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Whatever amount is comfortable now...don't we expect the amount to change with time? If $75k is comfortable now, with, say 10% inflation, that amount will need to be $150k per year in just over 7 years. So...if you have cost of living increases that truly reflect what you spend money on built into your pension, and you are comfortable with your pension now...it seems like you're in pretty good shape. However, i do wonder if anyone has an "honest" COLA built into their pension, and some of the debt reduction plans floating around out there include changes in COLAs for federal/military retirees that will make it more difficult for the COLA to keep up with any accurate rates of inflation. If you don't have a pension with a COLA, you really need to make sure your investments or cash reserve can generate the amount of cash to keep up with inflation.
Of course, another important factor that we all deal with...and generally can't answer, is the question of how long we will need money...not only to support the act of being alive, but to support a spouse or significant other if we croak first.
thats why there are so many miserable or failed retirements.
what seemed like enough money when they started became way to small of an amount as time went on . un-cooperative markets add to that too.
Always keep your eye on the prize of how much do you really NEED to retire on and how much can you afford to spend. If you need 75 and make 150 you have a much greater margin of error than the person who needs 40 and makes 50. As we age what we spend relative to inflation will probably decrease as we have discussed in other threads. You can stagger you income flow as we have discussed so your max point is 70 1/2. That is a big difference if your melt down starts there compared to 62 and how long will their be two spouses to live off of the income. The great part of retiring early is you get to really enjoy retirement and if you have to down size in 20 years you have had a good ride. Will we really need the beach home at 80 or even 75 or younger etc etc etc. Long term planning isn't just income but expenses and the ability to phase expenses out with time. That's why things like property taxes and utility costs become so important what is affordable now can become more of a challenge down the road. Always compare your income with the median family income where you live and that can give you an idea about your margin of error. Transplanting can buy you mucho in the way of inflation protection as your assets were driven by how much you made and the higher the cost of living the more you probably have as your salary was higher and saving 10% of 150K will leave you with more than saving 10% of 120K. You know all of that. Just imagine if you guys went to rural Tennessee you would be golden. What is inflation and what are the components of your life style inflation and how much will it really be impacted. Food yes, gasoline you have control over in retirement. Housing? Paid for and at these prices a good time to buy another and down the road if you don't need the second only time will tell. Utility costs yes but again where you live makes a difference. You know the drill, analyze your monthly spending with an eye to how much can you cut out and that gives you your margin of error. Living in the Pocono's can be very nice and very expensive with some serious fixed costs. We know we will eventually have to move as public transportation is non existent. Ten percent inflation even if it did happen long term is only going to be applied over some of your expenses.
Whatever amount is comfortable now...don't we expect the amount to change with time? If $75k is comfortable now, with, say 10% inflation, that amount will need to be $150k per year in just over 7 years. So...if you have cost of living increases that truly reflect what you spend money on built into your pension, and you are comfortable with your pension now...it seems like you're in pretty good shape. However, i do wonder if anyone has an "honest" COLA built into their pension, and some of the debt reduction plans floating around out there include changes in COLAs for federal/military retirees that will make it more difficult for the COLA to keep up with any accurate rates of inflation. If you don't have a pension with a COLA, you really need to make sure your investments or cash reserve can generate the amount of cash to keep up with inflation.
Of course, another important factor that we all deal with...and generally can't answer, is the question of how long we will need money...not only to support the act of being alive, but to support a spouse or significant other if we croak first.
That's why we took a pension reduction to guarantee each other our pensions. Good advice
thats why there are so many miserable or failed retirements.
what seemed like enough money when they started became way to small of an amount as time went on . un-cooperative markets add to that too.
I know folks who will be a disaster case within 5-10 years of retirement and others who will remain in good shape. One of the key things is expenses heading into retirement. The ones who are in good shape are our old neighbors who have their house paid for and travel a lot as in world travelers a lot and love time shares and buy Marriott time shares and points like crazy. That is a major chunk of change they could cut out if needed. The others still have a significant house payment and can get buy on their initial retirement but as noted inflation will destroy them.
That's why we took a pension reduction to guarantee each other our pensions. Good advice
It definitely a numbers game...
When retired friends from AT&T ran the numbers they opted for the full pension because and gambled they would be around the couple of years to reach the break even point... the additional money quickly paid the premium for a life insurance annuity to make up the short fall.
For one... it turned out to be very beneficial... his wife of 46 years passed 2 years after he retired and that was 24 years ago... he would have lost half his pension instead of a few years of life insurance premium.
As to the original question... I need very little... I would like more because with more time I could easily spend more
Can no longer depend on employer sponsored benefits... all that vanished over the course of mergers and acquisitions...
It definitely is a different world...
I signed on to employer matching 401k, Stock Option, Profit Sharing and generous medical... all no longer exist
Always figured to look after myself and whatever additional money comes in is extra...
I come from a family where no one really retires... they just slow down... that is very much the norm for those with small family farms of having built a business over a lifetime...
Maybe I'm reading the OP's question differently, but why does someone need more than $75k per year to be retired? $40k based on assuming costs for health insurance.
And, yes, a portion is for "wants" since that is included in the OP's question. I don't want to immediately hiberate and fall off the face of the earth when I retire.
Maybe I'm reading the OP's question differently, but why does someone need more than $75k per year to be retired? $40k based on assuming costs for health insurance.
And, yes, a portion is for "wants" since that is included in the OP's question. I don't want to immediately hiberate and fall off the face of the earth when I retire.
"Wants" are a wild card...
I had an aunt that lived on very little being retired... and her "Wants" were more than met. She basically lived on her Social Security and never touched her other money.
She always enjoyed gardening and really got into it when she retired... raised prized winning orchids and her produce was out of this world... even sold some at the Farmer's Market near her home just for fun...
Her expenses dropped dramatically no longer having the long commute, having business lunches, and having to dress a certain way...
She had her home of 40 years paid off, her California Prop Taxes were predictable under Prop 13 and having Medicare covered her medical needs...
Had she wanted to spend her time traveling and entertaining... she could have quickly exhausted her funds...
I had an aunt that lived on very little being retired... and her "Wants" were more than met. She basically lived on her Social Security and never touched her other money.
She always enjoyed gardening and really got into it when she retired... raised prized winning orchids and her produce was out of this world... even sold some at the Farmer's Market near her home just for fun...
Her expenses dropped dramatically no longer having the long commute, having business lunches, and having to dress a certain way...
She had her home of 40 years paid off, her California Prop Taxes were predictable under Prop 13 and having Medicare kick in covered her medical needs...
Had she wanted to spend her time traveling and entertaining... she could have quickly exhausted her funds...
Did your aunt live during the Depression Era? My oldest brother was born in '31 and he definitely shows signs of it from our parents. And he lives very modestly and doesn't need much. But he doesn't DO much, either. He is happy just to be with his friends. He'll drive to the coast once in awhile to visit people he knows there. He's still healthy as a horse, though.
I believe it can be a generational thing.
I think a few of my own bills would actually increase after retirement because I'd be home. The power bill definitely would, as I'm one of those who needs a lot of warmth to be comfortable. Commuting would increase for me, as my annual mass-transit pass is a fringe benefit provided by my employer.
Mortgage would come close to completion if I retire when I want to but then the will have to help pay for health insurance. Property taxes are another issue I'm concerned about, probably even more so that the medical stuff. Prop taxes are high where I live, and people tend to hike them at ballot time because they have holes to burn in everyone else's pockets.
But, then, my answers are based on remaining in my house of 21 years. That could change, too.
Last edited by Bluesmama; 06-09-2011 at 10:30 AM..
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