Retirement income.....how did you do it?

[Rukh O'Rorke]

Trying to get a sense for how this works within the YM crowd. I need to start thinking about these things.....

and imagine did you as will you if that is in the future and you have some ideas on it!


Q1 Budget
How did you determine what your retirement budget would be? i.e.....What specific numbers did you crunch (not the numbers themselves per se, but like, mortgage, electric, etc. or housing = x+y+z,, utilities, a+b+c+d, projecting into the future by what% inflation, etc.......how did you line all that out? what is flexibile and inflexible? What are your budget contingencies for down markets? 


Q2 Age
What age did you retire?


Q3 Social Security
What age did you take SS? How much/what percent of annual expenses does it cover?


Q4 Retirement savings
How many years retired before taking SS? What was your asset allocation at retirement (bonds, stocks, cash.....and.....tax deffered, taxable, tax free)? How did you fund yourself? i.e. what bucket did you pull from (stocks,bonds, cash/tax deffered, taxable, taxfree) and how often did you pull out of investment accouts (monthly yearly?) what percent of asset did you pull yearly? did you rebalance your AA? how often rebalance, etc. How long/how deep of a down market would break your budget contingency plan from Q1?

Are there other questions I should consider? Please add to the list with your answer!!

Thanks everyone!!

[plugginaway22]

I hope people respond to this. We have completed one year of retirement and it feels like we just went with let's 'wing it'! We need to have a PLAN, haha. Babysitting grandson this weekend but will reply with more later.

[Deleted]

Q1 Budget
How did you determine what your retirement budget would be? 

I kind of did it backwards- looked at projected income (DH's SS since he was already retired, a 3% draw from investments, $1,800/month in non-COLA pensions)  and the total was something we could live with compared to our current take-home (especially since we were saving a very large % of our current income and I was assuming we'd no longer do that).

Q2 Age
What age did you retire? 

61.  DH was 15 years older and already retired.

Q3 Social Security
What age did you take SS? How much/what percent of annual expenses does it cover?

I never filed for Spousal- DH died before I hit Full Retirement Age.  When he died in 2016, I was 63.  I got his benefit as a Survivor Benefit, which made it far easer for me to postpone filing on my own record.  That nearly doubled my net SS when I started that a year ago at age 69 since I'd maxed out on SS most of my career and I waited till age 69.

Last year SS was 28% of what I spent.

Q4 Retirement savings
How many years retired before taking SS? What was your asset allocation at retirement (bonds, stocks, cash.....and.....tax deferred, taxable, tax free)? How did you fund yourself? i.e. what bucket did you pull from (stocks, bonds, cash/tax deferred, taxable, tax free) and how often did you pull out of investment accounts (monthly yearly?) what percent of asset did you pull yearly? did you rebalance your AA? how often rebalance, etc. How long/how deep of a down market would break your budget contingency plan from Q1?

Eight years between retiring and filing for SS on my own record.

About half in after-tax and half in IRAs, pretty aggressive mix (70% stocks, 30% fixed income more or less) till last July when I scaled back to 60% equities and kept most of the proceeds in cash. I'm cautiously wading back in, mostly SPY, but every time I do the market drops the next day.

I don't really re-balance unless I sell something for other reasons and then I consider whether to put into equities or fixed.

I pull 3.5% even though 4% is considered safe by some.

So far I've taken everything out of after-tax.

What would break my budget? Not much, thank God. Of my total spend last year, 19% was travel, 27% charity and about 10% was home improvements (exterior painting, replacing a deck with TREX). If I had to cut my investment draw to zero or near-zero, my bare-bones budget would be covered- $700/month mortgage, food, utilities, routine maintenance, etc. It would be a lot more boring with no travel and our church Treasurer would cry but I don't see that happening. Still reassuring that I could do it.

Yeah, I over-saved. I'm darn grateful that I'm around to enjoy it and to use some of it to spoil my grandchildren and put $$ aside for their educations. Watching two little girls squeal with delight as the plane takes off from Des Moines en route to Chicago- priceless.

[Deleted]

Jan 21, 2023 14:22:27 GMT -5 Rukh O'Rorke said:

Trying to get a sense for how this works within the YM crowd. I need to start thinking about these things.....

and imagine did you as will you if that is in the future and you have some ideas on it!


Q1 Budget
How did you determine what your retirement budget would be? i.e.....What specific numbers did you crunch (not the numbers themselves per se, but like, mortgage, electric, etc. or housing = x+y+z,, utilities, a+b+c+d, projecting into the future by what% inflation, etc.......how did you line all that out? what is flexibile and inflexible? What are your budget contingencies for down markets? 


Q2 Age
What age did you retire?


Q3 Social Security
What age did you take SS? How much/what percent of annual expenses does it cover?


Q4 Retirement savings
How many years retired before taking SS? What was your asset allocation at retirement (bonds, stocks, cash.....and.....tax deffered, taxable, tax free)? How did you fund yourself? i.e. what bucket did you pull from (stocks,bonds, cash/tax deffered, taxable, taxfree) and how often did you pull out of investment accouts (monthly yearly?) what percent of asset did you pull yearly? did you rebalance your AA? how often rebalance, etc. How long/how deep of a down market would break your budget contingency plan from Q1?

Are there other questions I should consider? Please add to the list with your answer!!

Thanks everyone!!

Q1  We did not project a budget for retirement.  We knew we would probably have more income in retirement than during our working years because we saved a LOT of money while working.  And we have always lived below our means.

Q2  DH was 62, I was 54.

Q3  Both DH and I took our SS at 62.  I have never calculated the percent of annual expenses.  I think more or less it kept us from having to draw on investments for some things like home improvements and travel.  

