Retirement Budget -- Poll only for those currently retired.

[2B]

What difference does it make if you pay your mortgage in "large chunks" or not?

For you and CT, paying off your mortgage in a regular 30 year mortgage is like paying rent. The reduction in principal is small (usually) with respect to the total payment. "Large chunks" is reducing a debt/fixed income portion of your finances. If someone is paying off their mortgage, they have made a decision that it is an "expense" they choose to have. Paying off a mortgage is also a decision. I'm looking for what people are actually living on by whatever means they determine what they need.

 

[retire@40]

...The reduction in principal is small (usually) with respect to the total payment...

Whether the reduction of principal is small or large, it does not change the character of the item you are reducing. It is still principal.

And principal is usually large with repect to the total payment toward the end of the amortization period, while it is usually small at the beginning of the period. That doesn't prove or disprove anything. It's just a statement of fact. Large or small, it is principal and you would account for it as I mentioned in my previous post.

 

[2B]

Whether the reduction of principal is small or large, it does not change the character of the item you are reducing. It is still principal.

You are being too technical. I'm looking for what people are spending on a year to year basis. What do people "need" to spend in retirement.

 

[ladelfina]

I'm more confused with each post.. you insist on knowing what we "need" to spend in retirement.. well, I answered, but I can tell you right now that that number would double or triple if I had kids at home and were paying either mortgage or rent. This poll might be more valid if you were to look at
Single ERs w/paid off house
ER'd couple "
ER'd couple with kids at home (or supported in college) "
Single ERs paying rent/mortgage
ER'd couple "
ER'd couple with kids at home (or supported in college) "

Are you trying to get a baseline to compare with your own future budgeting?

 

[2B]

I'm more confused with each post.. you insist on knowing what we "need" to spend in retirement..

Are you trying to get a baseline to compare with your own future budgeting?

I am looking for the actual, current spending of those that are retired. I don't want to separate the group any finer at this point. If you are retired and have 3 kids at home, then you may be spending more than someone without a spouse or kids but maybe not. Personally, my "baby" graduates from college in December so my "cost of living" will drop by about $15K/year.

The finer point about how much of a mortgage payment may or may not go into principal is also "froth" on the data.

As for my own "baseline," the answer is "yes, but." I'm curious to see what people are actually spending but I know there are a lot of differences. I am also "different" too.

I think the poll is useful to see the spectrum of lifestyles represented. Based on the answers to date, we, as a group, aren't living in hovels and dumpster diving for our next meal. We are also not a herd of country clubbers that have amassed a fortune and are living in a czarist sense of luxury.

 

[jeff2006]

We are also not a herd of country clubbers that have amassed a fortune and are living in a czarist sense of luxury.

LOL!! This is a hoot. Wait til my friends who belong to the local CC find out that they are living in czarist luxury.

 

[retire@40]

...Based on the answers to date, we, as a group, aren't living in hovels and dumpster diving for our next meal. We are also not a herd of country clubbers that have amassed a fortune and are living in a czarist sense of luxury.

Yup, we're just a bunch of middle-class folks who managed to save (or in the process of saving) some money to live on for the rest of our lives.

 

[astromeria]

Yup, we're just a bunch of middle-class folks who managed to save (or in the process of saving) some money to live on for the rest of our lives.

hmmm...I think we're mostly upper middle class (household incomes $65-$100k during recent working years), which made/makes it easier to save. And we mostly had a clue (via brains and/or upbringing) about getting an education, avoiding debt, avoiding huge families to support, avoiding destructive habits like drug addiction, learning about retirement accounts, etc. And we were mostly lucky in our health--and in our health insurance.

 

[2B]

hmmm...I think we're mostly upper middle class (household incomes $65-$100k during recent working years), which made/makes it easier to save. And we mostly had a clue (via brains and/or upbringing) about getting an education, avoiding debt, avoiding huge families to support, avoiding destructive habits like drug addiction, learning about retirement accounts, etc. And we were mostly lucky in our health--and in our health insurance.

astromeria, sorry about the report. I figured out what I had done.

