Quote:
Originally Posted by GGG
I think you ignore the costs of working and the cost of mortgage when comparing to what they spend today. If you are driving 20km round trip to work and spending 400 a month on parking plus 2k a year on work clothes and $250 per month on lunch your cost of working is $1000 per month. Now some of that is transferred to your expenses while retired but certainly not all. Then account for say 20-30% of after tax income going to a mortgage and 10%-20% of pretax going to retirement savings.
So your retirement expenses are going to be significantly less so if someone is living off of 100k after tax during life there after tax income sans inflation only needs to be something around 64k to have the same lifestyle. I think it’s also reasonable to target savings based on an expected life expectancy then use your house to cover the overages. So cash savings to 85 then House seems like a reasonable way to plan as opposed to 4% save withdrawal rate and never hit capital.
I really appreciate this thread as it made me go look again through retirement planning and budgeting again and make a few tweeks. Also appreciated that MrMoneyMoustache link for a completely different philosophy around how to think about money.
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I wanted to come back to this because it's a good point. At the same time though, you are going to do
something in retirement. People who retire with nothing to do invariably are miserable. They go back to work doing something, or they die young. So while you might save some money on "not working" you also spend some money for the same reason.
It does also depend on what you want to do in retirement. I look at things like travel, which I definitely enjoy now. But it's changed. When I was young I would tolerate a certain kind of travel because it was all I could do. As I age, I want slightly nicer accommodations, better food and that type of thing. I can only imagine when I'm 70! I'm not sure that I'll be physically able to travel in the same way, and even less sure that I would want to at that point! It's different for everyone, but my point is that generally that kind of thing increases the costs for you, not the other way around.