Author Topic: What is your target retirement spend as a % of your current salary?  (Read 2739 times)

Abe Froman

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I happened into a couple Personal Finance conversations at work yesterday and I was stunned to hear that of the 3 individual people that I spoke to ... 2 planned to target 95% of their current salary, to fund their expectation of travel and golf, etc. The 3rd is seeking to cover a $100K annual spend.

I held myself together enough to not cringe.
I just can't fathom needing to bolster a ~$8250/month spend plan.

What is your planned PULL from your portfolio as a % of your current salary?

jlcnuke

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Re: What is your target retirement spend as a % of your current salary?
« Reply #1 on: August 08, 2018, 10:08:32 AM »
Of my base salary? 63%.

If I didn't care about retiring early, I'd probably shoot for more like 90% and spend more freely now as well as in retirement.

SimpleCycle

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Re: What is your target retirement spend as a % of your current salary?
« Reply #2 on: August 08, 2018, 10:15:54 AM »
Are we counting taxes?

Our target retirement spend is 23% of our combined salary, not counting taxes, which we haven't really figured out.  But we make a ton of money and almost 40% of our spending is daycare, so we spend more than the target now.

monte0930

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Re: What is your target retirement spend as a % of your current salary?
« Reply #3 on: August 08, 2018, 10:18:34 AM »
Mine is currently 30% of my salary, provided my mortgage is paid off by the time I retire. I have about 10 years left on my 15 year mortgage.

Bird In Hand

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Re: What is your target retirement spend as a % of your current salary?
« Reply #4 on: August 08, 2018, 10:23:07 AM »
Ballpark, around 30%.  Possibly closer to 50% when including taxes and health insurance   By far our biggest spending categories right now are retirement savings, tuition, and mortgage -- all of which will eventually be gone for us in retirement.

wageslave23

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Re: What is your target retirement spend as a % of your current salary?
« Reply #5 on: August 08, 2018, 10:24:35 AM »
about 15% with paid off house.

Laserjet3051

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Re: What is your target retirement spend as a % of your current salary?
« Reply #6 on: August 08, 2018, 10:27:24 AM »
20%-25% (portfolio pull PLUS Soc. Sec.)

Its not my "ideal" target, but rather, given my projected social security benefit, and my projected stash size at RE, I will likely only be able to draw 25% tops (of my current salary) at RE. Depending on the unknown future, it also could be 20%.

Of course I'd prefer 75% of my current salary, but short of some unanticipated holy grail, it is highly unlikely.

As a mustachian, I will just adapt to this lower (RE) spend. For example:

1) move from VHCOL area to LCOL. Currently planning this and yes, this will have a huge impact on my spend
2) no longer supporting 2 kids
3) downsize EVERYTHING
4) no more payroll taxes, life insurance, no more allocating $$ to RE savings
5) as a result of #1-#3, reduced utilities costs per year
6) eliminate all debt prior to RE

Whether this plan is realistic/workable doesnt matter. I will only have what I have to work with at RE and no more.
« Last Edit: August 08, 2018, 10:29:50 AM by Laserjet3051 »

mak1277

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Re: What is your target retirement spend as a % of your current salary?
« Reply #7 on: August 08, 2018, 10:57:05 AM »
My target spending in retirement is about equal in dollars to my current monthly spending, which is right around 50% of my gross base salary. 

But honestly, it's irrelevant to think about that way at all.  The only thing that matters is having enough retirement money to cover your spend...current salary has nothing to do with it.

wenchsenior

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Re: What is your target retirement spend as a % of your current salary?
« Reply #8 on: August 08, 2018, 11:10:46 AM »
I happened into a couple Personal Finance conversations at work yesterday and I was stunned to hear that of the 3 individual people that I spoke to ... 2 planned to target 95% of their current salary, to fund their expectation of travel and golf, etc. The 3rd is seeking to cover a $100K annual spend.

I held myself together enough to not cringe.
I just can't fathom needing to bolster a ~$8250/month spend plan.

What is your planned PULL from your portfolio as a % of your current salary?


Percent of current gross salary?

Our current gross income is about 135K and we spend 65-75K/year (but we partially support a second household,  including owning and maintaining a second house). 

We have different 'target levels' of FI ranging from minimum to lavish.

We are targeting absolute minimum of 80K/year spending (about 60% of current gross income, but >110% of our current spending).  However, we are hoping to have the option to spend at least 100K/year, which would be >70% of our current gross and >140% of our current spending.

