Join Early Retirement Today
View Poll Results: What %age of your pre retirement income do you need in ER?
0-10% 1 0.60%
11-20% 9 5.42%
21-30% 20 12.05%
31-40% 29 17.47%
41-50% 32 19.28%
51-60% 28 16.87%
61-70% 20 12.05%
71-80% 6 3.61%
81-90% 8 4.82%
91 to more than 100% 13 7.83%
Voters: 166. You may not vote on this poll

Reply
 
Thread Tools Search this Thread Display Modes
Old 01-03-2012, 12:26 PM   #41
Thinks s/he gets paid by the post
nun's Avatar
 
Join Date: Feb 2006
Posts: 4,835
Quote:
Originally Posted by Midpack View Post
Not sure how you're going to reconcile these two sentences, looking forward to your conclusions.

What % would you recommend FP's use for people who don't track their expenses and can't project spending for themselves (as they should)? I would expect an FP to err on the high side for those customers, unfortunately there are a lot of people like that though you won't find many here.
Thorough budgeting is the only way to estimate the income required. The %age will vary widely according to circumstances. That's my main issue with 80%, it's meaningless even as a rough guide. By polling I hoped to show that relating income requirements in retirement to gross income pre retirement is worse than useless, and given the standard deviation of the results and that the mode is under 50% I think the numbers confirm my assertion.
__________________

__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”

Current AA: 65% Equity Funds / 20% Bonds / 7% Stable Value /3% Cash / 5% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
nun is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 01-03-2012, 01:39 PM   #42
Thinks s/he gets paid by the post
 
Join Date: Nov 2009
Posts: 3,856
Quote:
Originally Posted by nun View Post
We should poll that, although the results for careful planners would probably be a lot of 100%s. My spending will be the same post as pre retirement. I'll have to pay for health insurance, but the premiums will be covered by savings on commuting costs and going from paying 16% Federal tax to 10%
I agree. The savings I had when I eliminated my commutation costs and FICA taxes were offset by paying for my own health insurance. Income taxes dropped a little, too.
__________________

__________________
Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.

"I want my money working for me instead of me working for my money!"
scrabbler1 is offline   Reply With Quote
Old 01-03-2012, 02:29 PM   #43
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 13,256
Quote:
Originally Posted by nun View Post
Thorough budgeting is the only way to estimate the income required. The %age will vary widely according to circumstances. That's my main issue with 80%, it's meaningless even as a rough guide. By polling I hoped to show that relating income requirements in retirement to gross income pre retirement is worse than useless, and given the standard deviation of the results and that the mode is under 50% I think the numbers confirm my assertion.

I don't think that this poll will show what you want as it is biased heavily to the under 80% crowd... IOW, not the results you would get if you asked the general public...

Also, as pointed out by others, it probably is a good estimate to start to the average Jane or Joe that does not make a lot of money or have much in savings... at least it might get them thinking about what they will need..
__________________
Texas Proud is offline   Reply With Quote
Old 01-03-2012, 02:36 PM   #44
Thinks s/he gets paid by the post
Bikerdude's Avatar
 
Join Date: Jul 2006
Posts: 1,901
I retired in 2000 with 60% of my working gross income. The amount was very close to my net take home income. I have averaged a 3% increase per year since and have no complaints.
__________________
“I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said” Alan Greenspan
Bikerdude is offline   Reply With Quote
Old 01-03-2012, 03:05 PM   #45
Thinks s/he gets paid by the post
nun's Avatar
 
Join Date: Feb 2006
Posts: 4,835
Quote:
Originally Posted by Texas Proud View Post
I don't think that this poll will show what you want as it is biased heavily to the under 80% crowd... IOW, not the results you would get if you asked the general public...
The poll has shown me exactly what I expected, ie that most people who can actually retire do it on far less than 80%. The majority of people who will need 80% are low earners who can't afford to save enough to generate 80% of their income......again, income %ages are a meaningless metric for retirement, actual spending should be used and the capital/fixed income sources arranged to meet that income need.
__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”

Current AA: 65% Equity Funds / 20% Bonds / 7% Stable Value /3% Cash / 5% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
nun is offline   Reply With Quote
Old 01-03-2012, 03:07 PM   #46
Recycles dryer sheets
Beryl's Avatar
 
Join Date: Jun 2007
Posts: 413
Quote:
Originally Posted by Bikerdude
I retired in 2000 with 60% of my working gross income. The amount was very close to my net take home income. I have averaged a 3% increase per year since and have no complaints.
I guess not!!! The only COLA my MegaCorp has provided was a mandatory one after they lost a class action suit. We all see under $20 added to our pension checks each month.
__________________
Retired - Class of 2011
Beryl is offline   Reply With Quote
Old 01-03-2012, 03:20 PM   #47
Thinks s/he gets paid by the post
Finance Dave's Avatar
 
