Rules of thumb can only get you into a ballpark at best. As that ballpark can be an unfamiliar place, Jacob can be an usher that can points you toward your particular seat.
I developed a formula that I ran by several retired colleagues and they said it was pretty accurate. I'll employ this as a baseline when I retire at the end of 2025. The year prior to retirement, take your total annual expenses (budget) and add in a 15% buffer for incidentals/emergencies. Take that total amount and divide it by 0.8. The resulting number should be your baseline gross income for year 1 of retirement. Adjust each subsequent year with a COLA.
Outstanding content, Jacob. For those who want to go more granular, an excellent spending app called YNAB could be employed ( no pun intended ) a year or two before retirement. In addition, for those wanting to retire earlier than Medicare, you need to understand how much your expenses will be to control reportable income for Affordable Care Act Premium Tax Credits. Having slack in how much your retirement income versus your spending is will allow you to adjust should you run into the nasty sequence of return issues in the first five to ten years of your retirement. Cheers!
Rules of thumb can only get you into a ballpark at best. As that ballpark can be an unfamiliar place, Jacob can be an usher that can points you toward your particular seat.
Thanks!
I developed a formula that I ran by several retired colleagues and they said it was pretty accurate. I'll employ this as a baseline when I retire at the end of 2025. The year prior to retirement, take your total annual expenses (budget) and add in a 15% buffer for incidentals/emergencies. Take that total amount and divide it by 0.8. The resulting number should be your baseline gross income for year 1 of retirement. Adjust each subsequent year with a COLA.
Outstanding content, Jacob. For those who want to go more granular, an excellent spending app called YNAB could be employed ( no pun intended ) a year or two before retirement. In addition, for those wanting to retire earlier than Medicare, you need to understand how much your expenses will be to control reportable income for Affordable Care Act Premium Tax Credits. Having slack in how much your retirement income versus your spending is will allow you to adjust should you run into the nasty sequence of return issues in the first five to ten years of your retirement. Cheers!
Great thoughts and suggestions here. Thanks, David!
@@RetirementAnswersMy pleasure.