laterbloomer
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Post by laterbloomer on Jan 29, 2021 19:52:16 GMT -5
For those that keep mentioning it, these numbers are from tracking my spending for the last 3 years. I had tracked back to 2012 but I seem to have lost a workbook. I have done most of the big house maintenance projects (HVAC, update wiring. repave driveway, flooring and renovate bathroom) I'll get the roof done before I retire, or have the money specifically for that. I think $6000/yr will be a healthy travel budget. so another $500/mth. I do appreciate the detailed list. I've covered most of that but there were 2 things it would be smart to itemize.
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laterbloomer
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Post by laterbloomer on Jan 29, 2021 20:04:28 GMT -5
So are none of you dipping into your principle?
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Deleted
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Post by Deleted on Jan 29, 2021 20:08:50 GMT -5
We dipped into our non-IRA investments twice; once for a trip to Europe and once for a major home remodel. We roll the RMD into our joint taxable account. We are very fortunate because DH has a stable pension and we are sort of frugal folks.
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Rukh O'Rorke
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Post by Rukh O'Rorke on Jan 29, 2021 20:12:40 GMT -5
So are none of you dipping into your principle? what do you mean by principal? Just the saving kitty at all - or are envisioning dividends as separate from the stocks, or if you retire with 1 million and if it goes to 1.1 million and you take out 50k, leaving 1.05 million - what's principal now, and have you dipped?
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laterbloomer
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Post by laterbloomer on Jan 29, 2021 20:21:44 GMT -5
So are none of you dipping into your principle? what do you mean by principal? Just the saving kitty at all - or are envisioning dividends as separate from the stocks, or if you retire with 1 million and if it goes to 1.1 million and you take out 50k, leaving 1.05 million - what's principal now, and have you dipped? I'm years away from retirement. I'm just trying to figure out if I am 5 or 10 years out. By principal I mean more than just what your investment earns. You have $1 million, It makes $50,000, you take out $100,000. In retirement, not before.
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buystoys
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Post by buystoys on Jan 29, 2021 20:22:22 GMT -5
Yeah, I don't look at it as principal vs dividends/growth. We have taken distributions from DH's IRA, but it's grown more in the five years we've done that than what we've taken out. We're ahead of where we were seven years ago. I'll keep taking x amount out each year and I can put it off if we have a down year. Or I can just go ahead and take it. Have you run your numbers through FIRECalc.com? Or I-Orp? Those both give you a good picture of where the future could go based on history.
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Post by minnesotapaintlady on Jan 29, 2021 20:45:44 GMT -5
I certainly don't spend $5K per month because my pension is no where close to $60K per year. I do not spend more than I earn and I do live in a LCOLA. Yeah, this is obviously a situation where everyone's "enough" is going to be very different.
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CCL
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Post by CCL on Jan 29, 2021 21:21:45 GMT -5
So are none of you dipping into your principle? We get a monthly 401k withdrawal. It comes out of principle. By the end of the year we usually get some dividends and capital gains that cover about half of what we took out. We also take random withdrawals whenever we feel like it, usually to pay for travel. After 8 years, we have more in the 401k than when we started.
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CCL
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Post by CCL on Jan 29, 2021 21:25:32 GMT -5
what do you mean by principal? Just the saving kitty at all - or are envisioning dividends as separate from the stocks, or if you retire with 1 million and if it goes to 1.1 million and you take out 50k, leaving 1.05 million - what's principal now, and have you dipped? I'm years away from retirement. I'm just trying to figure out if I am 5 or 10 years out. By principal I mean more than just what your investment earns. You have $1 million, It makes $50,000, you take out $100,000. In retirement, not before. I don't even keep track of gains vs withdrawals. Some years the balance goes down. Other years it goes up.
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Deleted
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Post by Deleted on Jan 29, 2021 21:50:41 GMT -5
I get the concept of principal, laterbloomer . You felt you needed 1 million or whatever to retire. Ten years later, do you still have 1 million? Or is your retirement pot shrinking?I I am 67 so I don't have to do RMDs for another 5 years. I did take some money out for house maintenance, but it was a mistake in terms of taxes. I had the cash, too, which makes it more aggravating. At present I don't need my retirement $$$. So, again, I am a bad person to ask. You will be a young retiree. What age are you thinking?
