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How much Pad?
Old 04-04-2007, 11:01 AM   #1
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How much Pad?

How much pad are you comfortable with? Say you figure you can live on $30,000 a year, and FIRECALC says you will have $35,000. Then you have a 17% pad to annual living expense. As I have retired, mine turns out to be 20%. I guess an accompanying question, is how much below you comfort level would you have to go before you went looking for w#$k?
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Re: How much Pad?
Old 04-04-2007, 11:24 AM   #2
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Re: How much Pad?

I am shooting for a 75 to 100% PAD. I will allocate 1/3 of it to replace vehicle on a 5 year basis and 2/3 for vacation and fun. The safety net per say is my home (which I may well pay off late this year or next) which I plan to downsize from in a few years. I really do not want to need to return to Mega-Corp. I may pick up some part time stuff for extra pin money though.

I think many of us who are single prefer to over-fund if at all possible. This may be because 2 folks working Part Time can make a lot more than 1 Part Timer.
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Re: How much Pad?
Old 04-04-2007, 11:34 AM   #3
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Re: How much Pad?

Vehicle replacement, vacation, and hobbies were included in my base figure. My base figure includes everything I spend money on. i.e. there is money budgeted for vacation, auto replacement, and home repair. If not spent it builds like a sinking fund. So the 20% figure is above all budgeted items.
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Re: How much Pad?
Old 04-04-2007, 11:49 AM   #4
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Re: How much Pad?

With 20% above the base including cars, vacation, entertainment and big/small home mtc. the only other gotcha is Health Care Costs. How does that look? If fairly SECURE then 20% PAD and I would be secure. I would tend to bank the 20% for a hedge on Health Care Costs rising. In my master plan I am allocating 100K Roth for the potential loss of healthcare. Come my early 60's I will feel free to party some with a part of that.
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Re: How much Pad?
Old 04-04-2007, 12:43 PM   #5
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Re: How much Pad?

I think 20% pad would be nice to have. On top of the discretionary expenses (new cars, vacations, etc.).

Thinking about this another way, a 20% pad at a 4% SWR equals zero pad at a 3.33% withdrawal rate. I'd be much more comfortable with a 3.33% WR than 4% WR given my 60+ year ER time horizon.
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Re: How much Pad?
Old 04-04-2007, 12:55 PM   #6
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Re: How much Pad?

I am thinking that a 33% pad would be really nice to have (above and beyond my short term, long term, or any other expenses).

Right now I am living well below my means as I prepare for ER. Once I have retired, I would like a little more to spend or invest, depending on what seems best. I don't want to stop saving for the future, just because I've retired!
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Re: How much Pad?
Old 04-04-2007, 03:36 PM   #7
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Re: How much Pad?

Healthcare is covered. I am x military, and covered by Tricare. It has a $3,000 catastrophic limit annually and that is within the 20%.

As I got to thinking about the question, I realize that it does make a difference how much you are retiring on. If you have $30,000 then 20% is a little over $5,000. If you have $100,000 then it would be $20,000. Now I realize the most people spend what the have, but not if you are ERing.
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Re: How much Pad?
Old 04-05-2007, 01:15 AM   #8
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Re: How much Pad?

Quote:
Originally Posted by crazy connie
I think many of us who are single prefer to over-fund if at all possible. This may be because 2 folks working Part Time can make a lot more than 1 Part Timer.
I think many of us who are married prefer to over-fund if at all possible. This may be because 2 folks spending can spend more than twice what one can spend!
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