Originally Posted by whitestick
DW asked me how much do the average people who are retired manage to save each year, over and above their expenses. Other then the obvious inflation factor of ~3%, I really didn't have a clue. I expect many of the FIREd folks here to have a higher savings rate then average, but then I don't know, and thought I'd ask before
lying through my teeth giving her the benefit of my wisdom. What's yours and your estimate of the average?
I have no idea of the "average" for all RE's.
As to myself and wife, I have an $80k cola'd pension that more than covers our living expenses. Anything else goes to savings/investments.
I also just started on SS at 62 and my wife and two of my kids ages 14 and 17 will be getting some SS. The SS for me and wife will go to savings/investments.
In addition, my wife has a pension (from same organization I worked for) still building (she hasn't worked for 24 years, but is vested and her pension fund is accumulating). She can either take that as a full pension anytime, or take 1/2 as a lump and a half pension, or take a full lump. We are thinking the half pension/half lump option, to roll $125k into an IRA perhaps in three or more years as we don't need the money now. But it will give her her own $13k pension plus 1/2 of my $80k when I croak. She will also be elegibile for SS as retiree in 12 to 16 years.
Besides all this, we have close to $1 million in tax deferred retirement accounts (some traditional and some Roth). It will be untouched until we hit the 70-1/2 marker (and the Roths likely never). Right now we are growing it in investments. Besides all that, we have $1/2 million in muni funds throwing off federal tax exempt income. And to beat the band, our home has been mortage free for over ten years.
So, we are probably saving/investing more now than when I was working. We are planning on building a new home. That should solve any problem we have from getting all that muni tax-exempt income from that pot. We'll pay cash for the new home, so will have no new mortage either.
One kid is through college, and we already funded UTMAs over the years for the other two kids college funds. Plus they will get a boost from their SS benefits for awhile---that's why I started SS at age 62. That made the SS at 62 or 66 question a no-brainer for me.
So, even after allowing for an occassional splurge like a cruise, a new (to us) used car, a new home (after 17 years in our mortgage-free current home), we are saving.
My next financial area to look into is longterm care insurance, to decide if the premiums will be worth it or not for us.
We will be able to leave a nice legacy to our three kids, fund some charitable interests, all while living how we want.
And to imagine, I never earned a salary higher than $60,000 a year my entire career when I was working (and even that only is my last year). Somewhere I've got the book "The Wealthy Barber". I'm going to have to finally read that and see if I already followed it's advice.
Back to your original subject---saving IN retirement. I think it is a wise thing to do. Living month-to-month, check-to-pension check, puts one in the same precarious position in retirement one would be in if still working.
Just one emergency away from disaster. Emergencys, unexpected needs, broken-down cars, health crises, leaking roofs, parents to care for, etc, etc all happen in retirement too. They don't magically stop after work ends.
Spending 100% of current income leaves one no way to build the emergency reserves, and it may even cause one to deplete existing reserves. One can live joyfully, contentedly, and richly without needing to spend 100% of retirement income.