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laterbloomer
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Post by laterbloomer on Jan 29, 2021 22:29:20 GMT -5
I get the concept of principal, laterbloomer . You felt you needed 1 million or whatever to retire. Ten years later, do you still have 1 million? Or is your retirement pot shrinking?I I am 67 so I don't have to do RMDs for another 5 years. I did take some money out for house maintenance, but it was a mistake in terms of taxes. I had the cash, too, which makes it more aggravat. At present I don't need my retirement $$$. So, again, I am a bad person to ask. You will be a young retiree. What age are you thinking? I'm dreaming of 60. 65 is my oldest date. I'm 55 now.
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tallguy
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Post by tallguy on Jan 30, 2021 0:36:04 GMT -5
I'm a bad person to answer this because I don't really even need my investments to get by. My SS benefit already covers all of my normal and necessary expenses and even those should be cut by a third shortly. Other income will cover house projects at least into the near future. For as long as GF and I are together my travel expenses will probably be substantial, but IRA withdrawals will more than cover that even without getting into income tax territory each year.
The one thing I would most advise is to reduce your necessary expenses as much as possible. It is very freeing to not have any financial stress and to know that all you have to do in rough times is cut back discretionary spending a little bit. And if times are good, it is more fun to spend on things you want to spend on rather than on things you have to spend on.
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Deleted
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Post by Deleted on Jan 30, 2021 9:28:31 GMT -5
The one thing I would most advise is to reduce your necessary expenses as much as possible. It is very freeing to not have any financial stress and to know that all you have to do in rough times is cut back discretionary spending a little bit. And if times are good, it is more fun to spend on things you want to spend on rather than on things you have to spend on. That, and have a large cushion in investments! If I cut the "frills" to zero- travel, charity, restaurants, house upgrades, etc.- I get to about $40K/year and that's with no attempt to reduce groceries or utilities. My cell plan is $17/month and Internet + Netflix is $84/month total. I'm also assuming taxes would be cut back if my actual income were that low, and no IRMAA surcharges on Medicare. My fixed income (SS + 2 non-COLA pensions) would just about cover it all. If the market tanks I can reduce my withdrawals from investments and still keep going. I think what happens to many people who "lost all their retirement savings in the last market crash" is that they were taking an unsustainable % out of their savings to meet basic needs and couldn't cut back. I don't even keep track of gains vs withdrawals. Some years the balance goes down. Other years it goes up. Oh, I watch mine like a hawk! My most reassuring metric: since my retirement in May, 2014, the investments have increased in value by an average of 4%/year AFTER withdrawals. That tells me that it's sustainable.
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laterbloomer
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Post by laterbloomer on Jan 30, 2021 10:39:15 GMT -5
Are any of you willing to share your numbers? Just of expenses, I don't really care about your income for this.
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sesfw
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Post by sesfw on Jan 30, 2021 10:39:36 GMT -5
I'm dreaming of 60. 65 is my oldest date. I'm 55 now.
The biggest thing I would look at in your position is the cost of health insurance. At age 65 you would have Medicare and earlier than that it would be all private. Might sting a bit.
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laterbloomer
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Post by laterbloomer on Jan 30, 2021 10:41:30 GMT -5
The one thing I would most advise is to reduce your necessary expenses as much as possible. It is very freeing to not have any financial stress and to know that all you have to do in rough times is cut back discretionary spending a little bit. And if times are good, it is more fun to spend on things you want to spend on rather than on things you have to spend on. That, and have a large cushion in investments! If I cut the "frills" to zero- travel, charity, restaurants, house upgrades, etc.- I get to about $40K/year and that's with no attempt to reduce groceries or utilities. My cell plan is $17/month and Internet + Netflix is $84/month total. I'm also assuming taxes would be cut back if my actual income were that low, and no IRMAA surcharges on Medicare. My fixed income (SS + 2 non-COLA pensions) would just about cover it all. If the market tanks I can reduce my withdrawals from investments and still keep going. I think what happens to many people who "lost all their retirement savings in the last market crash" is that they were taking an unsustainable % out of their savings to meet basic needs and couldn't cut back. I don't even keep track of gains vs withdrawals. Some years the balance goes down. Other years it goes up. Oh, I watch mine like a hawk! My most reassuring metric: since my retirement in May, 2014, the investments have increased in value by an average of 4%/year AFTER withdrawals. That tells me that it's sustainable. I could get my cell phone down to $35 but that's it. Canada is notorious for not getting the cheap plans available to other countries.
