Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
pre-retirement income
Old 09-13-2015, 06:11 PM   #41
Recycles dryer sheets
Sirka's Avatar
 
Join Date: Mar 2011
Location: Southern CA
Posts: 200
pre-retirement income

Quote:
Originally Posted by CaliforniaMan View Post
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.
+1
your pre-retirement income becomes history after a few years of retirement. It goes the way of 99c ground beef, 40c / gal gas ...etc

We just watch our spending as it goes up & up, out of our control.
__________________

__________________
Hard to say what it was, when it isn't.
FIRED in 2005 @ 55
Sirka is online now   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 09-13-2015, 06:31 PM   #42
Recycles dryer sheets
 
Join Date: May 2014
Location: Yuma AZ
Posts: 270
Opinion: The key to what matters is pre-retirement SPENDING, not income. Our retirement income is more like 30% of our pre-retirement income, but is in line with our pre-retirement SPENDING. While working, the rest we invested.
__________________

__________________
unno2002 is offline   Reply With Quote
WOW
Old 09-14-2015, 07:31 AM   #43
Confused about dryer sheets
 
Join Date: Sep 2015
Location: Kokomo
Posts: 6
WOW

Thank you everyone for your thoughts. My wife/I have always "planned" for retirement and it's pretty cool to find others w similar interests. A lot of what you said are the same as what we think and that's very reassuring. We are pretty simple and it doesn't take a lot to keep us happy. If our figures are even remotely close there shouldn't be any problems. We don't have degrees or trust funds we just go to work and do the best we can and will make necessary adjustments higher/lower as needed.

As many of you mentioned, we track and know ours costs now as well as our income streams which IMO are arguably the two most critical pieces.
__________________
THOMPMD is offline   Reply With Quote
Old 09-14-2015, 07:54 AM   #44
Thinks s/he gets paid by the post
 
Join Date: Dec 2009
Location: Alberta/Ontario/ Arizona
Posts: 3,158
Depends on what your objectives are. If you are trying to retire ASAP you could very likely do so on less than 70% of pre retire spend. But if your desire is to have a retirement that is tailored to your plans, simple- just use the plans. Rules of thumb are just a starting point or for those with no detailed plan. Your retirement is too important to leave to "rules of thumb". Track your expenses.
__________________
Danmar is offline   Reply With Quote
Old 09-14-2015, 10:33 AM   #45
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
kcowan's Avatar
 
Join Date: Jul 2006
Location: Pacific latitude 20/49
Posts: 5,739
Send a message via Skype™ to kcowan
and question every line. We found that our spend on telecom was way more than what we need in retirement. VOIP eliminated LD, paygo vastly cut down on mobile plans in 2 countries, switching from cable to satellite cut our expense considerably, simplifying bank/CC accounts and eliminating all CC fees. It was not until our bank imposed ATM FX fees that we switched. A spreadsheet will let you quickly assess the impacts.
__________________
For the fun of it...Keith
kcowan is offline   Reply With Quote
Old 09-14-2015, 10:59 AM   #46
Thinks s/he gets paid by the post
Big_Hitter's Avatar
 
Join Date: May 2013
Location: In the fairway
Posts: 4,099
In qualified pension plan design, 70% to 80% of final pay replacement is the general target and has been for decades.


YMMV
__________________
Swing hard, look up
Big_Hitter is offline   Reply With Quote
Old 09-14-2015, 01:31 PM   #47
Recycles dryer sheets
 
Join Date: Jan 2015
Posts: 170
We live on 25% of our income now, not including income taxes, and will need 35% when we retire (including taxes & added health insurance expenses). We save about half of our income towards retirement now, and the rest goes to income taxes and remodeling & mortgage expenses for a future rental property.

Sent from my EVO using Early Retirement Forum mobile app
__________________
Dreaming of Freedom is offline   Reply With Quote
Old 09-14-2015, 02:22 PM   #48
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2006
Posts: 11,019
Quote:
Originally Posted by Big_Hitter View Post
In qualified pension plan design, 70% to 80% of final pay replacement is the general target and has been for decades.