Zikoris

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Re: What is your target retirement spend as a % of your current salary?
« Reply #9 on: August 08, 2018, 11:12:14 AM »
Right now we save 60-70%, and plan to live a comparable lifestyle forever, so I guess 30-40%?

simonsez

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Re: What is your target retirement spend as a % of your current salary?
« Reply #10 on: August 08, 2018, 11:25:41 AM »
What people plan to do during retirement is so variable (as well as how long they plan to work) and salary can change a lot with age that I think it would be hard to tease much out from a % of current salary figure.

A household could plan to spend 100k/yr in retirement and that might be 25% of their current salary or it could be 200% right now but in 10 years time it might only be 50%.  They might want to use 50k/yr for charitable contributions or it could be zero.  Maybe they want a huge chunk set aside for medical emergencies that they'll never touch and are averaging that out.  Maybe the FI aspect is a lot more important than the RE and they want a low SWR.  Or they're probably paying premium for everything they plan on doing and want to live "comfortably". 

Hey, if they're planning for it and that's what they want, it's their choice.  Here's to hoping it happens in a somewhat environmentally conscious manner.

Dragonswan

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Re: What is your target retirement spend as a % of your current salary?
« Reply #11 on: August 08, 2018, 12:31:31 PM »
Annual retirement budget is about 50% of current salary and that includes taxes and a new 30 yr mortgage in a MCOL area (currently in a HCOL area so will be downsizing size and price of home I hope).  I'm not sure what you mean in terms of pull from my portfolio.  About 80% of the retirement will be funded by my pension and SS.  That covers my basic expenses (which includes several unmustachian things).  The things that make retirement desirable are what the other 20% is for and will be coming from the TSP (federal 401K): dining out, massages, performing arts, fun courses at the community college, and of course travel both foreign and domestic.

FIRE@50

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Re: What is your target retirement spend as a % of your current salary?
« Reply #12 on: August 08, 2018, 12:38:08 PM »
I would say about 35%

2Birds1Stone

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Re: What is your target retirement spend as a % of your current salary?
« Reply #13 on: August 08, 2018, 12:38:56 PM »
110%

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boarder42

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Re: What is your target retirement spend as a % of your current salary?
« Reply #14 on: August 08, 2018, 12:43:03 PM »
38% accounting for all my compensation including my mortgage.

26% not counting my mortagage payment.

RWD

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wenchsenior

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Re: What is your target retirement spend as a % of your current salary?
« Reply #16 on: August 08, 2018, 12:55:55 PM »
About 25% for us.


110%
Haha

Why the laugh? I said the same thing in my post. 

RWD

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Re: What is your target retirement spend as a % of your current salary?
« Reply #17 on: August 08, 2018, 01:12:25 PM »
About 25% for us.


110%
Haha

Why the laugh? I said the same thing in my post.

2Birds1Stone has a projected spending of $40k and income of $130k (according to their first journal page). So I'm assuming the 110% is a joke.

Also, you didn't say the same thing. You said >110% of current spending, not income.

ScreamingHeadGuy

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Re: What is your target retirement spend as a % of your current salary?
« Reply #18 on: August 08, 2018, 01:14:51 PM »
53% of my/our current gross income.

wenchsenior

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Re: What is your target retirement spend as a % of your current salary?
« Reply #19 on: August 08, 2018, 01:40:42 PM »
About 25% for us.


110%
Haha


Why the laugh? I said the same thing in my post.

2Birds1Stone has a projected spending of $40k and income of $130k (according to their first journal page). So I'm assuming the 110% is a joke.

Also, you didn't say the same thing. You said >110% of current spending, not income.

Got it. :)

Fomerly known as something

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Re: What is your target retirement spend as a % of your current salary?
« Reply #20 on: August 08, 2018, 02:15:50 PM »
Probably 30-50% depending on what choices I make as far as hobbies and the like.

Altons Bobs

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Re: What is your target retirement spend as a % of your current salary?
« Reply #21 on: August 08, 2018, 02:48:34 PM »
You said salary, not income.  We expect to spend about the same as now, which is about 122% of our gross salaries.

Jrr85

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Re: What is your target retirement spend as a % of your current salary?
« Reply #22 on: August 08, 2018, 02:57:47 PM »
I happened into a couple Personal Finance conversations at work yesterday and I was stunned to hear that of the 3 individual people that I spoke to ... 2 planned to target 95% of their current salary, to fund their expectation of travel and golf, etc. The 3rd is seeking to cover a $100K annual spend.

I held myself together enough to not cringe.
I just can't fathom needing to bolster a ~$8250/month spend plan.

What is your planned PULL from your portfolio as a % of your current salary?

I don't get targeting a percent of current salary (or income)? 

