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Old 09-10-2011, 07:44 AM   #21
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Originally Posted by Delawaredave5 View Post
This is why a "bottom up" retirement expense budget is so much better than a % of current income.

My estimates are 100% - kids expenses, work expenses, 401 saving all go away - but are replaced with extra travel and hobby costs.
Great advice. Thanks for pointing this out. (That your 401k and IRA will probably be replaced with extra travel and hobbies, etc.)

I doubt that many will be able to reach 100% let alone 135%...?
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Old 09-10-2011, 12:12 PM   #22
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We tested our retirement budget for two weeks, living in our retirement apartment (already purchased, currently renting it out), doing slightly ABOVE what we would do in terms of eating out and entertainment costs over the long retirement haul. We learned that while we live on about 40% of our current and save 60%, we will be needing close to that 135% of current SPENDING (not current income obviously) in retirement. Hence if we RE as planned, we'll need a few years of part-time work unless we really want to dial it back prior to SS. But as several mentioned, people on this board planning for retirement tend to save MUCH more than average. I also am a bit more conservative (read, paranoid) than my spouse on what we need to out of pocked medical expenses and asked that that figure be doubled.
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Old 09-10-2011, 12:18 PM   #23
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Originally Posted by Alan View Post
What we wanted in retirement was to do some serious traveling. While working we did as much traveling as we could in the 20 days a year vacation DW had, so we weren't denying ourselves that desire by choice.

Our expenses (excl. taxes) in the 4 years before RE were pretty consistent, and the expenses during the 2 years after RE are 27% higher. I expect similar expenses continuing while we can still afford it and our desire for such travel remains high.
That's a more understandable level, with expenses increasing by 27%. If you were saving 30% of income (leaving 70% for expenses including taxes) and then increased income by 35% in retirement to achieve an increase of 135%/70% = 93% in spending (including taxes and now spending the 30% that was used for retirement savings), that I would marvel at.
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Old 09-10-2011, 12:41 PM   #24
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That's a more understandable level, with expenses increasing by 27%. If you were saving 30% of income (leaving 70% for expenses including taxes) and then increased income by 35% in retirement to achieve an increase of 135%/70% = 93% in spending (including taxes and now spending the 30% that was used for retirement savings), that I would marvel at.
That's exactly right. We were saving over 60% of income for a good many years so we could spend a lot more in retirement. Since our main pleasure is travel we didn't need to spend money on new cars or fancy houses, etc, so we never felt deprived of anything during our working years.

I always tracked spending and budgeted for planned spending during retirement.
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