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What do you need to retire??

7K views 70 replies 43 participants last post by  jackie schmidt 
#1 ·
Just curious what people need to retire these days. $30,000, $40,000, $60,000, $100,000 a year? I know some people say they will never afford to retire but I don't know what some people need. I know everyone's needs are different but do you really need the same income in retirement that you need when you were working?
No one needs to post their specific income but what is enough to be comfortable?
BTW, I am retired due to disability and live very well making $50,000 a year myself but my wife still works as she is younger than me and adds to our income.
 
#2 ·
For me, I need to make the same as I did while working. Also, since the cost of living increases, you need to make progressively more as time goes on, putting you in the same financial bracket or better. Some retirees spend far more than they ever did while working so you really have to be honest with yourself.
 
#3 ·
A big part of it is your expenses. If you have a mortgage and car loans that will make a difference. I have no debt and get by pretty well on SS and a pension which totals about $2100/month. But because of IRA tax rules, I had to take an RMD last year of $57 000 which I really do not need for any immediate purpose.
 
#5 ·
Geographic location, debt load, and wants and needs factor into whats needed or wanted to retire. We have no debt and I retired at age 54 and my wife does not work. I started with far less than the amounts all the investment bobbing heads say you need and the way I've cyphered our money and us will probably die off together. When I can start collecting SS next year it will make my retirement much more pleasant, when my wife starts collecting in 3 years after that, it will be icing on the cake. Current cash requirement is about $2400/month
 
#6 ·
I've worked my way up over time to putting aside about 25% of my income into retirement savings every year by just taking raises and funneling them into savings instead of spending. So I know I can get by on 75% of my current income.

But I also know that when I retire I will have no debt (house will be paid off soon enough), so that will significantly reduce my expenses. Not sure exactly what I will need, but current estimate with no debt would be less than 50% of my income today, and it may be significantly less as much of my retirement savings is in tax free investments so my tax bracket will go down quite a bit too.

Only unknown thing will be health insurance as I plan to retire early, so I have to sort that part out.
 
#17 ·
Only unknown thing will be health insurance as I plan to retire early, so I have to sort that part out.
This is what i need to iron out as well. I'm single, my living expenses are low, and spending is primarily car parts. I just actually moved, put myself back into a 30 year mortgage, which is pretty small after recasting with the equity from the other house. I am aggressively buying down the principal, and if things went sideways with this job, i could go back to paying my regular payment and live on a much smaller salary. I have a decent sum in 401k, and another individual investment thing. I think im doing ok for a single guy, you guys with college payments, man that could be a downer.

I think, and hope, that i am in a better position than most guys i see at work here. My body isnt going to make 60 doing what i do, nor do i really want to do this much longer.
 
#7 ·
I retired last year at age 72. I have no mortgage, car payments or any of that stuff. My wife and I only have to pay for insurance, taxes and utilities........oh, yah, and food. We still have 3 years of annual payouts from the sale of our business, but we're fine without it. I wish our health was better, but you can't have it all. We'll be just fine.
 
#8 ·
No mortgage and auto loans are key. Im not retired living like the commercials show, like sailing around the world in a 100 foot sailboat, but I do as I want and the first thing I did was not set the alarm clock! Unless, I had an early tee time! Its all about your monthly expenses and how much more you think you may want on top of that. I have a 401 ,but I dont include that as part of my income needed monthly. So, I can take a vacation if I want, and have that as an emergency fund if needed.
But my way of thinking is I worked all the good healthier years of my life, so I owe whats left for myself. That there has value. I do miss the social part of work, but not the job itself. And Im not going to die at work. But in the end ,its all different for everyone.
 
#9 ·
We started saving "later" than most financial people say but we tried to pay down debt ASAP as it came along. Once the kids got out of college and such, we really started putting it away and investing. my wife has been retired for 4 yrs. and I still work part-time. We both are drawing SS and she gets a pension. We are rather frugal but once in a while a "luxury" is fun. The big question is healthcare, esp. in the future. Right now, our health is pretty good but tomorrow is another day. We hope we have enough but we are still investing small amounts for some growth/dividends...what constitutes enough?
 
