$4,000 a month

[gomo]

Our expenses for the last twelve months were $2,333 (married, me 38 wife 35, no kids, paid for house, two vacations). That does not include health insurance since my wife is still working. She's trying stick it out for four more years.

I recently got a quote for health insurance of $203 per month with $5,000 / $7,500 deductible.

I stopped working in early July 2012 and our expenses have gone down about $200 per month with fuel saving and no gym membership. The biggest savings has come from estimated tax savings of about $560 per month. We were paying quarterly estimated taxes of $1050 federal, $750 state and $250 city. The federal and state taxes were because of our dividends and the city tax was the lack of the city we live in giving credit for tax paid to the city I worked in. Now since of favorable federal tax on qualified dividends, 0% if you stay under the 25% tax bracket, we are no longer paying the fed tax and our state tax has dropped to $350 per quarter. By the way, our dividends should come in about $58,000 this year.

So, we could live off $4,000 since we are living off less now. It all depends on your personal wants and needs. Right now all of our needs our met and our wants our few.

 

[daylatedollarshort]

We cut a lot off our expenses these past few years from getting sustainable living books from the library. We cut our energy usage by more than half just from simple stuff - LED bulbs, cooking with small appliances instead of built ins, using drying racks, weather stripping, solar lights outside, etc.

For water we put in low flow shower heads and will eventually get rid of the lawn and plant native plants. So there will be no lawn to mow or water. Some of our neighbors have replaced their lawns with edible landscapes. For health care we turn to things like massage, yoga and herbs for anything minor before going to the doctor.

With our expenses lower we were able to drop disability and life insurance. We limited the use of disposable items except for toilet paper and made our own cleaning supplies. We make more food from scratch. I bought reusable bags for produce and sandwiches instead of using ziplocs.

Going green and somewhat anti-consumer might not be for everyone, but it really helped cut our expenses. We are sorry we didn't do this decades ago. We could have saved quite a bit more over the years.

We also compared our budget to the Consumer Expenditure Survey categories line by line to identify areas where our was still high. We kept finding things we could eliminate or reduce for $10 or $100 a month. Every $10 a month cut meant needing $4,800 less in a total 40 year retirement savings and every $100 cut meant needing $48K less.

 

[Independent]

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.

I'm not as confident in the CEX income data as in their spending data. The survey is designed to track spending.
I notice that the younger group has .6 workers, while the older has .3.
The big difference in income is in "wages and salaries" and in "self employment income".
But, they don't show a line for "pension", maybe that's included with wages.
Notice that the SS income is nearly the same.

I can believe that older people are more squeezed. Some of them have non-COLA'd pensions that have been shrinking. And, they've had more time to spend down assets.

 

[brett]

It has been an average of $6K month after tax for us over the past three years. No debt...so this is all consumption.

We do not have the heavy burden of health insurance costs (Canada).

We have been travelling quite a bit and intend to do more.

 

[pb4uski]

.....We limited the use of disposable items except for toilet paper ....

Well, my! You still use disposable toilet paper? How gauche! You obviously have a lot to learn from the truly frugal.

Family cloth: would you go toilet paper-free? | Offbeat Home

Just kidding, you're doing great.

 

[militaryman]

I do my parents taxes and know they are living off of $2333 per month and have been for many years at about that rate
They have a paid for home and get help from State?County with Electric bill and Prop Taxes are reduced because of low income.

I pickup their phone bills (including cell) but don't think they get any other assistance.

They have little savings ( under 5K) but somehow make it ok

Also out of the 2333/mo come $433 for their health ins premiums.

And another amount for a dental plan

 

[NW-Bound]

I just looked at my Quicken screen, which told me my health care cost was $10,800 for the last 12 months, of that only $900 was for dental care.

The above did not include the $10K annual deductible, which I spent this year out of an account maintained just for that. When that account is depleted, and it may, then my medical expenses will jump up to $20K+ a year.

But if I stay so sick, then the extra medical expense is canceled out by reduced expenses caused by inability to travel. See how that works out?

 

[NW-Bound]

Regarding the reduced spending model by Bernicke, I should seek out and read the original article.

Consider retiree A who cuts his expenses from $50K to $30K, vs. retiree B who goes from $100K down to $70K. We can see one's cutback is likely to include discretionary expenses, while the other is not.

Bernicke's model may be just the average model, and does not make a distinction for the reason of the cutback. Does anyone here know?

 

[aja8888]

I just looked at my Quicken screen, which told me my health care cost was $10,800 for the last 12 months, of that only $900 is for dental care.

The above did not include the $10K annual deductible, which I spent this year out of an account maintained just for that. When that account is depleted, and it may, then my medical expenses will jump up to $20K+ a year.

