If your HHI is $450k, what is your retirement number

[Anonymous]

[twitter]

Anonymous wrote:

Anonymous wrote:Our HHI is about $450K and we’re 48 and 49 years old. Looking to retire in 12 years. Our number is $16M, all pre-tax. Want to make sure we have at least 30 years of retirement runway at the same standard of living we enjoy today.

We currently have $7.3M in our retirement accounts. Fingers crossed that the market continues to work in our favor.

Specific amounts aside, I wanted to reinforce this framework. It baffles me when people discuss their "net worth" number to determine when they will retire. To my mind, the amount invested (whether in retirement or taxable accounts) is the right number to focus on. I don't count cash, because that's to be used for an emergency nd to smooth out stock market dips, and I can't count on it making any money. I don't count home equity, because we have to live somewhere, and we'd need to sell or take out a home equity loan to access it. I don't count 529 funds, because they have an allocated use. I don't count short term savings that will be used for new cars, vacations, etc. because those are budgetary items, not savings. I don't even count ibonds, because in our plans, those are emergency backups, and we don't plan to use them for income generating purposes in retirement.

We have a net worth in excess of $5m, but our invested amount is around $3.1m. It would be nuts to base retirement decisions on net worth.

Op here. That’s how I look at it as well. If you see the math above, that’s how everyone looks at it as well. Nobody is withdrawing 4% for their home every year unless your talking reverse mortgages.

[Anonymous]

Anonymous wrote:We are "practicing" living on what we assumed we would need in retirement. 12K/month spend. I am not loving it. We just got a big increase in our homeowner's insurance, property tax went up, all our groceries have gone up, and while our healthcare insurance will supposedly go down with Medicare, we are looking at those numbers and they are not that much lower when you have any sort of money, and RMDs will definitely affect that. Not to mention we haven't taken any trips. And at 12K/month spend that is 150K before taxes, so reasonably can assume 180K drawdown.

All to say that what sounds great in theory is proving to be a challenge for us.

We are adjusting to 230K including taxes, which puts us at 6M + paid off house to feel comfortable. Would love to hit 7M.

But, as has been mentioned several times, it's all about expenses.

Fascinated - can you provide a breakdown of your $12K / month spend? I can completely see how a mortgage & spending / saving for kids can get you to this number, but when you're retired, mortgage paid down, kids out of the house - do you really need that much?

[Anonymous]

Income doesn't matter. Spending does. We spend about 120k/year after taxes. So about 3M in a Roth or 4M in a non-tax advantaged account. Since our income in a multiple of our spend, we're actually pretty close to retiring (or simply jacking up our spending).

[Anonymous]

Anonymous wrote:

Anonymous wrote:We are "practicing" living on what we assumed we would need in retirement. 12K/month spend. I am not loving it. We just got a big increase in our homeowner's insurance, property tax went up, all our groceries have gone up, and while our healthcare insurance will supposedly go down with Medicare, we are looking at those numbers and they are not that much lower when you have any sort of money, and RMDs will definitely affect that. Not to mention we haven't taken any trips. And at 12K/month spend that is 150K before taxes, so reasonably can assume 180K drawdown.

All to say that what sounds great in theory is proving to be a challenge for us.

We are adjusting to 230K including taxes, which puts us at 6M + paid off house to feel comfortable. Would love to hit 7M.

But, as has been mentioned several times, it's all about expenses.

Fascinated - can you provide a breakdown of your $12K / month spend? I can completely see how a mortgage & spending / saving for kids can get you to this number, but when you're retired, mortgage paid down, kids out of the house - do you really need that much?

That's what I thought. But then my health insurance premium went up as did our home insurance. (Were paying 4300/year. Changed to get 2800/year. One month in, they raised it and we are back to nearly 4300/month with a lesser company.) Water bill, electric, gas. Property taxes. All went up.

