How much do YOU think YOU need to retire? ...and at what age will you (and spouse) retire? (Part 1)

Parents Forum Parent Cafe
14021

@TiggerDad, you don’t sound obsessed, you sound like you have figured out what works for you, and it sounds lovely. I wish someone at my house liked cooking.

However, there are others that get nutty about not spending money, and doing everything themselves. My dad is along those lines, not allowing until recently anyone to work on their house, with it falling apart around them because he’s unable to do it. Buying rotten fruit, living without heat, buying used shoes that he stumbles around in because he doesn’t want to buy new. Refusing a hearing aid and any possible niceties because he doesn’t want to spend money, doesn’t need anything to make his life better, and treasures suffering.

This from a retired Boeing engineer, with plenty of savings. People can go off the deep end being overly frugal.

14022

Ants and grasshopper

Some versions, and not just the Disney cartoon, have the ants supporting the grasshopper in gratitude for enriching their lives with music and song.

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14023

I first started by putting all receipts (especially for cash transactions) in a small basket on a counter near the door to our garage. Every time either DH or I came into the house, receipts came out of my purse or his pants pocket (or scrounged out of the car) into the basket. At the end of that first month, I took the AMEX statement (we only use the one credit card), the checkbook, bank statement, and all the receipts and entered every single transaction into a spreadsheet. (Yes, the first time it was horribly tedious as, back then, the electronic record was not as readily obtainable/downloadable as it is now.) I organized those first-month expenditures into loose categories and built from there adding new buckets and sub-categories each month. Over time, I had a bucket/sub-category to capture every single penny we spent monthly. Over the years, some buckets disappeared and other were added as life dictated, but the important thing was that the spreadsheet could clearly account for every transaction, including things like taxes and fees. If we paid cash, wrote a check, or put it on a card, it was included in that spreadsheet, and we started to get a very clear view of our spending habits.

Initially, the biggest area I had to get a handle on was ATM withdrawals. Cash is a devil to track. Having a bucket called ATM Withdrawals didn’t tell me where that money was going, so I put out the basket and started to require receipts for all purchases (not just cash). Eventually, we just stopped using the ATM and put everything, even a single pack of gum, on the AMEX, so the ATM bucket went away, and I had a nice electronic record of most expenditures. But even the AMEX record proved troublesome for receipts from places like Home Depot or Walmart where it is possible to have one total for items that clearly belong in separate buckets, like grocery items (food) and prescriptions (drugs/healthcare) from Walmart and garden plants (landscaping) and roof tiles (home repair) from Home Depot. I hate to say this, but 19 years later, I still require certain receipts and do the breakdown as buckets called “Walmart,” “Home Depot,” (and now “Amazon”) don’t give me the visibility I require. Not everyone is this crazy.

Today, I have an 8.5x11 20-pocket brown accordion folder near the garage door for receipts, labeled:

Auto
Clothing
Club Expenditures
Deposits/Withdrawals
Dining Out
Entertainment/Gifts
Grocery/Alcohol
Health
Home Depot/Hardware Stores
Household - General
Household - Mnt/Repair
Household - Office/Electronics
Misc (to sort later)
Personal
Tuition/School-Related
Vacation/Trips/Travel
Walmart
Xmas
Taxes (all tax documents, donation receipts, etc. go here to simplify tax prep)

I don’t have to look at all these physical receipts, just the ones most likely to span categories, and I can use the online record for Amazon purchases, but you get the idea. Where this took hours to set up and stabilize, it doesn’t take more than 30 minutes/month now and, when it came to retirement planning, we had a very clear picture to work with.

Anyway, I know that this method and level of detail won’t appeal to most people and certainly won’t work for people with businesses and complicated financial lives but, for regular people wondering where to start, some version of this approach might be helpful.

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14024

Property tax should be accounted for in the cost of housing. Obviously, choice of housing can affect how high that us.

Sales tax is typically embedded in the cost of taxable things bought.

Income and payroll tax would not ordinarily be part of consumer spending, though they would be costs of income that need to be accounted for when determining the pretax income needed to pay for a given lifestyle.

14025

@alh

That’s funny enough to produce some chuckling on my part, but in terms of real life situations of my own experience of the grasshoppers among my relatives, it’s not funny at all. My brother-in-law, for example, has been giving us lots of headaches over the years and as late as only a month ago. He doesn’t believe in work. He believes in investing in “big pipe dream” projects – always has been and always will – only to flush his investment money down the toilet. When he eats out, which is almost daily, his bill usually comes to $300 to $500 per dining. He goes to some of Korean operated bars where young women sit around the customers to pour the drinks that they charge $100 per bottle that you can buy at a liquor store for $29.99. He gives them $100 for a tip on top of all that. He wants to appear manly so no small tips, thank you. When he runs out of money is when he contact us. He knows we have a sizable stock holdings and our mortgage all paid for with zero debt in anything. He once asked us to sell our house and all of our stock investment to fund one of his pipe dream projects. Yea, he’s the quintessential grasshopper whose silky singing ways we won’t ever support. I even told my wife that, should we win a billion $ lottery, I won’t give him a penny. I’d rather spend the money helping those truly in need than a grasshopper with big pipe dreams and who has been living a lot fatter lifestyle than us hard-working ants.

14026

Every single thing is included in my actual spreadsheet. My post mentioned that there are other buckets. I was trying to give the general overview, not the detail. Not accounting for federal taxes would be a pretty big oversight. Property taxes were included under “All housing” in my post.

