How much minimum monthly retirement income should be enough for retire?

[rk911]

Hi, I am new here....
Just have a simple question for all experienced people here... If my monthly pension (not include SS and only 57 yr old ) can cover my monthly expense, then, should I retire?

Thanks

i'm late to this thread but the answer to your Q is...it all depends. depends on your chosen lifestyle. if we were to maintain our current level of living and spending and have zero cushion we would need around $9500 per month. but we live waaaaay beneath our means and want for nothing. some could likely live on less (and i'm certain we could as well' while others would require more.

my advice: do not live on the financial edge.

 

[Retired Expat]

i'm late to this thread but the answer to your Q is...it all depends. depends on your chosen lifestyle. if we were to maintain our current level of living and spending and have zero cushion we would need around $9500 per month. but we live waaaaay beneath our means and want for nothing. some could likely live on less (and i'm certain we could as well' while others would require more.

my advice: do not live on the financial edge.

I am late to this thread too but must make a point. Lots of discussion about tracking expenses to the penny, and I think that is great, but if anything Retirement taught me is that it has nothing to do with my life while working. I was free to move from a HCOL area to. LCOL area, but I took up Golf and Tennis and joined a club ($$$$). Prior travel expenses for vacations while working was much lower as I had no time to get away and when you fly every week for work you don’t want to do it on your vacation... dining out went way up as corp expense account was lost. There is hardly one pre retirement budget number based on actual expenses ad time that is within 25% of post retirement actual numbers.

But if you are flexible and willing to eat lots of noodles you can probably make anything work

Also it is not the things you budgeted for that will bite you in the butt, but the ones you didn’t even think of..

 

[PointBreeze]

I trended all of my expenses in an excel spreadsheet for many years (many = over 10 years) before I stopped working. I still trend every dollar spent .....and I have been retired for 11+ years.

Information is power for me. If I know what expenses are trending, I can anticipate an added 2-5% (minimum) for each year in the future and sort through what the costs will be. That's how I knew when enough was enough for me.

FireCalc can certainly help. But garbage in is garbage out....so making sure your data is true is very important. Only then will you know for sure what amount you need.

+1

 

[NXR7]

Actually I am a state worker and have worked more than 25 years. Therefore I have 100% medical coverage when I retire. I may require to pay a premium if I want a better HMO or PPO coverage.

My wife's pension fund and mine also covered health insurance until they didn't. Both decided to put pre-Medicare retirees on Obamacare and provide a fixed stipend to help defray part of the cost.

In many states including ours, Obamacare plans do not work outside of the area where we live, not even in other parts of Ohio. So if we travel we're buying travel insurance or taking a big potential risk.

Oh, and like yours, those are both State employee pension plans. Hers is Ohio Police and Fire and mine is Ohio Public Employees Retirement System. The State Legislature agreed with the change to Obamacare because medical costs were on track to bankrupt both plans. One plan, hers, actually had thirty years of pension payments in the bank but the skyrocketing medical costs threatened to bankrupt the fund in seven years.

Ray

 

[kimcdougc]

My question ...When should I retire? What mean enough? . We always think not enough then never retire... If I have enough pension for my basic expense and have emergency or saving fund , and 457k set aside. Why do I need to work for?

I think you answered your own question. Good Luck!

 

[rk911]

I am late to this thread too but must make a point. Lots of discussion about tracking expenses to the penny, and I think that is great, but if anything Retirement taught me is that it has nothing to do with my life while working. I was free to move from a HCOL area to. LCOL area, but I took up Golf and Tennis and joined a club ($$$$). Prior travel expenses for vacations while working was much lower as I had no time to get away and when you fly every week for work you don’t want to do it on your vacation... dining out went way up as corp expense account was lost. There is hardly one pre retirement budget number based on actual expenses ad time that is within 25% of post retirement actual numbers.

But if you are flexible and willing to eat lots of noodles you can probably make anything work

Also it is not the things you budgeted for that will bite you in the butt, but the ones you didn’t even think of..

+1. to the OP....this is just another way if saying...'it depends'. expat's post exemplifies differences in lifestyles. his lifestyle in retirement is much different than ours which is about the same as when we were still working. IMO the younger you are when you retire the more likely your lifestyle will undergo several changes during retirement.