But if I stay so sick, then the extra medical expense is canceled out by reduced expenses caused by inability to travel. See how that works out?

Actually, if you get and stay sick enough, you won't even need your car or car insurance!

 

[NW-Bound]

Hey, thanks for savings tips!

Would still need to keep one car for my wife to drop off/pick up from the hospital. I guess the other 2 cars and the RV can go.

 

[Mulligan]

I just looked at my Quicken screen, which told me my health care cost was $10,800 for the last 12 months, of that only $900 was for dental care.

The above did not include the $10K annual deductible, which I spent this year out of an account maintained just for that. When that account is depleted, and it may, then my medical expenses will jump up to $20K+ a year.

But if I stay so sick, then the extra medical expense is canceled out by reduced expenses caused by inability to travel. See how that works out?

Do I understand the math correctly, NW? Your premiums alone then were a little under $10k, because your total cost wasn't including paying for your deductible? I hope I am misunderstanding how this works because that would be over $800 a month for a catastrophic health plan. And BTW- May your good health return so you can spend that money on travel instead of healthcare!

 

[NW-Bound]

...that would be over $800 a month for a catastrophic health plan...

I looked again, and there were a few other items like eye care and things that are health related but not covered by insurance.

So, a bit less than $800/month for premium for a couple, plus a 24-yr old son (who will be off it soon, after getting a nice job with benefits). We need to call to see what reduction we will get. Probably not much.

After the $10K deductible, the insurer pays 100%. And as I found out, its coverage is quite comprehensive, and I think other plans may balk at some expenses that are incurred for my convenience and comfort.

So, I have stopped complaining about that premium.

PS. I have had this policy for a few years (5 or 6?). Then and now, I did not see any insurer offering any plan significantly less expensive, nor any plan that required underwriting which we did not mind as we were all healthy then. The only thing they required was continuity of insurance which we had always maintained.

 

[Mulligan]

I looked again, and there were a few other items like eye care and things that are health related but not covered by insurance.

So, a bit less than $800/month for premium for a couple, plus a 24-yr old son (who will be off it soon, after getting a nice job with benefits). We need to call to see what reduction we will get. Probably not much.

After the $10K deductible, the insurer pays 100%. And as I found out, its coverage is quite comprehensive, and I think other plans may balk at some expenses that are incurred for my convenience and comfort.

So, I have stopped complaining about that premium.

PS. I have had this policy for a few years (5 or 6?). Then and now, I did not see any insurer offering any plan significantly less expensive, nor any plan that required underwriting which we did not mind as we were all healthy then. The only thing they required was continuity of insurance which we had always maintained.

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.

 

[daylatedollarshort]

Well, my! You still use disposable toilet paper? How gauche! You obviously have a lot to learn from the truly frugal.

Family cloth: would you go toilet paper-free? | Offbeat Home

Just kidding, you're doing great.

I think I'm going to stop short of not using disposable toilet paper. Or even raising my own food or having backyard goats.

But for me the light bulb went on a few years ago when I picked up a homesteading magazine visiting someone on a small ranch. I realized the off grid homesteaders in the magazine were living on next to nothing and had a lot less stress and were getting more family time, sun shine and exercise than we were. But that seemed like a bit too much exercise. We didn't want to live like the Amish.

After that I found out more about sustainable living / minimalist ideas, reread Your Money or Your Life, and we've been intrigued ever since. Between paying less taxes from no longer having a W2 job (fewer deductions than our small business generates) and cutting living expenses we have cut six figures off our run rate.

I am always a bit surprised here at the people who really seem to hate their jobs but work one more year instead of cutting expenses. A year is a long time.

 

[pb4uski]

Actually, having a small vegetable garden can save a fair amount if you happen to like such "work". I despise gardening since dear old Dad forced me to help him with the garden when I was young, but DW love to get dirty so we get a lot of nice lettue and vegetables over the course of the season.

We also know a number of people how have a few chickens for enjoyment and eggs. DW would love to get some chickens, but thus far my protestations that it would crimp our ability to travel have been successful.

 

[NW-Bound]

We have always grown something, but it is for the enjoyment, and for the little physical exercise that it takes.

I have never tried to figure out the financial aspect of it, but suspect that after the cost of water and fertilizer we lose money. There is so much cheap veggie brought up from Mexico (I think, but it could be from Yuma or the Imperial Valley, CA), that the prices are ridiculous.

Examples of what $1 gets you: 5lbs of cantaloupe, or 3 lbs of cabbage, or 2lbs of plum, or 3lbs of tomato. How can I grow that amount for $1?

Anyway, to tie it to the $4K/month topic, one needs to live in a lower-cost-of-living-area, which can be in the suburb of a metropolitan area. Food is more expensive in the rural mountain area of my 2nd home. We've always brought food up from the flat-land home.

