Poll:What Amount of Your Pre-retirement Income are You Living On?

[tgotch]

I see a lot of articles stating retirees living on 60-70% of pre-retirement income. Just curious what the retirees here might be living on?

 

[W2R]

You probably thought of this, but in case you didn't - - -don't forget that many on this board are saving unusually large percentages of their work income, and living on a very small percentage of it while working.

So, even the smaller percentages in your poll might represent the same expenditures as always, and not someone having to cut back in retirement.

 

[MichaelB]

I can't answer because we did as W2R wrote and saved most of what I earned. We are probably spending more now than when I worked, not including taxes. Either that or we are enjoying it more.

 

[skyvue]

I think a better poll might be what percentage are you spending in retirement versus when working? Even this though is some what skewed because people often do not have a mortgage when retired nor expenses of raising children which can be two of your biggest ticket items.

 

[rescueme]

We planned to retire on 100% of our pre-retirement net income, adjusted to our personal rate of inflation. Any reference to "pre retirement income" is open to many, many variations and many "paycheck deductions" that skew any result. For us, it was easier to plan on spending what we had to spend in our accumulation years and set that as our baseline (of course, adding in retirement income taxes, which are much less at this time for me, and will even become less next year).

I've been retired a bit over 3.5 years; DW to join me next year.

Since we don't have any planned additional expenses in retirement, this has worked well for us...

That being the case, I answered greater than 100% (it is slightly more due to our personal rate of inflation over the few years I've been retired)...

 

[donheff]

What W2R said. Our spending hasn't changed much but for many years it was less than half of our working income and probably only 1/3 of our income in the last 5 years we both worked.

 

[dm]

I'm living on around 34% of my pre-retirement income. Ive been retired 3 years now. But my kids are now out of college and out of the house, and we were also big savers, so spending is about the same.

 

[73ss454]

40%

 

[M Paquette]

We're running on about 55% of the gross pre-retirement income, or 100% of the post-tax, post-savings pre-retirement income. Dropping from a high tax bracket to a very low one helps.

No pension, retiree benefits, or SS income...

One factor this doesn't really take into account is the high cost of buying individual health insurance. We paid off our mortgage, and effectively replaced the monthly mortgage payment with monthly insurance payments. Then again, these (beyond 7% of income) are tax deductible, and help keep us in a low bracket. The intersection of income, expenses, and tax policies is a strange neighborhood.

 

[MasterBlaster]

There is a name for what you ask.

It is called your income replacement ratio or income replacement rate. Also referred to as retirement income replacement ratio or retirement income replacement rate.

If you google one of those terms you'll get large volume of info.

Keep in mind that this include all your retirement income like pensions, annuities, Social Security, as well as your draw from your nestegg.

 

[Independent]

We were living on less than 30% of our gross income before retirement (but after children).
Now we're spending more than 40%.
Unfortunately, the increase is medical related instead of travel related.

 

[tuixiu]

Heh how accustomed to the internet I've become, I instinctively starting clicking on the underlined words in MasterBlaster's post to read more.

I can't answer the poll since not retire yet but we spend about 30% of our gross, but that might go up slightly (the total monthly amount) since currently living in paid off home but planning on renting after retirement.

 

[veremchuka]

i was living on 35% of gross salary but it just occurred to me that was maxing out the 401k so if you deduct that from my salary and what i lived on it was 63%. my withdrawal rate to supplement my pension was 1.2% the 1st 2 years of retirement.

 

[kumquat]

We appear to be among the few who are spending more than we earned while working. Why:
1) We spend a lot on travel, travel takes time, work absorbs the "travel time".
2) We've given some to the kids as an "early inheritance", mostly free education and down payments on houses.
3) We can afford it, so why not (SWR ~=3%). 4% of our investments is about 40% more than my best year's earnings (if you only count salary and bonus, not options).

 

[CyclingInvestor]

When I retired 4 years ago, my income (72t / dividends) was 36% of my previous gross. When adjusted for taxes, savings, health insurance, and just paid off mortgage (at the time), I got a slight raise when I retired. It is now about 40% higher.

 

[Lisa99]

We're not yet retired, but we save more than 50% of our gross income. When we retire we will spend no more than 50% of our gross pre-retirement income.

 

[traineeinvestor]

We currently save more than 50% of our income. For this purpose we count all of our mortgage payment as an expense (even though most of it is not).

When I retire, we should be living on less than 30% of pre-retirement income (assuming the mortgage is fully paid off).

 

[RE2Boys]

Of course, being basically a LBYM type, only lived on about 50-60% of income while working. So actually no change in spending habits in retirement.

RE2Boys

 

[youbet]

I'm glad to see DW and I aren't the only ones living on more than 100% of our pre-RE earned income. Since our last several years of having an earned income were, by choice, much lower than our serious working years when we did the bulk of our saving, we're actually spending more now than we earned then.

With all the folks who switch to pt or have one spouse retire first, etc., I'm surprised this isn't even more common.

 

[Fireup2020]

I look forward to retiring so I get a pay raise! No more TSP contributions, no more super saving for retirement! Living on about 20% today what estimated pension will be (military - will be age 50) and that does not even include VA disability, state pension (age 60) or SS (if even in existence in 2032+!)

 

[Alan]

We appear to be among the few who are spending more than we earned while working. Why:
1) We spend a lot on travel, travel takes time, work absorbs the "travel time".
2) We've given some to the kids as an "early inheritance", mostly free education and down payments on houses.
3) We can afford it, so why not (SWR ~=3%). 4% of our investments is about 40% more than my best year's earnings (if you only count salary and bonus, not options).

We are also spending more in retirement, but that is less than 50% of our pre-retirement income.

 

[Khan]

First 2 years of retirement, 'income' was 1/3 of last w*rking year; and I wasn't spending all of that.
I have slowly started spending/giving away more.

 

[scrabbler1]

Tough question for me to answer because I took voluntary pay reductions twice in my last 8 years of working, first from F/T to 20 hours per week, then from 20 down to 12 hours per week.

I based my answer to the poll on my last pre-retirement income (@12 hours per week) which was 61%-70%.

 

[NW-Bound]

Still working PT, so cannot vote. But even without PT income, it's tough for me to answer. In the past 10 years, our earned income has been erratic. It varied over a range of nearly 4 to 1!

 

[Nova]

Well, I selected >100%, but that's qualified. After the children were out of college and on their own, we "lived" on 25-30% of our earnings. We still live on about the same dollar amount. I don't know that my answer is really what you were asking. I could have said that we live on about 25-30% of what our pre-RE earnings were and that would be correct...and probably what you were asking.