We have $250K @ 5.5% left on our mortgage that we are paying down 125K at a time with recasting. That will help, but by the time that is done, I'm guessing other expenses will also have creeped up. Also, my DH is on Medicare. Because of our income (that even in retirement won't change significantly, and will probably go up once RMDs start) he is paying $500/month. (I have downgraded my private plan and am paying $800/month with 6K deductible. Obamacare was more expensive for the same plan.)

I am hoping that once fully retired we can get things closer to 10K/month. But that's still 120K + income tax. And so far this year we haven't taken a trip and have only eaten out once. We haven't bought any clothes. No new cars.

I will say that financial newsletters and premium streaming adds probably $200/month. But we feel it's important to stay abreast of investments since we are DIY. And since not traveling or doing anything, we want to at least watch shows together. We don't have a landline or cable.

[Anonymous]

Anonymous wrote:I'm 51 and husband is 56. We make about $300k down from about $325K. Husband was laid off recently and found another job which didn't pay as well.

Our net worth is ~$5.4M investments/cash, $1M home, $600K college savings.

While I think we could retire now if we had to as 4% of 5.4M is $216K, 80% of this after taxes is $173K assuming health insurance of $30K that leaves about $12K per month in spending. So I think we are at FIRE now- but we won't exercise it yet.

$7M is really our magic number, which we may be able to achieve in the next 4 years depending on how the stock market does, but we might reconsider if we have another job loss which is not unlikely.

At $7M, we can withdraw the same $216K but that's only 3% so we have a better buffer in the stock market goes down. We should theoretically be adding each year to our net worth if we withdraw 3% (after taxes). If we decide to withdraw 4% some years for kids weddings, helping with a DPs etc, house upgrades, new or used car we will still feel good- that would give us an additional $50K per year for those years. I personally think with $7M, we won't struggle.

A decade ago, our number was $5m (outside of home equity), but we ended up with $7m+ before we retired, and I’m glad. We could be comfortable on $5m, but have been free to travel, make some generous charitable donations, buy nice new cars, set up 529s for the grandkids, etc. and still have slightly more than we started with. It’s nice to not have to worry when the market takes a dip.

[Anonymous]

Anonymous wrote:[twitter]

Anonymous wrote:

Anonymous wrote:Our HHI is about $450K and we’re 48 and 49 years old. Looking to retire in 12 years. Our number is $16M, all pre-tax. Want to make sure we have at least 30 years of retirement runway at the same standard of living we enjoy today.

We currently have $7.3M in our retirement accounts. Fingers crossed that the market continues to work in our favor.

Specific amounts aside, I wanted to reinforce this framework. It baffles me when people discuss their "net worth" number to determine when they will retire. To my mind, the amount invested (whether in retirement or taxable accounts) is the right number to focus on. I don't count cash, because that's to be used for an emergency nd to smooth out stock market dips, and I can't count on it making any money. I don't count home equity, because we have to live somewhere, and we'd need to sell or take out a home equity loan to access it. I don't count 529 funds, because they have an allocated use. I don't count short term savings that will be used for new cars, vacations, etc. because those are budgetary items, not savings. I don't even count ibonds, because in our plans, those are emergency backups, and we don't plan to use them for income generating purposes in retirement.

We have a net worth in excess of $5m, but our invested amount is around $3.1m. It would be nuts to base retirement decisions on net worth.

Op here. That’s how I look at it as well. If you see the math above, that’s how everyone looks at it as well. Nobody is withdrawing 4% for their home every year unless your talking reverse mortgages.

Same, but I do think how you view home equity depends on your home. I think people in the DC area who have a small $1m house and think they’re going to move somewhere in a desirable area & buy a nicer house for $350k are in for a shock. House prices in desirable areas, even in “LCOL” areas have jumped considerably in the past few years (you can thank WFH). IME, $350k houses exist, but they’re small, shoddily built tract houses in what was a corn field a few months ago. If you want that cute, leafy, walkable, neighborhood, you’re looking at a million +.