 

[Old Microbiologist]

Gotta ask - does everyone have full faith that their pensions, from whatever source, will continue? Guess I'm just not that confident. What happens when a pension fund fails/ company goes bankrupt? I'd want a backup plan. Of course this is from someone with no pension and a whole $200/month this year in SS coming in. Spend my time worrying that the value of a dollar is getting chopped in half and that our savings might not be adequate.

My pensions are from the US government (1 military, another civil service (small) and the third Social Security) so if these fail the whole world is probably FUBAR. That said, I can envision SSA being taken away from us with proposed means-testing. We have low 7 figure investments and mid-6 figure cash for backup plus I mined Bitcoins back when it was profitable. Worst case we will always have those.

We also own our properties outright and here in Hungary, where we retired, there is no property tax so we could live our remaining 20 years or so on cash alone if necessary (assuming cash retains value). I never thought the US government was at risk of failing but I am seeing it more likely now with massive debt and horrible foreign policy that may cause the dollar to lose its reserve currency status. I also envision the abuses of MMT as leading to massive inflation. I am seeing the path the Soviet Union took looking more and more likely for the US.

With that in mind, we are moving our US dollar cash reserve to a Swiss Franc account here locally as you cannot open Swiss Bank accounts unless you are a Swiss Citizen and living inside Switzerland (sucks as an option due to negative interest rates). Physical gold would be another option. My next-door neighbor is a Swiss citizen and cannot have a Swiss account as she doesn't live there despite her pension being from the Swiss government. However, you can open accounts in Swiss Francs outside Switzerland. Her son is a Billionaire bank manager in Switzerland and also our friend so I get some good advice from him. I see this as the only potentially stable currency if you want to avoid US Dollars, Euros, Russian Rubles, or Chinese Yuan.

 

[rk911]

Gotta ask - does everyone have full faith that their pensions, from whatever source, will continue? Guess I'm just not that confident. What happens when a pension fund fails/ company goes bankrupt? I'd want a backup plan. Of course this is from someone with no pension and a whole $200/month this year in SS coming in. Spend my time worrying that the value of a dollar is getting chopped in half and that our savings might not be adequate.

we have three public pensions two of which are mine. we each have one from the illinois state govt, my other is municipally based. the state pensions are worrisome as they represent 37% of our monthly income but they are roughly only 40% funded. less worrisome is my municipal pension. it's managed much better and is 91% funded and represents 40% of our monthly income. SS fills in the remaining 22%.

but our net worth is in the low 7-figures with an asset allocation ratio of about 70/30. a review by a fee-only financial advisor a few years ago was of the opinion that, given our ages, life expectancy and our standard of living, we should should be able to maintain our lifestyle should all three pensions and SS disappear and the nest egg somehow survives which, IMO, is unlikely. so i have quit worrying about that. it's out of my control.

 

[Koolau]

Gotta ask - does everyone have full faith that their pensions, from whatever source, will continue? Guess I'm just not that confident. What happens when a pension fund fails/ company goes bankrupt? I'd want a backup plan. Of course this is from someone with no pension and a whole $200/month this year in SS coming in. Spend my time worrying that the value of a dollar is getting chopped in half and that our savings might not be adequate.

Old Megacorp is going 'gangbusters' right now - it has been a bit up and down since I started there 50+ years ago and during the 15 years since I ERd. BUT I have almost as much faith in my pension as I do in SS. For one thing, the gummint is WAY more likely to mess with SS than they are to mess with Megacorp's pension plan.

Also, we get the pension statement every year. It shows that the plan has always been funded at least 80% (bad years) to near 100% in good years. Is anything "safe"? I suppose nothing is truly safe. My pension just happens to be way down on the list of stuff I worry about though YMMV.

 

[calmloki]

No pension boy here again - need to correct an earlier statement. Said that I was getting $200 in SS after my medicare and drug payments were made. That was true last year. This year the gubbernment will be putting (per today's deposit) $91.30/month into my Discover account. For which I am grateful. And am also grateful that rentals did very well for us as far as stacking up the cash for our waning years. Getting that monthly SS check is the closest feeling to a pension I can imagine, and it is real gratifying having the checks click into the bank so regularly. Makes me have a touch of envy for pensions, but not my style to count on much from others.

