Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 09-02-2021, 09:53 PM   #101
Full time employment: Posting here.
 
Join Date: Dec 2018
Posts: 966
A good retirement is having a retirement income equal or greater than your income while working. If your income while working is $100K per year than a nest egg of $1M will only get you $40K per year based on the 4% rule. Hence you need a nest egg of $2.5M to earn $100K a year. Yes $1M is not what it used to be.
2177V is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 09-03-2021, 06:50 AM   #102
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2009
Posts: 6,310
Quote:
Originally Posted by vchan2177 View Post
A good retirement is having a retirement income equal or greater than your income while working. If your income while working is $100K per year than a nest egg of $1M will only get you $40K per year based on the 4% rule. Hence you need a nest egg of $2.5M to earn $100K a year. Yes $1M is not what it used to be.
There is no way I could ever agree with this. Aren't you assuming that someone spends all or nearly all of their income?

During my career, I lived on about $25k per year, yet my income varied between $30k and $75k in the last 10 years of it. I didn't automatically spend more when I earned more, nor did I spend less when I earned less. I saved whatever I didn't spend. I never, ever targeted $75k in retirement income. I retired with about $800k in my total portfolio, 2/3 of it in taxable (which is what I have been living off since I ERed in late 2008 at age 45).
__________________
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.

"I want my money working for me instead of me working for my money!"
scrabbler1 is online now   Reply With Quote
Old 09-03-2021, 07:05 AM   #103
Recycles dryer sheets
 
Join Date: Aug 2013
Location: Roanoke
Posts: 103
Quote:
Originally Posted by vchan2177 View Post
A good retirement is having a retirement income expenses equal or greater than your income expenses while working. If your income while working is $100K per year than a nest egg of $1M will only get you $40K per year based on the 4% rule. Hence you need a nest egg of $2.5M to earn $100K a year. Yes $1M is not what it used to be.
Fixed it for you.
rwdflynavy is online now   Reply With Quote
Old 09-03-2021, 07:14 AM   #104
Full time employment: Posting here.
 
Join Date: Jul 2011
Location: Reading, MA
Posts: 852
Quote:
Originally Posted by vchan2177 View Post
A good retirement is having a retirement income equal or greater than your income while working. If your income while working is $100K per year than a nest egg of $1M will only get you $40K per year based on the 4% rule. Hence you need a nest egg of $2.5M to earn $100K a year. Yes $1M is not what it used to be.
Yes, I tend to agree with your target retirement income concept and I'm there myself. Having an excess of retirement income gives one a lot of flexibility and options.

But that income can come from a combination of pension/annuities, SS, and portfolio withdrawals, not all from the latter.

Of course, if you delay SS until age 70, as I did, then you'll likely need bigger portfolio withdrawals in the years preceding.
Having gotten through that span of years, I'm now investing excess retirement income into my portfolio rather than withdrawing money from it, so that's good...
TheWizard is offline   Reply With Quote
Old 09-03-2021, 07:15 AM   #105
Full time employment: Posting here.
teetee's Avatar
 
Join Date: Jul 2019
Posts: 635
Quote:
Originally Posted by scrabbler1 View Post
There is no way I could ever agree with this. Aren't you assuming that someone spends all or nearly all of their income?



During my career, I lived on about $25k per year, yet my income varied between $30k and $75k in the last 10 years of it. I didn't automatically spend more when I earned more, nor did I spend less when I earned less. I saved whatever I didn't spend. I never, ever targeted $75k in retirement income. I retired with about $800k in my total portfolio, 2/3 of it in taxable (which is what I have been living off since I ERed in late 2008 at age 45).
I think the assumption was that you need equal amount of money during your working life to live on after retirement so you don't feel 'uncomfortable'.

If your spending during retirement is far less than you earn while working (a frugal saver), then use that amount as your basis to calculate how much you need in retirement.

My disagreement on this assumption is different: some retirees spend significantly more than their income from traveling or shopping while others can downsize and spend only half of what they used to spend.

With taxes (from RMD or passive income) and inflation, one would have to really know the math to do the estimate on the magic number they need for the nw to retire with.
teetee is offline   Reply With Quote
Old 09-03-2021, 07:25 AM   #106
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2003
Location: Florida's First Coast
Posts: 6,088
$1m may not be what it used to be but it is still a heck of a lot of dosh. At least in my books.
__________________
"Never Argue With a Fool, Onlookers May Not Be Able To Tell the Difference." - Mark Twain
ShokWaveRider is online now   Reply With Quote
Old 09-03-2021, 07:37 AM   #107
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
street's Avatar
 
Join Date: Nov 2016
Posts: 6,913
Quote:
Originally Posted by ShokWaveRider View Post
$1m may not be what it used to be but it is still a heck of a lot of dosh. At least in my books.
I think so too!! I have posted a few time on this thread but a million bucks is more then most have.