#11 ·
I retired at 62 and will be 69 towards the end of this year. My wife is going to finally retire at the end of this year at age 67. By no means are we rich. Everything we own is ours though no mortgage, no car payments. We never had any kids but we did have 6 of the little fury things running around the house through the years, were down to our last two now. Were not ones that want to travel the world we had a comfortable life together not expecting a whole lot. If we can keep the lifestyle we live now we'll be satisfied. To many people work their lives away save everything they can and in the end they die young and rich or end up in a rest home and the state gets everything if they didn't make plans ahead of time. How many people do you know that died at an early age or were really looking forward to retiring only to be cheated out of it because the end of their time beat retirement out. My wife and me had a good run never had any bill collectors breathing down our necks. Hopefully we'll still have a few good years together and if we have it planned out just right there won't be anything left for anyone to squabble about.
 
#12 ·
Mary and I have no debt, that is the key to retiring with a small income. Our combined Social Security income is $2300/month and I get $180/month pension. We have no desire to travel around the world or even the country. We take our once a year vacations, she goes to Alaska to visit family and I travel out of state for some car shows. My side job money supports our car addiction. We are happy and healthy, that is what is important to us.
 
#14 ·
we never really stopped to figure how much we will get or how much we will need. we are debt free, which helps. We got to talking about buying a bigger place and really didnt have a clue how much we should spend. we're 56 and thinking of a house payment after retirement really made us nervous. Either way, wife plans on retiring at 62, I told her I'll retire at the same time, ill be 63.
we get to keep my wifes insurance after retirement (DOD) so its affordable.
between pensions, SS and 401k we should be fine as long as we dont go buy a 300k house. jim
 
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#15 ·
I'm in California, San Francisco Peninsula, and with no debt but property taxes, homeowners dues and medicare payments along with car insurance I figure you can't take in less than $1K per month just for those. So that's 12K per year.

Younger wife requires health care but we have found that a very high deductible plan ($6K) which is a "sharing" plan is lower cost than regular "health insurance". Even with my wife having some back issues and a broken ankle this year it has still been FAR less money than the regular insurance people want. You need to negotiate with the clinic before doing anything though and pay cash. The clinics' love cash. 30% discounts!

An MRI for her back started at $1600, then after saying it was cash it was $1200, then we say we're going somewhere else they made it $900 and in the end, we did go somewhere else, and it was $500.

Then with the basic 12K per year and 4.5K for health we are at 16.5K and have not bought food, gas, a night out, trip to Europe, etc. Bottom line is I believe that you need in my geographic location about $30K per year to get by. All these things will go up every year so even at a small inflation rate, say 3%, it will be 40K or so in 10 years.

By then the bathroom will need a redo, the kitchen will need a redo, the Chevelle will need a redo.. it is hard to estimate. I believe that you need a minimum $30K free cash flow after taxes if you have no debts. Thus with a 3% return on $1,000,000, yes ONE MILLION DOLLARS! you can easily slide by. You can get better than 3% in a lot of conservative bond funds but if there is a recession maybe not.

Notice that SS is not included here. I have always bet that the government will screw me on this one. If not now sometime in the future. What SS I do get will pad enough that I will be able to get the 40K in 10 years.

Note that I'm not trying to spend down principal but just get by on returns; children will get what seems a lot but in 30 years it won't be.
 
#28 ·
Then with the basic 12K per year and 4.5K for health we are at 16.5K and have not bought food, gas, a night out, trip to Europe, etc. Bottom line is I believe that you need in my geographic location about $30K per year to get by. All these things will go up every year so even at a small inflation rate, say 3%, it will be 40K or so in 10 years.

By then the bathroom will need a redo, the kitchen will need a redo, the Chevelle will need a redo.. it is hard to estimate. I believe that you need a minimum $30K free cash flow after taxes if you have no debts. Thus with a 3% return on $1,000,000, yes ONE MILLION DOLLARS! you can easily slide by. You can get better than 3% in a lot of conservative bond funds but if there is a recession maybe not.

