What is your goal for retirement?

**jIM_Ohio** · 10-04-2010, 05:25 PM

The best thing you can do is to save... 20% to 401k or other qualified plans is an ambitious goal, if that is too much, try 10% to retirement plans and increase as you get raises.

**KTP** · 10-04-2010, 07:31 PM

Our goal is to retire as early as possible. I was thinking we would need $1.5 million and be about age 47/48, but if the socialists stay in power I think we could get by on $1.2 million and be age 45

**yugugelizer** · 10-05-2010, 07:32 AM

KTP - with that 1.2 Mil, how much are you planning to withdraw annually, and for how long? Just trying to get an idea whether my goal is realistic.

**jIM_Ohio** · 10-05-2010, 07:43 AM

Originally posted by yugugelizer View Post

KTP - with that 1.2 Mil, how much are you planning to withdraw annually, and for how long? Just trying to get an idea whether my goal is realistic.

3.5 M will almost cover 150k of expenses with a 4% withdraw technique (150k is 4% of 3,750,000).

Your targets look about right.

I would "question" 150k of retirement expenses, but you are 40 years from that, so I would focus on savings 10-20% of gross pay and deal with the expenses later- marriage, kids, lifestyle will change considerably every 5-10 years and change the expense projections.

Focus on savings- you have more control over that than the spending you project 40 years out.

**KTP** · 10-05-2010, 08:56 AM

Originally posted by yugugelizer View Post

KTP - with that 1.2 Mil, how much are you planning to withdraw annually, and for how long? Just trying to get an idea whether my goal is realistic.

It is a whole other thread, but probably our withdrawal rate will be tapered. Low at first while we are in our mid 40s, reasonably healthy, and are still doing odd engineering contract jobs for extra spending money. Higher as we get older. We do not have kids so technically can spend down to $0 when the last blip of the life support system is heard, but realistically will probably leave a few hundred K to some charity or another.

I envy you at 22. You could easily retire at 45 if you start saving now instead of at age 33 like we did.

**bjl584** · 10-06-2010, 09:26 AM

Save at least 20% and live below your means. That's the best general advice I can give.

**snafu** · 10-06-2010, 09:40 AM

The statisticians have recently modified their advice on retirement. Until a few weeks ago the rule of thumb was to expect to use 70% of income for retirement. The latest figure is 45%. Everyone has different expectations and circumstances so @ 22 y/o saving 10% of income for retirement which includes vesting/employer contribution is reasonable and achievable. It also presumes you are saving 10% of income for goals outside of retirement.

Income distribution is easy peasy using the formula: needs 50%, wants 30%, savings 20%. Our government gives the following statistical averages for Where the Money Goes

Housing 30%
Auto 15%
Food 17%
Health & Life Insurance 5%
Entertainment 7%
Clothing 4%
Medical 6%
Debt Repayment 5%
Savings/Investment 5%
Misc. 6%

**disneysteve** · 10-06-2010, 10:08 AM

Originally posted by snafu View Post

The statisticians have recently modified their advice on retirement. Until a few weeks ago the rule of thumb was to expect to use 70% of income for retirement. The latest figure is 45%.

Is this a typo? I can't imagine any expert recommending people plan to only spend 45% of their pre-retirement income in retirement. Most articles I've read did stop using the 70% figure but replaced it with 80% or more. Personally, I do my planning and goal setting based on 100%.

**KTP** · 10-06-2010, 10:28 AM

Originally posted by disneysteve View Post

Is this a typo? I can't imagine any expert recommending people plan to only spend 45% of their pre-retirement income in retirement. Most articles I've read did stop using the 70% figure but replaced it with 80% or more. Personally, I do my planning and goal setting based on 100%.

What are you taking 100% of? Your gross income, adjusted income, or income after savings?

Most of the people on here are contributing to a Roth and/or a 401K, and a few are also saving additional money in a taxable account. You won't really have those "expenses" when you retire.

For example, say you are making 100K gross, and putting $16,500 in a 401K. After taxes (including SS/medicare) and the 401K adjustment, maybe you bring home $60K. Of that, $5000 goes into a Roth, and perhaps you save an additional $5000 in a taxable account. So now you have an income of $50,000.

I could agree with 100% of $50,000, but I can't see needed 100% of $100,000 unless you really really enjoy shuffleboard on the ocean.

**disneysteve** · 10-06-2010, 11:07 AM

Originally posted by KTP View Post

What are you taking 100% of? Your gross income, adjusted income, or income after savings?

I'm looking at 100% of current spending. Some expenses will decrease in retirement. Others will increase in retirement. So I think it will balance out.

And I do happen to really enjoy shuffleboard at sea.

Actually, bingo at sea is more my speed and that costs even more than shuffleboard at sea.

**greenskeeper** · 10-06-2010, 01:15 PM

I am 30yrs old

planning to pay off the house by the time I am 40. (purchased 1st house at 23, current house was purchased at 27)

At the moment we save 25% of our income after taxes

10% goes into the traditional 401k (what will the tax rate be?)

15% goes to buying physical precious metals (no tax, can't be traced)

I won't be a millionaire when I retire, but I am going to live comfortably.

Having the house paid off will allow for college help for our kids (won't pay for all of it but give them some help)

**am_vanquish** · 10-06-2010, 01:45 PM

I'd like to point out that the 4% withdrawal rate rule of thumb really plays out so that your money lasts for about 30 years. If you plan on retiring early and if you believe that life expectancies will rise in your lifetime (you're 22, so another 50 years of medical advances can make a big difference), then the 4% withdrawal rate isn't really that conservative.

Our plan is a 3% withdrawal rate starting at age 55. We're currently about 25 and figure that our "ideal lifestyle" would cost about $90,000 in today's dollars.

$90,000 / 3% = $3 Million Portfolio in today's dollars.
Assuming 3.5% inflation for 30 years, $3 Million * 1.035 ^30, we're shooting for about $8.5 Million in retirement savings starting at age 55 (year 2040).

Obviously, this is a back-of-the-envelope, rough calculation that will be revised to be much more rigorous as we approach our mid-30's.

**jIM_Ohio** · 10-06-2010, 02:03 PM

Originally posted by greenskeeper View Post

I am 30yrs old

15% goes to buying physical precious metals (no tax, can't be traced)

If this is a taxable account, these items have a specific tax rate when sold- I believe last I checked it was a 28% federal tax across the board for precious metals like gold and silver and collectibles.

**snafu** · 10-06-2010, 09:17 PM

The statisticians have explained the MF industry's 70% of pre retirement income marketing strategy was never challenged. We were far less sophisticated in the 60's! The figures from a 10 year study has shown retirees found 45% of pre retirement income was adequate...shocked everyone. Their income included a mandatory 4% draw-down of their retirement saving. We are now encouraged to do a more realistic inheritance plan.

[Seniors in Canada have virtually no medical expense and a long list of taxpayer benefits]

What is your goal for retirement?