Realistic calculator for retirement

[Anonymous]

Anonymous wrote:

Anonymous wrote:I agree OP.

Once the kids are out of college and we are ready to retire we can downsize to a lower COL and our expenses will plummet. I am estimating 50k a year for us as a couple. (And this is being pretty generous. We could swing it on $35.)

We will have either no mortgage, an extremely low one, or rent. We are modest people -- our biggest splurges are occasional travel and our kids.

So in my case let's say we need about 4k a month. Maybe a third will come from SS and a third from our retirement funds (about $1 mil) and a third from savings/profit from our house which we plan to sell (about 1 mil).

I think we'll be fine. And I think my kids will still get a little chunk of change when we die.

So for people/couples like me (not big spenders or lavish lifestyle) I would sat $2 mil plus SS.

Can you live on that budget now? If so, ok. Otherwise, I wouldn’t count on “plummeting” expenses in a LCOL area unless you plan to lower your standard of living.

We moved to a “lower cost of living” area when we retired, and inflation has hit everywhere. Taxes are lower (but I couldn’t say that everywhere, obviously). Services (plumber, haircuts, appliance repairs) were cheaper, but worker shortages are making them more expensive every day. Restaurants aren’t cheaper than DC and groceries are slightly cheaper, but not much. Things from big box stores are pretty much the same price everywhere. We could have bought a cheaper house, but it would be in a cookie-cutter subdivision with no trees that was a farm last year. A nice house/condo in a desirable neighborhood, much less near the water or Mountain View, etc, is expensive everywhere, and prices have doubled in the last few years. With WFH, nice cheap places aren’t cheap anymore. Some things are more expensive — insurance (car and homeowners), utilities, and some odd things like dry cleaning or shoe repair. Remember you’ll have to pay for your own cell phone bill in retirement.

I just did some quick math and we spend almost $30,000 a year on taxes, insurance (car, home, health + deductibles), and utilities (cell, WiFi, electric/gas). Even if your costs are lower, are you really going to live on a $1,000 a month for everything else? That doesn’t include home maintenance, maintenance, groceries, travel, clothes, gifts for family, etc.

I realize that people do it all the time. In fact, i have. But I worked my a** off for a long time so I never have to do that again. Which is why I ask about your current standard of living. If you live that way now, you’ll be fine. Just don’t expect to lower your cost of living dramatically in retirement by virtue of moving somewhere else. That magic place doesn’t exist in the 50 US states.

Not to mention it sounds like you’re double counting your home equity — there will be a good chunk invested in your new house (or the income will be spent on rent, which will be on top of that $4k a month).

If you haven’t visited a LCOL area recently, don’t count on a 2000 (or even 2010) COL.

Maybe I am being too optimistic but I am helping pay for dementia care for my mom, which is a cost I won't bear in retirement, paying for college and paying for private school now.

I do not think I am double counting my home equity. Our house is about 1.5 mi now with a $300k mortgage. I hope/pray that in fifteen years we will have close to 1 mil net, and can put the rest towards a condo or small house with a small mortgage. Maybe this is crazy . . .

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My parents retired to coastal Maryland and live on 70k/year. They aren’t extravagant at all but they do go out to eat once a week or so, travel twice a year across the country, have excellent medical care. Just in case anyone thinks you need to have 200k in retirement to live a comfortable life.

I guess that is not a retirement that I would like. Certainly could live it if I had to but why would anyone? Travel more than twice a year for sure. Do it now not sure why dial back. Eat out once or twice a week? I am a cook and love to cook and eat in but that is pretty sucky. You might end up there but you want the freedom to do more.

I’m not retired and we make a good living but we never eat out more than once a week. It’s wasteful and unhealthy.

It is healthy depending on where you go. Often better than home. And there is no such thing as wasteful in this context unless you also cooked a meal at home and did not eat it. Eating out is less wasteful than eating at home.

