Target retirement income

[Anonymous]

Anonymous wrote:I’m 61. I retired around a decade ago. My spouse and I live off of a little over $200k a year. We find it very easy to do and want for nothing. Yes, we’re in the DMV.

What are your healthcare costs?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Husband and I are 53 and 50. We make about $250k combined. A few years ago it was more like $150k.

We have about 1.7m in savings, and about 600k in equity on a $1m house.

Our goal is 3.5m, with the house paid off and the two kids done with college. (We have separate 529s for that). That gives us about $125k a year.

Approximately early 60s retirement. The wildcard for us is no healthcare (neither of us is fed) so we may not be able to retire u til 65 depending on the cost of private care and our health in 10 years.

It boggles my mind how people save so much, afford such an expensive home, and pay off two kids’ college expenses on a $150k HHI. The math doesn’t work for me unless you are literally eating Ramen and tuna fish every night, take no vacations or have a lot of help from your parents.

Not PP but in a similar spot. The missing pieces are 1) we bought the house for $250k before prices exploded and then put another $200k into renovation. Many older couples around here that own a "$1m house" did not pay anything close to $1M for that. 2) Grandparents are paying for one year of college and both kids (one in college, one a HS senior) picked colleges that cost us <$30k. 3) the base of our retirement fund is mostly that DH saved like crazy for the first 10 years of his working life. Compound interest is amazing.

+1 with some variations, but the biggest things in common are saving a lot early on before expenses grew and investing that and buying a house that appreciated.
1) We bought our house somewhat later in life (late 30s) but it's grown more than 2.5x in value. We're early 50s now.
2) Because we rented rather than owning a house we saved a LOT--DH were together since college but didn't have kids until we were 30. Before then we rented a relatively cheap apartment in a city, didn't own a car and saved like crazy (40-50% of our income towards retirement, future downpayment and college savings) while still having a lot of fun in the city. We also had 1.5 years of foreign assignment where all cost of living expenses were paid and we saved like 80% of our incomes. We put much of this savings in stock investments that have done well.
3) Once we had kids we were able to arrange our schedules so we didn't have to pay for daycare when our kids were under 2.5.
4) We don't have parental support for college and our first kids' college costs about 40k (we'll see what the 2nd one costs soon).

[Anonymous]

Anonymous wrote:

Anonymous wrote:How are people figuring out how much they will need? We have 12-15 years until retirement and I am not sure where to start. Do you look at current expenses and subtract the ones you won’t have and add ones that you will (for example more on travel or health care)?

This is what I do. I regularly track our expenses and estimate that we won't have a mortgage in retirement but from some online calculators, it seems reasonable to expect health expenses to offset that. No more kid expenses but more entertainment/travel for us. I feel best assuming we'll need 100% of current income (after retirement savings since we won't be doing that anymore).

And try and account for inflation.

[Anonymous]

I am planning for $10k a month in spending (but could easily live on $6k of things don't work out) plus $2k a month for Healthcare costs for spouse and I.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:How are people figuring out how much they will need? We have 12-15 years until retirement and I am not sure where to start. Do you look at current expenses and subtract the ones you won’t have and add ones that you will (for example more on travel or health care)?

This is what I do. I regularly track our expenses and estimate that we won't have a mortgage in retirement but from some online calculators, it seems reasonable to expect health expenses to offset that. No more kid expenses but more entertainment/travel for us. I feel best assuming we'll need 100% of current income (after retirement savings since we won't be doing that anymore).

And try and account for inflation.

Different PP--I'm similar. I take our current spending (not income) multiple it by 1.25 to account for taxes and make that my estimate. All the retirement calculators factor in inflation and many give you a range of results depending on different inflationary/investment environments.

[Anonymous]

We are 49/57. Planning to retire at 59/59. Our combined salary now is $435K/yr and we're planning on living on $370/yr in retirement because house will be paid off and husband has health care covered by job for 5 years after he retires. We need to find a financial planner because I'm nervous about going from "earned" income to passive income from pensions and investments. I plan to work for another 10 years but I only make $70K in my nonprofit job. The bulk of our income would be my husband's pension/our investments.

