They plan to live on their new lower income for six month prior to their retirement date to adjust themselves to their predicted spending in retirement. They call this their retirement experiment. I rather like the idea myself, so I did a little digging into my own spending.
Currently after tax and deductions we take home around $3700 a month. If I deduct my current mortgage payments (principle and interest) I’m down to about $2600 and then if I drop off my extra retirement savings I’m down to $1900/month. If I convert that to a yearly amount I’m already living off just $22,800 with a small child. So if I can split around $27,000 a year between my wife and me prior to tax in retirement I should end up with a higher standard of living than I have now.
So to all people who say “You can’t live off $25,000/year after tax” Your right. I’m living already on less than that right now. So what would your retirement experiment look like?