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Old 07-27-2013, 12:09 AM   #81
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Only you know the answer.

It depends on the cost of living in your area, your lifestyle, your fixed costs, and what you plan to do in your retirement.
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Old 07-27-2013, 06:02 AM   #82
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Most recent 8 years of retirement average annual expenses $32K. Based on this article we will be setting $4K a month as a goal for 2014
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Old 07-27-2013, 06:37 AM   #83
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There are a lot of variables to consider, single or married, cost of housing, debt or lack of it, HI and out of pocket medical costs.

Me, I am 56, single, own my home, monthly cost to run it including tax, insurance, cable, utilities etx $800 a month. Self insured with HDHP policy at just over $400 a month. No other debt.

I am spending about $3K a month on life. Still working P/T because I am boring and need a little something to do.

Spending another grand a month would I think feel too indulgent to me, I Semi-ER'd at 51 because of my LBYM nature that I can't shake off.
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Old 07-27-2013, 07:25 AM   #84
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We are not ER'ed. Our expenses (excluding college expenses) over the last 4 years has been about $50K. We have no debts or mortgage payment. I consider our style of living is modest - eating out once a week, one out of state vacation a year, driving two 10-year old+ cars, living in a medium priced suburban home in Midwest. If ER'ed, our expenses will probably increase by the amount for health-care and dental insurance and travel expenses. If we moved to the S.F. Bay Area, the increased cost of living will add another estimated $20K. Living with only $4,000 a month is pretty tough.
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Old 07-27-2013, 08:20 AM   #85
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This is true in some but not all states. In my state, price is the same for a Plan F 65 year old and for a 100 year old.
I did say "most" understanding that these are state based programs.
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Old 07-27-2013, 08:26 AM   #86
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It depends on lot on each individual situation. If you are different from the "average" then it may not apply.

I spend less than half of the 4k/month mentioned. But I never spent 4k/month when I was working making 100K+ year.
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Old 07-27-2013, 08:39 AM   #87
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Still working P/T because I am boring and need a little something to do.
Don't you mean that you are bored? John Peel used to claim that he was the most boring man in the world, but I have a feeling that type of declaration wasn't your intent here
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Old 07-27-2013, 09:21 AM   #88
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For me:

1) Divorced
2) Home paid off
3) Live in high cost area (SF)
4) Former employer subsidizes 1/3 of health insurance costs
5) Total lifestyle cost $4500/month including discretionary spending


Yes, I believe some people can live just fine on $4000/month.
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Old 07-27-2013, 09:34 AM   #89
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Wow, that is still very high. I would imagine the exchanges may provide you some rate relief, along with only paying for 2 instead of 3.
Because I brought up this healthcare topic, I felt that I need to tell some more for people who have not bought their own insurance.

What I saw was the Quicken download from checking and charge cards accounts, and I often did not know the exact breakdown. So, I talked to my wife who manages all the bills, and I have now better knowledge.

The $800/month is for more than health insurance premium. The premium is $520. The difference goes into an HSA account. When we started this policy several years ago, the premium was a lot less, and the monthly HSA deposit was a lot higher. Until my son's and my own serious illness, we never tapped that HSA account, and always paid for doctor visits out of pocket.

So, over the years, that HSA account built up to almost $40K. Now that we have tapped $10K each year for 2 consecutive years, it is now down to less than $20K. That HSA account is off my Quicken list, hence I did not know the exact situation.

Anyway, we used to have our eldest child included in the policy. When she flew the coop, I was surprised to find out that taking her out of the policy saved us little, something like $70-80. Obviously, young'uns' actuarial costs are very low. My younger son just started a new job with good benefits, but there is a delay until his health insurance enrollment. Once I am sure of it, will see what I save by taking him off, but I suspect it will be minimal.

So, my earlier numbers for healthcare cost of $11K/yr for a "good year", and $21K/yr for consecutive bad years are still valid. In fact, it would be higher with dental care included. We are both due for an implant or two each, or a bridge. And we are still a number of years from 65, and the premium has been rising fast with each year.

