Retirement Income

[gerntz]

Quote:

Originally Posted by RobbieB Ok, here's the "income poll". Notice the title "retirement income", that's right income by retired people. If you are still working full time this isn't for you. If you work part time for "fun or hobby" that counts so include it. Include all of these; 7) Regular draw on investments or minimums required from IRA

I don't see how IRA draws or RMD's are income to you. It's yours already, counted in your net worth. Yes, it gets taxed then for the first time, but it was already assets.

[rodi]

Using your rules I was just over $100k. That's because I have a paid for house in an expensive rental area. But I can't spend a house...

Our spending budget - inclusive of taxes, healthcare, etc is $84k for a family of 4.

Using AGI doesn't work since some of the income is DH's ss.... which is only partially taxable.

[W2R]

I don't know about other forum members, but in my case I spent far less during my working years and during my first few years of retirement than I am spending now.

I have settled into retirement and know that I can spend more so I am doing that. The bull market has helped, as well as SS.

[Mulligan]

Quote:

Originally Posted by tmm99 It must be. I am as surprised as Danmar. There is a lot of discussions on this board about spending less than 40K.

I couldnt vote because I use Tapatalk for this but I am one of those types. My yearly income including pension (which is the majority, not my investing prowess or lack there of). I sneak over 6 figures yearly but spend around 40k. I was relatively poor my entire life so I am firmly ingrained in my spending habits, plus I live in a rural low cost area. Who wants to drive 80 miles daily just to eat a "fine dinner"? If I ate at the local dives daily, I would just be fat or dead.
Besides I got catching up to do, from my poorer and more wasteful days.....My stash isnt going to corner the gold market, and never will.
But my dad is worse... We were talking about his finances and I asked how much they spend monthly. He said he didnt know, but usually they have a $1000 a month left over from SS and tiny pension. Well it was easy for me to tell him he is spending $3k a month. Has a million in assets all earned after 45 and making no more than 40k a year...And yet at 78 he still adds $1k a month in addition to the earnings. Its hard to change spending habits if you have little desire for things and vacations.

[NW-Bound]

Quote:

Originally Posted by Fedup Oh come'on, it's not likely going to happen. I think max is down 30% in a recession. But most likely down 20%. I'm practicing fortune telling of course.

As I said elsewhere, there's no cataclysmic event now that would knock the market down that bad. Knock on wood (Hey, isn't that a repeat of the same word?).

But if you look at the mean of the poll result, a cut back of 50% is what it takes for many to go down to $40K/year. As a thought exercise, it's not bad to think about that worst case.

That's what distinguishes posters here from the couple described in the revived "Broken Eggs" thread, who checked out a mortgage to buy a million-dollar home while already in their 60s.

[Hermit]

I may be in the same boat as Mulligan where I don't spend my income, let alone investments in a couple of years. Right now, I am having no trouble spending income and then some. Once my house gets built, I should be down to under that magical $40k. But, then again, I sure would like a pickup like Senator has been talking about. And then I will need a couple of ATVs to keep me busy! I guess I don't have to worry about being in the same category with Mulligan's dad!

[Fedup]

It's true, GoodtoGo did mention in one thread, take a 40% hair cut and see if you can survive. But some retirement income don't entirely depend on the stock market so may not have to cut back so much.

[jabbahop]

Quote:

Originally Posted by Danmar I think I do understand this, it just seems like I'm such a lone voice here, Turns out I am not as alone as I thought? I think the difference of retirement spending vs income not that much of a issue as pointed out by NW bound? Some will simply use the spend numbers. If anything a pure definition of income will understate the figures, no? I guess taxes would be an issue? Many people will also view forecasted or realized cap gains as available to spend? Anyway, I am a little surprised at the higher levels 40% have incomes over $100k. I would have pegged the median around $50 but looks like it is more like $75k? Maybe that isn't such a big difference but there are quite a few at higher levels.

I am drawing from checking/savings currently for spending over my dividend income. Once that runs down I will be drawing from taxable where I still have substantial losses I have harvested so won;t be showing taxable income for another couple of years. Now SPENDING is another matter ;-)

[RobbieB]

I see that the "income producing residence" is a topic of contention. Some people don't even consider it part of net worth.

For me it is easy. I own a home worth $350,000. If I were renting it would cost me $1600/mo. That's $1600/mo I don't have to pay. It's pretty much the same as if I had that much invested and sent that income to the landlord. And it's not that bad of an investment either. 1600 x 12 is $19,200. Reduced by the 2 grand property tax and also 10% upkeep it's $15,480. About 4.5%.

