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

[childay]

No data but just looking at the cars, estates and the number of ski or lake homes owned by the partners of my former group (not to mention the surgeons and consultants) I can't see how it would be under $200K.

Maybe we can get medscape or MGMA to do spending survey of physicians..

[childay]

"Why You Need the Last Doubling
Interestingly, it is the last doubling that usually makes you “rich.”
That is, think about the rule of 72. If you get, on average, 10% returns each year, it will take your money 7.2 years to double.
The first doubling, if you have 100k invested, you get to 200k. The last doubling in a 30-year cycle, your money goes from 800k to $1.6M.
Thus, the last doubling is the one that really adds to your portfolio. You get 8 times more from the last doubling than the first!

The joke is a self fulfilling outcome. FI and RE are two separate objectives. ANYONE that actually focuses on saving, allocations, distributions and taxes and reaches ANY FI
has two controllable choices after 65.

• The house - this drives your cost of living in RE. Everything else is discretionary. Richest or poorest guy in the neighborhood, easy to change the neighborhood.
• The last doubling will in all probability occur.

Self preservation will lead to a behavioral finance choice that double is the human behavior. Twice as much for income or assets.
My crystal ball is not that hazy for almost anyone here with a plan. You will have way too much money by 2 times.

If your biggest problem is taxes, that is not really a problem. You will be rich regardless of the neighborhood you live in. All this fretting and planning is what caused you to overshoot your plan by double. Not bad and pretty funny.

While I agree Tim, not sure you're picking up what Lordosis was putting down, so to speak..

[White.Beard.Doc]

It totally depends. In particular because the majority of our spending is discretionary. And taxes are pretty unpredictable.

The basic expenses when you have a paid off house are property taxes, home maintenance, food and health care. The rest is all discretionary. Things like travel, gifts, and charitable contributions.

[Tangler]

I think 100-150 but I put 150-200 because i am beginning to worry that i am underestimating healthcare and taxes.

I think a lot depends on taxes, health insurance, and travel.

Currently we are working and earning a large income and taxes are our largest expense.

With lower income this should drop but not sure the amount, or if a wealth tax will worm its way into reality.

Spending (other than taxes and healthcare) is currently less than 100k.

Other unknowns are unknown!

Home repairs? Car replacement?

Guessing on some variables but uncertain.

Taxes?

Healthcare?

Travel is the 3rd expense and it will increase.

Wife loves to travel and she deserves to go wherever she wants.

I want to fish, visit family, and stay healthy enough to be active and enjoy life.

Will be an adventure!

[StarTrekDoc]

It totally depends. In particular because the majority of our spending is discretionary. And taxes are pretty unpredictable.

The basic expenses when you have a paid off house are property taxes, home maintenance, food and health care. The rest is all discretionary. Things like travel, gifts, and charitable contributions.

Famous line for inadequate funds to spending - 'but I gotta live'. Usually not an issue here

[StarTrekDoc]

Trying to understand

when you retire , you will also start taking money out of nest egg , does your RMD calculation take that into account ? ( the money spent between retirement and 72)
for how much money at 72, RMD will be 200k ? Thx

Also, most folks here are talking about today’s dollars or future dollars ? Thx

Fortunate to have secondary incomes (see Hatton's thread) to need relatively low draw on pretax funds at current levels -- hence RMD comes into significant play if unalterated/converted to Roth. RMD for us is looking a bit more than that and that's the reason we stopped any pretax shelter contribution for past couple years.

Today's dollars.

[ObgynMD]

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.

Does the Schwab RMD calculator take into consideration inflation? 400k sounds huge (and it is!) but not sure if it’ll be so crazy 20-30 years from now. Hopefully the tax brackets shift to account for inflation as well. Roth conversions don’t make sense for us now because we are in our peak earning years. I have a feeling when we are no longer in our peak earning years, Roth conversions will be off the table. Oh well.

I really wish I was a WCI follower right after finishing training. I would have done a Roth conversion for as much as I possible could have if I had understood how things worked back then. Glad to be informed now.

[Lordosis]

Such relies entirely on unknowable facts, such as your future rate of return and future tax policy, the age at which you'll die, and so on. It is that uncertainty paired with natural anxiety which creates these super savers in the first place.

On the fly math problem.

I put less than half in tax deferred but let's say it ends up as half my net worth for simplicity.

