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Old 01-18-2015, 08:33 AM
 
Location: Los Angeles area
14,018 posts, read 17,744,100 times
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Quote:
Originally Posted by rdflk View Post
......

That's one reason I'm curious about whether people feel as if they're on:
-- TIGHT retirement budgets
-- not tight, but not "money is no object"
-- or.....more than enough for anything I'd desire...money not a factor at all.

A money is no object retirement for me would be 20K in travel alone.
O.K., you are doing a sort of poll. I am in the second of your three categories (Not tight, but not "money is no object"). Although I abhor waste and therefore am aware of my expenditures, I never have the slightest worry about finances.
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Old 01-18-2015, 09:05 AM
 
Location: Maryland
282 posts, read 306,111 times
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Quote:
Originally Posted by rdflk View Post
Those are about the only work related expenses that I can think of off the top of my head that would go down. And that's not major money. So all the articles I see about being able to live off 70% of your salary -- I never did buy into.
Quote:
Originally Posted by MadManofBethesda View Post
There are a couple of other major items you're forgetting. For one, you won't be paying Social Security and Medicare taxes any longer, so that's 7.65% of your gross salary right there (if you're not over the cap) that you don't need to live on in retirement. Plus, you would have been paying income taxes on that 7.65% of salary so that's another 1.5% or so you don't need.

But the biggest "expenditure" that you won't have any longer is putting money away for retirement! If you've been putting 15% - 20% of your income into retirement savings of one sort or another, then with the SS & Medicare you've been paying, you've already actually been living on 70% -75% of your income.
I look at it the same as Bethesda. It is 70% of gross, since much less may be taken out.
6.20% SS payroll tax
1.45% Medicare payroll tax
20.0% Retirement savings (401k, IRA, etc.) just before retirement you should be saving lots of money.
Less tax since some retirement income sources are not taxed or reduced taxation
$$$ Union dues or pension contribution

Add to that, timing your retirement around the time your home is paid off saves on the expense side. But people can spend more on entertainment in retirement since they have time to do it. Others spend their extra time on things that don't cost much (gardening, volunteering, tinkering around the house, walks, hiking, etc.
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Old 01-18-2015, 09:48 AM
 
1,770 posts, read 2,443,971 times
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Much less: clothes, eating out, makeup, vehicle expenses, etc. All these costs drastically decreased.
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Old 01-18-2015, 10:00 AM
 
Location: Florida -
8,764 posts, read 10,848,423 times
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Six-years into retirement, we still live quite comfortably, with no sense of lack or loss, on about HALF of our (2) total pre-retirement income ... without touching IRAs or other investments. But, that doesn't mean we suddenly took a 50-percent income or discretionary spending cut upon retiring! 2-3-years prior to actual retirement, we shifted the balance between from spending to saving, and also rid ourselves of house payments, high risk investments and other things that could scuttle our plans to travel extensively, golf, boat, enjoy hobbies, pay cash for new cars etc., plus regularly engage in other retirement activities. Of course, we always lived 'well within our means', instead of running-up future debt that we only 'hoped' we could pay-off.

Since I retired 'early' (61), we also factored-in the cost of 4-years pre-Medicare health insurance; plus LTC insurance for both of us, and Term Insurance to offset a potential pension loss. We also continued with tithing and giving habits established over many years (far more important than many people realize). We planned for the likelihood of increased future inflation and taxes, by setting-up a deferred annuity and other investments (I'm not thrilled with the annuity investment, but, it will provide assured funds to help offset college costs for the 5 grandkids; and to supplement future savings).

We 'tested out' our planned retirement income (pension, SSx2) for a year or so PRIOR to retirement to ensure that our 'plan' was solidly rooted in reality. As stated, everything is working-out comfortably with no foreseeable major obstacles to our planned retirement lifestyle (I carefully review and update the 'retirement plan' against our lifestyle about every 6-months).

In some ways, 'planning for retirement' is similar to NOT running-up credit card debt to buy things one can't afford today ... with only a vague hope that one will magically be able to pay it off in the future. (At another level, look at what the huge debt of this country is doing to scuttle the future of our kids/grandkids!). The reverse is to 'think' about retirement, but, only 'hope' that one will somehow be able to pay for it. Having enough for retirement is about 'planning and implementing that plan', not about simply 'hoping' one will be able to afford the future.

Last edited by jghorton; 01-18-2015 at 10:45 AM..
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Old 01-18-2015, 10:18 AM
 
Location: Delray Beach
1,136 posts, read 1,440,242 times
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Living comfortably with lowered expenses (reduced home Maint by $600, eliminated SS and state taxes, lowered COL in FL vs NY with cheaper utilities, entertainment, auto and toll costs, and stopped saving %20 for retirement!).