With some help from SS or some other small cash flow, that 1 million bucks could compound.
street is online now   Reply With Quote
Old 09-03-2021, 08:35 AM   #108
Full time employment: Posting here.
 
Join Date: Dec 2018
Posts: 966
Quote:
Originally Posted by scrabbler1 View Post
There is no way I could ever agree with this. Aren't you assuming that someone spends all or nearly all of their income?

During my career, I lived on about $25k per year, yet my income varied between $30k and $75k in the last 10 years of it. I didn't automatically spend more when I earned more, nor did I spend less when I earned less. I saved whatever I didn't spend. I never, ever targeted $75k in retirement income. I retired with about $800k in my total portfolio, 2/3 of it in taxable (which is what I have been living off since I ERed in late 2008 at age 45).
It all depends on your definition of a “good” retirement. Your $800K portfolio translate to $32K. But your highest income was $75K. I get it about expenses so if your expenses is $32K, then that is an “OK” retirement. However a “Good” retirements income would $75K. A “good” retirement is better than a “OK” retirement. An excellent retirement income is more than $75K. Hence I rate retirements as excellent, good, ok, and bad. Most FIRE aim for an Ok retirement which is fine since they retired early. I retired at 65 but my retirement income is greater than my income while working so my retirement is excellent. It is subjective and people have different definitions of excellent, good, ok and poor retirement incomes. I let other people express their own opinions of excellent, good, ok, and bad retirement incomes. My excellent retirement income means my standard of living is better than my standard of living when I was working. I used this extra income to buy houses for my children so they can retire early.
2177V is offline   Reply With Quote
Old 09-03-2021, 08:41 AM   #109
Thinks s/he gets paid by the post
 
Join Date: Aug 2005
Location: Crownsville
Posts: 3,002
Basically, ask yourself one simple question. Are you happy in retirement? If the answer is "Yes", then it's a good retirement!
Andre1969 is offline   Reply With Quote
Old 09-03-2021, 08:46 AM   #110
Thinks s/he gets paid by the post
 
Join Date: Jun 2021
Posts: 1,049
Our retirement income is definitely far less than our working income. However, our expenses are now far higher after retirement. While we were working, we ate lunch and dinner out every day in nice restaurants and vacationed about 6 weeks a year. Now we vacation 2 to 3 months a year, cook more while home and spend a tidy sum on golfing.

What it means is that we saved enough while working so that we have income to meet our expenses in retirement.
RetiredHappy is offline   Reply With Quote
Old 09-03-2021, 10:44 AM   #111
Full time employment: Posting here.
 
Join Date: Dec 2018
Posts: 966
Quote:
Originally Posted by rwdflynavy View Post
Fixed it for you.
You are confusing me. Having retirement expenses greater than income expenses imply a negative cash flow.

In any case. Your disposable income (income minus expenses) is what drive your standard of living. If your expenses are $3000 per month and your retirement income is is 10% more or $3300 month then your disposal income is $300 a month. 10% is OK. 25% is good. 50% is excellent. 100% is difficult to do. Most FIRE has low disposal income while a traditional retiree has much more. This is because your nest egg in the stock market generally double in 10 years. Triple if you continues to contribute. Wealth increases exponentially and not linearly due to the compounding effect.
2177V is offline   Reply With Quote
Old 09-03-2021, 10:51 AM   #112
Full time employment: Posting here.
 
Join Date: Dec 2018
Posts: 966
Quote:
Originally Posted by Andre1969 View Post
Basically, ask yourself one simple question. Are you happy in retirement? If the answer is "Yes", then it's a good retirement!

