Gross Yearly Income needed in Retirement (Speculation)

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Grt2bOutdoors
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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by Grt2bOutdoors » Wed Oct 22, 2014 7:20 am

anonforthis wrote: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.


Try that when real estate property taxes cost $15K per year for an "average" home. Or rent for a 1 bedroom efficiency apartment is $1,400 but a parking space costs you $400 per month. Not exactly living high on the hog.
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market timer
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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by market timer » Wed Oct 22, 2014 7:28 am

Grt2bOutdoors wrote:
anonforthis wrote: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.


Try that when real estate property taxes cost $15K per year for an "average" home. Or rent for a 1 bedroom efficiency apartment is $1,400 but a parking space costs you $400 per month. Not exactly living high on the hog.

It seems like a waste of money to live in such a place when retired.

Grt2bOutdoors
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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by Grt2bOutdoors » Wed Oct 22, 2014 7:37 am

market timer wrote:
Grt2bOutdoors wrote:
anonforthis wrote: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.


Try that when real estate property taxes cost $15K per year for an "average" home. Or rent for a 1 bedroom efficiency apartment is $1,400 but a parking space costs you $400 per month. Not exactly living high on the hog.

It seems like a waste of money to live in such a place when retired.


I suppose you have no family nearby, or you're a free bird. A neighbor of mine pays $22K per year and is retired from a government job that paid him 70% of final salary after 25 years (he paid 7% of his salary into that pension - now they no longer offer those benefits because they found out that 15% (7% him and 8% state) wasn't nearly enough to offer such a sweetheart deal). Another neighbor packed up and moved to Delaware where real estate taxes are $800 per year, but comes back up to visit his doctors and use other services he can't get down there.

BTW, the going rate for a plot in the ground is $10K (for a 6 foot by 10 foot hole). Is that a waste of money to live when retired? :)
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Bill M
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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by Bill M » Wed Oct 22, 2014 7:41 am

The "rules of thumb" all seem to be a percentage of pre-retirement income. I found that ridiculous, since (like most Bogleheads) we saved a LOT.

So instead, I kept track of actual expenses for several years. Everything went through our joint checking account, so it was simple to get a CSV file from the bank at year-end, add up all the withdrawals. That established the baseline figure -- that in retirement we would spend everything we did pre-retirement.

Then the "extras". Pure speculation. How many European/African/Asian vacations per year?? How much other stuff?? To get a handle on the amount, I assumed one big trip per month -- and since that is a gross overestimate of what we actually have done, we can feel good about saving the excess.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by Grt2bOutdoors » Wed Oct 22, 2014 7:47 am

Bill M wrote:The "rules of thumb" all seem to be a percentage of pre-retirement income. I found that ridiculous, since (like most Bogleheads) we saved a LOT.

So instead, I kept track of actual expenses for several years. Everything went through our joint checking account, so it was simple to get a CSV file from the bank at year-end, add up all the withdrawals. That established the baseline figure -- that in retirement we would spend everything we did pre-retirement.

Then the "extras". Pure speculation. How many European/African/Asian vacations per year?? How much other stuff?? To get a handle on the amount, I assumed one big trip per month -- and since that is a gross overestimate of what we actually have done, we can feel good about saving the excess.


One big trip per month? - that could cost $10K or more - per month.
You must have ALOT of cattle.
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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by Kaufmanrider » Wed Oct 22, 2014 7:48 am

We live comfortably (same lifestyle as when working) on my retirement income, Gross is $70,000. After taxes, health benefits and survivor benefits net $57,000 a year, about $4800 a month.

We have a mortgage and one small student loan for my daughter.

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

Post by market timer » Wed Oct 22, 2014 7:54 am

Grt2bOutdoors wrote:I suppose you have no family nearby, or you're a free bird.

No family nearby aside from my wife and son and the in-laws.

BTW, the going rate for a plot in the ground is $10K (for a 6 foot by 10 foot hole). Is that a waste of money to live when retired? :)

It's not how I would choose to spend my last $10K. Cremation for me. As a one-time expense, it's not so bad, though.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by coalcracker » Wed Oct 22, 2014 7:59 am

Still about 10-15 years (hopefully) from early retirement. My goal is to have 12k/month AFTER tax to be able to live a fairly extravagant lifestyle in my world.

