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Old 07-21-2013, 09:36 AM
 
672 posts, read 837,744 times
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Love reading the threads and have learned a bit. Husband and I want to work 5 more years. I will need healthcare for 2 years. He will be MC eligible.

No pensions. He maxes out 401K. No debt (own house, no credit card bills)

My main question is this. If I add up all that we save each year (for argument sakes let's say our income is $150,000 and I save about 25%, $37,000). I figured I could automatically take that off of my income amount bringing it down to $113,000. I then figure I need approx. $113,000 to live on in retirement, adding 3% or so for inflation a year. I am in the process of starting to make a budget. If I start this month, July, and do it until end of Dec then I will just double it and that should give us a good indication of what we spend a month and year.

We plan on moving to a warmer climate, but that might end up being a wash for us after factoring in commission, moving expenses, etc. Although taxes would be a little less. And the way I see it electric bills in the south don't compete with heating bills in the north. Plus eventually, maybe after age 70 or so, we will go down to 1 car. We won't be near children and do have to factor in traveling to them. Health insurance will go up (and up and up) but rest of taxes should decrease. And no more disability insurance for 1 thing.

Please give any opinions on what I am not seeing here. I want to try to get a better picture and be fully prepared. Thank you.
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Old 07-21-2013, 09:59 AM
 
Location: The Triad (NC)
28,490 posts, read 62,120,010 times
Reputation: 32158
Quote:
Originally Posted by saralvr View Post
Husband and I want to work 5 more years.
I will need healthcare for 2 years. He will be MC eligible.
No pensions. He maxes out 401K. No debt (own house, no credit card bills)
We plan on moving to a warmer climate, but that might end up being a wash...
The house exchange (down south or across town) is about getting into a LESS expensive
and easier to maintain property then putting the balance of equity into investments.

Quote:
My main question is this.
I am in the process of starting to make a budget.
You lost me there... but yeah, start with a solid budget.
And plan to put every penny you can (even if it hurts some) into pretax retirement accounts.
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Old 07-21-2013, 10:10 AM
 
672 posts, read 837,744 times
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I say a wash because the home where I live is not in a high value area, although our taxes are crazy high. We will be going south to a warmer climate where the properties are maintained (lawn service). My home right now is not that large.

I meant by starting a budget is that I am putting together a program on the computer and adding in all of our monthly expenses to see just how much we are actually spending and where we can make adjustments.

Our plan for ourselves has always included automatic savings. We put extra monthly into our mortgage payments so that we paid it off in half the time. We max out 401K. So we have always had automatic savings in place. College is done and now we can focus on just saving as much as possible and trying to get a feel for what our retirement expenses will be.
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Old 07-21-2013, 10:18 AM
 
Location: Florida
4,359 posts, read 3,694,371 times
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You are on the right track.
Be sure to include state and federal income taxes in your budget.
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Old 07-21-2013, 10:34 AM
 
Location: Los Angeles area
14,018 posts, read 17,729,443 times
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Default "$113,000 to live on in retirement...."

Quote:
Originally Posted by saralvr View Post
My main question is this. If I add up all that we save each year (for argument sakes let's say our income is $150,000 and I save about 25%, $37,000). I figured I could automatically take that off of my income amount bringing it down to $113,000. I then figure I need approx. $113,000 to live on in retirement, adding 3% or so for inflation a year. I am in the process of starting to make a budget. If I start this month, July, and do it until end of Dec then I will just double it and that should give us a good indication of what we spend a month and year.
Please give any opinions on what I am not seeing here. I want to try to get a better picture and be fully prepared. Thank you.
Unless you live in a very high cost of living location such as New York City or Honolulu (and you indicate that you will not be once you retire), then $113,000 per year is rather lavish living, and it would be pretty easy to scale that back. Don't get me wrong; if that's the standard of living you desire and you are able to provide it for your retirement, more power to you.

I am merely saying that cutting back offers an additional option for your thinking. Living on $90,000 per year (just for example) in most places would be very, very comfortable living indeed.

In Los Angeles, at age 69 with a paid-off townhouse in a safe and attractive middle-class neighborhood, I spend about $35,000 per year to live, including property taxes but not including income taxes. Yes, I am basically frugal, but I do like some luxuries such as $200 tickets to live classical music concerts. I eat out about once a day, but not in upscale restaurants. I do some travelling, but I do not get $50 haircuts or $25 bottles of wine or BMW or Mercedes automobiles. I bought my last brand-new car six years ago for $27,000. And of course I am divorced and living alone, whereas you are a married couple. But couples do not require twice the money to live.

Again, the way I live may be totally unacceptable to you, and I have no quarrel with that. Just offering a different perspective.
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Old 07-21-2013, 10:50 AM
 
672 posts, read 837,744 times
Reputation: 1173
I was using the $150,000 as a clean number, not our income. I will not need $113,000 in retirement, nor do I live lavishly! Trust me on that!

We DO however save 25% of our gross income.

I do have to factor in health insurance and taxes. What % should I allow for that?
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Old 07-21-2013, 11:03 AM
 
Location: Tampa, FL
27,798 posts, read 26,200,766 times
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You won't be paying into FICA anymore once you leave the job force - so there's some more money in your pocket.
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Old 07-21-2013, 11:05 AM
 
71,511 posts, read 71,674,131 times
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one thing that we didn't really think about when we were looking at how cheap other areas are compared to here in nyc.

many like ourselves may be leaving apartments in the cities where their families are located.

in our case when we had the house in pa we would be going to a cheaper area but going from a 2 bedroom apartment in nyc where no one has to stay over to a 3 bedroom house out of state where all the kids stay over.

savings ,was a wash,.

Last edited by mathjak107; 07-21-2013 at 11:49 AM..
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Old 07-21-2013, 11:43 AM
 
29,774 posts, read 34,856,103 times
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Quote:
Originally Posted by saralvr View Post
I was using the $150,000 as a clean number, not our income. I will not need $113,000 in retirement, nor do I live lavishly! Trust me on that!

We DO however save 25% of our gross income.

I do have to factor in health insurance and taxes. What % should I allow for that?
Lots of changes with health care coming and it will differ by states. Decide where in the South and how much you want to pay for housing in any given neighborhood. Retirement will give you time and opportunity and that 113K may turn out to be reasonable as your lifestyle emerges. It will also allow you to save etc etc. You may be surprised about how your lifestyle emerges.
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Old 07-21-2013, 12:34 PM
 
48,516 posts, read 83,901,398 times
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Having retired early I have two things but you seem to be planning well. First is wife and I were really surprised at saving for not working. Second is to insure from future liability in medical. We have been lucky but I know some who have not been and without supplement it can add up quickly even with medicare. As you age its likely medical cost will go up remember. One other thing is you will find if both worked you can control spending much more in retirement.
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