We've had the "luck" discussion here before. The bottom line is that life is not "fair" but it is "equitable." Our first bit of "luck" is being born or being brought to the US or a comparable Western country where healthcare and education is generally available. 99% of India are "unlucky" and won't have anything that resembles what we take for granted.

Our personal health is partly "luck" and partly choice. My older brother smoked all of his life and hasn't had regular physicals despite them being available on his health plan. He is now "unlucky" and may need a bypass. Some are "unlucky" and born with Downs Syndrome.

Neither of my parents went to college and never helped or encouraged any of their children to go. Three paid their own way to the bachelor degrees of our choosing. We saved or spent as our lives evolved. I had more children than any of my siblings. I paid for all of their colleges. I drove the old cars and lived a lower lifestyle. I am the only one in a position to ER. I was the "lucky" one.

If I had learned what I know now sooner, I'd have been even luckier. Now, I only hope our politicians don't decide to take what my "luck" has created and distribute it to those less "lucky."

 

[astromeria]

I didn't say we were lucky--more like we were smart (and isn't that lucky!). I don't agree that life is "equitable"--but let's not go there...agree to disagree, as it were. The statement that we're all just regular middle class folks who saved is a wee bit misleading, IMO.

My parents weren't college folks either, and they really were middle class (just barely some of the time), but they did encourage (I should say insist!) that my brothers and I attend college. Lucky us! I mean--smart us :

 

[2B]

The statement that we're all just regular middle class folks who saved is a wee bit misleading, IMO.

I agree.

The "middle class" goes down to a pretty low income level IMHO. I suspect that many of us here would qualify for the governments definition of the "upper class." We may bristle at the term but my current income puts me safely in the upper quartile.

 

[Spanky]

According to a blog, the wealth distribution in the US:

The wealth distribution chart below shows that the top 1% own 38.1% of the wealth in the country, the next 4% own 21.3%, and the next 5% own 11.5%. That is to say, the top 10% of the country owns 70.9% of the wealth of this nation!

Ninety percent of the country owns a mere 29.1%.

 

[2B]

I'll bet that the top 10% down actually "own" 70.9% of the assets. I'll bet they loaned the money to the bottom 90% to buy it.

Wealth seldom survives more than three generations in this country.

 

[Gone4Good]

Truly, it is hard for me to imagine how I could spend 50K, even if I had an S.O.

JG

I guess that depends, in part, on where you live. Post ER I'm looking at $11K for health insurance, $8K in income taxes, $5K in property taxes . . . I'm about half-way to $50K and all I've done is paid for health insurance and taxes.

 

[retire@40]

hmmm...I think we're mostly upper middle class (household incomes $65-$100k during recent working years)...

I don't disagree with your definition, but I consider middle class people those who are neither poor (upper cutoff at the point where they make just enough to survive on a bare bones budget) and rich (lower cutoff at the point where they have saved just enough to live the rest of their lives completely on their investments). I don't think you will find those definitions anywhere because I just made them up. But that's how I define the middle class.

 

[2B]

I declare the end to the poll. The bulk of "FIRE'd" individuals/families on this board have a median spending in the $45 - 60K range. Hardly are they in the lower end of our society but they will not get an expose on the "Rich and Famous."

Amazingly, the target I have is right in the same range.

Thanks to all that replied.

 

[Sam]

Trying the 5% variable method as of 2006 for the portfolio - will force myself to spend, spend, spend as an old man of 63.

I really like your approach, unclemick2. Are you thinking of 5.5% when you're in the 70's? I know I don't want to die rich

 

[Sam]

The real key is the single vs family. That's what really widens the poll results.
I suspect those 7 respondents for < 30K may be single.

That's because you assume everyone retires in the US, right? Many members here retired abroad.

