute. :D I would ask those who take really early retirement, why? If you hated your job, why not find another one even if the pay is less? Not everyone dreams of retiring early.

bhsince87
Posts: 1307
Joined: Thu Oct 03, 2013 1:08 pm

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby bhsince87 » Sat Oct 25, 2014 6:01 pm

staythecourse wrote:I don't mean to steal the thread, but just wondering for those who are in the "I can spend >120k per year with <3% withdrawal" or better why did you not retire earlier?

It would seem the chances of running out of money happened A LOT earlier then the chances of dying before hitting the "I can survive to 95 and not go broke".

I would guess a large portion of these folks will not make it to see the fruition of their large wealth or at the least be in excellent health all the way into their 70's or 80's+ to be able to travel to all the destinations they plan for in their long term plans.

Good luck.



We're sort of in that boat. With Social Security and a 3% withdrawal rate, our income could be +120k per year at age 67 if we retired now. That's more than twice what we typically spend now. And we're 47 and 49. No kids to worry about either.

But I'm just not ready to retire yet. I'm at the peak of my career, highest earning power, I like what I'm doing, love the people I work with, and I'm working on cool stuff that's changing the world. I want to enjoy that ride for a few more years, God willing. But knowing I can walk away tomorrow if I want to is a very good feeling. And it's actually allowed me to stop playing the BS political games at work, and move into a role that is much more fun!
BH87

staythecourse
Posts: 4408
Joined: Mon Jan 03, 2011 9:40 am

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby staythecourse » Sat Oct 25, 2014 6:05 pm

Lynette wrote:Not everyone dreams of retiring early.


Excellent point. I guess the abnormal is the goal to retiring early to enjoy the fruits of their labor.

The norm. for many is the sense of accomplishment and meaning in the work they do despite what it means to their bottom line.

Good insight.

Good luck.
"The stock market [fluctuation], therefore, is noise. A giant distraction from the business of investing.” | -Jack Bogle

The Wizard
Posts: 9878
Joined: Tue Mar 23, 2010 1:45 pm
Location: Reading, MA

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby The Wizard » Sat Oct 25, 2014 6:26 pm

rec7 wrote:We need about 16k a year.

Umm, $16k a year is way low for one person, not to mention a We.

I know someone who pays just over $800 a month for ACA health insurance in retirement (not eligible for Medicare). And that's just one expense category.

You are not factoring in all expenses to get that number.
Please try again...
Attempted new signature...

avalpert
Posts: 4657
Joined: Sat Mar 22, 2008 4:58 pm

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby avalpert » Sat Oct 25, 2014 6:55 pm

staythecourse wrote:I don't mean to steal the thread, but just wondering for those who are in the "I can spend >120k per year with <3% withdrawal" or better why did you not retire earlier?

It would seem the chances of running out of money happened A LOT earlier then the chances of dying before hitting the "I can survive to 95 and not go broke".

I would guess a large portion of these folks will not make it to see the fruition of their large wealth or at the least be in excellent health all the way into their 70's or 80's+ to be able to travel to all the destinations they plan for in their long term plans.

Good luck.

The same question occurred to me. It's possible they enjoy working so much and can't see themselves not doing it - which is fine - but when you describe yourself as a 'working bee in IT' it doesn't come across as something extremely fulfilling.

User avatar
burt
Posts: 519
Joined: Sun Feb 17, 2008 7:47 am

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby burt » Sat Oct 25, 2014 7:12 pm

bhsince87 wrote: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.


I like the way you think.

burt

hoops777
Posts: 1490
Joined: Sun Apr 10, 2011 12:23 pm

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby hoops777 » Sat Oct 25, 2014 7:18 pm

I am 62 and trying to accumalate as many points as possible that do not expire for hotels and air.After reading this thread I realize that was a smart move.Most of my moves have not been so smart :D When I retire we should have enough points for free flights and hotels for quite a while.Really helps with the budget if you are fortunate enough to have the points.
K.I.S.S........so easy to say so difficult to do.

bradshaw1965
Posts: 608
Joined: Tue Jul 31, 2007 9:36 pm

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby bradshaw1965 » Sat Oct 25, 2014 7:58 pm

The Wizard wrote:
rec7 wrote:We need about 16k a year.

Umm, $16k a year is way low for one person, not to mention a We.

I know someone who pays just over $800 a month for ACA health insurance in retirement (not eligible for Medicare). And that's just one expense category.

You are not factoring in all expenses to get that number.
Please try again...


Who knows if things stay the same, so maybe you can't plan on it, but subsidies make apples to apples ACA comparisons difficult.

rec7
Posts: 1985
Joined: Tue Oct 28, 2008 7:22 pm
Location: ST LOUIS

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby rec7 » Sat Oct 25, 2014 8:07 pm

The Wizard wrote:
rec7 wrote:We need about 16k a year.

