U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Retirement
 [Register]
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)
Reply Start New Thread
 
Old 04-11-2015, 08:31 PM
 
Location: Grove City, Ohio
10,141 posts, read 12,404,828 times
Reputation: 13992

Advertisements

This article out just today and it is what I have been thinking for some time.

Why you will need less money than you think for retirement
The Wall Street Journal
By Jonathan Clements April 10, 2015 10:09 AM

Quote:
Conventional wisdom says you need retirement income equal to 80% of your final salary. But there is a decent chance you could happily retire with far less.
80%? That's crazy when I think about it.

Right now my take home pay is 72.3% of what my gross is so if I did have a retirement that gave me 80% of my gross salary I would actually be getting a raise in take home of $90/week.

Now if only I can get over my fear of not having enough, a lot of that is people telling me I need 80% of my final salary to be comfortable, I can take my coming retirement with less stress.
Reply With Quote Quick reply to this message

 
Old 04-11-2015, 09:11 PM
 
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
22,675 posts, read 40,039,994 times
Reputation: 23825
Quote:
Originally Posted by nicet4 View Post
...
Now if only I can get over my fear of not having enough, ...I can take my coming retirement with less stress.
relax... (if you have adequate savings / income streams) you will learn to get by on less, if that what it takes.

Run a few scenarios of your future income streams.

Mine were a bit bleak for the first few yrs (since I retired pre age 50).

With HC costs and property taxes going up a few hundred% in the first few yrs after early retirement..., and US Gov removing the affordable HC options...(pre-Medicare age). I went back to work to show enough income to secure a bunch more income property. (to increase my future cash flows).

Might be OK... might be another 'gotcha / torpedo' coming.

Be flexible, be informed.

Retire Early, retire Often.
Reply With Quote Quick reply to this message
 
Old 04-11-2015, 09:17 PM
 
48,516 posts, read 84,021,758 times
Reputation: 18050
Another day another retire article; ho hum.
Reply With Quote Quick reply to this message
 
Old 04-11-2015, 09:41 PM
 
Location: Montana
1,754 posts, read 1,659,698 times
Reputation: 5961
All through my working years it was 75% that financial planners held out as the standard.

Maybe this is like tipping, it was 10% forever, now it's 15% and moving to 20% as the standard. 10% I still the same as it always was (auto adjusts for inflation because it is a %), and while the waitress may disagree, it's still a decent tip!

I suspect that accounting for taxes, commute expenses, wardrobe expenses, eating out (lunches), car wear and tear, etc. 75% my well be a slight increase in actual spendable income, and 65% with some adjustments is probably fairly comfortable, and 55% doable, unless you are currently paycheck to paycheck with no significant ability to cut housing, auto or some other major monthly expense (loans, maybe).

I have been living on my pension income for the last three years, and my salary has been going into housing (mortgage retirement) and savings, with an expensive exotic trip, and covering some sibling medical expenses thrown in to make it interesting. When I retire early next year I will be going to about 40-45% of my current income, and will be very comfortable, because that is essentially what I live on now - I will still be carrying a small monthly mortgage payment, but quite reduced from my current one. So in my situation, retiring on 40-45% of my current income isn't a struggle, but my situation is admittedly somewhat unique - just like everybody else's situation is somewhat unique.
Reply With Quote Quick reply to this message
 
Old 04-12-2015, 12:12 AM
 
Location: Out there somewhere...a traveling man.
39,582 posts, read 47,825,261 times
Reputation: 110507
Why you will need less money than you think for retirement

Someone forgot the higher costs of medical care. After you retire a good chance, as in our case, medical costs will greatly increase as we start getting the illnesses that we never had in our younger years. We've gone from about $3500.00 annually in med bills since retiring to over $40,000.00 today. That's after what insurance will pay. We sure didn't plan on getting that sick.
Reply With Quote Quick reply to this message
 
Old 04-12-2015, 12:25 AM
 
Location: Silicon Valley
18,134 posts, read 23,037,051 times
Reputation: 35386
If you end up losing everything, you'll find a way to live within your means. Relax.

I make do on practically nothing and I'm fine and happy. I could use more, but I'm okay the way I am.

I just hate to see all this angst about retiring. It takes away from the life you're living today.

There are no guarantees that you won't end up disabled and/or broke. And guess what? If you do, you'll be fine.

I highly suggest if that happens, you come move here. It's beautiful. And cheap. And there ain't no snow!
Reply With Quote Quick reply to this message
 
Old 04-12-2015, 03:49 AM
 
71,841 posts, read 71,919,037 times
Reputation: 49410
Quote:
Originally Posted by wit-nit View Post
Why you will need less money than you think for retirement

Someone forgot the higher costs of medical care. After you retire a good chance, as in our case, medical costs will greatly increase as we start getting the illnesses that we never had in our younger years. We've gone from about $3500.00 annually in med bills since retiring to over $40,000.00 today. That's after what insurance will pay. We sure didn't plan on getting that sick.
bingo , healthcare costs are the giant wild card today un-doing all the studies done on retiree spending.

study after study showed amounts were overstated by financial calculators because they assumed inflation adjusting every single year forever.

retirees with discretionary income don't spend the same through out retirement.

they spend heavier early on going and doing things than spending plunges until mid 80's when medical expenses picked up.

