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-   -   Poll: How much income do you need to retire? (https://www.early-retirement.org/forums/f28/poll-how-much-income-do-you-need-to-retire-74379.html)

Rustic23 11-08-2014 09:28 PM

Poll: How much income do you need to retire?
 
I did not search to see if a similar poll to this has been posted, Mods, if so please delete.

There have been several polls as to how much you spend on various items in retirement. I got to wondering how much income do you think you need to retire. Here are my criteria. "In order for me to retire comfortably, I think I need $xx,xxx, before tax, inflation adjusted income per year."

This is not just 'how much to cover expenses' but how much you think you need to live comfortably, pay bills, sock away a little for emergencies, travel, etc. For us, we could live on about $36,000, need a little more to cover property tax, which could be deferred, a little more for taxes, then some more for pad, and a few thousand thrown in incase firecalc does not work, or I didn't use it right, so about $75,000 to $85,000 a year makes me feel comfortable that I won't be in a bread line at age 85 or so. Would I like more, well of course, but I feel comfortable with that.

2017ish 11-08-2014 10:14 PM

"need to retire," versus how much we plan to spend in retirement are two very different things. Comfortable "need" is about 1/3 of what we are planning to retire on.... Unless "sock away a little bit for travel" is construed to be twice as much as everything else?

ER1970 11-08-2014 10:20 PM

I think where you live plays a deciding role in how much income you need to retire. In the higher COL areas like major cities of east (where we are) and west coasts, less than $100,000/yr income will be a very tight budget.

FedExCourier 11-08-2014 10:41 PM

I'm estimating $49500 a year which includes taxes. I guess I will have a more solid number when I retire in 3 weeks! House will be payed off in 2018 so that will give me more travel money.

Independent 11-08-2014 10:53 PM

You seem to be trying to distinguish between income and spending. You're thinking the typical retiree should see an increasing net worth during retirement (sock away a little)? I was planning on our net worth going down, at least for the first 10 years.

rodi 11-08-2014 11:17 PM

Quote:

Originally Posted by ER1970 (Post 1514865)
I think where you live plays a deciding role in how much income you need to retire. In the higher COL areas like major cities of east (where we are) and west coasts, less than $100,000/yr income will be a very tight budget.

If you've got a paid for house, and have lived there awhile - the high COLA of California becomes more reasonable.

We retired with a less than 100k budget. It was based on our actual spending, pre-retirement. We're comfortable. We don't travel to Europe every year - more like every 3... and the intervening years we travel domestically.

In CA a big part of the high COLA is housing... but if you've got a paid for house, and low taxes due to longtime ownership and prop 13... those are less relevent.

wingfooted 11-09-2014 08:01 AM

How much income do you need to retire?
 
I agree with the consensus that your number will be different if you are going into retirement with the major fixed expenses such as house, vehicles, and maybe even travel trailer and boat already 100% paid for.

The other big factor is whether or not you have some kind of ex-employer health insurance subsidy or you are solely depending on self funded ACA.

And of course your mileage may vary if you are retiring in an area with high cost of living (California, NYC) versus 'flyover country'.


Sure you'll need to eventually replace automobiles but that is manageable if you already have a working solution for transport in hand.

Personally, we are setting up for expenses of $250,000 per year in a low cost area, no health insurance subsidy, and with the house, vehicles and travel trailer already provided for (but not the boat !). It is significant overkill to what we actually need to get by. Never mind, I have some expensive hobbies.....


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ER1970 11-09-2014 10:18 AM

Quote:

Originally Posted by rodi (Post 1514881)
If you've got a paid for house, and have lived there awhile - the high COLA of California becomes more reasonable.

We retired with a less than 100k budget. It was based on our actual spending, pre-retirement. We're comfortable. We don't travel to Europe every year - more like every 3... and the intervening years we travel domestically.

In CA a big part of the high COLA is housing... but if you've got a paid for house, and low taxes due to longtime ownership and prop 13... those are less relevent.

