50 and working (and will be for a while..)

[tmm99]

I found this site through Boglehead and I have been reading tons of posts here for the last couple of months.

50, single female, living in northern CA. 500K or so in 401K. 130ish K in taxable account/MM/cash. Grossing about 130K/yr. No debt. Maxing out my 401K (20K from this year) plus adding extra 20-25K savings to taxable etc. No pension plan (except for the $385/mo (no COLA) from my former employer.)

I moved to this area from AZ about 10 years ago, but never purchased a home here (I am renting.) - the price difference in housing was so ridiculous that I couldn't bring myself to consider paying 600K for a house I could get in AZ for < $200. I want to retire by 60, but unless I moved to a far away land or some rural area, it would be very tough.

I didn't start thinking about retirement stuff until about 3 years ago, so I am doing my best to catch up now. (I wish I thought about it 10 years ago, but better late than much later!)

This forum has been motivating me and encouraging me to get my goals set and dream/fantasize about early retirement.

tmm99

 

[NW-Bound]

50, single female, living in northern CA. 500K or so in 401K. 130ish K in taxable account/MM/cash. Grossing about 130K/yr. No debt. Maxing out my 401K (20K from this year) plus adding extra 20-25K savings to taxable etc. No pension plan (except for the $385/mo (no COLA) from my former employer.)

... I couldn't bring myself to consider paying 600K for a house I could get in AZ for < $200.

I want to retire by 60, but unless I moved to a far away land or some rural area, it would be very tough.

tmm99

I think you are doing well. Your savings rate looks quite reasonable, considering where you live.

Being from AZ, your comment reminded me that I should be grateful I spent my adult working life here in the desert. The low COL enabled me to save as much as I had, though the pay has been a bit lower than in Northern CA. I take it that you like where you are now, and do not want to move when you retire? Surely, there must be some not-so-rural places that are cheaper.

 

[xynny]

hi there! You sound just like my mom! She's a few years older than you and living in the East Bay. I think you are doing great, and not having a house here allows you to go wherever you want when you do decide to retire. My mom is hopelessly in love with the Bay Area, though. She could've retired if she moved back to China.

 

[mb]

Welcome to the forum tmm99. I'm also 50 and live in northern CA. Have a DW, two teenagers and a house though.

My current plans are to stay in CA. Financially it would make sense to go somewhere else but despite the high cost of living, congestion, etc., I haven't found anywhere else that I like better so I'll probably stay put.

I think that you're doing fine financially. Have run your numbers with FIRECALC?

MB

 

[tmm99]

Thank you all for the warm welcome!

I do like this area because the weather is great (no snow in the winter, not terribly hot in the summer, not too many bugs, etc, etc) and it is very convenient (especially food/restaurants - you can find just about anything here), although it is hard to get to nice nature spots without being in traffic for ever.

I did try the FIRECALC (I also did Vanguard retirement planner - the comprehensive kind, and I have talked to a fee only financial planner and he ran some numbers against his software) and all agree that I would have to cut down my living expenses *drastically* to retire at 60. (Even if I worked until 65, I would have to reduce my living expenses, but not as much as I retired at 60.) I have read some COL threads saying that they could live on $30K/year (some people even less), and that is truly amazing.

My issue is, well, I am in the computing industry and I am not sure if I could get employment until 65. (60 may be OK, but 65 is pushing it.) So I figure, I could lower my living expenses drastically and move to some rural area outside of CA where things are more affordable. Ideally though, I can save up enough money to purchase a small house in No. Ca, make it my base, and travel all over the world by renting in the travel destinations (OK, maybe not "all over" the world, but the part of the word where cost of living is very affordable!)

tmm

 

[NW-Bound]

I have read some COL threads saying that they could live on $30K/year (some people even less), and that is truly amazing.
tmm

I know I cannot do it. Yes, that would be tough, and depends a lot on the location. For example, in another thread, a forum member mentioned a small house on 2-acre lot in Iowa going for less than $100K. It would be difficult for someone accustomed to living in a metropolitan area. But you still have a few years to look around and make choices. Have fun.

 

[xynny]

The hubby and I live in San Mateo and we live on about 40k a year. It's definitely doable if you make an effort. Our biggest expense is rent. Food really doesn't cost that much. We can eat really well on less than $500 a month. Oh, and I understand what you mean about the ageism in the tech industry. Everyone is young. I am 25 and I feel like I'm getting old.