Umm, $16k a year is way low for one person, not to mention a We.

I know someone who pays just over $800 a month for ACA health insurance in retirement (not eligible for Medicare). And that's just one expense category.

You are not factoring in all expenses to get that number.
Please try again...


It is true but we are debt free and live in a low cost of living area. It would not work in some parts of the country.

User avatar
JDCarpenter
Posts: 1181
Joined: Tue Sep 09, 2014 2:42 pm

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby JDCarpenter » Sat Oct 25, 2014 9:25 pm

staythecourse wrote:I don't mean to steal the thread, but just wondering for those who are in the "I can spend >120k per year with <3% withdrawal" or better why did you not retire earlier?

It would seem the chances of running out of money happened A LOT earlier then the chances of dying before hitting the "I can survive to 95 and not go broke".

I would guess a large portion of these folks will not make it to see the fruition of their large wealth or at the least be in excellent health all the way into their 70's or 80's+ to be able to travel to all the destinations they plan for in their long term plans.

Good luck.


Hmm. I"ve seen that others have answered. Our reasoning is consistent with those, and has several components:

1. longevity genes and lifelong efforts to keep in shape. When your parents are climbing step pyramids in their late 70s, you plan for the same. DW's Grandparents who survived acccidents/childbirth into 90s and mentally spry. Her parents mid-80s,and seem at least a decade younger, FIL plays tennis 3 times week at 85 and could give his state ranked granddaughter a match up until three years ago, when she hit 16. My folks, at least those who didn't kill themselves with tobacco, made it into nineties still mentally adept.

2. Jobs are interesting, and before leaving them, we wanted to make sure that all three kids are well-launched on careers and aren't needing to borrow money for a grad/professional school program (one has, but is already paying back per the promissory note).

3. Once retired, it is not realistic to come back into a desirable position in either medicine or law at our ages. Better safe than sorry.

4. 3% withdrawal rate is our upper target per Pfau's analyses (although we will go dynamic at higher rate). Plus, we continue to plan for "$0" Social Security (if we get it, it will go to the ones paying it--our kids), and no inheritances from our parents. Given our desire/want for extensive international travel and DW's dislike of flying coach over the pacific, 120,000 is pushing it, so we will work for three more years before calling it quits in mid to late 50s.
Edit Signature

User avatar
4nursebee
Posts: 856
Joined: Sun Apr 01, 2012 7:56 am
Location: US

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby 4nursebee » Sun Oct 26, 2014 5:37 am

Thanks to all those retirees that list actual data.

I recall the OP asking how much do people "feel" they will need in retirement. Going on feelings, ie guessing, is not a good approach to finances or the market. I "feel" like selling my holdings when the market is bad and buying when it is good. Instead I have to look at the "facts", which is why I appreciate the BH principles. Facts are a low cost index fund increases my money at retirement.

To understand the facts in my situation I have been keeping track of what we spend right now, broken down over broad categories. I know that the range we spent is between 3-9K/month though average is $5260. Fact not feeling.
I expect the average to come down but will see if that is fact or fiction.

KNOWING this, knowing pension amount, rental income amount, expected annuity payment, expected healthcare costs I can decide if an expected drawdown rate is appropriate.
4nursebee

User avatar
obgyn65
Posts: 770
Joined: Sun May 06, 2012 9:11 am

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby obgyn65 » Sun Oct 26, 2014 5:53 am

I am 49, single, and thanks to pensions, SS, and 3% SWR, I could live on $120k a year until 95. However, I am happy living on $40k-50k. Still working though.
"The two most important days in someone's life are the day that they are born and the day they discover why." -John Maxwell

User avatar
Padlin
Posts: 654
Joined: Thu Mar 01, 2007 7:46 pm
Location: Rolling around the USA

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby Padlin » Sun Oct 26, 2014 7:01 am

Retired at 56, kind of a mid cost of living area, no debt.
Combined pre-retirement gross income roughly $120k, expenses $60-65k.
Post retirement net $60-65k.
We're RVers, travel the country for a couple months, costs about the same as a couple low end weeks in the Caribbean and is part of the $60-65k.

A couple things I've observed.
Retiring at 56 does not seem to be the norm, by far most folks work till SS, be it 62 or 66, mostly the latter.
I'm the only one I know that plans on waiting for SS till 70.
Regards | Bob

IlliniDave
Posts: 2028
Joined: Fri May 17, 2013 7:09 am

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby IlliniDave » Sun Oct 26, 2014 7:11 am

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.


