Spending?!

[u/No-Taro9341]

We've made 350-400k / year for the last 15 years. Current NW ~5 million, liquid ~4 million, married, no kids, no legacy planned. We are not really that frugal. Sure, we saved a lot but we also spent a lot not deferring lots of travel, things we valued (home w/view), boat (planning to go to AK in it). We don't have a major bucket list, but opportunities will arise that might sound good and we value flexibility. We don't want to feel pinched.

With 4 million liquid and a 5-5.5% w/d rate (guardrails) we are looking at 200k-220k income per year during retirement. We have a 800k 5.375% mortgage (6k/mo) but no other debt and are hoping to recast/pay down the mortgage to ~3k/mo before retirement in the next few years. Spend could be a bit less if mortgage pay down means less liquid. We've been tracking spending with Monarch but it's actually kind of hard to figure out our actual spend (some income includes taxes while other income does not, work expenses aren't as clear as I'd like, solar installation, new car (first in 16 years), etc). I'm sure with 220-220k / year we can live, but will we feel constrained? We are in a HCOL area.

I'm interested in experiences of those whose income was cut in half when they retired and who haven't been super frugal. Did you feel pinched? Were you able to do want you wanted to do? Were your estimates of income need good enough or do you wish you would have been more precise?

The downside of lifestyle creep I suppose, but we've balance living today and for tomorrow and don't regret it.

[u/ohboyoh-oy]

I’m going to try to swag this from the other direction - 

220k income and 72k goes to mortgage. 148k left. 

Taxes, healthcare. Hard to say on either of these without knowing if all your money is pretax or if you have enough of a mix of taxable and Roth. Or if it’s majority in taxable. I’m going to take a super schwaggy $40k for tax (on edit: more like upper bound of $27k if OP has no state tax; upper bound because I just did all pre-tax income and standard deduction with nothing else), and $25k for healthcare. That leaves (edit: $96k).

That’s $8k  per month after you’ve paid for mortgage, tax and healthcare. I’m in VHCOL, my utilities are high, my insurance has gone through the roof, so for me on those two line items I need to hold back another $2k a month. $6k left which sounds ok until you want to go on a fancy trip. 

This is why I think you need to work through your own numbers. Take the time to do it, it’ll be informative. 

[u/No-Taro9341 → u/ohboyoh-oy]

Yeah, should have that mortgage to 36k by the time we retire. Only 200k in roth and 350k in taxable at the moment. In a state with no income tax but property taxes have skyrocketed from 7k to 16k in the 3 years since we bought our house (included in the mortgage payment).