$50.00 per day rule

[Mr._johngalt]

Being new here, perhaps this has been covered.

The $50.00 per day rule was a main centerpiece of
Paul Terhorst's classic on very early retirement.
Even though he wrote the book in the 1980s, I have
found I can still use the rule for planning/budgeting
although I have had to make some adjustments
in my lifestyle. But...............I expected I would need
to do this as I assumed I would have some inflation for the rest of my life. With some creativity (and no frills)
a couple can still live on $50.00 per day, albeit not
necessarily in the style they might prefer. Guess it
depends on how motivated you are to retire. As for me,
I would rather be boiled in my own juices than go back to work.

 

[arrete]

Yeah - you do have to add inflation. In fact on my worst days at work that is exactly what I'd do. Look at my expenses, convert to Terhorstien dollars and tell myself "Yeah! I can do that!".

Other than that. Find work you can stand that doesn't eat your soul. Save. Then save. Then save some more. Look at your budget. Really keep track of what you are spending. That can be a real eye-opener. And hang in there.

I ran into a former collegue from my old job. We're the same age - he and his wife have always made much more than I and DH - they have 1 child - we had 3---- we're retired and he still hates his job. We're willing to live below our means, he isn't. Enough said.

So hang in there. It's doable, and you are the only one who knows how to do it for you.

arrete

 

[Mr._johngalt]

Well, I said you could still do it on $50.00 per day.
I never said that I was doing it I may be atypical
(in lots of ways), but before I read Terhorst and
starting thinking seriously about retirement
and really big life and death issues, I led a
pretty lavish lifestyle. Was never a saver until almost the day I retired for good. In fact, after I semiretired
in 1993, I got a very lucrative job offer almost
immediately. I fell back into my "big spender" ways
right away. So.....................I am lucky that I woke
up and smelled the coffee when I did. Another way
I am atypical was in my compulsive workaholism
(Type A) until the day I decided that I could quit. Went from a man of influence to a man of indolence practically overnight. Ah, when
they told us as youngsters how fast the time would
fly by....................if only we had listened.

 

[patnbj]

With some creativity (and no frills) a couple can still live on $50.00 per day, albeit not necessarily in the style they might prefer.

Just for the heck of it, I added in inflation. Terhorst came up with his figures in the mid-eighties. He said that a couple could retire on $50 a day, assuming they had a portfolio between $400 - $500k. I found that inflation has been running an average ~ 4% between now and then. So in today's dollars a couple would need $560k - $700 and would spend $71 dollars a day.

But I question how relevant those inflated numbers are since said inflation is tied to the US economy. After all, the Terhorsts lived in third world countries for much of their retired lives--countries who are on a completely different economic cycle than US. Also, I don't think that they accounted for US-based health insurance in their budget.

Still as single person, it is interesting that my budget is a not far off from $50 a day, even now.

 

[Mr._johngalt]

Hello again! That's right about the Terhorsts. Not sure
what they are doing now about health insurance but
they spend little time in the US. I was single for about
3 years, from 1998 until 2001 and every time I got
serious about the budget I could still convince myself that the $50.00/day was doable. Currently the health
insurance problem has messed it up. Being the
eternal optimist, I believe that I will eventually solve
that, thus keeping the $50.00 per day goal at least
within striking distance. Stay tuned!

 

[Mr._johngalt]

How many of you fine folks actual keep a regular budget? I did during the "early years" and through the
time I was single. After I remarried in Oct., 2001, I
stopped. Probably due to all the big changes in my
circumstances and general laziness. Of course, I have a
pretty good sense of where I am and what I am spending.
I just don't track it expense by expense and month by month.

 

[arrete]

How many of you fine folks actual keep a regular budget?

I do. I did before I FIREd - in fact that was a large part of getting to FIRE - knowing what I spent money on - makes it easier to LBYM. And I still do (retired 4.5 years) because new hobbies/interests/expenses come my way and I want to keep track of them.

I have recently started rehabilitating birds - this not only involves some startup costs but also recurring costs. I need to keep an eye on that if I don't want to outspend my income.

Elsewhere I believe I've yammered about how expenses change once you are retired (clothing costs way down) and that you didn't think of all the costs you would encounter when you retire - health costs seem to be more than you expect, no matter what you expected.

Besides - I like doing things in Excel - and budgeting works well there.

Most of all - I'm anal.

arrete

 

[Mr._johngalt]

Re. "anal", me too. For example, I habitually project
various "worst case scenarios" just to determine my response/solutions to same. Interesting! I can always
see a way out without going back to work no matter
how gloomy my circumstances. On the other hand,
I always think I can overcome just about anything
with brainpower and willpower. Cocky to the end .

 

[Ted]

The previous two posts should dispel any misconception that retirees lack sexual awareness :.

 

[RedOscar]

How many of you fine folks actual keep a regular budget?

Before retirement, I never maintained a budget. However, over the past 12 years, I kept very detailed records by computer of our expenses and savings.