[Anonymous]

Anonymous wrote:We are 49/57. Planning to retire at 59/59. Our combined salary now is $435K/yr and we're planning on living on $370/yr in retirement because house will be paid off and husband has health care covered by job for 5 years after he retires. We need to find a financial planner because I'm nervous about going from "earned" income to passive income from pensions and investments. I plan to work for another 10 years but I only make $70K in my nonprofit job. The bulk of our income would be my husband's pension/our investments.

Would love to know how to do that.

[Anonymous]

Anonymous wrote:At what age do you plan to retire, and what level of income in TODAY’s dollars are you targeting? Our goal is age 62 and $200K in today’s dollars with real purchasing power maintained over the length of retirement.

Before someone asks or comments, I know that desired income is a function of expected expenses, but I would like to get a sense of what people around here are targeting without all the personal details and talk about net worth. I know it is all connected, but let’s just keep it to age and income.

Pretty much identical to you - want to retire at 61/62, targeting $200k in today's dollars. When I run the numbers now (assuming 6% return, no SS), it says we're already there, even if we don't contribute anything further to retirement accounts or brokerage. I can't shake the feeling that cannot be true.

[Anonymous]

Anonymous wrote:Now 54/61
Retire 60/62

Struggling to get to our number but thinking $175K per year or $14.5K per month.

Based on other financial forums I follow, that number seems high but living here and based on lifestyle that is the current plan.

Does one of you age in dog years?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Now 54/61
Retire 60/62

Struggling to get to our number but thinking $175K per year or $14.5K per month.

Based on other financial forums I follow, that number seems high but living here and based on lifestyle that is the current plan.

Does one of you age in dog years?

I think she means that one of them will retire next year (at 62) and the other 6 years later (when they reach 60). If not, lots of doggy..

[Anonymous]

Anonymous wrote:

Anonymous wrote:Wow, what are folks expecting to spend all that money on? We spend around $100K a year now (including mortgage payments and daycare, two big expenses we won't have in retirement) and are planning on $75K a year in retirement.

Probably travel a lot, buy stuff for children, grandchildren etc

Yep, I posted earlier in thread. This is us..

[Anonymous]

Anonymous wrote:How are people figuring out how much they will need? We have 12-15 years until retirement and I am not sure where to start. Do you look at current expenses and subtract the ones you won’t have and add ones that you will (for example more on travel or health care)?

Yep, we are have also 12 years away from retirement and that’s what we do to calculate. We are targeting mid to late 50’s retirement so it gives us a good yard stick on how much to save and spend. Obviously we can continue working longer if health and economy permits but having a good idea is very helpful.

[Anonymous]

Y’all are nuts. Who needs 200k in retirement?

Admittedly planning on owning the house outright, and my work should cover our insurance if I stick around to retirement age. But we are only planning on spending 50k or so in todays dollars and already feel like that’s going to feel lavish. Where are these 200k+ numbers going? Genuine question, I’m trying to figure out if I’m missing something.

[Anonymous]

Anonymous wrote:Y’all are nuts. Who needs 200k in retirement?

Admittedly planning on owning the house outright, and my work should cover our insurance if I stick around to retirement age. But we are only planning on spending 50k or so in todays dollars and already feel like that’s going to feel lavish. Where are these 200k+ numbers going? Genuine question, I’m trying to figure out if I’m missing something.

Everyone has different plans for retirement. We are expecting to spend about $250K/year after tax in early retirement. That includes budgeting $50K annually for travel, $20K for philanthropy, $35K to run our house even after it's paid (insurance, property taxes, utilities, cleaning service, landscaping, etc), $15K for our country club membership, $25K for financial advisory fees. Obviously, you can do things differently and spend a lot less money depending on your lifestyle.

[Anonymous]

Anonymous wrote:Y’all are nuts. Who needs 200k in retirement?

Admittedly planning on owning the house outright, and my work should cover our insurance if I stick around to retirement age. But we are only planning on spending 50k or so in todays dollars and already feel like that’s going to feel lavish. Where are these 200k+ numbers going? Genuine question, I’m trying to figure out if I’m missing something.

It cost money to be affluent

It's easy to spend money. If you're well off, you tend to have bigger houses requiring more maintenance and upkeep, or a more expensive HOA if you moved to an upscale retirement community. Then sometimes there's second homes. Then there's travel. There's an active social life involving dining out and tickets to the theatre and events. You'll still need to replace cars periodically. Keep in mind that you also pay more taxes.