 

[haha]

The hubby and I live in San Mateo and we live on about 40k a year. It's definitely doable if you make an effort. Our biggest expense is rent. Food really doesn't cost that much. We can eat really well on less than $500 a month. Oh, and I understand what you mean about the ageism in the tech industry. Everyone is young. I am 25 and I feel like I'm getting old.

I guess that means $40,000 for expenses other than income tax?

Even so, this is very frugal for two people paying rent in San Mateo. You guys are doing quiet well.

Ha

 

[xynny]

yeah that's not including income tax. We pay approximately $40k in income tax (state+ fed + ss). Ironic, huh.

 

[CaseInPoint]

Food really doesn't cost that much. We can eat really well on less than $500 a month.

One organic potato chip per day?

 

[Darryl]

tmm99 welcome to the forum! It looks like the early retirement might be tough but you have a nice income and the portfolio is getting there so you're on track. Keep at it and you could get a good break that let's you out earlier. I visited California (Bay Area) many years ago and found the home prices mind numbing. Kept asking my host what would that sell for? and what would that rent for? as I pointed out houses and was certain I had entered another dimension as the cash flow was impossible compared to my environment.

 

[xynny]

One organic potato chip per day?

LOL, $500 a month is about $16 a day. That's enough for rice + a dish. I'm making some burgers now and the meat cost $3 a lb and the buns were free from church. So we're eating dinner for $3. It really isn't that expensive. Plus we get free food from work often, too.

 

[tmm99]

Thank you Darryl for the warm welcome.

I live in the bay area (south) and how you felt when you visited here is the same way I felt when I moved here. It was 1997 and I was renting a condo (600sqt one bedroom) and it was going for $200K . Even in this downturn now in 2008, it is being sold for $320K (plus $300/mo for HOA).

xynny,

40K/yr for two is quite impressive in San Mateo. (My yearly expense is 47K with $1750/mo rent). $500/mo for food I could easily do (I budget less than that with no problem, but it is just me whereas it's two of you.) I could do 40K/yr if I took out the expenses for hobbies /entertainment / vacation / a part of the living expenses, but I have a feeling that would put too much stress on my mental health and I would end up volting.

I have tightened my budget this year to squeeze out an extra $5K to go toward retirement savings (on top of putting extra $5K for the catch-up contribution), but that's about all I am willing to do at this point. (This raised my annual savings to about 26K/yr, so all together $20K for 401K + 26K = 46K/yr) and I consider this good enough, at least for now.

 

[tmm99]

I know I cannot do it. Yes, that would be tough, and depends a lot on the location. For example, in another thread, a forum member mentioned a small house on 2-acre lot in Iowa going for less than $100K. It would be difficult for someone accustomed to living in a metropolitan area. But you still have a few years to look around and make choices. Have fun.

Yes, I would probably have a hard time adjusting to living in a really remote area. (Actually, I have lived in a rural area in NV - poplulation of 15000 people - hours to any major cities - and I do not want to go back to it), but it is good to know that there are still pockets of really affordable housing in the US (and from what I read, this area sounded pretty - I thought it was Idaho, not Iowa? Maybe it was a different thread I was reading.)

tmm

 

[Rambler]

Welcome tmm99. Stick around this board and you may find other useful ways to save and invest...one is to use this board as a significant part of your entertainment. Not very expensive and well worth the time (most of the time...).

 

[xynny]

I think one big money saver for my hubby and I is that we have no healthcare expenses right now. We work for companies that pay the premiums. My mom is working right now purely for her CalPers benefits so she gets healthcare when she retires. She just got a new job this year at the age of 54 at SFSU and she needs to work for 5 years before she gets CalPers. She took a huge paycut though, (from 130k to 80k). However she calculated that the medical care is worth it if she were to retire in 5 years because her old company was paying 1500 a month in healthcare premiums for her. Plus she will be getting a small pension that is worth about $1000 a month. Also, the paycut allows her to contribute to a Roth IRA now and she can withdraw from her 401k/IRAs at age 59.5 penalty free so she's just targeting for that date now. Everyday she's telling me, 4 years and x months left, hehe.

Maybe you could do that, too. Find a government agency later on and be a director or something and then collect the perpetual healthcare benefits. Government agencies are more open to hiring very experienced people, and the benefits package is worth quite a bit if you consider that healthcare costs are growing faster than inflation..