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Old 05-12-2016, 10:12 AM   #61
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I live in a high cost area but everything is paid off with no debt. My approximate retirement budget for one is:

$25K for essentials (home, food, utilities, medical, transportation, etc.)
$12.5K for routine discretionary spending (entertainment, hobbies, gifts, travel, etc.)
$12.5k for non routine spending (new purchases, replacement, etc.)

$50k total

If I were to add one person (later this year)

$12k for essentials (food, medical, transportation)
$12k for routine spending (two people can spend about twice as much here)
$6k for non routine spending (lower than one, no need to replace the roof twice)

Add $30k to bring the total to $80k.

I feel that this is a modest budget but has plenty of room to cut back if needed.
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Old 05-12-2016, 10:14 AM   #62
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Try taking a mild antihistamine prior to imbibing, a lot of migraines are associated with the abundant amount of histamines found in red wine.
I will absolutely try that, thanks
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Old 05-12-2016, 10:21 AM   #63
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One thing to keep in mind as we toss numbers around is that some of us are talking about living off a single annual number as an individual, others as a couple, and others as a family. It's not really apples to apples...
Recently, I ran across the following on a billboard, then again on the Web. Apparently, it is popular but was new to me.

"Two can live as cheaply as one,
for half as long
" -- Anon.

But a couple really does not spend 2x. Many of the costs are shared and not doubled, such as housing and operating expenses. I let my wife come along for free on my RV treks, for example (but why does she keep thinking that she is doing me a favor by keeping my company?).
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Old 05-12-2016, 10:34 AM   #64
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OP here, responding to a variety of posts:

First, THANKS everyone for replying.

We are a "we" - DW and me. One adult child out of the house and far away (alas).

We will have more than 40,000 in income, but I was focusing on the expense side.

In my first calculation I included all the items that various posters have raised, except I'm planning on keeping my money in the market rather than a sinking fund for cars.

All home repairs (roof, siding, carpet) will be done in the last 2 years of work, and if I finish those early I might be able to cut a year off of working. We will likely downsize before that repair cycle hits again.

I'm learning that our health care cost savings are incredibly significant. Dental is less well-covered so I need to add to the budget for that.

If we sold the house and downsized we could probably quit 2 years earlier.

Sheesh, we might be able to do this.
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Old 05-12-2016, 10:47 AM   #65
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I guess when push comes to shove, it all depends on your lifestyle and what you are used to spending.

Personally I do just fine in retirement spending less than $40K on average, but I am single and it is probably harder for a couple to do that.

For me it hasn't been much of an adjustment since I spent less than $40K before I retired.
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Old 05-12-2016, 10:55 AM   #66
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we could also retire now if we only wanted a $40k income lifestyle. No offense at all, if that's what floats your boat, then go for it. We like to travel far too much to restrict ourselves to that level of spending. Our ten year anniversary trip was a 2 week cruise for a family of four and all expenses included it exceeded 1/3 your annual spending. We take many vacations each year and don't plan to stop. Part of the reason is that our family is farflung, from Hawaii to the midwest to the deep south. So lots of travel at major holidays (christmas, Spring break, etc) to see folks. Once the kids are out of school we can travel any time but our youngest just started kindergarten so that's 12 years away.

We feel like we live modestly with a very inexpensive house, cars that aren't fancy, etc., but we still spent almost $45,000 in the last six months alone. Hard to see where it all goes... $200 for cable/internet/phone/security... $200 for storage (the cost of having a very small house, this may change)... various insurances add up to a few thousand a year... The kids have many activities that add up to over $500 per month. We pay for summer camps. We like to eat out quite a bit and live in a great food city and that addds up to $1000 per month or so. So I guess the money just goes, and we like our lifestyle for it.