I am not sure how much PPACA will save us, but I will need to study the new policy very carefully to see if the coverage will be as comprehensive as our current one.
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Old 07-27-2013, 10:02 AM   #90
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Hey all you single folks that can live on 2k a month......what do you do when you need assisted living? You won't be able to afford it on 2k amonth and you won't have any kids to help. Just wondering if you are thinking ahead to age 75 to 85 when health care, assisted living etc. will cost in the 4 to 7k a month range. .....that's what I worry about because I don't want to be a burden, either financially or time wise on my kids.
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Old 07-27-2013, 10:12 AM   #91
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I am single but I do not live on $2K a month, but I do understand the likelihood of having to pay someone to look after me. Hence I have LTCI and critical illness insurance.
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Old 07-27-2013, 10:15 AM   #92
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Hey all you single folks that can live on 2k a month......what do you do when you need assisted living? You won't be able to afford it on 2k amonth and you won't have any kids to help. Just wondering if you are thinking ahead to age 75 to 85 when health care, assisted living etc. will cost in the 4 to 7k a month range. .....that's what I worry about because I don't want to be a burden, either financially or time wise on my kids.
These costs would make the $4000/month in jeopardy.
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Old 07-27-2013, 10:16 AM   #93
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Because I brought up this healthcare topic, I felt that I need to tell some more for people who have not bought their own insurance.

What I saw was the Quicken download from checking and charge cards accounts, and I often did not know the exact breakdown. So, I talked to my wife who manages all the bills, and I have now better knowledge.

The $800/month is for more than health insurance premium. The premium is $520. The difference goes into an HSA account. When we started this policy several years ago, the premium was a lot less, and the monthly HSA deposit was a lot higher. Until my son's and my own serious illness, we never tapped that HSA account, and always paid for doctor visits out of pocket.

So, over the years, that HSA account built up to almost $40K. Now that we have tapped $10K each year for 2 consecutive years, it is now down to less than $20K. That HSA account is off my Quicken list, hence I did not know the exact situation.

Anyway, we used to have our eldest child included in the policy. When she flew the coop, I was surprised to find out that taking her out of the policy saved us little, something like $70-80. Obviously, young'uns' actuarial costs are very low. My younger son just started a new job with good benefits, but there is a delay until his health insurance enrollment. Once I am sure of it, will see what I save by taking him off, but I suspect it will be minimal.

So, my earlier numbers for healthcare cost of $11K/yr for a "good year", and $21K/yr for consecutive bad years are still valid. In fact, it would be higher with dental care included. We are both due for an implant or two each, or a bridge. And we are still a number of years from 65, and the premium has been rising fast with each year.

I am not sure how much PPACA will save us, but I will need to study the new policy very carefully to see if the coverage will be as comprehensive as our current one.
Thanks for the follow up NW, as I always enjoy other peoples "accounting". You, in my opinion, have a safer way than mine, but I am too stingy to view my yearly HSA contribution as a "cost". I view mine as an appreciating asset. Now if I ever start to use it, my attitude will have to change. Not being a smarty pants or anything, but are factoring in your tax savings of the HSA as a reduced cost to your monthly medical expenses, or just treat it as bonus money come tax time? I treat mine as bonus money but my current health premiums are way cheaper than my annual HSA contribution.
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Old 07-27-2013, 11:02 AM   #94
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Hey all you single folks that can live on 2k a month......what do you do when you need assisted living?
Start using SS , pension and higher withdraw. Also purchase LTCI, most won't make it to 85 anyway.

But if I was spending more , how would this help any. That would make things worse.
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Old 07-27-2013, 11:23 AM   #95
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Originally Posted by jerome len View Post
Hey all you single folks that can live on 2k a month......what do you do when you need assisted living? You won't be able to afford it on 2k amonth and you won't have any kids to help. Just wondering if you are thinking ahead to age 75 to 85 when health care, assisted living etc. will cost in the 4 to 7k a month range. .....that's what I worry about because I don't want to be a burden, either financially or time wise on my kids.
As an early retiree, I am generating nearly $3,000 a month in dividend income (not the more erratic cap gain distributions) and that is only from my taxable accounts. As I have mentioned many times in other threads, I have my "reinforcements" waiting for me which include unfettered access to my IRA, my frozen company pension, and Social Security. These are in addition to the current dividend income and tapping into principal in the taxable account (which I have not had to do so it has grown since I ERed). And once I turn 65 I will have access to Medicare which should cost less than anything I will be able to buy in the ACA exchanges even with subsidies. This is why the Fidelity RIP has my wealth growing a lot after I turn 60-65.

I do expect to buy LTCI at some point, though.
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Old 07-27-2013, 11:23 AM   #96
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I did say "most" understanding that these are state based programs.
Yes, I had no intention of arguing with you, just clarifying something for other members. You said most are community based, and then modified that with a clause of age group pricing. If age group pricing is community based, and I suppose that it is since there is no individual underwriting, then all Medicare Supplements are Community based, and some of them define the community by age tiers. At least all that I know about are community based, if people sign up during the limited open enrollment periods.