On the other hand, if you paid $1m for a nice house in one of those places in 2018 and it’s now worth $2.5m, I wouldn’t consider it the same as cash, but I would keep it in the back of my head as a cushion. In other words, if the real estate market is strong, and you can sell and downsize to something perfectly nice for half the value, it’s fair to keep that in mind when considering how much you can safely spend.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I'm 51 and husband is 56. We make about $300k down from about $325K. Husband was laid off recently and found another job which didn't pay as well.

Our net worth is ~$5.4M investments/cash, $1M home, $600K college savings.

While I think we could retire now if we had to as 4% of 5.4M is $216K, 80% of this after taxes is $173K assuming health insurance of $30K that leaves about $12K per month in spending. So I think we are at FIRE now- but we won't exercise it yet.

$7M is really our magic number, which we may be able to achieve in the next 4 years depending on how the stock market does, but we might reconsider if we have another job loss which is not unlikely.

At $7M, we can withdraw the same $216K but that's only 3% so we have a better buffer in the stock market goes down. We should theoretically be adding each year to our net worth if we withdraw 3% (after taxes). If we decide to withdraw 4% some years for kids weddings, helping with a DPs etc, house upgrades, new or used car we will still feel good- that would give us an additional $50K per year for those years. I personally think with $7M, we won't struggle.

Op here. Thank you this is what I’m looking for. As a first gen immigrant, I cannot refer to what my parents or other family did. $5m seems like a lot of money, but this puts it in perspective that it’s not as much as it seems. It’s also hard to think of spending weI’ll have 15 years down the line when the kids are out of the house or know what inflation is going to be.

No problem. Actually, you helped me too as I've been thinking about this a lot recently and you helped me articulate why $7M is a good number. We don't use a financial planner so we are DIY.

It's only a good number if you can reach it. Can you reach it OP?

[Anonymous]

Anonymous wrote:

Anonymous wrote:I'm 51 and husband is 56. We make about $300k down from about $325K. Husband was laid off recently and found another job which didn't pay as well.

Our net worth is ~$5.4M investments/cash, $1M home, $600K college savings.

While I think we could retire now if we had to as 4% of 5.4M is $216K, 80% of this after taxes is $173K assuming health insurance of $30K that leaves about $12K per month in spending. So I think we are at FIRE now- but we won't exercise it yet.

$7M is really our magic number, which we may be able to achieve in the next 4 years depending on how the stock market does, but we might reconsider if we have another job loss which is not unlikely.

At $7M, we can withdraw the same $216K but that's only 3% so we have a better buffer in the stock market goes down. We should theoretically be adding each year to our net worth if we withdraw 3% (after taxes). If we decide to withdraw 4% some years for kids weddings, helping with a DPs etc, house upgrades, new or used car we will still feel good- that would give us an additional $50K per year for those years. I personally think with $7M, we won't struggle.

A decade ago, our number was $5m (outside of home equity), but we ended up with $7m+ before we retired, and I’m glad. We could be comfortable on $5m, but have been free to travel, make some generous charitable donations, buy nice new cars, set up 529s for the grandkids, etc. and still have slightly more than we started with. It’s nice to not have to worry when the market takes a dip.

I am too burnt out to bother appreciating ability to support my grandkids (that's sort of my kid's job?) and donating to charity.

[Anonymous]

Anonymous wrote:What difference does income have to do with retirement number?

It is how much you spend.

My income went from 160k to 450k over a period of time but my spending stayed the same. Same starter home, same used car.

Are you enjoying life in other ways though? Do you plan to start living on your income? I ask because I met a guy recently who has been a huge saver all his life, living well below his means so he had money for "when." "When" never came though, and he regretted the things he never did.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We are "practicing" living on what we assumed we would need in retirement. 12K/month spend. I am not loving it. We just got a big increase in our homeowner's insurance, property tax went up, all our groceries have gone up, and while our healthcare insurance will supposedly go down with Medicare, we are looking at those numbers and they are not that much lower when you have any sort of money, and RMDs will definitely affect that. Not to mention we haven't taken any trips. And at 12K/month spend that is 150K before taxes, so reasonably can assume 180K drawdown.

All to say that what sounds great in theory is proving to be a challenge for us.

