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Not to be insulting or condescending, but if you lived your live in the lower half of the income tax arena and are comfortable there, then $5k a month sounds mighty dang comfortable. When I had a lower income, in the beginning of my career, that number seemed unimaginably high. Mansions and Porsches and trips to Europe for everyone. But it's just not the case at all. If you feel you've worked your butt off to finally get to the top say, 15%, then being told you should be "happy with $5k/mo, who needs more"? is frankly just as irritating. I didn't work my whole life to settle for having to live on $5k/mo. That would scare the crap out of me. Sorry, but it's very real and very true. There is some comfort in knowing that we would never starve or worry about having a roof over our head, but for many, that is not enough, and it's no ones place to insist it is or should be.
That's an interesting paragraph, Perry. I agree that no one should tell others what they "ought" to be happy with. The wording you used to explain your goals is neither sneering nor condescending but simply explanatory. A few others have not been so successful in avoiding the sort of bragging which irritates people of more modest means because it is in fact sneering and condescending.
Personally I seem to occupy a kind of mid point in these discussions. I have been told that my gross retirement income of roughly $60,000 is something others can only dream about and that I am truly very fortunate to be able to live so well. (I do feel fortunate actually, although that may seem strange to you). And when you write about $5k/month to live on, that implies net, not gross. My net - what is available for me to spend - is about $4200/month. Given my paid-off house, that amount allows me some luxuries such as prime seats at classical music concerts and eating out almost daily (although not at high-end restaurants) with money left over every month. I don't worry about things like having to replace the heating/air conditioning unit or major repairs on the car because the money is there for those sorts of expenses. Family reunion in Mobile, Alabama on rather short notice? No problem, I just flew back there and stayed in a Day's Inn. Didn't even give a thought to the budget aspect of doing that.
Yet I respect that you have higher expectations and a higher life style and that you have worked long and hard to achieve those. We all have our comfort zones, and it is amazing how much those can differ. So no, I don't think you ought to be happy with my income and my life style just because I am happy with them.
i always felt i wanted to live better in retirement then we did working so that would be our reward for striving to make it better . it didn't always look like we could pull it off raising a family and JUST BEING WORKERS BUT IF YOU WANT SOMETHING BAD ENOUGH YOU WILL MAKE IT HAPPEN one way or another . .
Actually. as per my first paragraph, I meant gross income. That is why I mention taxes. I should have also included married or single as a parameter, but I've already wandered off topic, which as you point out is very easy and most commonplace in any forum. In fact, if I was trying to be the Forum Police,mthis question was only for soon to be retired people, not retirees at all. Read the question of the poll. I really don't have (many) higher expectations, outside of travel, which may be short lived after 10 years, or a higher lifestyle.
$5k for a single male is typically more workable than for a female. I'd replace my own hot water heater or fix my car. My wife would not. Men don't buy makeup, get their hair done, or need clothes as often as woman do, again, typically. $5k for a couple is far less than a single person, but for a couple, could all be SS, (at my FRA, our SS will be $4500), then typically tax free. $5k for a single would not be all SS. Etc, etc. my numbers are based on providing a lifestyle for US, and worrying about medical, etc for US. Double the fun, double the chances of an expensive issue late in life. In fact, not that I ever plan on it in any way, the engineer in me (since I've been divorced twice before) absolutely looked at my retirement plans and said "if she decides to leave me, could I live comfortably on half of what we are planning?". Cold and calculating? You betcha!
Besides a paid off home of maybe double the average home cost in the US, we don't nor plan to live large, or have higher expectations for our retirement. We live debt free,m(though still have a few years on our mortgage). But I absolutely want to avoid a downgrade in lifestyle, and include non extravagant world travel (not everywhere, either). It has always been one of the major driving forces in my career and life. I have always been a "moderation now, for reward later" , like mathjak says, kind of person. Pretty much nothing boils my eggs like my relatives that vacation 3 or 4 times a year, have more expensive cars and homes, yet have zero, zilch, nada for retirement because "If I pay my house off, SS is all I need". I've easily had more than double the lifetime earnings of anyone in my immediate family, which enables me to save more, plus I have a pension,mand will ger a higher benefit by far, yet I live more prudent than most all of them. Yet not a one with nothing saved, has any idea how much SS they will get!! Ant and grasshopper. Ignorance is bliss until it bites you in the behind.
Last edited by Perryinva; 02-05-2016 at 06:11 AM..