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buystoys
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Post by buystoys on Jan 30, 2021 10:51:04 GMT -5
Our expenses, without any major projects, will be just under $65K this year. It's higher than normal because DH and I are both having major dental work done. Our normal expense per year would be around $56K.
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Bonny
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Post by Bonny on Jan 30, 2021 10:52:27 GMT -5
For those that keep mentioning it, these numbers are from tracking my spending for the last 3 years. I had tracked back to 2012 but I seem to have lost a workbook. I have done most of the big house maintenance projects (HVAC, update wiring. repave driveway, flooring and renovate bathroom) I'll get the roof done before I retire, or have the money specifically for that. I think $6000/yr will be a healthy travel budget. so another $500/mth. I do appreciate the detailed list. I've covered most of that but there were 2 things it would be smart to itemize. What do you plan on doing in retirement? You'll have a lot of time on your hands. Besides traveling do you have any hobbies or projects you want to pursue? You'll want to put that in your budget.
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laterbloomer
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Post by laterbloomer on Jan 30, 2021 11:10:24 GMT -5
For those that keep mentioning it, these numbers are from tracking my spending for the last 3 years. I had tracked back to 2012 but I seem to have lost a workbook. I have done most of the big house maintenance projects (HVAC, update wiring. repave driveway, flooring and renovate bathroom) I'll get the roof done before I retire, or have the money specifically for that. I think $6000/yr will be a healthy travel budget. so another $500/mth. I do appreciate the detailed list. I've covered most of that but there were 2 things it would be smart to itemize. What do you plan on doing in retirement? You'll have a lot of time on your hands. Besides traveling do you have any hobbies or projects you want to pursue? You'll want to put that in your budget. The volunteer work I do covers expenses and sometimes includes travel. I sew and will do more of that. If I keep the house I will do more gardening. Other then travel my hobbies don't cost much.
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Deleted
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Post by Deleted on Jan 30, 2021 11:10:49 GMT -5
Are any of you willing to share your numbers? Just of expenses, I don't really care about your income for this. Here's 2019 since 2020 was atypical (minimal travel, more charitable, less overall). Travel $27,000 (about 9K of that ended up being applied as a credit to future travel when my early 2020 trip was cut short) Charity $23,800 Taxes $24,600 (includes property taxes) Mortgage 8,400 Medicare premiums $7,500 Home and Car Maintenance $6,200 (includes some upgrades to house) Groceries $4,800 Out-of-pocket medical (mostly dental work ) $4,000 Utilities $3,500 Homeowners and Car Insurance $3,400 Gas $1,300 Those are the big items. Others include clothing, entertainment, restaurants, gifts, "Discretionary" (mostly jewelry or computer stuff). Total was $121,700. Total in 2020 was $97,000 plus an additional $15K to the grandkids' 529 accounts. I didn't add anything in 2019. As I said in an earlier post- plenty of room to cut back if I had to.