We love to travel and would do so frequently and internationally. By having the time to take longer trips (maybe 4-6 weeks), we would save money on flights and rent apartments rather than hotels. If funds permit we may even spring for business class on longer flights, or at least try to upgrade.

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

Post by nordlead » Wed Oct 22, 2014 8:04 am

I spend ~$50k/year right now (excluding income taxes). I figure in early retirement $50-60k should be more than enough to travel a couple times per year considering I will own my home, own my cars, have no more kids at home, and not have to drive to work every day. My range goes to $60k since I don't know how health insurance will pan out (I haven't even looked at the ACA since I have employer health care and who knows how it'll change in the next 20 years).

So, gross would be $50-60k plus whatever you expect to pay in federal + state taxes. If we call that ~8%, then that would be ~$55-65k. $80k/year would mean a little more in income taxes and another ~$10k in fun money. That would pay for another 1-2 expensive vacations/year.

But, then again, it depends on your definition of travel. I travel all over the eastern US and Canada and it isn't that expensive. Drive there for ~$50-200, spend the week for ~$200-2000 depending on what type of accommodations you want to use. Even a week long cruise for 2 can be had for under $1k total if you live in a port city (otherwise you have to factor in transportation costs) and you are flexible with your dates. But, there are plenty of travel options that'll run you $5-10k too.

FYI, I live in a area listed with a COL index of anywhere from 95-105 (depending on the website you visit). I'd believe 100 since NY has the highest (or one of) tax burden, but since I live in CNY instead of NYC things are cheaper than the real high COL areas.

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l2ridehd
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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by l2ridehd » Wed Oct 22, 2014 8:12 am

I am retired, have about the same set of items you describe and do many of the things you plan. I plan on an income of 120K before taxes. So far it works fine and I only spend around 80K. So have some extra money each year that for now goes to a fund for extended travel, car replacement, major expense, etc. My plan provides the 120K before taxes indexed for 3% inflation until we both reach 95. So far it's working and appears to be over funded by 10K to 20K a year. So far the biggest issues I have is the cash flow doesn't match the income requirements. (to much) So still need to figure out best investments. And in a couple years RMD's kick in and the problem gets worse from a tax and invest view. Yes that is a much better problem to have than the reverse. But a need to know and understand our investment strategy never goes away.

I believe if you live in a moderate COL area and have 100K before taxes, everything works out for your "upper middle class" standard you are trying to achieve.

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

Post by MikeWillRetire » Wed Oct 22, 2014 8:23 am

I'm a few years away from retirement, but I estimate about $80k gross for a retirement similar to what the OP described. It includes $10k for travel and money set aside for long term expenses like a new car.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by mikeast » Wed Oct 22, 2014 8:50 am

70K Gross with the house paid off would be just fine for my wife and I. In reality, we will probably retire at about 105K--more if I delay SS.
I guess I would place our life style on the lower end of Middle Class--- the area we live in is about average cost-of-living wise.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by TomatoTomahto » Wed Oct 22, 2014 9:20 am

Between SS and pensions, assuming no defaults, we will get around $130/year. Since only the SS is inflation adjusted, that will buy us less and less as the years go by.

I do 3 kinds of budgets: "floor" (which could be less, but for practical purposes is the $130k income stream), $240k which is "comfortable," and $360k which is "living large." We are on track to be able to live large in retirement, but I don't expect that we will.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by PatrickA5 » Wed Oct 22, 2014 9:44 am

We're 5 years from retirement. No mortgage, no debts, but we still have a teenager at home. Our current expenses are in the $100K range (net of taxes). My retirement projected expenses (once all kids on their own) is in the $80K (after taxes). We're in a LCOL area. If we could stop eating out all of the time we could probably knock off another $10K. We could probably get by on $60K if we had to.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by avalpert » Wed Oct 22, 2014 10:26 am

market timer wrote:
Grt2bOutdoors wrote:
anonforthis wrote: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.


