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Old 02-14-2012, 09:48 AM   #41
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Originally Posted by NW-Bound View Post
A close friend of mine is contemplating retirement later this year. Knowing that his wife is a big spender, I politely asked if he knew if his future pension+SS would cover his current expenses. He truthfully admitted that he did not know. I was taken aback that he did not even seem to care!

Yes, one can swim, but with an anchor tied to his neck?

Anyway, one does not need to actually try to live on a budget if he has been tracking it and knows what he spends on, and has enough buffer for surprises.
Why doesn't your friend simply cut the anchor rope and sail away?
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Old 02-14-2012, 10:09 AM   #42
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We are faced with the opposite problem. DW and I are both 59, me retired, DW planning to retire next year. With two cola'd pensions and SS (whenever we do decide to draw the SS) we will have considerably more income than we now have with my pension and DW working. When we reach 70.5 and have to start taking RMDs it will only get much worse. We could do fine on just the pensions but why delay spending now and have even more later? We will take money out of the tIRAs and 403b accounts as a bridge from when DW retires till we start drawing SS. We decided to stop DW's 403b contributions now to see how we can live on some extra income.
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Old 02-14-2012, 11:00 AM   #43
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Originally Posted by jclarksnakes View Post
We are faced with the opposite problem. DW and I are both 59, me retired, DW planning to retire next year. With two cola'd pensions and SS (whenever we do decide to draw the SS) we will have considerably more income than we now have with my pension and DW working. When we reach 70.5 and have to start taking RMDs it will only get much worse. We could do fine on just the pensions but why delay spending now and have even more later? We will take money out of the tIRAs and 403b accounts as a bridge from when DW retires till we start drawing SS. We decided to stop DW's 403b contributions now to see how we can live on some extra income.
Don't you hate when that happens? No matter how much income we have, we're not mentally capable of thinking we have more than we need, regardless of what any metric may suggest. Seriously, good for you, enjoy yourselves...
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Old 02-14-2012, 11:52 AM   #44
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Originally Posted by jclarksnakes View Post
We are faced with the opposite problem. DW and I are both 59, me retired, DW planning to retire next year. With two cola'd pensions and SS (whenever we do decide to draw the SS) we will have considerably more income than we now have with my pension and DW working. When we reach 70.5 and have to start taking RMDs it will only get much worse. We could do fine on just the pensions but why delay spending now and have even more later? We will take money out of the tIRAs and 403b accounts as a bridge from when DW retires till we start drawing SS. We decided to stop DW's 403b contributions now to see how we can live on some extra income.
Just send the excess to haha, % general delivery 98104, seattle.
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Old 02-14-2012, 06:27 PM   #45
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+1

I couldn't imagine ER'ing without knowing how much I needed, and know better way of knowing it can be done than by actually living on that budget for a while.
+2
I've been doing this for several years with 2 years to go. Otherwise I would not know.
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Old 02-24-2012, 09:49 AM   #46
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I've started to do a lit bit of this although not 100%. I've tracked our expenses for several years each month and 3 years ago I set up my mock budget for retirement on both my DW's retirement income and my expected retirement income. I did not take into account any part time income that DW makes. My spreadsheet has our income and excepted expenses post retirement (I purposely estimated income low and expenses at the high end of what I have paid over the years and did not include any SS or $ from retirement accounts). I figured worse case senario. When I compare the current and projected side by side we are fine the one variable is the dreaded consumable expenses (shopping, dinner, gas, etc..) which can make some months a negative. The months when I have the additional mortage payment makes it a negative month.
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Old 02-24-2012, 12:18 PM   #47
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I guess we sort of do this...but in a backwards way. We live on a budget, and that budget is lower than what we anticipate spending in rehirement. So, by default, we can afford it so long as we create the income stream that equals our annual spend....for 30+ years.

IMO the difficult part is accurately determining how your spending will change by category. For example, we are relatively healthy now, so spend modest amounts on health care. It's difficult to determine how much that will increase. Even if you assume the full deductible as an expense, there are many items not covered by insurance such as home medical devices, walkers, knee braces, non-prescription drugs, eyeglasses, and on and on.

There are some upsides however. I can see almost no circumstance where we'll need two "nice" cars like we have today after the age of 85. And as for my two sports cars I have today...as long as they'll carry a bag of Depends, I may be able to keep one.
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Old 02-24-2012, 01:30 PM   #48
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IMO the difficult part is accurately determining how your spending will change by category. For example, we are relatively healthy now, so spend modest amounts on health care. It's difficult to determine how much that will increase. Even if you assume the full deductible as an expense, there are many items not covered by insurance such as home medical devices, walkers, knee braces, non-prescription drugs, eyeglasses, and on and on.
Another thing that is very difficult to predict about health care is how much of it will be covered by your insurance in the future. I have felt (and feel) very blessed to have Megacorp subsidized insurance going into retirement. Having said that, last year when we happened to also be big consumers of health care "product", Megacorp "changed" the rules on us. They doubled the total out-of-pocket we would be responsible for at the same time they significantly increased our share of the premiums. (The good news: They did NOT cancel the insurance!!) Between the "big year" and the increases in our share of the payout to the health "community", 2011 cost us almost $6K more than 2010. I'm not looking for a j*b, but such an increase in expense in one year makes one reflect on the "plan". If there is any good news in all of this, it would be that I will probably be eligible for some tax write-offs beyond the 7.5% of AGI that we spent on HC.

Trying to tie this to the original thread topic, it would seem those attempting to live on a fixed amount would be considering altering their ER plans or altering their ER budgets about now, had this been their experience. Obviously, YMMV.

YMMV
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Old 02-24-2012, 01:34 PM   #49
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good point Koolau. Currently we are in such a high income bracket that there's little likelihood I'd reach the 7.5% AGI limit. HOwever, once rehired...it becomes almost likely at some point.
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Old 02-24-2012, 02:06 PM   #50
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Originally Posted by KeyserSoze View Post
That is my number also... I have been LBYM for many years and my current annual budget is only 15% of my gross annual pay... Target date is set and I'm counting the days until ER...
New to this board. Is there a jargon translation chart available? I am guessing ER means early retirement. LBYM makes no sense if it stands for "living beyond your means". I think you mean "LWYM" ie. "living within your means"?

For what it's worth, the key to early retirement is simple. I retired at 50, the company's choice, not mine. It's called downsizing. Start saving in tax sheltered retirement accounts and regular investments the day you start working. Stay out of debt, pay credit cards in full each month, and pay off your mortgage as soon as you can. Don't buy new or used cars with loans. Cook more meals at home. Don't try to keep on the cutting edge of consumer goods. Fix stuff yourself. I can think of lots more, but those are the biggies.
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Old 02-24-2012, 02:07 PM   #51
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Old 02-24-2012, 02:24 PM   #52
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Just send the excess to haha, % general delivery 98104, seattle.
Are you sure that the zip code is correct for Hooverville?
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Old 02-24-2012, 02:44 PM   #53
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Originally Posted by Finance Dave
good point Koolau. Currently we are in such a high income bracket that there's little likelihood I'd reach the 7.5% AGI limit. HOwever, once rehired...it becomes almost likely at some point.
)
They are going to make it harder on you to reach it, even if you do make less. Remember in 2013 ( I think) medical deductions are going from 7.5% to 10%. That might sneak up on a few people down the road.
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