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
What %age of your pre-retirement income do you need in ER?
Old 01-02-2012, 12:31 PM   #1
Thinks s/he gets paid by the post
nun's Avatar
 
Join Date: Feb 2006
Posts: 4,836
What %age of your pre-retirement income do you need in ER?

I believe that the 80% income dogma is wrong. So let's test it by doing a poll of the %age of your pre retirement gross income you are living on (or plan to live on) in ER.
__________________

__________________
“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 01-02-2012, 12:42 PM   #2
Thinks s/he gets paid by the post
 
Join Date: Jan 2006
Posts: 2,972
Quote:
Originally Posted by nun View Post
I believe that the 80% income dogma is wrong. So let's test it by doing a poll of the %age of your pre retirement gross income you are living on (or plan to live on) in ER.
I believe the mean(not the, average but the mean) income in the US is under $40K/yr. For the half of all workers who earn less than that, 80% is probably pretty accurate. Most people on this forum make much more and therefore shouldn't need as high of a percentage. It's not "one size fits all". For those who made under $25K/yr in todays dollars for their entire career they will likely need >90% while those who earned $80K should NEED less than 50% although they may WANT more.
__________________

__________________
aaronc879 is offline   Reply With Quote
Old 01-02-2012, 12:44 PM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
bbbamI's Avatar
 
Join Date: Dec 2006
Location: Dallas 'burb
Posts: 9,039
I voted 51 to 60%, but since the poll said 'need' I should have gone one step lower.

Our discretionary expenses hover around 17%. IMO, there should be a little extra in the budget for 'wants'...if not, retirement wouldn't be much fun.

YMMV
__________________
There's no need to complicate, our time is short..
bbbamI is offline   Reply With Quote
Old 01-02-2012, 01:15 PM   #4
Recycles dryer sheets
 
Join Date: Jun 2010
Posts: 339
I am not sure which segment of the pool to choose.

For the past several years I have been consuming 33% of my annual salary. The other 67% has gone into my retirement fund. When I ER in 16 months, my income stream will increase by 40% and that does not include funds set aside for emergencies, health insurance, and major appliances/roof and car replacements.
__________________
LauAnn is online now   Reply With Quote
Old 01-02-2012, 01:25 PM   #5
Moderator Emeritus
 
Join Date: May 2007
Posts: 11,044
In 2011, we spent 22% of what was our combined income before I retired.

Next year, who knows... Big changes are coming.
__________________
FIREd is offline   Reply With Quote
Old 01-02-2012, 01:43 PM   #6
Thinks s/he gets paid by the post
Spanky's Avatar
 
Join Date: Dec 2004
Location: Minneapolis
Posts: 4,046
We have been living less than 40% of income. Thus, our estimated post retirement income need would be slightly higher because of higher medical insurance premium cost (that was paid by the employer earlier).
__________________
May we live in peace and harmony and be free from all human sufferings.
Spanky is offline   Reply With Quote
Old 01-02-2012, 01:44 PM   #7
Thinks s/he gets paid by the post
nun's Avatar
 
Join Date: Feb 2006
Posts: 4,836
Quote:
Originally Posted by aaronc879 View Post
I believe the mean(not the, average but the mean) income in the US is under $40K/yr. For the half of all workers who earn less than that, 80% is probably pretty accurate. Most people on this forum make much more and therefore shouldn't need as high of a percentage. It's not "one size fits all". For those who made under $25K/yr in todays dollars for their entire career they will likely need >90% while those who earned $80K should NEED less than 50% although they may WANT more.
This is a well made point. However, after three decades of stagnating wages, and increasing costs of medical insurance and their kids' college education many median earners simply can't save enough to retire. Also in the retirement examples I see from planners they use the 80% income replacement dogma for earners far above the median.
__________________
“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 01-02-2012, 01:52 PM   #8
Recycles dryer sheets
IBWino's Avatar
 
Join Date: May 2006
Posts: 423
For 2011, we lived well on 36% of our gross income from employment (I'm excluding investment income). Since we still have a few years left on our mortgage, I expect that our post-retirement expenses will be similar to our current expenses, with our mortgage payment being replaced by the cost of health insurance.

Edit: I want to add that for 2011, we also saved 40% of our gross income from employment. This is the first year that our savings exceeded spending (although we've been very close the past several years).
__________________
IBWino is offline   Reply With Quote
Old 01-02-2012, 01:57 PM   #9
Thinks s/he gets paid by the post
nun's Avatar
 
Join Date: Feb 2006
Posts: 4,836
So the early results show the median and mode are 31-40%.
__________________
“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 01-02-2012, 02:04 PM   #10
Administrator
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 38,905
How could anyone save for retirement if they spent 80% of their gross salary while they were working? Taxes and FICA took more than that out. If someone is used to spending less while working, they would probably be fine spending less than 80% when retired as well.

That formula may have worked 50 years ago, but does not seem to be relevant in my world.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities.

- - H. Melville, 1851
W2R is online now   Reply With Quote
Old 01-02-2012, 02:17 PM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Midpack's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 11,977
Quote:
Originally Posted by nun View Post
I believe that the 80% income dogma is wrong. So let's test it by doing a poll of the %age of your pre retirement gross income you are living on (or plan to live on) in ER.
There is no right number. And this audience is not representative of the mainstream, this poll will be lower on average than the population at large, so good luck with your poll.

