How much income do you need to retire?

[gumba]

Fixed income doesn't make it. Janet Yellen will tell you that inflation is at 1.5-2.5 %. That's b.s.. I gave $5.00 for a loaf of bread the other day. My advise is - get envolved with your savings. Find a good advisor/broker.

 

[Fred W]

Indeed they are. Without a 401k I would not even be considering retirement any time soon.

Some very good points made above.

My situation is that I am 57 this September and my intention (right now) is to retire at 60. Why 60? Because you can start taking distributions from your 401k at 59 1/2 with no penalty. There is also a possibility that my employer may offer me an early retirement package even before then.

At 60 I will receive a nice pension, though not as big as some of the ones mentioned above. Mine will deliver about 50% of my current gross earnings.

If I go out before 62 I'll get a small supplement until social security kicks in then. If I waited until 66 1/2 the SS would only go up $750 a month, not worth waiting for IMO.

In the next month or two we will have eliminated most of our debts, with the exception being a small car payment and our current home mortgage, which is only 16 years into a 30. That one doesn't bother me because we intend on selling the place we are in now in suburbia and moving to a more modest sized place somewhere out in the country. I would expect that readying our big 4 BR family home for sale will be my first job in retirement.

I started contributing to my 401k when I left the Navy and first hired on with my current employer over 30 years ago. I've always contributed the max amount that my employer would half-match (can't miss out on free money) and some of the time even more than that. So at least 10.5% of my pre-tax went into the 401k.

Most of the estimates I've seen say that you can take 4-5% distributions out of your 401k after retirement and still have it growing at 2-3% to take the sting out of inflation. I would have to do that to maintain 100% of my pre-retirement gross, at least for the first few years.

The big scary monster in the room is the whole health insurance thing. There are no healthcare benefits offered in retirement by my employer, so I'll be paying that insurance out of my own pocket until Medicare starts. After that point I would think I could ratchet back my income from the 401k and let it build back up some. But is even 100% of pre-retirement income enough when you have to pay your own health insurance? I guess that is the biggest unknown.

 

[Pterodactyl]

In 1999 retired from the Army after 26+ years as an infantry officer, then two years ago I retired from the state of Alaska after 12 years as a University administrator, and last year I began drawing Social Security, My wife is retired from the State of Alaska Virology Lab and will be eligible for Social Security in a couple of years. We are very fortunate to be part of what may be the last generation to receive defined benefit pensions. To match our monthly income with the proceeeds of an investment plan we would need a nest egg of $5 million or more. We have a few IRAs, but nothing near that amount. We have no debit and our single biggest expense is motorcycling. We have two special motorcycle accounts that we use to fund our addicition. A maintenance account and a travel account. We spend about $7,000 a year to fund our travels from those two accounts. They are a supplement to whatever we spend out of our normal day-to-day accounts when traveling. The IRAs are there just incase and so far on one occassion to splurge on a new FJR. The thing that has saved our bacon is a great medical plan(s). I became very ill a year after retiring in 2011. The first bill we got after a 70+ day hospital stay was for over $400K and we've received a couple more of those size bills since. Our out of pocket expense has been a couple of thousand dollars. Good health insurance is an important part of the retirement plan. Without it you can find yourself wiped-out in an instant.

 

[El Toro Joe]

Retire? not sure...but I think I may be able to when I'm done living.

 

[Top_Speed1]

Well a lot of you guys here are already retired (lucky basstards). Your riding times and dates are ad-lib'd at will, and yes, I'm jealous of guys like Petey and Geez who can just go where and when they see fit.

That being said, I wanna be able to be comfortable to to this 'at will stuff' as well when I retire. With inflation on lodging, food and of course who knows on the fuel rise, my IRA will (have to) shoot higher than I will predict at this present time. Thus meaning, I will keep working, and working probably till the SS max. Then speaking of which, who knows what even happens to that little subsidizing funding? Guess I don't even put that into the equation for safe thinking.

Thanks for the buzz-kill, Fred. I owe ya one

 

[RaYzerman19]

Because personal circumstances are different, I'd strongly advise going to a professional financial planner. Your medical benefits or lack thereof are big..... you'll need them later. Other than that, there is an adjustment to make in the first 6 months, and you'll find you don't need a lot of things any more. Have hobbies or maybe there's that part time flexible job somewhere for spare change.........

