Here's the reasons we will need less:
- Living below means when working. In my last 10 years of working, we generally were saving at least 20% of my salary. So we already were living at 80% of my pre-retirement income before retiring. 80% of 80% is 64%, which would be the amount of pre-retirement income that is needed.
- Paid off mortgage. In May 2009, we paid off our mortgage and reduced our monthly expenses by 24%. 76% of 64% is 49%.
- Living expenses. Our non-mortgage monthly living expenses haven't changed much. Net some expenses went down but retiree health care insurance eliminate the savings.
- Taxes. Although I haven't explicitly done the calculation, a reduction in income taxes has also contributed. Since our taxable income has been less in retirement, we play a lower income tax rate and qualify for more tax credits. That probably accounts for most of the additional 8% reduction in our expenses
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This is not financial advice. Please consult a professional advisor.
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