How Much Do You think You Need to Retire? What Age Will You/Spouse Retire? General Retirement Issues (Part 2)

Parent Cafe
7401

I know I should never assume, but my bank and several credit cards all allow me to pull down details for a full year, usually only going back for maybe 18 months, so you may be able to pull down full year 2023 for all of your accounts.

OK, I just looked and while my checking account will allow me to specify any period during the past 18 months, my CCs do not allow me to define the reporting period. Last year, YTD, and then by statement are the options, but last year is the one you would want now.

Even if you donā€™t look at it now, itā€™s worth pulling down the data to save for when you do feel like parsing it all.

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7402

BOAT

Bring
Out
Another
Thousand

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7403

Weā€™ve been living on less than half of Hā€™s pay for a while and saving a lot.

Weā€™ll drop

  • life insurance after retirement (thatā€™s $900/mo now between the two of us)
  • disability coverage through Hā€™s job
  • professional licenses/insurance
  • 401k
  • Social Security
  • clothing budget
  • Metro fares and parking at the station
  • employee contribution for pension
  • automatic transfers from payroll to savings
  • at some point, weā€™ll go to one car

I expect medical insurance will increase. Weā€™ll travel more, though this has always been our splurge (and we do it very cost-effectively). The house is paid off, but if we downsize in this area, it will cost us at least as much to get some place smaller and more accessible. Weā€™ll need to put some money into updates and infrastructure before we can sell this house (or make it better for aging-in-place). Iā€™d like to get 529s in place if there are any grandkids.

I used to track all of our expenses on Quicken. Should probably get back to that, but I do the bills and have a pretty good handle on what we spend. Our bills dropped significantly during Covid when we didnā€™t go anywhere. I felt a lot better about the future having seen that ā€œslow goā€ scenario in person. The big unknown is what weā€™ll need for AL/SNC.

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7404

IMHO, if one is concerned about having enough money to last during retirement, try to stay employed until can qualify for Medicare. Sometimes a big age gap between spouses may not have that possible for both - but the health care exchanges available are a help beyond COBRA time frame.

Many on this thread have not ā€˜counted onā€™ Social Security income, but at least know what makes sense for your situation on when to draw the SS.

Be sure to take advantage if you have some age 65 savings - sometimes with certain home property tax costs (for us small amount, but it is a savings); we actually get a 10% senior discount on our city water bill. At certain restaurants, getting a discount on meal (Dennyā€™s, AARP 10% off, and DH also has a Dennyā€™s ap) - I tip extra at places like Dennyā€™s because the help works hard and deserve a good tip. A friend sent a huge list of what use to be places with Senior Discount - a lot of that has gone away, but some is still there.

Gas/expenses on work commute are easy to add up. We definitely use less gas generally too - we can plan shopping trips and use less gas on errands.

Having a newer car at retirement is also a good thing, as it delays a car replacement.

Once DH no longer wants to keep up the yard (1/2 acre, but some of it is wooded) is also about the time he will give up his local hobbies and be willing to move near the grandkids (another state). I have a fund building up to do some home improvements, so when it is time to sell the house, the work has been spread out over years. Baby steps. Once we have spring weather (it was 67 degrees today, but we will surely get cold again - and in our area, best to wait until after April 1st) I will add some more ā€˜curb appealā€™ perennial plants - desire to have different things blooming at different times with good looking spring/early summer (which is the target time for selling our house, but years down the road I believe). This is the 3rd year for doing the extra with spring plants, and DH has been helping me with this task too.

One has to know their income stream after retirement. So will they have a pension, will they take money out of 401k or other investments, do they have annuities set up with taking monthly cash out w/o penalty, do they have income properties that are generating income?

For us, it took a little time to make all the transitions with health insurance/Medicare, social security, setting up annuity monthly cash payouts - DH and I retired at different times. I took SS and Medicare when I retired, and DH retired months earlier but started Medicare B at same time I retired. DH also delayed his SS till some months later, at the same time we had annuities making the monthly payments. At first we started taking a certain amount from annuities, but this year we are maxing what annuities will cash out each month w/o penalty to build up funds for home improvements. We have a separate investment account which is our money/not retirement funds, which also can be used for home improvements and other expenses.

SWAN - sleep well at night. Do the decisions that do not have you stressed out.

Some people want to travel right away when they retire - and they set up a budget for that and a source of funds for that. DH wants to be a home body after having to travel a lot for work, globally and nationally. That keeps most travel expenses to just me, and I have just one overseas trip planned and one airline trip planned for helping with the grandkids. We will have a few gatherings out of state that will be road trips/generally lower cost.

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7405

The discussion is a good reminder that we need to download the annual Visa credit card report. It does a nice job of categorizing expensesā€¦. sometime a bit shocking (like Restaurant), but as long as affordable I try not to fret.

Once a year I update a spreadsheet that lists the regular monthly bills from Visa and checking autopay. That is helpful.

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7406

Our monthly/annual spend has not changed much in retirement (weā€™re seven years in now). Some of my spreadsheet categories have gone, some added, some increased, some decreased, but the overall annual spend has remained pretty consistent. After tracking every penny in and out monthly for 25 years, and knowing that we wanted our retirement lifestyle to remain consistent with our working lifestyle (or a bit higher), our savings and investment strategy was built on achieving that level of sustained annual income.

I found that just because things like work-related expenses, education costs, and mortgages may go away, other costs happily take their place (you know, nature abhors a vacuum and all), so I didnā€™t concern myself too much with how the underlying buckets would change in retirement, I just needed a firm handle on our aggregate annual cash flow which turned out to be surprisingly consistent year over year regardless of where the money went.

