Retirement income as a percentage of NET working income?

[Fedup]

If it's easy money, stay working. That's my motto.

 

[rodi]

We're spending about the same as before we retired with the following caveats:
- We no longer contribute to 401ks - we were contributing about 30% of gross pay to 401k prior to retirement.
- We no longer have a mortgage payment... We were making extra principal payments prior to retirement... and that went away right before we retired...

Our income is LESS than our previous gross income. Probably about 30-40% less of the gross.

I can't really figure out the net difference without getting into the weeds since there were tax advantages to mortgage interest, 401k savings, etc. Now I have different tax advantages (HSA now, some of the income is DH's SS so not 100% taxable.) I'm retired... I don't feel like getting that much into the weeds... that sounds like work.

All I know is that we're doing ok... despite having kids under roof and preparing for college educations.

 

[LRDave]

If it's easy money, stay working. That's my motto.

Heirs, federal/state/local governments all ascribe to your motto.

 

[Fedup]

Heirs, federal/state/local governments all ascribe to your motto.

I know it against ER forum philosophy to suggest continuing working. I would continue working if I have that kind of job. There is nothing wrong with work if one is still enjoying it.

 

[LRDave]

I know it against ER forum philosophy to suggest continuing working. I would continue working if I have that kind of job. There is nothing wrong with work if one is still enjoying it.

I wouldn't put this on the whole community here. I am currently struggling with "easy money" and "enjoying it" right now - they are different for sure.

 

[Fedup]

I wouldn't put this on the whole community here. I am currently struggling with "easy money" and "enjoying it" right now - they are different for sure.

Not the whole community, but the ER forum is for Early retirement.

I had a job I didn't like, a horrorible commute, I cared for nobody at work. Same with my husband. I just asked him whether he would retire or work more if he has the same job as OP. He said he would work for a few more years. He retired at 64.5 years young.

 

[kcowan]

we only require 25% of our last year of w*rk salary to maintain our standard of living.

We were too. Then we discovered Mexico and dropped that number to 13% by spending 5 months there. So now we look for good causes to spend all the extra. We had no idea it would work out that way. We were just brave enough to give it a try...

Plus we both believe that any bad decision can be compensated by a subsequent good decision. So we do not shy away from decisions, including the RE decision. We have had substantial opportunities to resume earnings since then but so far no need.

 

[Fedup]

We were too. Then we discovered Mexico and dropped that number to 13% by spending 5 months there. So now we look for good causes to spend all the extra. We had no idea it would work out that way. We were just brave enough to give it a try...

Plus we both believe that any bad decision can be compensated by a subsequent good decision. So we do not shy away from decisions, including the RE decision. We have had substantial opportunities to resume earnings since then but so far no need.

I would think that's added cost, not the other way around.

 

[Perryinva]

Mexico is still very inexpensive. If you are a snowbird type, that's a mich less expensive way to do it than Florida. I would spend some time there, but DW, NO WAY NO HOW. She's very afraid of her perceptions of crime, bad sanitation, and the food. Just the way she is.

If one cannot spend or use the extra money, the I agree, better off ER. I refuse to work longer so the spendthrift heirs can blow it all. I'd spin in my grave so hard, I would cause an earthquake.

 

[Fedup]

Even if it's inexpensive, it's an added cost, it's on top of his house in Canada.

 

[NW-Bound]

... So, if possible to remember, would you say that you REd when you figured your retirement net (after lower taxes, assume no additions to savings, no SS or Med deductions, etc) income was above, equal, or below your net working income, and if above or below, roughly what percentage or how much? ...

We are spending about 1/3 of our gross income when working. I do not know about net income back then, because I only started to keep good records a few years ago. But back then, we had a lot more expenses than we do now, such as children in college.

No pension, or even SS yet. When I get SS, will have more money to spend, if I find something I care to spend on. Don't know about fancy shoes, or expensive shows. Oh, there's those business-class seats for overseas travel. But will I even care to travel then?

