HomerJ wrote: ↑
Mon Feb 03, 2020 12:55 am
$2000 a month covers most people food, utilities, property taxes, and insurance. Not all people. There are certainly people in this thread who can't cover those basics with $24,000 a year.
But most people.
With a paid off house, it's really not that hard to cover basic necessities. $4000 a month, really should cover those base needs plus extra for repairs and maintenance, car stuff, health insurance, etc. for most people with a paid off house. Not all people, but most people. $50,000 a year (with a paid off house) in retirement is pretty solid. Everything after that is for fun. For most people.
And Social Security alone (especially for a couple) gives you a pretty solid chunk of that $50,000 a year.
I will agree that floor expenses are about $50,000 for average people. And that assumes that you have an asset (house) worth $200K - $2M, depending on where you live.
And floor expenses basically mean you mostly sit at home or do only free things. But what about the upside expenses? Trip overseas every year, new $30,000 vehicles every few years, all the toys for whatever hobbies you have--bass boat, photo gear, etc., outsourcing work like cleaning service, lawn service, instead of DIY. Then $10,000 per year gifts to offspring, or helping with down payment on house, etc. How much will that add per year $20K, $30K, more?
As far as social security, it only starts at age 70 for most Bogleheads. So if retirement starts at 55, that's 15 years where your portfolio has to cover everything.
And if the money comes from tIRA, it is all taxed as ordinary income. So you have to withdraw more than you spend, to pay the taxes.
And then there is savings. I still save 20% of withdrawal amount, so that when it is time to make a large purchase, I am not making random withdrawals from tIRA account. E.g. I want to buy a $3,000 camera or $3,000 computer or $3,000 Telecaster. If I don't have the cash in savings account, I will not just sell $3,000 worth of Wellesley Income in retirement account, which would be consuming the income-producing assets.
I very quickly learned that you can't just tap your retirement accounts whenever you want to pay for some unplanned item. That is the road to ruin. You can only withdraw the planned amount, whether it is $3,000 per month, $4,000 or $5,000 whatever. Therefore, you need a savings regimen, even after retired, to build up money for unplanned purchases.
Sic transit gloria mundi. [STGM]