We are adjusting to 230K including taxes, which puts us at 6M + paid off house to feel comfortable. Would love to hit 7M.

But, as has been mentioned several times, it's all about expenses.

Fascinated - can you provide a breakdown of your $12K / month spend? I can completely see how a mortgage & spending / saving for kids can get you to this number, but when you're retired, mortgage paid down, kids out of the house - do you really need that much?

That's what I thought. But then my health insurance premium went up as did our home insurance. (Were paying 4300/year. Changed to get 2800/year. One month in, they raised it and we are back to nearly 4300/month with a lesser company.) Water bill, electric, gas. Property taxes. All went up.

We have $250K @ 5.5% left on our mortgage that we are paying down 125K at a time with recasting. That will help, but by the time that is done, I'm guessing other expenses will also have creeped up. Also, my DH is on Medicare. Because of our income (that even in retirement won't change significantly, and will probably go up once RMDs start) he is paying $500/month. (I have downgraded my private plan and am paying $800/month with 6K deductible. Obamacare was more expensive for the same plan.)

I am hoping that once fully retired we can get things closer to 10K/month. But that's still 120K + income tax. And so far this year we haven't taken a trip and have only eaten out once. We haven't bought any clothes. No new cars.

I will say that financial newsletters and premium streaming adds probably $200/month. But we feel it's important to stay abreast of investments since we are DIY. And since not traveling or doing anything, we want to at least watch shows together. We don't have a landline or cable.

12K a month is not hard to spend. Even if your house is paid off in an expensive COL area taxes are 2x what they were 10 years ago. We pay 2K a months in just RE tax+insurance+utilities on a very modest home. Add healthcare costs at 2-3K a month for a family (our kids are still at home), add food and essentials at 2K a month, add kids activities and other expenses (500-1K) and that's just essential basic living, no travel, fine dining, big ticket items, luxury items, etc. No repairs, maintenance, outsourcing either. Basic life in a paid off modest home easily can run you 7K. If you want to travel, go out to eat, buy clothes outside of discount stores, entertainment (movies, concerts), you can blow through 12K budget without having to drive luxury cars or improve your home.

If you live in a huge new expensive home and accustomed to driving a nice car and traveling in comfort and not looking at prices for basics, and indulging in a few small luxuries or doing some little improvements to your home and especially if you have a second home, you need upwards of 20K a month net. Tell me where I am wrong.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Our HHI is about $450K and we’re 48 and 49 years old. Looking to retire in 12 years. Our number is $16M, all pre-tax. Want to make sure we have at least 30 years of retirement runway at the same standard of living we enjoy today.

We currently have $7.3M in our retirement accounts. Fingers crossed that the market continues to work in our favor.

Specific amounts aside, I wanted to reinforce this framework. It baffles me when people discuss their "net worth" number to determine when they will retire. To my mind, the amount invested (whether in retirement or taxable accounts) is the right number to focus on. I don't count cash, because that's to be used for an emergency nd to smooth out stock market dips, and I can't count on it making any money. I don't count home equity, because we have to live somewhere, and we'd need to sell or take out a home equity loan to access it. I don't count 529 funds, because they have an allocated use. I don't count short term savings that will be used for new cars, vacations, etc. because those are budgetary items, not savings. I don't even count ibonds, because in our plans, those are emergency backups, and we don't plan to use them for income generating purposes in retirement.

We have a net worth in excess of $5m, but our invested amount is around $3.1m. It would be nuts to base retirement decisions on net worth.

Not if you own more than 1 home as the additional home can provide passive income.

[Anonymous]

Our HHI is 300k (but just reached that and we are 50s so haven't stockpiled millions--for the lean years of daycare, kids, and 2 non profit salaries in DC, we were barely saving up to the match) . Our retirement number is 4m, which should generate about 120-160k/year. DH and I both will have pensions totaling probably about another 120k/year., and if social security is still solvent thats an additional 80k or so a year. Which is a lot more than we spend now since we put away 60k in savings for college and retirement....of course, inflation changes the equation a bit....still I think we should be just fine on that, though we wont be flying first class on the regular. We plan to downsize and reduce some of those living expenses, while enjoying others.

