<p>I don’t count our house in our retirement amount, because I think there’s a good chance we’ll retire in it.</p>
<p>As said above, re: not counting the house, ditto. My feeling is we have to live somewhere, and we have no plans to hake a HELOC or take out another mortgage on the house (its paid off). If we ever decided to move to the other coast where our kids are, we’d never be able to get something decent, even a nice condo, for the cost (value) of our current home, so we’ll be paying out for housing.</p>
<p>We don’t count our house, cars, or even DH’s business (who knows what he’ll get for it) when we figure what we have for retirement. All we count are retirement plans, investments, and cash. I’d rather be happily surprised by what we have than unhappily scurrying to make up a shortfall.</p>
<p>What about expenses during retirement? Do you plan to spend about what you spend now? I don’t really see major changes in the way I live. Am I missing something? Those who’ve already retired, do you spend less? More?</p>
<p>We only count 401k’s, 403b’s, pension, and social security (…and I’m not even sure about THAT) when we dream/plan of retirement, even though our house is almost paid for. I figure this is a more conservative estimate, and this is the one part of my personal life where I tend to be conservative… </p>
<p>@Beil1958 , now that is the important question. What worked for me was creating a Quicken extract and loading it into Excel. I took the monthly average of expenses over the past few years in budget categories. To the right I added 3 columns with my “expected change” – bare-bones life, expected, and living-large. So, for example, for travel/vacation: for bare-bones, I would have $0 expenditure, for expected it’s twice what we spend now, and for living-large it’s 10x. Retirement savings goes to $0. Medical probably increases… and so on through the various categories. </p>
<p>@Beil1958: We expect to spend less on housing, including property taxes, HOA, utilities and insurance because we intend to downsize to a house that’s considerably smaller and in a somewhat less expensive area. Dh is currently “required” by his employer to donate a certain amount to a particular charity. (We’ll continue other contributions, but not that one.) Dh is no clothes horse, but the cost of his suits, shoes and other business attire add up, as do dry cleaning costs. In retirement, I’ll be surprised if he wears a suit more than five or six times a year. Food costs should drop some, since dh won’t be eating lunch out daily and we don’t plan to entertain on a large scale (like the luncheons for 40+ or holiday parties for 75+ that we’ve hosted here.) There are other categories that should decrease, and I estimate that overall we could see a reduction of $35 - $40K in expenses.</p>
<p><<<<Those who’ve already retired, do you spend less? More?<<<<</p>
<p>h just retired 2 months ago, so too early to really tell.</p>
<p>I think we’re spending less on gas, less on his lunches (which he would often buy), office vending machines (sodas, etc0, and will be spending less on professional clothing.</p>
<p>I’m thinking that in addition to travel, we might spend quite a bit more on entertainment after we retire–we might go to a lot more plays, concerts, movies, etc. (and the makeup of the audience at many of these things suggests to me that this might be pretty common).</p>
<p>Did not read this whole thread, so I apologize if this was mentioned. Since I’ve been plowing about 20% of my paycheck into a 401(k) since what seems like forever, that’s 20% less income that I’ll need in retirement. Am I right in looking at it that way?</p>
<p>I certainly look at it that way, sschickens. Retirement contributions and SS/Medicare taxes are major expenses that will disappear after retirement.</p>
<p>Another expense that hasn’t been mentioned is charitable contributions. I expect to substantially reduce monetary contributions and substitute contributions of time.</p>
<p>In addition, I realize now that I have time to be a smart shopper, wait for sales event or hunt for a bargain, all helping to lower expenses.</p>
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<p>Essentially. If you’re saving 20% of your income and spending 80%, and expect to continue the exact same spending patterns, you should draw 80% of your current income from your retirement accounts. Keep in mind though that if your 401K is put in pre-tax, it would actually be less than 20% of your take home-pay (IE, your take-home pay would be less than 125% of your current take-home pay if you were to not contribute to your 401K), which makes it much harder to calculate things based off of income.</p>
<p>It’s easier to just look at your expenses, the specific outflows you have, and add what taxes you’ll have to draw on your 401K in retirement to determine what you’ll need to draw. </p>
<p>The way IxnayBob describes on the bottom of page 35 makes the most sense to me. </p>
<p>Although we never count the house as part of our retirement as we plan to “age in place”, my dh is intrigued with the reverse mortgage idea. No one, including our FA, seems to know anything about them. Anyone here? It sure doesn’t seem to have caught on. I see ads on TV about it and they reference this being a Ronald Reagan idea.</p>
<p>Reverse mortgages were popular for a while…but are not in favor any longer. I would NOT consider that option.</p>
<p>Here is what we did. We looked at our monthy income, and expenses. And we have multiple retirement accounts to give ourselves “raises” over the retirement years. </p>
<p>My 83 year old MIL just did a reverse mortgage. She owns her house and basically lives on social security. She had some medical debt (FIL spent the last 3 years in a nursing home) in addition to some other outstanding debt that she just couldn’t pay. The reverse mortgage was her best option.</p>
<p>The upfront fees and expenses to take out a reverse mortgage tend to be very high. These typically include an upfront mortgage insurance premium, origination fees, real estate settlement costs, and reverse mortgage counseling costs.</p>
<p>In addition, the interest rate charged is very high, resulting in the homeowner getting a much smaller monthly amount than they might expect.</p>
<p>Thanks, dadinator.</p>
<p>My BIL has discussed the possibility of getting one. DH was very contemptuous of them, but I thought they had become more mainstream and accepted in the last few years.</p>
<p>My mother has a reverse mortgage. I’m not too happy that she did this, as I view the home equity as in reserve for nursing home care. Meaning that when you reach the point that you can no longer live in your home, you can sell it to pay for the care (in addition to hopefully having Long-Term Care insurance). Now my mother has neither, and I foresee that my brother and I will be on the hook for her care. She has always been a big spender & spent the nest egg left by my dad on home improvements & Ethan Allen furniture - now she is in pretty bad straights & the bank will reap the rewards of the home improvements she did. On the other hand, I think the(bad) example she set is a major reason that I started to save as early & as enthusiastically as I did!</p>