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laterbloomer
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Post by laterbloomer on Jan 30, 2021 11:19:28 GMT -5
Are any of you willing to share your numbers? Just of expenses, I don't really care about your income for this. Here's 2019 since 2020 was atypical (minimal travel, more charitable, less overall). Travel $27,000 (about 9K of that ended up being applied as a credit to future travel when my early 2020 trip was cut short) Charity $23,800 Taxes $24,600 (includes property taxes) Mortgage 8,400 Medicare premiums $7,500 Home and Car Maintenance $6,200 (includes some upgrades to house) Groceries $4,800 Out-of-pocket medical (mostly dental work ) $4,000 Utilities $3,500 Homeowners and Car Insurance $3,400 Gas $1,300 Those are the big items. Others include clothing, entertainment, restaurants, gifts, "Discretionary" (mostly jewelry or computer stuff). Total was $121,700. Total in 2020 was $97,000 plus an additional $15K to the grandkids' 529 accounts. I didn't add anything in 2019. As I said in an earlier post- plenty of room to cut back if I had to. LOL we are definitely in different income brackets. But thx, I have those categories but cheaper. I was forgetting my charitable contributions. That is about $65/mth
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Post by minnesotapaintlady on Jan 30, 2021 11:22:04 GMT -5
I'm dreaming of 60. 65 is my oldest date. I'm 55 now.The biggest thing I would look at in your position is the cost of health insurance. At age 65 you would have Medicare and earlier than that it would be all private. Might sting a bit. She's in Canada.
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laterbloomer
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Post by laterbloomer on Jan 30, 2021 11:26:18 GMT -5
I'm dreaming of 60. 65 is my oldest date. I'm 55 now.The biggest thing I would look at in your position is the cost of health insurance. At age 65 you would have Medicare and earlier than that it would be all private. Might sting a bit. She's in Canada. Sorry, I meant to answer that. MPL is right, I'm in Canada. Between 60 & 65 I just have to worry about dental and prescriptions. After 65 just dental.
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Deleted
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Post by Deleted on Jan 30, 2021 11:40:44 GMT -5
I did a budget right before the start of the new year. The problem is that I break things down more than you. I combined some categories to keep it simple. Mortgage - 1060 (includes additional principal of $250) Utilities $250 Fuel $75 Christmas Club $125 Savings $1165 Gifts 60 Church 300 Animal Rescue $10 House phone/internet 98 Lumber Liquidators 250 (0%/will be paid off in October) Savings for yearly expenses 240
Things like car insurance, cell phone, Penny's basic expenses are included in the "Savings for yearly expenses."
The total is $3633, but it could be much lower if I needed it to be. There is $723 left each month to cover food and everything else. Plus, my utilities don't usually go that high so I get some of that to add back in.
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Post by minnesotapaintlady on Jan 30, 2021 11:52:50 GMT -5
I have a spreadsheet with my current annual budget on it and for fun, I went in and zeroed out the line items I wouldn't have to pay in retirement. (specifically FICA, life insurance, employer health insurance, retirement savings, college savings, private school tuition, childcare and mortgage), and was left with a bare bones budget of 18K/year! Even if I have to pay $1000/month for medical insurance it's still less than half what I take home now between work, child support and tax credits. But, I was playing around on the exchange the other day and I think I could get a decent plan for a lot less than $1000/month especially with the subsidies. Honestly, one comparable to what I had was $450/month before subsidies.
My plan is to keep income low to qualify for all that, then hit up the Roth for big ticket stuff. I always seem to come up with 40K/year as a comfortable number.
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Rukh O'Rorke
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Post by Rukh O'Rorke on Jan 30, 2021 11:53:55 GMT -5
I certainly don't spend $5K per month because my pension is no where close to $60K per year. I do not spend more than I earn and I do live in a LCOLA. Yeah, this is obviously a situation where everyone's "enough" is going to be very different. I also recently refied my mortgage, 30 year fixed, and took out all the money they would let me. Unfortunatly not as much as I would have liked as there is a house very similar to mine a block or 2 over that was left to rot for 30-50 years, and when finally sold the ceilings were falling into the rooms from water damage. So apparently that is impacting our property values? There are very few houses in the area like mine, and they aren't up for sale very frequently and so I think this is putting a lot of pressure on our values. That place is currently undergoing a gut rehab down to studs, will probably sell for a packet and all our property values will soar up and over what they were previous - but right now my property value is down about 50k. Anyway - I doubt I'd refi again, unless the rates are equi-low/lower and the property value goes up by about 100k. but anyhoo - so I am incorporating the mortgage payment as a permanent budget item for my retirement strategy. While it does make it more difficult to get to the saving goal it is also nice to not have to try to pay something big off either. I was still at nearly 250k mortgage before the refi anyway, so it was big before that. It is a bit of risk as I plan to be about 100% stocks right up until retirement. Not sure how I might hedge that before pulling the trigger - but with a robust mortgage, big student loan balanaces, and high investment risks, I am going to need to address that someone. Sidebar: I lost over 100k this week in the kitty, so retirement is feeling a little farther away than it has been. So - back to the grind on Monday for sure!
