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Re: Contemplating The Big Move
Old 01-23-2005, 02:49 AM   #61
 
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Re: Contemplating The Big Move

This is a repeat, but Kay got my creative juices flowing
a bit as she mentioned her planned ER budget,
and also mentioned 25K a year as a deprivation level
of spending. I have seen many similar posts and it
always amazes me. We (a couple with 4 dogs) live quite
comfortably on 25K (gross) per year, and do not expect
to spend much more down the road (unless inflation goes
through the roof). "Bare bones" for us would be the $50
per day level which I have written about often. Thus,
we are currently about 7K per year (almost 40%)
over our "just scraping by" level. Also, the future
spending assumes no draw-down of principle whatsoever. Obviously, this is a further buffer against
inflation and other "troubles" which may pop up.
In summary, there are places all over the country where a couple can live on our income (or less) and not suffer
at all, unless a lack of expensive cars, the latest gadgets,
big houses and country club tabs that look like the
national debt are considered suffering

JG
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Re: Contemplating The Big Move
Old 01-23-2005, 03:00 AM   #62
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Re: Contemplating The Big Move

My step daughter lived for years in Ms (paid up mobile home on a paid up lot, no debt) on 9-12 k excluding business expenses( commercial fishing license, traps. boat maintence, gas, etc). Dog, cat, beer, cigarettes, ten year old truck - boyfriend funded vacations.

Doable - but not recommended ER wise.
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Re: Contemplating The Big Move
Old 01-23-2005, 04:08 AM   #63
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Re: Contemplating The Big Move

Dreamer - I'm also a Fed. employee under CSRS, 50 years old, have been putting $$ into TSP since it started (no govt. match, as you know). My total balance is only about $12,000 more than you said yours was, so don't feel bad. FERS employees get the govt. match, and anyone putting the max. into TSP in the latter half of the 90's, when the market went up, up, up, made out very well. You and I just could not keep up, but we still did okay. My problem now is that as I get closer to retirement (5 years away), I am getting more risk-averse with my TSP account, so I'm not comfortable exposing a big % of it to the equity funds. But, even just earning 4.4% in the G fund will grow the balance to over $160k by 2010 (contributions plus interest), which is adequate to meet my needs. This is just supplemental retirement $$ anyway, since my wife and I are living quite comfortably now on what my CSRS annuity will be upon retirement (the rest is invested), and expect to be able to do so after retirement as well.

I came to this thread late, but I must say I'm amazed reading Donner's description of his expenses. We live on about $35,000 now, and there are many, many ways that I could cut that back if I had to. We go out to eat (yes, nice places) occasionally, we drink wine every day with dinner (and we eat great meals at home), we go on 2 vacations each year (going to the Bahamas in March), we just bought a 2004 truck (need a 4WD where we live), our house is paid for, etc.. I don't feel deprived at all. Donner, I agree with Cut-throat that you need to do a lot more thinking about what is important to you. If you really want to retire, you can make it work on a lot less than
you your current budget. If you want to maintain that budget and feel the need to even increase the safety net due to unknown future health care expenses, etc., then by all means, keep working until you feel comfortable with your situation.

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Re: Contemplating The Big Move
Old 01-23-2005, 06:26 AM   #64
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Re: Contemplating The Big Move

JG - If I had to, I know we could live on $25 K a year somewhere outside a big city, just not here without feeling deprived. *And it would take me a lot of "work" to figure out how to do it! *And I am not sure I could do it if I needed to pay taxes out of that.

But we don't have expensive tastes or cars (1 10 year old Camry, but finally had to break down and buy another car this year as DH was working local and needed his own wheels). *We bought a Honda CRV. *No big screen tv.s etc. No country club. No debt. *But we pay a lot of taxes, donate a lot each year (will need to donate time instead of money in ER I suppose ). *One area like Donner where we spend a lot of money is groceries. *We haven't changed our habits but just from our Quicken records I see we spend about 20% more on this category here than we did in Texas for example. *Another example, we like to go out for Sushi and eat a fairly standard selection of items. *In Texas that meal, with a beer each (usually 2 for DH) and a 20% tip cost us around $35. *Here the exact same thing costs about $55. *

In ER I know my drycleaning, clothes, eating out (more time to cook) will go down, but I expect that I will want to spend more time and $ on hobbies so I am expecting that to wash. *Hopefully we'll be able to save on that but just planning worst case.

So, I think there is definitly room to downsize, move elsewhere and spend a lot less then we do. *But if we choose to stay here then we need to plan to have a bigger expense budget.

