Can I retire now?

[Looking4Ward]

Family of three, $300K paid for home. We try to limit our spending to $3K a month. In reality:

Property taxes: $750
Electric: $150
Water: $100
Gas: $40
Cable/Internet: $75
Home insurance: $65
HOA: $40
Car insurance: $75
Fuel: $300
Food: $500

The remaining $905 (or $10,860 per year) goes towards rare eating-out and a couple of week long vacations per year.

CapEx items like car replacements and major home repairs obviously are not included but we have managed to save thousands on such things because (for now) I am able to do them myself.

I did not include HC because currently DW's job covers that. If we didn't have that, it would mean she wasn't working and we'd most likely be eligible for ACA subsidies anyway.

Can it be done? I think so. But it takes an awful lot of work.

 

[Fermion]

Family of three, $300K paid for home. We try to limit our spending to $3K a month. In reality:

Property taxes: $750
Electric: $150
Water: $100
Gas: $40
Cable/Internet: $75
Home insurance: $65
HOA: $40
Car insurance: $75
Fuel: $300
Food: $500

The remaining $905 (or $10,860 per year) goes towards rare eating-out and a couple of week long vacations per year.

CapEx items like car replacements and major home repairs obviously are not included but we have managed to save thousands on such things because (for now) I am able to do them myself.

I did not include HC because currently DW's job covers that. If we didn't have that, it would mean she wasn't working and we'd most likely be eligible for ACA subsidies anyway.

Can it be done? I think so. But it takes an awful lot of work.

$9000 in property tax on a $300K home? They are seriously charging you 3% of your home's value per year just for you to live there? I hope the local school system enjoys their brand new I-pads and school bus with hot tub.

 

[flyingaway]

Look like YOU can retire. The situation will be better if your spouse does not retire. I disagree with some other people here, I think a family of 4 can live on $36K. When I was a graduate student, a family of 3 of us lived on a $12K stipend in Arlington, VA, and we did not eat cat food and was not on any government aids.

By the way, what do you plan to do at 43 without working?

 

[Looking4Ward]

$9000 in property tax on a $300K home? They are seriously charging you 3% of your home's value per year just for you to live there? I hope the local school system enjoys their brand new I-pads and school bus with hot tub.

Yes. Looking at the 2013 property tax breakdown, between the city, county, school, hospital district, MUD, community college and EMS/Fire it's 3.11% of appraised value.

The schools have Ipads but no hot tubs yet. And they certainly don't have a sterling reputation in regards to quality of education.

But property taxes are an area we could reduce if we needed to by selling and buying a much lower valued home.

We could even defer them when one of us reaches 65; the state will not collect them but instead let them accrue at 8% interest per year. The bill then comes due when the property changes hands.

There is a joke in Texas that nobody really owns their home, they just rent it from the state.

 

[Totoro]

There is a joke in Texas that nobody really owns their home, they just rent it from the state.

At 3% you might as well. Quite shocked by that I must say.

Then again, you don't have state income taxes in Texas right?

 

[Cobra9777]

At 3% you might as well. Quite shocked by that I must say.

Then again, you don't have state income taxes in Texas right?

Austin is higher than most. The statewide average in Texas is just over 2%. Yes, Texas has no income tax. So it's a great place to have a high income, but not a great place to own lots of property.

Even so, considering all state and local taxes, Texas usually ranks among the top 5 states for lowest taxes, generally about 25% below the national average.

 

[bulbar]

I'm absolutely baffled and impressed by families of 4 that can live this cheap. I'm embarrased to say that we spend over $120k per year for our family of 4. Two kids in high school. We spend probably $1,200 a month just on groceries alone. Then there's car insurance for the kids, gasoline, etc. $8k/yr mortgage. 2 cats and a dog that probably add up in vet bills. old house that requires maint. No doubt we spend more than we should, we do take decent vacations for example, but we're not extravagant. We live in Houston.

 

[2B]

Yes, Texas has no income tax. So it's a great place to have a high income, but not a great place to own lots of property.

Unless you have an ag exemption and then you pay next to nothing. Anyone that owns any property large enough to have livestock have them just to get the ag exemption.

Texas has a nominal 8.25% sales tax (including local portion that a couple places don't fully implement) and property taxes from hell. The only nice thing is that a typical $350,000 house in most metro areas would sell for several times above that in similar areas in Cali, NJ, MA etc.

 

[LARS]

I do find these kinds of debates (level of spending/thrift) at some level humorous. For me personally, I would have never ER'ed if I had to manage my spending aggressively. The point to me of ER is to enjoy myself/life as opposed to simply being able to live/exist without working. Had I not had enough for ER on the terms that I wanted, but had hated my job, I would have used my savings to subsidize a line of work I could enjoy (i.e. take a lower paying job and let saving subsidize lifestyle).

 

[eytonxav]

I do find these kinds of debates (level of spending/thrift) at some level humorous. For me personally, I would have never ER'ed if I had to manage my spending aggressively. The point to me of ER is to enjoy myself/life as opposed to simply being able to live/exist without working. Had I not had enough for ER on the terms that I wanted, but had hated my job, I would have used my savings to subsidize a line of work I could enjoy (i.e. take a lower paying job and let saving subsidize lifestyle).

That was my original point, how can anyone that has $151K after tax income limit their lifestyle to $36K per year and look to retire early on that amount with a family of 4. To me, that would take incredible discipline and I for one could never live or face a rather long retirement with that $ constraint. I also suspect that some of the expense numbers being mentioned in this thread may not be all inclusive of all "actual" expenses, but no point debating that further.