Our houses and cars are paid for, but where we are property taxes and living costs are among the highest in the country. Plus health care expenses need to be budgeted in as neither of our current jobs offers retirement health insurance. :facepalm: Our current annual expenses are at mid 200k, with company provided health insurance. When we ER, although we can scale back parts of living expenses, we will have to buy insurance on our own. Plus we'd like to travel... So all in all, I would say we need $200k/yr of income to retire, and that gives us some room to cut back if necessary.

ggbutcher 11-09-2014 10:34 AM

I divide our expenses into two categories: 1) mandatory, and 2) discretionary. I group the things into #1 that we need to be able to wake up in the morning in a comfortable dwelling, eat our meals, and get around to do the things we need to maintain that 'lifestyle'. Everything else is in #2. Yes, I do planning to accommodate a spending rate well into #2, but I always want to know where I sit in regard to #1.

For us in 2014, #1 is about $25K/yr. I plot that with a 3% inflation rate, and I work my pensions, SS, and savings withdrawals to stay well above. That includes contingencies such as premature demise and LTC.

W2R 11-09-2014 10:40 AM

Even the Vitamix and other silly non-frugal purchases didn't come anywhere near knocking my spending out of the first category (although my income is in a higher category).

But then I'm single with no mortgage living in the South and don't have any unfulfilled dreams of luxurious travel. Life is full of choices and forks in the road. If I ever find my dream house I might be spending more (but I would never have delayed retirement for such a dream house).

Meadbh 11-09-2014 11:02 AM

The OP's question can be read in two ways:
1. How much income do you need during your working years in order to build the financial portfolio that will enable you to retire? OR
2. How much income does a retiree need?

My answer is to question #2.

When my financial institution helped me to do a financial plan, I noticed that they were calculating "lifestyle expenses","taxes" and "debt service" in different columns. I thought that was a useful thing to do, because taxes are nondiscretionary but can be minimized with the right strategy, and debt service will hopefully be eliminated in the long run. So I built those formulae into my monthly expense spreadsheet.

I budgeted $55K for lifestyle expenses and am on track to spend ~$50K in 2014. That includes most of the costs of a month in Europe. I am paying more tax than I anticipated in 2014 due to unexpected income in 2013 (the estimated taxes went up) but next year I expect to get a refund. My investment rental properties are now paying their way and my car will be paid off in 2015. So I voted in the second category.

FANOFJESUS 11-09-2014 11:34 AM

I checked 25-75 but 20 would be plenty.

retire2020 11-09-2014 11:59 AM

120K

aja8888 11-09-2014 12:04 PM

$50K - $70K.....probably closer to the $50K side if I could throttle down DW's spending on grandkids and (kids) :facepalm: and if we could cut her medication costs down (she's in the donut hole pricing now).

mickeyd 11-09-2014 12:28 PM

"Need"~ A lot less than my current income stream is. I like the current spread between numbers.

daylatedollarshort 11-09-2014 12:52 PM

Quote:

Originally Posted by rec7 (Post 1515046)
I checked 25-75 but 20 would be plenty.

I am always amazed and impressed at numbers like $20K. Is that for one or two?

shortstop14 11-09-2014 01:23 PM

$45,000 for normal living expenses, ~$62,000 including quite a bit of travel and larger discretionary items. Two of us, no debt, house is paid off, most infrastructure expenses were incurred before retirement, kid is doing well and off our payroll. This pretty much duplicates our expenses prior to retirement, but with ~$12,000 added for medical insurance and expenses. Plenty of room for cutbacks in expenses if things go sideways.

Could have held on and continued working for a larger buffer or a higher expense draw, or to get us closer to Social Security added income. But we're not regretting pulling the plug at age 56.

Fortunately, as far as sequence of return goes, the last two years have seen net worth grow even while taking distributions. Once SS kicks in, withdrawal rate should drop from 3.5% to under 2%. We did most of our planning without regard to SS, but it won't hurt.

FANOFJESUS 11-09-2014 01:39 PM

Quote:

Originally Posted by daylatedollarshort (Post 1515085)
I am always amazed and impressed at numbers like $20K. Is that for one or two?

Two in the Midwest. Right now we are at about 17k for our day to day living.

Ally 11-09-2014 01:56 PM

We could live on $48000 easily, but we are budgeting for $75,000.


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Totoro 11-09-2014 02:20 PM

Including rent last estimate $26k. Excluding rent $15k.

Barebones budget is $20k including rent, excluding rent $9k.

Single, no dependents.


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