I'm not saying "oh poor me, I live in a high cost area". I am just recognizing a fact that if I continue to live here, it is going to cost me more than I could reasonably live elsewhere. It's our choice for now, to plan for a bigger expense budget.
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Re: Contemplating The Big Move
Old 01-23-2005, 06:37 AM   #65
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Re: Contemplating The Big Move

Quote:
My problem now is that as I get closer to retirement (5 years away), I am getting more risk-averse with my TSP account, so I'm not comfortable exposing a big % of it to the equity funds. But, even just earning 4.4% in the G fund will grow the balance to over $160k by 2010 (contributions plus interest), which is adequate to meet my needs. This is just supplemental retirement $$ anyway, since my wife and I are living quite comfortably now on what my CSRS annuity will be upon retirement (the rest is invested), and expect to be able to do so after retirement as well.
RAE,

As a retired CSRS Fed, I treat my pension as if it were the income stream from a very large bond allocation (>$1M). Therefore, my allocation to equities within the TSP is very low on an overall percentage basis. Also, since you can live comfortably on the amount your pension will provide, you would not need to withdraw anything from TSP until age 70.5. That gives you over 20 years to allow the volitility in equities to smooth out and to have some hope of staying ahead of inflation. From that perspective you may be better off with a good portion of your TSP funds in equities rather than running scared and pulling it all into the G fund.

Grumpy
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Re: Contemplating The Big Move
Old 01-23-2005, 06:54 AM   #66
 
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Re: Contemplating The Big Move

Hi Rae,

Thanks, I feel better now. I have been reading these boards for a few months and am going to introduce mysellf one of the days when I get financial info more in order. Do you make Voluntary Contributions? I have been having $25.00 per week withdrawn from C/A and don't miss it at all. I keep thinking that I should raise the amount.

I am wanting to retire at 55 also, so that is the reason that I stayed under the CSRS system.

I think that Donner should be able to cut back on some of their expenses also. I would love to be able to have his retirement income. I would not hesitate to retire at 55 also.

I know that my husband and I spend more than we probably should at times, but we also live below our means. We also have a 16 yr old daughter who requires way too much money!!! Once she is on her own, we will probably feel like millionaires! LOL

Have fun in the Bahamas. I am headed there and to St John and St Thomas on a cruise the beginning of 02/05. I am going with 4 ladies that retired from where I work at in 12/31/04. The youngest one that retired was 57 yrs and the other 3 are in their early 60's. I do not want to work that long. I have worked with 2 of the ladies since 05/80 when I transferred to this office, so we are like a family. It should be a great time!!

Dreamer
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Re: Contemplating The Big Move
Old 01-23-2005, 09:20 AM   #67
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Re: Contemplating The Big Move

Grumpy - good point about keeping my TSP funds in equities longer, since the annuity is basically an income stream from a large bond allocation. I guess I hadn't quite thought of it that way, but I should have. The way I had been thinking about it, the money I could draw off of TSP after retirement would be basically fun money.......for vacations, buying a toy if I want one, etc.. Granted, $160k is not a lot of money, but drawing off 4% per year would give me about $6400 annually to work with (if I want/need it), which is okay. I've had equity investments most of my life, and still do, but I have a lot of concerns about the equity markets in general these days, and I could easily see the markets going nowhere for a decade or more (while being exposed to risk all that time). But, I'll continue to think about it.

Dreamer - no, I have not made the voluntary contributions, but if you can do it, I think that's great. I'm maxxed out on my contribution to TSP, though (including the age 50 catch-up thing, which I just started). And I contribute the max. to my IRA every year. With all of that, plus setting aside some other $$ each year in taxable accounts, I think we're positioning ourselves fairly well for retirement in 5 years. I also stayed in CSRS because I wanted to retire at 55, plus the full COLA at 55 was a big factor as well.

I have two step-kids that are with us part of the time (dad pays some child support), so I know what you mean about kid's expenses. We are trying to teach our kids to be frugal and think about what they really want before spending their $$, and I think it's catching on (maybe), but it's a long, slow process. Lots of outside influences on kids these days, and most of them say "spend, spend, spend!!".

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Re: Contemplating The Big Move
Old 01-23-2005, 12:43 PM   #68
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Re: Contemplating The Big Move

Thought this thread was about played out. I think Cut-Throat put his finger on my situation vs others on this Board. Take away the mortgage, the obscene health care costs and the insurance costs and my expenses get to looking a lot like everybody else.

Cutting expenses is always an option, and we will if it comes to that.

My concentration in the G Fund comes as a result of two things: my view of market capitalization right now (considerably overvalued) and my belief that I can get to where I need to be in a relatively short time by taking the slow, safe fixed income overland route. The path eschewed by George Donner in 1847.

If Mrs. Donner and I were in a different situation I might be compelled to accept more market risk to get where I think we need to be. I gave up trying to maximize returns long ago. I do believe in a cool appreciation of risk. I don't want to accept risks I don't have to. I may die a bit poorer that way but I trust that Mrs Donner and I will enjoy a comfortable retirement for many years.