My target is just keep up my current spending.  That's conservative in some ways (probably 25-30% of our spending now is on children, another 8-10% is on a mortgage) but we also don't spend much on healthcare, which will presumably change.  When we get closer we'll put a little more thought into what our actual expenses will look like.

DreamFIRE

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Re: What is your target retirement spend as a % of your current salary?
« Reply #23 on: August 08, 2018, 03:27:21 PM »

45%

Rural

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Re: What is your target retirement spend as a % of your current salary?
« Reply #24 on: August 08, 2018, 08:45:48 PM »
Not a clue because health insurance.

EnjoyIt

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Re: What is your target retirement spend as a % of your current salary?
« Reply #25 on: August 08, 2018, 11:12:43 PM »
about 20%

Taxes are eating up 30% and the rest is going right into investments.

kpd905

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Re: What is your target retirement spend as a % of your current salary?
« Reply #26 on: August 09, 2018, 04:26:16 AM »
Looks like roughly 30% right now.

2Birds1Stone

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Re: What is your target retirement spend as a % of your current salary?
« Reply #27 on: August 09, 2018, 04:56:49 AM »
About 25% for us.


110%
Haha

Why the laugh? I said the same thing in my post.

2Birds1Stone has a projected spending of $40k and income of $130k (according to their first journal page). So I'm assuming the 110% is a joke.

Also, you didn't say the same thing. You said >110% of current spending, not income.

I was just trying to make a point of how this is an almost utterly useless metric.

Dances With Fire

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Re: What is your target retirement spend as a % of your current salary?
« Reply #28 on: August 09, 2018, 05:15:00 AM »
Bare bones FIRE = ~40-50%

Realistic target = ~60-75% (Extra for travel etc.)

ducky19

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Re: What is your target retirement spend as a % of your current salary?
« Reply #29 on: August 09, 2018, 06:32:42 AM »
We own two rental properties, so the plan is to FIRE when all three properties (those and our primary residence) are paid for. The rental income will cover all of our base expenditures, including taxes/insurance on all three properties as well as utilities, etc. (we live in IL where the property taxes eat a significant chunk of your dollars). Over and above that, I would like to have $25-$30k a year which would be around 22-27% of pretax income. The way it looks now, the 401k/Roth conversion ladder should be able to kick off around $35-$40k a year by that point (4-5 years), so should have some buffer for travel, etc.

mizzourah2006

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Re: What is your target retirement spend as a % of your current salary?
« Reply #30 on: August 09, 2018, 07:23:59 AM »
We have two incomes so Iím calculating it off of our current HH income, but right now our target spend is about 27% of our gross income. Itís about where we are now with expenses with about 21% of those expenses being childcare and another 23% being PITI.

Prairie Stash

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Re: What is your target retirement spend as a % of your current salary?
« Reply #31 on: August 09, 2018, 08:55:42 AM »
About 25% for us.


110%
Haha

Why the laugh? I said the same thing in my post.

2Birds1Stone has a projected spending of $40k and income of $130k (according to their first journal page). So I'm assuming the 110% is a joke.

Also, you didn't say the same thing. You said >110% of current spending, not income.

I was just trying to make a point of how this is an almost utterly useless metric.
Its a complicated way of asking SR if you assume constant spending. If your spending increases or decreases in retirement, SR doesn't fit the normal projections (i.e. 50% SR is FIRE in 17 years).

I agree, its a weird and impractical metric. It would be simpler to ask SR or if your spending will increase or decrease from yor current spending (depending what they're trying to get at)

Camarillo Brillo

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Re: What is your target retirement spend as a % of your current salary?
« Reply #32 on: August 09, 2018, 09:46:03 AM »
I agree with the posters saying that determining your retirement spend as a % of curr salary is not meaningful.  I had posted a reply earlier, and deleted it because of that.  So, let me take another stab at it.

We currently spend $12.5K/month.  We plan to spend $15K/month for the 1st ten years after I retire, and then we'll scale it back to $12.5K/month after that.  Those numbers will be adjusted upwards to match inflation.

The reason I don't want to compare spending to current salary is that we save a shitload, and after I retire I will no longer be saving anything.  So, current spend is the only meaningful number.

Mezzie

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Re: What is your target retirement spend as a % of your current salary?
« Reply #33 on: August 09, 2018, 09:59:27 AM »
I'm planning for 50% and hoping to only actually spend 30%.

