How much do you plan on living on in ER?

[Coloradoblonde]

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.

[SecondCor521]

40, formerly married, 3 kids, 13 years left on a 15 year mortgage.

My nominal FI point -- which is the point at which I believe I could quit work and maintain the same lifestyle as I currently do -- currently is targeted at just over $19K per year about 4 years from now.

I'm not sure what my net worth will be at that point. To work the problem the other way, I plan on using the 4% rule, so whatever 25x$19K works out to be is my targeted FIRE stash. To get from FIRE stash to net worth, I make several adjustments for various things.

I don't discuss income. Expenses currently run about $60K per year but I expect roughly 2/3 of that to go away between taxes, child support, and mortgage interest.

2Cor521

[W2R]

Originally I had planned to live on about $24K in retirement including taxes and health insurance premiums. But bear in mind that I have subsidized health care as a federal retiree, my mortgage is paid off and I am debt free, I am single with no dependants, and I live in the South. I think I could live comfortably on much less.

Eligibility for retirement, with a tiny pension and the subsidized health care, was what triggered my retirement. Had I been eligible earlier I would have retired earlier. Health insurance can be such a huge problem with pre-existing conditions, otherwise.

The year before I became eligible to retire, I came into an unexpected inheritance so I have more than $24K/year to spend. However, I have been spending about that much or less, other than the car that I had planned for and bought two months after I retired.

My withdrawal rate is a little under 3.5% right now, but when I decide to claim Social Security I will reduce that to about 3.0%.

[youbet]

Quote:

Originally Posted by Coloradoblonde 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.

This has been hashed out a number of times here. You'll probably want to do a search and read some of the other threads as I suspect many folks (with some very interesting stories) won't bother posting it all again. This in addition to whatever is posted here.

On this subject, qualifiers are everything. Pre-tax or post-tax? Extensive or spartan retirement benefits? Special needs or wants? Etc........

What is your situation and tentative plans? Perhaps we can begin by commenting on those.

[youbet]

Quote:

Originally Posted by W2R My withdrawal rate is a little under 3.5% right now, but when I decide to claim Social Security I will reduce that to about 3.0%.

I'm not following your math. If your total spending is a modest $24k and a "tiny pension" plus 3.5% withdrawals from your RE portfolio support that now, how can SS only reduce your WR from 3.5% to 3.0%? It would seem like your pension and SS should completely cover your $24k spending with 0% WR. (Or close to it, depending on what your pension and SS are.)

[plex]

26 single

In today's dollars:

Current Expenses: $9k/year (I have this posted in detail elsewhere)

Additional Work Expenses: $4k/year (gas/car maintenance/regular dry cleaning/etc)

Expected expenses for myself at retirement: $20k/year (50% increase in recreation budget, 50% increase in food budget, $5k increase in health care insurance costs that will be factored into the budget at retirement, at first it will be significantly under 5k, but later will be much more)

Expected expenses with a spouse/significant other: $40k/year (plus whatever savings she has managed to bring in by the time we retire that she can contribute to cover her additional costs)

Option 1: To reach $20k/year, I would need $540,000, and then need to adjust that for inflation, which, at my rate of expected income would result in needing ($640,000 inflated dollars). This sort of income stream is not realistic though, as I do not expect to be single all my life, so I expect I need to use the income stream number I expect to need to support a spouse (option 2).

Option 2: So, to reach $40k/year, I would need $1,080,000. Adjusting for inflation again, ($1,500,000 inflated dollars)

Option 1 (which I don't intend to do, it is just a fun mental exercise), could be, with average market returns, reached by the time I am 32.

Option 2 can be reached by the time I am 36, but that assumes no workplace switches (or a workplace switch with no break in between), and I expect there to likely be one during this period, so it will likely take me an extra year, so 37.

All calculations assume all relevant standard taxes and credits/deductions, it ignores potential changes to the tax structure, and ignores one-time tax deductions such as expected annual business expenses or charitable deductions. Due to the 60+ year expected retirement, I use a SWR of 3.7%. I also assume I will move to a medium or low cost of living area, I prefer a small town/suburb setting and I am not attached to any particular state, while working, I will be in a somewhat high-cost of living area, it is unavoidable. I assume there will be no children.

