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Old 01-06-2012, 12:12 PM   #21
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Like W2R I was not born with the "shopping gene" so it was wasy for me not to spend money. I got a kick out of seeing the savings/investment accounts pile up instead of material things. Once DH retired (I had retired yrs earlier) I was still in the saving mode and had a difficult time shifting to spending the money we had put away for travel, toys, etc. I finally realized how ridiculous that was and how much happier DH would be if I lightened up a little and had some fun so I set up different accounts for long-term care, travel, toys and entertainment. So far it's working fantastically. We're having more fun, definitely traveling more than I thought we would and I never feel guilty about spending the $$ since that's what they are set aside for.
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Old 01-06-2012, 12:54 PM   #22
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I saved around 63% of total income in 2011. Should go up a little bit more in 2012. My rate of progress has been agonizingly slow. I'm not sure how people can stand working until 50+.
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Old 01-06-2012, 12:56 PM   #23
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30% is pretty sweet. I would bet a lot of folks can't do it tho. Maybe the two income families.

I just put my TSP contribution up to $17k for the first time ever and am not sure I can live on what is left. And that is not even 25% of my salary.
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Old 01-06-2012, 01:18 PM   #24
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Originally Posted by RetireBy90 View Post
I'd like to raise a somewhat related question. After spending years saving although not at the 30% level recorded here we have 2 military pensions and DW will have a small county pension (all covered somewhat by cola). We then have our retirement savings and will get something from SS. I expect we will be doing well with the pensions and SS once we get to 66-67. So our retirement savings will only be needed between retirement and SS dates.

At the SS point, we will have a pot of retirement savings and some other investments that will be above 1M. It will be nice to have a backup if we need long term care, but when do we start spending it? I don't want to die with lots of $$. Anyone on this forum having FIRE and have similiar thoughts? I don't need a new house, don't need to buy any more things, will will be able to travel and do charity. I guess it is about when I make the transition from saving saving saving to why save more when you have met the goal.

I know this sounds crazy, but I wanted to see if others have similiar thoughts. Thanks
We are in a similar situation, with various income streams scheduled to come on line over the next 13 years.

Two years into retirement we have have upped our annual spending by over 30%/year, spending on the things we enjoy, mostly travel in our case.

We plan on continuing a high level of spending as long as we stay below 3% WR and have long life expectancies.

We decided to self insure on LTC some years back and have a ROTH that is not counted as part of our retirement savings and WR calculations. Each year we put $5k into it, and that $5k is counted as part of our expenses. (it currently stands at ~$70k, and we are both aged 56, but I have no way of knowing if it will be enough, or too much).

If we actually get to the point where we are doing everything we want to do, and have everything we need I don't see us spending lots more just because we can.

We don't have a problem with leaving lots of $ if we are fortunate and it works out that way.
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Old 01-06-2012, 02:27 PM   #25
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30% from day 1 of working would be very impressive.

For the last number of years, I've saved 10% of my gross into a 401k or other savings. We regularly get extra money, although not as regular as it used to be. In the old days, 20 to 30 years ago, our weekly paychecks were small and we got very regular bonus checks. For the last 10 or 15 years, we've received bigger weekly paychecks and less frequent bonuses.

I used to save 10% of my regular gross and then 50% of the after tax part of bonuses. I've continue doing that. We got a little off track for about 3 years when my wife had some extra income from something she inherited, but she did save a huge chunk of it for those 3 years. It's dried up now, but we're in pretty good shape.

I bet my oldest kid is in that 30% range. I'll check.
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Old 01-06-2012, 02:34 PM   #26
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I guess another way of all of looking at this is that if you're putting away 20% of your income, you are living 20% below your means, which is a very good thing!

We found that LBYM was the key for us to an ER. It now keeps us in a favorably tax bracket for IRA W/D as our needs are smaller.

In our big pay-check days, we could've bought into the Big House, Big Car, Big Lifestyle game but didn't.

In the end, we find that we are living a lot better than the wage-slaves who are still trying to pay for their 'things' instead of living well. And isn't 'Living Well' the whole idea?!
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Old 01-06-2012, 06:22 PM   #27
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For aiming 4-55
Even by saving 30% or more, the definition of when it is enough is relative.
As stated in another thread, being wealthy is defined as being financially
independent, meaning one does not need to work to satisfy the basic life's requirement of food, shelter, transport, with added security of freedom from worry to do things reasonably. People's standards vary widely.
Lifestyle expenses affects tremendously. Income is an important factor as well as number of dependents, etcs.

I will guess that a person who save 30% or more income, with a middle class income, who lives frugal and lucky enough to stay in a job for 25 years, and not lose much money in investment, has a good chance of being wealthy by the above humble definition.
Birchwood - gotcha on the wealth is relative. I was half teasing with my comment. It's nice to see rule of thumb info., but it's rarely one size fits all. For me I hope to have lots of freedom when we RE, so I see my expenses going up for a bit, say 10 - 15 years, it'll be current expense budget plus an extra 10k for travel or mad money. YMMV
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Old 01-07-2012, 05:20 AM   #28
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Like everything else its relative. In our twenties DW and I saved about 10% on meager salaries. With three kids and better jobs we saved 30% in our 30's (although a big chunk went to college). In the 15 years from 40 -55 we saved from 35-60% per year and achieved FI. We missed a lot of the boom years but our NW from 1995-2010 grew tenfold.
Last year DW retired (kind of) and we dipped down to saving about 25%. Now I find we're creeping back up, currently around 32%. Rule #1 - Save something from every paycheck.
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Old 01-07-2012, 06:49 AM   #29
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I'm not really a numbers nerd but from my random calculations I feel the average person should be saving 15 to 20% for a somewhat 'normal' retirement schedule. More for RE.

