Poll: How much are you planning to spend yearly in retirement?

[Mitchel674]

I just had a look at the RMD calculator found in another thread. The number hit me hard as my RMD will be close to $400k at age 70 and I plan on spending roughly $200k/year in retirement. I'm currently 57.

[StarTrekDoc]

sadly; house tax alone is 30k - Benefits of California San Diego living . Health insurance budgeting 17K. Rest of 'essential' beach bum living factored into LeanFI

Budget : Pretax dollars
Lean FI (beachbum with food): 120k
Reg FI (current lifestyle spend): 185k
Fat FI (taking ~10k monthly post retirement trips): 275k

--RMD: This is why the concentration on so much discussion in this forum (especially on my part). We oversave significantly for the poll reflecting most intend a <250k budget.

[jz-]

our retirement spending would drop $35k/yr. if we'd sell our vacation house.

[CM]

sadly; house tax alone is 30k -

[Kamban]

Maybe but with a low-mid seven figure taxable portfolio your dividends alone are going to be > $100k, throw in RMDs, SS, whatever else and that's unlikely to happen if you've been a successful investor doc.

This is what I was thinking too. My income from investments will easily exceed 200K and I can't turn it off by switching to some investments that do not pay dividends since that might mean selling the stocks and getting hit with CG. And the tax laws will keep on changing. So I plan to live the life I am dealt with and pay the taxes that come due.

[CM]

We probably won't spend more than $100K/year. We spend much less than that now.

Based on my experience with inadvertent FIRE 20 years ago, it isn't enough to cover projected retirement expenses with conservative assumptions; it's necessary to cover a significantly greater annual number with conservative assumptions. Otherwise (if you're like me), you'll end up worrying about funds.

Of course, that doesn't matter if your job makes you miserable.

[GasFIRE]

Based on my experience with inadvertent FIRE 20 years ago, it isn't enough to cover projected retirement expenses with conservative assumptions; it's necessary to cover a significantly greater annual number with conservative assumptions. Otherwise (if you're like me), you'll end up worrying about funds.

Of course, that doesn't matter if your job makes you miserable.

I feel the same way. Back in 2010 I hit my number again (hit it once before the Great Recession, but felt my portfolio hadn’t experienced a stress test) and started burning out as I wanted to get out (hadn’t yet heard the term FIRE). Good fortune prevailed leading me to a part-time position in 2012 and NW is now >2X 2010 despite a much more conservative portfolio. Other than travel spending hasn’t changed much. Nowadays I don’t worry about costs but I think if I FIRE’d back in 2010 I would worry much more about black swans disrupting the plan.

[Larry Ragman]

I just had a look at the RMD calculator found in another thread. The number hit me hard as my RMD will be close to $400k at age 70 and I plan on spending roughly $200k/year in retirement. I'm currently 57.

If you really have $10M in retirement funds subject to RMDs, or will by age 72 when RMDs are due, then it will be tough to get below the 35% bracket, but doable with Roth conversions starting when you retire as well as some gifting and deferred income strategies. You will still probably get pushed into the 32% bracket, but it is a good problem to have.

[Larry Ragman]

sadly; house tax alone is 30k - Benefits of California San Diego living . Health insurance budgeting 17K. Rest of 'essential' beach bum living factored into LeanFI

Budget : Pretax dollars
Lean FI (beachbum with food): 120k
Reg FI (current lifestyle spend): 185k
Fat FI (taking ~10k monthly post retirement trips): 275k

--RMD: This is why the concentration on so much discussion in this forum (especially on my part). We oversave significantly for the poll reflecting most intend a <250k budget.

Well, it is not necessarily either a RMD issue or a retirement issue. Can still save for other goals. And it is certainly not too late for most to shift from tax deferred to "taxable" savings. Many benefits: no RMDs, deferred capital gains (maybe zero if held to death), qualified dividends. For my part, I have been pounding a double mega backdoor roth situation, so I'll be bummed if it ends. But if so, I'll increase my taxable by the same amount I have to stop putting into roth.

