Level of income req'd in retirement?

[Timber Wolf]

Discussions on this subject with my former Supervisor have left me scratching my head. He claims to believe he will need MORE money coming in during retirement than during his working years because he wants to travel. Personally, I think it is a head-in-sand cop out on his part to keep him from making real decisions about retirement. As long as it is all too hard and the numbers impossible to nail down he can't possibly be expected to make a plan for his future.

I know that what "retirement" looks like is a very personal thing for each of us. Therefore it may be impossible to make across the board conclusions about what percentage of "employed" annual income we will each need to fund a year of retirement. But what are your expectations of your needs post retirement compared to now (or you may already know being retired)?

[Donna D.]

Retirement is about comfort level and that's really personal for each one of us. Too, how much debt is someone taking into retirement? Credit card, mortgage, etc.

My plan is to be debt free and make certain my expenses are lower than my income.

At this point, I'm so very tired of working if I need to grocery shop at the Dollar store and live on Vienna Sausage and beans for the rest of my life, I'd be happy

[Glenn Baglo]

If you retire debt free, you will be able to live quite well on your pension (s ), assuming you have them.
If you still have a mortgage and buy a new F250 just before retirement, you better have a lot of savings and investments.
Traveling down the Seine in one of those riverboats will cost you about $20,000, plus the airfare to Europe. Camping in the desert with a tent and a 24 pack of warm Buds is fairly cheap. Really depends on assets and expectations.

[steve dunham]

I attended several retirement seminar before I retired . The first rule that was often repeated was that you should have at least 8 times your annual income in savings to supplement your social security. That is assuming you wish to maintain the same standard of living in your retirement years. The second rule was to eliminate any debt before you retire.

[Hazel in Sk]

We have small pensions, no debts, a car waiting for when the current one dies and a Trillium. We can eat, buy gas, maintain our home etc fairly easily. It would be a whole different scene if we wanted to eat out wearing fancy clothing or pull a big camper or go on expensive holidays!

[David B.]

Check out rvsue and her canine crew | Living on less and enjoying life more

Sue has a spread sheet of all expenses over several years. It amazed me how cheaply one can live.
Dave & Paula

[Borrego Dave]

Originally Posted by Timber Wolf

Discussions on this subject with my former Supervisor have left me scratching my head. He claims to believe he will need MORE money coming in during retirement than during his working years because he wants to travel. Personally, I think it is a head-in-sand cop out on his part to keep him from making real decisions about retirement. As long as it is all too hard and the numbers impossible to nail down he can't possibly be expected to make a plan for his future.

I know that what "retirement" looks like is a very personal thing for each of us. Therefore it may be impossible to make across the board conclusions about what percentage of "employed" annual income we will each need to fund a year of retirement. But what are your expectations of your needs post retirement compared to now (or you may already know being retired)?

Great question and comment TW and one I heard for 30 years at work. The older employees kept saying they would retire when the "numbers" were right but really couldn't put it into words and numbers. I think you're right about your old boss. You really don't need the same income, close is good though unless you are really going to change your lifestyle. A % depends on what you need to pay bills, now and in the future and what you need to have as a cushion to be comfortable later. Take advantage of the companies deferred compensation programs, 401's ect early in your career. The last eight years of Saturdays have been great. Not sure if this answers any of your concerns but it really isn't rocket science, just numbers and some planning.

[Glenn Baglo]

When you get to the age where you are seriously thinking about retirement, it's probably too late.
The main thing is to retire without debt.

[padlin00]

I believe most folks have no idea how much they need to retire. They save what they can without scrimping on their current lifestyle.

Unlike anyone I knew, I spent a good amount of time coming up with how much nest egg I needed to retire. Looking back at it now, I came up with my first set of figures about 20 years before I retired, the initial figures ended up being pretty close to the ending ones.

At about 55 we figured out a Need and a Want figure by keeping track of spending for about 2 years, retired when I could do the Want. The Want figure happened to be pretty much our average spending before retiring. Push comes to shove we can fall back to the Need figure. We've always been pretty frugal, mostly out of necessity, in the later working years spending was a good deal less then income so saving wasn't difficult.

To answer your question, 2 years into retirement our spending levels are about the same as before. What we spend it on has changed some. Ask again in 20 years and I'll tell you how it worked out.

[Borrego Dave]

Originally Posted by Glenn Baglo

When you get to the age where you are seriously thinking about retirement, it's probably too late.
The main thing is to retire without debt.