YMMV
That may be the case, but that is based on a flawed mental model of the employee spending up to salary while working, then eliminating work related and educational expenses at "retirement age". For those of us who have been LBYM all along, expenses and salary had only a weak correlation.
__________________
Meadbh is offline   Reply With Quote
Old 09-14-2015, 02:42 PM   #49
Thinks s/he gets paid by the post
Big_Hitter's Avatar
 
Join Date: May 2013
Location: In the fairway
Posts: 4,099
Quote:
Originally Posted by Meadbh View Post
That may be the case, but that is based on a flawed mental model of the employee spending up to salary while working, then eliminating work related and educational expenses at "retirement age". For those of us who have been LBYM all along, expenses and salary had only a weak correlation.
that may be true, but the other 95% of the population need the high replacement percentage

those numbers are in every retirement plan design textbook
__________________
Swing hard, look up
Big_Hitter is offline   Reply With Quote
Old 09-14-2015, 03:28 PM   #50
Recycles dryer sheets
 
Join Date: Jan 2015
Posts: 170
My pension plan only pays out 52-70% of the final average salary after 30-40 years, and that is non-COLA'd. We used to contribute 4% of our income, but now we have to put in 6%. Wish I had a COLA'd pension.

Sent from my EVO using Early Retirement Forum mobile app
__________________
Dreaming of Freedom is offline   Reply With Quote
Old 09-14-2015, 03:31 PM   #51
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2006
Posts: 11,019
Quote:
Originally Posted by Dreaming of Freedom View Post
My pension plan only pays out 52-70% of the final average salary after 30-40 years, and that is non-COLA'd. We used to contribute 4% of our income, but now we have to put in 6%. Wish I had a COLA'd pension.

Sent from my EVO using Early Retirement Forum mobile app
Count yourself lucky. I wish I had a pension.
__________________
Meadbh is offline   Reply With Quote
Old 09-14-2015, 06:11 PM   #52
Recycles dryer sheets
Asher Aion's Avatar
 
Join Date: Aug 2013
Location: Northwest Ontario, Manitoba
Posts: 117
Ditto.
__________________
Asher Aion is offline   Reply With Quote
My Pension Freezes
Old 09-14-2015, 07:31 PM   #53
Confused about dryer sheets
 
Join Date: Sep 2015
Location: Kokomo
Posts: 6
My Pension Freezes

At the end of this year. I have almost 28yrs. In lieu of the frozen pension they are going to add an additional 5% of our gross annual income at the end of each calendar. The mega-corp I work for has been extremely hard on its hourly work force and I have only had 1 2.5% wage increase since 2007. Thank heavens we started long ago planning. We started other ways to earn money outside of work and educating ourselves like we are here and I feel we are very efficient with the dollars we have. Your advice is very much appreciated.
__________________
THOMPMD is offline   Reply With Quote
Old 09-15-2015, 06:02 PM   #54
Thinks s/he gets paid by the post
Koolau's Avatar
 
Join Date: Jul 2008
Location: Leeward Oahu
Posts: 3,244
As others have said, it's what you plan to spend during retirement that is important. Figure that out and then you can calculate how much you need to save. In our case, we were always relatively frugal before retirement. Now (perhaps making up for lost time) we spend significantly more than we did before retirement and actually more than we earned before retirement. So rules of thumb are only for folks with no fingers. Figure out what you will need for retirement spending and then work backward. YMMV
__________________
Ko'olau's Law -

Anything which can be used can be misused. Anything which can be misused will be.
Koolau is offline   Reply With Quote
Old 09-15-2015, 06:59 PM   #55
Thinks s/he gets paid by the post
imoldernu's Avatar
 
Join Date: Jul 2012
Location: Peru
Posts: 4,616
A 26 year look back at my ending salary in 1989. The net/net is that our current annual spending equals that final years' pay.

Lots of water under the bridge since then... No complaints.
__________________
imoldernu is offline   Reply With Quote
Old 09-15-2015, 08:11 PM   #56
Full time employment: Posting here.
 