Do tell us. I haven't heard that. I thought it was generally accepted fact that eating out is less healthy than home cooking. Where do you go that serves healthier dishes?

I have no idea what the pp was getting at by saying restaurants are healthier. Unless you order nothing but a dry salad at a restaurant, it is very unlikely to be healthier than home cooking from scratch.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I agree OP.

Once the kids are out of college and we are ready to retire we can downsize to a lower COL and our expenses will plummet. I am estimating 50k a year for us as a couple. (And this is being pretty generous. We could swing it on $35.)

We will have either no mortgage, an extremely low one, or rent. We are modest people -- our biggest splurges are occasional travel and our kids.

So in my case let's say we need about 4k a month. Maybe a third will come from SS and a third from our retirement funds (about $1 mil) and a third from savings/profit from our house which we plan to sell (about 1 mil).

I think we'll be fine. And I think my kids will still get a little chunk of change when we die.

So for people/couples like me (not big spenders or lavish lifestyle) I would sat $2 mil plus SS.

Can you live on that budget now? If so, ok. Otherwise, I wouldn’t count on “plummeting” expenses in a LCOL area unless you plan to lower your standard of living.

We moved to a “lower cost of living” area when we retired, and inflation has hit everywhere. Taxes are lower (but I couldn’t say that everywhere, obviously). Services (plumber, haircuts, appliance repairs) were cheaper, but worker shortages are making them more expensive every day. Restaurants aren’t cheaper than DC and groceries are slightly cheaper, but not much. Things from big box stores are pretty much the same price everywhere. We could have bought a cheaper house, but it would be in a cookie-cutter subdivision with no trees that was a farm last year. A nice house/condo in a desirable neighborhood, much less near the water or Mountain View, etc, is expensive everywhere, and prices have doubled in the last few years. With WFH, nice cheap places aren’t cheap anymore. Some things are more expensive — insurance (car and homeowners), utilities, and some odd things like dry cleaning or shoe repair. Remember you’ll have to pay for your own cell phone bill in retirement.

I just did some quick math and we spend almost $30,000 a year on taxes, insurance (car, home, health + deductibles), and utilities (cell, WiFi, electric/gas). Even if your costs are lower, are you really going to live on a $1,000 a month for everything else? That doesn’t include home maintenance, maintenance, groceries, travel, clothes, gifts for family, etc.

I realize that people do it all the time. In fact, i have. But I worked my a** off for a long time so I never have to do that again. Which is why I ask about your current standard of living. If you live that way now, you’ll be fine. Just don’t expect to lower your cost of living dramatically in retirement by virtue of moving somewhere else. That magic place doesn’t exist in the 50 US states.

Not to mention it sounds like you’re double counting your home equity — there will be a good chunk invested in your new house (or the income will be spent on rent, which will be on top of that $4k a month).

If you haven’t visited a LCOL area recently, don’t count on a 2000 (or even 2010) COL.

Maybe I am being too optimistic but I am helping pay for dementia care for my mom, which is a cost I won't bear in retirement, paying for college and paying for private school now.

I do not think I am double counting my home equity. Our house is about 1.5 mi now with a $300k mortgage. I hope/pray that in fifteen years we will have close to 1 mil net, and can put the rest towards a condo or small house with a small mortgage. Maybe this is crazy . . .

Seems like you're mixing real and nominal dollars. I would think about what you could buy now if you sold this house now, assuming the mortgage was gone. Make a retirement budget in today's dollars.

You should be able to get pension and SS estimates in today's dollars. The SS estimates assume you'll keep working at the same income, but they have a tool where you can change some years to zero for a more accurate estimate if you're retiring early.

Bogleheads can help, firecalc allows you to input annual spending and one-time spending (I think, it's been a while).

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:https://www.nerdwallet.com/investing/retirement-calculator

This calculator stupidly assumes that I need as much money during retirement as I need now when I will:

- have paid off my house
-no expenses for private school or college
- no more trips for 4 persons (plus no more expensive ski trips)
-no more expensive hobbies for DCs to pay (horses, sailing, etc)

There is no way I will need all of this. There is also no way I can pay for extended qualified home care. So what’s the point of this ridiculous calculator?

