Retirement Targets

1SEIACLONE

Well-Known Member
Jun 2, 2024
2,707
2,492
113
63
Ames Iowa
Health care is what is getting you (and anyone else that retires pre Medicare) Once you hit 65 you can eliminate most of that. You can make adjustments after that
Healthcare insurance is where we caught a major break allowing us to retire before we could get on Medicare. Since my wife worked for our local city, she was allowed to stay on their plan as part of her retirement package. Since I was also on the plan, we are paying less than $300 a month for great insurance through BCBS. When she hits 65 early next year, the rate for me goes up to around $500 a month, still much cheaper than what I could find through the exchange.
 

clonechemist

Well-Known Member
Apr 3, 2007
1,817
2,233
113
40
Philadelphia
I think a lot comes down to your retirement age. People who say 80% of your income of pushing investments. You are supposed to put 15% in 401ks while you are working. That takes you down to 85%. State of Iowa does not tax retirement income so now you are at 80% already. At 65 you have Medicare so you cut some there. You generally don’t need professional/work related expenses like the clothes, education/continuing Ed, meals, transportation, etc. Most professionals should have their house paid for so upkeep should be less than a mortgage. No kids expense I’d hope unless you started really late (that is huge).

If you start knifing out areas you will not be spending money on, you can probably be in that 50% area and anything over is just extra travel or entertainment type expense.

We’re planning around retirement income of 60% of our current income.

The other reason these simple rules aren’t very helpful for retirement planning, is that most people have there income vary quite dramatically over the 30-40 years they’re working. So the ‘percentage of income’ can vary wildly depending on what time period one uses as a reference
 
  • Agree
Reactions: CascadeClone

JK4ISU

Well-Known Member
Dec 5, 2022
344
587
93
66
Ames
I feel like I'm being reasonable but I'm probably exaggerating health care, entertainment, and dining costs.

Property taxes 6,000
Non medical insurance 3,000
Home improvements 5,000
Food/Dining out 8,000
Vacations/travel 6,000
Taxes 12,000
car costs 5,000
Entertainment 10,000
Utilities 4000
Health care-Pre medicare 20,000
Everything else 11,000

That's 90k
You’re not exaggerating health care if you are married. Two years ago, before we went on Medicare, we paid $1500 per month for health insurance. Plus, we paid for deductibles, copays, prescriptions, etc.
 

Stormin

Well-Known Member
Apr 11, 2006
45,473
14,346
113
Healthcare insurance is where we caught a major break allowing us to retire before we could get on Medicare. Since my wife worked for our local city, she was allowed to stay on their plan as part of her retirement package. Since I was also on the plan, we are paying less than $300 a month for great insurance through BCBS. When she hits 65 early next year, the rate for me goes up to around $500 a month, still much cheaper than what I could find through the exchange.

Medicare For All. That is what we need.
 

benman82

Active Member
Nov 17, 2009
472
38
43
32
Health care is what is getting you (and anyone else that retires pre Medicare) Once you hit 65 you can eliminate most of that. You can make adjustments after that
If you retire early you should be able to structure your taxable income (roth ladder, 72-t, large after tax brokerage) to be low income enough to get free or nearly free insurance through exchange subsidies.
 
  • Like
  • Agree
Reactions: h-man64 and qwerty

mkadl

Well-Known Member
Mar 17, 2006
2,131
928
113
Cornfield
If you retire early you should be able to structure your taxable income (roth ladder, 72-t, large after tax brokerage) to be low income enough to get free or nearly free insurance through exchange subsidies.
That is the wifes plan, in a couple years. I will be on medicare and she will retire at 62. Or she can keep working if she changes her mind.
 

dmclone

Well-Known Member
Oct 20, 2006
21,577
5,921
113
50131
If you retire early you should be able to structure your taxable income (roth ladder, 72-t, large after tax brokerage) to be low income enough to get free or nearly free insurance through exchange subsidies.
60-65 is tricky time. It's great time to make your income look low for those types of discounts. On the other hand, it's a great time to do roth conversions at super low rates.
 

