Spending in Retirement

[Anonymous]

Anonymous wrote:The question here is really -- for high earners --- do you really need only 70-80% of pre-retirement income.

Answer: For high earners this ratio makes little sense. You need to build out what your actual expenses would be and see where you end up. I will say that among high earners, most people spend about the same as now. Education costs that you now do not pay are used on grown kids. travel costs are much more. The real reduction as people have pointed out is no 401k or other savings. For high earners probably 100-200k that you saved that you no longer need.

I am not even sure the bolded is necessarily true, especially if you compare it to costs of traveling with kids. Right now lets say you make good $ and take a 2 week summer trip, 10 day winter break trip, and 1 week spring break trip, all with 2 kids. If you are going to popular destinations, you are going at peak of peak times, often getting 2 rooms or a 2/3BR rental. You are paying for say 3.5 meals every time you go out. Also buying 4 plane tickets.

Now let's say its 15 years later, you are retired, your kids are 25 and 28 instead of 10 and 13. You can travel anytime you want. Instead of going to the Caribbean at winter break, you go in late January, and go from a Monday to the next Thursday instead of leaving on Dec 22 and coming back Jan 1. Yes its still popular time to go to the beach, but airfare is probably 2/3 of what it is at the end of December, and of course you are only buying 2 tickets. And you only need one hotel room, and are getting 2 meals every time you go out. You can probably do this trip at less than half the price of when you used to do it with kids. I'd say that's true of most travel, most likely. So now instead of 3 trips a year you can go on 5 or 6, which is probably the max you want to do anyway (who really likes to travel THAT much?), for probably the same or slightly less than you were paying before.

[Anonymous]

Anonymous wrote:

Anonymous wrote:The question here is really -- for high earners --- do you really need only 70-80% of pre-retirement income.

Answer: For high earners this ratio makes little sense. You need to build out what your actual expenses would be and see where you end up. I will say that among high earners, most people spend about the same as now. Education costs that you now do not pay are used on grown kids. travel costs are much more. The real reduction as people have pointed out is no 401k or other savings. For high earners probably 100-200k that you saved that you no longer need.

I am not even sure the bolded is necessarily true, especially if you compare it to costs of traveling with kids. Right now lets say you make good $ and take a 2 week summer trip, 10 day winter break trip, and 1 week spring break trip, all with 2 kids. If you are going to popular destinations, you are going at peak of peak times, often getting 2 rooms or a 2/3BR rental. You are paying for say 3.5 meals every time you go out. Also buying 4 plane tickets.

Now let's say its 15 years later, you are retired, your kids are 25 and 28 instead of 10 and 13. You can travel anytime you want. Instead of going to the Caribbean at winter break, you go in late January, and go from a Monday to the next Thursday instead of leaving on Dec 22 and coming back Jan 1. Yes its still popular time to go to the beach, but airfare is probably 2/3 of what it is at the end of December, and of course you are only buying 2 tickets. And you only need one hotel room, and are getting 2 meals every time you go out. You can probably do this trip at less than half the price of when you used to do it with kids. I'd say that's true of most travel, most likely. So now instead of 3 trips a year you can go on 5 or 6, which is probably the max you want to do anyway (who really likes to travel THAT much?), for probably the same or slightly less than you were paying before.

Or, you’re renting a giant house to fit your kids and grandkids and still catering to school schedules. It all depends on what you prioritize which is impossible to guess at for others. And yes, this isn’t a NEED but it is a desire for many retirees.

[Anonymous]

We make 650k and will retire in two years. we need 15k/mo net to live on and that is splurging. We have no mortgage, kids are out of college, no debt at all. Besides property taxes and insurance all 15k is fun money. I have a feeling we will end us gifting money to our kids out of this 15k/mo as well.

That's about half of the take home pay we receive.