After 6 1/2 years of retirement, we still don't know what we need to live on! It varies annually depending on any major purchases, the amount of travel etc.

We've always lived within or even below our means and continue to do so in retirement. The big difference makers for us are no mortgage, no car payments and no debt. We've been using a good financial planner for 3 1/2 years and survived the recession in pretty good shape.

I agree the 4% per year withdrawal limit is a good starting point.

Good luck...

We're in the same boat as you, although we've done our own financial planning. We have no debt at all. Our income consists of 2 pensions, one social security and income from investments, and is running about 72% of what it was during working years. And when the other social security kicks in we'll be probably 80-90% of pre-retirement income. We're finding that, as in the working years, we just don't spend it all. Sometimes your lifestyle will change in that you have more free time, so you'll travel more and use more money for entertainment and possibly health related expenses, so your needs are more than 70% of pre-retirement income. Really depends on your lifestyle and pre-retirement income level, and "wants" vs. "needs". We see some people living what we call pretty extravagantly, and we've never had that desire. Of course, we think nothing of taking huge vacations and traveling all over the globe, while other people have no interest in that either. Everyone's spending habits are different.

Good answer. The 70% rule is a bogus ROT. l2ridehd answered his own question with the comment about 20% for 2 million a year. That percentage is a highly variable metric that can only be derived after calculating what you need in retirement and then doing the arithmetic.

Tony:

I believe ROT = Rule of Thumb



Chuck

And remember, you won't have to pay your country club dues anymore. :laugh:

Living on a budget
 

I am tired of worrying whether or not we can survive on our simple social security income and still buy a courtyard villa. So watch out. We may just camp out in your back yards !!

Don't worry. As long as you keep spending in control and you don't run into a bunch of monthly bills you should be fine.

Wow $2 million that's a lot. @ 4% that's $80K per year very sweet.
Say $1 Million @ 4% plus SS plus any pension should be enough for TV especially if you have a little mortgage.

Found this on Yahoo finance how to keep your $1 Million. Just an excerpt.

Smoother ride

Why not go 100% into stocks? Bear markets can last a long time; nevertheless, two spouses retiring at 65 and spending 5% of their portfolio each year will have a two-thirds chance of their money lasting until they die (assuming the actuarial average ages of death) if they put all their cash into stocks, but their money has only a one-half chance of lasting if it is distributed 20-80.

Here, however, is the catch: A 60-40 stock-bond portfolio does almost precisely as well as an all-stock portfolio, and the ride is a good deal less thrilling. Bernstein's research finds that an ideal combination for retirees is a 60-40 portfolio with a drawdown of 4% a year. That gives the couple an 85% chance of having their money last till death.

If the couple retire at age 55, then spending should be around 3.4% of assets. Retirement at 70 means a couple could be comfortable spending at a 4.5% rate; at 85, the rate could go to 7%.