It’s not ridiculous. You’ll find new things to spend money on. You can eliminate income that went toward savings and work-related expenses (commuting costs). But other than that, most retirees who *can* spend about as much as they did before. Travel, expensive hobbies of your own, grandchildren, etc. Do you really plan to sit around your house all day?

Signed, a retired person

Well, obviously. One could always just spend *more*. I could go on luxury trips that cost $20k per trip or I could do the same trip on $2k. I could buy expensive clothes, get the best concert tickets at $350 per person, or I could go to the local university and get a similar experience for $20. I could take senior classes at the local college for next to nothing or go on guided archeological tours for a multiple. I mean there are no limits to spending money. Doesn’t mean I will become wasteful in retirement.

Those $2,000 trips add up when you have the time to take more of them. This was us last year — we didn’t take any one expensive trip, but all the small ones (vast majority were road trips) really added up.

However, if that’s truly your lifestyle now, then you should be fine. The point is that you shouldn’t believe you are going to be happy with dramatic changes in your COL/standard of living that aren’t obvious (e.g., no more private school tuition) just because “retired” or “moved to a LCOL area.” Sure, like pp, people can live on $70k a year if they only travel domestically to see family members twice a year. However, I suspect pp’s parents weren’t making $300k+ and spending a large chunk of that when they were employed. Many have this attitude that they suddenly won’t want to do things that they like to now just because they’ll be older. Most 60-70 year olds are healthy enough these days, that this isn’t true, and once you’re old enough that this is actually true, health care expenses will eat up any additional money.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I agree OP.

Once the kids are out of college and we are ready to retire we can downsize to a lower COL and our expenses will plummet. I am estimating 50k a year for us as a couple. (And this is being pretty generous. We could swing it on $35.)

We will have either no mortgage, an extremely low one, or rent. We are modest people -- our biggest splurges are occasional travel and our kids.

So in my case let's say we need about 4k a month. Maybe a third will come from SS and a third from our retirement funds (about $1 mil) and a third from savings/profit from our house which we plan to sell (about 1 mil).

I think we'll be fine. And I think my kids will still get a little chunk of change when we die.

So for people/couples like me (not big spenders or lavish lifestyle) I would sat $2 mil plus SS.

Can you live on that budget now? If so, ok. Otherwise, I wouldn’t count on “plummeting” expenses in a LCOL area unless you plan to lower your standard of living.

We moved to a “lower cost of living” area when we retired, and inflation has hit everywhere. Taxes are lower (but I couldn’t say that everywhere, obviously). Services (plumber, haircuts, appliance repairs) were cheaper, but worker shortages are making them more expensive every day. Restaurants aren’t cheaper than DC and groceries are slightly cheaper, but not much. Things from big box stores are pretty much the same price everywhere. We could have bought a cheaper house, but it would be in a cookie-cutter subdivision with no trees that was a farm last year. A nice house/condo in a desirable neighborhood, much less near the water or Mountain View, etc, is expensive everywhere, and prices have doubled in the last few years. With WFH, nice cheap places aren’t cheap anymore. Some things are more expensive — insurance (car and homeowners), utilities, and some odd things like dry cleaning or shoe repair. Remember you’ll have to pay for your own cell phone bill in retirement.

I just did some quick math and we spend almost $30,000 a year on taxes, insurance (car, home, health + deductibles), and utilities (cell, WiFi, electric/gas). Even if your costs are lower, are you really going to live on a $1,000 a month for everything else? That doesn’t include home maintenance, maintenance, groceries, travel, clothes, gifts for family, etc.