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7407

Or two, or four, or ā€¦ :money_mouth_face:

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7408

@Coloradomom ā€“ I check our Visa categories every year and the biggest bucket is medical. My primary and cardiologist just switched some of my meds and the copays now total $700/mo. Weā€™ll see how the new meds work and if the cost is justified.

Iā€™m increasingly leaning towards staying on Hā€™s medical plan after retirement, assuming thatā€™s still an option five years from now. Heā€™s not retiring til at least 67.5, and Iā€™m 6 mo older, so I can stay on his plan til then before we have to make decisions.

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7409

I know Iā€™ve posted it multiple times, but accurately tracking your personal expenses is the best way to figure out likely retirement expenses. Once you see what they are you can figure out what stays and what goes or changes in retirement.

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7410

Thanks again for all these insights and sharing experiences.

I would really like to think our expenses will go down in retirement (and base a retirement date on that figure) but I donā€™t think I can comfortably rely on that projection (especially since so many here said expenses remained similar to pre-retirement!)

And while I am looking to end the full subsidy of Dā€™s expenses in a few months when she graduates college - that budget item could return in some form in a few years if/when she goes to graduate school.

Iā€™d love to work part-time in retirement - but thatā€™s not as stable an income projection as my current salary.

Looks like Iā€™ll just keep expense-tracking and seeing how low I can get our monthly expenses right now. Thanks again!

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7411

I think part of the retirement plan is planning (imo) how you will fund expenses that arenā€™t reoccurring.

My husband and I decided that after paying for undergrad, that we were done funding our children. Yes we give gifts but they were funding their lifestyle and we were funding ours. Graduate school was on them, phone, cars. They paid.

I know this might seem controversial but it was our decision. Both kids have good jobs and have been self sufficient since graduation.

Our daily and monthly expenses have not changed. The house isnā€™t paid off. Our interest rate is 3%, we donā€™t feel any pressure to pay off early. Yes, our income is less than it was when working because not saving for retirement. But expenses havenā€™t changed. Since the pandemic, work was not an expense since all work was at home.

We have spent more on travel, we have spent more on the house. More on hobbies. We still dine out.

But once college was paid for, our expenditures went down. Once it was only 2 of us in the house, expenses were much less. But we had a decade plus of that to figure what 2 of us spend.

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7412

I will add for 7 of the 8 years before I retired, we lived completely on DHs income. Mine paid college costs. Every penny of mine paid college costs. So having that amount less as retirement income was no big deal. And our annual retirement income is about that amount and we still have a couple of untouched retirement accounts.

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7413

Our expenses are the same or more - but we now do a lot of travel (while we are still able) and there are things we could cut. For example we own 2 cars but with living in a very walkable area of a city we could easily get by with one.
Our commutes were fairly short, we both packed lunches when we worked and spend about the same on clothes now, so work expenses were a non factor.

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7414

Same here. Once I went back to work when DS entered first grade, my income for the rest of my career went 100% into fully funding my 401K, the 529, and boarding school so, basically, my income never hit our living expenses. When DS graduated from the ā€œfreeā€ service academy, his fully-funded 529 came back to us penalty-free, compliments of Uncle Sam, and enabled us to retire two years earlier than planned. Our retirement planning only needed to match the net of DHā€™s highest earning years. We didnā€™t figure in SS, so we took it early when we realized that the current amount met 90% of our monthly need.

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7415

Have you told dd that you would fund her graduate school? Youā€™ve probably heard the saying that you canā€™t take out loans to finance retirement, but you can to finance college. Put on your oxygen mask first. Having said that, Iā€™m a big believer in not changing the rules in the middle of the game. If you have told her that you would pay for grad school, sheā€™s likely made decisions based on that info. If you said that youā€™d ā€œhelpā€ now is the time to clarify what that means. If you never said that youā€™d pay for grad school, you donā€™t have to.

Like @deb922 we told our kids that we would take care of undergrad but anything beyond that was on them. Turns out that both went to undergrad for close to free so ds1 used his prepaid plan to pay for grad school. That was fair to me as we werenā€™t out any more money; they knew there was a set amount and ds1 figured out how to get two degrees out of it.

ETA: We also did the live on one salary thing before I quit my job 20+ years ago. And then we pocketed all my salary to pay for those big, one-time expenses that we knew would come up.

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7416

For those with kids in college, early in the planning / tracking processā€¦ you might want to consider getting a new family credit card for each kid. You would still pay it. Even on your main account they build credit history. But with a separate kid-only card your self tracking will be easier.

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7417

Agree, and will add that you should have the student also open his own CC. Initial limit may only be $500 or $1000, but good to start learning about CCs while also building credit history. Having said that, I had my children set up autopay as soon as the first bill arrived as I knew they would not remember to pay on time.

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7418

That is a great ideaā€¦ once the student has enough own money to pay own expenses (which may include pricey airline tickets).

I was rather surprised when our daughter had a good credit rating at college graduationā€¦ said it meant she did not need a co-signer for her first real apartment. She had only used her card from the family Visa account (paid promptly every month by dear old mom).

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7419

I wanted mine to have own cards to pay own expenses. While I felt I was fairly generous in covering all college-related expenses, I did not pay for concerts or nights out at a bar, so they were expected to use own CC for those expenses.

And yes, the solid credit rating allowed one of mine to sign lease w/o a co-signer.

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7420

My daughter got her first card - affiliated with her own bank account - the minute she got a driverā€™s license. Never wanted her to not be able to get a tow, ride home, or fill up.

She now has an over 800 credit rating (at 30 years old).

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