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$4,000 a month
Old 07-25-2013, 11:20 AM   #1
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$4,000 a month

I recently read a blog written by an individual named Darrow Kirkpatrick who retired at 50. His blog is called "Can I Retire Yet?"

He cited a figure that most retired couples live on $4,000 a month on average. He even stated that couples that had incomes in 6 figures prior to retiring only spent $4,500 a month on average. I don't recall where he got these statistics but when I read this I remember thinking the source was credible.

I've not retired yet but I am getting dangerously close. I know what my wife and I spend now but there are things in retirement we want to do that will most likely drive up our spending at least in the early years.

With this said, for those of you in retirement, does the $4,000 spending per month seem plausible?
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Old 07-25-2013, 11:25 AM   #2
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You will find people on this site who spend a lot less that $4k per month and those that spend a lot more than $4k. Depends on a variety of factors....mortgage payment, yes or no. Retiree health care...yes or no. I could go on and on.
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Old 07-25-2013, 11:27 AM   #3
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I would be interested as well. also agree spending may increase in the first few years (pent up demand).

I am budgeting for twice that, at least. (includes expenses and discretionary)
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Old 07-25-2013, 11:29 AM   #4
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Quote:
Originally Posted by Brooks Saddle View Post
I recently read a blog written by an individual named Darrow Kirkpatrick who retired at 50. His blog is called "Can I Retire Yet?"

He cited a figure that most retired couples live on $4,000 a month on average. He even stated that couples that had incomes in 6 figures prior to retiring only spent $4,500 a month on average. I don't recall where he got these statistics but when I read this I remember thinking the source was credible.

I've not retired yet but I am getting dangerously close. I know what my wife and I spend now but there are things in retirement we want to do that will most likely drive up our spending at least in the early years.

With this said, for those of you in retirement, does the $4,000 spending per month seem plausible?
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.
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Old 07-25-2013, 11:30 AM   #5
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$4k/month in retirement sounds very plausible to me.
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Old 07-25-2013, 11:33 AM   #6
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As a single person I spend about half of that with home paid off, no other debt, and health insurance from pre-retirement employer. All other things considered, it probably depends on one's lifestyle and there is no real answer. The most common thing I hear is that retirement costs less than they had expected.
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Old 07-25-2013, 11:33 AM   #7
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Because I have no mortgage, and modest tastes, wife and I could live very comfortably on that amount of money once the kids are out of college.
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Old 07-25-2013, 11:43 AM   #8
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While it may satisfy our curiosity to know how the others live, every situation is unique. Some spend a lot more, some a lot less, as an earlier poster noted.

Another question is if one's expenses go up or down after retirement. I think that has been asked before, and if I remember correctly, many spend more due to travel or leisure activities, and having to pay for own health insurance.

In our case, we did not pull the plug abruptly as most people. First, I worked part-time, then my wife retired fully, then I stopped my work. We had been traveling a bit even before full retirement, due to having too much free time compared to working couples. We have been buying our own health insurance for a few years.

I cannot remember exactly what we spent when we were both working full-time, but I suspect it was a bit less. However, other than the health insurance, all other increases are discretionary, and one incurs them only as the budget, aka market, permits.
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Old 07-25-2013, 12:01 PM   #9
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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.
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Old 07-25-2013, 12:11 PM   #10
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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.
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Old 07-25-2013, 12:13 PM   #11
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No, we do not live in an expensive area, and other than having a 2nd home, a gas-guzzling RV, and the love of travel, have few indulgences. If it weren't for the above, I could live well on $50K/yr (after income tax), and be just as happy. No German cars. Fancy restaurants only once per month if even that. I even maintain my own cars.

Ah, a lot of stuff people do is just fluff. If I have to cut back on the above extraneous stuff, I am sure I will not be at all miserable. What makes one miserable is being sick, I tell you.
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Old 07-25-2013, 12:13 PM   #12
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Doing some math, 100K probably comes out to around $70K take home, give or take depending on your state tax rate. Take $54K for expenses out of that, that leaves $16K in savings, including 401K. Sounds a bit high for the average American, but I suppose it's possible for a couple making 100K.

If I had to guess, I'd say that the average is more like $60-66k or 5000-5500 per month, especially if you include the annualized cost of replacing cars and doing major home repairs. A couple who spends $54K/year but replaces 2 cars on average every 5 years taking a hit of $15K per car is really spending $60K.

Not sure what it matters though. I base my own budget on my own real needs and wants. I don't really care if it's typical or not.
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Old 07-25-2013, 12:32 PM   #13
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With the average social security around $1300 I think a lot of couples retire on $2600. So 4k would be no problem for most people unless you are in a high cost area. We live on less that half of 4k here in MO.
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Old 07-25-2013, 01:02 PM   #14
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If the $4000 a month comes from a traditional IRA or 401k it may not even be much for a single person who rents.

Taxes and healthcare can total $1000 a month.
Apartment and utility expenses $1000.
Auto expenses, food, entertainment and everything else?

A $1000000 retirement account may not provide much more than a good lifestyle.
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Old 07-25-2013, 01:09 PM   #15
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By the time I retire in a few years, we will be debt free, and $4K per month is about the minimum that my wife and I could get by on without making any significant life-style changes (assuming that we can get health insurance for <$1500/month). However, we're planning on $6K/month because we want to be able to dine out at a nice restaurant at least once a week, and take occasional short weekend trips. Additionally, we are planning on supplementing our travel budget by $10K/year for the first ten years, but this is discretionary and could be eliminated if need be.
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Old 07-25-2013, 01:34 PM   #16
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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 07-25-2013, 01:46 PM   #17
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Median household income in New Orleans is $37,325 according to census.gov . Orleans Parish QuickFacts from the US Census Bureau

That median income of $37,325/year ($3110/month) includes working people, too.

Often retirees have finished paying off their homes, so that would lower their expenses in comparison with working people.

Most people, ER Forum members excluded of course, are abysmally ignorant (or hiding their heads in a hole?) with respect to the often tremendous differences in cost of living from place to place within the US.
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Old 07-25-2013, 02:06 PM   #18
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I am living just fine on slightly under $2,000 a month (single, no kids, no debts). I pay for my own HI although that will rise a bit once the ACA goes into effect next year. However, I won't mind that because I will be able to return to a broader coverage like the one I got rid of in 2011 after the premiums rose 50% in 2 years. My investment income is around $3,000 per month so if it were $4,000 a month that would be pure gravy.
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Old 07-25-2013, 02:29 PM   #19
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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.
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Old 07-25-2013, 02:32 PM   #20
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Quote:
Originally Posted by Brooks Saddle View Post
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 think the Consumer Expenditure Survey is a great place to start. daylatedollarshort gave you a link to one. It shows the average household 65-74 has 1.9 people and spends about $45,000 per year.

The nice thing about the table is that it has detailed lines (way too much detail in food, IMO) that let you compare categories where you are high or low and think about whether you would want to change that item.

There are more cross-sections here: Consumer Expenditures Survey (CEX)
scroll down to "Additional CE Data Tables" in green, then scroll down to "Cross-Tabulated Tables". Note they are available in xls format.

Coincidentally, when I retired, I thought we could cover all our expenses on $44,000, including FIT. We found that medical costs were much higher than expected.
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