Poll: Do YOU have a floor income % built into your retirement income plans?

[rodi]

I did not answer because I'm not retired... but DH is in process of figuring out when to give notice to his employers... (this week, next week, 2 months from now... he's trying to figure out if the project he's working on is wrapped up "enough".)

Once the various income sources come online, (small pension at age 55 for me, SS at 62 for both of us, ongoing rental of our granny flat/guest house.) it will cover about 60% of our FULL needs - which include getting our kids launched. It covers 80% of our post kids-college expenses. Since I plan to retire at 55, well before SS age, and kids have 10 years or more before they're done with college, we've got frontloaded expenses.

When just DH is collecting SS - before I qualify - it's a very low percentage of our total budget. This is because of high early expenses (529 funding, teen boy appetites to feed), and low early income.

In hindsight I should have met my husband 10 years sooner, had kids 10 years sooner, and not have to have complicated spreadsheets to see if the nest egg is big enough to fund my early retirement. But... that's not the way life worked out.

 

[Midpack]

But... that's not the way life worked out.

As I am sure you've heard

Life is what happens to us while we are making other plans. [-]John Lennon[/-] Allen Saunders

 

[Alan]

I retired with 3 private non COLA pensions covering 70% of planned spending, and over the 1st 15 years of retirement plan on 4 more pensions/SS to come on line to maintain at least 70 % of expenses covered by secure income sources.

 

[Moemg]

I have a survivor's pension & SS . SO has SS . Between that we would be able to cover all regular expenses but forget travel or big home projects .I feel like I have already passed a test since I retired in 2008 and immediately saw a drastic drop in my portfolio and since I use percentage of portfolio yearly as my guide 2009 was slightly lean.

 

[daylatedollarshort]

In hindsight I should have met my husband 10 years sooner, had kids 10 years sooner, and not have to have complicated spreadsheets to see if the nest egg is big enough to fund my early retirement. But... that's not the way life worked out.

Just a thought, but semi-retiring before our kids finish college hasn't been half bad for us because of now qualifying for financial aid, ACA subsidies, tax credits and reduced income and SS taxes. We just have to be careful to have the assets kept in exempt asset classes for financial aid and plan out our income and taxes due year by year.

 

[racy]

I've retired but my wife is still working. So, our floor income is her salary which is about 60% of our necessary expenses. When we're both on SS (our only floor since I took my pension as a lump sum) that'll cover 90% of necessary expenses. I've set aside money in ultra-safe investments to cover this gap till I'm 90 (kind of a floor, I guess). The rest of our portfolio is invested for moderate growth and will provide for our 'wants'.

I voted "100% floor income" as that seemed the closest.

 

[sheehs1]

I voted but after reading all the posts not sure I should have. I'm retired, as of this month but my husband is not. That said, I still plan for us to live on his income and my passive income, taking nothing away from investments in the foreseeable future. This will allow us to pay for all essentials, discretionary and then some (saving still) . Neither are we applying for SSN for at least another 5 years since we are 58 yrs old (if then).
What is guaranteed at that point should be both of our SSN's + passive income which will still cover 100% essentials and discretionary without having to go into our investments.

For the picture to change, drastic things would have to happen. Doesn't mean it can't happen but is not likely.

 

[Katsmeow]

In hindsight I should have met my husband 10 years sooner, had kids 10 years sooner, and not have to have complicated spreadsheets to see if the nest egg is big enough to fund my early retirement. But... that's not the way life worked out.

You and me both. Of course, think of my poor DH. When he and I started dating, his youngest daughter was in her second year of college. I'm sure he was starting to think that he would soon be free of child related needs (he had 3 children). But, I had never been married and wanted kids. He was actually OK with it...but it has led to him now being 66 and our youngest child just graduating from high school... And, yes, it does complicate the retirement scenarios...

 

[NW-Bound]

We had our first born when we were 29. I thought we were a bit late, and it was, compared to our parents who had children in their early 20s.

Yet, now we are just 57, our children are already 24 and 28 and fully independent. Of course we were financially independent when we were 20. Oh, how things have changed. People live longer, and so they also take longer to mature.

 

[rodi]

You and me both. Of course, think of my poor DH. When he and I started dating, his youngest daughter was in her second year of college. I'm sure he was starting to think that he would soon be free of child related needs (he had 3 children). But, I had never been married and wanted kids. He was actually OK with it...but it has led to him now being 66 and our youngest child just graduating from high school... And, yes, it does complicate the retirement scenarios...

Gotcha beat - youngest will graduate when DH is 69.
I'll be 59.

I have to thank you again for the tip you gave me way back when I first joined about kids and SS. That made a big difference in our complex spreadsheet planning. I was clueless about it till you pointed it out to me. You rock, Katsmeow!

