I read about some of y’all living in retirement on a fraction of the income you had during peak earning years and I don’t get how you do it. Personally, I’m planning for way more than 100%. That’s probably overkill but I see how it can also go horribly wrong and it’s scary.
That's great planning on your part, saving more is better than less. As for living on way less than I made during my peak earning years, here's how I am doing it (just one guy's story, we all have variations on the theme) -
For about 20 years before I retired, I contributed the max each year to my 401k (I contributed to my 401k before that, but not the max annual amount allowed).
From 1996 - 2020, I lived in a townhome that was built new in 1996 for about $147k. I paid off my mortgage years early, so had no mortgage payment after that, and saved all of that money as opposed to spending on things.
Was married at 21, divorced at 25, no kids. That's hundreds of thousands of dollars that I didn't pay raising children. I am betting that every parent on this thread doesn't regret the money you're spent on your kids one iota, which is as it should be. I'm just saying I didn't incur those expenses, and I didn't squander money much after I turned 35 or so. I sent my Mom money every month for the last 15 years of her life, even during the period where I didn't have a job and was hunting all fall. My reserve funds took care of it during that timeframe.
For 20 years prior to retiring in 2020, I dated someone on the other coast (I was in MD, she was in CA). While the 5-6 trips each year to see her cost some coin, I'm betting it cost less than seeing her every week or every day. It also meant that when I retired, we sold two homes instead of one, so we had a nice war chest to buy a lot and build our home in Tennessee.
When I retired in 2020, I owned a 1994 Mazda B4000 small truck that I had bought for $7000 cash in 2001. That was my hunting, fishing, and fun vehicle. So no truck payments for 20 years, saved that money instead. Last year, I bought my post-retirement truck, a 2022 Toyota Tacoma. Paid for in cash that I had saved years ago, to buy a new truck when I retired.
My work vehicle was a 2009 Mazda6 that had been paid off since 2014. So no car payments after 2014. We are just this month trading it in for a new car, that will be paid for in cash that we set aside for this purpose years ago.
I had a really good job that in my peak earning years paid close to $200k annually when bonus was included. My current retirement draw is $60 gross per year.
With no car payments, a relatively small mortgage that we are paying off early, and no other outstanding debt, $50-54k a year ($60k after taxes) can go pretty far, especially since my girlfriend also brings money to the table. We have taken separate trips to California, Alaska, and Maine this year, and I have a caribou hunt upcoming in September in Alaska. The money for that has been saved since 2017 or so.
The key to ALL of this - control and understand your spending, and do not spend on whims or fancies. My employees got me $150 in Cabelas gift cards as a retirement gift - it took me 18 months to use them, simply because I couldn't think of a single thing that I really wanted or needed. I never buy anything the first time I think of it. If it keeps popping into my head, it's something I genuinely do want, and I get it. If it doesn't keep popping into my mind, it was a passing whim that would have been money wasted.
I look back now and think of the crap I spent money on between 22 and 35, and I shake my head.
Sorry for the log winded response. It really all comes down to understanding and controlling expenditures, at whatever level of income you are currently earning.