I'd like to ensure we keep some of that money for long term care and helping our kids if/when they need it. There may be some inheritance from my side that could change the calculation, but honestly my goal is to plan as if nothing is coming (and definitely for DH nothing is coming) and if it does, it will go in a trust for the kids.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We are "practicing" living on what we assumed we would need in retirement. 12K/month spend. I am not loving it. We just got a big increase in our homeowner's insurance, property tax went up, all our groceries have gone up, and while our healthcare insurance will supposedly go down with Medicare, we are looking at those numbers and they are not that much lower when you have any sort of money, and RMDs will definitely affect that. Not to mention we haven't taken any trips. And at 12K/month spend that is 150K before taxes, so reasonably can assume 180K drawdown.

All to say that what sounds great in theory is proving to be a challenge for us.

We are adjusting to 230K including taxes, which puts us at 6M + paid off house to feel comfortable. Would love to hit 7M.

But, as has been mentioned several times, it's all about expenses.

Fascinated - can you provide a breakdown of your $12K / month spend? I can completely see how a mortgage & spending / saving for kids can get you to this number, but when you're retired, mortgage paid down, kids out of the house - do you really need that much?

That's what I thought. But then my health insurance premium went up as did our home insurance. (Were paying 4300/year. Changed to get 2800/year. One month in, they raised it and we are back to nearly 4300/month with a lesser company.) Water bill, electric, gas. Property taxes. All went up.

We have $250K @ 5.5% left on our mortgage that we are paying down 125K at a time with recasting. That will help, but by the time that is done, I'm guessing other expenses will also have creeped up. Also, my DH is on Medicare. Because of our income (that even in retirement won't change significantly, and will probably go up once RMDs start) he is paying $500/month. (I have downgraded my private plan and am paying $800/month with 6K deductible. Obamacare was more expensive for the same plan.)

I am hoping that once fully retired we can get things closer to 10K/month. But that's still 120K + income tax. And so far this year we haven't taken a trip and have only eaten out once. We haven't bought any clothes. No new cars.

I will say that financial newsletters and premium streaming adds probably $200/month. But we feel it's important to stay abreast of investments since we are DIY. And since not traveling or doing anything, we want to at least watch shows together. We don't have a landline or cable.

12K a month is not hard to spend. Even if your house is paid off in an expensive COL area taxes are 2x what they were 10 years ago. We pay 2K a months in just RE tax+insurance+utilities on a very modest home. Add healthcare costs at 2-3K a month for a family (our kids are still at home), add food and essentials at 2K a month, add kids activities and other expenses (500-1K) and that's just essential basic living, no travel, fine dining, big ticket items, luxury items, etc. No repairs, maintenance, outsourcing either. Basic life in a paid off modest home easily can run you 7K. If you want to travel, go out to eat, buy clothes outside of discount stores, entertainment (movies, concerts), you can blow through 12K budget without having to drive luxury cars or improve your home.

If you live in a huge new expensive home and accustomed to driving a nice car and traveling in comfort and not looking at prices for basics, and indulging in a few small luxuries or doing some little improvements to your home and especially if you have a second home, you need upwards of 20K a month net. Tell me where I am wrong.

You're not. I've always tracked spending closely and I average $12.5k/month in a small, paid-off home in a nice area, driving a couple of Subarus for me and my teen, who's in public school. I'm self-employed so health insurance is high, and of course car insurance for my teen is high, and something in the house always needs fixing. While there's certainly a lot of fat in my budget (we eat out a lot, have too many streaming services, and I'm generous with gifts and charity), I rarely buy new clothes and my only vacation so far this year was within driving distance.

It's a great life and I'm thankful to be able to provide it for me and my kid, but I'm more cost-conscious than I thought I would be with a paid-off home. I used to think I might upgrade my house once my business took off, but now I think the extra spending required would be too stressful.