 

[beemerdons]

Well a lot of you guys here are already retired (lucky basstards). Your riding times and dates are ad-lib'd at will, and yes, I'm jealous of guys like Petey and Geez who can just go where and when they see fit.
That being said, I wanna be able to be comfortable to to this 'at will stuff' as well when I retire. With inflation on lodging, food and of course who knows on the fuel rise, my IRA will (have to) shoot higher than I will predict at this present time. Thus meaning, I will keep working, and working probably till the SS max. Then speaking of which, who knows what even happens to that little subsidizing funding? Guess I don't even put that into the equation for safe thinking.

Thanks for the buzz-kill, Fred. I owe ya one

Kevin my Good Friend, I just have one word for you: PLASTICS! No, the word is actually Rentals. For you young FJR Forumites and I do mean the youngsters, scrape and scrounge to obtain rental properties. Mine are now all free and clear and I use them as my Motorcycle Mad Money. As a returning US Army Veteran in 1974 I bought my first Rental under the CAL-VET program and eventually I parlayed that into six rental properties, I am currently down to four homes, making huge profits on the sale of two of them. I also have SS, Two Pipefitter Pensions, IRA's, Stocks/Bonds: But I do LOVE my Rental Homes!

I have to thank my very best old friend Cy Noel for this, Cy passed on six years ago but back in 1974 he was the force that got me buying Rentals! Cy, RIP!

 

[Fred W]

Retire? not sure...but I think I may be able to when I'm done living.

No, no... I'm not talking about stopping living. I'm just talking about stopping working for the outfit I work for now and reaping some of the rewards before I'm too old to enjoy them.

One way I look at this is: If they are willing to give me half of my current pay to stay home(pension), doesn't that mean my actual pay to continue working would be getting cut in half from that day forward?

I'm sure that I'll eventually get some sort of a little job of some kind just to stay active and make a little coin. Maybe even start my own little hobby business, but then I'd probably have problems with the boss.

 

[rockmurf]

Great points mentioned so far and I will probably repeat a few and maybe add a new one. The question was how much do you need to retire. To come up with that number is actually easier than you think. Add up you monthly expenses, your want and or need to do list, your projected expenses ie maintenance to home and vehicles etc,. and you have your amount. The stumbling blocks will be health care, taxes and inflation. People with 401k's and deferred compensation savings will be hit with taxes of 20% and up when they withdraw their money. So if you have 400 grand in a 401k and your tax bracket is 25% and you were to withdraw all of it you would net 300k.

Do your best due diligence and hopefully you will be ok. The best thing you can do prior to retirement and as soon as possible is to take care of your health through diet and exercise. The healthier you are going into retirement the less problems you will have, the more you will be able to enjoy that moment you worked your whole life for, and not only will insurance be cheaper for you but you will be able to get insurance.

Tomorrow is not guaranteed so live life in moderation and have fun. I hope this was helpful.

 

[ice_station_zebra]

I found when I retired that my expenses shot up fairly significantly because I finally had the time to do the things that I had sacrificed or put on the back burner for my career...little time to spend money when you are working 10-12 hrs/day, six days a week! That spending settled down after the first couple of years and with each birthday I've noticed my spending is slowing down a little. The general rule of thumb that I had targeted for annual income on retirement was half my salary and getting completely debt free. I did take advantage of the services of a financial planner and I found that to be most helpful.

 

[Fred W]

People with 401k's and deferred compensation savings will be hit with taxes of 20% and up when they withdraw their money. So if you have 400 grand in a 401k and your tax bracket is 25% and you were to withdraw all of it you would net 300k.

Well, actually if you withdrew all of it in one year you'd pay almost 40% in taxes, but who would be dumb enough to do that?

All of the advice I have seen says to leave your pretax 401k savings in your company's fund (assuming that this is an option) to compound for as long as possible, and defer taking the tax hit until later in retirement when you are in a lower bracket.

And yeah, any distributions that you take from those pre-tax savings will be at your normal tax rates, but... the portion of that money that you would have paid as taxes on that income back when you earned it (ostensibly at a similar tax rate) will have been sitting in your account cranking out earnings and interest for all of those past years. That deal is way too good to pass up.