Q4  DH took his SS at retirement, I took mine 8 years later at my earliest eligibility.  Our asset allocation was and is primarily equities with some bond exposure in DH's IRA.  It's a very aggressive profile.  It's very important to note that the big difference in our situation and many others is that DH has a guaranteed pension amount with an extremely solid basis.  One financial adviser told us we would need an investment portfolio north of $1M to have the same yield.  We have only pulled from our investments for European travel or a major home remodel.  A down market, while unsettling, does not affect our routine spending which is solely funded by pension and SS.  In fact, we still save a substantial part of our income.  

Other Questions to Consider  We followed the old-time conventional wisdom of saving in pre-tax accounts which means we sometimes have a substantial tax bill.  Taxes are part of the great unknown in retirement as we don't know what will happen in Washington down the road (or at your local statehouse if you have state income tax).  Depending on your area, property taxes can also be an unknown that has a big impact in later years.  Also, a couple who, like us, has an age difference may need to consider alternate scenarios.  

[tallguy]

I am very much an outlier in a lot of ways, so I don't think my answers will help you much, but if anyone wants to see the benefit of keeping necessary expenses low....

Q1.  I don't now and have never made or worried about a budget.  I am not only a saver by nature but am overly disciplined.  I actually need to start spending more money than I do, and having a budget will have zero effect on my thought processes.

Q2.  Retired shortly after turning 58.

Q3.  I claimed SS when I turned 60, because I could.  (Survivor's benefits) -- At the time I started receiving SS it more than covered my basic and necessary expenses, so maybe 110%?  Because I was able to significantly reduce my expenses further by qualifying for a property tax break, my SS now covers about 175% of basic and necessary expenses.  Because anything else is discretionary I don't worry about it and don't include it as part of the calculation.  My spending "budget" is whatever I decide is worth it.

Q4.  I had built up a bunch of cash in anticipation of early retirement, so started spending that instead of pulling from taxable accounts.  My asset allocation is effectively 100/0 between stocks and bonds, and will probably remain so forever.  I thus have no need to rebalance either.  I do have cash, but since it just builds up naturally and is not a planned part of my retirement monies I don't consider it part of my asset allocation  To this point, with COVID having interfered with spending plans for two years, I haven't needed to pull from investments for any spending.  I have been doing Roth conversions however, and even now have significant tax-free space to continue them until I start really spending more.  I would guess I could remain pretty confident of living a life free of stress even if I lost 80% of what I have, and if disaster ever truly hit I would always have the last resort of selling my house and being back to seven figures again.  When I do have something big to spend on, my Roth balances are now larger than my T-IRA balances so I have tremendous freedom to do whatever I want without even creating a tax hit.  Yes, I feel really good about where I am.  

[susana1954]

I am something of a unicorn since I have a pension, but so does @athena53 for that matter.  

Q1 Budget

How did you determine what your retirement budget would be? I assumed that my budget would be fairly close to what it was with a cushion provided by the fact that I no longer contributed to retirement or taxes other than Federal Income Tax.  Health insurance went up but I was paying almost nothing before I retired.  However, my expenses are fairly modest.  There was an initial period of major expenditures after DH died, but I'm past that for awhile (I hope).


Q2 Age

What age did you retire?  I was 65.5.  That was deliberate.  I needed to reach 25 years for a variety of reasons.  I hadn't taught much in public schools before my divorce at age 44.  Twenty-five years gave me a little more than 50% of my final salary + no service surcharge on health insurance.  I would have had an age additional surcharge if I wasn't Medicare-eligible.  If I had known that DH was going to die less than 6 months later, I would have taken a leave of absence instead.  I had enough sick leave to cover an entire semester.  But my crystal ball was cloudy.




Q3 Social Security

What age did you take SS? How much/what percent of annual expenses does it cover?  I took SS at 65 and 8 months so not quite FRA.  It was timed so that it would start when I received my last paycheck from teaching, which was August 30.  It ended up not mattering because DH died shortly before I received my first/last check on my own record.  I then got his amount as the survivor.  He earned a lot more than I did; his was $500 a month, after taxes, than mine.  With the COLAS we have received so far, SS is about 50% of my income.




Q4 Retirement savings

How many years retired before taking SS? As I stated above, I was 65+.  I am trying not to touch my IRA except to convert small amounts to the Roth.  I have to be careful not to penalize myself with a much higher tax on my SS.  

My "tip" for retirement is that you need to plan on having something to do.  For me, that is church and substituting.  I like being busy some of the time.   Because you are so overworked right now, it is tempting to think you could do with a lot of downtime to declutter and organize, rest and read, enjoy some hobbies, etc.  That lasts about six months or so.

[The Walk of the Penguin Mich]

1.  TD has been tracking our expenses for years, so we knew pretty much what the outgo was like.  50% of our budget was travel, and as it is discretionary we can adjust as necessary.  The next few years, our travel budget is twice our living budget but it’s not always going to be this way.  
2.  When I started collecting disability for me, so 54.  TD is retired until someone makes him an offer he can’t refuse (and it doesn’t interfere with travel plans).  Someone has already made noises about wanting to hire him when we get home.  
3.  TD is waiting to FRA to collect SS.  He will be eligible for Medicare in May, which was a lot of the driving force as to working.  My SS covers my expenses, other than travel.  Our combined SS will cover 100% of our living expenses, minus travel.
4.  This question is difficult.  Right now, TD invested in funds that produce dividend income, and it more than covers what he’d make working plus SS.  We are top heavy in untaxed accounts, so are pulling from them as needed (mostly for travel), and the converting to Roth’s to a certain tax point.  The goal is to try to minimize the IRMAA penalties x 2, so I’m getting hit myself.  IRMAA is eating up nearly 30% of my SS right now.   