I agree but this thread is about the relative value of $1M. I know some homeless people who go to the bathroom at the City recreational center. They are really happy because they have no bills to pay and they live on SS. They just need someplace to go to the bathroom. I kinda wished the City recreational city also includes a shower because Their BO is so strong, I can only talk to them for only a minute.
2177V is offline   Reply With Quote
Old 09-03-2021, 11:30 AM   #113
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2009
Posts: 6,310
Quote:
Originally Posted by vchan2177 View Post
In any case. Your disposable income (income minus expenses) is what drive your standard of living. If your expenses are $3000 per month and your retirement income is is 10% more or $3300 month then your disposal income is $300 a month. 10% is OK. 25% is good. 50% is excellent. 100% is difficult to do. Most FIRE has low disposal income while a traditional retiree has much more. This is because your nest egg in the stock market generally double in 10 years. Triple if you continues to contribute. Wealth increases exponentially and not linearly due to the compounding effect.
I have to disagree again. My disposable income, as you define it, has risen and fallen in my retirement years, even though my expenses have been rather stable. But my standard of living has not changed as my disposable income has risen and fallen. I have had expenses of about $2,000 a month with retirement income of sometimes $2,500 or $3,000 or $3,500 a month. With my expenses stable, the added disposable income had zero effect on my standard of living. All I did was to plow any excess income back into my portfolio.

Having that cushion in my budget allows me to go on small spending sprees now and then without having to worry about busting my budget. That's a good thing, of course, and it allows me to maintain the standard of living I had before I retired. But that cushion ranging from a decent size to a huge size makes no difference to my day-to-day lifestyle.
__________________
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.

"I want my money working for me instead of me working for my money!"
scrabbler1 is online now   Reply With Quote
Old 09-03-2021, 11:39 AM   #114
Full time employment: Posting here.
 
Join Date: Dec 2018
Posts: 966
Quote:
Originally Posted by TheWizard View Post
Yes, I tend to agree with your target retirement income concept and I'm there myself. Having an excess of retirement income gives one a lot of flexibility and options.

But that income can come from a combination of pension/annuities, SS, and portfolio withdrawals, not all from the latter.

Of course, if you delay SS until age 70, as I did, then you'll likely need bigger portfolio withdrawals in the years preceding.
Having gotten through that span of years, I'm now investing excess retirement income into my portfolio rather than withdrawing money from it, so that's good...
Good for you. I took a similar path in having excess income in retirement and delaying SS a year or two. I decided to buy houses in cash with one California house for my daughter. If my daughter took out a mortgage from a bank, this will mean 30% of her income will go into a mortgage payment. With no mortgage payment, her standard of living is much higher than her peers. Like you stated: Having excess retirement income provides a lot of options and flexibility.
2177V is offline   Reply With Quote
Old 09-03-2021, 11:53 AM   #115
Full time employment: Posting here.
 
Join Date: Dec 2018
Posts: 966
Quote:
Originally Posted by scrabbler1 View Post
I have to disagree again. My disposable income, as you define it, has risen and fallen in my retirement years, even though my expenses have been rather stable. But my standard of living has not changed as my disposable income has risen and fallen. I have had expenses of about $2,000 a month with retirement income of sometimes $2,500 or $3,000 or $3,500 a month. With my expenses stable, the added disposable income had zero effect on my standard of living. All I did was to plow any excess income back into my portfolio.

Having that cushion in my budget allows me to go on small spending sprees now and then without having to worry about busting my budget. That's a good thing, of course, and it allows me to maintain the standard of living I had before I retired. But that cushion ranging from a decent size to a huge size makes no difference to my day-to-day lifestyle.
Good for you. Everyone has a different viewpoint of a good retirement. My portfolio is 25% equities, 25% treasuries, 25% properties (other than my principle) and 25% commodities which includes VCMDX. This portfolio is designed for double digit inflation which is very likely in my opinion. Inflation hurt retired people because their income tends to be fixed while the cost of living will inflate. However, the government tends to benefit because people's wages goes up which means taxes collected on their increased wages goes up too.....without the political backlash of a tax increase. When this happens, $1M will appears small after double digit inflation.
2177V is offline   Reply With Quote
Old 09-03-2021, 12:16 PM   #116
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Nov 2009
Posts: 6,310
Quote:
Originally Posted by vchan2177 View Post
Good for you. Everyone has a different viewpoint of a good retirement. My portfolio is 25% equities, 25% treasuries, 25% properties (other than my principle) and 25% commodities which includes VCMDX. This portfolio is designed for double digit inflation which is very likely in my opinion. Inflation hurt retired people because their income tends to be fixed while the cost of living will inflate. However, the government tends to benefit because people's wages goes up which means taxes collected on their increased wages goes up too.....without the political backlash of a tax increase. When this happens, $1M will appears small after double digit inflation.
I was challenging your earlier statement that "Your disposable income (income minus expenses) is what drive your standard of living." I don't dispute that "everyone has a different viewpoint of a good retirement."
__________________
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.