 

[Old Microbiologist]

More or less the same

we have three public pensions two of which are mine. we each have one from the illinois state govt, my other is municipally based. the state pensions are worrisome as they represent 37% of our monthly income but they are roughly only 40% funded. less worrisome is my municipal pension. it's managed much better and is 91% funded and represents 40% of our monthly income. SS fills in the remaining 22%.

but our net worth is in the low 7-figures with an asset allocation ratio of about 70/30. a review by a fee-only financial advisor a few years ago was of the opinion that, given our ages, life expectancy and our standard of living, we should should be able to maintain our lifestyle should all three pensions and SS disappear and the nest egg somehow survives which, IMO, is unlikely. so i have quit worrying about that. it's out of my control.

We are in a similar situation except 100% of our needs are met from the pensions and we haven't tapped a single dollar from anything else in over 12 years. Instead, we are underspending our pensions roughly $40k a year. We are also aging and it is impossible to estimate life spans but assuming worst case we live to 100 we have enough to carry us for that long without pensions. Our actual spending is especially low due to COVID and not traveling for the foreseeable future.

 

[watchman3135]

Just curious to get others opinions, which is a better scenario?
1. John & Jane Doe's Pension, social security and $500,00 in 401k/IRA investments or
2. $1.5 million in 401k/IRA investments, social security with no pensions?

I always say pensions beats a higher retirement savings because it's mostly guaranteed income minus the possibility of bankruptcy or other default. I truly envy those with pensions theses days. The fact is, the 401k origins was never intended as a means to save for ones retirement. It was a tax shelter derived for the rich to shelter wealth. It became the instrument of choice when employers found out how much more they could save.

 

[Winemaker]

Just curious to get others opinions, which is a better scenario?
1. John & Jane Doe's Pension, social security and $500,00 in 401k/IRA investments or
2. $1.5 million in 401k/IRA investments, social security with no pensions.

6. His and her pensions, his and hers SS, his and hers 401k/403b/tIRA/Roth IRA, rental income, and oil/gas royalties.

We schlogged and scrimped for 35 years and #6 is working pretty good for us right now. We won't be taking SS for another few years, though.

 

[cyber888]

As long as you have a budget 20% - 25% below your pension and based on your numbers, I think you can retire. But it actually depends on how you feel .. can you sleep at night with your pension ? If so, you're good. If you feel insecure, then .. you have a lot of thinking to do.

 

[RunningBum]

Just curious to get others opinions, which is a better scenario?
1. John & Jane Doe's Pension, social security and $500,00 in 401k/IRA investments or
2. $1.5 million in 401k/IRA investments, social security with no pensions?

I always say pensions beats a higher retirement savings because it's mostly guaranteed income minus the possibility of bankruptcy or other default.

Impossible to answer without knowing their ages, and how much the pension is worth. One could always buy an SPIA for $1M to get a pension-like annuity. Do you always make decisions without considering the math, or even knowing the numbers to make an educated guess with?

 

[ncbill]

Just curious to get others opinions, which is a better scenario?
1. John & Jane Doe's Pension, social security and $500,00 in 401k/IRA investments or
2. $1.5 million in 401k/IRA investments, social security with no pensions?

I always say pensions beats a higher retirement savings because it's mostly guaranteed income minus the possibility of bankruptcy or other default. I truly envy those with pensions theses days. The fact is, the 401k origins was never intended as a means to save for ones retirement. It was a tax shelter derived for the rich to shelter wealth. It became the instrument of choice when employers found out how much more they could save.

Pensions are nice...a COLA pension plus free retiree health care plus a modest, paid-off house allowed my in-laws to retire 25+ years ago with low five figures in liquid assets.

No reason you can't do both...my oldest plan to stay the 20 years needed for a military pension plus is saving ~1/3 of their base pay into the Roth TSP & receiving a 5% match into the traditional tax-deferred TSP.

