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How much to do need to live off of in RE
Old 05-03-2005, 07:50 AM   #1
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How much to do need to live off of in RE

I am curious to get some answers as to how much money one needs in retirement. I suppose some say it all depends on what your salary was prior to retirement but I know some people can do it with less. How much for a couple? How much for a single person? Guesses or estimations are welcome. Thank you all very much.
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Re: How much to do need to live off of in RE
Old 05-03-2005, 08:25 AM   #2
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Re: How much to do need to live off of in RE

This is a tough question depending on individual circumstances, but I do think rules of thumb, like 70% of pre-retirement income, are next to useless. I have seen ranges here from $12,000 to $100,000 plus a year.

It is helpful to look at your specific circumstances, like:

1. How many people are you budgeting for?

2. A big variable that has increased greater than inflation is healthcare costs. Do you have retiree health insurance? If not, costs vary widely by age, where you live, health, and type of policy you purchase (amount of deductible, are drugs covered, etc). I have seen costs here for the policy alone vary from less than $200 a month to more than $1000 a month. There also are copays and deductibles; dental and eyeglasses often are not covered. If you are retiring very young, be prepared for big increases in these costs.

3. What are your housing costs? Mortgage? Rent? Fully paid for home? Utility costs? Property taxes vary widely throughout the US. Don't forget to budget for repairs. New roofs, furnaces, appliances, etc.

4. What are your vehicle expenses? Even if you car is paid for, need to budget for replacement, insurance, gas, repairs.

5. What kind of taxes do you expect. Is your income coming from after tax investments, a 401(k) or pension?

6. Food, clothing, and other day to day living needs. Are you an Amy Dacyczyn type, the frugal zealot, who scrimps, saves, and recycles? Or the type that wants to do some traveling, eat out once in a while, etc?






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Re: How much to do need to live off of in RE
Old 05-03-2005, 11:54 AM   #3
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Re: How much to do need to live off of in RE

Martha,

Thank you for your replies. I suppose the cost that I worry about the most is healthcare. It is truly the "X" factor if you will. Healthcare involves two uncertainties, the individual's health and the cost of medical care. My emergency fund can tackle most expenses, even moderately large ones such as a big house or car repair.
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Re: How much to do need to live off of in RE
Old 05-03-2005, 12:05 PM   #4
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Re: How much to do need to live off of in RE

JC, couldn't agree more. The two things I worry about in early retirement are healthcare inflation and a bad stock/bond market "conspiring" together to make our plans fall apart.

But I can't spend all my time worrying. Might be dead tomorrow.
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Re: How much to do need to live off of in RE
Old 05-03-2005, 12:06 PM   #5
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Re: How much to do need to live off of in RE

There were some posts here a few months back on this topic.* If I remember correctly, most people responded with current detailed spending budgets for 2 people in the $40K range.* Of course, you would need to gross this up for income taxes, so that would bring you to about $50K in total gross income.*
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Re: How much to do need to live off of in RE
Old 05-03-2005, 12:14 PM   #6
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Re: How much to do need to live off of in RE

Quote:
Originally Posted by retire@40
There were some posts here a few months back on this topic. If I remember correctly, most people responded with current detailed spending budgets for 2 people in the $40K range. Of course, you would need to gross this up for income taxes, so that would bring you to about $50K in total gross income.
There are quite a few budgets posted if you look at the most viewed topics, especially the ones for living on $3000 a month and the $50 dollar a day thread (which most seemed to agree was not very doable).
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Re: How much to do need to live off of in RE
Old 05-03-2005, 01:37 PM   #7
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Re: How much to do need to live off of in RE

Hi!

Everyone's retirement situation is different.* My situation is that while working, my wife and I traveled the USA on my company's expense account,* health benefits were provided at no cost and I had a new company car each year.* Thus, we were able to save* 75% of our after tax income for 15 plus years.* Now that I am ER'ed, we need about $100,000 (to be indexed for inflation) versus the $40,000 we were spending before.* We will now have to pay our own travel, health, car and motorhome expenses.

My mother and stepfather live on about $20,000, but dont travel.* *I also have a friend who lives on about $350,000, lives in south Florida and travels the world, first class.* He and his wife have a nice life, probably worth $50 million.

Everyone is different and that is a good thing!

Dave
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Re: How much to do need to live off of in RE
Old 05-03-2005, 01:48 PM   #8
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Re: How much to do need to live off of in RE

My rule of thumb is retiring when I have the ability to generate $50,000 per year, with a paid-off house. I'm closing in on it!
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Re: How much to do need to live off of in RE
Old 05-03-2005, 05:54 PM   #9
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Re: How much to do need to live off of in RE

2004 was our first full year of ER. We spent $34,000.