"I want my money working for me instead of me working for my money!"
scrabbler1 is online now   Reply With Quote
Old 09-03-2021, 12:31 PM   #117
Full time employment: Posting here.
 
Join Date: Dec 2018
Posts: 966
Quote:
Originally Posted by scrabbler1 View Post
I was challenging your earlier statement that "Your disposable income (income minus expenses) is what drive your standard of living." I don't dispute that "everyone has a different viewpoint of a good retirement."
OK. We disagree. That is OK too. My disposable income (income minus expenses) is what drives my standard of living. Perhaps this does not apply to you...but it applies to me. Hence I changed the word "your" to "my".

BTW I believe double digit inflation is just around the corner:

https://www.investopedia.com/article...ck-returns.asp

Most of my equities are now "value" equities according to the above link to protect myself against inflation. VCMDX is also my hedge against inflection because bonds provide a hedge against a crash or a bear market but not against inflation. VCMDX uses derivative so this is for advanced investors who understand derivative investing. Inflation is a different animal and most investors do not know how to prepare for this event because the last double digit inflation era was 1974.
2177V is offline   Reply With Quote
Old 09-03-2021, 12:33 PM   #118
Moderator
rodi's Avatar
 
Join Date: Apr 2012
Location: San Diego
Posts: 13,191
pre-retirement income is very different (at least it was in my case) than pre-retirement expenses. I was funneling the max amount into retirement savings, after tax savings, extra principal on my house to pay it off. So my income was not related to my expenses.
Add in the fact that you no longer pay SS and Medicare taxes. The key number is pre-retirement SPENDING vs post retirement SPENDING.
__________________
Retired June 2014. No longer an enginerd - now I'm just a nerd.
micro pensions 6%, rental income 20%
rodi is offline   Reply With Quote
Old 09-03-2021, 01:08 PM   #119
Full time employment: Posting here.
 
Join Date: Dec 2018
Posts: 966
Quote:
Originally Posted by rodi View Post
pre-retirement income is very different (at least it was in my case) than pre-retirement expenses. I was funneling the max amount into retirement savings, after tax savings, extra principal on my house to pay it off. So my income was not related to my expenses.
Add in the fact that you no longer pay SS and Medicare taxes. The key number is pre-retirement SPENDING vs post retirement SPENDING.
I agree. There are many factors involved. Example: I no longer have to pay union dues, SS contributions, commute costs. The correct method is developing a "pre-retirement budget" and a "post retirement budget". The post retirement budget has a lot of costs line items that drops out.

On the other hand, there are some cost items that gets added in the post retirement budget such as a sport car, a boat, taking more cruises and vacations, money to help grandkids, more partying since you have more time, etc.

It all depends what type of retirement you want. A better life style or the same life style. I prefer a better life style since this is your final stage of your life. I call it the "finishing kick" during a marathon race.
2177V is offline   Reply With Quote
Old 09-03-2021, 01:25 PM   #120
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jan 2018
Location: Tampa
Posts: 9,799
Quote:
Originally Posted by vchan2177 View Post
A good retirement is having a retirement income equal or greater than your income while working. If your income while working is $100K per year than a nest egg of $1M will only get you $40K per year based on the 4% rule. Hence you need a nest egg of $2.5M to earn $100K a year. Yes $1M is not what it used to be.
Will disagree.
In my example, our income before retirement was way higher than it is in retirement.
The type of lifestyle led a few years before retirement came along with a Wall Street type career. There is no need or want for that lifestyle now.
One simple example is our food budget pre retirement was 36k yearly. It is still 16k which is considered high on this forum. This amount suits us fine and we don't feel like we are giving up anything.
__________________
TGIM
Dtail is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Simple Wealth, Inevitable Wealth meleana FIRE and Money 20 02-28-2019 10:23 AM
Converting t-IRA dollars into Roth IRA dollars HadEnuff FIRE and Money 82 11-14-2017 10:46 AM
If I had a million dollars . . . bongo2 FIRE and Money 136 12-21-2011 07:26 AM
Retirement - 1 million dollars ain't enough shotgunner FIRE and Money 137 03-23-2010 11:36 AM
World Wealth Report or 8.7 Million High-Net-Worth Individuals Worldwide Spacebär FIRE and Money 5 07-01-2006 09:40 AM

» Quick Links

 
All times are GMT -6. The time now is 12:48 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2022, vBulletin Solutions, Inc.