Not retired yet, but your "description" is a bit too general. It's tedious, but what you probably need to do flesh out a notional future budget for yourself. An "upper middle class" lifestyle can mean a broad range of things. I started with my current spending (with which I live contently), adjusted them for the absence of a full-time professional career, estimated the costs of some moderate increased leisure expenses, and added a $1000/month bogey for health insurance, then plussed it up for income tax. That came in a little below the median household income, so I rounded up to approximately that, around $50K pre-tax. I'm single, and plan to enter retirement debt-free. That's probably not what would be considered upper-middle class by most, but to achieve that I'll be taxing my retirement accounts at < 2% annually, so there's a good chance I'll have plenty of margin for the occasional splurge, or be able to weather a wide variety unforeseen negative issues.

As I mentioned, it's a bit tedious of a chore, and while one cannot anticipate everything or know the future with precision, you probably get a better answer that way than picking a number that seems like it should work.
Don't do something. Just stand there!

nbseer
Posts: 136
Joined: Wed Jan 01, 2014 10:00 am
Location: New Jersey

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby nbseer » Sun Oct 26, 2014 7:49 am

I retired end of last year at age 62. House, 2 cars, child's college all done and paid for, no debt.

Will get pension in two years, will wait till 70 for SS, but will file and suspend at 66 so wife gets spousal benefit.

Until then will rely on TIRA withdrawls which will only last until pension starts (that is, also until RMD's start).

Will need Obamacare for myself until Medicare starts, wife is already on Medicare.

Unfortunately, live in high-property tax NJ.. but seems like around $50,000/year provides for comfortable life/travel/dining out for us.

Being debt-free is a big part of that.

cashmeout
Posts: 14
Joined: Sun Oct 12, 2014 7:02 am

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby cashmeout » Sun Oct 26, 2014 10:43 am

Not sure if this was discussed as I haven't read thru every response, but one issue that my wife and I discuss (ages 55 & 54) is that we want to do most of our traveling before the age of 75. We feel that we can enjoy traveling far more in our younger years of retirement and that health issues will make traveling after 75 difficult. Lord knows that at our ages dealing with travel thru airports can be stressful now... never mind when we are older. Plus I am sure that after 75 more of our income will go to pay for health related issues. Plus moving to a state such as Florida that does not have a state income tax or estate tax and does not tax SS or pension benefits is a way to stretch retirement dollars. Plus I hate the winters in my area.

User avatar
VictoriaF
Posts: 16443
Joined: Tue Feb 27, 2007 7:27 am
Location: Black Swan Lake

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby VictoriaF » Sun Oct 26, 2014 11:00 am

I keep a spreadsheet with my budget and actual expenses. For the retirement years, I took my working-years budget, increased expenses in some categories and reduced expenses in other categories. The result was a large net increase in my expenses. The only major area that decreased was IRA contributions in the absence of employment income. The most significant budget increase was for the travel and entertainment expenses.

I will try to hold myself accountable to spend no *less* than my budget, which could be tricky because I fly economy, stay in hostels, and don't seek expensive dining. On the other hand, I like taking long vacations, measured in months rather than days, and I fly internationally several times a year. In 2015, I want to spend two months in Spain, first walking el Camino de Santiago and then sightseeing. In addition to Spain, I will go to Germany for at least two weeks and to South Korea. There is also a possibility that I will travel several times to Europe for one of my retirement projects. After I make detailed plans for these trips, I will see how much time and money I will have left on other activities.

For 2016, I will see how much I will have spend in 2015 and adjust my budget accordingly.

The purpose of my retiring was to do things that I could not do while I was working. I don't want saving money to prevent me from pursuing this purpose.

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

hoops777
Posts: 1490
Joined: Sun Apr 10, 2011 12:23 pm

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby hoops777 » Sun Oct 26, 2014 12:29 pm

Cashmeout....We are 62 and 64 and my wife loves to travel.We are trying to do all of our big trips now,while we know we can.It is a little tough to get away because of my business,but since I own it I have more flexibility.We do not want to be in that famous situation of always planning and never doing it.
I am very confident we can retire comfortably on 5000 a month in todays dollars after taxes.
K.I.S.S........so easy to say so difficult to do.

fposte
Posts: 837
Joined: Mon Sep 02, 2013 1:32 pm

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby fposte » Sun Oct 26, 2014 12:34 pm

4nursebee wrote:I recall the OP asking how much do people "feel" they will need in retirement. Going on feelings, ie guessing, is not a good approach to finances or the market. I "feel" like selling my holdings when the market is bad and buying when it is good. Instead I have to look at the "facts", which is why I appreciate the BH principles. Facts are a low cost index fund increases my money at retirement.


Though I do think the OP was trying to get at emotional security as well as financial security--that's why the title and the post are a little contradictory, in that what was really asked was how much would mean we don't worry about bills. For many of us, that would involve a generous safety margin. I know I need less to live on than what I stated, but it would not include the kind of insulation from worry that seemed part of the question.