I realize that people do it all the time. In fact, i have. But I worked my a** off for a long time so I never have to do that again. Which is why I ask about your current standard of living. If you live that way now, you’ll be fine. Just don’t expect to lower your cost of living dramatically in retirement by virtue of moving somewhere else. That magic place doesn’t exist in the 50 US states.

Not to mention it sounds like you’re double counting your home equity — there will be a good chunk invested in your new house (or the income will be spent on rent, which will be on top of that $4k a month).

If you haven’t visited a LCOL area recently, don’t count on a 2000 (or even 2010) COL.

Maybe I am being too optimistic but I am helping pay for dementia care for my mom, which is a cost I won't bear in retirement, paying for college and paying for private school now.

I do not think I am double counting my home equity. Our house is about 1.5 mi now with a $300k mortgage. I hope/pray that in fifteen years we will have close to 1 mil net, and can put the rest towards a condo or small house with a small mortgage. Maybe this is crazy . . .

Maybe not crazy, but it does sound like you are assuming that the cost of real estate will go up where you live and not where you’re going to buy. Net of transaction costs, your current budget is pretty minimal. With the boomers retiring, on top of remote workers, most nice LCOL places are appreciating faster than cities right now.

Not trying to rain on people’s parades, but we were on the brink of retiring in 2007, and we thought we could just barely make it work. When the recession hit, we decided to back off our work schedules but wait another ten years to actually retire, and I’m so glad we did. When I go back and look at the fairly detailed budgets I drew up back then, I laugh. My assumptions were so far off. I would have been better off doing what pp suggests — figure out how much we were spending and then backing out obvious expenditures (retirement savings, private school tuition) but assume we’d find a way to spend the rest. Now, we’re staring down a recession and watching our investments stagnate, at best, and I’m so very glad we aren’t trying to make it on what we had in the bank back then.

[Anonymous]

Anonymous wrote:

Anonymous wrote:https://www.nerdwallet.com/investing/retirement-calculator

This calculator stupidly assumes that I need as much money during retirement as I need now when I will:

- have paid off my house
-no expenses for private school or college
- no more trips for 4 persons (plus no more expensive ski trips)
-no more expensive hobbies for DCs to pay (horses, sailing, etc)

There is no way I will need all of this. There is also no way I can pay for extended qualified home care. So what’s the point of this ridiculous calculator?

So you overspent (expensive hobbies and ski trips) and now want to convince yourself you can live on a shoestring in retirement? Sounds fun!

[Anonymous]

Anonymous wrote:If I think we will need $100k per year for retirement, how big does my pension pot need to be?

How much are you scheduled to get from Social Security? Will you own your home? How much will the taxes be for that? Any pensions?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I agree OP.

Once the kids are out of college and we are ready to retire we can downsize to a lower COL and our expenses will plummet. I am estimating 50k a year for us as a couple. (And this is being pretty generous. We could swing it on $35.)

We will have either no mortgage, an extremely low one, or rent. We are modest people -- our biggest splurges are occasional travel and our kids.

So in my case let's say we need about 4k a month. Maybe a third will come from SS and a third from our retirement funds (about $1 mil) and a third from savings/profit from our house which we plan to sell (about 1 mil).

I think we'll be fine. And I think my kids will still get a little chunk of change when we die.

So for people/couples like me (not big spenders or lavish lifestyle) I would sat $2 mil plus SS.

Can you live on that budget now? If so, ok. Otherwise, I wouldn’t count on “plummeting” expenses in a LCOL area unless you plan to lower your standard of living.

We moved to a “lower cost of living” area when we retired, and inflation has hit everywhere. Taxes are lower (but I couldn’t say that everywhere, obviously). Services (plumber, haircuts, appliance repairs) were cheaper, but worker shortages are making them more expensive every day. Restaurants aren’t cheaper than DC and groceries are slightly cheaper, but not much. Things from big box stores are pretty much the same price everywhere. We could have bought a cheaper house, but it would be in a cookie-cutter subdivision with no trees that was a farm last year. A nice house/condo in a desirable neighborhood, much less near the water or Mountain View, etc, is expensive everywhere, and prices have doubled in the last few years. With WFH, nice cheap places aren’t cheap anymore. Some things are more expensive — insurance (car and homeowners), utilities, and some odd things like dry cleaning or shoe repair. Remember you’ll have to pay for your own cell phone bill in retirement.

