Target retirement income

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

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.

You are going to be spending 10 percent of your income on financial advisory fees?

That is the craziest thing I’ve ever heard…

That's not our income, it's the expected annual spending. We have a very high net worth.

No matter your HHI, that’s crazy

Np

DP. Maybe at $50mil net worth and paying 0.5% management fees.. in which case, their spend should be way more than $250K.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We are aiming for $175K combined from investment drawdowns, pensions, and SS, for an early retirement (by our mid 40s).

Recently got an EU citizenship, so there is opportunity for some extended geo arbitrage. COL is much lower in much of Europe and QOL is the same or better.

Why work more of our best remaining years away just to get soaked by high taxes on W2 income and likely substantial reduction of SS benefits via means testing.

Kids?

Their non-existence makes this much easier. Glad other people have them, don't want our own.

[Anonymous]

We have HHI $450K now but can go WAY down with retirement in our early 60s.

We have two homes that will be paid off, 3 kids out of college (two are currently in private schools at the cost $100k/year). Plus the food bills for 3 teens and the extracurriculars and cell phones and clothing costs....

Basically we currently spend almost no money outside of housing and kids. We could probably live very comfortably on $100K/year in retirement.

[Anonymous]

Why does everyone assume they have to pay their mortgage off before retiring?

[Anonymous]

Anonymous wrote:Why does everyone assume they have to pay their mortgage off before retiring?

I don't think people assume you have to, but it is desirable for most of us. For instance, in our case, retirement plan is structured around a government pension which will be worth about 65k/yr. Our goal is to fit all our ordinary expenses, including healthcare, within that pension, giving us far more leeway with our remaining retirement dollars (between 1.5 and 2m in various accounts). If we don't have a mortgage, that's really easy, and we can do it without even having to budget that carefully. This allows us to use the remaining funds for travel, gifts to kids, bucket list hobbies and expenditures.

If we have a mortgage, we just have to do a lot more budgeting about how we structure retirement. I don't want to. I want to enter retirement without debt or saving obligations. That's the whole point of retirement to me. Otherwise I should probably keep working until those obligations are taken care of.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Why does everyone assume they have to pay their mortgage off before retiring?

I don't think people assume you have to, but it is desirable for most of us. For instance, in our case, retirement plan is structured around a government pension which will be worth about 65k/yr. Our goal is to fit all our ordinary expenses, including healthcare, within that pension, giving us far more leeway with our remaining retirement dollars (between 1.5 and 2m in various accounts). If we don't have a mortgage, that's really easy, and we can do it without even having to budget that carefully. This allows us to use the remaining funds for travel, gifts to kids, bucket list hobbies and expenditures.

If we have a mortgage, we just have to do a lot more budgeting about how we structure retirement. I don't want to. I want to enter retirement without debt or saving obligations. That's the whole point of retirement to me. Otherwise I should probably keep working until those obligations are taken care of.

DP: In my view, tax and insurance portions of the mortgage start to eclipse the principal mortgage with inflation so it's not really all that different to budget to cover the full PITI--just the same autopay. I easily have enough money to pay off my mortgage, but I refinanced when rates were sub-2.5% and I will let that stay through its full term--which includes the first 10 years of my retirement. I have a pot of money earning more than the interest on the mortgage on autopay for it so I don't even have to think about it. If ever the calculus changes, I could pay it off in full. I won't consider it part of my retirement budget from my larger portfolio because I just set aside the pot of money needed for the mortgage--just let the pot of money pay it off and then I get to keep the extra I earned as a bonus. I like liquidity and higher earnings, even in retirement.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Why does everyone assume they have to pay their mortgage off before retiring?

I don't think people assume you have to, but it is desirable for most of us. For instance, in our case, retirement plan is structured around a government pension which will be worth about 65k/yr. Our goal is to fit all our ordinary expenses, including healthcare, within that pension, giving us far more leeway with our remaining retirement dollars (between 1.5 and 2m in various accounts). If we don't have a mortgage, that's really easy, and we can do it without even having to budget that carefully. This allows us to use the remaining funds for travel, gifts to kids, bucket list hobbies and expenditures.