Along these lines...… you want to consider how do you want to leave this planet.

Do you want to leave a large sum of money to your kids, or is that not really important to you? Because if you do want to leave a large inheritance; you are going to need a much bigger pot of money. So large that you can live comfortably "off the interest" and still allow growth to the pot.
 
#18 ·
Looks to be pretty unanimous.

Debt free good, healthcare bad.

Keep on working..........:angry:
 
#19 ·
I'm 53 and the wife is 52. She's not working other than running a couple online blogs. These produce very minimal income. Our only debt at the time is our house payment. But we are planning to sell when I retire, and we'll recoup quite a bit of cash.
The plan is for me to retire at 55 from my full time 40-50hr a week job . She/we started following the FIRE movement about 6 years ago and made some big changes in regards to retirement accounts and living way more frugally to save money. We are in really good shape once we can start drawing from accounts and SS. We have a home is a retirement community in Fl. It's payed for and the monthly bills are very low. While healthcare is still a bit of an unknown we've budgeted it in and we think we can live quite comfortably on 50K a year. This includes money for travel/golf/entertainment each year.
The thing we are still working on is what we call the bridge years.The 5+ years we have before being able to draw money. As it looks now, I/we need to find some part time work to get us to our budget amount with the amount of cash we've saved so far. I joke that my dream job is to work at Home Depot anyway ;)
 
#20 ·
I never figured on retiring , or even retiring early. Odd being that I started doing retirement planning and 401k design for a living. The irony. Still dont plan on full retirement anytime soon. My dad never retired, dead at 47. My mom retired at 52 and has done a whole lotta noting for near 30 years. But back to Ron's query.

There are numerous excel-based free programs out there, nerd wallet, and nowadays, if you have a proper 401k, your 401k website ought be very "planning friendly" and allow you to plug in outside data and run analysis. While it certainly can be done on a legal pad with a financial calculator, these retirement planning apps are based on excel and let you input all the various sources of income and, most importantly, what your retirement budget will be, monthly after tax. I still ahve to do a better survey of whats out there for free. Marketing games like "personal capital", that want you to link your accoutns, etc are not what I would recommend. Vanguard yes, Personal Capital , no. PC is a bull**** marketing ruse, not a real deal. To me, imho. Just like some "roboadvisors".

CAVEAT: I just woke and havent even finished a cup of coffee yet, but I'll try and make this professional as possible. It is part of my trade.

The excel spreadsheet behind the apps allows us to input social security benefit, any pensions, and then assets and savings. Of course, the hardest part for most of us is determining our monthly or annual needs. There are simple rules out there 70% of pay, etc, but I prefer to have the client actually work up a budget. If they havent been budgeters, they'll likely have to be much more so in retirement. Some folks show up with an excel spreadsheet, and they'll likely be fine in retirement, as they've already been planning! Once you get your data up in Excel, you can also easily model various scenarios for yourself. ( hard to do with a calculator and legal pad)

So, as I've said here before, it become "legs of a stool", in terms of your retirement income sources. The more legs you have, the more stable it will be. The spreadsheet will also factor in inflation. Good planning programs, like the one I use from MoneyGuidePro, also allow the pre-retiree to goal plan. " Oh, we'd like to tavel more", or " we want to move to FLA", and then we can estimate costs and build them into the plan. Now, I dont do stnad alone financial planning, but Certified Financial Planners can and do. No idea what they'd charge for doing a "retirement planning module" , and I would recommend you use one that will simply charge a fee for time, as opposed to try and sell you some bullcrap variable annuity for commissions, so cavet emptor there.

As mentioned, the big swing factor has been healthcare coverage until medicare@ 65. Spouses can help here, but often the client has to go and buy health insurance on the exchange to cover them until 65. we see rates from $800 for singles, to $1200 for couples to start, per month.


Vanguard and others also have available a " retirement planning worksheet" that entails a broader scope of issues, not just finances. As when we move past finances there are also some personal issues that the pre-retiree has to be mindful of, not least of which is, " So what are you going to do with your time in retirement?"