[minnesotapaintlady]

This is obviously all theoretical for me since I'm not there yet.

Q1.  That one is easy as I've been budgeting for so many years and have a very good idea what my monthly expenses are.  I basically took my today budget, which has a lot of "kid" expenses.  Assumed kid would be replaced with other things like increased medical and travel and then tacked $1000 on for a buffer to come up with what I felt would be comfy for me in retirement.  I'm not real thrilled with carrying a mortgage into retirement, but probably will.  It will only equal 5K/year, but that's 5K/year I can't spend on more fun things.

Q2.  As close to 59.5 as possible!  My youngest graduates from high school and turns 18 pretty much the same time as I hit 59.5, so some of it kind of depends on him and what his post high school plans are.  If he's already dropped out and moved in with his dad or pregnant girlfriend and is working a full time job things will be different than if he is planning on going to an expensive private school in hopes of law school afterwards.   I could see maybe staying on until 61 or 62 if I needed insurance for Carrot, but I might go part time. We keep full benefits for 30 hours, so you can just work 3 10's. 

Q3. Tentatively planning on 70 and it would cover more than 50% of expenses.  I had just always had that as a goal with no actual reasoning behind it just because it gives the highest payout, but recently I've ran some calculators and they were all coming up with 69 years 8 months or so, so I wasn't far off.

Q4.  8-11 years.  Plan on living completely off my 401K during that time, but having a 2 year "cash" (safe investments) buffer in case the market is down.  My asset allocation right now is 90% stocks and I think I will move more to 80/20, but not sure I'll get a whole lot more conservative than that.  I don't know yet.  If there's another run-up in the market I can see myself shifting some of it out of stocks though.  I won't have any guaranteed income for a decade, so probably should start considering asset allocation more.  I'm also considering buying an SPIA at some point.  Coincidentally, I just set this book on my end table to start reading.

www.amazon.com/Make-Your-Money-Last-Indispensable/dp/1476743770

[Pink Cashmere]

I really appreciate these threads you start Rukh O'Rorke, because I have some of the same questions, and I always learn something.

From the point that I resigned myself to working my job until I could retire, even though I don’t really like my job, I made the decision to keep my expenses low, so I could retire ASAP. That meant changing my mind about my “starter house” and making it my “forever home”. It also meant getting over my love for cars and deciding to keep my ‘03 Honda until it fell apart.
 
So to answer the questions, I still haven’t figured out a budget for retirement. I’ve just continued to try to keep my “committed” expenses low. My house will be paid off around the time I’m eligible to retire, if I don’t sell it before then, so the mortgage payment will go away, but I will still have taxes, insurance, and maintenance and repair expenses. It’s a sturdy little house, and even though it’s old, it hasn’t been a money pit like the house I live in now is. Mister pays for the maintenance and repairs for the house I live in now.

I will be eligible for retirement in about 7 years. I want to be able to retire as soon as I’m eligible. With the nature of my job and all the aches and pains I already have because of that, I don’t see myself working into my 60’s if I can avoid it. My employer has offered early retirement several times in the past, and March 1st I would be eligible to take early retirement if they offer it. The requirements for that are at least 25 years of service and at least 50yo. I would love to be able to take it if they offer it, but I’m not sure I could make the numbers work right now.

SS, part of my retirement benefits is that if I retire after 30 years, and at least 57yo, my employer will give me a “supplement” until I am 62yo and eligible for SS. The bottom line for me, is that I will probably file for SS when I am 62yo. 

This is me continuing to plan for my retirement without including anything to do with Mister, and including him or his money in my plans. We will probably get married this spring or summer, but I still need to know that I can be okay and support myself financially without him. It’s not a matter of not trusting him and our commitment to each other, it’s just how I’m made and how strongly I feel about being able to take care of myself no matter what.

He is 5 years younger than me, and will have to work longer than I plan on having to work. His income is also a lot more than mine. Given all that, I might be able to delay taking SS, but I prefer not to count on that. I’m the kind of person that hopes for the best, but tries to prepare for the worst, the worst in this scenario is being on my own in retirement.

[teen persuasion]

Jan 21, 2023 14:22:27 GMT -5 Rukh O'Rorke said:

Trying to get a sense for how this works within the YM crowd. I need to start thinking about these things.....

and imagine did you as will you if that is in the future and you have some ideas on it!


Q1 Budget
How did you determine what your retirement budget would be? i.e.....What specific numbers did you crunch (not the numbers themselves per se, but like, mortgage, electric, etc. or housing = x+y+z,, utilities, a+b+c+d, projecting into the future by what% inflation, etc.......how did you line all that out? what is flexibile and inflexible? What are your budget contingencies for down markets? 


Q2 Age
What age did you retire?


Q3 Social Security
What age did you take SS? How much/what percent of annual expenses does it cover?


Q4 Retirement savings
How many years retired before taking SS? What was your asset allocation at retirement (bonds, stocks, cash.....and.....tax deffered, taxable, tax free)? How did you fund yourself? i.e. what bucket did you pull from (stocks,bonds, cash/tax deffered, taxable, taxfree) and how often did you pull out of investment accouts (monthly yearly?) what percent of asset did you pull yearly? did you rebalance your AA? how often rebalance, etc. How long/how deep of a down market would break your budget contingency plan from Q1?

Are there other questions I should consider? Please add to the list with your answer!!

Thanks everyone!!