If we have a mortgage, we just have to do a lot more budgeting about how we structure retirement. I don't want to. I want to enter retirement without debt or saving obligations. That's the whole point of retirement to me. Otherwise I should probably keep working until those obligations are taken care of.

DP: In my view, tax and insurance portions of the mortgage start to eclipse the principal mortgage with inflation so it's not really all that different to budget to cover the full PITI--just the same autopay. I easily have enough money to pay off my mortgage, but I refinanced when rates were sub-2.5% and I will let that stay through its full term--which includes the first 10 years of my retirement. I have a pot of money earning more than the interest on the mortgage on autopay for it so I don't even have to think about it. If ever the calculus changes, I could pay it off in full. I won't consider it part of my retirement budget from my larger portfolio because I just set aside the pot of money needed for the mortgage--just let the pot of money pay it off and then I get to keep the extra I earned as a bonus. I like liquidity and higher earnings, even in retirement.

Same here.. We pay about $3K/month towards a mortgage that will end in about 20 years (when I'm 77, well into retirement). That's just another budget line item for me. If I didn't have the mortgage, I'd still be paying $1,200 in taxes/insurance anyways so what's another 1,800/month?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

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.

What about the other $100K in the budget?

Kind of sad to spend more on the empty part of a giant house than on philanthropy. With $50K/yr travel, are you even at home(s) more than half the year?

We live in DC, and our house isn't giant - 2,000 square feet plus a finished basement. Property taxes are $12,000 a year, our utilities, cable, phone and internet are $7,500. Landscaping is $4,000. Cleaning is $6,000. Insurance is $4,000.

We'd like to travel comfortably in retirement, especially when we're older, and pay for our kids to join us. $50K means we would be away from our "giant" home maybe a month a year.

For philanthropy, this number is outside what we've already contributed to endowed funds and donor advised funds/foundations. To get $250,000 in income, we'd pay $125,000 in taxes with current rates so I'm pretty comfortable with our contributions to society.

Other big ticket items for us are insurance premiums and medical care - that's through my husband's current employer ($12K), a nice car and insurance ($8K), dining out and entertaining ($25K), groceries/house supplies, personal care ($20K). It all adds up! And yes, you can obviously live on way less, but the OP wanted to know projections in the area. I don't think our numbers are out of range for a HCOL comfortable retirement.

[Anonymous]

I think a better question is how much do you plan to spend/month or year in retirement? The income question is confusing because it’s unclear if people are giving a pre or post tax number. Expenses seems more universal.

[Anonymous]

Anonymous wrote:I think a better question is how much do you plan to spend/month or year in retirement? The income question is confusing because it’s unclear if people are giving a pre or post tax number. Expenses seems more universal.

The vast majority of the responses talked about retirement expenses and not income..

[Anonymous]

I am one of the previous poster saying that we are planning for 200K in retirement. Our ideal would be $200K but there is a lot of discretionary budget built in- kids gifts, vacations, fancy dinners, concerts etc., visits to family in Asia in business class. We can be comfortable in a lot less when the kids leave home.

[Anonymous]

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.

At first I thought this was us! Except the ages are a little off. And our savings amount is more like $1.4M with a goal of $2M by retirement at 62. House and college are the same. But one of us is a fed, so we have the health insurance option and we have the pension, so we hope to approach $200K in 2023 dollars.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Why does everyone assume they have to pay their mortgage off before retiring?

I don't think people assume you have to, but it is desirable for most of us. For instance, in our case, retirement plan is structured around a government pension which will be worth about 65k/yr. Our goal is to fit all our ordinary expenses, including healthcare, within that pension, giving us far more leeway with our remaining retirement dollars (between 1.5 and 2m in various accounts). If we don't have a mortgage, that's really easy, and we can do it without even having to budget that carefully. This allows us to use the remaining funds for travel, gifts to kids, bucket list hobbies and expenditures.