So while you dont need the advice of a CFP to get started, they can be a big help in planning, especially, if you are not the most fastidious type. Starting a file for yourself, getting a hold of a good free retirement calculator ( I wish I had better recomendations for you) , and start "modeling" your financial future. Many of them allow scenarios, and we certainly do play out different scenarios for clients, in fact, all the time. " try 62, try 63".

So short answer to Ron is, you have to start some mindful planning, get organized, and then set your goals. "Fail to plan, plan to fail" sort of thing.

Interestingly, MoneyGuidePro allows me to setup a "client portal" , which you can then sign in and start doing your own planning. Again, the "numbers" are only one aspect of it, a critical one to be sure. If you have issue finding a decent planning app out there Ron, PM me, and I can make MGP available to you. No agreements, no fees. Just doing a bud solid. For all that time you spent at Chevellebration "in uniform". :D
 
#21 · (Edited)
I got lucky in life. Back in 1961 my Dad decided to buy a small building in Jacinto City Tx and start a small machine shop.

His plan was to build the business and retire early as his four Sons continued to run things.

He got a bad hand dealt and died of Lung Cancer in 1983, my next oldest Brother died 2 years later of the same malady. Both smoked heavily.

So my remaining two brothers and myself built the business into what it is now, the finest Marine Machine Shop on the Gulf Coast. We specialize in the repair and new construction of the drive and steering systems in Inland Push Boats.

So what's the problem? I am now 72. I am still working just the same as I did at 52. We are very profitable, and have a great work force that is rather young. But I can feel age catching up with me.

I make great living, 350+ combined with $4000 a month Social Security. (Of course, I pay my current tax rate on it). My Wife has her teacher retirement.

My two brothers and myself are in a delima. The logical course of action would be to sell. But sell to who, and for how much. I like the security of a weekly paycheck. It allows me to pay for Grand kids college and do pretty much what I want. My entire life revolves around our business. Not having it is almost unthinkable.

Plus, I love what I do. I thrive on people depending on us. I thrive on the fact that large companies are willing to spend thousands and thousands of dollars on not much more than my word.

But I am not getting old, I am old.
It's like a professional base ball player coming to the end of his career and realizing he can't hit the fast ball anymore.

So I would like a suggestion from others like me who face a similar delima. That being, everything is going great except we forgot that sooner or later, age catches up.
 
#23 ·
So I would like a suggestion from others like me who face a similar delimma. That being, everything is going great except we forgot that sooner or later, age catches up.
My wife and I will be facing this same dilemma heading our way in the next 10-12 years (we are in our mid 50's and still enjoy are business).

There are two paths when the time comes.

Sell the business with/without the property or hire someone (or two) to run it.

To sell: find a business broker to get a proper valuation. There is a formula, and there is no obligation to get a valuation from them.

As the owner of the property, you can sell it along with the business, or lease it and make a residual on the rent money.

The problem we found with this is that the buyers either have money but don't want to work, or want to work but have no money.

Holding a note for a stranger is taking a big risk and not something we want to do.

The other BIG issue for me on this was we that will get killed on Capital Gains Tax, 25-28% to the Government after the 10% broker's fee upon the sale.

Hiring a General Manager is also an option, but you have to find someone who will eat and sleep like he owns the place, and you have to pay him (or her

or them).
 
#22 ·
Jackie do you have any succession planning? If not, you need that ASAP.

Your business will be worth more money in two instances. The first a larger company wants to acquire yours as a strategic growth initiative and does not need or value the administration you have. In the other instance, the company has to have strong leadership and organization and can reproduce the profits with the principals gone.

I have a bunch of local resources that I can share with you. The first is a very good deal attorney, probably the best in Houston. Start getting yourself structured to sell if that’s what you want to do.
 
#26 ·
At this point, there are no heirs to take over. My Son had no interest in our business, (he was never that fond of work), and my two brothers have daughters, who went their own way.

We have had a few inquiries. One major company has talked to my younger brother but their idea is to acquire us for dimes on the dollar.

We employ 12 men at this time, varying in skills, but each a integral part of the daily functioning of our production.

