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View Poll Results: Retirement Income as a percentage of working income
less than 80% 85 72.65%
80% to 90% 7 5.98%
90% to 100% 13 11.11%
100% to 110% 3 2.56%
110% to 120% 3 2.56%
Over 120% 6 5.13%
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Poll: Percentage of pre-retirement income earned
Old 03-30-2017, 08:43 AM   #1
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Poll: Percentage of pre-retirement income earned

The financial industry keeps pushing the 70%-80% of your pre-retirement income is needed for a safe and secure retirement. This group is proof that isn't a true statement since many on this forum live on small percentages of the pre-retirement income.

So my hypothesis is that all members have lived below their means during their working years. Furthermore, one could deduce that a high number of the members actually are earning 100% or more of their pre-retirement income, even if they are spending very little of it.

So using your average peak earning year's wages, what is the percentage that you are earning in retirement from all sources:
SS
Pensions
Rents
Minimum required distributions
Net Capital Gains
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Old 03-30-2017, 08:50 AM   #2
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Posts: 11,401
SS 0
Pensions 0
Rents 6%
Minimum Required Distributions 0
Net Capital Gains Varies, but <10%

Total: <16%
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Old 03-30-2017, 08:53 AM   #3
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I currently spend ~60-65% of my gross income and save the remainder. I expect that once I pay off the mortgage I'll spend that money on increasing quality of life instead of saving more. As such, I intend to maintain my spending at approximately this level after I retire (plan on paying off the house in the early years of FIRE). So 60% should still be pretty accurate at that point.
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Old 03-30-2017, 08:56 AM   #4
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I can't say what income will be since capital gains goes all over the map. Spending budget is about 70% of salary/bonus. It's about what I was spending, maybe a bit more in the first year or two for travel.
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Old 03-30-2017, 09:13 AM   #5
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I saved so much of my income, 50% + of the gross, that we'll be well below 80%, probably closer to 45% and still have a nice retirement.
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Old 03-30-2017, 09:21 AM   #6
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Since most of my savings is invested in equity index funds, how do you determine the income associated with these funds? The stock market returns can vary wildly from year to year. They only pay a small amount of dividends, and most capital gains are not recognized until you sell.
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Old 03-30-2017, 09:27 AM   #7
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We are not retired yet, but roughly 35% of our current income goes to work related expenses and miscellaneous savings for retirement.

Social security, medicare, union dues, life insurance, parking fees, industrial insurance, IRA contributions, pension contributions, etc.

Income taxes should reduce after retirement due to lower income, though healthcare costs will increase dramatically.

We're planning for 60-70% of our pre-retirement income after retirement. Essentially the same life style we are living now. We could still reduce our spending a bit if it really came to that.
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Old 03-30-2017, 09:28 AM   #8
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Originally Posted by Ready View Post
Since most of my savings is invested in equity index funds, how do you determine the income associated with these funds? The stock market returns can vary wildly from year to year. They only pay a small amount of dividends, and most capital gains are not recognized until you sell.
If I were retired, I'd count income (for something like this) as all money you took from any source that wasn't reinvested (i.e. what you spent including taxes on average).
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Old 03-30-2017, 09:30 AM   #9
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Heck, not just less than 80% but way way less. And when we were working, we spent way less than our gross income.

Many posters here did the same, and that's how we could retire early: 1) spend less to have more savings, and 2) be LBYM to keep the lifestyle affordable to ER.
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Old 03-30-2017, 09:37 AM   #10
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My working income varied greatly over the years. The salary rose and I had a fair amount of stock related compensation based on one-time events, which is difficult to average over time.