We are tiptoeing into retirement - DH is retired, I'm still working part-time, but putting half into retirement accounts as I go.
Q1. I don't strictly budget, but our spending is controlled and fairly even, so I knew what our minimum needs to be.  Then I tried to figure out what kind of spending we *could* sustain from retirement accounts + eventual SS.  Planning to take SS at 70, that left about 15 years to cover from retirement accounts alone.  Conceptually I divided our stash into two parts.  First part: I used our SS amount as a baseline, so SS * 15.  Subtracting that from our total retirement stash (assuming it gets used up), the remainder (second part) I applied the 4% rule to (generates a SWR of 4% adjusting for inflation annually) for a layer that essentially sits on top of the SS baseline income.

Q2. DH 54 (mid-2021), I'm playing OMY as long as it's still fun and we have DS5 as a dependent (EITC makes it worth having a limited bit of earned income, and trying to bulk up my non-Roth retirement account for a state tax quirk)

Q3. DH plans to wait to 70 for SS; opensocialsecurity website says I shouldn't bother waiting at all (actual decision will depend on desired Roth conversions and tax ramifications).  SS at 70 for both of us (I will get half of his FRA amount) is more than we currently spend, but we have plans for the additional layer of income (updates to the house, etc).  We are flexible.

Q4. Fifteen years between DH retiring and SS. I had it at 70/30 stocks to bonds, but haven't been rebalancing and all retirement contributions were going into stocks, so it's drifted more stock.  Hate bonds anyways, so not buying them now.  Combined, we have about 35% Roth to 65% traditional, but DH has the majority of the traditional (and all bonds are in his bigger trad account to slow it's growth).  Roth is all stock.
The plan is to Roth convert each year, and when we need income we can with draw previous contributions from Roth; withdrawing from trad would incur under 59.5 penalties.  It's tricky for the next few years, because we are trying to balance everything: keep AGI low enough to qualify DS5 for max financial aid, max EITC (additional cash), push more to my SIMPLE IRA (can't max it, ironically need enough earned income to get max EITC), and Roth convert as much as possible (but must keep under phaseout zone for EITC).

After we no longer have a tax dependent, EITC goes away, so perks of earned income go away, too.  We can just do all Roth conversions for AGI, and withdrawals from Roth for spending needs - the big question is how much to convert each year when we don't have outside limits?  On Bogleheads Professor McQ recently had a thread about single people and hitting IRMAA and the SS tax torpedo.  Of course, that's the hard part of forecasting for MFJ - when will one of you suddenly be thrust into the S tax brackets and standard deduction?  So I followed along with recreating his spreadsheets, inserting my situation instead, and kept tweaking them to see what I can expect to happen with SS taxation.  We can probably keep converting forever (or at least past age 100) up to the top of the standard deduction (assuming it stays the same, not a good assumption) - as long as we are a couple.  The survivor gets higher taxes, on less income (loss of lower SS).  We can convert to the top of the 10% bracket (about $2k each year) and get about everything converted by age 76.  Woo hoo!  But then we have so much wasted standard deduction space going forward from there.  We could convert to half the 10% bracket ($1k each year), and have controlled RMDs (equal to or less than the conversions were) after 75.  Or we could convert to the top of the 10% bracket for 5-6 years, get the trad balances down enough that we could pull back to zero tax or $1k tax going forward. Etc.

We were holding onto cash leading up to DH retiring, and all those pandemic checks pushed our cash up.  We still haven't needed to dip into retirement accounts yet.  I may first withdraw from our HSA; we have never reimbursed ourselves for expenses to date, so we have a good bit we could draw tax free.

[bookkeeper]

Q1:  When we were planning retirement, I was also cash flowing college expenses for our sons.  We had been saving about 40% of our income at that point.  I sat down and documented all of our income and expenses for the previous two years.  That helped me see how much was going to supporting our college students and how much we were spending at home.  Not a budget so much as a realistic accounting of what we actually spend.  This gave us confidence to go forward without a paycheck.

Q2:  DH was age 55 and I was age 50. DH had a pension with a 30 years of employment and age 55 provision.  I had been working part time for most of my career.  I slowed my employment down at age 48 to help care for my parents.  My father died a year after we retired.

Q3:  DH took Social Security at age 62.  The break even point for benefits paid to him if we waited would be age 80.  Men in his family don't live that long, so he started drawing at 62.  I am 58 now and don't have a plan for taking my benefit.  It's a ways off, so we'll see.  DH's SS covers about 1/3 of our bare bones spending.

Q4: DH took a lump sum pension payout instead of a monthly amount.  With that fund and the 401k money we had saved, we had 25 times our annual income.  We knew that keeping spending low the first few years of retirement was going to be key to letting our money get growing so we could easily afford 4% withdraw rate later.  Our allocation is 60/40 stocks and bonds.  We had two years of living expenses on hand when we retired.  We pull from the 401k once a year and DH rebalances probably 3 or 4 times annually.  The lump sum went into an IRA.  That account is left to grow.  We are wanting to do some Roth conversions, but keeping our income low for healthcare subsidy is worth $20,000/year.  We need to start paying the tax on more of the pile.

My personal situation at retirement was difficult.  My father was dying of cancer.  DH wanted to move back to our home state and leave the home where we raised our children.  Add retirement and the uncertainty of how your financial future will be, I was a mess.  My father passed a year later, and my mother was of a mind to start sharing her income now rather than waiting until she died to transfer her assets.  The point of this is that my family farm provides me with a nice supplemental income in addition to our own retirement savings.  When we were planning for retirement, we were counting on only ourselves and our savings to live the rest of our lives.  Farm income and Social Security income were always going to be the extra on top of our savings.  We arranged our finances to be able to get along with just our IRA's and 401k.

