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Hello From Beautiful San Diego
Old 07-29-2008, 05:18 PM   #1
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Hello From Beautiful San Diego

Hello, my name is Susan, coming to you live from shaky Southern California…I’ve been lurking around for a couple of months and have decided to throw my two cents in…
I’m planning on retiring in about a year and a half at 55, although my better half will be retiring in about 7 years, give or take a few, depending on how his company is doing financially.
I am somewhat perplexed how so many of you can live on what you do…in San Diego, the cost of living is out of control. We spend about $6,000 per month for expenses and that does not include traveling, which we have decided to cut out altogether, does not include a car payment or a housekeeper. I realize that we could easily cut down our expenses by about $1,000/mo when I retire, but that’s still $5,000 per month, or about $2,500-$3,000 for me (yes, I spend more than my partner).
When I retire January 31, 2010, I will be receiving about $40,000 per year in income; however, that is pretaxed; I may have a “small business” on the side just to make sure that my taxes are very low; however, I don’t plan on spending a lot of time at it.
I know, stop complaining, living in paradise; but the real question is: how did you psychologically go from paying for what you wanted, to trying to live on a tight budget month after month after month?
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Old 07-29-2008, 05:53 PM   #2
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Hi Susan, welcome. I'm not sure I understand how/why you'll be on a tight budget when you retire. Do you and your SO keep your finances separate? Do you know where your money is going? Any areas that you could trim expenses without "feeling" it?

I know that everyone feels differently about this, but personally, I'd rather work a bit longer and maintain a lifestyle that I'm comfortable with instead of retiring earlier and pinching pennies. Of course, you can always move to Iowa and live like a queen!
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Old 07-29-2008, 06:06 PM   #3
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Welcome, Susan.

It is true that many members here live on amazingly low amounts of money, by choice or by design. But there are many others whose resources and lifestyles call for higher retirement income. Or, like yourself, they live in an area where the cost of living is very high.

A couple of things to keep in mind: after you retire, your taxes usually go down a lot. In addition you are no longer setting aside for retirement, so right there you might free up 10s of thousands per year. Still, everyone has their limits and you would do well to assure that you can pull in that $6K per month plus fun money on your retirement income.

As mentioned, if it's tight then working just 1 or 2 more years can make a big difference (a dilemma I have often mulled over), if you don't despise your job. Finally, there's always semi-retirement which many here have chosen.

You've got some time, so reassessing in a year or so with an open mind should make things clearer for you.

Have you considered moving to a less expensive region?
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Thanks for the great welcome.
Old 07-29-2008, 09:03 PM   #4
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Thanks for the great welcome.

Thank you so much for the nice welcome to the Forum. Yes, my partner and I keep our expenses separate and track where the money is going. I probably could cut some more when I retire, but I guess I'll cross that bridge when I get there. If I need more, I can either take it out of my accounts and/or do some part time work, so I'm not really worried. My health care is taken care of as I have Tricare with the military. I guess I was just complaining as I see so many people here in the Forum that live on much less in retirement than I plan on doing. Working longer is probably not an option as I hate the commute and the stress. And, after working 32 years in public accounting, I believe I'm getting really close to total burnout.

Susan
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Old 07-29-2008, 09:24 PM   #5
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I'd watch inflation carefully before making a final decision to retire, and have an inflation fighting strategy if you do.
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Old 07-29-2008, 09:39 PM   #6
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Hi Susan,

welcome to the board. You are facing the choice most people face when retiring: are you willing to trade less time and more money for more time and less money?
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Old 07-29-2008, 09:43 PM   #7
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Quote:
Originally Posted by Susan View Post
I am somewhat perplexed how so many of you can live on what you do…

but the real question is: how did you psychologically go from paying for what you wanted, to trying to live on a tight budget month after month after month?
Hi Susan,

I've joined this forum recently with similar questions: How can so many people retire early and still be financially independent?

The answer is that, for the most part, many of the "early" retirees are not retiring quite so early, and they are willing to live a lifestyle that borders on poverty. Of course not all, but many.

After a while, you'll also see certain patterns: Small houses that were bought a long, long time ago, no children (or no expectation of supporting children or anyone else for that matter), very few or no purchases beyond the absolute necessities, and ongoing fear of not making it financially as time goes on. The ability to pay for health care is another big concern.

In most cases, so far as I can see, the psychology behind the willingness to live so sparsely always boils down to unwillingness or inability to work. You'll often see people saying (although not in so many words) that they would rather live in poverty than go back to work for a living. The words 'work' and 'job' are often considered dirty words, and productive working people are called "worker bees," "desk jockeys," and plain "stupid."

At the same time there is a support group to reassure each other that living on the edge of poverty is not so bad.