Lynette
Posts: 1158
Joined: Sun Jul 27, 2014 9:47 am

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby Lynette » Sun Oct 26, 2014 3:27 pm

staythecourse wrote:
Lynette wrote:Not everyone dreams of retiring early.


Excellent point. I guess the abnormal is the goal to retiring early to enjoy the fruits of their labor.

The norm. for many is the sense of accomplishment and meaning in the work they do despite what it means to their bottom line.

Good insight.

Good luck.


I always wanted to travel but for nearly 30 years I went to South Africa once or twice a year to see my parents. Then I decided that I could combine that with my dream of travel. I've been doing that for nearly 20 years since I started getting a pension and a salary. Work is OK. It pays for my travel. As I'm working into my seventies, I've been able to continue to travel extensively. I'm now in the Knoxville/Smoky Mountain area. I will be joining my group on Tuesday and decide if I really want to go on the long hikes. I did not realize that the accents in Tennessee were so southern. I found it hilarious that the lady at McDonalds could not understand my accent. :D

Life is fun - enjoy
Lynette

avalpert
Posts: 4657
Joined: Sat Mar 22, 2008 4:58 pm

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby avalpert » Sun Oct 26, 2014 3:54 pm

staythecourse wrote:
Lynette wrote:Not everyone dreams of retiring early.


Excellent point. I guess the abnormal is the goal to retiring early to enjoy the fruits of their labor.

The norm. for many is the sense of accomplishment and meaning in the work they do despite what it means to their bottom line.

Good insight.

Good luck.

I'm not sure it is fair to say that is the norm. Do you think most people in say retail do it for the sense of accomplishment and meaning in their work or do they do it as a means to an end and find their sense of accomplishment and meaning (if any) in family, community etc.? I think it is far more likely that the norm is the latter rather than the former.

Professor Emeritus
Posts: 2628
Joined: Mon Aug 13, 2012 6:43 am

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby Professor Emeritus » Sun Oct 26, 2014 4:18 pm

cashmeout wrote:Not sure if this was discussed as I haven't read thru every response, but one issue that my wife and I discuss (ages 55 & 54) is that we want to do most of our traveling before the age of 75. We feel that we can enjoy traveling far more in our younger years of retirement and that health issues will make traveling after 75 difficult. Lord knows that at our ages dealing with travel thru airports can be stressful now..


63 and 62 , DW is ambulatory disabled.
Interestingly travel is one area where spending money can make a great deal of difference in the stressfullness of travel. I budget 20 k a year to deal with DW's disability issues and about 15 k of that is spending more for travel. I pay for refundable tickets, insurance, taxis, guides, extra services and even discount first class airfare. If there is a weight limitation on luggage I pay the overweight charges if we need the stuff. I buy spares of camera and computer equipment. DW can no longer scuba dive. We had to give up skiing. But there is a big world out there and we haven't seen all of it.

KingTut
Posts: 7
Joined: Sat Sep 29, 2012 11:46 am

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby KingTut » Sun Oct 26, 2014 4:51 pm

A lot of variables obviously but here are my thoughts. Using today's dollars, I believe my wife and I will need at a minimum of 60K a year in retirement to maintain a lifestyle we enjoy. However, I am shooting to be able to afford to spend $90k a year during retirement. That means we will have $30K a year for luxuries or helping others out. If I could ever afford to spend $120K a year in retirement I wouldn't retire that day regardless of age. Many in my family earn less than $60k a year and live happy lives but they worry about $$$ more than I would like to do during retirement.

letsgobobby
Posts: 10039
Joined: Fri Sep 18, 2009 1:10 am

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby letsgobobby » Sun Oct 26, 2014 4:53 pm

My dad turns 80 next year and his travel expenses are increasing not decreasing, not for any disability reasons but just to be a little more comfortable. Limited time becomes the problem more than limited money, but this approach still costs something.

Theintern
Posts: 9
Joined: Sat Aug 11, 2012 5:59 pm

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby Theintern » Mon Oct 27, 2014 2:42 pm

Lynette wrote:
staythecourse wrote:
Lynette wrote:Not everyone dreams of retiring early.


Excellent point. I guess the abnormal is the goal to retiring early to enjoy the fruits of their labor.

The norm. for many is the sense of accomplishment and meaning in the work they do despite what it means to their bottom line.

Good insight.

Good luck.