Join Date: Apr 2015
Posts: 903
Quote:
Originally Posted by Meadbh View Post
That may be the case, but that is based on a flawed mental model of the employee spending up to salary while working, then eliminating work related and educational expenses at "retirement age". For those of us who have been LBYM all along, expenses and salary had only a weak correlation.
This is easy when salary is high. For someone making little more than minimum wage, I reckon 70-80% is about right.
__________________
hnzw_rui is offline   Reply With Quote
Old 09-16-2015, 09:30 AM   #57
Thinks s/he gets paid by the post
 
Join Date: Sep 2012
Location: Seattle
Posts: 2,906
Lets see, last year we paid $60,000 just in federal income tax (not counting SS or medicare or ACA extras).

Our spending is about $40,000

So we actually don't need 70% of our pre-retirement income, we just need 67% of that federal tax back.
__________________
Fermion is offline   Reply With Quote
Old 09-16-2015, 10:47 AM   #58
Recycles dryer sheets
lem1955's Avatar
 
Join Date: Mar 2007
Posts: 124
Send a message via Yahoo to lem1955
As others have said KNOW THY SPENDING. We live on 37% of my last year's earnings at BIG JOB that ended in 2011. The last 4 years it's been 138% of my part time earnings at my non-profit job. Semi-retirement has been great for getting comfortable with not saving and spending from past saving.
__________________
Retired 12/16/2015 at 60.
lem1955 is offline   Reply With Quote
Old 09-16-2015, 11:06 AM   #59
Full time employment: Posting here.
martyp's Avatar
 
Join Date: Sep 2010
Location: Bangkok
Posts: 963
When I was w*rking, the amount of money I lived off of, after savings, FICA, and taxes, was about 50% of my gross wages. Now, my COLA'd pension gives me 85% of that amount. I've found that I'm spending even less and have plenty to put into savings each month some of which I have been using for travel expenses.
__________________
Happy, Wild, and Free
martyp is offline   Reply With Quote
Old 09-16-2015, 11:12 AM   #60
Recycles dryer sheets
beowulf's Avatar
 
Join Date: Oct 2007
Posts: 466
I'm confused by all the comments about "we spend XXX.....not including taxes, health costs, housing, and whatever." To me, the only true measure of expenses is what you spend - and that includes housing, health, taxes and anything else that passes from your hands to someone else. If all your outgo comes to $100K a year, you don't get to subtract items that you don't think are expenses. If it goes out the door, then it's an expense and part of your budget. Savings by any means are not part of expenses.

In our case, fixed gross income after retirement (for a 2 earner family) is 50% lower than what it was prior to retirement. Post retirement income includes pensions and SS. However, our expenses prior to retirement - meaning the money wasn't readily available to us anymore including savings - were 100% of our income. This includes normal expenses, taxes, 401Ks, IRAs, I bonds, etc., etc. The only way it can be different for anyone is if they spend more than they earn through use of credit (which many do - maybe not on this list, but in the general population.

Our post retirement expenses are equal - just about 100% - to those of pre-retirement, just in different categories. A LOT more spent on travel (many trips by land and sea to exotic places around the world - we are away from home about 50% of the year). Nothing spent on savings, SS, pension costs, etc. This means that, for a few years, we will be drawing far more than 4% from our savings. It's unlikely we can continue at this pace for any length of time - for both physical and economic reasons, but it's a lot better to do things you want to do while you are able to, rather than wait until you are older and can't. We are lucky in that our income from other than withdrawals from savings will pretty much cover all our outgo once we ramp down on the trips in a few years. RMDs will also force us to keep traveling . After we stop, we can enjoy the over 100K digital jpgs, mpegs, etc. we are accumulating. That's what we worked for - not about to sit around and wait to grow older counting pennies.
__________________

__________________
Mission accomplished - not necessarily ER, but certainly R.
beowulf is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Pre-Retirement Then Post-Retirement Income Transition Planning LongTerm FIRE and Money 43 08-04-2014 11:01 AM
What is your pre-retirement income strategy? iam21177 Young Dreamers 17 03-20-2014 04:24 PM
What %age of your pre-retirement income do you need in ER? nun FIRE and Money 62 01-06-2012 07:02 PM
Poll:What Amount of Your Pre-retirement Income are You Living On? tgotch FIRE and Money 25 12-03-2010 03:39 AM

 

 
All times are GMT -6. The time now is 01:37 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.