$4,000 a month

As a baseline, consider the living expenses of two real-life couples in their 50′s, no children at home, living on opposite sides of the country. Both have what I would call a “restrained upper-middle-class lifestyle.” Think smaller houses in upscale neighborhoods, gas-efficient vehicles, few big toys or fancy clothes, careful diets, but plenty of frugal fun: road trips, coffee bars, dining out, books and movies. In both cases, minimum monthly expenses sans mortgage (this assumes your house is paid for), come in at a bit over $4,000/month, or $48,000/year.
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Definitely doable for a no-frills lifestyle in the south, though it could never be confused with a "upper-middle-class lifestyle", even a "restrained" one (whatever that means). A lot more difficult where I currently live.
 
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I'm not retired (age 37) and I spend around $2,000 a month. I'm single, no kids, and rent an apartment. On average I invest around $5,000 a month.

If I was retired I'd probably spend about the same as I do now.
 
Brooks Saddle said:
I realize everyone has a unique situation. I live in an area where the cost of living is a little below the national average. Perhaps you live in NYC or San Francisco. Like many my house is paid off while for others this may not be the case. I drive cars a long time and don't spend a lot on them to begin with while your tastes might be imports from Germany. We don't dine out frequently and then it will be a Mexican restaurant or other less expensive menus while some like white table cloth restaurants. I'm not making judgements but merely agreeing each couple has their own unique situation.

I agree there are a lot of variables. The figures cited of $4,000 and $4,500, however, were averages and I just wondered if others thought they seemed somewhat based in reality.
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As many have said, only you can decide that, based on your expenses and lifestyle choices. But others can give their spending amounts in relation to what that provides them. I am single and live on around $3500 a month. I also live in a low cost small town area in Midwest. In retirement I carry a monthly mortgage, child support, and pay for my health insurance. I generally go out once or twice a week with girlfriend. $500 of my monthly expenses revolve around pure miscellaneous "entertainment". I have a yearly golf membership, fly to Vegas 5-6 times a year, travel to USVI once a year, and about a half dozen getaway weekends a year to St. Louis. But the key to all my low cost travel yearly is I let them dictate when to go based on the deals. I broke the Hotwire "code" so I can get a $150-$200 hotel from Westin or Hyatt for $50 when available. I wait patiently for an airfare sale to USVI and then strike. For example I booked a flight to USVI round trip in February for this November from STL for $214 and book housing arrangements through VRBO and bypass the expensive hotels. Last time I got a brand new condo on St. John for $125a night, negotiated down, with no taxes because I paid in cash (St. John is not cheap if you don't know what you are doing). You can have a lot of airfare travel vacations very cheaply if you know what you are doing. I find people generally unsophisticated in their ability to find simple deals while vacationing. Being retired affords you the luxury to find these deals. I drive a vehicle that has almost 200k and simply refuses to break down in any way, so I continue driving it and saving a lot of money.
 
ESRwannabe said:
I'm not retired (age 37) and I spend around $2,000 a month. I'm single, no kids, and rent an apartment. On average I invest around $5,000 a month.

If I was retired I'd probably spend about the same as I do now.
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Have you accounted for health insurance, particularly when you get older but not yet eligible for Medicare?
 
Alan said:
$4k/month in retirement sounds very plausible to me.
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+1 my monthly "paycheck" (automatic withdrawal) is $5k/mo but that includes ~$1.5k/mo for our mortgage, but our property taxes and car/home insurance are in November and we do a special withdrawal for those on top of the monthly "paycheck". But we are trying to scrimp very much at this point.
 
That is the number I came up with as a ballpark minimum for two assuming a paid off home, fully funded 529's and a modest COL area/lifestyle. But healthcare in ten years (w/~15 years to medicare) is the wildcard.
 
Here is one data point for you, I am rapidly approaching 6 years of retirement and here is what Quicken tracking data tells me. I have spent an average of $4010 per month. No budget, I just do what interests me and record all expenses. Quicken tells me in seconds how I'm doing. So far, so good !
 
NW-Bound said:
Have you accounted for health insurance, particularly when you get older but not yet eligible for Medicare?
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No, I haven't tried to figure that out. I don't know if it would even be possible. So I am just assuming I'll be spending similar to what I do now.

The only health problems I have ever had are colds, which I don't even bother going to a doctor for. My parents were the same way until they got into their 60s. Maybe I'll get lucky and remain healthy another few decades.

My current plan is that when I get to 45+ I'll look into ESR. If it doesn't look like it will work out then I'll just keep working full time. I'm not really worried about it. I don't hate working, it would just be nice to have the option to work less.

More than being able to retire early I want to make myself as financially secure as possible. I work in IT and you just never know how things are going to turn out down the road. Due to the pace of change I think it is easier to screw yourself over in this line of work, in comparison to many others.

