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Old 11-28-2007, 04:38 PM
 
Location: UK
296 posts, read 730,145 times
Reputation: 316

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No, a PO box won't do, Mr GLS, nor can we rent the property because we need to return to the UK for 3 to 4 months each tax year. It would be difficult to work out a return with tenants. Also, my husband isn't keen on giving up his UK home - at least for the time being.
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Old 12-04-2007, 11:00 AM
 
Location: Northern Arizona
329 posts, read 1,157,037 times
Reputation: 279
Quote:
Originally Posted by GLS View Post
Very helpful and very interesting responses and I thank all of you. I see some commonality with several that helps explain my concerns. I am 61 and my wife is 56 (she doesn't read this post so I'm ok admitting this). We have always been very fortunate financially because we have two professional incomes and no children or family members that we are financially responsible for. Our net is about $20K/month, no credit card debt, no car payments, etc. We have never really had to have a budget due to good income. The problem is that when the jobs stop our revenue with Social Security, her pension (I have none because I'm self-employed), and using the 4% withdrawal of savings suggested , will give us about $8K/month. I plan to work part-time because I enjoy work and don't really have any hobbies. However, my health may prevent me from working much. This is a strange feeling because whenever I wanted to buy something in the past, I just worked more, saved until I could afford it, then paid cash. I paid off our mortgage last year, but now combined with the self-employment tax the government is eating our lunch, and the political winds of 2008 don't give me much optimism for tax relief.

Here is the kicker. My wife's hobby will probably be the most expensive part of our retirement. She loves training hunting and obedience dogs. We have property in another state and would like to build a "vacation" home there because the area is becoming a summer mecca for dog training. The cost will be about $500K and we have already considered all the possible compromises and can't build it for less. The plan would be to stay there about 6 months out of the year, and return to our primary residence in the Winter. We don't want to sell the primary residence because we worked too hard to get it the way we like it, and winter in the vacation area is out because it's like being naked at the North Pole. This means little or no down payment for the vacation project and borrowing $417K conforming. I figured this will give us a good tax deduction and a free ride for the last 15 years of the 30 year loan because I won't be around that long. If I follow the approach I did all my life i.e. try saving the $500K and pay cash, I'll be dead before we build the house. On the other hand I'm used to a "no-debt" existence and the thought of having a $3K mortgage going into retirement gives me the willies. I think it's a good plan for us, but I'm not much of a risk taker.

Just thought I would share that since everyone has been so forthright. Also, sorry for rambling. It's the end of the week and I'm somewhere between hysterical and demented. Finally, let me emphasize that I didn't start this thread to focus on my problems or seek specific advice. I learn more by hearing other people's circumstances and their decision-making process.
Curious, at your age with incomes as high as you mention and no kids or other dependents you should have more that $1,000,000 in savings. If not then you are not ready to retire anytime soon if you expect to maintain your current lifestyle. Just my opinion.
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Old 12-05-2007, 04:05 AM
 
Location: San Antonio
7,629 posts, read 14,374,443 times
Reputation: 18706
I read in AARP that when you are trying to figure out your retirement income "needs" you can automatically deduct the amount that you put into you put into your 401K or retirement savings...which I would have never thought of. Since DH and I put 20% of our income into the TSP (gov workers) that means that we can use the 80% rate as we are already living on that. It seems to make the calculations for retirement a little less daunting.
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Old 12-05-2007, 08:11 AM
 
3,750 posts, read 9,599,239 times
Reputation: 7025
for some reason my husband thought FICA/Social Security had to be paid on retirement income. He was shocked at finding out it did not. So he could deduct that expense from his calculations. Amazing what strange assumptions I found in his figures.
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Old 12-05-2007, 09:37 AM
 
Location: DC Area, for now
3,517 posts, read 12,048,324 times
Reputation: 2141
There are several things that aren't paid out during retirement.

Commute costs should go away
Clothing should be reduced
no IRA/401k/other pension contributions
no FICA/SS contributions (unless you work)
income less so taxes should also be less
lunches & coffee out (I've already cut way back on this)
And for some of us, no mortgage payment

What may increase:

Utility bills because I'll be at home much more
Vacation travel costs
Hobby costs
Computer/Internet costs (a lot is now subsidized by my workplace)

and the relentless yearly increase in health insurance/drugs/medical
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Old 12-05-2007, 05:48 PM
GLS GLS started this thread
 
1,985 posts, read 4,845,696 times
Reputation: 2408
Quote:
Originally Posted by poolgirl51 View Post
Curious, at your age with incomes as high as you mention and no kids or other dependents you should have more that $1,000,000 in savings. If not then you are not ready to retire anytime soon if you expect to maintain your current lifestyle. Just my opinion.
Thanks for your opinion, and you are right, we have about 1.5 million set aside. However, I doubt it will be enough. For example, my wife's credit cards were stolen 2 weeks ago, and I didn't even report it to the police............the thieves were spending less than she was.
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Old 12-06-2007, 01:47 PM
 
29,766 posts, read 34,851,819 times
Reputation: 11675
Quote:
Originally Posted by Tesaje View Post
There are several things that aren't paid out during retirement.

