What % do you spend in retirement?

[JustCurious]

I have often heard the advice that you should save enough to be able to spend 80 percent of your pre-retirement income during retirement. I am curious to find out the real life experience of those on this board.

I understand that the "80 percent of pre-retirement income" rule is not really useful for those of us who LBYM, since we are already accustomed to spending 80 percent or less of our income even before we retire. For those who LBYM, a percentage of pre-retirement spending is a more useful metric, but I am still curious to find the retirement spending as a percentage of pre-retirement income because I want to see how the experience of people on this board relates to the oft quoted rule.

 

[grumpy]

You are asking the wrong question. Not what percentage of your pre retirement INCOME but what percentage of your pre retirement EXPENSES? If you were not living on all of your income (and almost all ER's don't) before retirement then the answers to your question probably don't mean much.

Grumpy

 

[JustCurious]

You are asking the wrong question. Not what percentage of your pre retirement INCOME but what percentage of your pre retirement EXPENSES? If you were not living on all of your income (and almost all ER's don't) before retirement then the answers to your question probably don't mean much.

Grumpy

Grumpy, did you read my first post

 

[cute fuzzy bunny]

Currently spending roughly 6% annually of what I earned in my final working year.

So yeah, 80% is BS.

 

[ERguy]

Spending in first year of ER was 43% of pre-ER income. Roughly what I had expected.

 

[grumpy]

Grumpy, did you read my first post

Whoops, I shouldn't post after taking a vicodin. Sorry

Grumpy

 

[lazygood4nothinbum]

i voted more than 100% but inheritance probably makes my vote nonapplicable. my income was never much to speak of though i did manage to accumulate a net worth better than 10x's my final annual salary. i never thought i was living below my means, rather, i thought i was living within my means which included savings. actually rather than lbym i lived quite beyond my means on other people's money. hey, don't bitch at me. they're the ones who extended the invite. i was perfectly happy playing at home. as my realtor said today while gazing from our dock at the neighbors' tiaras (boats) "if you ever have a choice of paying for the champagne or the gas, bring the champagne".

 

[JustCurious]

It's very interesting that 2/3 of those who are retired and responded to this poll actually spend less than 50 percent of their pre retirement income in retirement. That means the "80 percent of preretirement income" goal is really irrelevant for those who LBYM. The rule might have some value to those who live at or near their means.

 

[Nords]

That means the "80 percent of preretirement income" goal is really irrelevant for those who LBYM. The rule might have some value to those who live at or near their means.

That "rule" is misleading. Focus on spending, both pre- & post-retirement.

 

[Gone4Good]

Target is 14%.

 

[SteveR]

That "rule" is misleading. Focus on spending, both pre- & post-retirement.

Agree.
You need to take CFB's data with a few pounds of salt because it is not representative of most people's income vs expense levels. Very very very few people will ever see a 7 figure annual salary. Likewise, those living a 'possum lifestyle are not representative of most folks on this board.

Spending post retirement will be different that pre-retirement for many reasons and each of us will have a different budget. The rule is....there is no rule there are only general guidelines. The over-touted 80% is based on not paying Fed. Tax , state tax, SS, Medicare or "other" business-related expenses. It does not account for the elevated savings levels represented by most people on this board. If you stop all the above and stop saving your after-retirement income needs could be quite small compared to your pre-retirement expenses. In my case it is estimated at 40% of current expenses but is on a decreasing scale over time. I will recalculate every year to see if I need to adjust it for missing my estimates. Real data is golden vs estimates. Nothing like real life to use as a model.

 

[unclemick]

Hmmm - I believe we have some old threads/posts in the achives using current $ budgets.

$12k - $79 k for me. The big number post Katrina with mortgage, car payment, health insurance and higher taxes cause I'm tapping trad IRA.

Heart of hearts - the cheap bastard in me wants to honk that number back down to the more familiar $18 - $24 k/yr - but I'm not sure that's possible in today's $ in MO.

I'm commiting the common sin of spending while I'm young although being really really cheap can produce it's own kind of thrills.

heh heh heh heh - %'s suck - show me the money - er ah budgets.

 

[Zathras]

In the first 2 years of retirement I am spending more, however I am building a home which will be chewing up a lot of that. After the next year, I expect that to go down quite a bit.

Up front costs high, then lower than most (of the general public, not the board members here).