Try that when real estate property taxes cost $15K per year for an "average" home. Or rent for a 1 bedroom efficiency apartment is $1,400 but a parking space costs you $400 per month. Not exactly living high on the hog.

It seems like a waste of money to live in such a place when retired.

That depends on what value you get from the place - be it for family, friends, entertainment, nature etc.. Frankly I find it a waste of money to live in many places that cost a small fraction of that in retirement (including some of the more 'popular' retirement destinations). You can't evaluate whether something is a waste of money for someone without investigating the value side of the equation and to assume their values are the same as yours is absurdly presumptuous.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by Enkidu » Wed Oct 22, 2014 10:40 am

Bill M wrote:I kept track of actual expenses for several years. Everything went through our joint checking account, so it was simple to get a CSV file from the bank at year-end, add up all the withdrawals. That established the baseline figure -- that in retirement we would spend everything we did pre-retirement.


This is what I did, and so far it has worked pretty well. I retired mid-year and spending is pretty consistent, perhaps a bit higher than the baseline projection based on past spending. We have done some road trips, replaced our roof, installed hardwood floors and plan to spend December in FL. In the past we have had home repairs and some travel in our annual expenses so the baseline is pretty close to our spending in our first partial year of retirement. I believe that we could spend more and perhaps next year we will, but remain somewhat cautious. Probably just part of my character.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by stoptothink » Wed Oct 22, 2014 10:51 am

anonforthis wrote: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.


Last year, our (wife, 2yr old) total living expenses were ~$22k in a medium COL area. With a paid off home and kids on their own, $40k after taxes would be living in the lap of luxury for us. We'll see, still have about 30yrs until we are planning out the details

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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by technovelist » Wed Oct 22, 2014 11:07 am

coalcracker wrote:Still about 10-15 years (hopefully) from early retirement. My goal is to have 12k/month AFTER tax to be able to live a fairly extravagant lifestyle in my world.

We love to travel and would do so frequently and internationally. By having the time to take longer trips (maybe 4-6 weeks), we would save money on flights and rent apartments rather than hotels. If funds permit we may even spring for business class on longer flights, or at least try to upgrade.


It's a lot cheaper in many cases to buy tickets and/or upgrade with miles. Matthew Bennett's "First Class Flyer" (www.firstclassflyer.com/) has a lot of tips and tricks that are especially good for those with flexible schedules such as retirees. I used to subscribe and would do so again when I have the free time to travel.
In theory, theory and practice are identical. In practice, they often differ.

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

Post by Watty » Wed Oct 22, 2014 11:16 am

I would be nice to hear from some Retirees.


Not retired yet but from what I have seen my relatives go through it really varies by age.

People in early retirement may spend a lot on things like travel and setting up a retirement home.

By the time people are in their mid-70's or so they often naturally slow down and even if they are relatively good health they may not want to do things like travel, or even go out to diner or shop much. When my Mom was in that phase she didn't even spend her whole social security check each most months even though she ample means. She had a paid off house in a moderate cost of living area so her main expenses were just things like utilities, food, a house keeper, and few things like a Medicare supplements.

Once people move to assisted living many of their other costs stop so the critical expense is the gap between what they would have spent anyway and what the assisted living costs. For the type of higher income person that you were positing about assisted living might cost more or less the same as their normal living budget, if they don't have a surviving spouse that still lives outside of assisted living.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by Frugal Disciple » Wed Oct 22, 2014 11:40 am

anonforthis wrote: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.


That is exactly what I was thinking as I was reading some of these responses, but I guess each person has their own priorities and standards. I am planning to have a passive income of about $50k/yr when I retire. I am also planning to "retire" well before the traditional 65 but also generate some other active income doing part time work on the side. Today $50k would be more than enough right now, but my family is 3 total right now and will hopefully be larger by then.
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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by Lynette » Wed Oct 22, 2014 11:52 am

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Last edited by Lynette on Wed Dec 06, 2017 10:03 am, edited 1 time in total.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by MoonOrb » Wed Oct 22, 2014 12:50 pm

I live in a relatively high cost of living area and I think I could accomplish this for about $80-90k annually without accounting for income tax, so $100k annually would seem to be feasible.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by whomever » Wed Oct 22, 2014 1:48 pm

For us, $50k + health insurance[1] gives us our current lifestyle, which is certainly in the 'buy whatever we want' category. This includes a lot of domestic travel. If the market gods smile on our retirement, we could burn more for international travel, but we're not going to delay retirement to guarantee that.

