Yearly ER withdraw

[thegradwife]

How do you decide how much you will need a year to cover living expenses when you retire?

We currently have one toddler in a pretty expensive location and have living expenses of $22,800 a year including housing cost. (12,800 is housing cost) I'm trying to estimate how much we need to save for ER and I'm struggling. I feel like the $10,000 spending is actually enough for our families current needs and we rarely find ourselves saying no because we feel like we don't have enough money. I was planning on $25,000 for our year ER budget with the assumption that we have paid off whatever future home we are living in.

But looking at most people's plans they have it closer to $30,000-$50,000.

Is there something I'm overlooking? Am I being naive?

[TheAnonOne]

Back of the napkin 22,800 * 25 = $570k stash needed

Is your housing cost going to go down? (Pay off the house ect?)

Do you want to add travel to retirement? Other activities? Will you generate income in retirement in any way?


I think if you spend 22,800 today INCLUDING housing, that is pretty low even for this forum on average. You may want to consider a buffer or small side income.

My $.02

[Eric]

I thought this was a pretty good article detailing the thought process:

http://rootofgood.com/developing-a-retirement-budget/

[thegradwife]

I thought this was a pretty good article detailing the thought process:

http://rootofgood.com/developing-a-retirement-budget/

Perfect! Thanks!

[ltt]

We are a family of 6 with my husband closing in on retirement in, hopefully, 3 to 4 years.  Two of our children will be in college at that point.  We will help them somewhat, but not all, and have already set aside the funds.  Our bare bones retirement budget at that point would be around $30,000 for the 4 of us then with a paid off mortgage; however, that does not include health care insurance which would easily drive the budget up to $50,000 as the kids can remain on insurance until age 26.

[thegradwife]

We are a family of 6 with my husband closing in on retirement in, hopefully, 3 to 4 years.  Two of our children will be in college at that point.  We will help them somewhat, but not all, and have already set aside the funds.  Our bare bones retirement budget at that point would be around $30,000 for the 4 of us then with a paid off mortgage; however, that does not include health care insurance which would easily drive the budget up to $50,000 as the kids can remain on insurance until age 26.

We currently have free health insurance through my husband's job, so I really don't know what to budget for that.

/

Is your housing cost going to go down? (Pay off the house ect?)

My $.02

Our housing cost are actually going up from $940 to $1540 in the next month, since we are renting. I figured $20,000 for 2 people with a paid off house would be more than enough since that is almost double our current spending money. We do travel just not a lot. We just stick pretty close to home, but with an extra 10,000, we could spend more on travel.

[AlwaysBeenASaver]

I think for many people, health insurance in retirement is a big chunk of the estimated expenses; it is for me. You need to include not only the cost of premiums, but the cost of care beyond the premium (deductible/copays/whatever.) You also need to estimate your expenses that don't occur every year, but will likely occur occasionally during retirement. Even a paid off house sometimes needs a new roof, painting, whatever. If you own a car, you may eventually decide to replace it. Things like that. Esimate how often those things will occur, then divide the estimate cost by the number of years.

[FIRE me]

We currently have free health insurance through my husband's job, so I really don't know what to budget for that.

During the open enrollment period (December and January) go to either your state's exchange or the Obamacare Federal site and plug in you estimated income in retirement and the number of people to be insured. Keep in mind that the cost is likely to rise, and Obamacare may even go away entirely, depending on the next election.

[RootofGood]

During the open enrollment period (December and January) go to either your state's exchange or the Obamacare Federal site and plug in you estimated income in retirement and the number of people to be insured. Keep in mind that the cost is likely to rise, and Obamacare may even go away entirely, depending on the next election.

You can actually check out the plans and what subsidies you might get here:  https://www.healthcare.gov/see-plans/

That link isn't available from healthcare.gov if you just click around, but you can find it by searching on google.