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Old 09-12-2015, 07:22 AM   #21
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Not even close. We spent about 20-25% of our average earnings during our working years. We were good at limiting "lifestyle inflation" as our earnings increased.


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Old 09-12-2015, 08:51 AM   #22
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If we held to preretirement spending we'd end up leaving piles of cash to two kids who don't need it. Hence we are aggressively trying to spend about 90% of what our pretax income was. That's still only pulling a tad over 3% of assets and don't intend to touch SS until 70. We had a number of things put us into this favorable situation, not the least of which was I actually enjoyed career until last few years so went many years beyond what was necessary for comfortable retirement.
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Old 09-12-2015, 08:52 AM   #23
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I only lived off 45% of my income when I was working and then when I retired I moved so my expenses dropped even more so I could have lived off only 25% of what I was making. So really its about what % of income are you using now to live and then base it off that.

I've always assumed 80% was based on lower tax bracket+not having to save any longer...for the "average" person. However, for people that may have already been living paycheck to paycheck, they may find in retirement they need 100%+ to cover medical, a mortgage that may not be paid off, debt that may not be paid off...etc
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Old 09-12-2015, 09:17 AM   #24
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Pay no attention to industry rules of thumb. They are invented to keep the services of financial advisers in high demand.
Another chestnut is "Save 15% of your income", which might be OK if you want to work for 50 years and take full SS if your health holds out that long. If professionals advocated the 50%+ needed for ER, they'd get no clients, just the usual blank looks of incomprehension when it comes to asking advertising-saturated Americans not to spend every dime they have. Great post!


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Old 09-12-2015, 09:27 AM   #25
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Agree with the many posts that point out the many variables. In common with many in this biased sample, we never spent anything near 70% of our income during our working years despite having 4 children. Spending might go up at some point but it will be entirely voluntary and not based at all on what we 'need' to spend. Can't ever imagine spending the equivalent of 70% of income from peak earning years. We were very lucky in that regard.
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Old 09-12-2015, 10:37 AM   #26
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I do think at least some of the 80% of salary in retirement is really more of a marketing slogan by the investment companies than a number with any factual basis. If you work until you drop it maximizes their income because you keep adding to your 401Ks and they keep collecting their fees.

It is just that needing 80% of salary has more marketing cache than work until you drop. The mutual fund CFP who did our "free" retirement plan kept bringing up the 80% number, when like others here we weren't spending anywhere near that when we were working full time. Post work years our kids will be off the payroll before too long, our taxes are lower, we no longer have to save for retirement or college, we have time for some leisurely driving vacations instead of always having to fly so as to not burn up vacation days, we no longer have job and commute costs, and we are free to downsize and/or move further out into the boonies where home prices are cheaper or even move to a lower cost of living city or state if we want to.

And best of all - early bird matinees and week day happy hours.

Instead of looking at our gross income, we started comparing our spending to the Consumer Expenditure Survey and looked for areas of opportunity to lower our run rate.
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Old 09-12-2015, 10:38 AM   #27
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Another chestnut is "Save 15% of your income", which might be OK if you want to work for 50 years and take full SS if your health holds out that long. If professionals advocated the 50%+ needed for ER, they'd get no clients, just the usual blank looks of incomprehension when it comes to asking advertising-saturated Americans not to spend every dime they have. Great post!
Wouldn't financial advisers actually benefit from recommending higher savings rates? That would mean more assets under management ergo greater fees for the same amount of work. I do believe the 15% is the minimum savings rate recommended. Certainly, FAs collecting AUM fees would like you to think you need a much bigger nest egg than necessary to maintain your standard of living upon retirement. Of course, you probably do need a bigger nest egg if you're funding both your retirement and the FA's so you're gonna have to keep working longer.
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Old 09-12-2015, 11:04 AM   #28
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Wouldn't financial advisers actually benefit from recommending higher savings rates? That would mean more assets under management ergo greater fees for the same amount of work.
Absolutely, but I'm guessing most FA's prefer to be able walk their talk, and there's no evidence I've seen that professionals are any better as a group at saving their income than they are at picking winning investments.
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Old 09-12-2015, 12:00 PM   #29
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To continue your same standard of living. That seems to be the "standard" the financial planners and some of the calculators? I realize this will vary wildly depending on your lifestyle and how many revenue streams you have, how long it has to last.

I'm also curious how many stick to the withdrawal amount of 4% that is the generic industry standard?

I know there are countless other factors but I'm always fascinated with the answers retirees give and their experiences/advice.
The 70% figure might have been right for me when I first began working full-time. But my salary grew while my expenses (other than income taxes) stayed pretty flat the whole time, enabling me to save more and more over the years. It didn't take long for that 70% figure to drop to 50% and lower.