 

[unclemick]

I really like your approach, unclemick2. Are you thinking of 5.5% when you're in the 70's? I know I don't want to die rich

Hmmm - given that I'm 78% trad. IRA, 7% Roth and 15% taxible dividend stocks - I figure the IRS and RMD acting on the 78% may wag the dog - but I'll see what 5% variable does for 7 yrs first.

In short - I don't know.

heh heh heh heh heh heh

 

[modlair]

The real key is the single vs family. That's what really widens the poll results. I suspect those 7 respondents for < 30K may be single.

That's because you assume everyone retires in the US, right? Many members here retired abroad.

Yup, I did.

Not my poll, of course. I was kinda curious as to what ER folks are really spending, but I suspect most people would be curious in that regard with the intent of comparing it to either themselves now, or themselves as they plan to be.

It's a good baseline poll. But the married/family vs single question would remain and the pensions vs nestegg question would too because of taxes.

If a family is spending 50K/yr (incl taxes) with $50K of pensions coming in, that will not be comparable to an ER based on nestegg. The taxes are different. The "spending" will mean different things.

A single person extracting 3% from nest egg and doing so off of a 1.66 million portfolio will be at $50K, but that $50K can have LT capital gains tax treatment or qualified dividend treatment and yield an after tax quantity of dollars for what we might call "lifestyle defining expenditures" substantially different from the pension dollars. An ER based on nestegg with a 50K draw does not define "spending" equivalent to $50K in salary (pension).

No matter. It's a good baseline poll. One of the more interesting ones offered.

 

[2B]

Baseline is the best description. If it's for a family, are there children? How many? What % of the income comes from each spouse? Etc. etc. etc.

I just wanted to see what people lived on as a group. As I expected, this forum isn't full of uber-wealthy that just took their fortune from the dot com boom and slipped away although I remember a few posts from someone that did make a bundle on a stock buyout.

Another interesting point is that there weren't that many respondents to the "retired only" poll. We also have a lot of wanabee lurkers like me not yet retired or those living off part time work or a spouse. My wife could have answered the poll if I hadn't excluded those with working spouses.

 

[modlair]

Another interesting point is that there weren't that many respondents to the "retired only" poll. We also have a lot of wanabee lurkers like me not yet retired or those living off part time work or a spouse. My wife could have answered the poll if I hadn't excluded those with working spouses.

I am kind of intrigued by the top end 10 respondents spending 90K/yr as a retirement budget.

I can see this happening from maybe former airline pilots. Even after they got their pensions slashed, the PBGC I think is paying them $70K/yr, taxable. Add 20K from nestegg withdrawl and you have 90K spendable, including taxes.

Also, I wonder how many are shelling out alimony and child support money, which would fall into the spending category too.

That's not lifestyle defining expenditures, of course, because of the taxes, but it's still an impressive chunk of retirement bux.

 

[youbet]

I am kind of intrigued by the top end 10 respondents spending 90K/yr as a retirement budget.

I bet many of those projecting $90K are speaking as a dual career couple. Two small pensions plus two SS checks plus one million dollar portfolio = $90K.

 

[kcowan]

Once again I think people are confusing income versus spending. I answered what is my actual spending. My portfolio is growing nicely.

Maybe I will use the surplus someday for extraordinary items not in the budget (e.g. maybe a big contribution to my alma mater or buying a villa in Tuscany). But I am not committing to those yet.

 

[haha]

I bet many of those projecting $90K are speaking as a dual career couple. Two small pensions plus two SS checks plus one million dollar portfolio = $90K.

Two public school teachers with 25 years or so in at a fairly good district would easily hit this figure, even without any SWR from savings!

Where I live decidedly ordinary people are buying million dollar house with a mortgage, and having plenty spendable left over to drive nice cars, eat $20/# steaks, etc.

If you can possibly stand it, get onto the public teat!

ha