 

[MarieIG]

The following are my conditions:

My monthly pension can covers the most current average monthly basic expenses plus 20% extra.

Also, approximate 30% of extra 457k monthly fund for emergency and vacation uses ( 4% of my total assets).

Therefore, I have 1.2x 1.3 = 1.56. 56% extra fund can be used every month and set aside.

SS doesn't count on yet because it requires 62 yrs above to collect it.

house has been paid off

Pension covers medical insurance. I can pick PPO or HMO.

Is it safe to retire? Or still wait....

Your plan has NOT addressed your spouse in the event you are first to die. Is your pension 100% J&S? Will your spouse be able to continue your health insurance?

 

[SumDay]

Not yet... Let me try it first... Thanks for your info

I was terrified before we retired, and I found a Fee Only Financial Planner who confirmed we were good to go. I went back the next year and she said the same, and the third year she almost yelled at me, and then I retired.

I found her here: https://www.napfa.org/

It was worth it to have a 'pro' confirm what I already knew, I just didn't trust myself.

 

[NXR7]

Just curious to get others opinions, which is a better scenario?

1. John & Jane Doe's Pension, social security and $500,00 in 401k/IRA investments or

2. $1.5 million in 401k/IRA investments, social security with no pensions?

I always say pensions beats a higher retirement savings because it's mostly guaranteed income minus the possibility of bankruptcy or other default.

Depends on life expectancies, depends on expenses, and assumes you move the savings into a cash fund with zero risk and zero appreciation (or loss). Or a fireproof, theftproof mattress.

You're talking about a million dollar in savings difference so:

$1,000,000 *.8 (for taxes) / 20 years / 12 months = $3,333 in spendable cash per month.

At age 65 that gives a life expectancy of 85 before the savings runs out.

Interestingly, that is almost precisely how much my current SS + a pension gives me today.

In your scenario you would get SS on top of that.

Wanna trade?

Ray

 

[watchman3135]

Impossible to answer without knowing their ages, and how much the pension is worth. One could always buy an SPIA for $1M to get a pension-like annuity. Do you always make decisions without considering the math, or even knowing the numbers to make an educated guess with?

Ok, fair enough. Say in this example they are both 62 and the combined pension is $2,300 per month + a 4% annual withdrawal rate on 1 & 2's savings.

I say I am a bit jealous of those with pensions as my last employer, while great to work for and I was compensated reasonably well, dumped their pension plan 4 years later in 2005 in favor of a 403b. Because I was grafted in for the 4 years, my projected pension at 65 is $53 per month. If I took it now at 55 it's $33 per month no COLA or a current lump sum of $7,600.

Luckily I caught on early and began saving more than 25% of my annual income early on and nearly 40% in my last 5 years in the 403b and left with a decent sum.

 

[1242Vintage]

If you are a State Worker there are also several other considerations

If you have substantial vacation saved up and you will be cashing it out at retirement you’ll want to retire in November or December. The State will spread that out over two years into a 457 and 401(k) plan to minimize tax implications.

And if you are covered by CalPERs, working 10 months in your last year counts as a full year. So if you started your career say in June many years ago, in your last year you only need to work to April to get that full year of credit.

And keep in mind the timing of when the State provides the COLA adjustment. The mass exodus happens typically in December 31 every year. This gives the shortest time to the first COLA adjustment.

If you had any time working directly for the State as a student assistant, that time counts towards retirement if you can substantiate with timesheets or other documents.

And if you have a disabled dependent there’s some paperwork you can do to set them up to receive your survivor benefit upon your passing. My adult child is disabled (she’s deaf) and discovered by chance that as long as she is unmarried she will be eligible for approx $3k per month for life plus health care after wife and I pass.

Direct message me if you have any questions. Been through the retirement process recently.

 

[Miarocks]

Besides the income taxes on your pension, don’t forget that your $1500/month withdrawal from your 457 plan will be taxable as well. Good ol’ Uncle Sam.
We are converting much to Roth these days to avoid these tax torpedos later, especially as tax rates will assuredly be higher than today, and before RMD’s hit. DH has 5 years until age 72, and I have 12. Gettin’ after it NOW!!