I like Grumpy's take on viewing the TSP balances as a long term vehicle for dealing with market risk. My worry is inflation risk. Arlington Va. homeowners got their annual assessment in the mail last week. Average increase from last year -- 24%! But my own research tells me that common stocks don't do well at all in periods of high inflation. Stocks do best in periods of very modest inflation 2 -3% kinda like what we have had for the past decade or so. (Deflation is a killer for stocks). If inflation heats up I may be forced out of my slow track approach. Might even be forced out of the TSP altogether via a rollover IRA at the point of retirement. I don't relish the thought of searching out non-equity inflation coping investment vehicles in high cost managed funds. Hope we don't get to that point.
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Re: Contemplating The Big Move
Old 01-23-2005, 01:27 PM   #69
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Re: Contemplating The Big Move

Donner:
I was rethinking my strategy to stay in Arlington after getting that assessment.

Compared to 2000 when we bought our increase has been 89%. We certainly could not afford to buy a house here now. Or we could afford it, but I wouldn't be able to sleep at night.
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Re: Contemplating The Big Move
Old 01-23-2005, 06:52 PM   #70
 
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Re: Contemplating The Big Move

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Re: Contemplating The Big Move
Old 01-24-2005, 01:00 AM   #71
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Re: Contemplating The Big Move

Greetings Donner-

Fed here too. Falls Church.

I think some who have commented here missed the point that your 94 K Pension is taxable. (I know, a tiny portion is a return of your contribution). For simplicity lets assume it is all taxable. Gross up your $108K expenses and you will need 108 x 150% = $162 K before taxes to maintain your present expenditure level. That means you need to draw $68K per year from TSP just to maintain. At 4% that's $1.7 million. Looks to me like you need to think some more.

Here's a thought: Did you know that in NC your pension is not taxed by the state provided you have 5 years of service pre-1989? Look it up!

Best,
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Re: Contemplating The Big Move
Old 01-24-2005, 04:22 PM   #72
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Re: Contemplating The Big Move

Quite a few states do not tax federal pensions. Michigan is another one. I know, because that was a big factor in choosing where I wanted to retire as a fed. employee.

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Re: Contemplating The Big Move
Old 07-21-2005, 08:49 AM   #73
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Re: Contemplating The Big Move

Hi;
I am a FED also and under FERS this program will be good for the young employees if they make good use of it. For those that had to join it late it is not so good unless you are a non risk averse investor. I live in Virginia not in the metro DC thank goodness. I live in Norfolk and the prices and expenses are shooting out of sight here.

Soooo, I am leaving when I retire moving to a state that does not tax my fed retirement and taking the equity out of this humble house and buying a humbler house in a lower cost of living area. Ya gotta do what you gotta do to get by, I will be so relieved when I get freed next year I will have to resist running up and down the hallways yelling "I'm free, I'm free at last" at the top of my lungs. Working for the Feds has its good points (the check doesn't bounce) and bad points you have to take a lot of crap for a loooong time to get anywhere. Well it is almost over and it is time to move on.

You will know when it is time and intuitively know where if you give it some thought; remmember DC is not reality there are very nice places to live very well on a lot less.
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Re: Contemplating The Big Move
Old 07-23-2005, 12:41 PM   #74
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Re: Contemplating The Big Move

Hi Kitty--

* * * * Sounds like you are ready to go! DW and I are thinking hard about retirement as well right now.* As far as the financial aspect goes, the two biggest items in our retirement budget will be the mortgage and out -of -pocket health care costs.* If we were to dump the mortgage and move to a lower cost area and limit the health care costs by joining a comprehensive HMO instead of relying on consumer unfriendly high out-of-pocket cost Blue Cross/Blue Shield Fee for Service payment standards for out-of-network health providers then the financial descision would be a no brainer for us.

* * * * *Trouble is we like living in Arlington,* Va.* My wife has lived here all her life and it has been my home since 1988.* We have lots of family, good friends, good neighbors and an active church community.* Our first grandchild was born two weeks ago and lives down the street.* These are ties that bind and it would be difficult in many ways for us to pack up and leave.* We also like our expensive doctors who give us high quality care with a lot of attention and immediate access when we need it.*

* * * * * I agree with you when you say you gotta do what you gotta do.* Fortunately for us we have done enough saving and preparing over the years that we don't have to move.* We can afford to retire in place at the standard of living to which we have become accustomed.* That really is the goal of all retirement planning.* But I realize that there are tradeoffs that people are willing to make to ER.* Part of that may involve making choices that we, at our age, find difficult to contemplate.* We will not be ERing.Too late for us. We are just now at the beginning of the normal R stage* Waiting a little later does have some advantages -- perhaps one of them is the financial ability to age gracefully in place in the company of family, friends and loved ones.*

* * * * * But it sounds to me like you have a plan and are good to go in a short while.* I wish you all the best as you enter this wonderful new stage in your life.* Go for it!


Donner
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