Join Date: Mar 2007
Posts: 1,046
This is good to see, as I had asked this question a few months ago. Taxes play a big role in this too. When you're making big bucks, a huge % of your gross goes to paying taxes. In FIRE, tax rates will be much lower for me...I'm guessing I'll be paying in the 15% marginal bracket, or about 9-10% average....which will be nice.
__________________
"Live every day as if it were your last, and one day you'll be right" - unknown
Finance Dave is offline   Reply With Quote
Old 01-03-2012, 03:50 PM   #48
Recycles dryer sheets
 
Join Date: Jun 2010
Posts: 339
Quote:
Originally Posted by tmm99 View Post
Are you spending in retirement 80% of what you used to spend? (I imagine this would be another poll...)
A poll phrasing the question similar to the way you suggest makes more sense to me.
__________________
LauAnn is offline   Reply With Quote
Old 01-03-2012, 03:50 PM   #49
Thinks s/he gets paid by the post
Bikerdude's Avatar
 
Join Date: Jul 2006
Posts: 1,901
Quote:
Originally Posted by Beryl View Post
I guess not!!! The only COLA my MegaCorp has provided was a mandatory one after they lost a class action suit. We all see under $20 added to our pension checks each month.
Sorry, I guess my statement was not very clear. The 3% increase was not a cola just my inflation rate. So I retired with 60% adjusted for inflation each year. All out of my own pocket.
__________________
“I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said” Alan Greenspan
Bikerdude is offline   Reply With Quote
Old 01-03-2012, 04:20 PM   #50
Full time employment: Posting here.
 
Join Date: Mar 2008
Posts: 704
Quote:
Originally Posted by nun View Post
Thorough budgeting is the only way to estimate the income required. The %age will vary widely according to circumstances. That's my main issue with 80%, it's meaningless even as a rough guide. By polling I hoped to show that relating income requirements in retirement to gross income pre retirement is worse than useless, and given the standard deviation of the results and that the mode is under 50% I think the numbers confirm my assertion.
When I used 80% of income, planning indicated retirement age at 66+ and I was resigned to working that long. As I get older and closer to retirement, expenses and confirmations from others indicated the actual percentage will be less. Now, when I plug in a more reasonable percentage, retiring at age 60 became possible. Retiring before age 60 is not possible, mainly because of the medical benefit that kicks in then. For planning, I still use a higher percentage than what I think it will be, which gives me a safety factor.

What I wonder about is how people who plan on 100% or more of income will ever be able to retire?
__________________
akck is offline   Reply With Quote
Old 01-03-2012, 05:19 PM   #51
Thinks s/he gets paid by the post
nun's Avatar
 
Join Date: Feb 2006
Posts: 4,835
Quote:
Originally Posted by Finance Dave View Post
This is good to see, as I had asked this question a few months ago. Taxes play a big role in this too. When you're making big bucks, a huge % of your gross goes to paying taxes. In FIRE, tax rates will be much lower for me...I'm guessing I'll be paying in the 15% marginal bracket, or about 9-10% average....which will be nice.
I reduce my taxable income by contributing to 457, 403b and 401a accounts and with deductions end up paying 16% Federal tax. In ER my annual income requirement will be $30k, although I'll probably also do a $10k IRA to ROTH rollover each year as with $40k income my federal tax should be around 10%
__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”

Current AA: 65% Equity Funds / 20% Bonds / 7% Stable Value /3% Cash / 5% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
nun is offline   Reply With Quote
Old 01-03-2012, 09:10 PM   #52
Full time employment: Posting here.
Moscyn's Avatar
 
Join Date: Mar 2009
Posts: 728
With housing loan and taxes no longer expenditure items, I require substantially less income post-retirement. Other expenditure items have reduced too like I shop a lot less and rarely take taxis for commuting now. I still spend the same for holidays as I was travelling a lot while working. Insurance is covered by DH's employer - so little expenditure there as I only pay for the annual check-up. Cooking a lot more too though still enjoy the gals' night or lunch out.
__________________
Moscyn is offline   Reply With Quote
Old 01-03-2012, 09:51 PM   #53
Moderator
Alan's Avatar
 
Join Date: Jul 2005
Location: Eee Bah Gum
Posts: 21,079
Quote:
Originally Posted by RockyMtn View Post
This is an irrelevant question in my mind. Post retirement spending related to pre retirement income as a % is misleading. The better question is what % is your post retirement spending of your pre retirement spending IMHO.
Quote:
Originally Posted by nun View Post
We should poll that, although the results for careful planners would probably be a lot of 100%s. My spending will be the same post as pre retirement. I'll have to pay for health insurance, but the premiums will be covered by savings on commuting costs and going from paying 16% Federal tax to 10%
Although the income we need (as per the poll question) is ~40% of our pre-retirement income, we are spending 130% more than we did when we were working. (at least the last few years of our working, with no kids on the payroll).