I always wanted to travel but for nearly 30 years I went to South Africa once or twice a year to see my parents. Then I decided that I could combine that with my dream of travel. I've been doing that for nearly 20 years since I started getting a pension and a salary. Work is OK. It pays for my travel. As I'm working into my seventies, I've been able to continue to travel extensively. I'm now in the Knoxville/Smoky Mountain area. I will be joining my group on Tuesday and decide if I really want to go on the long hikes. I did not realize that the accents in Tennessee were so southern. I found it hilarious that the lady at McDonalds could not understand my accent. :D

Life is fun - enjoy
Lynette


As an alumnus of the University of Tennessee and growing up in the state, I can confirm that people in East TN have a very unique accent. The state is so long that each part (ie., East, Middle, & West) has its own interesting qualities. As you travel west in the state, the accent moves from hillbilly-ish to country, if you know what I mean? Oh well, maybe you just have to visit to see. I'm not sure why I am still commenting anymore. Seeing as how I am 22, I have absolutely no idea on my target income, but I do appreciate the opinions in the thread. Thank you! :sharebeer

nelson1015
Posts: 128
Joined: Mon Aug 11, 2014 3:21 pm

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby nelson1015 » Mon Oct 27, 2014 2:53 pm

fposte wrote:
4nursebee wrote:I recall the OP asking how much do people "feel" they will need in retirement. Going on feelings, ie guessing, is not a good approach to finances or the market. I "feel" like selling my holdings when the market is bad and buying when it is good. Instead I have to look at the "facts", which is why I appreciate the BH principles. Facts are a low cost index fund increases my money at retirement.


Though I do think the OP was trying to get at emotional security as well as financial security--that's why the title and the post are a little contradictory, in that what was really asked was how much would mean we don't worry about bills. For many of us, that would involve a generous safety margin. I know I need less to live on than what I stated, but it would not include the kind of insulation from worry that seemed part of the question.


I'm the OP and I was more referring to what ideal retirement income everyone is shooting for. This would be a value much more than the minimum necessary to "survive" for most people. I also realized at the onset that I would receive a wide range of responses. I created this thread mostly out of curiosity and the replies thus far have been great!

User avatar
BHCadet
Posts: 391
Joined: Sun Jan 15, 2012 12:47 am
Location: SoCal

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby BHCadet » Mon Oct 27, 2014 3:14 pm

I just retired this year.
Income needed is fluctuated from year to year.
I estimated we need the followings after taxes:
...$70k base.
...$30K for travel.
...$20k for big ticket items/emergency.
...$35k for my child’s college.
Expenses for college will end in three years.
Travel and big ticket items could be optional.
If necessary, we can cut back on the base amount too.

User avatar
HomerJ
Posts: 9781
Joined: Fri Jun 06, 2008 12:50 pm

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby HomerJ » Mon Oct 27, 2014 4:36 pm

It's easier when you're closer to retirement.

We're about ten years out (youngest kid graduates college in 10 years), and our current expenses will very likely be about the same in retirement. Maybe spend a little more on vacations and health care premiums, but a little less with the kid gone.

So we track our current expenses, and we spend about $5000 a month plus another $1000 a month for vacations (this is with house paid off, living in the Mid-west).

So we spend $72,000 a year NOW, and that's a really nice lifestyle...

Now in 10 years, my wife can collect Social Security... around $1500/month... That's $18k a year, inflation adjusted.... So now we only need $54,000 a year from our investments.

Figure 3% inflation, and that $54,000 in today's money is $72,000 ten years from now...

$72,000 x 25 = $1.8 million.

So I'm shooting for $1.8 million (with a paid off house, and wife's SS coming in).

My Social Security is just an extra buffer that maybe we'll start collecting 10 years after I retire.

vested1
Posts: 904
Joined: Wed Jan 04, 2012 4:20 pm

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby vested1 » Mon Oct 27, 2014 6:00 pm

staythecourse wrote:I don't mean to steal the thread, but just wondering for those who are in the "I can spend >120k per year with <3% withdrawal" or better why did you not retire earlier?

It would seem the chances of running out of money happened A LOT earlier then the chances of dying before hitting the "I can survive to 95 and not go broke".

I would guess a large portion of these folks will not make it to see the fruition of their large wealth or at the least be in excellent health all the way into their 70's or 80's+ to be able to travel to all the destinations they plan for in their long term plans.

Good luck.


I would say that your incredulity is misplaced considering the saver mentality of most who contribute to this forum. We are planners, and planners are usually averse to taking unnecessary chances. I made a plan that involved my wife maximizing her pension, which increases dramatically during the last 1.5 years of her employment, which ends next year at her age 62. I refuse to retire if she is still working, so voila, there you have it. I also come from a family who did little or nothing to prepare for retirement and paid dearly for that mistake.

That we will have a comfortable retirement is not an accident, although our best laid plans may be derailed by events out of our control.

ubermax
Posts: 1235
Joined: Tue Feb 11, 2014 2:19 pm
Location: Connecticut

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby ubermax » Mon Oct 27, 2014 6:53 pm

Our core retirement budget is roughly 60% of out pre-ret gross & that's split 57% SS/pension and 43% Savings ; the budget is roughly based on our spending habits during the 3 years before retirement & assumes 3% inflation & 6% return ; it's not a rigid budget , for travel and unexpected larger expenses we dip into savings ; so far we haven't had to adjust the amount from savings for inflation .

