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Old 03-01-2010, 12:40 PM   #21
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Originally Posted by Coloradoblonde View Post
I know everyone's situation differs, depending on whether you still have children, a spouse, a mortgage, but I'm curious as to what you think you will need to comfortably retire in passive income/pension etc per year?
What do you think your net worth needs to be to achieve this or if you are on this site and have already achieved FIRE, what did it take for you to accomplish financial freedom for you?
Please explain your personal story, income and expenses.
We tracked our spending, built a budget based on that, and then made sure that we had enough in the ER portfolio to cover the gap between my pension (started 2002) and spouse's pension (2022).

Reality has worked out better than the budget. ER turned out to be cheaper than we expected, we've had plenty of time to pay attention to cutting costs, and dropping interest rates have allowed us to considerably cut back on mortgage expenses.

I'm not sure I understand the original question, because everyone's financial situation is different and everyone has different living standards. Does that answer your question, or were you asking for different info?
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Old 03-01-2010, 01:00 PM   #22
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I am absolutely amazed at how little money some you get by on. This is what I am using as estimates:

MonthlyRetirement (2010 money)Budget
...................................
Monthly Total Spending 3,945
Just one of you? You can't do health insurance for 500 for two I don't think....unless its subsidized. So you don't make much of your own food and you eat out for a lot? And you buy $175 in gifts every month?

I won't have to save for vacation because when I'm retired I will be on permanent vacation and since I've chosen to retire in a vacation resort, I'll already be on vacation??
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Old 03-01-2010, 01:14 PM   #23
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I'm single and own a home. I have a pension, retiree heath care and SS. My basic budget is $36,500. I plan to spend $50,000 to $55,000 per year adjusted for inflation going forward. So $13,500+ for fun per yr. I retired 10 yrs ago (age 52) and started at $36,000 the first year.
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Old 03-01-2010, 01:28 PM   #24
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Just one of you? You can't do health insurance for 500 for two I don't think....unless its subsidized. So you don't make much of your own food and you eat out for a lot? And you buy $175 in gifts every month?

I won't have to save for vacation because when I'm retired I will be on permanent vacation and since I've chosen to retire in a vacation resort, I'll already be on vacation??
Yes, I am single and plan to stay that way. The "gifts" budget is $43 per month. The "shopping" budget (stuff for me) is a $130 per month.

No, I only eat out about 2-3 per week (including lunch). My grocery budget that I am getting by on now is $55 per week.
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Old 03-01-2010, 01:28 PM   #25
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I'm pushing 40 and have been tinkering with the idea of retirement or semi-retirement. I live in New York (now the burbs) and have been making an annual income between 250k and 300k for the past five years or so. With each raise, I found myself trying hard not to get used to it, instead doing the automatic deposit of a decent chunk of each check into a savings account for which I had no ATM card, and then sending most of it to my money manager every few months. When you're making a great income, however, it's funny how you do pick up certain habits, like taking taxis instead of the subway, driving into the city on the weekends and paying 40 bucks for parking, not thinking twice when a friend invites you out to a dinner that you know will be at least $100 apiece. Still, the whole time I kept trying to tell myself (and my partner) "don't get used to this." Now, I'm at a point where I quit my job a year ago, have a nice portfolio, and my financial advisor tells me I could probably withdraw 60k per year for the rest of my life (combined with my partner's take-home pay of 60k a year). Needless to say, even the combined amount is MUCH less than I have been making these past five years, and I wonder if I can really adjust now that the time is here. Nevermind whether or not I could emotionally handle retiring right now (I really don't think I could), but I wonder how tough it will be for me to actually adjust my spending now that it's no longer theory but financial reality. It is scary to take that leap (especially in this economy) and it makes me want to go back to work for another few years to squirrel even more away.
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Old 03-01-2010, 01:40 PM   #26
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Depends on what happens with health care and on how taxes and qualifications for entitlements change.

If we wind up with universal health care which is heavily subsidized for lower incomes, means-tested Social Security and higher taxes on higher incomes, you can bet I'll configure my lifestyle to "need" as little income as reasonably possible for a comfortable but simple lifestyle. If these things don't happen, I'm prepared to ratchet up our lifestyles a bit and take more income.