[Alan]

Quote:

Originally Posted by Coloradoblonde 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.

I'm 55 and retired about 4 weeks. Married (been together for 36 years), 2 kids age 29 and 27, grown, living away from home and independent.

Income comes from 3 pensions and savings where a 3% withdrawal rate will provide plenty to live the lifestyle we want. I also have retiree health insurance for DW and myself.

[Coloradoblonde]

I'm hoping for a post-tax income of about $55K/yr. This would assume debt fee, no mortgage and kids are off not depending on us anymore.
I still have quite a few years to go, but this is the number I've been thinking of for a while. I hope to dine out a few times (5-6) a month, travel to Mexico where we own a condo for a couple of months a year and enjoy hobbies. I don't care about having the latest and greatest fashionable clothes! We will need to keep maitenance up on our house and cars though.

I want to ER this year, but my husband will keep working for another
10-15 years. By the time he retires, the kids will be off on their own.
(God, I hope so!)

I was just hoping to average some of the other ER posters and make sure our projections looked right.

[bbbamI]

Quote:

Originally Posted by Coloradoblonde 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?

$45k

Quote:

Originally Posted by Coloradoblonde 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?

DH and I are both retired. It took a lot of blood, sweat and tears, IOW working and saving. DH hung in there long enough to receive a pension and retiree medical benefits for the both of us.

Quote:

Originally Posted by Coloradoblonde Please explain your personal story, income and expenses.

My personal story is boring. Stayed out of debt (had mortgage most of the time though), didn't have children and didn't get divorced. Income now is pension and investments. Our 3% WR allows two adults with no mortgage to live well.

[Coloradoblonde]

Quote:

Originally Posted by plex 26 single In today's dollars: Current Expenses: $9k/year (I have this posted in detail elsewhere) Additional Work Expenses: $4k/year (gas/car maintenance/regular dry cleaning/etc) Expected expenses for myself at retirement: $20k/year (50% increase in recreation budget, 50% increase in food budget, $5k increase in health care insurance costs that will be factored into the budget at retirement, at first it will be significantly under 5k, but later will be much more) Expected expenses with a spouse/significant other: $40k/year (plus whatever savings she has managed to bring in by the time we retire that she can contribute to cover her additional costs) Option 1: To reach $20k/year, I would need $540,000, and then need to adjust that for inflation, which, at my rate of expected income would result in needing ($640,000 inflated dollars). This sort of income stream is not realistic though, as I do expect to be single all my life, so I expect I need to use the income stream number I expect to need to support a spouse (option 2). Option 2: So, to reach $40k/year, I would need $1,080,000. Adjusting for inflation again, ($1,500,000 inflated dollars) Option 1 (which I don't intend to do, it is just a fun mental exercise), could be, with average market returns, reached by the time I am 32. Option 2 can be reached by the time I am 36, but that assumes no workplace switches (or a workplace switch with no break in between), and I expect there to likely be one during this period, so it will likely take me an extra year, so 37. All calculations assume all relevant standard taxes and credits/deductions, it ignores potential changes to the tax structure, and ignores one-time tax deductions such as expected annual business expenses or charitable deductions. Due to the 60+ year expected retirement, I use a SWR of 3.7%. I also assume I will move to a medium or low cost of living area, I prefer a small town/suburb setting and I am not attached to any particular state.

WOW, all I can say is I'm super impressed at your calculations and plan for your life and you are only 26 years old! When I think back to when I was 26, I was still trying to figure out what type of 6 pack to bring to that party on Sat night!

Way to go and I'm confident you will achieve all of your dreams!

[calmloki]

plan on living on several more decades at least.

[W2R]

Quote:

Originally Posted by youbet I'm not following your math. If your total spending is a modest $24k

Well, actually last year I spent under $21K. But my original ER plan was $24K. Of course, now it is substantially expanded.

Quote:

Originally Posted by youbet and a "tiny pension" plus 3.5% withdrawals from your RE portfolio support that now,

I have more than $24K to spend these days (perhaps my post was confusing - - sorry).

Quote:

Originally Posted by youbet how can SS only reduce your WR from 3.5% to 3.0%?

That half a percent is less than what SS says my payments will be. So, I will be getting a "raise" when I claim SS.