 

[Perryinva]

Doh! I forget that so many of you REd while still raising a family, etc. So of course in those cases your retirement costs would not correspond to your Pre- REd living expenses. I suppose those that retired at 40 or 50 (and I mean both spouses REd. I am amused that one spouse retires from a career at 45 while the other continues to work, and considers that the same as a single person or both REd. In that case, my mother was retired from birth. She never held a job, besides raising 5 kids, cleaning house, shopping, cooking, and running errands. When the last one left the house she was 48. And amusingly, she was always very regretful that she never went to college and had a career. When I pointed out that many mothers had careers and kids, same age as her, she would get quite indignant. ) must think those of us that think 62 is early have wasted too much life living making sure we have enough, when we will need it for a much short time period. Or that we will try to cram a lot of expensive living in the short time before we are too decrepit to enjoy it. What we should have done was alter our lifestyle to fit our income, once the long term numbers worked, which sure could make a lot of sense.

 

[Surewhitey]

I look strictly at a spending history model. We lived abroad and spent $1800 / mo. Living back in DFW, we're spending on average $3900 / mo (all-in, taxes, insurance, travel). When we pull the plug, I plan on using a $4200 + 3% annual inflation + "planned maintenance, cars, health events". We will likely downsize to a "half-house" of what we have now, reducing the monthly by $4-500 / mo.

We then look at where to withdraw funds to maximize tax efficiency from now until SS & Medicare. I have a pretty detailed spreadsheet with lower than average returns of 2-3% (over inflation) for safety measures. DW wants to "feel" her way and is ultra conservative due to her mother's experiences (never saved), so I have more work to convincer her of a reasonable timeframe.

Our spending is 30% of takehome...

 

[kcowan]

Even if it's inexpensive, it's an added cost, it's on top of his house in Canada.

I could present the spreadsheet but I am inclined to let you think what you want.

 

[daylatedollarshort]

We are spending about 1/3 of our gross income when working. I do not know about net income back then, because I only started to keep good records a few years ago. But back then, we had a lot more expenses than we do now, such as children in college.

No pension, or even SS yet. When I get SS, will have more money to spend, if I find something I care to spend on. Don't know about fancy shoes, or expensive shows. Oh, there's those business-class seats for overseas travel. But will I even care to travel then?

We're a bit less than 1/3 of former gross under the latest retirement budget, but I'm always optimizing and tweaking the budget so that may change. We also had kids who are now grown up and mainly self sufficient - another big budget improvement for us.

I've never bought fancy shoes or paid for business-class seats for non-work travel, though we've paid for the extra leg room seats. For shows we currently have six memberships with seat filler type tickets. Half the fun for me is watching the different lists and seeing what pops up. Between the memberships there are usually at least a few fun events to choose from every week.

 

[Music Lover]

I've read all the clichés, you can't buy time, etc, etc. as many here have noted, it's often hard to give up what you worked so hard to get.

You will also find that a lot of people here have said that they are sorry that they didn't go earlier, and very few have ever regretted retiring.

 

[Perryinva]

That is quite true. But since I know enough people, including work associates and my parents and DWs parents that both regretted retiring early, I saw first hand the train wreck it can become. My mother died at 69 ( chain smoker her whole life), which was in a way, a blessing, as she would have been dead broke and selling her house to live in less than 2 years. People that regret not retiring sooner are being Monday Morning quarterbacks. Everyone has 20/20 hindsight. You may just as well say "what I should have done is pick the right lottery numbers. Or a rich spouse". Well duh. But one can't. This is right up there with "How much is too much to walk away from?"

There is no right answer, just better ones.

 

[Music Lover]

^^

Obviously people who are broke or have a history of poor decision making might not be good candidates to retire early. But, I wasn't referring to those people...I was referring to the many people here who have said that they should have retired earlier.