We have catastrophic health insurance ($5,000 deductible) for >$2400 per year for both. We're 44 and 45 and pay outright for high blood pressure and high cholesterol meds. Otherwise we're healthy.

Mortgage is paid off. No kids, 1 dog. It's amazing what federal taxes are when they're not taxing INCOME.

We're living a little cautiously, but still have our wine and go out to dinner when we want (which is not that often).

All in all, not bad ...
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Re: How much to do need to live off of in RE
Old 05-03-2005, 06:19 PM   #10
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Re: How much to do need to live off of in RE

Hello Sparky! Sounds like us except that we spent about 25K,
including $3,800 for health insurance. We have 4 dogs and we
also pay cash for all meds.

JG
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Re: How much to do need to live off of in RE
Old 05-03-2005, 06:30 PM   #11
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Re: How much to do need to live off of in RE

Quote:
Originally Posted by MRGALT2U
Hello Sparky!* Sounds like us except that we spent about 25K,
including $3,800 for health insurance.* We* have 4 dogs and we
also pay cash for all meds.

JG
Are you getting your meds from Canada? We are, and are saving about 30-40% over US prices.

That is, until the US drug companies shut that down (Pfizer already has).
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Re: How much to do need to live off of in RE
Old 05-03-2005, 06:31 PM   #12
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Re: How much to do need to live off of in RE

Quote:
Originally Posted by jimmycarter
I am curious to get some answers as to how much money one needs in retirement.**
As summarized before most on this board need about $40k per year to live. If you are invested moderately I think you will need $1 million in cash to substain that.

In Charles Schwab's book he says one needs $250,000 dollars in cash for every $1000 per month withdrawn. So $3333. per month requires $833,583 in cash. Thats moderate investing.

If your portofolio is conservative $340,000 in cash for every $1000 per month or a bank book worth $1.133,553.

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Re: How much to do need to live off of in RE
Old 05-03-2005, 06:36 PM   #13
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Re: How much to do need to live off of in RE

25K (gross) for 2 people and 4 dogs. No problem. $50 per day is
still doable.

JG
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Re: How much to do need to live off of in RE
Old 05-03-2005, 06:39 PM   #14
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Re: How much to do need to live off of in RE

We are not getting our meds from Canada. Neither of us takes
any prescription meds on a long term basis, with one exception.
I negotiated a price for generic with the pharmacy and the cost is quite low. We've been lucky so far.

JG
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Re: How much to do need to live off of in RE
Old 05-03-2005, 07:11 PM   #15
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Re: How much to do need to live off of in RE

Hey JG...you know it doesnt count to split up your posts to one paragraph per in order to stay ahead of me, now dont you?
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Re: How much to do need to live off of in RE
Old 05-04-2005, 06:27 AM   #16
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Re: How much to do need to live off of in RE

Hey th, no "post splitting" here..............................
I usually strive for brevity (it being the soul of wit and all) .
Unless.................. I really get "pumped" about something. As long as I stay away from political discourse I am able to stay relatively in control
of my pontifications Anyway, since I have opinions on everything and absolutely no shyness about sharing them, well.............
it gives me quite an advantage post-wise.

JG
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Re: How much to do need to live off of in RE
Old 05-04-2005, 11:43 AM   #17
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Re: How much to do need to live off of in RE

Well now that you're a member, you CAN go back and edit a post to add content to it ya know...
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Re: How much to do need to live off of in RE
Old 05-04-2005, 11:45 AM   #18
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Re: How much to do need to live off of in RE

Otherwise, two can play at that game I have to sit home all day waiting for a refrigerator delivery, so I can probably catch you by late this afternoon...

Besides, I've deleted at least 300-400 of my posts over time. Can I have those back now?
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Re: How much to do need to live off of in RE
Old 05-04-2005, 10:39 PM   #19
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Re: How much to do need to live off of in RE

GTM, my wife and I collect about $20k per year in SS ..... draw
down about $24k from $600k in investments and clear 8-12k
per year from a part time business. You don't need no stinking
$1-2 mil in investments if you are lucky enough to live in the
right part of the country and are already into SS.

Cheers,

Charlie
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Re: How much to do need to live off of in RE
Old 05-05-2005, 07:45 AM   #20
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Re: How much to do need to live off of in RE

Hello Charlie! You are preaching to the choir in my case, obviously.

Since I left for good in 1998, the financial aspects of ER have actually been pretty easy, and.................I still have one year, 4 months
and 5 days to SS

JG
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