We've only been retired 2 years but see no reason not to party on
__________________
Retired in Jan, 2010 at 55, moved to England in May 2016
Now it's adventure before dementia
Alan is offline   Reply With Quote
Old 01-03-2012, 10:41 PM   #54
Recycles dryer sheets
Beryl's Avatar
 
Join Date: Jun 2007
Posts: 413
Quote:
Originally Posted by Alan
We've only been retired 2 years but see no reason not to party on
Amen. You can't take it with you.

I told my father to enjoy ALL of his $$ and not give a thought about leaving anyone anything. He earned it.

I practice what I preach.
__________________
Retired - Class of 2011
Beryl is offline   Reply With Quote
Old 01-03-2012, 10:49 PM   #55
Moderator
Alan's Avatar
 
Join Date: Jul 2005
Location: Eee Bah Gum
Posts: 21,079
Quote:
Originally Posted by Beryl View Post
Amen. You can't take it with you.

I told my father to enjoy ALL of his $$ and not give a thought about leaving anyone anything. He earned it.

I practice what I preach.
Glad to hear it.

We told our parents the same thing and really enjoyed seeing them enjoying the fruits of their working years including lots of vacations to other countries and continents.
__________________
Retired in Jan, 2010 at 55, moved to England in May 2016
Now it's adventure before dementia
Alan is offline   Reply With Quote
Old 01-04-2012, 12:07 AM   #56
Thinks s/he gets paid by the post
 
Join Date: Nov 2009
Posts: 3,856
Quote:
Originally Posted by Beryl View Post
Amen. You can't take it with you.

I told my father to enjoy ALL of his $$ and not give a thought about leaving anyone anything. He earned it.

I practice what I preach.
Reminds me of what my dad told me last year when he needed some costly dental crowns replaced. He joked that my (and my brother's) inheritance was going into his mouth.

Not sure if he told my brother the same thing when, a few months later, my brother and I were talking about our dad's dental work and he said to me, "There goes our inheritance!" [We are both wealthy so we don't bemoan our dad needing this dental work.]
__________________
Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.

"I want my money working for me instead of me working for my money!"
scrabbler1 is offline   Reply With Quote
Old 01-04-2012, 01:59 AM   #57
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2006
Posts: 11,017
I didn't vote, because it's not the right question. The right question is: what percentage of your current expenses will you need in retirement? Your income is not directly correlated to your expenses.
__________________
Meadbh is offline   Reply With Quote
Old 01-04-2012, 09:21 AM   #58
gone traveling
 
Join Date: Apr 2009
Location: Eastern PA
Posts: 3,851
Quote:
Originally Posted by Meadbh View Post
The right question is: what percentage of your current expenses will you need in retirement? Your income is not directly correlated to your expenses.
+1
__________________
rescueme is offline   Reply With Quote
Old 01-04-2012, 11:56 PM   #59
Full time employment: Posting here.
 
Join Date: Nov 2010
Posts: 583
As we save for retirement, 51% gross goes to savings (Roth IRAs, and Roth 401k's mostly). Taxes account for 33% +. Expenses such as food, utilities, etc come out of the last 20% +. Company matches makes the extra money above 100% of gross pay.

As a wage slave, the difference between taxes on wages and long term capital gains, and fixed retirement income makes the often mentioned 80% needed to retire as equivalent to 100% of wages IN OUR CASE!. YMMV

Suffering from one-more-year syndrome...
__________________
devans0 is offline   Reply With Quote
Old 01-05-2012, 11:40 AM   #60
Thinks s/he gets paid by the post
walkinwood's Avatar
 
Join Date: Jul 2006
Location: Denver
Posts: 2,676
This may have been said before in this thread, but this is the wrong question to ask.

The more meaningful question is "What percentage of your pre-retirement spending do you need in ER?" My answer would be 85% (2008,09,10), but as much as 110% (2011)
__________________

__________________
walkinwood is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Poll: Which source provides the most retirement income for you? nun FIRE and Money 59 11-21-2011 01:34 PM
Question on level income option early retirement JOHN CARRIGAN FIRE and Money 5 10-17-2011 04:38 PM
Income Investment Strategies During Retirement easysurfer FIRE and Money 22 09-01-2011 10:29 AM
GAO Report on Retirement Income Purron FIRE and Money 5 07-17-2011 03:27 PM
What percentage of your working income do you spend in retirement? KisKis FIRE and Money 29 07-06-2011 01:59 AM

 

 
All times are GMT -6. The time now is 04:46 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.