Poll: Percentage of pre-retirement income earned

[Kwirk]

Spending hasn't changed much over nearly 9 years of retirement and is about equal to what we spent pre-retirement, maybe a little more. Income has dropped considerably though we continue to add to savings and our heirs will likely be very pleased.

 

[Luck_Club]

Truly bad poll when the min answer is 'less than 80%'.

Try again OP.

Got it.

 

[aja8888]

SS - 60%
Pensions - 0%
Rents - 0%
Minimum required distributions - 40%
Net Capital Gains - 0%

Pretty easy for us.

 

[FIREd]

Our wages were all over the map because so much of it was tied to company performance. But if I take the average of our ten best years, then we spent only about 20% of our earned income during those years. The rest went to retirement savings and income/FICA taxes. We do not need to save for retirement anymore and our income/fica tax bill is now quasi-inexistant, so an income replacement rate of around 20% is sufficient for us to maintain our working years lifestyle.

Edit to add:
SS - 0%
Pensions - 0%
Rents - 0%
Minimum required distributions - 0%
Net Capital Gains - very variable but minimal
Dvidends and interests - ~ 100%

 

[kimcdougc]

When working, we spent about 70% of our income, saving the other 30%. Since fully retiring over 2 years ago, we spend about 50% of what we did while working. No change in lifestyle except more traveling.

 

[ABQ2015]

My retirement income will be about 65% of my working income. But because my savings and taxes were so much while working, the amount that I have to spend in retirement will be greater (e.g., about $25K more) and I plan to spend it. For my actual retirement income to be greater than my working income would require that I have another $2M in investments at a 3-4% withdrawal rate and that is not going to happen.

 

[NW-Bound]

If we have no unexpected large expenses, this year we will be spending about 50-60% of what we can draw (using FIRECalc or iorp). And what we can draw is about 60% of our gross income when working.

We were saving a lot of money when working, but not at as high a percentage as many posters reported. Our expenses were higher back then, with two children going to college, a mortgage, and other miscellaneous things. Taxes were higher too.

 

[W2R]

Percentages of highest working income

My capital gains distributions are re-invested to combat inflation. I regard my dividends as fair game for spending, however.


INCOME: My point of view is that income from my portfolio only includes dividends and interest. YMMV and that is perfectly fine, but I calculate income from my portfolio as solely the sum of dividends plus interest.

So, retirement income expressed as percentages of my highest earning year while working are as follows:

35% Portfolio income (dividends + interest)
16% Social Security
10% Tiny FERS pension
61% TOTAL RETIREMENT INCOME


SPENDING:
When I was working, I spent around 25%, give or take a few percent.
In retirement, so far I have spent 27% - 51%, depending on the year.



Like so many others, after a financially catastrophic divorce I had to put LBYM into overdrive in order to retire at all. So, during my highest earning years my retirement savings greatly exceeded my spending. Now, I have more to spend than when I was working, and that's a very nice position to be in.

 

[audreyh1]

Since most of my savings is invested in equity index funds, how do you determine the income associated with these funds? The stock market returns can vary wildly from year to year. They only pay a small amount of dividends, and most capital gains are not recognized until you sell.

If you're living off investments, I'd use your annual withdrawal as your income. That is what you've decided to pay yourself as income over the long run.

 

[Dash man]

Our combined working income had wild swings, but we saved and invested a lot of it. Since retirement we plan on spending an average of $15K/ month over the year. With remodeling, landscape improvements and traveling our spending also has wild swings, but the average monthly spending plan seems to work. Retirement income from pension, interest, dividends and rent cover about $10K/month. No SS yet and no realized capital gains since I rarely sell my individual stocks. Net worth continues to grow, so we're happy. Our financial planner says we can spend more if we want, but we plan on helping the kids.

 

[INTJ10]

We are still in the planning stage but the retirement income we are hoping to live on will be about 60% of our working income. Which makes sense because we save about 40% of our working income.

 

[cyber888]

We should be spending 50% - 60% of income during retirement. If you earn more than $120k, a large part goes to paying taxes. In retirement, you pay less taxes and do not contribute to SS and Medicare anymore

 

[Bir48die]

I lived off the same amount for 15 years. After paying for kids college I socked away every raise and bonus. At the height was putting in 33% of my salary in retirement, savings and Deferred Comp. So, once I retired it was an easy adjustment for me.