[1]I break out health insurance because it varies a lot pre and post medicare

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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by bhsince87 » Wed Oct 22, 2014 2:14 pm

whomever wrote:
[1]I break out health insurance because it varies a lot pre and post medicare


Excellent point! I hadn't even considered that in my budgeting. I guess I have more cushion than I thought.

Thanks!
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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by MichDad » Wed Oct 22, 2014 3:41 pm

We live in a high cost area. I’m eligible to retire but plan on working for about three more years. My wife and I still enjoy our respective jobs. If we retired today, we’d have about $130,000 in gross annual income from my pension and our investments/savings and rental income. This assumes a conservative 3% withdrawal rate on our investments. A good and growing portion of our investments (~27% today; perhaps 33% at the beginning of retirement) is in Roth accounts so we’ll be able to minimize our taxes. This sum does not take into account our future Social Security benefits that we’ll hold off on collecting until I turn 70 so we can continue to make Roth conversions and increase that percentage of our portfolio even further.

I estimate that when we retire in a few years, we’ll have about $150,000 in gross annual income, not including Social Security. When we start collecting Social Security in over ten years, our gross annual income could increase by $50,000. When we retire, we’ll still have over a year’s worth of mortgage payments to make but the interest rate is so low (2.49%) that I don’t want to pay it off early. Sometime after we retire, we’ll sell our big house and downsize to a nice condo. That sale will likely add significant cash to our savings.

We each have long term care insurance policies in force. We’ll also have guaranteed employer-subsidized health insurance for life.

We have plans to travel a lot each year, especially to Europe, but to Asia and Australia/New Zealand as well. In fact, we plan on living in Europe for six months each year. As we age, we’d like to be able to fly business class for the long haul flights and to stay in nice hotels and apartments. We realize that many of our friends will not be able to travel with us for long periods but we hope that we’ll have some friends accompany us for two or more week trips to different destinations.

We are both active and in good health. Our plans depend in large part on our continued health. That is the most difficult factor to control.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by coop » Wed Oct 22, 2014 4:03 pm

I am getting close to retiring, nearing age 60. I'm married, wife is 63. I have been tracking my spending for the past 3 years. A couple of things either not mentioned or just touched upon:

Health insurance - remember that when you're working full time and have health insurance through work, premiums are deducted from your paycheck pre-tax. If you retire before Medicare and you have to buy health insurance on the open market, you have to add that into your expense budget. As one poster mentioned, with Medicare that expense should drop quite a bit.

Also note that if most of your savings is in regular IRAs and 401(k), and if you are counting on a pension, all of that is taxable income. For example, if you withdraw $50,000 from your TIRA to meet your spending need based on what you are spending in your working years, you also need to add in the Federal, and possibly state, tax liability on those withdrawals. So you need to carefully consider income taxes in your budget, even though you may not have any earned income. In my case, most of my retirement savings is in 401(k) and IRA accounts and I have spent a lot of time tax planning the withdrawals and conversions to Roth IRAs to keep myself in the 15% marginal Federal bracket in retirement.

