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>> I find the worksheet has some basic issues, but as a guestimation tool, it has some serious value to me. One of the biggest issues I see is that they suggest using 80% of your current salary as the amount you will need in retirement. I find that number to be very high. From the FIRE board, I remember a discussion that put the real number closer to about 50%. What are you using as your benchmark? The article does discuss cheaper clothing, commuting, etc costs, but they also point out that you will probably pay more for health care and possibly you will travel more. Still, many people who are aggressively chasing FIRE live on less than 50% now. <<

I think 80% is way too high -- particularly if you own your home free and clear and you live simply.

We actually "live" on about 70% of our income; the rest is saved and invested (2/3 of that by maxing out my 401K and two Roths). We could easily make this 60% *today* if we wanted to badly enough.

So right off the bat, since we won't be actively funding retirement *during* retirement, we could live on 70% of our income today. Plus, the mortgage would be paid off -- that's another 10% of our income. Okay, we're down to 60%.

But with only 60% of our current level of income, and much of this potentially coming from long-term capital gains and Roth IRAs, our federal income tax burden is probably cut in half. Since federal income tax was about 14% of income last year, that's another 7% we don't need. We're down to 53% of current income. And we're not living as simply, or as far beyond our means, as we easily could, and we could probably get that down to 45% fairly painlessly.

This, of course, ignores health care. I might have to add 10% back in for that, so call it 55%. I'd say there would likely be a little more travel, but is probably offsets reduced commuting costs, less eating out, et cetera, to the point where it's close to a wash.

I'm planning for 65% of current income, knowing that we can fall short of that and probably still be okay -- and that factors in health care.

I believe the 80% figure is for people who aren't good at LBYMing.

>> Another questionable entry I found is using your house as a source of your income in retirement. They discuss selling the house and having the first $250,000 as tax free. I know that, but is the house a part of your plan? I don't consider my house as part of my nest egg, simply because I live here. If I sold it, I'd have to find somewhere else to live. There would be costs associated with that. While I do expect my house to appreciate over time, I also expect it to shelter me. I'm certain I won't remain here until I die, I do expect to have my retirement house paid for when I retire. Am I missing out on a big part of my nest egg planning? <<

If you know you're going to "downsize" your home in retirement, it does make sense to include *some* of its value in your calculations. We're planning to move to a smaller home, cheaper home with less space to cool and lower property taxes. If you're not planning on moving, then no, it makes little sense to include home equity in your calculations.

There are other things, too, which are likely to happen but which we don't include. My inheritance, for example. First of all, we don't *want* it for a long time, for obvious reasons; second of all, there's no guarantee that it will still be there when my parents pass (or that I won't predecease them, for that matter), though it's very likely that it will be. Still, I think I know about what that portion of the estate would be, at least ballpark, and in the back of my mind I know it's potentially there even though I do not and will not use it for retirement planning.

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