Say I want to spend 100k in retirement. With a 3.5% withdrawal rate that is 3.5M. Half of which is 1.75M. if you can completely get by on the taxable the deferred can grow to say 3.5-4M in 15-20 years. Is that enough to cause a problem?

In addition a good chunk of my tax deferred is a 457 which will be coming out first.

If you need to save more for a higher spending rate than I see a problem. Or if you do all your saving in tax deferred.

[MaxPower]

On the fly math problem.

I put less than half in tax deferred but let's say it ends up as half my net worth for simplicity.

Say I want to spend 100k in retirement. With a 3.5% withdrawal rate that is 3.5M. Half of which is 1.75M. if you can completely get by on the taxable the deferred can grow to say 3.5-4M in 15-20 years. Is that enough to cause a problem?

In addition a good chunk of my tax deferred is a 457 which will be coming out first.

If you need to save more for a higher spending rate than I see a problem. Or if you do all your saving in tax deferred.

3.5% of 3.5 M is actually $122,500, so you’d “only” need $2.857 million at 3.5% to get $100,000.

What I’m wondering is what size of taxable account do people have where they’re getting six figure yearly dividend payments??? The current yield for VTSAX is 1.25%, so you’d have to have $8 million in VTSAX to get $100,000 in dividends. Even at 2% yield your taxable account would have to be $5 million. Those are crazy numbers.

[GasFIRE]

Does the Schwab RMD calculator take into consideration inflation?

The calculator only adjusts assumed average portfolio returns, no inflation adjustment.

[Lordosis]

3.5% of 3.5 M is actually $122,500, so you’d “only” need $2.857 million at 3.5% to get $100,000.

What I’m wondering is what size of taxable account do people have where they’re getting six figure yearly dividend payments??? The current yield for VTSAX is 1.25%, so you’d have to have $8 million in VTSAX to get $100,000 in dividends. Even at 2% yield your taxable account would have to be $5 million. Those are crazy numbers.

Oops my bad

[FIREshrink]

3.5% of 3.5 M is actually $122,500, so you’d “only” need $2.857 million at 3.5% to get $100,000.

What I’m wondering is what size of taxable account do people have where they’re getting six figure yearly dividend payments??? The current yield for VTSAX is 1.25%, so you’d have to have $8 million in VTSAX to get $100,000 in dividends. Even at 2% yield your taxable account would have to be $5 million. Those are crazy numbers.

Dividends on value and international stocks are considerably higher. Real estate is higher. Munis were higher. Mega cap USA has a historically ultra low yield right now.

[uksho]

Probably most of us know that we are saving more than enough

I just want to reach the FIRE number .

probably it is the fear that if something happens tomorrow ( not death or disability )

If I can work till 60 in the same job , and save at same rate just in pretax space , should have close to 5 million dollars at 5-6 percent return

pension will be about 160 k starting at 65

We don’t need more than 60 K per year ( that’s our current expense excluding kids tuition etc ), add 24 -36 K if we end up getting a bigger house , which likely I will pay off before retirement

But is there any guarantee that we can save at this rate till 60? So better save as much as we can , till at least reaching FIRE number ( still 6-8 years away ) . If I need to pay high RMD / taxes at time , will do so , I see that as a good problem to have .

[Turf Doc]

The problem seems like the same as the 4% issue. Are you more than likely going to end up with way more then you need if you follow it? yup, but its safe and maybe you get a really bad SOR.

If everything goes smoothly for the next 25 years will people have an RMD "problem"? Yep, but maybe it doesnt go so smoothly, so you have to accept that and save while you still can.

[StarTrekDoc]

Probably most of us know that we are saving more than enough

I just want to reach the FIRE number .

probably it is the fear that if something happens tomorrow ( not death or disability )

If I can work till 60 in the same job , and save at same rate just in pretax space , should have close to 5 million dollars at 5-6 percent return

pension will be about 160 k starting at 65

We don’t need more than 60 K per year ( that’s our current expense excluding kids tuition etc ), add 24 -36 K if we end up getting a bigger house , which likely I will pay off before retirement

But is there any guarantee that we can save at this rate till 60? So better save as much as we can , till at least reaching FIRE number ( still 6-8 years away ) . If I need to pay high RMD / taxes at time , will do so , I see that as a good problem to have .

So your pension at 65 will be 160k; which you only need 100k AND you'll have 5M in pretax on top?

Yes, make hay; save big early - let compounding do its job; Pass FI, then reassess and let the foot off the gas, loosen the purse strings, or glide to parttime to retirement date.