I assumed the question was gross income (projected, if not there yet) before retirement and gross income after retirement. Since the tax situations, as well as location, management of tIRA & ROTHs plus "when in retirement" are not discussed, plus when income is salary plus unknown overtime and bonuses, the percentage, as a useful number is meaningless.
I could use a least common denominator and assume only my guaranteed current base salary (happens about 20% of the time), assume no raises for the next 4 years, (possible, but very unlikely), and move to a lower COL area, collect pension and SS at 62, etc, etc and just say my fixed income from pensions, SS, and RMDs after I'm 70 will be around 90 % of my final (decent, low 6 figure salary). I've ANSWERED the poll question.
I agree that a simple percentage is meaningless. Though it does answer the poll question.
I assumed the question was gross income (projected, if not there yet) before retirement and gross income after retirement. Since the tax situations, as well as location, management of tIRA & ROTHs plus "when in retirement" are not discussed, plus when income is salary plus unknown overtime and bonuses, the percentage, as a useful number is meaningless.
I believe the question was CURRENT (not projected) gross income and either CURRENT or PROJECTED retirement gross income.
All retirement planning articles have used this percentage of working income as a retirement guideline with 80% 'replacement' income being a common recommendation. The 'flatline' poll responses here clearly demonstrate that this 80% guideline is too broad and close to 'meaningless'.
IMO, the most important ratio is your retirement expenses (current or projected) over your retirement NET income (current or projected). If it is > 1, you will have to either cut back on your spending and find ways to bring in additional income.
Even when your retirement expense is less than your net income, you still have to look at the number and figure out what percentage of your income HAS to come from your savings. There have been quite a lot of discussion here on what is the right draw-down percentage 4%, 3%, 2% etc. I don't believe that there is a single number to fit everybody and guaranteed to work all the time. Each person just have to figure out a 'budget' he/she can live with and sleep well at night in spite of all the market gyrations.
if you are basing the answer on actually working off expenses and needs and expressing it as a percentage of "old" income it is fine but really meaningless .
it has no more meaning then losing a high paying job , getting a lower paying job and still expressing your needs as a percentage of the old salary instead of the new.
All retirement planning articles have used this percentage of working income as a retirement guideline with 80% 'replacement' income being a common recommendation. The 'flatline' poll responses here clearly demonstrate that this 80% guideline is too broad and close to 'meaningless'.
I suspect that's because the authors of the articles know most people won't take the time to understand a more complex answer, or crunch the numbers for their own specific situation. 80% is a crude approximation that tries to bake in some of the issues pointed out in this thread.
Quote:
Even when your retirement expense is less than your net income, you still have to look at the number and figure out what percentage of your income HAS to come from your savings.
Or where you need to cut back on your expenses and/or how much part time work you're going to have to do to make the numbers work.
Well, it's just a question. I didn't ask how people were trying to achieve the percentage, I didn't ask what the actual numbers were. Since percent of current income you want to have in retirement is frequently used as a proxy for how much you will need (at least as a starting point subject to individual variation) by many investment companies, I was just curious to see what was happening in the real world.
$5k for a single male is typically more workable than for a female. I'd replace my own hot water heater or fix my car. My wife would not. Men don't buy makeup, get their hair done, or need clothes as often as woman do..
My observation of men vs. women saving/spending patterns is that it depends more on the individual and not gender or marital status (albeit that one's habit could be compensated/modulated by one's spouse opposite tendency).
Yes, there are not many women who replace hot water heater or fix cars but there are not many men who do their own cooking, cleaning, mending/sewing etc. Regarding spending habit, some women may spend more money on grooming and clothing but some men spend money on toys (fancy car, boats, electronic gadgets). If anything, men's toys cost a heck more money than women's clothing, beauty routines etc.
Of course, we are both stating things quite stereotypically. There are many exceptions, our family included. My husband and I do everything together. If anything, I am more 'gungho' about fixing things than he. I have to rely on his strength for some mechanical stuffs, but I am the chief technician when it comes to electrical/electronic stuffs. He also pitches in with house work, cooking & cleaning. Neither one of us are into clothing, fancy grooming, but we are both into planes, and appreciate using electronic gadgets to optimize/enhance our hobbies (photography and videography).
From what I have read at this forum and observe in real life including examples of two retired single women in my family, many women have quite a knack for frugal living, finding bargains, stretching a dollar and establishing a support network. Statistics show that retired women have lower income than men so while there may be more older women living in 'poverty', I tend to think that for a given amount of income, a woman can handle it better than a man.
Last edited by BellaDL; 02-05-2016 at 11:51 AM..
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