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What percentage of your retirement income is Social Security? If you're in a couple who mingle their income/expenses, then do so for this poll.
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80-100%
60-80%
40-60%
20-40%
0-20%

Click here to see results so far.

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Please define income. Do I include income from tax exempt bonds? IRA income? 401k income? RMDs? IRA distributions? Unrealized capital gains?

Very complicated.

When I am asked this question, the best I can do is throw out a guess.

I do not pay taxes on all income, and not all that I pay taxes on is income. Much is reinvested.

Unlike people who work for paychecks, many retirees have diversified sources of income. That gives you options if one of your income sources fails to deliver.
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Unlike people with fat pensions......some of us have to live off our nest eggs. That nest egg will usually have 'excess income' which we will have to re-invest- or it automatically does like stock funds unless you specifically withdraw the cap gains distributions and the dividends during the year.

I 'take' out and us about 2/3rds of what I have to pay tax on...... the rest has to be re-invested if I expect my nest egg to survive.

Thus, SS is about 1/3rd of what spend each year. Of course, by the time they take out my Medicare payment........and I have them take out some withholding........ if you figure 'net SS', that is an even smaller contribution to spendable money.


t.
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Do I include income from tax exempt bonds? IRA income? 401k income? RMDs? IRA distributions?

Yes, that's all income. Doesn't matter whether it's taxed.

Unrealized capital gains?

No, that's not income.

And I mean gross income, not adjusted gross or taxable. To me that goes without saying, but I should've said ;-)
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Unlike people with fat pensions

Oh, good grief...

some of us have to live off our nest eggs. That nest egg will usually have 'excess income' which we will have to re-invest- or it automatically does like stock funds unless you specifically withdraw the cap gains distributions and the dividends during the year.

I 'take' out and us about 2/3rds of what I have to pay tax on...... the rest has to be re-invested if I expect my nest egg to survive.
Thus, SS is about 1/3rd of what spend each year.


I didn't ask what you spent, but what was income. When you were working you didn't spend all your income either, but that doesn't make the amount you saved not income.

by the time they take out my Medicare payment........and I have them take out some withholding........ if you figure 'net SS', that is an even smaller contribution to spendable money.

Of course you include the part that is deducted from SS to pay your Medicare premium--it's still income even if it's earmarked for a particular purpose. If you have your mortgage or 401k contribution deducted from your paycheck, it's still income. If you weren't collecting SS but were paying for Medicare because you were 65+, you'd be spending different income on Medicare. You wound't not count that income becasue it was going to Medicare, would you?
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Sorry I was so cranky. I'm watching NCIS with my husband (distracted-), and I spent 7 hours today accompanying my brother car shopping (tiring, tedious) and got home so late my husband turned what was to be my delicous Thai shrimp soup into...something else ;-)

PS--Bro got a Hyundai Genesis...sweet ride!
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"I didn't ask what you spent, but what was income. "


You are not comparing apples to apples again



those who have a pension actually have the equivalent of a giant nest egg. If it is COLA protected, they are getting significant appreciation of that 'virtual nest egg' which will pay out each year their pension. If you get a $30,000 pension, that is likely the equivalent (at a 4% SWR) of $750,000 in a private nest egg for someone without a pension. That nest egg, might spin off 6 or 8% a year 'income'.

So.....a person getting a pension is totally different as far a 'income' vs one having only a nest egg (no pension) to live on.

If all my nest egg was in an IRA/401K...then it would not matter - I wouldn't pay taxes on the gains/dividends/distributions each year for the 'growth' part of the nest egg.

If you have ever looked at the curves for the 4% SWR, and the projected growth, then eventual decline of a 'typical' 30 year survival, you'll not that the nest egg should grow most of the time until you are 15 years or so into retirement. If not tax deferred, you get to pay the taxes on that growth.

Those with a pension don't pay it. The pension fund has the growth and likely pays no taxes on the growth.


So......asking me what' percentage' of income is not the same as asking someone on a pension. I have to re-invest a large part of my 'income' just to keep my nest egg in a good condition, yet pay taxes on it. I can't 'spend it' and I'm not going to give to charity based upon it's growth (and the taxes I gotta pay for that growth). You don't seem to have that thought sunk in to your mind.


t.
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Brother got another Genesis. I told you that is what I am considering when the Volvo gives up the ghost.
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those who have a pension actually have the equivalent of a giant nest egg....

I know. My husband's 2 little pensions are very important to us! An extra thousand a month is mighty nice, especially in a state that doesn't tax pension income after age 65.

a person getting a pension is totally different as far a 'income' vs one having only a nest egg (no pension) to live on.

They are different only in that they don;t have to manage this money themselves. The most relaxed retired people I know are those with big pensions.

...the nest egg should grow most of the time until you are 15 years or so into retirement. If not tax deferred, you get to pay the taxes on that growth. ...So......asking me what' percentage' of income is not the same as asking someone on a pension. I have to re-invest a large part of my 'income' just to keep my nest egg in a good condition, yet pay taxes on it.

AS a couple whose taxable accounts are about the same size as total IRAs between us, I know this in spades.