 

[YVRRocketSurgery]

Didn't answer the poll since I'm not retired yet. But my targets are:

First part of retirement is to have retirement income at approximately 85% of my working income. That's more than enough to maintain current lifestyle and even allow for a significant increase in discretionary spend because of:
- More advantageous tax treatment (less payroll-type taxes, preferential rates on dividends, etc)
- Reducing the percent of income we're socking away for retirement. During our working stage, we're directing a lot of our income to savings and investments. Once in retirement, we can lay off the pedal.

In the latter half of retirement, I suspect our retirement income will be over 120% due to government income kicking in and withdrawing from other buckets not touched in the first phase.

In some ways I suppose you'd want a higher income in the early stages of retirement but we should have enough to support our early goals and it's just our way to layer another level of safety to our plans.

 

[Pilot2013]

I was thinking that the Poll was about the "FINANCIAL GURU" statements of you should plan your retirement SPENDING/$ needs to be approximately 80% of what your working life INCOME was. ie, you made $a00k, you need $80k in retirement to live off of.

After reading all of the responses, I'm not sure that was the question any more.

Too bad, I was looking forward to hearing what peoples REAL SPENDING has been as a % of income during their working time. Although I am sure there will be the "follow your spending for 5 years so you know" statements, I think everyone agrees there are changes in retirement that could/should mean changes to those last 5 years while you were working.

 

[Just_Steve]

My wages while w@rking were stagnant so I had the same net income for the last 3 years of w@rk.
My current income streams are 89% of my take home w@rking income.
Some months I spend it all and some months I save a bunch.
Life is good.

 

[Ed B]

My wages while w@rking were stagnant so I had the same net income for the last 3 years of w@rk.
My current income streams are 89% of my take home w@rking income.
Some months I spend it all and some months I save a bunch.
Life is good.

I like your take on this: 89% of your w*rking take home pay. Because of a combination of high taxes, savings, and the cost of benefits my after tax take home pay while still w@rking is 57% of gross.

 

[Nightcap]

Retirement as a percentage of working income? Easy - it's 40%. We retired two years ago, so the numbers are fresh. No more Social Security, effective federal tax rate is about 10%, no more maxing out the retirement plans, no more parking and tolls, no more buying lunch, etc. Life is grand.

 

[Out of Steam]

We're planning for 60-70% of our pre-retirement income after retirement. Essentially the same life style we are living now. We could still reduce our spending a bit if it really came to that.

Not retired yet, but our plan is similar at about 60% at age 62. We're sinking a lot of money right now into college tuition, commuting, and parking for work. My commute is costing me 7-8% of my gross income.

I'm very comfortable with that 60%, but we're working on how not to stay in the rat race until 62.

 

[Fedup]

I used the percentage of income in the last 5 years, before retirement. Not include money in investment accounts that we don't plan to touch. Who cares what they are earning or growing. They don't count yet. The numbers could be off if you retired for a while. But we just retired last year.

 

[Red Badger]

Keep in mind that the "biblical source" of these 80%(+) figures come from the FA community. It is their vested interest to have folks earning $$ long past the actual need to do so. Your real need is, as most here know, related to your spending as you near retirement. Some adjustments might be less taxes and commuting but higher health care and vacation, etc. For most folks, the 80% figure is hogwash.

 

[Viking]

Our "income" consists of DW's pension and a withdrawal from my investments. for 2017, this is 34% of our pre-retirement gross salaries. In 10 years, CPP/OAS will boost this to 44%.

But since we are now in a much lower income tax bracket, pay no payroll taxes, no longer have employment expenses, mortgage done, and no need to save for retirement, our disposable income is 125% of what it was pre-retirement.

That will come in handy for travel, home improvements and hobbies.

 

[GTFan]

Too bad, I was looking forward to hearing what peoples REAL SPENDING has been as a % of income during their working time.

I agree, all of these current polls miss the mark. I guess the curiosity factor is what's driving them, not relevance.

Start your own.

 

[Fedup]

I thought that was how I responded to this poll. Somehow all the income from other sources seem to have clouded the poll.

 

[kcowan]

Income 40%
SWR 20% - 25%