If we eliminated half our expenses we'd be retiring now with an SWR below 2%. But that would be more like surviving than living...
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Old 05-12-2016, 11:51 AM   #67
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Here is a recent Canadian study that suggested that retirees were spending 62% of their previous income.

https://www.sunlife.ca/ca/Learn+and+...=en_CA&sf=true
That's a good data point worthy of discussion. However US retirees may need more than Canadians due to healthcare costs.
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Old 05-12-2016, 12:42 PM   #68
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we could also retire now if we only wanted a $40k income lifestyle. No offense at all, if that's what floats your boat, then go for it. We like to travel far too much to restrict ourselves to that level of spending. Our ten year anniversary trip was a 2 week cruise for a family of four and all expenses included it exceeded 1/3 your annual spending. We take many vacations each year and don't plan to stop. Part of the reason is that our family is farflung, from Hawaii to the midwest to the deep south. So lots of travel at major holidays (christmas, Spring break, etc) to see folks. Once the kids are out of school we can travel any time but our youngest just started kindergarten so that's 12 years away.

We feel like we live modestly with a very inexpensive house, cars that aren't fancy, etc., but we still spent almost $45,000 in the last six months alone. Hard to see where it all goes... $200 for cable/internet/phone/security... $200 for storage (the cost of having a very small house, this may change)... various insurances add up to a few thousand a year... The kids have many activities that add up to over $500 per month. We pay for summer camps. We like to eat out quite a bit and live in a great food city and that addds up to $1000 per month or so. So I guess the money just goes, and we like our lifestyle for it.

If we eliminated half our expenses we'd be retiring now with an SWR below 2%. But that would be more like surviving than living...

NVM
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Old 05-12-2016, 12:54 PM   #69
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That's a good data point worthy of discussion. However US retirees may need more than Canadians due to healthcare costs.
I'll also preface this with no offense intended, but I don't think any discussion of retirement needs based on working income is worthy of discussion. How much you need in retirement is based on your budget needs. Period.

How much you made is largely irrelevant because it doesn't consider how much you were saving in retirement (a huge factor) , how much your life changes, and so on. Some people may have had long commutes (but can now cut down to 1 car), requirements to wear expensive clothes, and so on which drop their expenses a lot; others may have to pay their own medical insurance, want to take big vacations, pursue expensive hobbies, all of which could mean they actually spend more in retirement.

Any notion or guideline to base your needs on a % of working income is misguided.
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Old 05-12-2016, 01:05 PM   #70
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I'll also preface this with no offense intended, but I don't think any discussion of retirement needs based on working income is worthy of discussion. How much you need in retirement is based on your budget needs. Period.

How much you made is largely irrelevant because it doesn't consider how much you were saving in retirement (a huge factor) , how much your life changes, and so on. Some people may have had long commutes (but can now cut down to 1 car), requirements to wear expensive clothes, and so on which drop their expenses a lot; others may have to pay their own medical insurance, want to take big vacations, pursue expensive hobbies, all of which could mean they actually spend more in retirement.

Any notion or guideline to base your needs on a % of working income is misguided.
I agree with you and I don't at the same time. Expenses determine needed nest-egg I agree.

But what you have (perhaps) not considered is that lifestyle, and it's associated expenses are highly correlated with income.

Therefore the 62% of income Canadian data point is indeed worthy of discussion.
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Old 05-12-2016, 01:07 PM   #71
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I'll also preface this with no offense intended, but I don't think any discussion of retirement needs based on working income is worthy of discussion. How much you need in retirement is based on your budget needs. Period.

How much you made is largely irrelevant because it doesn't consider how much you were saving in retirement (a huge factor) , how much your life changes, and so on. Some people may have had long commutes (but can now cut down to 1 car), requirements to wear expensive clothes, and so on which drop their expenses a lot; others may have to pay their own medical insurance, want to take big vacations, pursue expensive hobbies, all of which could mean they actually spend more in retirement.

Any notion or guideline to base your needs on a % of working income is misguided.
I always thought that intuitively but it seemed like the industry has the news media eating out of its hand on the "must have 70-80% of current income" trope - thanks for making those points.
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Old 05-12-2016, 01:23 PM   #72
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One thing we have realized since retiring is that lifestyle does not necessarily equal spending. If we can live the same lifestyle for $50K a year less than our neighbors spend, over a 50 year retirement that adds up to $2.5M less in total retirement funding needed.