Commute costs should go away
Clothing should be reduced
no IRA/401k/other pension contributions
no FICA/SS contributions (unless you work)
income less so taxes should also be less
lunches & coffee out (I've already cut way back on this)
And for some of us, no mortgage payment

What may increase:

Utility bills because I'll be at home much more
Vacation travel costs
Hobby costs
Computer/Internet costs (a lot is now subsidized by my workplace)

and the relentless yearly increase in health insurance/drugs/medical
Remember these are deductions from you net with the exception of taxes not your gross. That makes it even better. You also have non retirement savings that you may be able to continue etc. If you are on current income of $50K your 80% may not be the same as someone on a retirement of 100K. Unless you have significant debt you have tremendous flexibility at higher income levels.
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Old 12-06-2007, 02:04 PM
 
Location: Forests of Maine
30,676 posts, read 49,423,020 times
Reputation: 19129
Quote:
Originally Posted by TuborgP View Post
Remember these are deductions from you net with the exception of taxes not your gross. That makes it even better. You also have non retirement savings that you may be able to continue etc. If you are on current income of $50K your 80% may not be the same as someone on a retirement of 100K. Unless you have significant debt you have tremendous flexibility at higher income levels.
Um, maybe.

Before my retirement, when I made a much higher gross, I had far more write-offs, and was better able to keep my income sheltered.

Now with a lower income, I have to scramble more to keep it sheltered.
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Old 12-06-2007, 04:02 PM
 
Location: Branson Area
880 posts, read 2,584,439 times
Reputation: 710
Default Retirement expenses and such

My husband and I retired early about 6 years ago. He was 58 and I was 55.
We sold our home in the SF Bay Area and paid cash for a home in Las Vegas in 2001.

We both made 6 digit incomes so we enjoyed the ability to not budget, pay cash, etc. Unfortunately, other than 401K's we hadn't saved anything to speak of...we traveled, had a second home, etc. We didn't have debt or live above our means, but we certainly hadn't focused on savings. When I turned 42 we sat down and figured out what we thought we might need using one of the "retirement calculators". According to that information we needed to save 3.3 million! What a wake up call that was......even if we thought it was unrealistic.

So for the next 13 years, we maxed out on 401K contributions, company stock programs, and put 100% of my net paycheck into savings/investments. We didn't really scrimp or save, but we were more aware of where we spent money. We also didn't save $3.3 million but we saved alot more than we thought we could.

We were also lucky in that we worked in the high tech arena during the dot.com boom and we didn't buy into the "bigger and better" lifestyle thing that was going on all around us. We began to sell our options and put the $$ elsewhere out of high tech.

When we retired in 2002 we sat aside some of the money out of the house to use as "income" so we wouldn't have to draw out of our retirement nest egg for 2-3 years. The nest egg amounted to enough that we would be able to draw 3.5% and live comfortably (for us that's about $75K plus SS).

We have figured out that for us, $80K in retirement is about the same as $110K of net working income.

As far as "income" in retirement...remember that you pay no state/federal income tax, no more investment into 401K/Stock programs, no SS, HSA, etc. and your no longer trying SAVE any money. Your net income less anything you save/set aside from that number is your real "income" from a retirement viewpoint.

Then there is a chase to live in one of those states with no income tax. Since we don't have traditional "working income" it turned out that things like overall all cost of living (cost of a house, property taxes, sales tax, health insurance, etc.) was more important than income tax.

Health insurance is our single biggest expense as we have to buy our own medical insurance for 8-10 years. In Nevada it was almost about $9,000/yr for both of us. That was basically for major medical. We have a $5800 deductable and we have no preexisiting conditions. We moved to Missouri earlier this year and our insurance went down about $1200/yr. Next year my husband turns 65 and he'll drop off the policy. As an important note...put the health insurance policy in the younger spouses name. We talked to several companies who indicated that if the health insurance was in my husbands name, it would be droppped when he turned 65 and I would have to reapply. So by it being in my name (I'm 3 years younger) when he turns 65 I drop him off the policy but retain the policy which is already in my name.

This area (SW MO) is a pretty big retirement area, so finding a doctor that takes medicare isn't difficult, but your supplemental is important as to what will be paid and how..(which impacts how the doctors works with you). But you won't have the types of insurance that is offered thru a lot of companies...unless you want to pay for it and it IS expensive! To get the same type of insurance we had in the Bay area it would have cost us about $15,000 a year with annual increases. As we are pretty healthy, it didn't pay for us to pay for that type of insurance. We don't have co-pays, vision, dental, prescription drug insurance and the actual cost hasn't bridged the difference for what the insurance would have cost.

As far as other types of expenses, they may go down, they may not. If you like to buy clothes now, you'll like to buy them in retirement. If you have an expensive hobby now, you'll have it later. You may do it less or you may do it more. Gas may cost you more rather than less (you won't be commuting, but you probably won't be staying home either). If you like to eat out, you'll still eat out, you may just change the when or where. You decide your priorities and where you want to spend your $$. We no longer have a housekeeper, but we do still have a gardener. We no longer buy "things"...we would just have to find someplace to put them.

But to wind up this long response...it depends you what you want out of retirement, where you live, and what your priorities are (they will change when you retire BTW). We travel quite a bit by motorhome, but have given up the yearly trips to England/Scotland (we used to work there)....we still eat out 2-3 times a week, but it's usually breakfast or lunch rather than the more costly dinners. Small changes, but they all add up in the end and we don't feel like we have really changed our lifestyle...just our priorities.

Last edited by mrschilicook; 12-06-2007 at 04:13 PM.. Reason: typo
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Old 12-06-2007, 07:34 PM
 
4,948 posts, read 16,517,317 times
Reputation: 2866
my goal is 3000 per month-next 2 years, a will say no to S.S. and live on 25,000?
can I do it, yes-hard yes
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