In my case it looks like I will need about $95K in retirement until I hit Medicare, then it will hopefully drop some. A big chunk of the expense will be health insurance premiums, long term care premium ($4K/year), Federal income taxes, and property taxes. I live in Texas, and although there is no state income tax, property taxes in metro areas generally run in the 2.25%-2.50% of full market value of the home. So on a relatively modest $250,000 home, one can be looking at a $5-$6,000 property tax bill each year. We aren't big world travelers, but take about 4 domestic trips a year of short duration to see our kids.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by ddunca1944 » Wed Oct 22, 2014 4:44 pm

We are into Year 7 of retirement. Our gross income (SS & pension) is $84K annually (We pay $11K for health ins premiums: Medicare, Medigap, Part D and a dental policy.) is enough to be comfortable. No debt of any kind. We take a couple of domestic trips annually. We also take one international trip annually (if the retirement accounts have been up). The funds for the international trip come out of the retirement accounts.
FWIW spouse is 65; I am 70.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by Bill M » Thu Oct 23, 2014 7:47 am

Grt2bOutdoors wrote:
Bill M wrote:Then the "extras". Pure speculation. How many European/African/Asian vacations per year?? How much other stuff?? To get a handle on the amount, I assumed one big trip per month -- and since that is a gross overestimate of what we actually have done, we can feel good about saving the excess.

One big trip per month? - that could cost $10K or more - per month.

We've sometimes dreamed about taking one of the private jet excursions offered by Smithsonian, but it hurts to even think of paying those kind of prices.

A trip could cost $10K or more, but doesn't. We prefer seeing countryside instead of fancy lobbies. Hostels are not expensive. Coach is fine; using frequent flier miles is better.

But the main point...it is better to over-estimate what you might want, instead of feeling restricted and unable to leave the house.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by Toons » Thu Oct 23, 2014 7:52 am

anonforthis wrote: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.



+1 In that ballpark :happy
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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by Grateful1 » Thu Oct 23, 2014 8:32 am

The wide variation in reports of desired gross retirement income is likely related to "needs vs wants" and the level of spending one has grown accustomed to prior to retirement. For high earners who have been prodigious savers the traditional rules of thumb about the amount needed in retirement seem to be an overestimate. That has been our experience.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by JDCarpenter » Thu Oct 23, 2014 8:45 am

Grateful1 wrote:The wide variation in reports of desired gross retirement income is likely related to "needs vs wants" and the level of spending one has grown accustomed to prior to retirement. For high earners who have been prodigious savers the traditional rules of thumb about the amount needed in retirement seem to be an overestimate. That has been our experience.


Amen. The rules of thumb provide no guidance whatsoever in this situation. Thus, our objectively outlandish desires/plans for retirement still involve annual spending of only 25-30% of our current gross income. Have a hard time even conceiving of spending 80% of pre-retirement income given our situation. (But, my siblings, all in solid blue collar families, are another story; we've worked hard, spent little, and have been lucky.)
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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by Professor Emeritus » Thu Oct 23, 2014 8:55 am

We are in our first year of full retirement.

Frankly we have more retirement income than I ever thought we would have. We paid off our house in the 1990s Paid for college for kids. Hit 50 with no debt of any kind. Starting In 2002 we were able to put lots of money into 403b 457 and TSP plans. All in index stock funds. S&P was at 820. I am clearly a brilliant market timer. Fast forward to 2014 and the S&P 500 is 1947.

With retirement I moved a big chunk into Wellesley and the fidelity bond fund. This will provide income while I defer SS and is our Self insurance for long term care. DW is disabled so she is on SSDI and at 66 I can get spousal SS and keep deferring mine.
So we will have two DB pensions and Two SS.

Our RMDs will put us in the AMT So I am taking income now and not spending it.

Disability makes some things more expensive. I budget about 20K a year for the enhanced costs of disability. so far so good
Our after tax expenditures for the last 5 years ran about 80K for the household and 40 K for trips and "luxuries' (paying for kids and now grandchildren to join us)

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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by new2bogle » Thu Oct 23, 2014 3:14 pm

How are people coming up with these numbers? 90K? 120k? Even $180k???

What kinds of savings rate does one need to take $100k/year in retirement? It seems unattainable without a two income high earning (physician level +) people.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by JDCarpenter » Thu Oct 23, 2014 3:20 pm

new2bogle wrote:How are people coming up with these numbers? 90K? 120k? Even $180k??? Budget runs of desired/wanted expenditures in retirement, based upon current research of costs. As I said in my first post on this thread, there is a LOT of fat to cut if we retire in 1929 conditions

What kinds of savings rate does one need to take $100k/year in retirement? save more than post-tax spending, and live low[ish] now to live high later. It seems unattainable without a two income high earning (physician level +) people. Yep, although I've got friends who are way way beyond us, with one income/business.
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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by avalpert » Thu Oct 23, 2014 3:40 pm

new2bogle wrote:How are people coming up with these numbers? 90K? 120k? Even $180k???