 

[ERhoosier]

Basically correct, understanding that losing everything is historically unheard of.

Unfortunately, there are ways of loosing everything. Like risky non-diversified investments, scams, "un-neccessary" (per HI) medical expenses of complex chronic illness, gambling/drug/alcohol problems, becoming target of an aggressive tort-claims lawyer, etc.

 

[Walt34]

We will have two main sources, my pension (DW gets 70% of that when I kick the bucket) and SS. Oh, and there's some life insurance on me. I told DW she has to wear black for a year before she starts partying with the pool boy.

I have not yet applied for SS but probably will somewhere around 65. That keeps DW comfortable if not a luxury world traveler. Much as I dislike the idea I'll wait until RMD's kick in on the 457 account as that's partially there to tide DW over to her SS FRA if I should be so inconsiderate as to die before then.

 

[Katsmeow]

I can't seem to find the article but I think it was by Wade Pfau. The point of the article was that in retirement, people didn't usually think that much about their necessary expenses versus discretionary expenses. That is, most people don't want to retire if they can only cover necessary expenses and - in practice - they actually see their "discretionary" expenses as being necessary to their happiness.

If I look at our budget when I'm 66. With DH's SS (he took at 62) and let's say I took at 65 then about 80% of our desired expenses would be covered by SS. Over 100% of our necessary expenses would be covered but I for sure really wouldn't want to only be able to afford those.

 

[pb4uski]

I found it hard as well (in fact I didn't answer). While I do have SS and a small pension, I don't necessarily yearn for a certain percentage of our living expenses to be from highly reliable sources like SS and pensions. Yet, the reality is that once all of these are online, they will cover about 60% of our living costs and we could not be retired if we didn't have them. But if it was lower that would be fine with me as long as we have enough considering all sources available to me.

 

[Danmar]

Not sure how you would categorize a rising stream of relatively " safe" divs. 0bviously not guaranteed but maybe half of these could be compared to other more stable sources of income? If so we are at about 75% as divs are about 50% of our income with our private pensions being the rest. Gov't sponsored pension yet to come not even a rounding error.
Basic needs are pretty hard to define for us. Things we would call "necessities " might be otherwise for most other people. Hopefully we never need to change our definition.
We are lucking indeed.

 

[donheff]

My Pension and DW's SS (to come) cover 100% of essentials with COLA. Our portfolio covers a two house, extensive travel lifestyle.

 

[golfersailor]

Been retired going on 5 years and SS+pension = 100% However my pension is non-Cola which means someday we will need extra.

 

[kcowan]

We have a household budget which we count on increasing by 4% a year. At the end of the year, we compare it to what capital we would need at 4% and then compare that amount to our accumulated portfolio. As long as it is less, we consider ourselves OK.

IOW we do not set the budget based on the current portfolio size. As it stands now, 11 years into retirement, we can live forever.

 

[seraphim]

For the last five years before retirement, my wife's income paid the mortgage and our son's college expenses. We lived on my take home income. Son's graduated and the house is paid off. Our combine pensions, after tax and insurance, is about the same as my old take home, so we can live on our pensions. I haven't done the math specifically, but the pensions are about 67% of our previous income. A 2% withdrawal permits us to travel as we wish; when the market's down, we can forego travel and live off pensions. I'd like to leave a significant inheritance for our son, given the employment situation. I'm pessimistic it will improve.

We have higher expenses at the moment - two cars will be paid off in August. Payments on pickup for another couple of years. Truck is for our RV. When those are paid off, we may need to tap into the investments at all. We'll receive a small SS payment in 5 years; enough to pay for gas...

 

[martyb]

I will have a pension (federal) with COLA when I retire later this year, that will cover around 80% of expenses, & wife will keep working which will cover the rest. When she retires in a couple of years (no pension) I will then tap my TSP for the 20% that we'll lose when her income stops. 2 years after that, my military reserve retirement will begin & will again pick up where her stopped income left off. TSP & her 401k withdrawals after that point will be for discretionary spending, for the most part.

I should add that when I'm withdrawing from my TSP, it will be at a rate no higher than 4%, likely less, before taxes.

 

[Meadbh]

I voted the first option based on the current situation. I have no pension. By the time I reach government pension age, I will not get the whole amount (CPP) and will probably have OAS clawed back (assuming my portfolio does not tank in the meantime). Recognizing how vulnerable this makes me to the slings and arrows of outrageous fortune, I have added some investment real estate to my portfolio. When all the mortgages are paid off about 12 years from now, I estimate that this will provide an income equivalent to ~25% of my baseline lifestyle expenses.