I'm still completely on the technical side of things. I haven't tried management and from what I've seen I don't think I want to. Its amazing to me watching people that are 50+ behave like children, engaging in petty political battles at the expense of our employer and customers.

I believe that age-wise, I am quickly approaching a point where I want to have a lot of money set aside. So that I have of options.
 
ESRwannabe said:
No, I haven't tried to figure that out. I don't know if it would even be possible. So I am just assuming I'll be spending similar to what I do now.

The only health problems I have ever had are colds, which I don't even bother going to a doctor for...
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For years, I rarely went to my doctor. I would go for an annual checkup every other year, just so that the doctor's office keeps my file and not puts it into storage, or throws it away. I once passed a huge kidney stone myself with no help (photo of stone posted here a few years ago), and no pain medicine. BMI never higher than 25. BP a bit higher than I'd like, but doctor said was fine for someone of my age (57). My blood work, urine test, blah blah blah, the doctor said it was the best he had seen in a while. Never had to take any daily medicine.

Then, 6 months ago, I was diagnosed with a serious illness. The treatment is still on going. Now, I understand why my medical insurance premium is so high, even though my policy has a $10K annual deductible. That $10K out-of-pocket expense, I went through in just a couple of weeks.

Just so younger people know...

PS. Last year, my 23-yr old son, who was still under our policy then, came down with a rare form of internal bacteria infection that could easily cost him his life. He had not been to a doctor since he was 12, and that was just a check up as an introduction. The 3rd time he went to the ER was when they finally obtained the correct diagnosis. Result: 9 days in the hospital, multiple CAT scans, the right cocktail of antibiotics, some minor surgeries, home treatment and home visits by a nurse for follow-ups. Yes, we also went over that $10K deductible in no time at all.

Several infectious-disease specialists scratched their head, and never could explain why he was infected. It just happened. Thanks goodness they found a drug that killed the bug before it killed my son.

The point is that health care cost is the most significant unknown for an early retiree. It's something that I was never concerned with, as a healthy individual and a worker covered by insurance provided by the employer.
 
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That's our plan starting next week.:dance:
No loans,
85% Med coverage for 13 yrs to 65. ($150 mo.)
Prop tax (home & rental) being our largest annual expense.
Made 6 figures for the past 10 yrs, but never used all of it to live on. So, it should be a non issue for us.
Time will tell!
 
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I'm budgeting 24k for healthcare expenses from ages 54-65 for a family of 4 (5 for the first year or two) and although this seems exorbitant, I'd rather be conservative on this. Potentially could get a subsidy thru the ACA. If not, I plan to itemize and deduct healthcare expenses (the excess of 10% on schedule A) since we will have property taxes of about 10k as well.
 
Brooks Saddle said:
I realize everyone has a unique situation. I live in an area where the cost of living is a little below the national average. Perhaps you live in NYC or San Francisco. Like many my house is paid off while for others this may not be the case. I drive cars a long time and don't spend a lot on them to begin with while your tastes might be imports from Germany. We don't dine out frequently and then it will be a Mexican restaurant or other less expensive menus while some like white table cloth restaurants. I'm not making judgements but merely agreeing each couple has their own unique situation.

I agree there are a lot of variables. The figures cited of $4,000 and $4,500, however, were averages and I just wondered if others thought they seemed somewhat based in reality.
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I too read his blog. I am not yet RE, but from observations and curiosity on this same issue my guess is that could match up to the means of living you yourself described. Driving cars 8 years or more and eating well prepared home cooked meals 90% or more of the time etc. $4,000 - $4,500 is in the ballpark unless you like to add expensive travel once a year. Add another $500-$1,000 per month if you want to do that maybe? Others can chime in that actually have retired.


I get the impression that for budget savvy folks that being told by financial advisors to expect to spend 70% or 80% of your current salary in retirement is what confounds us!

If I make $150,000 and save/invest $60,000 per year for our retirement and another $20,000 on kids living exp and college savings, how does that correlate to needing $105,000 or $8,700 per month in retirement?

After taxes now my expenses after kids and investing would leave me in this example with less than $4,000 per month before retirement.
 
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Fascinating to see the difference in the average income/expenditures 65-74 and 75+. $20,000 less per year in income for the latter (with only a .3 difference in household size), while annual expenditures were only $12,000 less per year. Not a good picture.
 
