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Got enough to retire? Think again
Old 10-24-2008, 11:35 AM   #1
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Got enough to retire? Think again

By Walter Updegrave, Money Magazine senior editor
October 24, 2008: 10:40 AM ET

Life gets cheaper in retirement? Not so fast - Oct. 24, 2008
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Old 10-24-2008, 11:58 AM   #2
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Thanks for the link. Hey, at least there is one advantage to having earned a low salary (under $50K) all my life--it takes far less to replace it than would be the case had I been earning six figures.
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Old 10-24-2008, 12:18 PM   #3
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Quote: You'll need just 70% to 80% of your pre-retirement income to maintain the same standard of living when you leave work behind.

Anybody who would make a flat out statement like this is not a logical thinker. I got a $10 subscription to Money Magazine last year. They sent me an offer to renew at the same price. I believe in trying to get good value for my money, so I did not renew.
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Old 10-24-2008, 12:19 PM   #4
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Thanks for the link. Hey, at least there is one advantage to having earned a low salary (under $50K) all my life--it takes far less to replace it than would be the case had I been earning six figures.
LYBM and paying off the mortgage are crucial components of ER. I've never understood the 80% pre-retirement income requirement once you've retired.
For a start they should use expenses rather than income. Once I've ERed my commuting costs will go down and they'll be no mortgage. I don't see much else changing so my post retirement expenses will be about 30% of my pre retirement expenses
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Old 10-24-2008, 12:28 PM   #5
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I see that a lot in sources like Money Magazine.

They have the article where some silver haired stallion wants to retire and of course needs to replace 80% of his 180k salary the lifestyle. In fact sometimes one sees articles that pshaw at 70-80% saying you'll need closer to your working salary because of rising medical costs.

As sstated by previous poster it's a matter of expenditures, not income. I can't conceive of someone saving a large percentage of their income and planning on having their mortgage paid off by the time they retire needing anywhere near the salary of their working years.
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Old 10-24-2008, 12:29 PM   #6
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It is kinda lazy the way they always talk those percentages. You HAVE to do a real budget forecast in order to know what you will need in retirement. No shortcut will do the job, especially for those wanting to get out early.
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Old 10-24-2008, 12:31 PM   #7
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I think most on this board know it isn't how much you earned; it is how much you saved and plan to spend in retirement that will determine your success.
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Old 10-24-2008, 12:32 PM   #8
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Yeah, it's ridiculous to make such a blanket statement. We've run the calcs on our expenses and have determined that we can get by on 30% and live very well on 45% of our pre-retirement earnings. And that includes paying $10K-$12K per year for health care, which is currently provided by my employer.
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Old 10-24-2008, 01:32 PM   #9
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Yeah, it's ridiculous to make such a blanket statement.

As is true for most blanket statements.......
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Old 10-24-2008, 01:42 PM   #10
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The projection should read 100% of current and projected real expenses plus a realistic amount for entertainment. You can cut the number down to a fairly exact number with some effort to track expenses.
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Old 10-24-2008, 01:54 PM   #11
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The projection should read 100% of current and projected real expenses plus a realistic amount for entertainment. You can cut the number down to a fairly exact number with some effort to track expenses.
Yep, I've got a fun budget!

I also have a bare bones budget.
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Old 10-24-2008, 01:57 PM   #12
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Originally Posted by riskadverse View Post
Quote: You'll need just 70% to 80% of your pre-retirement income to maintain the same standard of living when you leave work behind.
Anybody who would make a flat out statement like this is not a logical thinker.
Actually it's based on a 1980s study that concluded work-related expenses were roughly 20% of a budget-- work clothing, drycleaning, commuting, & lunching out.

Today it might be closer to 40% due to housecleaners, yard services, pool guy, after-school programs, foreclosure-avoidance consultants, dog-walkers...

Of course it neglects ER entertainment, travel, leisure sports, home improvement, and hobbies.
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Old 10-24-2008, 01:59 PM   #13
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12% - after a few years ran across this forum's 33% That's My Story, joined in with my trusty webtv and been slipping ever since on discipline.

Sometimes I remember the shear ecstasy of being a really cheap bastard but you can never go home again.

I suppose in times like these your attitude is more put upon than grabbing frugal by both cheeks.

heh heh heh - some people might think they are not having fun even.

Hang in there - this too shall pass - when I have no clue - but it shall pass.
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Old 10-24-2008, 02:07 PM   #14
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Yep, I've got a fun budget!

I also have a bare bones budget.
My fun budget and bare bones are almost the same.

My exercise/hobby/vacation is bicycle touring, usually 500 mile round trips
as that's a good week's ride. Camping along the way it is pretty cheap. Also I do all my shopping on my bike.

Fun is people watching at a few local cafes, going to the movies, I pay $300 for a year long pass and my extravagance is another $300 for season tickets to the theatre. I just saw a new play called "The Communist Dracula Pageant", lots of fun.

If I had to stop one thing it would be weekend drinking in bars with friends as I pay for late nights the morning after.
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Old 10-24-2008, 03:04 PM   #15
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Quote:
Originally Posted by Nords View Post
Actually it's based on a 1980s study that concluded work-related expenses were roughly 20% of a budget-- work clothing, drycleaning, commuting, & lunching out.

Today it might be closer to 40% due to housecleaners, yard services, pool guy, after-school programs, foreclosure-avoidance consultants, dog-walkers...

Of course it neglects ER entertainment, travel, leisure sports, home improvement, and hobbies.
Luckily I don't spend 40% of my income on work related expenses, when my expenditures on everything other than ER savings come to less than 30%. I just don't have the time or inclination to spend much more.

I have not yet, and may never reach the purity and peace of mind expressed by Thoreau in Walden in the recent addition to my signature line. Yet, he inspires me and I wish I could be more like that.

You are so right about ER entertainment. Even though I do not care for further international travel, I expect my entertainment budget will need to be increased somewhat in ER.
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Old 10-24-2008, 03:07 PM   #16
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12% - after a few years ran across this forum's 33% That's My Story
Speaking of, since the search feature is hard to manage, anyone have a quick link to the 33% story and also that old favorite of mine The BS Bucket?

Lazy Sarah in the rain....
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Old 10-24-2008, 03:08 PM   #17
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Actually the most pleasurable things in life are free...aren't they? (well almost free)
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Old 10-24-2008, 03:15 PM   #18
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Speaking of, since the search feature is hard to manage, anyone have a quick link to the 33% story and also that old favorite of mine The BS Bucket?

Lazy Sarah in the rain....
33%? That's my story.
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Old 10-24-2008, 03:29 PM   #19
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That's a good analysis and guideline.

The lower the work income the higher the percentage needed in retirement.
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Old 10-24-2008, 03:43 PM   #20
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and also that old favorite of mine The BS Bucket?
Maybe this is it:

How many of you can RE now, but are saving to raise your std of living?
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