So with almost the same income my discretionary spending is way higher... and I save money still.
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Old 01-18-2015, 10:30 AM
 
Location: WA
5,395 posts, read 21,401,588 times
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We have less discretionary budget than we anticipated but in ten years of retirement we have not really wanted for much as we still spend about what we always have.

We went into retirement without a fully implemented plan and suffered from inadequate planning and slow reaction. Had a couple of real estate deals go poorly, were not well diversified and lost a good amount in the market, and got hit with some medical costs. So the pad in the plan deteriorated in a couple of years.

I never really believed our spending level would drop much in retirement and it has not... if anything the base costs have gone up a little.

So unless you have reliable fixed income, good savings, and the ability to adjust as needed, retirement can have some substantial challenges requiring adjustment in expectations.
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Old 01-18-2015, 10:43 AM
 
2,429 posts, read 3,225,700 times
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Quote:
But the biggest "expenditure" that you won't have any longer is putting money away for retirement! If you've been putting 15% - 20% of your income into retirement savings of one sort or another, then with the SS & Medicare you've been paying, you've already actually been living on 70% -75% of your income.
Quote:
If you were saving 20% of a salary before you retired, though, your retirement expenses drop 20% if you change nothing else.
Pre tax, post tax...I just care about net money in my pocket that I have to allocate for living.
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Old 01-18-2015, 10:56 AM
 
Location: Florida -
8,764 posts, read 10,848,423 times
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Quote:
Originally Posted by rdflk View Post
Pre tax, post tax...I just care about net money in my pocket that I have to allocate for living.
Deferred, pre-retirement "pre-tax", becomes Post-retirement "taxable income" (unless one has a fixed pension or some other form of net income). Retirement withdrawal taxes from deferred accounts, can significantly reduce what one can withdraw from 'retirement savings' to produce 'net money in one's pocket.'

Many, for example, plan on an annual 4% withdrawal rate to avoid eating-away their principle ... only to discover that they must have 6% (hypothetical) to offset the impact of taxes and lower ROI years than one had planned. And even if one can avoid excessive withdrawals, RMD's at 70-1/2 will force the issue.
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Old 01-18-2015, 12:18 PM
 
5,819 posts, read 5,187,315 times
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I keep myself on a strict budget, although I guess I really don't need to. One might as well understand where one's money goes! BTW, I have a line item just for travel, so that's bugeted in.

As for expenses, at the end of the 2014 I realized that I had only spent $133.35 on clothing for the whole year! That's FAR less (for a professional woman) than when I was working. And my "gas and car care" line item was also FAR less than before.

Utilities and health were more than expected, and I had very unexpected home maintenance/repair costs. So I ended up spending about $3000 more than I had budgeted in 2014. You just can't plan ahead for some health and home care related costs.
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Old 01-18-2015, 12:27 PM
 
Location: Central IL
15,243 posts, read 8,538,301 times
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Quote:
Originally Posted by Escort Rider View Post
People's work situations vary enormously, so the plain fact is that some people have work-related expenses which will disappear in retirement and some people don't.

1. One thing that comes up a lot is dry cleaning. In an age with wash-and-wear dress shirts and dress slacks (for men at least), where the hell does dry cleaning come in? Sure, ties and sports jackets, but how often does one need to have them dry cleaned? Yes, I am speaking from a male perspective.

2. Work clothes. With some exceptions (lawyers who appear in court, lobbyists like Curmudgeon who hob-nob in the state legislatures, and some others) most people in this day and age do not need any work clothes different from just regular clothes. I continue to wear the same clothes I've always worn - clothing expense has not changed at all.

3. Parking costs. If you have to pay to park at work, then of course you will save that if you no longer work. I never had to pay to park at work, so no savings there.

4. Commuting costs. Everyone goes on and on about how we retirees save our commuting costs. Not me. I didn't have a very long commute anyway and I probably put more miles on my car now because I have more free time to go places and do things.

5. Lunches. Some people bring sack lunches to work (not always socially acceptable depending on the job, I know) or utilize inexpensive cafeterias, so there is no lunch saving for me.

6. Union or professional association dues. There is my saving as a retiree, right there, but it doesn't amount to all that much.

The work-related savings of retirement is just one of those urban myths built on an upper middle class stereotype. For most people it's just pure bs. But for others its reality.
I agree that for most people these are very minimal costs and won't go down unless you work in an urban professional setting.

What will go down is the amount of taxes you pay because you're in a lower tax bracket, any contributions you made when saving for retirement, and hopefully housing costs (unless you'd already paid off your mortgage).
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