[StarTrekDoc]

If you really have $10M in retirement funds subject to RMDs, or will by age 72 when RMDs are due, then it will be tough to get below the 35% bracket, but doable with Roth conversions starting when you retire as well as some gifting and deferred income strategies. You will still probably get pushed into the 32% bracket, but it is a good problem to have.

Using Schwab calculator: today's 2.7M with 22 year horizon (age 50 ->72) puts RMD at 402k on a 6% ROI presumption for 25 years Life expectancy.

My guess is that since many folk earn more than my primary care academic job, 2.7M at age 50 is a relatively common situation here.
Coupled with the poll showing vast majority <200k -- most folk here will have a RMD issue if not addressed.

[FIREshrink]

Using Schwab calculator: today's 2.7M with 22 year horizon (age 50 ->72) puts RMD at 402k on a 6% ROI presumption for 25 years Life expectancy.

My guess is that since many folk earn more than my primary care academic job, 2.7M at age 50 is a relatively common situation here.
Coupled with the poll showing vast majority <200k -- most folk here will have a RMD issue if not addressed.

Not "common" even here except perhaps among the regulars.

But I deal with this issue by holding most bonds in pretax accounts, so I use a lower real rate of return, and my taxable is growing much faster. That creates a different but related problem from high RMDs, which is high dividend distributions.

[StarTrekDoc]

This is what I was thinking too. My income from investments will easily exceed 200K and I can't turn it off by switching to some investments that do not pay dividends since that might mean selling the stocks and getting hit with CG. And the tax laws will keep on changing. So I plan to live the life I am dealt with and pay the taxes that come due.

So this is our current (pre BBB, future tax bracket changes for conversion, CG changes) near term to our oversaving /RMD concern - strategy:

Post FI
1 Increase spend - now.
2. Increase spend - remind self to reward self
3. Increase spend. - remind stop rewinning the game and not be oversaving - stick to your IPS and budget

4. Build cash capital for SORR
5. Plan RMD conversions per tax bracket allows to keep optimal sweet spot: ~24% -- that 8% jump to 32% is significant in current day brackets. convert years when <32%
6. Stop contributing to pretax as RMD figures outpace your budget as CG may be more ideal situation (per current CG rules).
7. If taxable dividends start overrunning budget; leverage DAF to manage that beast while keep appreciated assets for stepup inheritance as needed.
8. Once really know you've won over twice more -- use Roth as your speculative account. (CAUTION! 5x over!!)

[StarTrekDoc]

Not "common" even here except perhaps among the regulars.

But I deal with this issue by holding most bonds in pretax accounts, so I use a lower real rate of return, and my taxable is growing much faster. That creates a different but related problem from high RMDs, which is high dividend distributions.

Agreed- Poll reflects overall spend in this forum is significantly lower than average physician spend. My guess minority of physician colleagues will have <200K budgets while 55%+ here in forum are have it. That makes the equation of saving and RMD and conversion challenges from dividends much less frequent outside this forum (sadly).

[Hatton]

So this is our current (pre BBB, future tax bracket changes for conversion, CG changes) near term to our oversaving /RMD concern - strategy:

Post FI
1 Increase spend - now.
2. Increase spend - remind self to reward self
3. Increase spend. - remind stop rewinning the game and not be oversaving - stick to your IPS and budget

4. Build cash capital for SORR
5. Plan RMD conversions per tax bracket allows to keep optimal sweet spot: ~24% -- that 8% jump to 32% is significant in current day brackets. convert years when <32%
6. Stop contributing to pretax as RMD figures outpace your budget as CG may be more ideal situation (per current CG rules).
7. If taxable dividends start overrunning budget; leverage DAF to manage that beast while keep appreciated assets for stepup inheritance as needed.
8. Once really know you've won over twice more -- use Roth as your speculative account. (CAUTION! 5x over!!)

Brilliant plan

[CM]

Agreed- Poll reflects overall spend in this forum is significantly lower than average physician spend. My guess minority of physician colleagues will have <200K budgets while 55%+ here in forum are have it. That makes the equation of saving and RMD and conversion challenges from dividends much less frequent outside this forum (sadly).

You think most physicians spend more than $200k/year?

I remember WCI writing once that he upped family spending to $160k/year and considered that to be a very generous amount. Is there data on median or average physician household spending?