Granted a house is not a liquid asset and there are serious costs involved in selling as well as significant time delays. Unless you are fairly "well rooted", you are better off renting. However you do have to live somewhere and you do have to pay for it. Food, clothing and shelter eh? One of the "primary human needs"

Interesting discussion. I would like to hear why those of you who do not consider a house to be an "income producing asset" think that way. For me it's easy, I own a house and I only have to pay 2 grand a year plus upkeep instead of $1600/mo. Not have to pay out is sorta the same as getting extra dough?

[NW-Bound]

Quote:

Originally Posted by Fedup It's true, GoodtoGo did mention in one thread, take a 40% hair cut and see if you can survive. But some retirement income don't entirely depend on the stock market so may not have to cut back so much.

Our SS alone will be significantly higher than $40K, even if we take them early. So, if our entire egg basket gets crushed, we can still survive.

However, if I croak before my wife, and that is most likely, with only my SS which is higher, she may have to do some tightening. Or not, as I have been the bigger spender.

[Hermit]

Quote:

Originally Posted by RobbieB ... Interesting discussion. I would like to hear why those of you who do not consider a house to be an "income producing asset" think that way. For me it's easy, I own a house and I only have to pay 2 grand a year plus upkeep instead of $1600/mo. Not have to pay out is sorta the same as getting extra dough?

My lot costs me $450 per year. The motor home I live in was given to me. (I probably paid more than it was worth!) ~$400 per year in taxes & insurance. You could call it the motor home down by the creek. I think I am currently paying about what someone would be willing to part with for my housing. No extra dough here.

[mathjak107]

Quote:

Originally Posted by RobbieB I see that the "income producing residence" is a topic of contention. Some people don't even consider it part of net worth. For me it is easy. I own a home worth $350,000. If I were renting it would cost me $1600/mo. That's $1600/mo I don't have to pay. It's pretty much the same as if I had that much invested and sent that income to the landlord. And it's not that bad of an investment either. 1600 x 12 is $19,200. Reduced by the 2 grand property tax and also 10% upkeep it's $15,480. About 4.5%. Granted a house is not a liquid asset and there are serious costs involved in selling as well as significant time delays. Unless you are fairly "well rooted", you are better off renting. However you do have to live somewhere and you do have to pay for it. Food, clothing and shelter eh? One of the "primary human needs" Interesting discussion. I would like to hear why those of you who do not consider a house to be an "income producing asset" think that way. For me it's easy, I own a house and I only have to pay 2 grand a year plus upkeep instead of $1600/mo. Not have to pay out is sorta the same as getting extra dough?

a house you live in cuts expenses , it can improve cash flow . that is not the same thing as producing income .

that is why wall street looks at profits which can come from cost cutting as well as revenue which is income .

while it appears similar at first , cost cutting has a bottom after which increasing expenses or inflation can no longer be offset .

increasing income has no limits like cost cutting does .

a home is an expense , it just may be less of an expense then renting but that does not mean income increased a penny .

do not confuse improving crash flow with increasing income .

[Fedup]

Quote:

Originally Posted by NW-Bound Our SS alone will be significantly higher than $40K, even if we take them early. So, if our entire egg basket gets crushed, we can still survive. However, if I croak before my wife, and that is most likely, with only my SS which is higher, she may have to do some tightening. Or not, as I have been the bigger spender.

I take care of that by buying life insurance. I'm younger than my husband. There is a good chance that I might live longer than my husband.

[Fedup]

I agree with Mathjak, I don't count owning a house as income because I don't want to think I have too much income when I don't. I encourages spending frivolously.

[mathjak107]

the costs of a home is on the expense side of a balance sheet . income is on the other side

[Meadbh]

Quote:

Originally Posted by mathjak107 a house you live in cuts expenses , it can improve cash flow . that is not the same thing as producing income. do not confuse improving crash cash flow with increasing income .

FIFY. I agree!

[RobbieB]

That makes sense, it is an expense but less than renting would be.

I added it here so that a "more level playing field" would be had for owners and renters.

[daylatedollarshort]

Quote:

Originally Posted by RobbieB That makes sense, it is an expense but less than renting would be. I added it here so that a "more level playing field" would be had for owners and renters.

I think there is a case for considering home appreciation as real estate investment income, especially in high rent areas. If a retiree has $500K in stocks or a $500K mortgage free house, would you count the unrealized capital gains in stocks as income but not the house appreciation?

[Fedup]

Stocks you can sell but a house you can only get a HELOC to have access to some equity but not all of it. I found out I can only get max on $400k.

[kcowan]

While we own our southern home (1760 sq.ft. ocean-view condo), we rent our northern penthouse. It is on rental land where the 100 year-land lease was established in 1966. So we have to earn enough money to pay the rent. (We had an extra $750k back in 1997 that we could have sunk into a purchase.)

OTOH we rent it out during our 6 months down south for premium rates. But we do not include the rent in our income.

So there are probably apples, oranges, and pineapples in these results!