I plan on retiring next December so this past weekend I sat down to look over my numbers. I was shocked at what I found out.
I currently bring home $890/wk after all deductions and taxes which is $46280/yr. Once I retire, I am thinking I’ll need about $49000/yr in income. I’ll get $13,000 from a pension so the other $36,000 will come from my 401k until Social Security kicks in. With 750k total in my 401k, that works out to 4.8% withdrawal so I could increase to 5% if needed plus a couple of years cash in the bank if I needed more.
Now I am not a math or tax genius but the way it works out is when I retire I will bring home $854/wk which is all of a whopping $36/wk less than what I was bringing home while working. I know my 401 will take 20% for taxes but after the first year it won’t matter because I should get the overpayment back in refund.
I just used the standard deduction(married filing joint) for both state and federal nothing and I came up with $2,500 in federal taxes and $2,042 state for a total $4,542 tax on $49,000 income. Now that doesn’t include a 2% inflation increase yearly but we don’t spend all we bring home now, so we will probably have $6,000 leftover each year.
Also part of my deductions from work includes medical but if we use obama care we will pay $0 so it cancels out.
I know $49,000 a year in income doesn’t sound like much but we live comfortably and get whatever we want(within reason of course). We usually take a few weekend trips a year and a big vacation every couple of years. We eat good and the bills are paid. What more could we ask for? We just don’t spend much on a daily basis.
I say all this because so many people think they can’t retire but have they really checked their numbers? I know I am fortunate for the 750k in investments and no debt with a small pension but I think a lot of people get hung up on their income. Yes you might make $100-$200k/yr but what do you actually bring home to live on. I make about $87k/yr but only bring home about 53%.
I’ve seen the videos you have made about knowing your expenses, running your numbers and work ruining your health and dying at or just after retiring. If those videos don’t get people to pull the plug maybe something like this will.
I still plan on retiring at 56 next December unless something changes. It’s not a bad job. I’m just tired and don’t want to put up with much more B.S. But for $36 less a week it won’t take much till I am gone. That’s not even an hour’s pay so we eat out twice a week instead of three times. Big deal, the wife’s cooking is better anyways!