Anyway, to answer the OP's question - $8M.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We are "practicing" living on what we assumed we would need in retirement. 12K/month spend. I am not loving it. We just got a big increase in our homeowner's insurance, property tax went up, all our groceries have gone up, and while our healthcare insurance will supposedly go down with Medicare, we are looking at those numbers and they are not that much lower when you have any sort of money, and RMDs will definitely affect that. Not to mention we haven't taken any trips. And at 12K/month spend that is 150K before taxes, so reasonably can assume 180K drawdown.

All to say that what sounds great in theory is proving to be a challenge for us.

We are adjusting to 230K including taxes, which puts us at 6M + paid off house to feel comfortable. Would love to hit 7M.

But, as has been mentioned several times, it's all about expenses.

Fascinated - can you provide a breakdown of your $12K / month spend? I can completely see how a mortgage & spending / saving for kids can get you to this number, but when you're retired, mortgage paid down, kids out of the house - do you really need that much?

That's what I thought. But then my health insurance premium went up as did our home insurance. (Were paying 4300/year. Changed to get 2800/year. One month in, they raised it and we are back to nearly 4300/month with a lesser company.) Water bill, electric, gas. Property taxes. All went up.

We have $250K @ 5.5% left on our mortgage that we are paying down 125K at a time with recasting. That will help, but by the time that is done, I'm guessing other expenses will also have creeped up. Also, my DH is on Medicare. Because of our income (that even in retirement won't change significantly, and will probably go up once RMDs start) he is paying $500/month. (I have downgraded my private plan and am paying $800/month with 6K deductible. Obamacare was more expensive for the same plan.)

I am hoping that once fully retired we can get things closer to 10K/month. But that's still 120K + income tax. And so far this year we haven't taken a trip and have only eaten out once. We haven't bought any clothes. No new cars.

I will say that financial newsletters and premium streaming adds probably $200/month. But we feel it's important to stay abreast of investments since we are DIY. And since not traveling or doing anything, we want to at least watch shows together. We don't have a landline or cable.

12K a month is not hard to spend. Even if your house is paid off in an expensive COL area taxes are 2x what they were 10 years ago. We pay 2K a months in just RE tax+insurance+utilities on a very modest home. Add healthcare costs at 2-3K a month for a family (our kids are still at home), add food and essentials at 2K a month, add kids activities and other expenses (500-1K) and that's just essential basic living, no travel, fine dining, big ticket items, luxury items, etc. No repairs, maintenance, outsourcing either. Basic life in a paid off modest home easily can run you 7K. If you want to travel, go out to eat, buy clothes outside of discount stores, entertainment (movies, concerts), you can blow through 12K budget without having to drive luxury cars or improve your home.

If you live in a huge new expensive home and accustomed to driving a nice car and traveling in comfort and not looking at prices for basics, and indulging in a few small luxuries or doing some little improvements to your home and especially if you have a second home, you need upwards of 20K a month net. Tell me where I am wrong.

You're not. I've always tracked spending closely and I average $12.5k/month in a small, paid-off home in a nice area, driving a couple of Subarus for me and my teen, who's in public school. I'm self-employed so health insurance is high, and of course car insurance for my teen is high, and something in the house always needs fixing. While there's certainly a lot of fat in my budget (we eat out a lot, have too many streaming services, and I'm generous with gifts and charity), I rarely buy new clothes and my only vacation so far this year was within driving distance.

It's a great life and I'm thankful to be able to provide it for me and my kid, but I'm more cost-conscious than I thought I would be with a paid-off home. I used to think I might upgrade my house once my business took off, but now I think the extra spending required would be too stressful.


Anyway, to answer the OP's question - $8M.

How do you arrive at 8 mil after describing such a modest lifestyle you seem to value? Holy sh**, how will anyone ever retire if you need so many millions to maintain a ho hum life in an old paid off house with subarus? Are you planning to start living large at 65? or do you all really strongly believe you must leave sizeable inheritance to your kids, god forbid they have to work for a living? You obviously all believe there will be no social benefits for you in any shape in old age...

