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Old 12-15-2013, 05:24 PM   #21
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Originally Posted by Midpack View Post
-3. I'll be more polite, but using any percentage is a bad idea.

When I retired my take-home pay went up slightly even with taking a spousal pension benefit. I'd been maxed out on deferred compensation (same idea as 401k) for years, SS/pension deductions stopped, and a couple of other smaller deductions went away.

It is so highly individual to one's circumstances that there is no "one size fits all" number.
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Old 12-15-2013, 08:43 PM   #22
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Originally Posted by brownred View Post
After reading how much a lot of you have accumulated it sounds like I might be fooling myself about retirement.

54 years old

Single, no kids

55 to 57 hopeful early retirement

Will be 57 and home will be paid off July 2016

$80,000 - salary

$440,000 - 401K with 20% of salary yearly contributions
Broad Market Bond Fund 25%
S&P Indexed Equity Fund 15%
US Equity Fund 10% MSCI EAFE Indexed Equity Fund 25%
Small/Mid-Cap Indexed Equity Fund 20%
Emerging Mkts Indexed Equity 5%

$31,000 – Roth maxed out each year
FTSE All-World ex-USSmall-Cap100%

$30,000 yr. – Pension
$11,000 – approx. SS level income (If you don’t know what this is, I can try to explain)

$41,000 a year

Any suggestions on how I can make this work?
I also am single and just retired this summer. I thought my spending would be covered by my pension and SS ($51k). I have found it way too easy to say yes to travel when someone asks now that I am retired. My future planning will include another $10k for additional travel and fun. This was totally unexpected for me. I will take the additional cash from retirement funds. The point is even living on your planned retirement budget while still working may not be totally accurate. Leave yourself a little wiggle room.
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Old 12-15-2013, 09:24 PM   #23
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Originally Posted by brownred View Post
I havenít figured my exact expenses like I should, I will start that Jan. 1.
I will probably go %30 bonds when I rebalance Jan. 1, Donít know if I can go much more than that. Iím the kind that things will continue to go up.

Yes, my plan allows penalty free withdraws if you retire early.
I have Co. healthcare now but I assume I and everyone else will eventually end up with ACA.

FierCalc? I went there and donít understand some of what itís asking me. Example: On the pension page, Iím lost. I donít know what it means by, off chart spending reduction, off chart spending.

Thanks everyone
My understanding is pension leveling keeps your pension the same now (41K) as when you collect SS. If so, at what age are they assuming you'll collect SS.

Your savings of $440K (or 5-6x your salary) while quite good compared to the rest of population, isn't terrific for early retirement. As rule of thumb you can spend roughly 4% * 440K= $17,600 for somebody your age, and more conservative plan would be 3% of 440K or $13,200 per year.

So that says you can be spend between $54K-$58K a year.

Taking your 80K salary and reducing it by 20% for 401K contributions an additional 7.15% for FICA and medicare tax leaves you with a $58K of taxable income.

You'll find your taxes somewhat less as a retiree. On the other hand you have to pay for health insurance and you probably won't qualify for a subsidy. That probably won't be cheap for a 57 year old.

You didn't mention either additional savings or debt, so I assume you basically are spending your paycheck.

It summary, it sounds like you've got a bit of trimming to do in your budget, but my guess is once the house is paid off you'll be able to maintain your current lifestyle so working until the house is paid seems like a good strategy.
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Old 12-16-2013, 09:27 AM   #24
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Add me to the list of those who believe that a percent-of-income amount is bunk and it is expenses which matter most. Twice at the end of my working years I reduced my weekly hours worked. My expenses changed little due to working less. So, which income figure should I have used in that calculation, the full-time amount, the higher part-time amount, or the lower part-time amount
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.

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Old 12-16-2013, 09:40 AM   #25
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We are, I suppose, part-time retired. We w*rk 20-25 hrs (combined) / week and have expenses of $2,500-3k / month. Our debts are $0 and we pay $283 for healthcare (we just locked in a year on a high deductible plan with Humana).

Our living in a foreign country helps a bit, but as another mentioned, it's easy to say "yes" to traveling with friends. We tripped back to Dallas & again to Isla Mujeres this past month or so and are still staying below the $3k mark though.

We plan to see where O-care goes from here before committing to this as we can control our "income" a bit to get the most from it, but are waiting this year for them to get the kinks straight.

We live on less than 1% of our savings since we almost make enough to live here. One day we'll likely get back to the states, but shouldn't affect us much as we can live on this amount anywhere. We did $4k / month in LA, so I figure we could do $3k most places.

We're 43 & 49 fyi.
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Old 12-16-2013, 09:11 PM   #26
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Ignore the 'percent of income' requirement. We're living very well on a 50% reduction with no lifestyle change. It depends on your personal situation and lifestyle. No one can advise you until you know your expenses.

Using the 54.5k calculated above, and assuming that's a pretax amount, you might - depending on state and local taxes - be looking at $44k net income, or about $3600 a month ( estimating in my head lol). You have to determine if you can live within that amount, and handle any financial emergencies that come. What if you need long term care? LTC insurance? Medical bills can eat up investments quickly.

For comparison purposes, DW and I can manage on $3800 net pension ( after taxes and health insurance) a month. We have some minor debt disappearing in the spring, and $650 no interest truck payment ( to haul our RV). We also assist our son slightly ad he attempts to start career. When those obligations are cleared up, that'll decrease our expenses about $1200 a month. We do a 2% draw because we like to travel. That money is strictly for fun stuff.

So, it's entirely possible for you to live on $3600 a month. My concern would be emergencies which eat into your savings, thus reducing your future income as cost of living increase.

Just my two cents.
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Old 12-16-2013, 09:31 PM   #27
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Originally Posted by Theduckguru View Post
I still a believer in a minimum of 65 - 75% of income for an active retirement. You will likely need at least 70% if you need to purchase health care.
DH retired in 2010 and I went to very part-time work. This year our spending is roughly 40% of what we earned in our last year of full-time work. However, we have 2 adolescents at home one of whom is in college. So, we have a lot of expenses due to still having kids at home and in college. Once the kids are gone, I expect our spending to be between 20% and 25% of what we earned. FWIW, our standard of living hasn't changed.
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