I just did some quick math and we spend almost $30,000 a year on taxes, insurance (car, home, health + deductibles), and utilities (cell, WiFi, electric/gas). Even if your costs are lower, are you really going to live on a $1,000 a month for everything else? That doesn’t include home maintenance, maintenance, groceries, travel, clothes, gifts for family, etc.

I realize that people do it all the time. In fact, i have. But I worked my a** off for a long time so I never have to do that again. Which is why I ask about your current standard of living. If you live that way now, you’ll be fine. Just don’t expect to lower your cost of living dramatically in retirement by virtue of moving somewhere else. That magic place doesn’t exist in the 50 US states.

Not to mention it sounds like you’re double counting your home equity — there will be a good chunk invested in your new house (or the income will be spent on rent, which will be on top of that $4k a month).

If you haven’t visited a LCOL area recently, don’t count on a 2000 (or even 2010) COL.

Maybe I am being too optimistic but I am helping pay for dementia care for my mom, which is a cost I won't bear in retirement, paying for college and paying for private school now.

I do not think I am double counting my home equity. Our house is about 1.5 mi now with a $300k mortgage. I hope/pray that in fifteen years we will have close to 1 mil net, and can put the rest towards a condo or small house with a small mortgage. Maybe this is crazy . . .

Maybe not crazy, but it does sound like you are assuming that the cost of real estate will go up where you live and not where you’re going to buy. Net of transaction costs, your current budget is pretty minimal. With the boomers retiring, on top of remote workers, most nice LCOL places are appreciating faster than cities right now.

Not trying to rain on people’s parades, but we were on the brink of retiring in 2007, and we thought we could just barely make it work. When the recession hit, we decided to back off our work schedules but wait another ten years to actually retire, and I’m so glad we did. When I go back and look at the fairly detailed budgets I drew up back then, I laugh. My assumptions were so far off. I would have been better off doing what pp suggests — figure out how much we were spending and then backing out obvious expenditures (retirement savings, private school tuition) but assume we’d find a way to spend the rest. Now, we’re staring down a recession and watching our investments stagnate, at best, and I’m so very glad we aren’t trying to make it on what we had in the bank back then.

This is good advice. It does worry me a bit that there might not be any nice lower COL areas in 15 years. At least ones I would want to live in.

[Anonymous]

My experience is that LCOL areas are only nice during one or two seasons. So, either end up suffering half the year or have two LCOL areas to switch between. This can fit well with tax reduction as well.

[Anonymous]

Anonymous wrote:If I have a paid off house and federal pension and live in a low tax state, how much will I really need have in savings?
There are certain possibilities like long term health issues, long drawn out medical treatments, stay in a nursing home, etc that there’s no way I can possibly save enough for, and it seems stupid to live on oatmeal now in case those things happen later.
I don’t have expensive hobbies or travel plans. Why would I need millions?
Most online calculators are from banks and finance companies and of course they will tell you to put in the absolute max.
I’m 42 and I have some time. Right now I have significant home equity, a secure remote job, but I did get a late start on retirement savings (was SAHM for a few years, 2008-2009 wiped us out, divorce was costly and I had to use some retirement funds) so I only have 100k in retirement and maybe 25k in cash.
Plan right now is to cash out of NoVa house in a few years, move to lower COLA, and be able to save quite a bit of my salary once kids are done with college.

Remember that there’s probably something like a 15 percent chance that you’ll die before you reach retirement age, and maybe a 10 percent or more chance that you’ll be severely disabled by then. So, budget for having fun now.

[Anonymous]

https://engaging-data.com/will-money-last-retire-early/