So far, so good.  We have all we need and much of what we want.  We are in a position to help our sons with education and homes.  We feel very fortunate.

[jerseygirl]

We’re very unusual Jerseyguy retired around 52 from an extremely stressful job ( his replacement died of heart attack after 1 year). I officially retired when company I worked for was bought (61) . But after a year at full salary I was bored and took consulting jobs. Consulting was very lucrative and enjoyable for me! Last year I decided to finally stop - I’m 80 today! Consulting jobs still contact me and tempting but finally stopped mostly due to poor health of Jerseyguy

Q1 Budget
How did you determine what your retirement budget would be?
Just looked at all checks, CCs etc and added some for unexpected
]Q2 Age
What age did you retire? Finally at 80
br]

Q3 Social Security
What age did you take SS?
I took SS at 66 and have been giving it to grands for education. I made mistake of not applying for Medicare until I applied for SS, wasn’t aware of the life time penalty I pay because I enrolled late.br]
How much/what percent of annual expenses does it cover? SS really not used for expenses

Q4 Retirement savings
How many years retired before taking SS? What was your asset allocation at retirement (bonds, stocks, cash.....and.....tax deffered, taxable, tax free)? How did you fund yourself? i.e. what bucket did you pull from (stocks,bonds, cash/tax deffered, taxable, taxfree) and how often did you pull out of investment accouts (monthly yearly?) what percent of asset did you pull yearly? did you rebalance your AA? how often rebalance, etc. How long/how deep of a down market would break your budget contingency plan from Q1?

Are there other questions I should consider? Please add to the list with your answer!!

Thanks everyone!![/quote]


I bought an annuity that pays me $85000/yr, Jerseyguy has a small pension also. Have about 1/3 of funds in tIRAs that require RMDs of about 4% year. Then 2/3 between brokerage account and smaller Roth
We’re facing the dreaded IRMAAs but have been successfully avoiding so far by showing life changing events - consulting jobs ended ( doesn’t seem to matter that started on a consultation with a new company) and this year dissolved my company
Love to take big family trips . Twelve of us chartered 2 sail boats in the BVI for a week in July ( I paid for flights and charters), in February taking YDS family of 5 to Hawaii. Also have given kids and oldest grand some money for houses. I’m happy to spend on them now instead of them getting money when we’re gone

We have a fairly big house but can easily just use first floor since we updated the 2 baths and put in a laundry ‘closet’. At this point we’re still happy to have space for family to stay on visits. Will we move?? Property taxes are terrible here and we need to hire for snow, lawn etc.
we know we’re fortunate but try to share our good fortune with family. I’m on the Board of a charity also

[geenamercile]

Q1 Budget
How did you determine what your retirement budget would be? i.e.....What specific numbers did you crunch (not the numbers themselves per se, but like, mortgage, electric, etc. or housing = x+y+z,, utilities, a+b+c+d, projecting into the future by what% inflation, etc.......how did you line all that out? what is flexibile and inflexible? What are your budget contingencies for down markets? I am 24 years off, so besides planning on having a paid off house no real budget crunching yet.  


Q2 Age
What age did you retire? I am hopeful for 65, at that point I will have the 30 years needed for my pension to top out and that will cover 60% of my working pay.  I could potentially pick up subbing too for some extra if I feel like it.  It does have a cost of living increase with it.  I also am dropping the max in my HSA, so I guess that might count as savings for the future.   


Q3 Social Security
What age did you take SS? How much/what percent of annual expenses does it cover? Right now the SS benefit estimator puts me at 30% of take home pay when I retire if I retire at full.  I am  thinking of doing the delay, which would give me about another 600 a month increase 


Q4 How many years retired before taking SS? What was your asset allocation at retirement (bonds, stocks, cash.....and.....tax deffered, taxable, tax free)? How did you fund yourself? i.e. what bucket did you pull from (stocks,bonds, cash/tax deffered, taxable, taxfree) and how often did you pull out of investment accouts (monthly yearly?) what percent of asset did you pull yearly? did you rebalance your AA? how often rebalance, etc. How long/how deep of a down market would break your budget contingency plan from Q1? I plan to live off of the pension and savings until I can get the max for SS.  Once I have the SS and Pension I am hopeful Savings can just be for shit and giggles fun stuff.  Most of my savings are not in retirement accounts, once I no longer have the girls I will need to adjust this for tax purposes, but for now I like the access to my money.   

[NastyWoman]

I am another outlier here on YMAM. Only on the other side of the scale with a very late start and late retirement due to a late in live divorce that left me with very little.

Q1: I tracked my spending for years and aimed to replace that plus a buffer for my retirement. I reached my goal at 66. Quite old but I was in my early 50s when I got started. All my debt, including my mortgage were paid off. I was something of a super saver...

Q2: Retired at 70 due first to some family related decision I had to make, followed by Covid lock downs. I was not going to sit at home doing nothing while I could work so I could have some structure to my days

Q3: took SS and Medicarw when I retired at age 70. As I had creditable coverage through work no late application penalty is attached to my Medicare

Q4: NA, I took SS upon retrement I have enough of a buffer that I did not need to touch any of my investments. Good thing with what the markets have done since I retired. My luck runs out this year though as I will turn 72 so the required 401K withdrawals have arrived.

[tallguy]

Jan 23, 2023 9:56:13 GMT -5 NastyWoman said:

I am another outlier here on YMAM. Only on the other side of the scale with a very late start and late retirement due to a late in live divorce that left me with very little.