PS. Edit to avoid confusion.

 

[pb4uski]

Examples of what $1 gets you: 5lbs of cantaloupe, 3 lbs of cabbage, 2lbs of plum, 3lbs of tomato. How can I grow that amount for $1?...

Not that it matters but out of curiosity, is that for each item or for the lot? (I assume you mean each item).

With some creative cooking I would think you could make a food budget go a long way (and the same would apply to people on SNAP/food stamps).

 

[NW-Bound]

No, farmers cannot be squeezed that hard.

 

[Meadbh]

I could just about live on $4000 a month if I didn't have a car loan. Two more years and that will be paid off! With an interest rate of 0.99%, financing the car was the obvious choice.

 

[explanade]

There are people in rural areas who hunt their food all the time. Not big game but smaller animals.

Some are even said to check out roadkill.

That's minimalism.

As for the topic on hand, wasn't ObGYN trying to spend $48k or $4k a month and having a difficult time? Obviously must not include housing expenses.

 

[oldtrig]

The way I understand supplements is this. If you wait until say 70 and buy one you will pay more than if you enroll at 65. The only increase in mine is based on inflation not age because I enrolled at age 65. No way I could afford what one posted and no mine will not go up just because I get older. It was explained to me pretty good when I signed up. If I were to have to pay $1200 per month I would just cancel it and take a chance. I refuse to give my retirement income to insurance companies. I really have thought about just canceling my home insurance and just insure myself. I took a chance for 24 years and did not have garage liability when I owned a business. It was just more than I could pay. I lucked out and never once had a problem and look at the money I saved. We gamble everyday so why not take a few chances on insurance. You can be ripped up if you let them.

 

[aja8888]

The way I understand supplements is this. If you wait until say 70 and buy one you will pay more than if you enroll at 65. The only increase in mine is based on inflation not age because I enrolled at age 65. No way I could afford what one posted and no mine will not go up just because I get older. It was explained to me pretty good when I signed up. If I were to have to pay $1200 per month I would just cancel it and take a chance. I refuse to give my retirement income to insurance companies. I really have thought about just canceling my home insurance and just insure myself. I took a chance for 24 years and did not have garage liability when I owned a business. It was just more than I could pay. I lucked out and never once had a problem and look at the money I saved. We gamble everyday so why not take a few chances on insurance. You can be ripped up if you let them.

You have to choose to buy supplemental medical insurance within a short time after you sign on to Medicare. I'm not sure if you can wait a few years and buy it then without a medical evaluation. I have had my policy for 5 years. Premiums are community based.

Having no insurance late in life may not be a wise choice. You certainly can go without homeowner's insurance, but you better hope someone does not slip and fall on your property and sue you. Or if your dog bites some kid.

 

[MDJO]

For us I do not see it. Our planning is for 8333/month (basically 100K year), in the DC-MD-VA area which is not low cost. This month has been another "practice run" for a retirement living month. Our projected "fixed" expenses alone (mortgage, state/federal taxes, property taxes, health insurance premiums, auto insurance premiums) leave very little room for 4K a month. Now we do still have one child who is 18 so that is a factor in the health/auto premiums cost.

I have the same budget, although we don't live in a high cost area. I've actually budgeted for $86,000 per year but rounded up to $100 K. Just retired at the beginning of July at 59 1/2 so we'll see how it goes.

 

[Mulligan]

The way I understand supplements is this. If you wait until say 70 and buy one you will pay more than if you enroll at 65. The only increase in mine is based on inflation not age because I enrolled at age 65. No way I could afford what one posted and no mine will not go up just because I get older. It was explained to me pretty good when I signed up. If I were to have to pay $1200 per month I would just cancel it and take a chance. I refuse to give my retirement income to insurance companies. I really have thought about just canceling my home insurance and just insure myself. I took a chance for 24 years and did not have garage liability when I owned a business. It was just more than I could pay. I lucked out and never once had a problem and look at the money I saved. We gamble everyday so why not take a few chances on insurance. You can be ripped up if you let them.

I have the same opinion concerning insurance, except on health. I have a high deductible now and am being rewarded for it. But when I turn 65, I will load up on the supplementals and pay. I couldn't sleep at night without homeowners insurance, but only carry liability on car. I never spent a penny on life or disability insurance. I figured if they are a profitable insurance company and are willing to make a big bet that I live and won't get hurt, well I am gonna be on their side of that bet. Ditto with LTC insurance, too.

 

[bmcgonig]

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.

I'm yet unretired and have been trying to nail down a budget line item for healthcare after 65. Would it be ok to assume then that for a single, 4k/yr would be sufficient or would some suggest more?