{"id":2512,"date":"2018-04-05T09:16:30","date_gmt":"2018-04-05T13:16:30","guid":{"rendered":"https:\/\/kneedeepinit.com\/?p=2512"},"modified":"2019-09-01T09:37:17","modified_gmt":"2019-09-01T13:37:17","slug":"how-much-is-enough-a-foundation-for-retirement-spending","status":"publish","type":"post","link":"https:\/\/kneedeepinit.com\/how-much-is-enough-a-foundation-for-retirement-spending\/","title":{"rendered":"How Much is Enough? – The Spending Part"},"content":{"rendered":"\n
NOTE: We know people like to hear about beaches and travel and dogs etc. but we have to pay for all that somehow. This is a series of posts on the financial side of retirement. Like many bloggers and most people, I’m not going to share our actual numbers because it’s pretty personal, and it may not be safe in the modern world. But I will give you what I think are important foundational points. I also want to say I’m not your financial advisor! I’m our financial advisor, and I’m only that until I tire of it and hire a professional. So if you’re taking financial advice from me, <\/b>well I really urge you to hire a professional!<\/p>\n\t
I have broken down my retirement planning into three main areas: calculating\/estimating income needs (spending), income generation (paying for it all), and closing the loop (comparing spending and income, and making adjustments).<\/p>\n
In this post, we’ll discuss the Income Needs (Spending) aspect of all this.<\/p>\n\t\t\t\t\n\t\t\t\t\t\tEnough? No…\n\t
Estimating income needs in retirement is a two-step process. It starts with current spending, and then that gets projected into the future. You need to know where you are today, so you start by tracking current spending. Once this is known, you estimate future spending by making adjustments for inflation, future tax differences, and future spending changes. You should know that spending is the number 1 most important factor as to whether your retirement nest-egg will last your lifetime, so it’s important to understand (Number 2 is luck, but we’ll get into that later).<\/p>\n
To do this, start by recording several months worth of spending, and then track it monthly as time goes on. It takes about 20 minutes a month once you have a simple consistent process set up. The goal is to get to a whole year of spending, so as to cover any bills (like car insurance or property tax) that only come once or twice a year. Another goal of checking the monthly spend is to see where the $s are really going, where you could pull some of that back and maybe redirect it elsewhere. Remember the idea of living life \u201con purpose\u201d? This is a big positive step in that direction, even as you do your retirement planning.<\/p>\n
The next step is adjusting the numbers to what you might spend in the future, in retirement. These are only going to be estimates, but they beat any rule of thumb out there, so don’t worry if you aren’t nailing it down to the penny. This isn’t too difficult either if you follow Mike Piper’s \u201cCan I Retire?<\/a>\u201d book or one of the many other resources out there.<\/p>\n