But the fact that you and I and others like us need to save/invest out of this income does not make it not income. It's simply an expense we have that some others do not. Many retirees have other expenses that you & I don't have...mortgage(s), car loan(s), student loans for their kids, credit card debt. Should those paying off debt not include the income they use to pay it as part of their income? Investment expenses are just that--another expense, not so different in my mind from groceries, gasoline, or taxes. A cost of living. (And BTW, when we reach age 65, our state income taxes will be all but nonexistent as South Carolina doesn't tax Social Security income or pension/annuity/IRA income up to a certain amount. People in other states may have those taxes, but that's an expense they have and I do not. Doesn't change our income.

I can't 'spend it'...You don't seem to have that thought sunk in to your mind.

Not so. We just did our taxes and I had to think about our quarterlies for 2013 to boot, so it's especially on my mind just now.
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Posted too soon...

I guess some people have trouble recognizing income that must be spent on investment expenses, saving, and taxes as income. Maybe it was all those years of tax deductions for 401k contributions?? Maybe it's having most of your income as interest, dividends and (recognized-) capital gains??

I've been paying taxes on income in taxable accounts for decades, income we didn't need while working. I am very practiced at seeing that income as income. (In retrospect, I should've bought non-dividend-paying stocks with that money, but...too soon old, too late smart ;-)
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(In retrospect, I should've bought non-dividend-paying stocks with that money, but...too soon old, too late smart ;-)


+++
+++


Not necessarily so! TOTAL RETURN inside a ROTH cares not what the ratio of div to cap gain is or will be! {Not taxed = no taxes = no concerns}

sunray
a man with ROTHs


;-)
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Brother got another Genesis. I told you that is what I am considering when the Volvo gives up the ghost.

He left his 2010 Genesis at the Hyundai dealer and drove off in the new leased 2013. IIRC the residual value of the 2010 was ~$23k. It has only 15k miles on it (bro doesn't drive a lot). Other than mediocre gas mileage, it's an awesome car--I've never sat in one so comfortable, not even a Mercedes, Lexus, Caddie or Lincoln. C'mon down ;-)

ASIDE
I tend to assume that car leasing is for wealthier drivers who trade up often and don't mind the never-ending payments and always-high insurance premiums (in return for little or no maintenance & repair costs & inconvenience). But I was chit-chatting with the receptionist at the lab this morning (took the hubster to get his lab work done), and she leases her car. I doubt she makes more than $10/hour, although I suppose she could be married to someone who does better. Leasing is also for people who want a better ride than they can afford to buy. The thought of always having a car payment (maybe even for two cars!!) is too depressing to contemplate. My last car loan had a term of 2 years. I could hardly wait to get out from under that burden. Debt makes me uptight.
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telegraph posts,

If you have ever looked at the curves for the 4% SWR, and the projected growth, then eventual decline of a 'typical' 30 year survival,....

I don't know what you mean by the "typical" decline, but using the Shiller database (1871-2002) more than 85% of the time a retiree limiting his withdrawals to 4% ends the 30-year payout period with more money than he started with.

http://retireearlyhomepage.com/re60.html

intercst
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alstro:"I tend to assume that car leasing is for wealthier drivers who trade up often and don't mind the never-ending payments and always-high insurance premiums (in return for little or no maintenance & repair costs & inconvenience). But I was chit-chatting with the receptionist at the lab this morning (took the hubster to get his lab work done), and she leases her car."

Some folks get new car fever every 3 years. They are going to trade no matter what......so maybe a lease might work for them. or is close to breaking even, and there is a lot less hassle in negotiations. When dealers are desperate to move cars and car makers have too much inventory, they often do some real good leasing deals just to move the cars.

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alstro:" Leasing is also for people who want a better ride than they can afford to buy."

Well....it is for those who want an expensive ride, and plan to change cars in a few years to something new. For some, the 'status' of a new car is everything.

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alstro: " The thought of always having a car payment (maybe even for two cars!!) is too depressing to contemplate."

I haven't had a car payment since 1972......and never expect to have one again. Paid for my first 'new' car ever - a Ford E-150 extended van - back in 1975. Great van for everything from hauling rocks and lumber, to hauling a ton of radio equipment, to sleeping in the back on a 2 inch thick foam mattress with a sleeping bag on overnight trips and several day trips here and there. Only got 13 mpg though but gas wasn't too bad in 1975. No one really worried about gas mileage but there were years of 'gas rationing by inconvenience' with odd/even days, etc.

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alstro:" My last car loan had a term of 2 years. I could hardly wait to get out from under that burden. Debt makes me uptight. "

I had a two year loan on my '69 VEtte - put half down......paid it off and that was the end of car payments forever!......have paid cash on the barrelhead ever since.

-----

Way back when, I had a friend who traded cars about every 18 months. Had to have the latest 'muscle car'. Had Firebirds, Camaroes, Charger - all with the big engines and fancy paint jobs. He worked to save up enough money for a down payment, and when he could buy a new car with the 'same payments' as his old car - trading it in, adding some cash -- he would do it. He must have blown 2 years salary in five years just buying new cars about every 18 months.



Now...one car is a 2007 Prius ....the other a 2009 Malibu . I'll keep the 2007 car till the wheels fall off......and the 2009 has 107,000 miles and when it reaches over 200K, I"ll look at getting something new - probably about 3-4 years from now.

WHo knows? in 4 years, I might go down to 1 car..... I really like the high intensity discharge lights on the Prius.....makes night driving a bit easier.....


t.
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I was referring to taxable accounts, not Roths, when I said I should've bought non-dividend-paying stocks with that money.
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Of course, leasing these days seems to also mean a down payment, too, so... where is the advantage?

Just saying.

Vermonter
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