2 bits
Posts: 52
Joined: Fri Jun 27, 2014 9:42 am

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby 2 bits » Mon Oct 27, 2014 7:50 pm

Padlin wrote:Retired at 56, kind of a mid cost of living area, no debt.
Combined pre-retirement gross income roughly $120k, expenses $60-65k.
Post retirement net $60-65k.
We're RVers, travel the country for a couple months, costs about the same as a couple low end weeks in the Caribbean and is part of the $60-65k.

A couple things I've observed.
Retiring at 56 does not seem to be the norm, by far most folks work till SS, be it 62 or 66, mostly the latter.
I'm the only one I know that plans on waiting for SS till 70.


+1 Padlin, this is comforting to see as it fits me to a tee. $120 K combined current gross; expecting to spend $66 - 70K. With19 full moons to go before retirement we are watching the spending to see if the $66-70k will fit our current lifestyle. We have ramped up the 403 b and 457 contributions to put the artificial limit on our income to match expected income in early retirement years. That starts at 57 for me. SS at 70.

We live in a moderate col area, our home is paid for, not the rentals (I am letting somebody else pay them off), a modest trailer in the woods by the river. Might dip into savings to get the place on the river. DW loves to travel. Planning some of those trips now. Might try that RV thing too.
Good read all, fun stuff. Thanks to those sharing real numbers.
I sometimes think that I am living the life of which my immigrant ancestors dreamed.

hoops777
Posts: 1490
Joined: Sun Apr 10, 2011 12:23 pm

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby hoops777 » Mon Oct 27, 2014 8:50 pm

Not to be a pessimist but I would caution anyone retiring early because they assume the stock market will give them 6,7 8 or maybe 10 pct over the next x amount of years.Yes it probably will over time but probably does not give me the confidence that I will not have to sell my home at age 75 because I expected the market to act like it usually has.No way I retire early without a guaranteed safe money covering my expected and unexpected expenses. :P
K.I.S.S........so easy to say so difficult to do.

avalpert
Posts: 4657
Joined: Sat Mar 22, 2008 4:58 pm

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby avalpert » Mon Oct 27, 2014 9:13 pm

hoops777 wrote:Not to be a pessimist but I would caution anyone retiring early because they assume the stock market will give them 6,7 8 or maybe 10 pct over the next x amount of years.Yes it probably will over time but probably does not give me the confidence that I will not have to sell my home at age 75 because I expected the market to act like it usually has.No way I retire early without a guaranteed safe money covering my expected and unexpected expenses. :P

Well, since there is no such thing as guaranteed safe money and unexpected expenses apriori are infinite I guess you aren't retiring 'early' - so when is it no longer early?

RetiredinKaty
Posts: 109
Joined: Mon Sep 09, 2013 6:52 pm

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby RetiredinKaty » Mon Oct 27, 2014 9:47 pm

I am approaching 3 years in retirement. Columnist Scott Burns sometimes writes about his "Life of Riley" index, which is supposed to be at the upper 25% of household income. His value for this amount was about $74,000 per year based on IRS data, but I have seen Census data that put it at about $96,000. Either way, I think this is a good way to look at things - at least 1 out of 4 households ought to be able to find happiness with their income.

hoops777
Posts: 1490
Joined: Sun Apr 10, 2011 12:23 pm

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby hoops777 » Mon Oct 27, 2014 9:52 pm

Well I am not so pessimistic to say there is no such thing as safe money.I would think treasuries,ibonds,cd's,cash and I would throw in highest rated GO muni's as safe money.If you have to worry about inflation then you should work a few more years.Retiring early is a luxury as discussed here so you should have a lot of money....enough to live off without the stock market.Just my opinion.It is no longer early when you can cover your retirement without higher stock market returns that are in NO WAY guaranteed.To me it is great to retire early if you have enough to get through your worse case scenario such as health problems or a stock market that really stinks for a long period of time.If you retire early and do not have a large cushion .....good luck.
K.I.S.S........so easy to say so difficult to do.

avalpert
Posts: 4657
Joined: Sat Mar 22, 2008 4:58 pm

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby avalpert » Mon Oct 27, 2014 10:06 pm

hoops777 wrote:Well I am not so pessimistic to say there is no such thing as safe money.I would think treasuries,ibonds,cd's,cash and I would throw in highest rated GO muni's as safe money.If you have to worry about inflation then you should work a few more years.Retiring early is a luxury as discussed here so you should have a lot of money....enough to live off without the stock market.Just my opinion.It is no longer early when you can cover your retirement without higher stock market returns that are in NO WAY guaranteed.To me it is great to retire early if you have enough to get through your worse case scenario such as health problems or a stock market that really stinks for a long period of time.If you retire early and do not have a large cushion .....good luck.