Paying off the mortgage in 9 years greatly lowered my expenses to the point that I was able to take not one but two pay cuts (working part-time then further reducing those PT hours) and still be able to live on at most 70% of that reduced salary. And it wasn't like I was making a boatload of money, my highest annual FT salary was just under $80k.

As I was putting together my ER plan back in 2007 and 2008, one condition was that I did not want to have any change to my day-to-day lifestyle.

My SWR since I ERed has been in the 2.0%-2.5% range although it will rise closer to 3% for 2015 due to some medical issues. No changes to my day-to-day lifestyle on the money side but a few on the medical side.
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Old 09-12-2015, 01:08 PM   #30
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No. When I was w*rking, I didn't even need 70% of my pre-retirement income .
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Do you need 70% of your pre-retirement income
Old 09-12-2015, 02:14 PM   #31
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Do you need 70% of your pre-retirement income

The best answer I can give to this question is my actual numbers.

The amount I have actually spent during each full year of retirement, as a percentage of my highest annual salary (uncorrected for inflation) has been:

2010: 41%
2011: 35%
2012: 37%
2013: 43%
2014: 43%

This may look more encouraging than it should. Bear in mind that I have intentionally spent more in retirement than I ever did while working, and I have been trying to expand my lifestyle a bit.

2015: So far this year, I have spent 112% because I bought and moved into my dream house. That is even after subtracting the proceeds of my old house. But I don't care. You can't take it with you, and I will be fine.

(Edited to add: These percentages include taxes, medical, everything.)
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Old 09-12-2015, 03:00 PM   #32
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Question: Do you need 70% of your pre-retirement income?

Answer: That depends on if I can keep DW from spending on the granddaughter! Otherwise, we are OK!
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Old 09-12-2015, 03:04 PM   #33
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Been retired for ten years and have been spending right around 50% of what I was making prior to retirement. Portfolio has grown to a greater amount than what it was when I retired. The concern now is what I will need to be taking when the RMD requirement kicks in, in about six years. Hope to leave a good chunk so when I take the dirt nap there is enough to help get the grandkids through college.
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Old 09-12-2015, 03:28 PM   #34
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Pre-retirement income is irrelevant. How much do you spend? That's how much you need.


12% my personal all time best one year. 15 - 25% ball park first decade. Maybe 110% one year post Katrina.

Withdrawal rate 2 - 6% variable over the 22 years in ER

heh heh heh - the ancient Dory36 post/article '33% That's My Story' got hooked on this forum in the first place.

P.S. DO NOT DO IT MY WAY!! I was waaay too frugal/cheap. My Pals at the IRS are ecstatic when they get their cut of RMD at the tender age of 72.
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Old 09-12-2015, 03:37 PM   #35
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I think it depends on how much you need to have and how much you wish to have available. This year we are spending 100 percent of our preretirement income because several travel opportunities presented themselves and being in our midsixties, we are not wanting to postpone them. Take excessive travel and grandchildren indulgency out of our equation and we are easily at <50 percent. Some people also have expensive interests they have been waiting to enjoy, like snowbirding.

So best imo to have a good idea of what you need to spend and work around that and not the percentage of your preretirement income
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Old 09-12-2015, 03:54 PM   #36
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Might be better to ask how much of your pre-retirement spending rather than income you will need to replace in retirement.

As others have noted, much of the your pre-retirement income went into saving for retirement and to taxes. We found that we could actually spend a bit more in retirement than we spent before.
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Old 09-13-2015, 09:15 AM   #37
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Quote:
Originally Posted by W2R View Post
The best answer I can give to this question is my actual numbers.

The amount I have actually spent during each full year of retirement, as a percentage of my highest annual salary (uncorrected for inflation) has been:

2010: 41%
2011: 35%
2012: 37%
2013: 43%
2014: 43%
We are pretty close to these as well, and that includes purchasing new appliances, new car and trip to Europe in different years.
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Old 09-13-2015, 09:43 AM   #38
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Im going to say yes especially since If I travel the way I want to in retirement I will be spending more than I do know. Lol the purpose of me retiring early is too do all the things I don't have the time for now

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Old 09-13-2015, 03:13 PM   #39
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30% covers all expenses including travel
46% when I add in sunk cost like auto replacement, new roof and such.
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Old 09-13-2015, 05:31 PM   #40
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WE are spending about half of our pre-retirement income. Some years are more depending on how much travel we do or purchase of big ticket items.
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