Q1: I tracked my spending for years and aimed to replace that plus a buffer for my retirement. I reached my goal at 66. Quite old but I was in my early 50s when I got started. All my debt, including my mortgage were paid off. I was something of a super saver...

Q2: Retired at 70 due first to some family related decision I had to make, followed by Covid lock downs. I was not going to sit at home doing nothing while I could work so I could have some structure to my days

Q3: took SS and Medicarw when I retired at age 70. As I had creditable coverage through work no late application penalty is attached to my Medicare

Q4: NA, I took SS upon retrement I have enough of a buffer that I did not need to touch any of my investments. Good thing with what the markets have done since I retired. My luck runs out this year though as I will turn 72 so the required 401K withdrawals have arrived.

Not sure if you mean this is your last year without RMDs but if you turn 72 this year you do not have one due.  It changed to 73 so they technically arrive next year.

[Tiny]

For those who say "no budget" as per se  -  how are you accounting for big lumpy not very often but required expenses?  Like a new vehicle or something like a new roof (or repainting and appliances)?    

I guess what I'm asking is how are you planning to handle, say a 20K expense that's above and beyond your typical yearly spending?    

Do you use a "sinking fund" that's more or less "cash"  so a small part of the big expense is included in your yearly expenses?   so basically spending "cash"? 

OR 


Do you just "take out more" in the years when these expenses happen?  Are you taking it as taxable income?  or are you pulling from "cash" or something like a Roth? 
Basically, is the way it effects your Medicare expense or how your SS gets taxed important? 

[svwashout]

Just retired a few weeks ago so I'm new at this

Q1) while working my spend was dominated by income taxes, this averaged several times my rent plus everything else combined. After retiring my rent+all else should rise by the cost of health insurance. Plus inflation. Income taxes should drop a lot, but no complaints if Mr Market drops me a windfall capital gain I have to pay taxes on

Q2) laid off at 58 so decided to give retirement a try. I didn't file for unemployment as my last resume and job interview came three decades ago, and I'm not up for a reprise. I'd probably return to my old job given the chance, assuming it's still there and my replacement quit for a better offer from a FAANG.

Q3) planning to take SS at age 70. If no haircuts SS should cover about 2/3 of my spend excluding income taxes. RMDs should hit several times my SS, as I plan to start those late as I can (age 75?).

Q4) so my plan is taking SS on 12th year of retirement and RMDs starting on 17th year. Current AA is 15% FDIC insured bank deposits, 50% taxable brokerage (50% stocks), and 35% tax deferred (90% stocks). Initial spend will come from CD ladder maturities which should easily last until SS and RMDs. A long-term stock market wipeout would fix my RMD tax jump, in which case I'd have to spend what's left of my bank deposits and cash from taxable brokerage.

At this point I'm more concerned about a wealth tax than stock valuations. I'd be willing to give up all my SS benefits in exchange for no wealth tax (or at least a 1%/yr cap). I think I could handle either a wealth tax or a prolonged stock market crash, but maybe not both together.

[TheOtherMe]

I was offered an early out for anyone with 25 years of service.  I took it.  I was 47 years old.

I didn't foresee it but I was so over the job.  ETA:  I was also sick and had already applied for a disability retirement which I got and increased my pension amount.  

I've worked numerous part time jobs since I retired.  When the last part time job ended because the church closed, I was done.

I didn't think I would receive any SS because I had been a federal employee and there is an offset.  Surprising to me, I applied at age 70 and I do receive a small amount of SS.  It pays my Medicare premiums and I receive a small amount.

I have set  up automated savings when my pension hits the bank account.  The money goes to various categories, including paying myself back when I borrow from the largest savings account.

I remodeled my bathroom and bought a car with cash with the inheritance from my parents.  

[laterbloomer]

I recently got the job of my dreams so I am revamping my plans. This is a work from anywhere in my province job with a good amount of vacation. Most people I know get some kind of job after retirement, if I'm going to do that I might as well keep this one. So tentatively I'm planning to retire at 65 but I'm not married to that. I'm 57.5 now.
I track my budget every year. I divide it into essential spending (mortgage, property tax, insurance, electric and water, heating oil, groceries, phone and cable, gas for my vehicle and $750 for miscellaneous) and flex spending (travel, dining out, entertainment etc). The flex spending is going to depend on what I can save and how well my investments do.
Gov't money (I'm in Canada so it's a bit different) will cover 75% of my essential spending. I have always had boarders and I see no reason that will change as long as I stay in my house. That will cover the rest of my essentials and maybe a bit to spare.
I'm working on a 2 year emergency fund for market downturns, vehicle replacement and house repairs.
The way rents are sky rocketing in my area I am starting to consider the idea of renting out my house for income for traveling. This would be at least 10 years out so I have more research to do.

[debthaven]

I can't answer all the questions because not everything is comparable here.

I feel like we are winging it too ... it's been 3 weeks lol. 

My big regret is that we leased another car last fall. I regret not having purchased the old leased car. (I wanted to, DH didn't, and I caved, despite my better judgement.)

I'm still working PT, which would be the equivalent of you continuing Rukh Inc Rukh O'Rorke . I go to school two days/week and WFH one day/week. I have Fridays and Mondays off. I'd earn more if I retired later but I was done with going into school 4 days/week and all the marking. 

Another advantage to working PT is that I get complementary health insurance through work, and it's much cheaper ... 110e/month for both us (vs 330e). 

I "officially" retired in Jan at 63. DH is "officially" retiring in May at 67 (FRA here), but he'll keep working too. DH works from home and makes his own schedule. All he needs to work is an internet connection.