 

[Live And Learn]

I do find these kinds of debates (level of spending/thrift) at some level humorous. For me personally, I would have never ER'ed if I had to manage my spending aggressively. The point to me of ER is to enjoy myself/life as opposed to simply being able to live/exist without working. Had I not had enough for ER on the terms that I wanted, but had hated my job, I would have used my savings to subsidize a line of work I could enjoy (i.e. take a lower paying job and let saving subsidize lifestyle).

It's all about priorities. I once had a realtor tell me "everything in life is a compromise" and I see that everywhere I look.

For some, time is the thing they value most, and they would prefer to be home with their kids, enjoying low cost activities with them, then keep working. For others, they want their retirement to be a time for great travel. Some go for something in between.

I do admire folks with low cost budgets. The one posted here looks very reasonable but my budget for two (excluding HC) is $70k (no mortgage, no other debt and a travel budget of $5k / year).

 

[Looking4Ward]

Austin is higher than most. The statewide average in Texas is just over 2%. Yes, Texas has no income tax. So it's a great place to have a high income, but not a great place to own lots of property.

Even so, considering all state and local taxes, Texas usually ranks among the top 5 states for lowest taxes, generally about 25% below the national average.

While we aren't in Austin proper (about 20 miles outside of Austin), yes - Austin is expensive.

But I was in the Fort Lauderdale/Boca Raton/Miami area for a week last month and did some extensive comparisons because we were entertaining the thought of moving to Florida.

I was shocked, as I always believed that Florida was comparable to Texas.

While property taxes were lower, comparable homes in comparable neighborhoods cost much more; home and auto insurance was almost triple what we currently pay. I'm betting utilities are much higher as well.

Gas was $3.09 here and $3.55 there.

Groceries? I took pictures because I couldn't believe the difference. While Walmart seems to do a pretty good job on keeping the price of dry goods consistent among different regions of the country (pasta, sauces, cereal were exactly the same price), milk was $4.35 a gallon (it's $2.98 here). Meat, dairy, produce and baked goods (bread) were all much higher and the produce couldn't compare in terms of freshness. I suppose there are advantages to being right up the interstate from Mexico where a lot of our tomatoes and other vegetables come from.

I've since been told that I was looking at one of the most expensive areas of Florida, a point that seems to bear evidence that one's acceptance of whether or not another's claims to be able to live on a certain amount of $$ each month can definitely be clouded by local conditions.

 

[Live And Learn]

I was shocked, as I always believed that Florida was comparable to Texas.

While property taxes were lower, comparable homes in comparable neighborhoods cost much more; home and auto insurance was almost triple what we currently pay. I'm betting utilities are much higher as well.

Gas was $3.09 here and $3.55 there.

Groceries? I took pictures because I couldn't believe the difference. While Walmart seems to do a pretty good job on keeping the price of dry goods consistent among different regions of the country (pasta, sauces, cereal were exactly the same price), milk was $4.35 a gallon (it's $2.98 here). Meat, dairy, produce and baked goods (bread) were all much higher and the produce couldn't compare in terms of freshness. I suppose there are advantages to being right up the interstate from Mexico where a lot of our tomatoes and other vegetables come from.

I've since been told that I was looking at one of the most expensive areas of Florida, a point that seems to bear evidence that one's acceptance of whether or not another's claims to be able to live on a certain amount of $$ each month can definitely be clouded by local conditions.

I am on the other coast near Tampa and the prices you quoted above are similar to what we have here. Homeowners insurance went through the roof after the 2004 season. Don't let anyone fool you, its expensive to live in paradise, but you can find good sales and manage your expenses if you take the effort.

 

[RobLJ]

With kids at college age and in their early 40s, the OP's spending budget is a big concern but anything is possible. Of course semi-retiring mid50s seems early, for myself. Everyone's circumstances differ.
We're similar in investment assets and a paid off house but more than 10 years older. DW will continue working for a few years next year when we move to the PNW and I'll work PT and draw from retirement while DW's continue to accrue (one hopes). I'll qualify for retirement health coverage and can draw from retirement plan, which is a big factor. We're planning an aspirational budget of 100k/year largely to fund a lot of travel and contingencies to support DM; about half that is the survival budget.
Barring a market collapse, after a few years of semi-retirement, I plan to shift to full retirement and DW to partial/consulting, then full retirement for DW in about 5-6 years.
Everyone's circumstances differ.

 

[dallas27]

That was my original point, how can anyone that has $151K after tax income limit their lifestyle to $36K per year and look to retire early on that amount with a family of 4. To me, that would take incredible discipline and I for one could never live or face a rather long retirement with that $ constraint. I also suspect that some of the expense numbers being mentioned in this thread may not be all inclusive of all "actual" expenses, but no point debating that further.

Pretty much my numbers. Not counting mortgage. I pay my savings accounts first, and try to make due with whats left.

I do not have the family of 4 though. However, i find it strange that people are including paying fir their kids insurance and gas. I had to work and pay my parents those costs if i wanted access.


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[Rustic23]

Remember that deferred tax number of 8% is simple interest not compound. Still it is a choice of who is going to spend the money you or your kids. We currently pay the tax, but keep the deferment in sight in case we would have to use it.

 

[DallasFH]

I try really hard but could not do this even $45K we could not manage. But if we really have to I am sure we can.

Not skeptical, but very curious. I would like to know how to live on $36K/year with a family of 4, in a $350K house, and not eat dog food.

Also, the discipline to have a $151K after tax income and be able to limit lifestyle to $36K is amazing. How many on this forum could duplicate that feat?