Well you are changing your tune here a bit aren't you. We are no longer talking about 'guaranteed' safe and we are now talking about not needing 'higher' stock market returns - higher than what?

hoops777
Posts: 1490
Joined: Sun Apr 10, 2011 12:23 pm

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby hoops777 » Tue Oct 28, 2014 12:00 am

I am saying treasuries,cd's,ibonds and GO highest rated Muni's are guaranteed safe money.If some catstrophic event occured which caused these to lose money it would no longer matter because there would be chaos.The stock market however could return nothing or lose money over a prolonged period of time and life would go on.As a matter of fact 2000 to 2010 was not real great and it could be longer and worse than that very easily.You may not like my point but it is valid.I see many people here who in my opinion take for granted that the market will always come back and give them their 7 or 8 or 10 pct even if it is bad for a few years.My point is if you retire early with a need for the market to do that to have a comfortable retirement you are gambling with your future.I am not talking about people who have to retire and do not have a lot of money and in a sense are at the mercy of the stock market.....A very simple point...If you choose to retire early because you think the stock market is going to fund it you better think twice.
K.I.S.S........so easy to say so difficult to do.

Johm221122
Posts: 4880
Joined: Fri May 13, 2011 6:27 pm

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby Johm221122 » Tue Oct 28, 2014 3:59 am

Hoops777,
Those retiring around 2000 seem to be fine
viewtopic.php?f=10&t=134142

viewtopic.php?f=10&t=99278&hilit=+retired+in+2000
But there are no guarntees,

John

dolphinsaremammals
Posts: 2094
Joined: Tue Jul 22, 2014 4:18 pm

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby dolphinsaremammals » Tue Oct 28, 2014 5:55 am

I burn through about $65K a year, no debt, but my property taxes are about $14K. Also, even with Medicare, Medigap Plan F, and Plan D, my medical expenses other than premiums last year were about $4K. Expensive dental work as well. Fortunately, the house didn't need major maintenance, but that can run several thousand if a new roof is needed, it's time to repaint, etc.
Last edited by dolphinsaremammals on Tue Oct 28, 2014 6:06 am, edited 1 time in total.

dolphinsaremammals
Posts: 2094
Joined: Tue Jul 22, 2014 4:18 pm

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby dolphinsaremammals » Tue Oct 28, 2014 5:58 am

The Wizard wrote:
I know someone who pays just over $800 a month for ACA health insurance in retirement (not eligible for Medicare). And that's just one expense category.


They must be fairly well to do to be shelling out that much. Otherwise they'd be getting a subsidy, I would think.

The Wizard
Posts: 9878
Joined: Tue Mar 23, 2010 1:45 pm
Location: Reading, MA

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby The Wizard » Tue Oct 28, 2014 7:18 am

dolphinsaremammals wrote:
The Wizard wrote:
I know someone who pays just over $800 a month for ACA health insurance in retirement (not eligible for Medicare). And that's just one expense category.


They must be fairly well to do to be shelling out that much. Otherwise they'd be getting a subsidy, I would think.

That retired person (not me) had a MAGI of just over $50,000 hence no subsidy in the state of Rhode Island.

But my point in mentioning that number was to argue against setting your needed income too low in retirement.
Stuff breaks down and needs fixing or replacement, whether we're discussing body parts or mechanical things in your house...
Attempted new signature...

avalpert
Posts: 4657
Joined: Sat Mar 22, 2008 4:58 pm

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby avalpert » Tue Oct 28, 2014 9:21 am

hoops777 wrote:I am saying treasuries,cd's,ibonds and GO highest rated Muni's are guaranteed safe money.

High inflation would take away the safety of treasuries, cd''s and muni's without requiring chaos. A political default on Treasuries would cause many issues in the financial world but wouldn't neccesarily come with total chaos.

The only guarantee in life is death - waiting for 100% safety is not a valid point. Basically it is the same thing as saying you won't get into a car until their is guarantee of no accidents. Yes stocks could have a prolonged period of negative returns and you should be sure you are financially resilient enough to adapt - but given the actual likelihood of that happening you shouldn't put your life on hold 'just in case'.

A very simple point...If you choose to retire early because you think the stock market is going to fund it you better think twice.

Ok, simple question - do you think a 4% withdrawal rate is safe or not?