I budget for some outing every day like seeing a play, visiting a museum or going out to eat, but I use coupons and have a lot of memberships with discounts and freebies so it doesn't cost much out of pocket. I also have a lot of little odds and ends income streams, like credit card reward points, that cover the cost of the membership fees, so that reduces how much we need to spend from our portfolio income.
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Old 05-12-2016, 01:57 PM   #73
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One thing to keep in mind as we toss numbers around is that some of us are talking about living off a single annual number as an individual, others as a couple, and others as a family. It's not really apples to apples.

I'm heading toward the two-year mark, and I've also been shocked at how little I've spent, even though I live in an expensive city and don't feel I've deprived myself of anything. Of course, I do live simply, and it helps that the mortgage is paid off. The great thing is that it's eliminated any doubts I had about whether it was the right time to pull the trigger.

Going forward, I plan to loosen up a bit by supporting local coffee shops and restaurants more, and perhaps adding some travel. However, I remain wary of major one-time expenses (be they auto, medical or house related) that could throw everything out of whack.
I'm heading toward the three year mark and have been surprised at how much I have been spending! I have recorded my expenses using Quicken for 20 years or so. I thought I knew exactly how much I would spend. It was right at $40k. Sometimes things don't work out the way you might expect.

My retirement was to coincide with DS's graduation. That didn't happen, so tuition and living expenses for him for two more years. I also moved back to Virginia for the first winter to maintain Virginia residency while he remained in school. That meant rent for 6 months. He is on his own this year. This year DD will get married in the fall. (I kind of figured that would happen some time. ) I'm hoping $15k or so on the wedding. My home building project is over budget. I had a cash bucket set aside for construction. I am adding to that bucket from annual spending/income. I also estimated medical lower than it was for the first two years. That was mostly the cost of insurance after retirement.

My available annual spending/income is much greater than $40k, so all is well, but it certainly has cut into my ability to buy more toys!
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Old 05-12-2016, 02:44 PM   #74
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Yep, one would have to develop expensive hobbies or some high cost living to spend $70K a year. Outside of my mortgage (which I am on track to pay off before retirement). I spend around $20K on living and this includes yearly expenses like taxes and insurance. (My employer health insurance is cheap and does continue into retirement...) Maybe an expensive vacation year would be another $5000 - $6000 for 2 big trips and some weekend splurges.

My cars are paid off and maintained well enough that car repairs are only minor expenses.

I couldn't see spending that much money ever. I might be considered a tightwad though. I was just looking at the USDA Thrifty food chart and figured up about $520 for our sized family. My budgeted spending is actually $300 or less. The other $200 is for eating out - though some weeks we don't spend our $50 allotted and some weeks we spend more on a splurge.

I think I eat well and live well. My hobbies are skiing and doing crafts like sewing or scrapbooking. I love going to yard sales/flea markets/estate auctions too but am pretty picky about what I actually buy.

As far as skiing, since I am a local I buy a season pass and it is pretty cheap ($300 - $700 per year depending on which one I chose). I own a fully paid for mountain condo that pays for itself in rental income and I use it at least 2-3 times a month year round. (I take my "weekend" during the week in the winter so I don't cut into rentals in order to use the place. I hate skiing on Sat anyway because it is too crowded and the traffic is horrid on Sunday, so I may as well work on Sat/Sun.) My family's ski gear is all bought or sale or even picked up used - I spend $250 on new skis a couple of winters ago and will probably use them for 8 or 10 years more - you can't even rent skis for $25 a day anymore - yet that is my yearly cost averaged out.
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Old 05-12-2016, 02:52 PM   #75
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FUEGO is my hero here . Detailed tracking of low spending with family and awesome life.

I have much to learn from you guys.
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we could also retire now if we only wanted a $40k income lifestyle. No offense at all, if that's what floats your boat, then go for it. We like to travel far too much to restrict ourselves to that level of spending. Our ten year anniversary trip was a 2 week cruise for a family of four and all expenses included it exceeded 1/3 your annual spending. We take many vacations each year and don't plan to stop.
No offense taken.

