retirement planning - what is needed for a kick ass retirement?

[twobone]

I'm doing some financial planning and I have put down the following as monthly discretionary cash flow needs over and above utilities, etc.. Where am I nuts?

In my vision of the future, I hope to have enough money to travel a couple of times a year (sometimes with my kids and sometimes just my wife and I) and have enough cash flow that we don't freakout when we want to go out for dinner or argue if we want to buy something small (like car parts!).

I have this vision that with retirement I'm going to have more time to do the things I want to do including travel, so I really don't see the amount of discretionary expenses dropping

For the folks who have experience with retirement, do these monthly expense figures sound bonkers? For example, the travel figure annualized to $20K. One or two big trips and a couple of small ones each year with burn thru $20K pretty fast


Food $1250
Travel $1650
Misc expenses $2700 - buying all that crap that ends up on your Visa bill (Home Depot, Amazon.com, etc.)

Ignore all of the regular expenses, I have those tracked and accounted for in my calculations

Thanks

[Don Ro]

$5,600/mo., or thereabouts? Man, I'd live like a king on that.

[porsche4life]

You forgot to budget money for hookers and blow

[strupgolf]

Wow, $2700 per month on misc. expenses. What in the world would you buy for that money? Good luck, I hope you have a good income stream.

[2porscheguy]

Twobone, ironically I've been thinking about this quite a bit lately. I'm 53 and would like to retire in about 7 years at 60. Not to hijack your thread but maybe we can get some of the newly retired Pelicans to chime in on your retirement planning thread here and offer some of us some advice!

I've heard alot about the 4/30 rule....if you can get by on 4% of your nest egg per year, adjusted for inflation, your nest egg should last you about 30 years. So, as an example, if you have a 2.0M$ nest egg, that should give you about $80,000.00 or about $6600.00 per month in today's dollars. This, of course, is over and above any government or company pension plan if you are fortunate enough to have one of those!

[recycled sixtie]

For the past 5 years the daughter has been gone.Just the 2 of us now. These figures incl. everything and starting 2009 we bought a condo so these figures incl. condo expenses and utilities.
The condo we rent out. The house we live in.Incl. house repairs too.

All in Can. $. Includes property taxes.

2002 Total $58400
2003 48586
2004 new car 29000+54347 54347
2005 50172
2006 48000
2007 used car 17000 + 54768 54768
2008 60790
2009 60995
2010 75339
2011 used car 18500+58238 58238
2012 53241
2013 64552

These are yearly totals. To calc. monthly divide by 12. Car insurance is around $3000 a year for 3 drivers.
Holidays are typically $6000-9000 a year. To conclude the total year amounts have not increased as much as I would have thought.Been retired 12 years. Hope this helps!
A couple of these dependents too!

[twobone]

Thanks. I guess I see the crazy cost of running a modern household while working. Our monthly visa bill is regularily over $5K and so I want to be realistic. Its rarely more than a massive collection of $65-100 items. We don't live an extravegent life style. It just seems to the run rate of modern urban living.

[ckelly78z]

$2700 for misc. expenses every month is the main problem I see. My household obviously make less money than your household does, but that number just seems unusually high. Maybe you should audit yourself and find out if all those expenses are truly necessary, and if something could be cut out or reduced. I would say (by your definition) that I spend maybe $500 in this category, and maybe $800 on food for the 2 of us and my 15 year old football player.

Maybe try to buy store brands and eat leftovers. That $4 coffee and Danish every morning, and buying whatever interests you on "shopping" trips is where it's all going.

[on2wheels52]

I've never been much of a budget person, have been more on the lines of a retirement fund amount as a goal. As 2pg suggested(?), the $2M figure sounds good.
Jim

[motion]

I think a better idea is to never stop your income streams. Keep em coming. Then, you will never have to bother worrying about how many fun tickets you managed to stash away, all lonely and unused.

[95avblm3]

I'm a long way from retirement, so I can't help on that front... But was reading through this as my wife and I are working hard on building our nest egg, so I clicked on this thread out of interest.

My comment to everyone here is to be careful when you compare you monthly expenses as some of you are in Canada and others are here in the States. I don't know what the current exchange rate is on the Canadian to US dollar, but I imagine this may be skewing some of the conversation.