User avatar
Bustoff
Posts: 1979
Joined: Sat Mar 03, 2012 6:45 pm

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby Bustoff » Tue Oct 28, 2014 10:29 am

I think $2 million is more than enough for most people.

bradshaw1965
Posts: 608
Joined: Tue Jul 31, 2007 9:36 pm

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby bradshaw1965 » Tue Oct 28, 2014 10:49 am

hoops777 wrote:Well I am not so pessimistic to say there is no such thing as safe money.I would think treasuries,ibonds,cd's,cash and I would throw in highest rated GO muni's as safe money.If you have to worry about inflation then you should work a few more years.Retiring early is a luxury as discussed here so you should have a lot of money....enough to live off without the stock market.Just my opinion.It is no longer early when you can cover your retirement without higher stock market returns that are in NO WAY guaranteed.To me it is great to retire early if you have enough to get through your worse case scenario such as health problems or a stock market that really stinks for a long period of time.If you retire early and do not have a large cushion .....good luck.


I see a lot of the opposite here, expectations that the stock market will return much lower then historical returns and plans for very, very low withdrawal rates and figuring in complete elimination of Social Security income at the planning stages. If it makes you feel better about the situation then do whatever works, but it's just as much of an outlier as expecting rosy outcomes.

The Wizard
Posts: 9878
Joined: Tue Mar 23, 2010 1:45 pm
Location: Reading, MA

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby The Wizard » Tue Oct 28, 2014 10:52 am

Bustoff wrote:I think $2 million is more than enough for most people.

That number I think you mean for Retirement Assets, not Gross Yearly Income.
But yes, I could survive nicely with $2M in taxable income each year as well. It would be no problem keeping my yacht's fuel tank full...
Attempted new signature...

User avatar
JDCarpenter
Posts: 1181
Joined: Tue Sep 09, 2014 2:42 pm

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby JDCarpenter » Tue Oct 28, 2014 10:55 am

The Wizard wrote:
Bustoff wrote:I think $2 million is more than enough for most people.

That number I think you mean for Retirement Assets, not Gross Yearly Income.
But yes, I could survive nicely with $2M in taxable income each year as well. It would be no problem keeping my yacht's fuel tank full...


Naw, you'd have to buy more and bigger, until the point at which you'd have problems keeping your yachts' tanks full! :-)
Edit Signature

User avatar
VictoriaF
Posts: 16443
Joined: Tue Feb 27, 2007 7:27 am
Location: Black Swan Lake

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby VictoriaF » Tue Oct 28, 2014 10:59 am

JDCarpenter wrote:
The Wizard wrote:
Bustoff wrote:I think $2 million is more than enough for most people.

That number I think you mean for Retirement Assets, not Gross Yearly Income.
But yes, I could survive nicely with $2M in taxable income each year as well. It would be no problem keeping my yacht's fuel tank full...


Naw, you'd have to buy more and bigger, until the point at which you'd have problems keeping your yachts' tanks full! :-)


It takes only $50m in assets to get $2m annual income at the 4% withdrawal rate. I pity billionaires who have a real problem finding suitable spending.

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

User avatar
HomerJ
Posts: 9781
Joined: Fri Jun 06, 2008 12:50 pm

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby HomerJ » Tue Oct 28, 2014 11:03 am

The Wizard wrote:
rec7 wrote:We need about 16k a year.

Umm, $16k a year is way low for one person, not to mention a We.

I know someone who pays just over $800 a month for ACA health insurance in retirement (not eligible for Medicare). And that's just one expense category.

You are not factoring in all expenses to get that number.
Please try again...


If you have a paid off small house (easier to cool and heat), and live in LCOL area, food and electricity and Internet just isn't all that expensive.

My parents live on 100 acres (80 of it wooded) in southern Missouri... Place is paid for, property taxes are $500 a year. They both are over 65 and have Medicare. All they really have to pay for is food, electricity, cable, and Internet. They have a wood-stove that heats most of the house, and 80 acres of trees to get firewood. They spend more than $16k a year, but if they had to, I bet they could live on $16k, and be living better than 50% of the people in the United States.

User avatar
Bustoff
Posts: 1979
Joined: Sat Mar 03, 2012 6:45 pm

Re: Gross Yearly Income needed in Retirement (Speculation)

Postby Bustoff » Tue Oct 28, 2014 11:13 am

The Wizard wrote:
Bustoff wrote:I think $2 million is more than enough for most people.

That number I think you mean for Retirement Assets, not Gross Yearly Income.
But yes, I could survive nicely with $2M in taxable income each year as well. It would be no problem keeping my yacht's fuel tank full...

...and you could hire an entire crew! 8-)

Yep, I just figured pick your own SWR.
2% SWR gets you $40K per year plus SS. (bullet-proof*)
3% allows 60K per year plus SS. (probably safe*)

* Ages of the Investor, Bernstein, William J.


Return to “Personal Finance (Not Investing)”

Who is online

Users browsing this forum: Afty, Bogleingle, EasilyConfused, Easy Rhino, Google [Bot], Jill07, ksb, N10sive, nura, Pranav, SheReadsHere719, TBillT, Viking Too and 129 guests