The earlier you want to retire, the lower your % replacement will have to be. 80% is right for some people, there are people who spend more in retirement than their working income, although that implies a much shorter retirement (unless spectacular investment results, inheritance, lottery, etc.).
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 60% equity funds / 35% bond funds / 5% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
Midpack is offline   Reply With Quote
Old 01-02-2012, 02:28 PM   #12
Thinks s/he gets paid by the post
nun's Avatar
 
Join Date: Feb 2006
Posts: 4,836
Quote:
Originally Posted by Midpack View Post
There is no right number. And this audience is not representative of the mainstream, this poll will be lower on average than the population at large, so good luck with your poll.
Obviously this forum is way out of the mainstream and I expect the results to be skewed by that. Still it's an interesting exercise and it might highlight the basic contradiction inherent in the 80% dogma. Those on large incomes can save enough to retire because they don't need 80% of their income to live on. Low earners can't save enough to retire because they must live on 80% of their income.
__________________
“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 01-02-2012, 02:35 PM   #13
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,465
This topic is frequently discussed here, and the consensus generally is spending in retirement is a function of assets, not income or spending when working. My income varied a great deal so it makes little sense to relate our budget now with income or spending then. The children have been through college and left the nest, so our needs are also much different.

Quote:
Originally Posted by aaronc879 View Post
I believe the mean(not the, average but the mean) income in the US is under $40K/yr. For the half of all workers who earn less than that, 80% is probably pretty accurate. Most people on this forum make much more and therefore shouldn't need as high of a percentage. It's not "one size fits all". For those who made under $25K/yr in todays dollars for their entire career they will likely need >90% while those who earned $80K should NEED less than 50% although they may WANT more.
The 2010 Consumer Expenditure Survey says median household income after tax was $60731 and median household expense was $48109, which equates to 79%. Perhaps this is the basis for the 80% estimate.
__________________
MichaelB is offline   Reply With Quote
Old 01-02-2012, 02:40 PM   #14
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,465
Quote:
Originally Posted by nun View Post
Obviously this forum is way out of the mainstream and I expect the results to be skewed by that. Still it's an interesting exercise and it might highlight the basic contradiction inherent in the 80% dogma. Those on large incomes can save enough to retire because they don't need 80% of their income to live on. Low earners can't save enough to retire because they must live on 80% of their income.
Many people with high incomes spend beyond their means and others with low incomes save. It would be very interesting to see research correlating savings with income.
__________________
MichaelB is offline   Reply With Quote
Old 01-02-2012, 03:06 PM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,625
Quote:
Originally Posted by aaronc879 View Post
I believe the mean(not the, average but the mean) income ...
Is anyone else confused by this statement?
__________________
LOL! is offline   Reply With Quote
Old 01-02-2012, 03:08 PM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,431
Aaron, the word you want is "median", but I understand what you meant. And I agree 100%.

Yes, the average worker does not have the large excess income over the basic needs like many posters here. And not all can be like Jacob.
__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is offline   Reply With Quote
Old 01-02-2012, 04:07 PM   #17
Thinks s/he gets paid by the post
Onward's Avatar
 
Join Date: Jul 2009
Posts: 1,667
18%. Two years in. This is the first time I'd done the calculation.
__________________
And if I claim to be a wise man, it surely means that I don't know.
Onward is online now   Reply With Quote
Old 01-02-2012, 04:12 PM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
mickeyd's Avatar
 
Join Date: Apr 2004
Location: South Texas~29N/98W
Posts: 5,884
My current expenses are about what they were prior to retiring, so I cast a vote for 100%.
__________________
Part-Owner of Texas

Outside of a dog, a book is man's best friend. Inside of a dog, it's too dark to read. Groucho Marx

In dire need of: faster horses, younger woman, older whiskey, more money.
mickeyd is offline   Reply With Quote
Old 01-02-2012, 04:46 PM   #19
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
If I eliminated SS and Medicare taxes, eliminated my savings and investment allocations (retirement and non-retirement), adjusted taxes downward to reflect the lower income and added some health care costs back in, we'd probably be around 40% of current total income. If we really wanted/needed to make it happen to retire, we could easily scale back some of our discretionary expenses and possibly go down to one car. But for now we're assuming a standard of living comparable to what we have now, so I'd say 40% is in the ballpark.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 01-02-2012, 06:04 PM   #20
Thinks s/he gets paid by the post
Koolau's Avatar
 
Join Date: Jul 2008
Location: Leeward Oahu
Posts: 3,244
Quote:
Originally Posted by nun View Post
I believe that the 80% income dogma is wrong. So let's test it by doing a poll of the %age of your pre retirement gross income you are living on (or plan to live on) in ER.
I had to make some assumptions and guesstimates because my "gross income" prior to ER was all over the place. There were investment results (occasionally even negative!) but, in any case, always left to grow in the investments. There were "bonuses" but I included those in "salary" as they were predictable within certain parameters. There was DW's income (rarely 20% of mine and variable - again, most of the net was saved, no matter how much it varied). There were gains from the family business, but, again, these varied widely. Often, these cost us money within a given year as the gains were taxable, but we often didn't take the money out - even to pay the taxes. So, because it's "complicated", I chose my final salary (with typical bonus) as my starting point. I assumed (not quite clear from the poll - but pretty sure) that we were comparing what we spent after retirement - not what we needed from our portfolio. So, regardless of source (pension, port., SS, etc.) I voted 91 to 100% plus. Looks to be almost outlier territory. Still, it fits the plan and I have backups in place in case it doesn't some day. YMMV
__________________

__________________
Ko'olau's Law -

Anything which can be used can be misused. Anything which can be misused will be.
Koolau 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 09:35 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.