With a simple lifestyle, a small and paid-off house and no debt, many would be surprised at how little one needs to live, especially if the 800-pound health insurance gorilla is no longer standing in your way.
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Old 03-01-2010, 01:42 PM   #27
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Originally Posted by Nords View Post
We tracked our spending, built a budget based on that, and then made sure that we had enough in the ER portfolio to cover the gap between my pension (started 2002) and spouse's pension (2022).

Reality has worked out better than the budget. ER turned out to be cheaper than we expected, we've had plenty of time to pay attention to cutting costs, and dropping interest rates have allowed us to considerably cut back on mortgage expenses.

I'm not sure I understand the original question, because everyone's financial situation is different and everyone has different living standards. Does that answer your question, or were you asking for different info?
Everyone's answers are great. I just wanted to make sure my target figure wasn't really out of the ordinary high or too low as if I was forgetting to put something in my calculations. It seems like ER budgets range from $20K to $55K a year and maybe a crazy spender with a fancy lifestyle would be up near $75K
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Old 03-01-2010, 02:19 PM   #28
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We figured out a bare bones budget (some people call it "heat and eat") that covered everything we had to spend without moving somewhere cheaper or otherwise adjusting our circumstances--I think it's @$2600/mo for both of us. I think that is a really good place to start when figuring out if you have enough for retirement. Our resources are higher than that, so we are not actually living on the bare bones budget.

Skyvue's monthly expenses above would be the opposite of a bare bones budget--it's also a good point to start in that it's a list of all the things one would want to have enough money to afford.
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Old 03-01-2010, 04:15 PM   #29
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Retired, two of us, we spend around $72,000 per year. $12,000 is health insurance. $6000 to $10,000 on golf.
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Old 03-01-2010, 05:37 PM   #30
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I will ER at 55. DW ER'd at 51. We are over prepared. We can spend about 140% of our current spending level when I ER. We have mega corp retirement insurance.

We have always lived below our means. The increased spending will fund travel and snowbird living in the winter.
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Old 03-01-2010, 05:48 PM   #31
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Many moons ago, my late husband and I bought our starter home based on 1 income only. We paid it off within 15 years. I still live here.
Therefore, I figured my decision to FIRE based on my own post-w*rking income only.
I am not trying to be grim here, but when you are widowed at age 46, you learn first-hand the meaning of "sh*t happens".
Oddly enough, a CFP had modelled our worst case and had actually done 2 realistic and independent analyses for each of us living on our own after that type of scenario.
Always plan for the "worst case" financially and then go upwards from there.
If all goes well, you're in the gravy.
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Old 03-01-2010, 09:51 PM   #32
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I figure about $1,000.00 per day should cover just about anything that comes up. Can get there with about 3.8 million in paid for rental real estate.
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Old 03-01-2010, 10:07 PM   #33
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I figure about $1,000.00 per day should cover just about anything that comes up. Can get there with about 3.8 million in paid for rental real estate.
Hmm. think you are going to be about 50% short of your necessaries unless unless your return is way better than mine. not that i'm playing with that much real estate.
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Old 03-01-2010, 10:59 PM   #34
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Hmm. think you are going to be about 50% short of your necessaries unless unless your return is way better than mine. not that i'm playing with that much real estate.
The recession has been good to some of us.

Closed on a SFR last month. Paid $24K. Long term (4+ yrs) tenant in place paying $825/mo. KY property taxes are about 1% of assessed value. Current assessment is 67K. Pretty much automatic to get assessment lowered to sales price. Insurance is low here too. Vacancy not much of a factor - collected 102% of our scheduled rents last year. Of course, not all of our properties (20 homes) throw off 40+% returns. But, like I said, the recession has been good to some of us.

That $1,000.00 per day goal is closer than ever.
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Old 03-01-2010, 11:46 PM   #35
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Kypix, essentially you are going to need a near 100% dependable income stream of 365k/year. If you had a normal portfolio, this would mean 8.5M-9M. Since it is real estate (which is essentially a business), it is much harder to predict exactly what your 100% safe scenario is without a lot more information, but regardless, it is your "worst case" scenario. If you were to liquidate everything, and get out of the real estate business, and invest the money, you would indeed need 8.5-9M, because you would stop working. Using a $X million in equity is only one part of determining what your worst case scenario is, because the equity itself, e.g. 3.7M, is only increasing at something near, or slightly above, inflation. Of course, this is a business, so there is much more to the income than just equity, there is income, leverage, and probably in this case, profit.