If we have a mortgage, we just have to do a lot more budgeting about how we structure retirement. I don't want to. I want to enter retirement without debt or saving obligations. That's the whole point of retirement to me. Otherwise I should probably keep working until those obligations are taken care of.

DP: In my view, tax and insurance portions of the mortgage start to eclipse the principal mortgage with inflation so it's not really all that different to budget to cover the full PITI--just the same autopay. I easily have enough money to pay off my mortgage, but I refinanced when rates were sub-2.5% and I will let that stay through its full term--which includes the first 10 years of my retirement. I have a pot of money earning more than the interest on the mortgage on autopay for it so I don't even have to think about it. If ever the calculus changes, I could pay it off in full. I won't consider it part of my retirement budget from my larger portfolio because I just set aside the pot of money needed for the mortgage--just let the pot of money pay it off and then I get to keep the extra I earned as a bonus. I like liquidity and higher earnings, even in retirement.

Same here.. We pay about $3K/month towards a mortgage that will end in about 20 years (when I'm 77, well into retirement). That's just another budget line item for me. If I didn't have the mortgage, I'd still be paying $1,200 in taxes/insurance anyways so what's another 1,800/month?

A lot of people also move in retirement. Either to relocate or downsize that 4/5 bedroom home when only 1/2 people live in it!

This many times requires no mortgage. I believe it is difficult to get a mortgage once you have no W-2 income anymore. So unless not moving at all once you retire, you may be forced to not have a mortgage.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Why does everyone assume they have to pay their mortgage off before retiring?

I don't think people assume you have to, but it is desirable for most of us. For instance, in our case, retirement plan is structured around a government pension which will be worth about 65k/yr. Our goal is to fit all our ordinary expenses, including healthcare, within that pension, giving us far more leeway with our remaining retirement dollars (between 1.5 and 2m in various accounts). If we don't have a mortgage, that's really easy, and we can do it without even having to budget that carefully. This allows us to use the remaining funds for travel, gifts to kids, bucket list hobbies and expenditures.

If we have a mortgage, we just have to do a lot more budgeting about how we structure retirement. I don't want to. I want to enter retirement without debt or saving obligations. That's the whole point of retirement to me. Otherwise I should probably keep working until those obligations are taken care of.

DP: In my view, tax and insurance portions of the mortgage start to eclipse the principal mortgage with inflation so it's not really all that different to budget to cover the full PITI--just the same autopay. I easily have enough money to pay off my mortgage, but I refinanced when rates were sub-2.5% and I will let that stay through its full term--which includes the first 10 years of my retirement. I have a pot of money earning more than the interest on the mortgage on autopay for it so I don't even have to think about it. If ever the calculus changes, I could pay it off in full. I won't consider it part of my retirement budget from my larger portfolio because I just set aside the pot of money needed for the mortgage--just let the pot of money pay it off and then I get to keep the extra I earned as a bonus. I like liquidity and higher earnings, even in retirement.

Same here.. We pay about $3K/month towards a mortgage that will end in about 20 years (when I'm 77, well into retirement). That's just another budget line item for me. If I didn't have the mortgage, I'd still be paying $1,200 in taxes/insurance anyways so what's another 1,800/month?

A lot of people also move in retirement. Either to relocate or downsize that 4/5 bedroom home when only 1/2 people live in it!

This many times requires no mortgage. I believe it is difficult to get a mortgage once you have no W-2 income anymore. So unless not moving at all once you retire, you may be forced to not have a mortgage.

True. Also explains why some people determine their retirement destination and buy a home before retirement.

[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.

Retirement at 63.5 so that we can do COBRA until 65 and then start Medicare. We are targeting about $10k a month (post tax ) which includes everything. We have paid off our house. We have over saved.