Now, I withdraw a target % of the portfolio. What should one compare in this situation?
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Old 03-30-2017, 09:37 AM   #11
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Originally Posted by exnavynuke View Post
If I were retired, I'd count income (for something like this) as all money you took from any source that wasn't reinvested (i.e. what you spent including taxes on average).
OK. In that case, I'm spending about 15% of my average annual income. The less than 80% seems like too high of a minimum threshold for this forum.
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Old 03-30-2017, 09:39 AM   #12
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Originally Posted by COcheesehead View Post
I saved so much of my income, 50% + of the gross, that we'll be well below 80%, probably closer to 45% and still have a nice retirement.
Same here - I would guess this is far more common on this board than the OPs original assumption?
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Old 03-30-2017, 09:40 AM   #13
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Less than 50% without capital gains. I don't count on that category because I don't spend that money.
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Old 03-30-2017, 09:41 AM   #14
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OK. In that case, I'm spending about 15% of my average annual income. The less than 80% seems like too high of a minimum threshold for this forum.
Maybe a 20% floor ... (Not that we are going to be that much lower than 50%, but I bet you aren't the only one!)
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Old 03-30-2017, 09:51 AM   #15
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Again, it comes down to definitions. It's really spending that counts. For example,in my last year of working I spent about 25% of my all in income. Once retired I spent about 50% more but my income was all over the map as I cashed out incentive comp awards for 5 years after retirement. Not sure why people focus on income rather than spending? Income is very difficult to define in retirement. Cash flow is the key.
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Old 03-30-2017, 09:56 AM   #16
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Still w*rking but I am planning on about 60-65% in retirement. But as my w*rking gross income continues to increase my planned retirement income percentage goes down.
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Old 03-30-2017, 10:10 AM   #17
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My peak annual wage income is hard to quantify because I switched to working part-time 4 months after my last raise while working full-time. So I will use that final annual full-time wage earnings in the denominator. As for the numerator, my retirement earnings vary some because of the irregular cap gain distributions which make up about 40% of the total investment income.

So when I divide one by the other, I get about 55% of my peak, FT wage income is replaced by my current, typical investment income. That being said, I spend about 60% of my investment income on expenses.

I should also add that I made a second reduction in my wage earnings after I began working PT when I asked to work even fewer hours. If I used those final wages instead of my peak earnings, my investment income would be about 140% of my final wages.
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Old 03-30-2017, 10:21 AM   #18
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Quote:
Originally Posted by Danmar View Post
Again, if comes down to definitions. It's really spending that counts. For example,in my last year of working I spent about 25% of my all in income. Once retired I spent about 50% more but my income was all over the map as I cashed out incentive comp awards for 5 years after retirement. Not sure why people focus on income rather than spending? Income is very difficult to define in retirement. Cash flow is the key.
+1

"Income" is nearly impossible to define in a comparable way due to all the various ways retirees generate cash, including different stages of retirement with different cash inflows (SS, pension). I answered based on average spending in retirement as a percent of average gross household earnings over the last 5 years that we were both working. Answer = 32%.

Our spending went way down after retirement mainly due to payroll taxes, income taxes, college costs, and paying off the mortgage. Excluding those large items, spending is up a bit due to travel, health insurance, hobbies, and home improvements. But those items are partially offset by reductions in commuting costs and other work-related expenses.
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Old 03-30-2017, 10:59 AM   #19
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Assuming we are retired; something I struggle with. Is we is or is we ain't? As we had the rentals we pushed money at paying them off and as one paid off snowballed the money into the next highest interest rental property loan. At some point all the rentals were paid for and the income started to stack up. We became snowbirds, but found we could easily make property loans to investors and make a pretty decent return on something we were familiar with - property. Because everybody does it we stuck a slug of cash in the market - this year makes that look like a brilliant plan. The rentals continue to tick along - now with - New! - annual rent bumps.

Thing is, our income continues to grow each year, and I can't see how or why to stop it. We spend about the same or less on ourselves but have more money to deploy - which makes more money. Uncle Sam should send us a thank-you note this year.
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Old 03-30-2017, 11:40 AM   #20
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When working we saved more than 20% of our income, so even if we spend the same amount it would be 80%.
Since we don't work, spending needs went down.

Last week I splurged and bought 8 golf shirts, at only $8.00 each.
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