Finance Dave
Thinks s/he gets paid by the post
- Joined
- Mar 29, 2007
- Messages
- 1,862
First off, let me say "good to see everyone again", as I tend to come and go to the forum...but things are heating up so you may see more of me.
I don't follow the rules of thumb ("you'll need 80% of your pre-retirement income to maintain your lifestyle"), but I want to just check to see if I'm missing anything.
Currently 49 (birthday soon) , married, both of us work professional jobs. currently save ~30% of our gross. Everytime I do a rehirement (yes, I spelled that right) budget, I only can come up showing that I need about 55% of my pre-retirement income...no where near the numbers all these calculators and "experts" use.
(As a side note, my grandmother use to tell me "ex" means "former", and "spert" is a drip under pressure.)
I basically made a model showing all expenses in Excel, then applied "factors" to each category. The factor represents how the expense will act in rehirement. For example, if the cost will be the same (let's say property taxes), then it's 1.0. If the cost will increase 20% (let's say utilities), then it's 1.2, and so on.
Doing it this way, and adding in new expenses such as health care premiums I'll have to start paying (budgeting $500/mo/person at the moment), LTC (budgeting $225/mo/person based on quotes), increased travel (this is a biggie for us, budgeting $10k/year), I STILL only come up needing 55% of my gross pre-rehirement income.
I think there are two factors making this happen, but would like your views.
1) We are saving considerably more than the average person - 32% of our gross income
2) Taxes will decrease SUBSTANTIALLY in rehirement - we pay nearly $60k in Federal taxes each year now. Not to mention other taxes such as FICA/state.
Based on these two factors alone, it would seem we can make 32% less + an additional $60k less and live the exact same lifestyle.
So then I tried a different method. I took our current income, and started SUBTRACTING things that will decrease or go away.
Initial income minus $42k taxes minus $24k house payment (will be paid off in 2 years, about the time I rehire), minus $4k health care premiums (this is an offset to the spending above of $500/mo on health care plans), minus 6.2% FICA minus 1.45% medicare etc.
Doing it this way, I arrived at nearly the same answer...so I think I'm doing things right.
Are some of you "high savers and high earners" seeing the same phenomenon related to saving a TON on taxes and the fact that you no longer have to save for rehirement?
Thanks in advance,
Dave
I don't follow the rules of thumb ("you'll need 80% of your pre-retirement income to maintain your lifestyle"), but I want to just check to see if I'm missing anything.
Currently 49 (birthday soon) , married, both of us work professional jobs. currently save ~30% of our gross. Everytime I do a rehirement (yes, I spelled that right) budget, I only can come up showing that I need about 55% of my pre-retirement income...no where near the numbers all these calculators and "experts" use.
(As a side note, my grandmother use to tell me "ex" means "former", and "spert" is a drip under pressure.)
I basically made a model showing all expenses in Excel, then applied "factors" to each category. The factor represents how the expense will act in rehirement. For example, if the cost will be the same (let's say property taxes), then it's 1.0. If the cost will increase 20% (let's say utilities), then it's 1.2, and so on.
Doing it this way, and adding in new expenses such as health care premiums I'll have to start paying (budgeting $500/mo/person at the moment), LTC (budgeting $225/mo/person based on quotes), increased travel (this is a biggie for us, budgeting $10k/year), I STILL only come up needing 55% of my gross pre-rehirement income.
I think there are two factors making this happen, but would like your views.
1) We are saving considerably more than the average person - 32% of our gross income
2) Taxes will decrease SUBSTANTIALLY in rehirement - we pay nearly $60k in Federal taxes each year now. Not to mention other taxes such as FICA/state.
Based on these two factors alone, it would seem we can make 32% less + an additional $60k less and live the exact same lifestyle.
So then I tried a different method. I took our current income, and started SUBTRACTING things that will decrease or go away.
Initial income minus $42k taxes minus $24k house payment (will be paid off in 2 years, about the time I rehire), minus $4k health care premiums (this is an offset to the spending above of $500/mo on health care plans), minus 6.2% FICA minus 1.45% medicare etc.
Doing it this way, I arrived at nearly the same answer...so I think I'm doing things right.
Are some of you "high savers and high earners" seeing the same phenomenon related to saving a TON on taxes and the fact that you no longer have to save for rehirement?
Thanks in advance,
Dave
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