ve been writing passive income updates for over a year now as I continue to work towards becoming financially independent. Last week, I received the following comment:
-receive anywhere near that amount
-need such money
2-I do not NEED 100K and could easily live on less
3-There is a big difference depending on where you live. 100K of income in New York City, in South-East Asia or a small city in the middle of nowhere makes a huge difference. I could certainly imagine moving for such reasons but I currently live in a big city and like having the option to remain here.
4-I prefer to be extremely conservative here and will adjust if needed.
5-I also hope to live exclusively off of passive income and not tough the capital in order to leave that income stream to my kids
-Housing & Property Taxes – (30-35K/year) unclear but I’d expect to see a significant decrease as I’ll no longer have a mortgage so property taxes and changes/house improvements will be my main expenses. Yes I might end up needing to go to a retirement house but that would mean selling my house which by itself will generate enough additional income.
-Everyday expenses (20K) – If I include grocery, medications, other pharmacy expenses, I don’t think I should expect a significant change but this category would decline somewhat. Some things such as groceries and restaurants might increase slightly as my wife and I have more time to dine with friends but I’ll be spending less on clothes once I no longer require suits and nice clothes to go to work.
-Travel (15-20K) – This is a big one obviously. I currently am lucky enough to do 2-3 longer trips (a week or more) per year as well as a few weekends in cottages). I do expect this category to increase in the earlier years when my wife and I are healthy enough to do bigger trips such as going to Asia, a safari, etc. We do understand that this is a luxury and might not be possible but if we’re going to try planning ahead for out retirement, why not try to have the possibility for such trips.
-Taxes (25K) – Fortunately, taxes that I currently pay will diminish near retirement as the nature of my income changes. That being said, with governments struggling to avoid big deficits, rates might increase so I prefer being conservative.
-Other Expenses (5-10K) – Many other expenses such as insurance, gifts to family and friends, helping out kids or giving to charitable foundations will also be part of our regular budget if we’re able to do so.
Yes, 100K Is My Aim (in today’s dollars). I could certainly live on less but I’m trying to prepare a retirement that I can look forward to and dream about so why not aim for stars:)
Do I Really Need 100K?
That is certainly a good question. I certainly know that most retirees do not:-receive anywhere near that amount
-need such money
So why 100K? First I will state a few different things:
1-I do expect to retire at a young age and hopefully be active by that time2-I do not NEED 100K and could easily live on less
3-There is a big difference depending on where you live. 100K of income in New York City, in South-East Asia or a small city in the middle of nowhere makes a huge difference. I could certainly imagine moving for such reasons but I currently live in a big city and like having the option to remain here.
4-I prefer to be extremely conservative here and will adjust if needed.
5-I also hope to live exclusively off of passive income and not tough the capital in order to leave that income stream to my kids
How Would I Even Use 100K In Passive Income?
First, as I mentioned, I do currently spend a bit over 100K per year (gross amount) – this does exclude savings to my different (retirement and other) saving accounts. How? Here are spending categories based on how they would increase/decrease or remain the same:-Housing & Property Taxes – (30-35K/year) unclear but I’d expect to see a significant decrease as I’ll no longer have a mortgage so property taxes and changes/house improvements will be my main expenses. Yes I might end up needing to go to a retirement house but that would mean selling my house which by itself will generate enough additional income.
-Everyday expenses (20K) – If I include grocery, medications, other pharmacy expenses, I don’t think I should expect a significant change but this category would decline somewhat. Some things such as groceries and restaurants might increase slightly as my wife and I have more time to dine with friends but I’ll be spending less on clothes once I no longer require suits and nice clothes to go to work.
-Travel (15-20K) – This is a big one obviously. I currently am lucky enough to do 2-3 longer trips (a week or more) per year as well as a few weekends in cottages). I do expect this category to increase in the earlier years when my wife and I are healthy enough to do bigger trips such as going to Asia, a safari, etc. We do understand that this is a luxury and might not be possible but if we’re going to try planning ahead for out retirement, why not try to have the possibility for such trips.
-Taxes (25K) – Fortunately, taxes that I currently pay will diminish near retirement as the nature of my income changes. That being said, with governments struggling to avoid big deficits, rates might increase so I prefer being conservative.
-Other Expenses (5-10K) – Many other expenses such as insurance, gifts to family and friends, helping out kids or giving to charitable foundations will also be part of our regular budget if we’re able to do so.
Yes, 100K Is My Aim (in today’s dollars). I could certainly live on less but I’m trying to prepare a retirement that I can look forward to and dream about so why not aim for stars:)