Totally correct Glenn and glad I started early on. One thing I did at work was to talk to all the newbies about starting in our deferred comp system as soon as they could. Most argued they couldn't afford it...what? $10 a payday? Bring a lunch once a week and not do the fast food thing. The bottom line that got their attention was when I told them in 30 years when they did retire they would remember my talk with them and either thank or cuss me for following through or not. Gave the same info to my kids and they were surprised at what they had on account in just two years.
MMMM, some times kids listen

[honda03842]

Originally Posted by Timber Wolf

Discussions on this subject with my former Supervisor have left me scratching my head. He claims to believe he will need MORE money coming in during retirement than during his working years because he wants to travel. Personally, I think it is a head-in-sand cop out on his part to keep him from making real decisions about retirement. As long as it is all too hard and the numbers impossible to nail down he can't possibly be expected to make a plan for his future.

I know that what "retirement" looks like is a very personal thing for each of us. Therefore it may be impossible to make across the board conclusions about what percentage of "employed" annual income we will each need to fund a year of retirement. But what are your expectations of your needs post retirement compared to now (or you may already know being retired)?

Tim,
The answer of course "it depends".

If you plan on traveling in a trailer it can be a low cost adventure or it can be expensive.

As an experiment I suggest the following. It's easy and quick, easier of you have a smart phone because there are apps that can help you. For the next year write down everything you spend by category, food, fuel, mortgage,,,,, I do mean everything.

At the end of the 3 months (and again at 6 and 12 months) total up each category, see where your money went and determine which expenses will disappear or be reduced. This is a good lesson in where does it all go. A great starting point for understanding the use of your money. (If you're a user of cigarettes, alcohol, a gambler...keep track of those as a category..things you could absolutely eliminate or dramatically reduce..don't drop them into the food categoty)

Certainly you want to clear all debt. You want to determine what kind of traveler you want to be, there's expensive RVing and inexpensive RVing, a whole other topic. Personally I thing we're in the middle.

If you're traveling with another person, generating a common view of money is important. Ginny is very careful with money.

Choosing cost effective equipment, reliable trailer and tow vehicle. A tow vehicle that can do 65 up a steep grade may be nice..but also expensive to buy and drive... when you're retired do you really care if it takes five more minutes to get up a hill.

There's much to consider but the real starting point is understanding how you handle money and where it goes. Pay close attention to your spending for a year, it's a great life lesson.

By the wat we spend dramatically less than when we worked..

[rgrugg]

I've been retired 25 years. My pension and social security total about what I earned my last year employed. I have to make mandated withdrawals from my IRA but don't need it. My wife passed so around 40% of income dropped. I have no debts beyond current expenses. Judicious spending is so very important. So is planning and investing during working years.

[Huck]

The hard part is figuring out when you will die. My money will probably run out when I am in my early 80's, if I last that long.

The other big problem is health care, including long term care. The cost of these goes up faster than increase in Social Security, so more and more of your pension or savings will be used every year for healthcare.

[honda03842]

Originally Posted by Huck

The hard part is figuring out when you will die. My money will probably run out when I am in my early 80's, if I last that long.

The other big problem is health care, including long term care. The cost of these goes up faster than increase in Social Security, so more and more of your pension or savings will be used every year for healthcare.

We were 58 and had no 'gift' insurance until we reached Medicare. Even that is not inexpensive. Healthcare has turned out not to be an issue, partially because we've got healthier. I really hope I out live my money, that would be a good deal.

If you spend you're time worrying about all the negatives, you'll keep working. I know plenty of people who work until they nearly die. Life is short enough without limiting living. I rather be poor when I'm old than when I can actually be doing something.

[Donna D.]

One year after I retire, I'm selling my home (if the economy hasn't tanked again). I really, really want to downsize. I'm tired of all the maintenance and just keeping the dang thing clean. So, I'll either rent or look seriously into tiny house living. I've never aspired to be a world traveler, I can be happy touring North America in my trailer, meeting new friends, experiencing new things and making memories. I hope to do that for fifteen years after retirement... but with some sort of small home base.

[Jon Vermilye]

I was 58 when I took early retirement (a great offer from my employer, my wife's poor health, and a bit of burnout) with no debt. My current income consists of Social Security, & a 403b funded through 32 years of teaching split at retirement equally between an annuity & stocks, & savings. On edit - my savings has generally increased every year, so I'm not sure I should list it as an income source... I also have the advantage that my former employer (NY State) pays both my Medicare & supplemental health insurance.