 

[Geezer]

Fred, you can start withdrawing from your 401K as soon as you retire without penalty, regardless of age. I know this because I retired at 57. The extra few years will help your 401K grow a bit more, and you will be closer to Social Security eligibility, so there is reason to wait. It depends on whether or not you are really ready to do it, both financially and psychologically. I originally planned to retire at age 52, but I found myself short on funds due to major changes in the company pension plan and I enjoyed my job so I wasn't ready at that time.

 

[Joe]

I waited till I was 66 ( full retirement ) to get ss. I had no company retirement so the extra money from ss was welcomed.

Also since I worked longer I was able to save a lot more. One help is the fact that we have lived in the same house for 43 yrs.

Having no dept lets us live on ss only. We only take out of savings for travel if we need to.

Some things have changed in the fact we do not eat out as often. We would rather spend our money to travel. After I retired in Aug of '13

we bought a used toy hauler 5 th wheel. This led me to have to get a newer truck as our other one was not legal to tow, to much weight. This was an expense we I'd not expect, be we had no problem with it.

We love to go place to ride and explor on our RZR Sid by side.

Retirement is great.

Hope you all love it as much as Cec and I do.

Good luck with it.

Joe

 

[SouthernCruizer]

Fred, you can start withdrawing from your 401K as soon as you retire without penalty, regardless of age. I know this because I retired at 57. The extra few years will help your 401K grow a bit more, and you will be closer to Social Security eligibility, so there is reason to wait. It depends on whether or not you are really ready to do it, both financially and psychologically. I originally planned to retire at age 52, but I found myself short on funds due to major changes in the company pension plan and I enjoyed my job so I wasn't ready at that time.

The only way you can withdraw penalty free before age 59 1/2 is if you use the SEPP rules ,.,,,IRS 72(t). There are pitfalls to that also. See IRS website for full law.

 

[Fred W]

+1 - I was going to say about the same thing, except to add that I think if your company forces you out early (SERO? layoff) then I think there is a way to access the 401k with no 10% penalty.

My goal is to wait the three more years as that will help get everything lined up right and leave me fewer years of full medical coverage to pay. Somehow, just seeing that light at the end of the tunnel has improved my daily outlook tremendously.

 

[08FJR4ME]

Let me know when you start counting the days. Hopefully I won't be far behind you. My 2 cents worth.

Silver and Gold for an inflation hedge and I don't mean a piece of paper saying it sits in a vault somewhere. If you can't hold it in your hands it's not yours. there is more gold on paper than what exist in the world today. Soon the fiat currency will be worth nothing. Tangible assets is the key IMO. Yeh, I thought about things last week when I paid almost $5.00 dollars for a loaf of bread also. No inflation my arss. There are two ways to go the way I see it.

A ) Gobs & Gobs of money stuffed in a safety deposit box.

B ) No money at all on record, Uncle Sam is your best relative.

Dave

 

[ionbeam]

..just seeing that light at the end of the tunnel has improved my daily outlook tremendously...

I'm in that tunnel looking for the light but I'm beginning to realize my tunnel forms a mobius surface.

 

[FJRMGM]

1) pay off house - done

2) pay off credit cards - done

3) pay off all car payments - done

4) both of us contribute to retirement savings - done and still going

5) get dedicated financial advisor to run 401k at Fidelity - done (and doing quite well)

6) move to location where cost of living is one-third to one-half of prior location - done

7) three more years to retirement for her - working on it

8) four more years to retirement for me - working on it

 

[BikerGeek99]

Retirement?

WTF is that??

Sounds like a myth to me.

An urban legend.

Something that only happens to other people.

You know - like Canadians.

And Petey.

 

[juniorfjr]

3 years, 3 months and 13.5 days left. At 62, I'm signing up for Medicare and getting as much as I can as soon as I can. If you amoratize it the difference between 62 and 65 breaks even at 15 years. I'll take the money up front. If I live past 77 then I'll let the state take care of me. No pensions in health care, but have saved some in 401k and have a younger wife that has good health insurance. But will have no bills other than a small mortgage payment.

For you younger guys, I think Beemerdons hit the nail right on the head, rental properties. Real property that has real value and can provide income.