Hello To All

[novaman]

I've been lurking for about a week and finally wanted to make myself known and introduce myself.

I'm a 43 years old, happily married with wife and 3 kids. Living in The DC suburbs of Mclean, Va.


I had always wanted to be able to retire early, but as the years have gone by, and I realize just how much I love my career, I think I probably aspire more towards the FI (financially independent) rather than the RE of FIRE.

Ive been a bit mystified by how much people really need to live on once they retire early. I know all the financial books use 80% as a rule of thumb, but I've noticed people here getting by on probably much less.

If I can get a solid handle on this number, then I can figure out how much I can cut back to semi retire, which will give me the best of both worlds.

Any advice?

[73ss454]

Welcome Novaman, just pop your #'s into Firecalc and you'll have your answers.

[Nords]

Welcome to the board, novaman.

Originally Posted by novaman

Ive been a bit mystified by how much people really need to live on once they retire early. I know all the financial books use 80% as a rule of thumb, but I've noticed people here getting by on probably much less.
If I can get a solid handle on this number, then I can figure out how much I can cut back to semi retire, which will give me the best of both worlds.

The 80% number is a piece of crap mined from a 1980s study on people's expenses where commuting & other work-related costs made up about 20% of their spending. Although it makes a great journalistic soundbite, your retirement spending will vary from about 10% to about 300% of your salary. Or maybe wider.

Retirement expenses are a huge fat bell curve, although there seems to be one hump at $2000/month and another at $4000/month. However in the last couple years I've noticed at least two posters from your area who insist that they couldn't possibly afford to retire on anything less than at least $8000/month. (If either of you are still reading this board, please jump in with a detailed budget!) But your retirement spending is an individual issue with a solution that has to be tailored to your lifestyle.

So start tracking your expenses. Find out how much you're spending each year and add in a little more for a new roof, replacement vehicles & appliances, kid's weddings (if applicable), and a fantasy vacation or two. Once you know what you're spending, take a look at what you won't be buying in retirement (office lunches) and add in what you'll be spending more on (travel, hobbies).

Then you're ready to test your various numbers in FIRECalc.

[DangerMouse]

I think the truth in part depends on how badly one wants to RE. Personally I think if my husband was ready to quit today we could make it by on $40k a year, however for now we keep working adding to our pot.

[grumpy]

Novaman,

DW and I retired at age 55 and live in a No. Virginia suburb of D.C. We are living on the same amount as before retiring. I planned it that way. Use Quicken (or some similar software) to track all of your expenses for a year or two. Then subtract out all items that go away when you retire (e.g. saving for retirement, commuting costs, etc.) and add in new costs (additional travel, hobbies, etc.) I found that the new costs just about equal the costs that went away. It feels like we are living at a little higher standard than when we were working but our total expenses are about the same.

Grumpy

[wheel9]

My savings rate is about 35% towards retirement, plus there are other costs that go away. I have a hard time believing that I will add back in that much in the way of spending after retirement. If I pay off my mortgage, my expenses go way down. I think the amount required is a personal thing, and the best advice is to understand where your money goes and then to realistically budget for the extraordinary.

[novaman]

DW and I retired at age 55 and live in a No. Virginia suburb of D.C. We are living on the same amount as before retiring. I planned it that way. Use Quicken (or some similar software) to track all of your expenses for a year or two. Then subtract out all items that go away when you retire (e.g. saving for retirement, commuting costs, etc.) and add in new costs (additional travel, hobbies, etc.) I found that the new costs just about equal the costs that went away. It feels like we are living at a little higher standard than when we were working but our total expenses are about the same.

Thanks for the insight. Yeah DC is an expensive place to live. I've been using quicken to track everything so I've got a good idea on what my expenses are right now. I just wasn't sure how much it would/could change if I retired. You've given me a great idea on what to expect expense wise. Thanks