Jrr85

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Re: What is your target retirement spend as a % of your current salary?
« Reply #34 on: August 09, 2018, 12:07:03 PM »
We own two rental properties, so the plan is to FIRE when all three properties (those and our primary residence) are paid for. The rental income will cover all of our base expenditures, including taxes/insurance on all three properties as well as utilities, etc. (we live in IL where the property taxes eat a significant chunk of your dollars). Over and above that, I would like to have $25-$30k a year which would be around 22-27% of pretax income. The way it looks now, the 401k/Roth conversion ladder should be able to kick off around $35-$40k a year by that point (4-5 years), so should have some buffer for travel, etc.

Are you not concerned about your properties taking a significant haircut if (when?) Illinois raises taxes (or ups contributions from local gov't entities) to start funding their pensions? 

I worry about my long term real estate and the state I'm in doesn't have nearly the pension problem that Illinois has, although it is probably one of the 10 or 15 worst. 

damnedbee

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Re: What is your target retirement spend as a % of your current salary?
« Reply #35 on: August 09, 2018, 12:54:30 PM »
40% of gross income with paid-off house

DreamFIRE

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Re: What is your target retirement spend as a % of your current salary?
« Reply #36 on: August 09, 2018, 01:01:20 PM »
We own two rental properties, so the plan is to FIRE when all three properties (those and our primary residence) are paid for. The rental income will cover all of our base expenditures, including taxes/insurance on all three properties as well as utilities, etc. (we live in IL where the property taxes eat a significant chunk of your dollars). Over and above that, I would like to have $25-$30k a year which would be around 22-27% of pretax income. The way it looks now, the 401k/Roth conversion ladder should be able to kick off around $35-$40k a year by that point (4-5 years), so should have some buffer for travel, etc.

Are you not concerned about your properties taking a significant haircut if (when?) Illinois raises taxes (or ups contributions from local gov't entities) to start funding their pensions?

Illinois income tax has already been increased 65%!  And IIRC, the property taxes are/were second only to New Jersey.  The democrat candidate for governor wants to increase income taxes even more.

ducky19

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Re: What is your target retirement spend as a % of your current salary?
« Reply #37 on: August 09, 2018, 01:16:51 PM »
We own two rental properties, so the plan is to FIRE when all three properties (those and our primary residence) are paid for. The rental income will cover all of our base expenditures, including taxes/insurance on all three properties as well as utilities, etc. (we live in IL where the property taxes eat a significant chunk of your dollars). Over and above that, I would like to have $25-$30k a year which would be around 22-27% of pretax income. The way it looks now, the 401k/Roth conversion ladder should be able to kick off around $35-$40k a year by that point (4-5 years), so should have some buffer for travel, etc.

Are you not concerned about your properties taking a significant haircut if (when?) Illinois raises taxes (or ups contributions from local gov't entities) to start funding their pensions?

Illinois income tax has already been increased 65%!  And IIRC, the property taxes are/were second only to New Jersey.  The democrat candidate for governor wants to increase income taxes even more.

I'm concerned about the resale value of them, yes, but I'm pretty confident I can keep them rented with little issue. It may mean I need to either a) up the rent, b) take more from investments to make up for the property taxes, or c) leave the state. Option c) isn't really on the table as our families are both here. The safety net assumption is based on if we both quit working when I'm 48 and never earn another penny except from rental and investment income. I'm currently not planning to pull the plug when we have the mortgages paid off. I'll either continue in my current job til I'm 50 (so 2 more years) or get a part time job at UPS or someplace similar. My wife is 3-1/2 years younger than me, so she plans to continue working for a few years as well. Even if she quits at 48, we've got a lot of buffer on the $25-$30k. Factoring in tradelines and another small business I own with a partner (low overhead, monetizes our running habit), and we'll probably have a hard time spending it all.

Arbitrage

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Re: What is your target retirement spend as a % of your current salary?
« Reply #38 on: August 09, 2018, 03:31:37 PM »
Currently, ~31-34% of my pre-tax salary (with paid-off house).  ~20-22% of household income.  Definitely makes filling out those retirement calculators that specify targeting 70-80% of pre-retirement income as a spending target a bit challenging to get anything of value.  Thankfully, I don't use those calculators anymore. 

onlykelsey

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Re: What is your target retirement spend as a % of your current salary?
« Reply #39 on: August 09, 2018, 03:49:52 PM »
Are we counting taxes?

Our target retirement spend is 23% of our combined salary, not counting taxes, which we haven't really figured out.  But we make a ton of money and almost 40% of our spending is daycare, so we spend more than the target now.

In a similar boat.  Taking out 30K/year in daycare from my budget will be merciful.  I should get a hand on other kid-related expenses for older kids, I suppose, and budget something in.