Our gross is between 4 and 5 million a year, with a very comfortable profit margin.

I figure a good selling price to be around $12 million. But that will be split 3 ways. Then there are taxes. If lucky, I might end up with $3 million to put in the bank.

Combined with my current assets, (mainly cash), I could live out my life on that.

But I would be delagated to the status of "Useta", that being I "Useta" be somebody. Now I'm just another old retired guy.

I have to decide if I can live with that.
 
#25 ·
Yup. not as "blessed" as Jackie, yet I still dig on what I do, especially the P/T gig I have teaching finance, etc. If you hate your job, your health may prefer an quicker out.

BTW, for biz owners, valuation is one thing, and pretty easy to do ( I teach vals), but DEAL STRUCTURE is the key to keeping the proceeds from being unduly taxed. I;ve worked on a few ESOPs for clients, its a neat way to go if size and good key people allow.
 
#27 ·
Both the wife and I starting serious retirement planning years ago. We are both retired from USG and I am currently working as a consultant in the aviation business.

We are debt and have been for years. We invest all that we can and where is makes the most tax sense.

I plan on retiring from the consulting business in two years. Although our income level will go down a little, our standard of living will not change. And, we will be able to do just about anything that we desire.

We are very lucky because we starting planning early and are fortunate that we both have retirement checks forever and that our investment dividends will provide money for the extras.

As previously stated, the key for us was very early planning both for retirement income and to retire debt free.
 
#31 ·
I agree that Vanguard is a "trusted" source. We have used them as a 401K depository in different funds over the years as their "loading" has been very low, lower than their competitors. While they may not have the highest returns every year they are, generally, consistent.

Planning is everything. Especially taking into account inflation. The CPI (Consumer price index) is not the best indicator as it only includes a fixed number of goods. It has also been redefined by the governement over the years so it is not good for comparisons over a long period.

Here is an alternate measure:
Alternate Inflation Charts
and:
https://youtu.be/o_JVfyvoa04
 
#30 ·
How much do you need? MORE.
My expenses have gone way up since retirement but mainly for optional things like travel, etc. We could get by on less but choose not to.
I’m 62 and and retired at 56 so we are spending our healthy years doing everything we can. When we get older and less mobile we will slow down our travels and not spend as much. Hoping to postpone SS until 70 to maximize monthly check.
 
#32 ·
Just one thing - do the math on SS and taking it early vs postponing it and then consider your options.

I have, and I have come to the conclusion I'm taking it as soon as I can. For me (and for most I've been told) the crossover point is right around age 79 for when taking it at 70 finally gives you more than taking it at 62.

I figure by the time I get to 79, I'm not going to be nearly as active and won't need as much money, so I would rather spread that money out over 17 years instead of 9 years and take advantage of it earlier.

And of course I have to make it to 79 to have postponing it make any sense at all. If I don't get there, postponing it was a waste.
 
#34 ·
how much is needed to live comfortably in retirement? It depends on debt, lifestyle, overall health, the cost of living in your current city/state, taxes and the degree of your car addiction. Lol
 
#35 ·
I have been retired for 15 years. You do not need a lot of cash " IF " you have no debt. Wife has a 017 Subaru my Silverado is fine its a 6.2 Half ton.
So far the wife and I are in good health...... For me that is worth more than money. We live just fine on SS. We have some cash in the bank. My new full time job is going to Chevelle shows & Cruises and keeping the one acre yard looking like---- " YES, people do live in that house ".
I still play in a band, ( oldies & old country). My son is working in the U.K. we visit once or twice a year.
The wife & I have a roof over my head and some food to eat. Two Chevelles., Also our cat " Missy' a Collie,,, her name is " Chevelle". With her we have three Chevelles on the property.:laugh:
I see the future as= " As long as I am looking at the grass and not the roots,,,, Its a very good day".
Life is a one way street.... Enjoy the hell out of it !...:thumbsup:
So far it has been a wonderful 79 years and would not change one d@m thing !
Bob
P.S. The wife hates the cable bill..:surprise:
 
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