U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Retirement
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Old 06-01-2014, 05:07 AM
71,934 posts, read 71,971,035 times
Reputation: 49499


i still fail to see the reliability factor at retirement between losing the human capital factor vs just markets.

the ability to not have to work or can't work is a major factor when putting together a retirement plan.

to many plans that folks put together based on 80% of income while working are under funded to do that without a pension. low income wage earners tend to have smaller savings as well to work with as well as less ss.. the uncertainty of markets and rates requires more dry powder held in reserve then when collecting a pay check..

it really amounts to how much descretionary vs non descretionary income your budget is made up of.

the point is you can't count on growing assets through retirement as we did in the past. there can be decades of downward balances happening and that makes things very unlike a pay check.

Last edited by mathjak107; 06-01-2014 at 05:16 AM..
Quick reply to this message

Old 06-01-2014, 05:16 AM
29,833 posts, read 34,918,975 times
Reputation: 11752
Originally Posted by mathjak107 View Post
i still fail to see the reliability factor at retirement between losing the human capital factor vs just markets.

the ability to not have to work or can't work is a major factor when putting together a retirement plan.

to many plans that are based on 80% of income while working are under funded to do that.
He is talking about high income earners. So if a couple has a base 200k working year income and retires on 80 percent of that or a 160k that might not leave room for continued savings? He is asking what percentage for a high income retiree with no kids or debt without a geographic location qualifier. How he goes there is something that came up in follow up up posts. Assuming a family final working income of 200k I will let readers decide what percentage of that they could live on and still save. As always it is individual and my perspective is a post retirement one. I have found that what you target as a percentage and what you actually need varies with income level per the OP question.
Quick reply to this message
Old 06-01-2014, 05:22 AM
71,934 posts, read 71,971,035 times
Reputation: 49499
i couldn't even guess what that would mean for the op. again even if he took the most aggressive route which was 100% equities there is no telling how much would get spent down.

if it was pre 2000 quite a lot would have evaporated depending on how much is being pulled.

the higher the income the more descretionary spending usually occurs . that in theory allows a higher income person with bigger nest egg some slack in the plan for cutting back even at the same percentage withdrawal rate as a lower income person..

the lower the income and nest egg amount even at the same withdrawal rates has less slack in the plan because there is usually less descretionary spending going on and less to cut if markets don't perform.. in theory a lower income person needs to keep more powder dry than a higher income person with more descretionary spending.

as we see on suzie ormann all the time many higher income folks won't make that spending cut if need be and so they run in to trouble as well. that is why i can't say what kind of outcome the op may have if things take an extended sideways or downward trend.
Quick reply to this message
Old 06-01-2014, 06:28 AM
71,934 posts, read 71,971,035 times
Reputation: 49499
i know i mention it a few times but how i ball parked a retirement budget was very simple:

i added up all the non-descretionary bills we have that will remain. those are things like insurance, housing costs, medical insurance,utilities, and every other thing we couldn't cut.

i then times that x2 for a total budget that includes 50% descretionary spending. that is clothes,food,gifts,trips,the gym , etc. it is really the wants and not the needs .

i throw in some extra for taxes and basically thats my budget year 1 of retirement.

i then subtract social security,pensions ,any annuity income etc.

the remaining has to come from savings..

so if i had 20k in non descretionary expenses and 20k in descretionary i need 40k plus some tax money so call it 50k

if ss is 30k i need to generate 20k from savings.

i multiply that by 25 and come up with a savings needed of about 500k.

i then can check an allocation chart to see what kind of allocation of my money has stood a high success rate of generating that income.

a quick check shows a 50/50 mix should sustain life fairly well unless we have some pretty tough times ahead .

the nice part of the plan is with descretionary spending taking up 50% of the budget it gives a big margin of safety if things do not go as planned and you need to take a pay cut.

of course someone with a lower budget and less assets may not have as much descretionary income to cut and that can be an issue down the road. they may need more savings vs expenses .

how you will do will depends on that relationship between needs and wants in your own lives and how much can be cut if need be , your savings amount , and how you intend to allocate your savings to generate what you need to draw.

how long you live ,your health, how markets and interest rates do as well as you and your wifes ages at retirement add further uncertainty in to the mix.

all of the above are reasons why you really do not want to work off some percentage of what working income was.

Last edited by mathjak107; 06-01-2014 at 07:01 AM..
Quick reply to this message
Old 06-01-2014, 09:29 AM
Location: Albuquerque NM
1,663 posts, read 1,532,675 times
Reputation: 3650
Originally Posted by doss1 View Post
Since I am a 6 figure earner and don't plan to take many vacations or eat out (I prefer to cook my own food), can I realistically just replace 50% of my earnings for retirement? What kind of numbers do high earners usually use when planning retirement? Is it 70-80% across the board?
After tracking my expenses for a couple of years and with my house paid off and employer subsidized health insurance in retirement, I'm planning on replacing 65-70% of income. This is allowing a nice chunk for travel, entertainment, and emergency expenses. If I was willing to live frugally in retirement and was a handyman type around the home, I might be able to get it down to 50-55%. But you also have to plan for replacing a car, new roof, unexpected medical or dental expenses, etc. Health insurance costs can be expensive. And this assumes that you don't live in an high cost part of the country with high property and state incomes taxes. I would agree that if you are a higher earner putting the max into a 401K and IRA, maybe investing some on the side, and paying off your mortgage, you may not need 80% of income in retirement. But I would be hesitant to plan on less than 70% at your age, especially as things can change in thirty years.
Quick reply to this message
Old 06-01-2014, 09:38 AM
Location: Haiku
4,188 posts, read 2,607,728 times
Reputation: 6178
Originally Posted by rjm1cc View Post
You need to make up a budget. The %'s are ok for planning at a younger age. Be careful, you will have lots of time to spend more money than you did.
We made a budget and I have tracked our living expenses very closely for a year now (we are retired) to see how close the budget is. It is OK in some areas, way off in others.

Here is another way to answer your question - what exactly will you be doing differently while retired than what you were doing before? Think about lifestyle changes you anticipate.

For us...
- our eating habits are the same. Same amount of eating out, same grocery bill
- our car and driving is about the same. We both want our own cars. We spend MORE on gas retired because we are not sitting in an office all day, we are out doing things.
- our vacation expenses went way up. We are way over budget on that one. That is directly related to being a high-earner - I got used to nice hotels from business travel. When we vacation travel now I have a hard time staying in back-packer hotels.
- we spend more on entertainment/sports/gym/hobbies post-retirement because we have more time for those things now
- we spend less on clothes
- we eliminated our mortgage payments (nothing to do with retiring, I just decided to pay it off)
- Internet + cable is the same before as during retirement
- Medical went up by a lot. No longer covered from work so on private insurance.
- Household maintenance went down. No more calling the plumber, it is all about me doing those things now. I have the time so may as well.

The biggest cost saver for us is we are stopping our constant stream of house improvement, remodel projects. Those used to consume 30% of our budget. But that is not a lifestyle change, it is just eliminating a line item from our budget because we can not afford those any more.
Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.

Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Retirement
Follow City-Data.com founder on our Forum or

All times are GMT -6.

© 2005-2019, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top