it was believed retirees needed a lot less inflation adjusting because what hey stopped buying and doing more than covered increases in what they did continue to spend on.

but soaring medical and dental costs are destroying that premise.

medical costs are eating up that savings from reduced spending like wild fire.

our healthcare cost first year ,now that i am retiring are insane.

i will cobra to 65 , marilyn goes on medicare and a medigap plan and we have our long term care policy and that is 17k a year before tax credits on the long term care and deductions on the medical. different states have different price structures and medigap plans can run 2x what they are in another state.

but while our state is higher we are also not priced by age . most states are age based so your expenses will shoot up yearly as you age for a medigap plan , ours will not since we are a community based state..

dental was another 6k this year for the two of us.


right now the jury is still out on just how much is enough , especially if you have no intentions of moving to a lower cost area..
Reply With Quote Quick reply to this message
 
Old 04-12-2015, 04:46 AM
 
Location: Los Angeles area
14,018 posts, read 17,763,041 times
Reputation: 32309
Quote:
Originally Posted by wit-nit View Post
Why you will need less money than you think for retirement

Someone forgot the higher costs of medical care. After you retire a good chance, as in our case, medical costs will greatly increase as we start getting the illnesses that we never had in our younger years. We've gone from about $3500.00 annually in med bills since retiring to over $40,000.00 today. That's after what insurance will pay. We sure didn't plan on getting that sick.
Ouch! I presume you are not yet on Medicare, because once you turn 65 and go on Medicare, your medical expenses are taken care of. Sure, there are still things like co-pays, or monthly premiums for Medigap policies, but all that doesn't amount to a hill of beans. So you have major savings to look forward to starting on your 65th birthdays!

Of course dental expenses are not covered by Medicare, so that's a whole different issue. Since turning 65 six years ago, I've had two implants at close to $4,000 a pop that I paid for out of pocket.
Reply With Quote Quick reply to this message
 
Old 04-12-2015, 04:53 AM
 
71,841 posts, read 71,919,037 times
Reputation: 49410
for marilyns medicare we have budget numbers of about 1500-1600 for a,b,d

medigap hi deductible f about 900 or 3200 for a regular plan f so we are looking at 2500 with a 2k deductible or 4800 and no deductibles.

since that will be x2 for both of us that is still a lot of dough even on medicare.

we are talking 11k in either costs or exposure.

since we intend to travel a lot an advantage plan is no good for us. my cousin got nailed big time on his advantage plan when he had a heart attack on a trip.

sure you could cut back on the medigap plan and take on more risk but if you do that you still need to budget for the exposure .

i am in great shape but still prediabetic which i am sure will one day just shift to diabetic , it always seems to so i don't want to much exposure which is why i would roll the dice on a high deduct plan f..

ny is a community rated state so we are higher up front and stay cheaper going forward than most of the country which is age based. a plan f is 1/2 the cost elsewhere but escalates yearly by age. we don't.

your healthcare situation , states structure and how much exposure you want is going to be the big wild card as far as what is enough. next to housing ,healthcare is our biggest expense

Last edited by mathjak107; 04-12-2015 at 05:08 AM..
Reply With Quote Quick reply to this message
 
Old 04-12-2015, 05:17 AM
 
Location: Los Angeles area
14,018 posts, read 17,763,041 times
Reputation: 32309
All these articles and guidelines represent averages which are totally meaningless to the individual. I spend about 110% of my pre-retirement expenditures, because I have more time to go places and do things. I derived almost no savings at all from the cessation of full-time work, other than union dues. I will address some of the points in the article plus other commonly made points on this topic.

1. Paid off mortgage: Since I paid off my mortgage several years before retirement, there was no difference in that department.

2. Putting kids through college: Well that's huge, of course, but I have no kids, so that one is meaningless to me.

3. Medical expenses: Lower after Medicare, so yes, I did derive some savings there.

4. Dental expenses: Way up after retirement, because I used to have excellent employer-paid dental insurance and now I have a crappy plan that doesn't pay for much.

5. Commuting and parking expense: I had no parking expense because I did not work in a dense urban core and I had a pretty short commute the last 20 years or so of my full-time employment. So I drive more now than I did while working because there is more time to go places and do things.

6. Clothing expenses for work: No savings for me, as I still wear the same kind of clothes I used to wear. I had very little dry cleaning then (was not an attorney) and I continue to have very little dry cleaning now. For women the dry cleaning thing may be more significant, but we men can have wash-and-wear dress shirts and dress slacks.

7. Union dues: Yes, that's something I no longer have, but it wasn't an arm and a leg.

8. Saving for retirement: That one is certainly a source of reduced expenses for most people, but my retirement savings (8% of gross salary) came from automatic payroll deductions from gross, and I never spent that money out of net income, so it didn't feel like an "expense".

9. Federal income taxes: I didn't make much while working, so it turns out my retirement income is actually a bit higher than my full-time working income, hence I pay more income taxes than before. Not all us are "successful" in the workplace in terms of being doctors, lawyers, CPA's, investment bankers, middle and upper management, Ph.D.'s, and so forth. Therefore my view may be skewed being that it's a view from closer to the bottom of the food chain (high school teacher).
Reply With Quote 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.


Reply
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
Message:

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