Fi(re) on the Farm

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Re: What is your target retirement spend as a % of your current salary?
« Reply #40 on: August 09, 2018, 04:01:22 PM »
A year ago it would have been 32% but dh decided to semi-retire so his salary got cut in half. So, based on current salary, it would be 42% of our gross income.

use2betrix

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Re: What is your target retirement spend as a % of your current salary?
« Reply #41 on: August 09, 2018, 09:08:28 PM »
One of my lowest spending months in the last several years was during a sabbatical in which we camped every single night, ate out a fair share, and drove around 4000-5000 miles.

Due to my type of work a lot of my entertainment is costly. We live full time in a 5th wheel so limited room for hobbies. We donít live in ideal locations often so hobbies are weekend trips, concerts, and restaurants.

For now - I ďthinkĒ if I was fully FIREíd my expenses would lower around 20-30% a month. Right now theyíre around 33% of my takehome. Iíd like to hope my retirement would be around 28% of my current take home.

Bateaux

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Re: What is your target retirement spend as a % of your current salary?
« Reply #42 on: August 09, 2018, 10:02:43 PM »
I expect our stash to earn 100k or more in retirement, but we'll likely not spend that much.  I expect to spend 50 or 60K.  The rest will go on to build more stash or go to charity.  Current combined income is about 200k.

Malkynn

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Re: What is your target retirement spend as a % of your current salary?
« Reply #43 on: August 10, 2018, 03:55:22 AM »
I literally have no idea.

My retirement life wonít look a thing like my current life, so I canít really say. We plan on slow traveling and that can be done at a huge range of costs.

I also have no idea how much we will save. Rough estimates have us somewhere between 1.5-3M depending on what kind and how much work I decide to take on. I truly donít know, and donít really care. If we save a ton, we will probably spend a lot more. Weíll still spend the first years slow traveling, but with little attention to COL of our destinations. After slow traveling, weíll decide where to live, and who knows how much that will cost.
 
Essentially, we have no plan other than to have no plan.


chasesfish

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Re: What is your target retirement spend as a % of your current salary?
« Reply #44 on: August 10, 2018, 06:47:22 AM »
17.5%

I've been fortunate to have my salary really accelerate over the past few years

OurTown

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Re: What is your target retirement spend as a % of your current salary?
« Reply #45 on: August 10, 2018, 08:58:23 AM »
33%

TartanTallulah

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Re: What is your target retirement spend as a % of your current salary?
« Reply #46 on: August 10, 2018, 01:30:57 PM »
We're assuming 50% of our current household income as the ceiling but expect it will be more like 40%.

branman42

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Re: What is your target retirement spend as a % of your current salary?
« Reply #47 on: August 10, 2018, 01:41:06 PM »
What people plan to do during retirement is so variable (as well as how long they plan to work) and salary can change a lot with age that I think it would be hard to tease much out from a % of current salary figure.

A household could plan to spend 100k/yr in retirement and that might be 25% of their current salary or it could be 200% right now but in 10 years time it might only be 50%.  They might want to use 50k/yr for charitable contributions or it could be zero.  Maybe they want a huge chunk set aside for medical emergencies that they'll never touch and are averaging that out.  Maybe the FI aspect is a lot more important than the RE and they want a low SWR.  Or they're probably paying premium for everything they plan on doing and want to live "comfortably". 

Hey, if they're planning for it and that's what they want, it's their choice.  Here's to hoping it happens in a somewhat environmentally conscious manner.

My desired retirement spend is 250% :D of my current salary. (Low paid intern in public service, but planning on moving up and having a lot of side hustles, like I do now).

aceyou

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Re: What is your target retirement spend as a % of your current salary?
« Reply #48 on: August 10, 2018, 01:49:53 PM »
I don't know, but...

My wife and I gross about 160k/year. 
We spend about 55k/year (that does not include taxes). 

In retirement we are preparing to be able to spend more than 55k/year, but less than 160k. 

So, we hope to be able to increase our spending in retirement, but to still be spending far less than 160k/year. 

ender

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Re: What is your target retirement spend as a % of your current salary?
« Reply #49 on: August 11, 2018, 06:16:37 AM »
I literally have no idea.

My retirement life wonít look a thing like my current life, so I canít really say. We plan on slow traveling and that can be done at a huge range of costs.

I also have no idea how much we will save. Rough estimates have us somewhere between 1.5-3M depending on what kind and how much work I decide to take on. I truly donít know, and donít really care. If we save a ton, we will probably spend a lot more. Weíll still spend the first years slow traveling, but with little attention to COL of our destinations. After slow traveling, weíll decide where to live, and who knows how much that will cost.
 
Essentially, we have no plan other than to have no plan.

This is similar to our situation. We've been accumulating pretty significantly now but are having kids - and that will change things in a way we can't really predict.