There are different ways to use the equity, a good portion of it can be leveraged by being invested in the market, this provides perhaps 2-3% after subtracting the costs of the loan (this approach require steel nerves though). This still would not give you the income stream you need on its own, off the cuff, I would guess you need something like a worst case scenario of 200k/year (10% vacancy rate?) or so in profits (rent+deductions+credits-costs), and be able to increase rent with inflation (no city regulations which require set % increases).
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Old 03-02-2010, 12:10 AM   #36
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Originally Posted by Coloradoblonde View Post
It seems like ER budgets range from $20K to $55K a year and maybe a crazy spender with a fancy lifestyle would be up near $75K
Depending upon individual situations you can spend more than $75k without being a crazy spender or having a fancy lifestyle. Of course some of this also deals with wants v. needs. In our case, we are retiring soon with two kids about to graduate high school and one about to start high school. Our spending for the next few years will exceed $75k without having a fancy lifestyle at all. It will go down after that.

Even so there are things I would like to have in the budget that I know are wants and aren't necessary. I have put certain things in the budget that I would like to have but I recognize they aren't necessities. I have several versions of the budget from a very bare bones one to one that is sort of midrange and then to one that has much more wants in it. I suspect we will end up around the midrange one.
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Old 03-02-2010, 01:51 AM   #37
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Based on my estimates, we would be not quite but pretty close to bare bones at $75k per year post tax. Biggest reasons are the 13k in property tax and insurance on the California McMansion, and 13-17k estimate for health insurance and deductibles/pharma. There is a bit of spending & travel money in that 75k, but not a whole lot. I'm hesitant to say what my "target" is, but its quite a bit higher than 75k.

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Old 03-02-2010, 08:46 AM   #38
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66K in current dollars after tax for the two of us.
This corresponds to the past few years spending during work minus

Fed & State Taxes
SS/Medicare
401K
Mortgage ( almost done with mine, will be moving & taking no mortgge)
Kids tuitiion & support ( they are now off the payroll)
10K adjustment for land taxes ( NY versus Fla or similar low tax locale)
A few other adjustments -both up and down.

Since this involves no squeezing of recent spending i expect we could take 10% or so off of this amount without much pain.

(I'm retiring next month at almost 56)
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Old 03-02-2010, 09:27 AM   #39
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I wasn't going to respond to this thread. There really is no correct answer on how much you need to live on once the utmost basics are covered. The rest is gravy.

I thought that I wanted to retire early and planned accordingly . Then when the nestegg could support my somewhat frugal lifestyle my attitude changed. All of a sudden I didn't mind working anymore. In fact I look at it as a privilege and an honor to be working. So now that the frugal retirement is covered I'll reach for a better lifestyle - both now and after I quit working.

Working isn't so bad if you quit worrying about all the things that really don't matter. Yes the place could be managed better. yes some of the co-workers have unusual personalities. But who cares I can walk away anytime I want. For the first time you can be yourself at work - You don't have to keep your head down anymore.

My advice is to skip the collection of stuff when you are young to enable financial independence. All that stuff won't really make you happy. And it just may cause you to work way harder to support it all. Collecting stuff means working harder which raises the stress level and lowers your contentment.

Being financially independent is really quite liberating.
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Old 03-02-2010, 09:33 AM   #40
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I wasn't going to respond to this thread. There really is no correct answer on how much you need to live on once the utmost basics are covered. The rest is gravy.

I thought that I wanted to retire early and planned accordingly . Then when the nestegg could support my somewhat frugal lifestyle my attitude changed. All of a sudden I didn't mind working anymore. In fact I look at it as a privilege and an honor to be working. So now that the frugal retirement is covered I'll reach for a better lifestyle - both now and after I quit working.

Working isn't so bad if you quit worrying about all the things that really doesn't matter. Yes the place could be managed better. yes some of the co-workers have unusual personalities. But who cares I can walk away anytime I want. For the first time you can be yourself at work - You don't have to keep your head down anymore.

My advice is to skip the collection of stuff when you are young to enable financial independence. All that stuff won't really make you happy. And it just may cause you to work way harder to support it all. Collecting stuff means working harder which raises the stress level and lowers your contentment.

Being financially independent is really quite liberating.
There is much wisdom in the above. Great post.

However, Im still leaving this month.
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