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:We are "practicing" living on what we assumed we would need in retirement. 12K/month spend. I am not loving it. We just got a big increase in our homeowner's insurance, property tax went up, all our groceries have gone up, and while our healthcare insurance will supposedly go down with Medicare, we are looking at those numbers and they are not that much lower when you have any sort of money, and RMDs will definitely affect that. Not to mention we haven't taken any trips. And at 12K/month spend that is 150K before taxes, so reasonably can assume 180K drawdown.

All to say that what sounds great in theory is proving to be a challenge for us.

We are adjusting to 230K including taxes, which puts us at 6M + paid off house to feel comfortable. Would love to hit 7M.

But, as has been mentioned several times, it's all about expenses.

Fascinated - can you provide a breakdown of your $12K / month spend? I can completely see how a mortgage & spending / saving for kids can get you to this number, but when you're retired, mortgage paid down, kids out of the house - do you really need that much?

That's what I thought. But then my health insurance premium went up as did our home insurance. (Were paying 4300/year. Changed to get 2800/year. One month in, they raised it and we are back to nearly 4300/month with a lesser company.) Water bill, electric, gas. Property taxes. All went up.

We have $250K @ 5.5% left on our mortgage that we are paying down 125K at a time with recasting. That will help, but by the time that is done, I'm guessing other expenses will also have creeped up. Also, my DH is on Medicare. Because of our income (that even in retirement won't change significantly, and will probably go up once RMDs start) he is paying $500/month. (I have downgraded my private plan and am paying $800/month with 6K deductible. Obamacare was more expensive for the same plan.)

I am hoping that once fully retired we can get things closer to 10K/month. But that's still 120K + income tax. And so far this year we haven't taken a trip and have only eaten out once. We haven't bought any clothes. No new cars.

I will say that financial newsletters and premium streaming adds probably $200/month. But we feel it's important to stay abreast of investments since we are DIY. And since not traveling or doing anything, we want to at least watch shows together. We don't have a landline or cable.

12K a month is not hard to spend. Even if your house is paid off in an expensive COL area taxes are 2x what they were 10 years ago. We pay 2K a months in just RE tax+insurance+utilities on a very modest home. Add healthcare costs at 2-3K a month for a family (our kids are still at home), add food and essentials at 2K a month, add kids activities and other expenses (500-1K) and that's just essential basic living, no travel, fine dining, big ticket items, luxury items, etc. No repairs, maintenance, outsourcing either. Basic life in a paid off modest home easily can run you 7K. If you want to travel, go out to eat, buy clothes outside of discount stores, entertainment (movies, concerts), you can blow through 12K budget without having to drive luxury cars or improve your home.

If you live in a huge new expensive home and accustomed to driving a nice car and traveling in comfort and not looking at prices for basics, and indulging in a few small luxuries or doing some little improvements to your home and especially if you have a second home, you need upwards of 20K a month net. Tell me where I am wrong.

You're not. I've always tracked spending closely and I average $12.5k/month in a small, paid-off home in a nice area, driving a couple of Subarus for me and my teen, who's in public school. I'm self-employed so health insurance is high, and of course car insurance for my teen is high, and something in the house always needs fixing. While there's certainly a lot of fat in my budget (we eat out a lot, have too many streaming services, and I'm generous with gifts and charity), I rarely buy new clothes and my only vacation so far this year was within driving distance.

It's a great life and I'm thankful to be able to provide it for me and my kid, but I'm more cost-conscious than I thought I would be with a paid-off home. I used to think I might upgrade my house once my business took off, but now I think the extra spending required would be too stressful.


Anyway, to answer the OP's question - $8M.

How do you arrive at 8 mil after describing such a modest lifestyle you seem to value? Holy sh**, how will anyone ever retire if you need so many millions to maintain a ho hum life in an old paid off house with subarus? Are you planning to start living large at 65? or do you all really strongly believe you must leave sizeable inheritance to your kids, god forbid they have to work for a living? You obviously all believe there will be no social benefits for you in any shape in old age...

Because $8M is only $240k a year? What part don’t you understand? (DP)