We spent two weeks cruising the Caribbean most years. Sometimes we cruise with 4, sometimes with 5 (difference is whether we leave the youngest with Grandma or take Grandma with us). It's usually off season so we save massive amounts on cruise fares (and shop for the cheapest fares).

7.5 weeks in Mexico last summer at about $4500 total (travel hacking cut the cost in half).

All on well under $40,000 total household spending per year.
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Old 05-12-2016, 03:07 PM   #76
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I agree with you and I don't at the same time. Expenses determine needed nest-egg I agree.

But what you have (perhaps) not considered is that lifestyle, and it's associated expenses are highly correlated with income.

Therefore the 62% of income Canadian data point is indeed worthy of discussion.
The fact of math dictates that there has to be some number that is retirement expenses divided by working income. It doesn't say that number has to be useful or indicative. One way to see would be the standard deviation of that 62%. The higher it is, the less likely the number is to have any real value. Taken to extreme, if 5 people spend 100% of what their income was, and 5 spend 24%, the average is 62%, but nobody actually spent anywhere close to 62%.

Many people here on e-r.org probably aren't getting into the lifestyle associated with their income. See this current thread Hiding Your Wealth (NOT a poll) :) for example. Others may, but I don't think it's to be recommended. I'll give you that there is some correlation. If you were a CxO in working life you are likely to be a country club type in retirement, and a middle class worker probably isn't going to be splurging on first class vacations, but the extent of the expenses will vary too widely, for reasons I already mentioned, to be of value for individual planning. This is why, when newbies come here and ask "Can I retire now?", the comeback question is "What is your retirement budget?", and never, that I've seen, "How much are you making now?"

But feel free to discuss. I'll stay out of it.
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Old 05-12-2016, 03:24 PM   #77
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But feel free to discuss. I'll stay out of it.
We got your point the first time, You are repeating yourself.

But feel free to discuss it, again.
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Old 05-12-2016, 03:40 PM   #78
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Yep, one would have to develop expensive hobbies or some high cost living to spend $70K a year. Outside of my mortgage (which I am on track to pay off before retirement). I spend around $20K on living and this includes yearly expenses like taxes and insurance. (My employer health insurance is cheap and does continue into retirement...) Maybe an expensive vacation year would be another $5000 - $6000 for 2 big trips and some weekend splurges.
As people have said before it's a lifestyle choice. We live in a high cost of living area where our real estate taxes and condo fees are over 10K/year. our travel and entertainment budget is over 20K.

Never been to a yard sale/flee market and don't plan on going anytime soon. It's not our cup of tea. If we find a discount on a play or a concert we'll take it but that won't stop us from paying full price.
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Old 05-12-2016, 03:43 PM   #79
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We got your point the first time, You are repeating yourself.

But feel free to discuss it, again.
Actually I responded to the point you said I (probably) didn't consider, and only repeated my conclusion.

edit: At least I thought I did, but I know I have a tendency to repeat myself, so I apologize if I did.
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Old 05-12-2016, 04:01 PM   #80
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And I left out toys like airplanes and larger boats. There's probably no upper limit on what one can spend on those. They're great for those who have the income to support them but it's simply not in most people's budget.

It depends, of course. In the 70's/80's I owned a couple of planes which cost me 2,500 & 7,500 respectively. I have no idea what it costs these days to get into something older but airworthy as I no longer follow such things. But I can say that our small 22' cruising boat passed that by a factor of four.

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"I can't figure out how I'll spend $40,000/year in retirement..."



Get a boat

Bingo. And once owned, it's often more about the cost of storage and slip rental than about maintenance and depreciation.

As for the 80% rule, no it's never made sense to me to use something like that outright. I do estimate roughly 70% for the years leading up to SS@70 and about 50% thereafter. And, even there, I hope to discover I'm wrong (in the good direction). But those are based on our actual anticipated costs. Incidentally, those percentages include going into retirement with a fairly new sub-4% mortgage. Should we pay that off early, I'd expect we might get down to 50k yearly but would be surprised to get it any lower without moving to a lower cost area. That's not likely. So I don't see 40k or less for us but I know quite a few who have or are retired on such amounts.
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