My working spreadsheet tracks income as well as expenditures and has lots of pivot tables and fancy graphs so I can quickly see run rates on certain buckets (like how this year’s utilities compare with last year, etc.). It’s become a bit of a game now. I’m a retired data analyst. :slight_smile:

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14027

@busdriver11 – Oh, no, I’m not like that at all. I have no problem spending my money on things that I consider important (like my photography equipment or my son’s violin which is expensive enough to pay an annual insurance for) or some things that would bring me happiness. Everyone has a different meaning of happiness or life’s fulfillment, and I sure hope that everyone can achieve those personal dreams. If I have the means, there are things that I wouldn’t mind spending my money on – don’t we all?

I didn’t learn the meaning of fiscal discipline from my parents. It was from my uncle and only by chance. He’s a self-made multi-millionaire. Because of the Korean war, he’s never even earned a high school diploma. He started from the scratch and now owns multiple hotels and lands in resort areas of South Korea. And here’s the first fiscal lesson I learned from him, by chance.

At the time he was visiting Chicago suburb close to my aunt. I happened to be in Chicago for my fellowship year, so I had a chance to get together with both my uncle and my aunt. One day I visited my aunt’s house, and I can tell she wasn’t in a good mood, so I asked my uncle who was also visiting her that day what’s going on. He told me that she wanted him to lend her $20,000 so she can pay off the credit card bill so she can plug the ballooning interest amount. She was in a very foul mood because he had told her no. She knew that $20,000 was just his pocket money, yet he declined!! He explained to me that a person like my aunt, who’s credit card trigger happy person with no fiscal discipline, would mean that HIS $20,000 would only amount to less than $10,000 in actual value. So why would he, with his hard earned money, give his sister $20,000 ONLY knowing that it amounts to $10,000 in value? Then, he asked me how much debt I have on my credit card spending. I said Zero. Then he handed me an envelope containing a freshly minted $100 bills amounting to $1,000. NOT a crumbled kind of $100 dollar bills, but those crisply produced kind. Even though they amount to the same $1,000, the “experience” was different, and he knew that. This was a few decades ago. But I learned my lesson very well. After he had left my aunt’s house late that evening, and in spite of the lesson that I learned, I gave that envelope to my aunt just to console her. Many more fiscal lessons that I learned from my uncle over the years, but that’s for another occasion…

14028

A significant percentage of the homeless population has mental health issues.

14029

I’m enjoying reading the spending categories, their summaries and apparent differences seemingly due to housing location and dining/travel expectations.

What do you need to live off in retirement was always the hardest question to answer in our 40s. College for 3 was a giant financial ???

My big question is: Has anyone planned as a couple to live past 85 on a certain income (in our case starting at Bout 60) and then had the world turned upside down with a medical diagnosis realizing that you will be alone?

How lost income will impact college expenses and raising children until they are 22 is messy and a big unknown. However, it is relatively short term < 10 years. How did you recalculate living expenses for one for the long term?

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14030

When I was planning to retire, we worked with a financial planner who helped us lay out our potential incomes in retirement. He had three columns…Mr. Thumper, BOTH Thumpers, and Mrs. Thumper. The columns with just one of us had retirement income innthe event the other person died. The goal was that Mr. or Mrs. would have about the same balance income if the other was no longer alive.

This took some balancing of our accounts, but we think we did it. One thing we considered was that if there is only one of us, we will definitely not keep this fully paid for too big house. That would reduce expenses right there.

Clearly, we have more retirement income with both of us alive. It reduces by about 1/3 in the event one of us dies.

These are not the numbers…but for example…with two retirement incomes (everything…pension, SS, TSA and IRA distributions) we have about $125,000. If one person dies…the remaining spouse has about $75,000 or so. That does not include proceeds from selling the fully paid for house.

14031

@thumper1 125K annually? That’s great.

14032

@coolweather…it was just an example…

14033

The key is…we have contributed the maximum allowed to our retirement accounts for 30 years or more. We haven’t taken distributions from those accounts yet, and probably won’t until we reach 70 1/2.

We have no mortgage and really, no outstanding debt. That helps too.

We are fortunate that we were able to make those retirement account contributions for all those years.

14034

@choatiemom, I do the same thing in considerable detail, only using Quicken. Started doing it in 1996! I can tell you how much we spend on Metro, books, fabric…and I am behind in entering things. DH used to be very involved with this (he was an accountant in a prior life), but now leaves it all to me.

14035

It is a good idea to run the alternate scenarios—couple retired, Widow retired, Widower retired and be sure all scenarios are ok.

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14036

Here’s an article about homelessness, for those interested.

https://www.nlchp.org/documents/Homeless_Stats_Fact_Sheet

Domestic violence is a major cause of homelessness. Mental health issues are lower down on the list of causes.

Anyway, I agree that tracking all expenses is a great first step at taking charge of finances and beginning to plan.

14037

I just renewed my Quicken account for the upteenth Time. I track everything

14038

^^ Same here. I couldn’t live without Quicken. I track every receipt, every bill, every income check, going back to 1992. I can generate a spending report by category for any time period I want. It has been enormously helpful with projecting our retirement spending. I don’t feel like it takes that much time out of my life to keep it updated. A few minutes a day is all I need.

14039

Another plug for Quicken. A lot of people complain about it moving to a subscription model, but I’d pay a lot more for it than I do. This year was a busy one for us, raising cash for a house purchase by selling funds while trying not to break the bank on capital gains (I couldn’t stand the mortgage company acting like little fascists). Without Quicken, selecting the specific lots to sell would have been a very time consuming affair (afaik, there’s no direct download from Vanguard to Excel of individual tax lots).

With Quicken, it was easy peasy. When the market went down recently, it provided a few opportunities for Tax Loss Harvesting to offset the unfortunate capital gains we had racked up earlier in the year.

14040

How are capital gains “unfortunate”? They show one has made a profit, and they are taxed at less than regular income.