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Rukh O'Rorke
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Post by Rukh O'Rorke on Jan 30, 2021 11:56:33 GMT -5
I get the concept of principal, laterbloomer . You felt you needed 1 million or whatever to retire. Ten years later, do you still have 1 million? Or is your retirement pot shrinking?I I am 67 so I don't have to do RMDs for another 5 years. I did take some money out for house maintenance, but it was a mistake in terms of taxes. I had the cash, too, which makes it more aggravating. At present I don't need my retirement $$$. So, again, I am a bad person to ask. You will be a young retiree. What age are you thinking? were you 63 susana? I forget. I think athena was 61?
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Deleted
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Post by Deleted on Jan 30, 2021 12:00:35 GMT -5
I retired at 61; I'm almost 68.
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Deleted
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Post by Deleted on Jan 30, 2021 12:05:02 GMT -5
I get the concept of principal, laterbloomer . You felt you needed 1 million or whatever to retire. Ten years later, do you still have 1 million? Or is your retirement pot shrinking?I I am 67 so I don't have to do RMDs for another 5 years. I did take some money out for house maintenance, but it was a mistake in terms of taxes. I had the cash, too, which makes it more aggravating. At present I don't need my retirement $$$. So, again, I am a bad person to ask. You will be a young retiree. What age are you thinking? were you 63 susana? I forget. I think athena was 61? No, I was 65. But I think you were right about Athena.
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Tiny
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Post by Tiny on Jan 30, 2021 12:10:38 GMT -5
I'm getting close to "Financial Independence" which will eventually flow into "retirement" - as in from 58 to 65 I need to use my "saved up money - either taxable or tax advantaged" and may have to do some paid work - at least between 58 and 62. Once I hit 65 the bulk of my income will come from a Pension. And then SS kicks in at 67 or 70 or later depending on if I need it or not.
I'm currently 57. The only "expenses" I see that you haven't accounted for are the once that will most likely occur 10 years or more from TODAY. So, maybe you'll need new appliances or want to paint/re carpet/new furniture (like a couch or matresses). Your house may also be due for a big expense - like a new roof or tuckpointing or something else.
On my 5 years from now and 10 years from now time line I have the following: Roof will be 25 years or 30 years old - I have 30 year shingles so odds are good at the 25 year mark I will need to reshingle. Furnace will be 25 and 30 years old - I may need to deal with the furnace after 10 years (30yo) A/C will be 15yo and 20yo - I will definitely have AC issues in the next 10 years.
Vehicle will be 13yo in 5 years - I will definitely need a vehicle at or before the end of 5 years.
There are some other issues - appliances, new mattress set and other odds and ends that may reach the end of their life in the next 5 to 10 years.
If enough of the smaller expenses hit during the year they can add up to a Big Expense.
I have built in a "loan repayment" line in my "FIre" budget. It's currentlly $250 which just goes to savings for these known future expenses. Once I use my saved money for the expense (downpayment or full payment) I can serially allocate that $250 a month to which ever thing I had to "borrow" for - say a 0% offer on appliances? or to repay my HELOC for the roof? I will probably need to account for more than $250 a month for that but it's a start.
I'm not really comfortable pulling the 40K a year I need from my retirement money and then having to pull an additional $10K or $20K or $30K during a year when something on my "Oppps it broke and needs to be replaced" list. I'm sure doing those kinds of big pulls will mess with my taxes as well.
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