Just my $0.02 (US)

[M.D. Holloway]

Originally Posted by porsche4life

You forgot to budget money for hookers and blow

Hookers, depends on how often...prolly every 3 to 4 days at $300 a throw...as for blow...nah, to many complications with sourcing...stick to fine hootch and a little weed...

Yup, $5000/mth should do it

[twobone]

Thanks recycled sixties that helps a lot !

I do think I have my expenses estimate too high. However you never know how things might change. One of my kids could need more help than was budgeted or we could decide to regularity rent a cottage or other vacation property. I'm only 6 years from the magic date so I want to get this right. I don't plan on going back to work

[twobone]

Also Ontario Canada is stupid expensive

[jyl]

I'm interested in this thread.

Conventional wisdom is that you need 80% of your current income to retire comfortably. But if you are currently paying a mortgage and sending X kids through school, and you won't be doing either during retirement, seems like that 80% is rather high.

[imcarthur]

Originally Posted by twobone

Thanks recycled sixties that helps a lot !

Agreed, thanks.

My wife is ~3 years away & ready. I am 5 years away & ready but I’m about to jump into a new project at work to offset burnout.

Yes, Ontario is expensive. Real estate. Taxes. Offset somewhat by free healthcare, of course - which is no small thing as you age imho. Every time I feel the lure of southern warmth, the realization of purchased healthcare (with their ‘pre-existing’ exclusions) cools things down somewhat.

As for costs, I have no clue. We have been doing all of our dream vacations for the past 15 years. We (well I) decided that I would never be able to stomach cruises & tours to see the world when I am an antique. I have seen too many old folks stumbling on cobblestones (metaphorically) to ever want it to be me.

Ian

[recycled sixtie]

A couple other things you should think about. If you have credit card debt pay it off each month so you don't incur interest expense. You should not have any debt when you retire. No mortgage etc.

You can only live in one residence at once so I consider a 2nd residence a luxury especially if it is not rented out.

We only had one child so expenses now with her are minimal as she has moved out. If you have children it is essential that they be self supporting asap. Helping with tuition fees is of course up to you. People are a creature of habit. If you are a moderate spender now, you tend to be the same later.

Total up all your expenses each month now. Calculate all your income each month. If the latter exceeds your expenses then you are doing okay. It should not be hard to calculate the income stream you need to cover expenses when you retire.

PM me if you need any more info.
Cheers, G.

[dan88911]

How much cash for retirement is a lifestyle issue as well as an inflation issue. Expected rate of return on your portfolio. Let us not forget longevity. Figure on needing more. You can always give it way if you don't need it.

[Evans, Marv]

A couple of people have made good comments, "especially recycled sixty" and "dan88911" I've been retired a little over 10 years and agree with them. It's important project your income as far into the future as you suspect you might live. Retiring all debt and getting a handle on frivolous and impulsive monthly spending is super important. You will find all that crap you are spending your $5 grand on monthly will add up to a lot of junk you will not use or have to get rid of sometime. I've got a lot of crap I'm getting rid of and I can tell you it takes up time you'd rather spend doing other things. You will want to simplify your life and possessions because you just won't want to fool with a mountain of crap you don't use on a regular basis. Identify all the things that will increase in cost over the years and figure those projections in (taxes, etc.) Decide what you will want in the way of replaceable things and amortize that into your calculations. Notice "recycled sixty" bought three cars over an approximate ten year period, which would be an average of about $6,500/yr. Car and that sort of buying is up to your discression Try to identify all those sorts of things. What about major health problems or the need for long term care? Down here those can be major budget changers. It could be a long discussion, because things will keep coming to mind. You might start beforehand listing things and ideas you will or won't want to incorporate into your retirement. Another thing is - life goes on with it's static things and changing things.

[Brian 162]

I'm retiring this Sep. when I hit 55. I'm lucky I've got a pretty good company pension, plus I have retirement accounts in Can. and U.S. funds. I still have a mortgage but my plan is to sell and rent for a year and look for a smaller home NOT in Toronto.
I have to be careful if I work part time it may affect my tax rate.