Just as I eased into retirement, with lots of vacations near the end, I am easing into spending more money. It's easier for me to adjust that way.

[youbet]

Quote:

Originally Posted by W2R I am easing into spending more money.

You need say no more. That explains it!

[youbet]

Quote:

Originally Posted by Coloradoblonde I'm hoping for a post-tax income of about $55K/yr. This would assume debt fee, no mortgage and kids are off not depending on us anymore.......... I was just hoping to average some of the other ER posters and make sure our projections looked right.

Understating your retirement budget is key. Folks on this forum get by with anything from $20k or so up into six figures. Huge variation. Your $55k sounds fairly typical but you need to consider health care and any special considerations for you and DH. Then, if $55k still sounds good, go spend some significant time with FireCalc to determine how your savings, SS and a possible pension can get you there. And since $55k is what you want to spend (your post tax income), be sure to gross that up since FireCalc doesn't take tax into account.

[Fireup2020]

I am actually looking forward to a raise when I retire! Military & state pensions will be more than I am living on now (because my TSP/Def Comp/Savings eat all my income these days) and this does not even include rolling TSP/Def Comp over to 72t if I decide to go that route. Currently "living" on less than $20K per year - COLA'd pensions about $98K in 2020, with second one kicking in 2030 adding about $20K more. Travel money!! Woohoo!

[Nodak]

I have after tax income of about $3100 per month with normal expenses of about $1200. I own my home and am completely debt free. Also have subsidized health insurance as a former DoD employee.

[HsiaoChu]

Its all about budgeting, and projected costs.T hese are the costs that I know I will have living in BH Maine


House Insurance($94):
School & property Taxes ($190 a month):
Food($850 a month):
Phone(Vonage for phone and internet and line rental: $50 a month):
Winter Fuel and propane cooking fund per month(propane and possibly wood: maybe $80 a month):
Trash($33 a month):
Electricity with all flourescent lights and solar cell payback into the lines($100 a month):
Gasoline( little driving unless income driving needed)$130 a month):
Car Insurance($217):
Health Insurance: (continued to carry on current employer's group policy which is currently at about $850) $1000)

Additional expenses:
Christian /children’s fund: $27
Triple A: $14
Memberships: $20
Eating out and movies fund: $100



Auto repair fund:$100
Vet bills accruing fund: $30
Miscel acruing fund: $300: Sh*t happens Fund
_________________________
= $3335 expenses

Pension and SS will cover this with about 60% of it as extra. If wife and I work a bit it will be higher.



I'm more concerned about friendships and activities than funding the retirement. But I wouldn't be if I hadn't budgeted everything. Good idea to check with your insurance agents about the costs.

[Ed_The_Gypsy]

If I retired today, our household PRE-TAX income would be about $60k/year (wife still working). If she bailed, too, about $48k.

NOTE: This has nothing to do with our taxes or expenses (one of the reasons I am still working). Our only two debts are the last of the mortgage and the kids' college educations, which are more significant.

[rescueme]

I retired three years ago at age 59. My target income for retirement has always been 100% of net income, based upon my wor*ing years, adjusted during retirement by my "personal rate of inflation" (e.g. not the government's numbers).

My only income sources at this time is income from an SPIA (purchased at retirement), along with a small VA disability. My "major income source" will be SS, at age 70 (eight years from now), along with portfolio withdrawls. A smaller, temporary income source will be when I claim 50% spousal SS, at age 66 (we're the same age).

Our lifestyle has not changed. We still purchase cars (when needed), eat out several times a week, and travel the world each year. No different than what we did when we both wor*ed.

We are completely debt free (no mortgage or CC balances) and that was a "requirement" for us to consider retirement (not as early as some, but earlier than most will )...

[skyvue]

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
Property Taxes/Maint on Condo 700
Car 300
Cable/Onstar/Internet 151
Credit Card/Misc 125
Fuel 120
Grocery 217
Entertainment 802
Vacation 347
Shopping 130
Gifts 43
Auto/Condo Insurance 120
Water/Garbage 15
Natural gas 30
Maint Fees 143
Phone 103
Health Insurance 500
Electric100
Monthly Total Spending 3,945