They are estimating how much they plan to spend in retirement probably based on what their current standard of living is plus some lifestyle adjustments - it isn't rocket science.

What kinds of savings rate does one need to take $100k/year in retirement? It seems unattainable without a two income high earning (physician level +) people.

Well, let's see. To get $100k in retirement using a SWD of 4% you would need $2.5M. Assuming a 5% rate of return and 30 years of savings you would need to put in ~$38k a year. Let's assume they want $100k to maintain their current $100k lifestyle so their current salary would have to be $138000 for a savings rate of ~27.5%. Not all that remarkable at all and for a couple to each earn $70k doesn't require them to be doctors at all - it would put them around the 85th percentile so attainable for 1 in every 6 households.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by jlawrence01 » Thu Oct 23, 2014 3:45 pm

I would agree with those that say that you need to see what you are currently spending prior to retirement before answering this question. We started tracking our spending about 20 months ago and now have a very good idea as to where the money is going.

I think that we could probably live on $50k per year including healthcare expenses which will increase in retirement until we are eligible for Medicare. This year, we spent $60-62, but incurred about $10k in moving costs, $5k in temporary housing, and $8k in home repairs related to our new home. It would be at least 20% more had we decided to stay in Chicagoland for what I consider to be a less comfortable lifestyle.

As for those complaining, life is a choice. I could probably afford to spend 2-3x more then that. However, my wife and I have always chosen a modest lifestyle. And compared to our families, we live "high on the hog."


By the way, Cleveland is BY FAR the BEST place that we have ever lived. Great amenities, great people. My only regret was moving to Chicago. As long as you are NOT a high wage earner, it is a pretty good place to retire to, especially in terms of senior housing and top-notch health care.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by sdsailing » Thu Oct 23, 2014 4:09 pm

new2bogle wrote:How are people coming up with these numbers? 90K? 120k? Even $180k???

What kinds of savings rate does one need to take $100k/year in retirement? It seems unattainable without a two income high earning (physician level +) people.


This forum is strongly skewed to high earning individuals, thus the average retirement income expectations/wants are correspondingly high.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by Wolkenspiel » Thu Oct 23, 2014 6:56 pm

new2bogle wrote:How are people coming up with these numbers? 90K? 120k? Even $180k???

What kinds of savings rate does one need to take $100k/year in retirement? It seems unattainable without a two income high earning (physician level +) people.

$100k/year retirement household income doesn't seem that far-fetched. For a not-too-atypical couple, 1/3 of that could come from SS alone. If one is lucky enough to have a pension that could provide another 1/3 (I understand that is not typical, but still more common than dual-physician households with $500k+ income). That leaves about $33k per year to draw from investments. One would have to be unlucky not to get there by maxing out pre-tax savings during good/peak earning years.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by Lynette » Thu Oct 23, 2014 7:41 pm

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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by bluelight » Thu Oct 23, 2014 9:08 pm

I've been tracking our spending this year in anticipation of retiring at age 60 in Jan 2017. DH is 10 years older than me and is retired. We live in a modest house now in a high COL area with high property taxes, we plan to move to a lower COL area once I retire. As now, we will have no mortgage or debts. I expect though that what we now pay for property taxes will be fairly close to what I will be paying for my own medical insurance/bills until Medicare kicks in, so I am keeping that in the equation.

Our estimated expenses will be about 80K per year which includes 10-15K for travel budget. Between DH's SS, our pensions and our investment income we should bring in 70K before taxes. The difference will be made up with a less than 2% withdrawal rate.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by Lorenz » Thu Oct 23, 2014 9:47 pm

market timer wrote:My wife spends another $25K at the mall on things like Chanel bags and cosmetics, so I guess that makes us upper middle class. :)


Top 1% I'd say, maybe higher :)

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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by MichDad » Fri Oct 24, 2014 11:21 am

new2bogle wrote:How are people coming up with these numbers? 90K? 120k? Even $180k???