In a system like mine, unless the insurance company can find a way to wall off a cohort from new entrants, given the shape of the baby boom cohort, new relatively healthy entrants will for a long time act to mitigate the negative effect of aging by the older cohorts. Previously some Ins companies in WA did manage to wall off groups and then let them age into very high rates, but our excellent insurance department put a stop to this, at least for now.


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Old 07-27-2013, 01:48 PM   #97
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Thanks for the follow up NW, as I always enjoy other peoples "accounting". You, in my opinion, have a safer way than mine, but I am too stingy to view my yearly HSA contribution as a "cost". I view mine as an appreciating asset. Now if I ever start to use it, my attitude will have to change. Not being a smarty pants or anything, but are factoring in your tax savings of the HSA as a reduced cost to your monthly medical expenses, or just treat it as bonus money come tax time? I treat mine as bonus money but my current health premiums are way cheaper than my annual HSA contribution.
I regard the HSA as spent on healthcare, as it will be all spent eventually, so do not count it as asset. I consider it advanced payment for healthcare, hence the reason to not track it on Quicken.

It is not appreciating either during the good years that I did not need it, because it is getting 0.6% interest, which is below inflation.

However, once it is depleted (and I hope not!), then it should be counted towards the current year deductible. So, my number of $11K in a good year and $21K in consecutive bad years should be revised to $11K and $18K. For budgeting, I have to remind myself that we have expensive dental work to come, and the above numbers do not include that.

I get no tax preferential treatment on the HSA as a retiree. It is not tax deductible. Workers with access to an HSA set up by an employer contribute to it with before-tax money, then pay no tax when spending it on healthcare.

The above is another thing among the oddities of our tax laws. Health insurance premium of an early retiree is not tax deductible, but healthcare subsidy provided to an employee by his employer is not taxed as income. Similarly, 401k before-tax contribution at megacorps used to be limited to $10K/yr, but some pension plans appear to have much higher limits.

PS. On the other hand, my dividends and cap gains are taxed so little if any. So, I'd better keep my mouth shut!
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Old 07-27-2013, 02:45 PM   #98
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I regard the HSA as spent on healthcare, as it will be all spent eventually, so do not count it as asset. I consider it advanced payment for healthcare, hence the reason to not track it on Quicken.

It is not appreciating either during the good years that I did not need it, because it is getting 0.6% interest, which is below inflation.

However, once it is depleted (and I hope not!), then it should be counted towards the current year deductible. So, my number of $11K in a good year and $21K in consecutive bad years should be revised to $11K and $18K. For budgeting, I have to remind myself that we have expensive dental work to come, and the above numbers do not include that.

I get no tax preferential treatment on the HSA as a retiree. It is not tax deductible. Workers with access to an HSA set up by an employer contribute to it with before-tax money, then pay no tax when spending it on healthcare.

The above is another thing among the oddities of our tax laws. Health insurance premium of an early retiree is not tax deductible, but healthcare subsidy provided to an employee by his employer is not taxed as income. Similarly, 401k before-tax contribution at megacorps used to be limited to $10K/yr, but some pension plans appear to have much higher limits.

PS. On the other hand, my dividends and cap gains are taxed so little if any. So, I'd better keep my mouth shut!
Interesting. I am retired and only draw a pension. Even though it is not considered "earned income", I still get the tax deduction from my HSA, as I have a self directed one. So you currently have no other income other than dividends and cap gains? I did not know that you couldn't use an HSA to reduce taxes from them. I guess I am a little fortunate in that I get to deduct my health premiums from my state income taxes. That rebates me 6% back. That will mean more once I get dumped into Obamacare and have a hefty premium increase next year.
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Old 07-27-2013, 02:58 PM   #99
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So you currently have no other income other than dividends and cap gains?
That is correct. I might do some IRA-to-Roth conversion, and that will be counted as income, but I do not think that changes anything.

My insurance policy and HSA account have always been as self-directed. When I had part-time business income, it was simple to claim the premium off the income. The HSA part, I did not spend the time to figure out the tax law or how to set up the account, so missed out on that tax allowance if it existed.
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Old 07-27-2013, 06:01 PM   #100
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Re: $4000/mo,:
The question of how much, is interesting, and implicit in the discussion would be the obvious factor of inflation. For those who may be interested, here's a "take" on the general subject, but instead of a single number for years of living in retirement, even WITH inflation, I would suggest considering a "Phase II" period for planning later retirement years... thoughts covered in this post:
Sharing 23 years of Frugal Retirement

While using this approach (2 levels of retirement) does not fit easily into planners/calculators, we have found that there can be a dramatic difference in the later years... 75 to 85. Because of this second look at expenses, we are finding that our success rate chances have increased our "covered years", from age 85 to well over age 90.
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