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Old 02-16-2012, 06:44 AM   #21
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Teekaymn --- What I always do when I am being conservative and also realistic when thinking about SS's future is to count it as 60-70% of what they say it should be.

I do this based on the thinking that SS itself has said that when all funds from the "trust fund" are exhausted that the incoming receipts from existing workers will be what is used to exclusively fund SS checks and those receipts account for over 75%

So add in whatever "slop factor" you want but counting on some figure north of 50% should be a very safe bet. I think the "slop factor" should be based on how much of a retirement bankroll one has as the really well off folks may end up getting "means tested" out of more of their benefits than others.

"at the time of projected trust fund exhaustion in 2037, continuing tax revenue is expected to be sufficient to cover 76 percent of the currently scheduled benefits."

The Future Financial Status of the Social Security Program

USAF Veteran -- Retired Air National Guard -- OSW -- ONW -- OIF
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Old 02-17-2012, 12:57 AM   #22
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Originally Posted by teekaymn View Post
DW insists we ignore SS, though, just to keep us more focused on contributing to our self-directed accounts.
In theory that is a good idea but doing that is a choice which has very, very real consequences. That is, for many people if you assume that you will receive $0 SS then retirement is either impossible or you are assuming a level of spending that will be painful. Therefore, the person ends up working extra years or living at a very low standard of living.

I agree that one should consider the possibility SS benefits could be 100% taxable or reduced but I personally didn't feel it was reasonable to assume there would be no benefits.

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Old 02-21-2012, 01:56 PM   #23
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Teekaymn - To address the points you made in the OP concerning quality of life in other countries, I believe I can provide some insight as going expat is my plan once I finally cut the string...

I have traveled to many countries searching for the ideal place to retire outside of the US... There are many issues to consider before considering such a decision...

Culture, language, quality health care, safety, political stability, exchange rates, family & friends, cash flows, emergency preparation, etc are just a few and are all issues that any person considering going expat needs to address. Hopefully before you make the leap... Most of these things are non-starters as long as you stay in the US...

After years of travel and much research, it boils down to this... If you want to maintain the same lifestyle you have today in the US while living in another country, you will wind up paying the same price for it no matter where you are... If you live comfortably in the US on $3K per month, then that is what it is going to cost you in Costa Rica, Panama, Colombia, Thailand, Philippines, Malaysia, etc... Yes, some things are less expensive, such as housing in Thailand, but other items are much more expensive, such as imported goods like wines and cheese... So it all balances out in the end... Yes, you can cut some corners, but then you have to sacrifice some aspect of the above list... If you want to reduce housing cost, you can, but at the risk to your safety...

If you want to go native in a foreign country you can live very cheaply, but this is not the mindset of most westerners looking for a quiet, enjoyable retirement...
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Old 02-21-2012, 03:34 PM   #24
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I find it refreshing seeing someone ask about ER'ing on 2-3K per month, since most of the posts I've read on this board have been by folks with huge portfolios who are often spending 2-3K per month on health care and home maintenance alone.

We've been forced to find ways to live on that kind of draw due to premature exits from the corporate world, the '08 market crash, etc. I'm 55, DW is 48, so a long, long way to go for SS. In our experience ER is do-able on those amounts in many low-overhead parts of the U.S., but your lifestyle will bear little resemblance to what you're probably used to while earning 130K per year.

We've lived in Mexico (Lake Chapala area) for two years and are currently based in small-town New Mexico. I'm writing this from San Miguel de Allende, Mexico, where we've been spending a few weeks visiting friends and escaping winter. I can tell you that comparative cost of living for us here vs. a very low-cost (and beautiful and sunny) part of the U.S. runs about $500-600 a month more in the U.S. for a roughly equivalent lifestyle. I say "roughly" because overall quality of life in this part of Mexico is higher in key ways, at least for us. Here one can walk everywhere or use excellent, inexpensive public transport so no car needed or wanted (and the hills are steep, so no treadmill workout needed either!). That saves ~$150+ per month in gas, maintenance and insurance (and our car at home is a 40mpg used Toyota). Food is half the cost of the U.S., for incomparably fresher and more flavorful fruits and vegetables (due in part to year-round growing season) albeit one has to forego U.S. prepared foods (which we don't eat anyway). Then there is the 1000 lb. gorilla: health insurance and health care. We have an ultra-high deductible bare bones plan now and are paying under $300 a month for catastrophic-only coverage, but if we lived down here again we'd drop that coverage, join that national health care system here for less than $600 total per year for the two of us, and pay out-of-pocket for routine care. We just had our teeth cleaned using state-of-the-art equipment for 150 pesos (about $12 each) and I needed a large filling as well ($32). While at the beach a month ago I came down with an ear infection and wanted to see a specialist (ENT) since I'd had other issues. I called one up, got in the next day, and $45 later had diagnosis, treatment and antibiotics in hand plus the Doctor's home phone number for follow ups.

I would say for most trying to make it on 2-3K per month in the U.S. the decisive issue is going to be what happens with health care and insurance costs. Are you prepared, like militaryman's parents, to allocate 25% or more of a tight budget to insurance premiums and meds? Are you eligible for coverage between your ER date and age 65? Further down the road, will you have enough socked away for assisted living or nursing home care?

Frequent ER board posters the Kaderlis have been living well and traveling the world on about 24K a year for over two decades, and have several excellent downloadable books and a ton of info on lifestyle choices on their web site. I suggest checking it out for inspiration, and hopefully you'll have the chance to try living as an expat for a few months at least before you "pull the plug" on full-time work. Here's the link:

Retire Early Lifestyle
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Old 02-23-2012, 11:56 AM   #25
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@KeyserSoze -- First of all -- nice pick on the handle you've chosen -- one of my favorite movies.
My DW would love it if we were able to find, in retirement, something similar to our first house -- 780 sf, 1 bath, no garage. We don't intend to continue to spend anywhere near our current lifestyle. The larger question is how to determine what we WILL spend, and what location will best support that level.

@KevinK -- I was really happy to see your description of costs encountered in San Miguel de Allende and Lake Chapala. DW has mentioned frequently that SMA should be on our list of possible retirement destinations, and I'm very open to that idea. Much reading and research is on tap for me as I continue to dream. Cold and snowy here in Minnesota today -- I think a scouting trip to Mexico is a swell idea......

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