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Old 07-25-2013, 02:39 PM   #21
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My inlaws lived on about 30k/year for years. Until my FIL went into a nursing home.
Helps that they had a paid for house, and paid for "share" of a vacation house (co-owned with siblings)... so they had property taxes on two homes, insurance on two homes, etc.

We're budgeting for about 8k/mo for the first 10 years of retirement. That's because we have minor kids that we'll still need to fund 529's for during that 10 years. Hopefully that will give enough $ to fund their college (public university only). We used our current budget - adjusted for no 401k contributions, no mortgage p&i (we're paying it down and will pay it off when we retire), but increased healthcare insurance. Since we live comfortably now. Take a "big" vacation every other year (europe), etc, we consider that a good starting point for a budget.
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Old 07-25-2013, 02:41 PM   #22
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Darrow is writing about upper income retirees with a paid off home, and subsidized health insurance. Given those parameters I wonder if his numbers were true for most upper income retirees.
How Much Will it Cost You to Live in Retirement? - Can I Retire Yet?
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Old 07-25-2013, 02:41 PM   #23
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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.
Have you gotten quotes?

I've received quotes for continuing my current coverage - family of 4, husband in his 60's (so expensive)... It's less than $1200/month. But this is an HMO... not a cadilac plan.
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Old 07-25-2013, 02:46 PM   #24
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Our property taxes would eat up more than half of that. Health care would probably eat up most of the rest. Not sure how we'd eat or heat the house.


In a low cost of living area I'm sure its doable, as long as you have inexpensive health care.
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Old 07-25-2013, 02:56 PM   #25
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As some have alluded to: HC insurance (and co-pays, etc.) are the key to whether you can retire on a given monthly income. I'm guessing that most of us could adapt to a figure of $2500/mo if we had to - as long as HC was covered outside that figure. Just a generalization, of course.

BUT, in our case, we spend more like three times that ($8k/month) but that does include HC premiums, etc. To downsize to $4K, we would have to 1) move 2) travel less 3) Rarely eat out 4) curtail charitable and "kid" giving. None of those things are we willing to do (unless our fortunes turn around or if the ACA makes my old Megacorp do away with it's highly subsidized retiree HC insurance - which seems very possible.)


Within limits, one can adapt to very low income levels and still lead a life better than 90+% of the world. As income goes down, "programs" (e.g., food stamps) open up and taxes disappear (or become "credits"). So, toward the lower end of typical living standards, your money goes a lot further. At $4k/mo, you are likely not able to avail yourself of programs, but your taxes should be minimal if you pick your state wisely.

As in everything, YMMV.
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Old 07-25-2013, 02:57 PM   #26
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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.
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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Old 07-25-2013, 03:04 PM   #27
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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.
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Old 07-25-2013, 03:04 PM   #28
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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.
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.
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Old 07-25-2013, 03:39 PM   #29
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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.
Have you accounted for health insurance, particularly when you get older but not yet eligible for Medicare?
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Old 07-25-2013, 03:43 PM   #30
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$4k/month in retirement sounds very plausible to me.
+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.
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Old 07-25-2013, 04:19 PM   #31
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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.
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Old 07-25-2013, 04:24 PM   #32
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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 !
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Old 07-25-2013, 06:34 PM   #33
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Have you accounted for health insurance, particularly when you get older but not yet eligible for Medicare?
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.
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Old 07-25-2013, 06:47 PM   #34
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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...
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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Old 07-25-2013, 09:31 PM   #35
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You can check out the Consumer Expenditure Survey by age for averages -

http://www.bls.gov/cex/2011/Standard/age.pdf

The median household income in the U.S. is around ~50K.
Greaf info - but looks like costs are averages, not median. I would think median much less.
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Old 07-25-2013, 09:51 PM   #36
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Greaf info - but looks like costs are averages, not median. I would think median much less.
Have you seen the elder index? -It is not median, but purports to show the minimum amounts needed in retirement, so it is not really average either, but some sort of number derived from other numbers. I've noticed many of the studies of this type do contradict each other.

Elder Index
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Old 07-25-2013, 09:55 PM   #37
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That's our plan starting next week.
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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Old 07-25-2013, 10:15 PM   #38
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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.
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Old 07-25-2013, 10:25 PM   #39
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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.
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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Old 07-25-2013, 10:37 PM   #40
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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.
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