What kinds of savings rate does one need to take $100k/year in retirement? It seems unattainable without a two income high earning (physician level +) people.


My wife and I have always lived well below our means, saving a large percentage of our incomes each year. For example, I purchased a new compact car for cash in 1995 and it remains the only car our family has had for all those years. I'd like to keep it until after I retire. We shop at Costco and clip coupons. While we live in a big house, we don't have lots of stuff. Before we purchase anything we ask: Do we need this? If the answer is "no," we usually don't purchase it.

We live on my salary and we save 90 percent of my wife's. We contribute the maximum to our respective Roth 401(k) plans and to our Roth IRAs each year. For 25+ years, we've invested almost exclusively in domestic and internatonal low-expense equity mutual index funds (no bonds). We also own shares in a REIT fund and in a commodities fund. We've experienced some large swings in portfolio value but the overall result has been extraordinary gains. We have never panicked when our portfolio dropped. I will have a pension from my work. We have some rental income. We save like fiends.

If things progress as I expect, I figure that by the time I'm 70 years old and begin to collect Social Security, we'll be able to spend (including charitable giving) about $200,000 per year in today's dollars. Much of our spending will be from Roth accounts and not subject to federal or state income taxes. If I've miscalculated and we have only half that much, we should be fine.

Slow and steady wins the race.

MichDad

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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by letsgobobby » Fri Oct 24, 2014 1:56 pm

^^^
all nice but he's just asking how much you make.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by Lon » Fri Oct 24, 2014 2:14 pm

I am 80 years old and have been retired for 25 years. In each of those years my annual income was never over $50,000 annually. I had two cars (one now) no mortgage, no debt. Considerable travel and cruises in the past 25 years was paid for from savings/investments.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by retired recently » Fri Oct 24, 2014 5:31 pm

My wife and I live in a low COL area and own all outright. We spend about 110K-120K per year gross. Each year we typically take a "big" vacation which has cost in the neighborhood of $10-15K each year. We have an 12 year old and we pay about 1k/month for various education/recreation related activities. We could cut back to spending $75K per year w/o too much difficulty.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by vested1 » Sat Oct 25, 2014 3:53 pm

avalpert wrote:
new2bogle wrote:How are people coming up with these numbers? 90K? 120k? Even $180k???

They are estimating how much they plan to spend in retirement probably based on what their current standard of living is plus some lifestyle adjustments - it isn't rocket science.

What kinds of savings rate does one need to take $100k/year in retirement? It seems unattainable without a two income high earning (physician level +) people.

Well, let's see. To get $100k in retirement using a SWD of 4% you would need $2.5M. Assuming a 5% rate of return and 30 years of savings you would need to put in ~$38k a year. Let's assume they want $100k to maintain their current $100k lifestyle so their current salary would have to be $138000 for a savings rate of ~27.5%. Not all that remarkable at all and for a couple to each earn $70k doesn't require them to be doctors at all - it would put them around the 85th percentile so attainable for 1 in every 6 households.


Not at all. My wife and I will be getting about $58k from SS after I turn 70 and her pension is 30k with 100% survivor benefit. That's 88k without dipping into retirement accounts. I believe the question was about income, not savings. I'm counting on that amount of income by drawing down some of the savings for 6.5 years after retirement next year until 70, then having the ability to draw more after 70, or more likely only to satisfy RMD, which would still raise our income after 70 to around 115k to 120k before taxes. Roth conversions are on the horizon.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by Lynette » Sat Oct 25, 2014 4:40 pm

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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by staythecourse » Sat Oct 25, 2014 4:58 pm

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

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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by rec7 » Sat Oct 25, 2014 5:08 pm

We need about 16k a year.

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Re: Gross Yearly Income needed in Retirement (Speculation)

Post by TomatoTomahto » Sat Oct 25, 2014 5:17 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?


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.

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