Again, not all early retirees fall into this category, but many will follow these patterns.

So that's the big mystery. Welcome to the forum.
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Old 07-30-2008, 12:14 AM   #8
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Inflation is very important and I have included that in my financial projections until age 100; I hope I don't live longer than that. The question of do I work longer for more is still a valid one in that if I do work one year longer, I do not have to consider the possibility of having to work again, even part time; however, the toll on my physical as well as mental health is not worth the extra money. I am not so worred about how much money is enough; it's what that "enough" buys to have a good life in retirement. I can see, as CaseInPoint brought up, that some people choose to live very modestly, and that is fine; however, I cannot and will not live that way. If I find in retirement that costs are going up more rapidly than I predicted, I can always get part time work that pays pretty well, being in the tax accounting business for as long as I have. I truly appreciate the frank and insightful responses to my thread.

Susan
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Old 07-30-2008, 07:27 AM   #9
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Originally Posted by Susan View Post
I am somewhat perplexed how so many of you can live on what you do…in San Diego, the cost of living is out of control. We spend about $6,000 per month for expenses and that does not include traveling, which we have decided to cut out altogether, does not include a car payment or a housekeeper. I realize that we could easily cut down our expenses by about $1,000/mo when I retire, but that’s still $5,000 per month, or about $2,500-$3,000 for me (yes, I spend more than my partner).
Hi, Susan,

Just for my curiosity, would you mind sharing what you spend your money on? If it's OK, break down your expenses and then separately add a list of your DH's expenses to get a picture of $6k/mo. Do you have children to support or mortgage to pay?
I'm being nosy about other people's spending because I cannot imagine such big spending unless it includes house payments and kids.
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Old 07-30-2008, 07:55 AM   #10
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Welcome , I do not live any differently in retirement than I lived while working . large house , children , travel and minimal worry .Some people here do live on small amounts but a lot of them live that way my choice not necessity and a lot of us live on much larger amounts and spend freely . It is more a personality thing than a budget issue .
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Old 07-30-2008, 12:31 PM   #11
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In resposne to Aida, below is our monthly spending, excluding travel as we have decided that we cannot afford it. This amount does not include children but does include a small house payment and a second (for renovations) that will be paid off on 12/1/2009.

$304 - HOA
$142 - Property taxes
$166 - Auto/house/jewelry insurance
$735 - Mortgage (will be paid off in 2034)
$774 - Second (which will be paid off on 12/1/2009)
$250 - Car repairs (average for two Audi vehicles)
$108 - Cable
$100 - San Diego Gas & Electric (sometimes lower, sometimes higher)
$600 - Gas (yes, that's right, for premium gas at $4.50/gallon)
$100 - medical insurance
$200 - parking at work
$400 - food out
$600 - food in/paper products/shampoos/other
$400 - Cash for misc stuff (sometimes lower, sometimes higher)
$150 - hair
$1000 - entertainment/clothing/gifts/other (sometimes lower, sometimes higher) for a total of
$6,029 per month

The above expenses are for an average month; we used to travel a lot and our expenses were much higher. We also used to do a lot of entertaining at home but we have also scaled that down. And, we are renting more movies and entertaining ourselves at home much more instead of going out to jazz venues and other types of expensive entertainment. In San Diego, there are not many free concerts; if they are around, they ususally happen in the summer months and wherever they are, there are tons of people and traffic, so we tend to avoid them. I realize when I retire, the second mortgage will be paid off; however, our HOA/property taxes/car repairs/utilities/food keep going up every year, and not by a couple of dollars per year. When I stop working, I will no longer pay $200/mo for parking, buy expensive clothes, my car insurance rate will probably go down a little, my gasoline bill will go from about $400/mo to about $150-$200/mo, we will be eating in more as I will cook and other expenses will probably go down. So, instead of $6,000 per month, our expenses should be about $5,000 per month. With traveling, who knows.

Susan
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Old 07-30-2008, 12:37 PM   #12
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Originally Posted by CaseInPoint View Post
Hi Susan,

I've joined this forum recently with similar questions: How can so many people retire early and still be financially independent?

The answer is that, for the most part, many of the "early" retirees are not retiring quite so early, and they are willing to live a lifestyle that borders on poverty. Of course not all, but many.

After a while, you'll also see certain patterns: Small houses that were bought a long, long time ago, no children (or no expectation of supporting children or anyone else for that matter), very few or no purchases beyond the absolute necessities, and ongoing fear of not making it financially as time goes on. The ability to pay for health care is another big concern.

In most cases, so far as I can see, the psychology behind the willingness to live so sparsely always boils down to unwillingness or inability to work. You'll often see people saying (although not in so many words) that they would rather live in poverty than go back to work for a living. The words 'work' and 'job' are often considered dirty words, and productive working people are called "worker bees," "desk jockeys," and plain "stupid."