I keep a spreadsheet of retirement information, and over the years since retiring (I'm now 70), I've gone from as little as 63% of pre retirement income (the year after my wife passed away) to as much as 84% (this year). This year was a fairly large increase because of the minimum distribution requirement the IRS imposes on retirees the year they turn 70 1/2.

I've never felt that I needed more money, and have not changed my lifestyle other than shifting from a tent to a trailer for traveling. That said, I have to admit that I'm comfortable with less than many of my friends, for example, I live in a 1200 square foot home purchased in 1970 (for less than my present automobile or, for that matter, my Escape 17.

[honda03842]

Originally Posted by Donna D.

One year after I retire, I'm selling my home (if the economy hasn't tanked again). I really, really want to downsize. I'm tired of all the maintenance and just keeping the dang thing clean. So, I'll either rent or look seriously into tiny house living. I've never aspired to be a world traveler, I can be happy touring North America in my trailer, meeting new friends, experiencing new things and making memories. I hope to do that for fifteen years after retirement... but with some sort of small home base.

Donna and Jon,

Like both of them Donna and Jon downsized to our present house, being sold, it is less than a 1/3rd the size of our previous house and even that size is an effort to maintain. We decided to sell 5 years ago but the economy....

Like Donna we have no further desire to travel outside North America. It's obvious to that after 15 years we won't live to see all of NA.

We have also run into the 70 1/2 issue as well and have more cash than previously.

We were very disciplined when we retired at 58 and had a good image of what we spend. As well we have never spent very much on RV purchase or our present home, like Jon the purchase price was less than the Odyssey.

[Bobbie Mayer]

I had a friend from work who retired and did a ton of traveling. I asked him how he managed on the amount of retirement income I knew he had. He said they saved for 1-3 years for a trip, took the trip, then started saving again. They went to Europe and Russia, among other places, before he passed away. I'm pretty sure he did retire debt free but his spouse didn't have retirement income other than social security. And I don't know how much savings they had going in. You can do a lot by tightening your belt.

[Evergreengirl]

So many good thoughts here. We were able to retire when Bruce was 60 and I was 59. I was a little hesitant to do it, thinking it might be prudent to work a few more years, but Bruce had had enough and didn't want to wait to do the things he wanted to do until "someday". Too many people say they'll travel or get that RV or take up scuba diving or whatever "when I retire". Guess what? They retire and then a few years later they get hit with some unexpected health issue or even drop dead. Even when we were working we tried to nake the time to do the things we wanted to do. Like Norm says, life is too short and uncertain to postpone things.

That said, we've always lived pretty frugally by choice and we've always been savers. We had a respectable nest egg built up by the time we retired and for many years we've been tracking our expenses, putting them by categories on our "Daily Money Log." Once you get into the habit of doing this it's really not hard to do. So many people don't really know just how much they spend each month and what they spend it on.

Our expenses have decreased some, but not dramatically. And yes, that's partly due to more money being spent on travel. The biggest difference though has resulted from our becoming eligible for Medicare which has drastically cut our health care costs. Before that, since we both had been either self-employed or worked jobs where health insurance wasn't part of the deal, we had to buy our own insurance and it was really expensive and only covered catastrophic things.

We live comfortably, but not extravagantly. I know we could cut back further and still be comfortable and have a fulfilling life. We have so many friends our age who are still working and complaining about it. They express envy over our trips and adventures and then say "I wish we could do that." I look at their lifestyles and just shake my head because you know, they could if they changed their priorities.

[floyd]

I retired in 2007 which supports the sentiments of Robert Burns when he wrote....

But Mousie, thou art no thy lane,
In proving foresight may be vain:
The best-laid schemes o' mice an' men
Gang aft agley,
An' lea'e us nought but grief an' pain,
For promis'd joy!
Still thou are blest, compared wi' me!
The present only toucheth thee:
But och! I backward cast my e'e,
On prospects drear!
An' forward, tho' I canna see,
I guess an' fear!


So... the most important decision we made at retirement was to never look back and second guess the decision.
We know that a job or savings is not our source.
Despite the devastation of 2007, we are happy and prosperous and will remain so.

Burn's admonition is quelled by Matthew 6: 24-34.
Faith displaces fear.