To answer Tiny 's question, we are getting our 4 huge French doors plus other windows replaced and having the outside of our house repainted. The goal is to pay 2/3 in cash, and get a loan for 1/3. It's not ideal but it's fine because we have no mortgage on our home. Much of what I earn this year working PT will go towards those improvements.

We do have a small loan on our rental (26.7K). Once that's paid off (5 years) we'll have that additional income.

We should be fine but we won't be spending 6 months a year travelling to exotic locations. I'm OK with that as long as we can go away twice a year (in addition to weekend trips ... 3 of our 4 kids are a long weekend away.)

ETA: I've never earned or saved much, so working PT gives me an opportunity to earn and save more: for windows, travel, whatever. I've been VERY strategic about which classes I've kept so my "quality of life" has increased post-retirement/this semester beyond having an additional day off per week (ie no more evening classes, no more 6 am alarms, and I finish teaching in late April instead of in mid-June).

[debthaven]

Most people I know get some kind of job after retirement, if I'm going to do that I might as well keep this one.

laterbloomer my question would be, would you be allowed to do your job PT? Hypothetical question, but people who retire and continue to work usually work less than they used to. 

The way rents are sky rocketing in my area I am starting to consider the idea of renting out my house for income for traveling.

laterbloomer is there any way you could create a separate/MIL apt so you could one day rent out the majority of the house but keep a separate space for yourself/SO?

[azucena]

Didn't realize that we had some many FIRE folks here but I guess that makes sense amongst savers. Would love to hear your magic FIRE numbers if you don't mind sharing. I know there are lots of variables that go along with that number but I'd love to hear the number all the same.

[Tiny]

Jan 23, 2023 14:50:43 GMT -5 azucena said:

Didn't realize that we had some many FIRE folks here but I guess that makes sense amongst savers. Would love to hear your magic FIRE numbers if you don't mind sharing. I know there are lots of variables that go along with that number but I'd love to hear the number all the same.

My current FIre number is 1,250,000 in tax advantaged retirement accounts  by 59.5.   I'm 59 now and am not going to make this goal.  I am very close.    I have other sources of "savings" and I could FIre at 59.5.   I'd really like my retirement accounts to be at the 1.25 million.... though.  

My FIre number and age changed over time: 
My original goal when I was 40 was to be able to walk away from my corporate job at 55.  I estimated I would need 1.75 million to 2.25  million (with no pension and no SS).  
I realized before I turned 50 that that was somewhat unreasonable.   I also discovered the value of my employers no COLA pension and realized I was chained to my job until at least 58 or 59.    So then I switched my age goal to 59.5 and after lots of calculating and what not I came up with needing 1,250,000 in retirement savings.     

The absolute best case scenario most money smart/financial smart thing would be for me to work for my employer until my 62nd birthday - but I can't do it.  I don't have the energy to re-invent myself at work to keep myself going. 

I will be spending my retirement accounts backwards - taking more from them early in retirement (more than the 4% rule of thumb) and then slowly cutting back as the pension comes online and then as SS comes on line.     

I'm hoping my SS benefits will not be cut in some way over the next 10 to 15 years.      

[Deleted]

DH and I had about $2.5 million in 2014 when I retired in 2014, excluding equity in the house. It's increased by an average of 2.2%/year even after the latest dip and after withdrawals, which reassures me that I'm not going broke any time soon. I'm almost 70 so in theory a small decrease would be acceptable.

[NastyWoman]

Jan 23, 2023 11:39:03 GMT -5 Tiny said:

For those who say "no budget" as per se  -  how are you accounting for big lumpy not very often but required expenses?  Like a new vehicle or something like a new roof (or repainting and appliances)?    

I guess what I'm asking is how are you planning to handle, say a 20K expense that's above and beyond your typical yearly spending?    

Do you use a "sinking fund" that's more or less "cash"  so a small part of the big expense is included in your yearly expenses?   so basically spending "cash"? 

OR 


Do you just "take out more" in the years when these expenses happen?  Are you taking it as taxable income?  or are you pulling from "cash" or something like a Roth? 
Basically, is the way it effects your Medicare expense or how your SS gets taxed important? 

Roth IRA. I had ~$175k in it when I retired. That was in no way included in any of my spending plans. Like my 401k it took a hit last year but since I don't need it right now and there is no requirement to take anything out I am sure it will recover

ETA: while retiring at 70 makes me a FIR  rather than a FIRE, I adopted the FIRE mentality to get where I am. I figured if people could get enough money together to retire after say 25 years at 50 or so, I could do the same thing. I may not be able to go back to work should that ever become necessary but I also have 20 years less to "worry" about

[debthaven]

The absolute best case scenario most money smart/financial smart thing would be for me to work for my employer until my 62nd birthday - but I can't do it. I don't have the energy to re-invent myself at work to keep myself going.

Believe me, I get it Tiny . Could you make it to 60? But the REAL question is, do you even need to?!

[laterbloomer]

Jan 23, 2023 14:38:38 GMT -5 debthaven said:

Most people I know get some kind of job after retirement, if I'm going to do that I might as well keep this one.

laterbloomer my question would be, would you be allowed to do your job PT? Hypothetical question, but people who retire and continue to work usually work less than they used to.

The way rents are sky rocketing in my area I am starting to consider the idea of renting out my house for income for traveling.

laterbloomer is there any way you could create a separate/MIL apt so you could one day rent out the majority of the house but keep a separate space for yourself/SO?

I would make too much with the job to collect Gov't money but I'm OK with that. And by delaying it I get more per month when I do collect.
My current house isn't well set up for that but it has crossed my mind to sell this one and get a duplex with a bigger unit and a smaller one.