Personally I don't make a huge salary but through short notes on rentals I have actually been saving approximately 125% of it!
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Old 01-07-2012, 08:39 AM   #30
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The rule of thumb seems to make sense if planning for normal retirement age. For early retirement I would increase each by 15%.

I was just beating myself up over lax spending this year, but I saved 48% of my gross income. 34% went to taxes, and I spent 18%. My goal in 2012 is to save 50%.
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Old 01-07-2012, 08:39 AM   #31
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Quote:
Originally Posted by WestLake View Post
I'm not really a numbers nerd but from my random calculations I feel the average person should be saving 15 to 20% for a somewhat 'normal' retirement schedule. More for RE.

Personally I don't make a huge salary but through short notes on rentals I have actually been saving approximately 125% of it!
An example of why all these numbers are useless, everybody is using a different formula. Some use just salary, some using w2 earnings net pre-tax money, some using gross earnings, some using take home earnings net pre-tax, SS, and taxes, etc etc
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Old 01-08-2012, 12:55 PM   #32
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I am pleased to read I am not the only one with tens of thousands of $ in my checking account...
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Anyway, even to this day, my wife has been so used to seeing a lot of money in the checking account for her to pay bills (I take care of all investment accounts). She does not like it when it drops below $10K. Right now, I have $23K sitting there, a surplus from my recent part-time income, and she is happy.
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Old 01-08-2012, 11:47 PM   #33
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I lifted this from another forum (that some here frequent), thought it was a good rule of thumb, at least for those without pensions and/or not counting on Soc Sec in large part.

Maybe #3 is the de facto LBYM threshold...just sayin'
When I was still working, too many people I knew were saving less than 10% unfortunately. Some had nothing at all saved at 40 and 50 years old, even though they had steady employment with us.
You can use math, too, and transcend the rules of thumb. Note that the post has been updated with a quick & dirty spreadsheet from Arebelspy:
How many years does it take to become financially independent? | Military Retirement & Financial Independence

With reasonable assumptions on financial rates of return, things happen a lot faster when you're able to save 40%. But 30% ain't so bad either.

Quote:
Originally Posted by RetireBy90 View Post
I'd like to raise a somewhat related question. After spending years saving although not at the 30% level recorded here we have 2 military pensions and DW will have a small county pension (all covered somewhat by cola). We then have our retirement savings and will get something from SS. I expect we will be doing well with the pensions and SS once we get to 66-67. So our retirement savings will only be needed between retirement and SS dates.
At the SS point, we will have a pot of retirement savings and some other investments that will be above 1M. It will be nice to have a backup if we need long term care, but when do we start spending it? I don't want to die with lots of $$. Anyone on this forum having FIRE and have similiar thoughts? I don't need a new house, don't need to buy any more things, will will be able to travel and do charity. I guess it is about when I make the transition from saving saving saving to why save more when you have met the goal.
I know this sounds crazy, but I wanted to see if others have similiar thoughts. Thanks
This is the part of retirement where you have to be responsible for your own entertainment. You might want to start spending a little now, and accelerate as you near your filing date for SS.

Not only have you annuitized almost all of your income, but you might even be at the point where your monthly pension deposits could pay for your long-term care-- and with a COLA, too. For example, my father's care facility costs $214/day in a large Western city. His pension & SS income covers more than half of that. His SS has a 3.6% COLA this year, and it'll be interesting to see what happens to the cost of his care facility.

So it's worth looking at your budget to see whether you've just succeeded in the legendary self-insuring for long-term care.

Aside from the LTC perspective, here's what you can do with your money:
1. Find a cause you care about, and gift at least 10% of your income every year. You can do it anonymously through a charitable gift fund like Fidelity or DonorsChoose.org. If you want suggestions, "The Military Guide" royalties are being donated to Wounded Warrior Project and Fisher House. But we also give to a local food bank, a local homeless shelter, and a local surf access program.
2. Gift your kids (or nephews/nieces) and suggest that they fully fund their TSP or 401(k) or IRAs.
3. Start a 529 account for some family youngster.
4. Buy a nice car. Not a red Ferrari, but a nice car that you wanted when you were in your 20s and didn't have the money. If it's still killin' ya to spend the money then buy it used. If even that's not working then take a look at a late-model Toyota Prius. Or a Shelby Mustang. Or at least test-drive a Tesla.
5. You don't need a new house, but you might want to remodel the one you're in. Energy-efficient insulation & windows? Photovoltaic panels or solar water heating? An extra bedroom/bathroom? A bigger kitchen?
6. A housecleaner.
7. A yard service.
8. Surfing lessons.
9. Serious walking shoes that encourage you to put in five miles a day on the streets or the local trails.
10. [Insert idea here from Ernie Zelinski's "Get-A-Life Tree"...]

We've done #1, 2, 4, 5, 6, 8, and 9. I haven't made the time to get going on #10 yet.
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