qwerty

Well-Known Member
SuperFanatic
SuperFanatic T2
Apr 3, 2020
7,679
11,618
113
60
Muscatine, IA
60-65 is tricky time. It's great time to make your income look low for those types of discounts. On the other hand, it's a great time to do roth conversions at super low rates.
Just have to run the numbers to see what is the bigger lifetime benefit. Tax savings at RMD time or medical insurance discounts from 60-65. I plan to split the difference and do smaller Roth at top of lower tax bracket. As stated earlier, this is where New Retirement software can really be a help.
 

dmclone

Well-Known Member
Oct 20, 2006
21,577
5,921
113
50131
Just have to run the numbers to see what is the bigger lifetime benefit. Tax savings at RMD time or medical insurance discounts from 60-65. I plan to split the difference and do smaller Roth at top of lower tax bracket. As stated earlier, this is where New Retirement software can really be a helhelp
I really like that software but it doesn't factor in ACA discounts. It would be pretty hard for it to factor in those discounts, since they range widely.
 

ISUATC

Well-Known Member
Feb 1, 2007
518
330
63
I feel like I'm being reasonable but I'm probably exaggerating health care, entertainment, and dining costs.

Property taxes 6,000
Non medical insurance 3,000
Home improvements 5,000
Food/Dining out 8,000
Vacations/travel 6,000
Taxes 12,000
car costs 5,000
Entertainment 10,000
Utilities 4000
Health care-Pre medicare 20,000
Everything else 11,000

That's 90k
Food/Dining out. Is that a combo of grocery's and dining out? Or, just dining out?
 

dmclone

Well-Known Member
Oct 20, 2006
21,577
5,921
113
50131
Food/Dining out. Is that a combo of grocery's and dining out? Or, just dining out?
Combined and just a total guess. Now that I look at my actual spending, that's way under what we spend now on a combo of groceries, restaurants, and alcohol. Probably closer to 12k, which is sort of embarrassing. I may have to start drinking Coors.
 

Cyclones_R_GR8

Well-Known Member
SuperFanatic
SuperFanatic T2
Feb 10, 2007
23,951
25,939
113
Omaha
Just have to run the numbers to see what is the bigger lifetime benefit. Tax savings at RMD time or medical insurance discounts from 60-65. I plan to split the difference and do smaller Roth at top of lower tax bracket. As stated earlier, this is where New Retirement software can really be a help.
What is a good software that's available? Free would be even better.
 

Clonehomer

Well-Known Member
Apr 11, 2006
26,796
24,894
113
I think a lot comes down to your retirement age. People who say 80% of your income of pushing investments. You are supposed to put 15% in 401ks while you are working. That takes you down to 85%. State of Iowa does not tax retirement income so now you are at 80% already. At 65 you have Medicare so you cut some there. You generally don’t need professional/work related expenses like the clothes, education/continuing Ed, meals, transportation, etc. Most professionals should have their house paid for so upkeep should be less than a mortgage. No kids expense I’d hope unless you started really late (that is huge).

If you start knifing out areas you will not be spending money on, you can probably be in that 50% area and anything over is just extra travel or entertainment type expense.

How do you factor in inflation? Income needed 10-20 years from now will certainly be higher than now.
 

BCClone

Well Seen Member.
SuperFanatic
SuperFanatic T2
Sep 4, 2011
67,649
63,712
113
Not exactly sure.
How do you factor in inflation? Income needed 10-20 years from now will certainly be higher than now.
If you are investing, putting your funds somewhere to create funds, they should handle the inflation factor. I always take what I estimate for my income at retirement and factor in 2.5 percent annual inflation.
 

Stormin

Well-Known Member
Apr 11, 2006
45,473
14,346
113
How do you factor in inflation? Income needed 10-20 years from now will certainly be higher than now.

SS has a COLA. That certainly helps. Investments like farmland or rental property should yield income that grows with inflation. Asset value would rise as well with inflation.

Money and stocks would be most harmed by inflation. Diversified assets of real property and financials is best.
 

Cyclones_R_GR8

Well-Known Member
SuperFanatic
SuperFanatic T2
Feb 10, 2007
23,951
25,939
113
Omaha
If you are investing, putting your funds somewhere to create funds, they should handle the inflation factor. I always take what I estimate for my income at retirement and factor in 2.5 percent annual inflation.
Currently my scenarios give me a 4% yearly raise for inflation
 
  • Like
Reactions: BCClone