Sorry I misread the first part. At the very least I could take unpaid time off on top of my paid vacation. I'm already allowed to flex time so it really is a keeper.

[teen persuasion]

Jan 23, 2023 11:39:03 GMT -5 Tiny said:

For those who say "no budget" as per se  -  how are you accounting for big lumpy not very often but required expenses?  Like a new vehicle or something like a new roof (or repainting and appliances)?    

I guess what I'm asking is how are you planning to handle, say a 20K expense that's above and beyond your typical yearly spending?    

Do you use a "sinking fund" that's more or less "cash"  so a small part of the big expense is included in your yearly expenses?   so basically spending "cash"? 

OR 


Do you just "take out more" in the years when these expenses happen?  Are you taking it as taxable income?  or are you pulling from "cash" or something like a Roth? 
Basically, is the way it effects your Medicare expense or how your SS gets taxed important? 

Our spending has always been lumpy, and earnings were lumpy too (no summer pay for DH), so I've always kept a good bit of extra in the checking account to let things roll along on an annual basis.  And those bigger lumpy expenses seem to come along on a fairly regular basis, one per year or two, so just get incorporated into the "average" annual spend.  We buy used cars, so not super expensive but frequent repairs; replaced the roof a few years ago and cash-flowed it;  another year the water heater went and replaced that (stupid expensive because it's piggybacked on the boiler).  Honestly, just pre-buying oil for heat is getting crazy - it was nearly $5k this year!  Random college expenses when aid was rescinded, etc.

In the near future, ALL spending will come out of the Roth.  I'm planning to finesse the taxes thru Roth conversions each year, no direct tIRA withdrawals.  Choose the level of tax I want to pay, convert the appropriate $$ amount, withdraw from Roth for spending. After SS starts, count SS towards spending first, convert to desired amount figuring the SS taxation triggered, withdraw remainder wanted for spending from Roth.  When RMDs start, they just stack on top of SS for taxes and spending, and Roth conversions/spending as desired last.  I'm mentally separating the annual Roth conversion decision-making calculation from the annual spending calculation.  Systematic conversions to shift $$ from trad to Roth over time, to control RMDs and avoid SS tax torpedo for single survivor whenever in future.  Spending from Roth as needed, no tax implications to deal with, especially if I can convert nearly everything (leave some for medical expenses). I don't expect to hit IRMAA level income, but also won't leave it to chance.

We are starting to consider upgrades to the house, etc., to make us more fossil-fuel independent.  Ideally we'd like to get off oil, do geothermal for heat and hot water plus EV to get off gasoline, and then solar/wind to generate electric for those. If we can realistically save $1k a year (or more) on X project, it's worth spending $25k from our stash - reduction in expenses = reduction in income.  Oil jumped thousands this year, what's coming in the future? I'd rather have more control over our energy use/source, and help the globe.  Tax and other incentives would be helpful, but as written we get little assistance - they are primarily non-refundable tax credits that we can't use RN, but maybe when we lose our last dependent in a few years.  Maybe.  It'll be another long-term systematic plan, one piece per year.

[plugginaway22]

We are newbies to this retirement thing. I retired in Oct. 2021 at age 61 and DH retired in Jan. 2022 at age 62.

Q1- Budget
I averaged the 5 years expenses prior to retirement. We were spending around 50-60K annually and we knew that this could be reduced. We live in a pretty LCOL area where we raised our 3 children and live in the paid off home we have owned for 27 years. We have no debt. After the kids flew the nest we spent $$ on fixing up the home, replacing our vehicles, replacing appliances, fencing, roof, windows, etc. The only thing that we had not replaced was the boiler and yes it went out this year to the tune of 9k! We also spent $13,000 on travel in 2022. 

Q2- ages above

Q3- Social Security
We have no pensions and no healthcare options until Medicare at age 65 so we knew that we needed to purchase healthcare through the marketplace and that our required income would keep the premiums affordable with govt. subsidies.  In 2022 we lived off savings. We took the advice of many and started retirement with 3 years of expenses in cash. It was not fun to watch our invested retirement funds drop this year. We did a $50,000 Roth conversion because if you show NO income you can only qualify for Medicaid and that was not an option. So for 2023 we again will keep income around $50,000. But, we have decided to file for SS benefits for both of us, DH at 63 and me at 62.  This SS income amounts to about $45K, so if you only need to pull $15K/year from savings and later investments, all is good in our minds. 

Q4- Retirement $$
We hope to not need any of this for next 2 years, so let's plan for the markets to bounce back!  Most of it is in a 60/40 AA. We have an HSA account with $30K.

Other thoughts:  We cannot decide about downsizing our home, we do not need 3 vehicles, with controlling our income we cannot just yank a chunk of money from investments if I want to help a kid with down payment or whatever. We do have a home equity line of credit that could be used in the short term but wow that interest rate now!

I am enjoying reading what all of you are doing. Thanks for this thread RukH.

[svwashout]

Jan 23, 2023 14:50:43 GMT -5 azucena said:

Didn't realize that we had some many FIRE folks here but I guess that makes sense amongst savers. Would love to hear your magic FIRE numbers if you don't mind sharing. I know there are lots of variables that go along with that number but I'd love to hear the number all the same.

I never had a pension so my magic FIRE target was a portfolio market value of 33x annual living expenses excluding income taxes, and that happened in 2003. My job situation improved around that time, so I stayed on at work. Last year's layoff round caught me by surprise, but I've been ready for it financially all these years. I am starting to see how retirement readiness involves more than just financial preparation, though.