Live And Learn said:
Until age 65, for two people, I have $2,100 a month budgeted for Heathcare alone. After age 65 I have $1,250 per month budgeted for Healthcare. I could retire on $4k / month if I were 65, but not before that.
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Not sure where you got your numbers but my healthcare only cost me $150 per month for Medicare Supplement. Of course they take a little over $100 per month from my SS for Medicare but I never miss that anyway because I never see it. In a few months my wife turns 65 and that is what hers will cost.
I do claim to be an early retiree even though I waited until almost 65 to make the move. I really feel for anyone who makes the exit before age 65 trying to pay for health insurance. Its worth the wait, at least it was for me.
In todays world I would think someone who leaves work at say age 50 needs a lot of money to make ends meet.
I planned for retirement for many years and so far it has been great. Nobody knows what tomorrow will bring. oldtrig
 
Delawaredave5 said:
Greaf info - but looks like costs are averages, not median. I would think median much less.
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That's correct. I think that for the purposes of the OP, who is simply trying to see if $48,000 is "reasonable", knowing that the mean spending is only $44,000 seems like a useful fact. Presumably the median is even lower, so we can say that more than half the families in that age range live on less than $44,000.
 
oldtrig said:
Not sure where you got your numbers but my healthcare only cost me $150 per month for Medicare Supplement. Of course they take a little over $100 per month from my SS for Medicare but oldtrig
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I have been on Medicare fr a few years and my wife has now. Things cost more the older you get. We have traditional Medicare with supplemental policies and Part D. Costs are

Medicare - ~$100/ month each
Supplemental Plan F (not high deductible) - about $200/month each of us
Part D - ~$30/month each of us.

So, under this scenario, which is typical for really good coverage, it costs us roughly $7,920/year.

Now add in our part of drug costs (wife has COPD) and we add about $2500 more annually.

That brings our cost to about $10,420 annually.

So Live and Learn's $1,250/month budget is not far off the track and has a bit of a margin built in.
 
aja8888 said:
....We have traditional Medicare with supplemental policies and Part D. Costs are

Medicare - ~$100/ month each
Supplemental Plan F (not high deductible) - about $200/month each of us
Part D - ~$30/month each of us.

So, under this scenario, which is typical for really good coverage, it costs us roughly $7,920/year.....
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My great aunt's costs were very similar. She paid $213 a month for her Medicare supplement policy and $44 a month for Rx/Part D in addition to her Part B that was deducted from her SS. But beyond that, the insurance company covered virtually everything.
 
Brat said:
Fascinating to see the difference in the average income/expenditures 65-74 and 75+. $20,000 less per year in income for the latter (with only a .3 difference in household size), while annual expenditures were only $12,000 less per year. Not a good picture.
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Good observation. That made me review my retirement income plan for if I should live so long as 75.
 
pb4uski said:
My great aunt's costs were very similar. She paid $213 a month for her Medicare supplement policy and $44 a month for Rx/Part D in addition to her Part B that was deducted from her SS. But beyond that, the insurance company covered virtually everything.
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Believe me, it's worth it to have this coverage at our ages. My wife has a constant battle with breathing and drug costs are high. I am in very good health but had a hip go bad and cost of replacement (by the best orthopedic surgeon in Houston) was zero. Plan F is the best you can get for supplemental coverage and couple that with Medicare and it's all you need.
 
Brat said:
Fascinating to see the difference in the average income/expenditures 65-74 and 75+. $20,000 less per year in income for the latter (with only a .3 difference in household size), while annual expenditures were only $12,000 less per year. Not a good picture.
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yes, interesting. I wonder if the trend in decreased spending from 55-64 vs 64-75 vs 75+ is a result of inadequate retirement planning and necessary spending cuts OR the fact that there is just less to spend on (other than the obvious increase in health care costs). If spending needs are indeed lower, should we use a reduced spending model in FireCalc rather than the conventional 3-4% inflation adjusted SWR all the way to age 95 ?
 
Apex1 said:
yes, interesting. I wonder if the trend in decreased spending from 55-64 vs 64-75 vs 75+ is a result of inadequate retirement planning and necessary spending cuts OR the fact that there is just less to spend on (other than the obvious increase in health care costs). If spending needs are indeed lower, should we use a reduced spending model in FireCalc rather than the conventional 3-4% inflation adjusted SWR all the way to age 95 ?
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(emphasis mine) I'd bet on inadequate retirement planning as the culprit. I am 65 and I have spent more this year than during any year from 55-64. Since I can afford to spend a little more I see no reason why I would want to cut back. It seems to me that there are still plenty of ways to spend money as I grow older. :D
 
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W2R said:
It seems to me that there are still plenty of ways to spend money as I grow older. :D
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Thanks W2R for confirming the obvious :facepalm:..... I was just hoping there was an outside chance that I might be able to fudge my retirement number lower. Time to play the "I'm Canadian, so health care is covered" card.:cool:
 
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We had budgeted 56,000 annual using prev expenses, and I went to part time in feb. we are spending closer to 70k and still have insurance paid for by my company. Not sure if spending will decrease. Travel, food and wine, housing repairs, all higher than I had planned but I've been able to cover with part time work. So it would make sense to try living on the 4k a month for a while and see if it is doable until you cut all your lifelines. I now look at extra play expenses in how many hours I have to work to cover the costs.
 
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