During the first 18 months of retirement (I'm almost through my 3rd year now) I did not make a budget, but rather I noticed in what ways our expenses had changed. I used that information to develop detailed budgets for 2002 and 2003.

I intend to budget 3.5% of my asset base each year during my 50's. During my 60's I hope to raise that to 4.0%. To date, we have had no problems staying within our forecast. Only time will tell that this plan remains viable for the long run.

Red

 

[txdoc]

To be exact, $50 in 1984 (when Paul retired) = $86.70 in 2002. So, we are talking about $700k - $860k portfolio needed, not a small change.

 

[txdoc]

Quote:
Just for the heck of it, I added in inflation. Terhorst came up with his figures in the mid-eighties. He said that a couple could retire on $50 a day, assuming they had a portfolio between $400 - $500k. I found that inflation has been running an average ~ 4% between now and then. So in today's dollars a couple would need $560k - $700 and would spend $71 dollars a day.
+++++++++++++++++++++++++++++++++++++



To be exact, $50 in 1984 (when Paul retired) = $86.70 in 2002. So, we are talking about $700k - $860k portfolio needed, not a small change.

 

[Mr._johngalt]

I still believe that a couple can live on $50.00
per day without being in a state of deprivation.
I'm not claiming that we do it, only that it can still be done.

 

[patnbj]

To be exact, $50 in 1984 (when Paul retired) = $86.70 in 2002.

Based on what inflation rate? Disagree with me if you want, but please show all your cards.

 

[haha]

Overall our first year retirement expenses with alot of travel were less than $75/day (excluding college expenses for my youngest and car purchases).  Of couse, we have no mortgage, but do have four total in the household to feed, etc.  Very pleased with first year results.... 

GDER, you should be pleased. I live alone, in a paid for house. I have a well, so no water charges. This is a cheap area for heating, and I don't use AC. I didn't make any major purchases, or have any big medical expenses. I didn't go anywhere that required a plane or overnight stay in a hotel. I have one car, paid for. I do pay $400 a month to pay off some CC debt that bears interest at from 1.9% to 3.9%, fixed for life of balance. This was formerly margin debt, that I wanted to get a fixed rate nailed down on. I also pay $325 a month for my own medical insurance.

I consider it to be a good month if I can keep my expenses including the above but excluding income tax at or below $2000. This sometimes happens, but not often. I didn't buy anything other than some CDs and DVDs, and a few incidentals for my drum kit. And adequate but modest gifts. My social life consists of dancing, and playing in a band. I buy a few drinks, and pay some cover charges, but nothing uptown.

I don't have boat, a gym or a church membership to feed. I do feed and care for one dog. I cancelled my cable, even though I really miss football.

I never eat out, yet my food costs for me only, at 150 pounds, average about $450 a month. This is food, not food plus everything thing else that one might buy in supermarket.

I used to keep a careful set of accounts, all skookum with double entry and everything. I looked at all the expenses, and I always came away thinking that short of getting so far away from civilization that there was nothing attractive to do, how could I spend less? I decided that I will live always within my means, if it means tying myself to a tree. But I don't think I will ever volunteer to spend less than I feel that I safely can. I hate to spend money on something that doesn't satisfy, but there is a lot out there that does, and I would hate to put it off until heaven.

Mikey

 

[Mr._johngalt]

Hey Mikey, after I read about your life/budget, even I began to wonder how I do it. What makes the difference is that my wife still works and covers a big
share of the monthly costs. I would like for her to be
able to retire (or at least cut back) but don't see how to
do it right now. I have 3 years until SS and she is 5 years younger, so........................I suppose a couple with a longer term outlook would wait for my SS
before my wife quit working. That would be smart
but 3 years seems like forever to us. Don't have the answer for this one as yet.

 

[haha]

Guys,

Thanks for your supportive input. I was feeling guilty, like everyone but me gets to live in the South of France on just $10 a day, but I have to spend more than that just preventing weight loss!

Have a nice weekend,

Mikey

 

[Mr._johngalt]

Hey GDER, not sweating the small stuff is always good
advice. Now, if we can only identify what really is
"small stuff". Re. depriving yourself, and "llife's too short". We aren't the least bit deprived and tend to eat out and travel quite a bit. However, I consider all
expenses beyond buying the daily paper carefully, and what
cumulative effect they may have down the road. With
us it is a real balancing act, as my wife and I tend to live as if there is no tomorrow while I have to make sure
the ER lifestyle continues in the event the sun does
come up in the morning, after all.

 

[Mr._johngalt]

Re. "not going broke waiting for SS", I was pretty
concerned about that 10 years ago when I left
my workaholic ways behind for ER. Still had a
10 year old at home then. All 3 of my children
(37, 32, 19) are doing well now and I can see the
SS light at the end of my ER tunnel. Soooooooooo,
I can relax a bit on that issue. But, we should all remember what Gilda Radner said, "It's always something!"
So true.