At the same time there is a support group to reassure each other that living on the edge of poverty is not so bad.

Again, not all early retirees fall into this category, but many will follow these patterns.

So that's the big mystery. Welcome to the forum.
Hey, what you doing? Trying to make moderator?

Ha
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Old 07-30-2008, 12:44 PM   #13
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After a while, you'll also see certain patterns: Small houses that were bought a long, long time ago, no children (or no expectation of supporting children or anyone else for that matter), very few or no purchases beyond the absolute necessities, and ongoing fear of not making it financially as time goes on. The ability to pay for health care is another big concern.
Uh - no

Of course, I'm only speaking about me/DW ...

- Ron

PS - Welcome Susan. San Diego is great (especially the drinks in old town ). However, when I/DW were last there 5+ years ago, we went across the border. I understand you are having problems in that area right now (gang/drugs). How sad.
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Old 07-30-2008, 01:04 PM   #14
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Hey, what you doing? Trying to make moderator?
Ha
Maybe he was just trying to scare away newbies with tales of poverty?

Quote:
Originally Posted by haha
During the early period on this board people more or less knew one another's status. But there are so many people now that it gets confusing.
Ha
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Old 07-30-2008, 01:10 PM   #15
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Hey, what you doing? Trying to make moderator?
Heh.

I like your new avatar.
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Old 07-30-2008, 01:13 PM   #16
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I like your new avatar.
Run with the Dogg

Ha
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Old 07-30-2008, 01:21 PM   #17
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Quote:
Originally Posted by Susan View Post
$304 - HOA
$142 - Property taxes
$166 - Auto/house/jewelry insurance
$735 - Mortgage (will be paid off in 2034)
$774 - Second (which will be paid off on 12/1/2009)
$250 - Car repairs (average for two Audi vehicles)
$108 - Cable
$100 - San Diego Gas & Electric (sometimes lower, sometimes higher)
$600 - Gas (yes, that's right, for premium gas at $4.50/gallon)
$100 - medical insurance
$200 - parking at work
$400 - food out
$600 - food in/paper products/shampoos/other
$400 - Cash for misc stuff (sometimes lower, sometimes higher)
$150 - hair
$1000 - entertainment/clothing/gifts/other (sometimes lower, sometimes higher) for a total of
$6,029 per month
Susan,

Very reasonable for a place like SD.

You're lucky to have such a low mortgage payment and super-low health insurance cost, actually.

Just as a thought, let's say that your retirement expenses would total $5k/mo (60k/yr). That would require a gross income of about $75-80k, considering Fed, State and local tax to net the $60k.

FWIW, keep in mind that many other people tend to view retirement as costing around approx. $30k/yr, so they will view certain items on your list as extravagant.
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Old 07-30-2008, 01:27 PM   #18
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Quote:
Originally Posted by CaseInPoint View Post
Hi Susan,

I've joined this forum recently with similar questions: How can so many people retire early and still be financially independent?

The answer is that, for the most part, many of the "early" retirees are not retiring quite so early, and they are willing to live a lifestyle that borders on poverty. Of course not all, but many.

After a while, you'll also see certain patterns: Small houses that were bought a long, long time ago, no children (or no expectation of supporting children or anyone else for that matter), very few or no purchases beyond the absolute necessities, and ongoing fear of not making it financially as time goes on. The ability to pay for health care is another big concern.

In most cases, so far as I can see, the psychology behind the willingness to live so sparsely always boils down to unwillingness or inability to work. You'll often see people saying (although not in so many words) that they would rather live in poverty than go back to work for a living. The words 'work' and 'job' are often considered dirty words, and productive working people are called "worker bees," "desk jockeys," and plain "stupid."

At the same time there is a support group to reassure each other that living on the edge of poverty is not so bad.

Again, not all early retirees fall into this category, but many will follow these patterns.

So that's the big mystery. Welcome to the forum.
A 2007 poll* on the forum indicated more than 75% of the 267 who responded had net worths in the seven figure range. Add the fact that many also have very nice pension benefits, and I think it shows you are attempting to make a "case-in-point" where the evidence does not offer support.

*Net Worth 2007
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Old 07-30-2008, 01:43 PM   #19
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Susan ,looking at your budget the $250.00 a month for car repairs seems high & of course the $1,000 a month for gifts ,clothes & entertainment . I give a lot of gifts so I know it can add up but I'd try to trim that area to free some money . Also if you really want to travel you'll trim back in other areas to make it happen.
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Old 07-30-2008, 01:47 PM   #20
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the evidence does not offer support.
There you go again - trying to be factual/logical ...

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