How much do you live on?

[Free To Canoe]

Amazing. Tell us how the two of you live on less than 9 cents a day, please!

I am so glad you have taken an interest!
You can read about in my new book: How To Retire On 9 Cents per Day.
Now available at Amazon.com.

Free to canoe

 

[REWahoo]

You can read about in my new book: How To Retire On 9 Cents per Day.
Now available at Amazon.com.

Let me guess: You only need to sell three a year to cover your annual living expenses...

 

[chemist]

Boy am I an outlier on this one.

Me too Danmar. We scrape by on $140K a year now that the mortgage is paid off. I am always amazed on what people are able to live on. I guess I am disadvantaged by living in the Northeast with a wife who shows horses.

 

[REWahoo]

We scrape by on $140K a year now that the mortgage is paid off. I am always amazed on what people are able to live on. I guess I am disadvantaged by living in the Northeast with a wife who shows horses.

Wow. What does she show them that costs so dang much?

 

[HFWR]

Wow. What does she show them that costs so dang much?

Been out of the market a while, eh?

 

[lets-retire]

Me too Danmar. We scrape by on $140K a year now that the mortgage is paid off. I am always amazed on what people are able to live on. I guess I am disadvantaged by living in the Northeast with a wife who shows horses.

I'm glad I don't live up there. Even with an expensive mortgage and a kid in private school I don't spend that much.

 

[NW-Bound]

I am happy with our living standard now. It is something I should be able to afford easily, barring the potential stratospheric rise of health care costs. If I have twice the means, I think I can learn to spend more. As I wrote earlier, I don't think that ability would be too difficult to acquire. But if I were to spend twice what I do now, would I be twice as happy? Or half as unhappy as I sometimes find myself to be? I doubt it, but I would spend more as a way to "spread the wealth", in addition to giving more to charity.

 

[haha]

I doubt it, but I would spend more as a way to "spread the wealth", in addition to giving more to charity.

You are a wonderfully generous, public spirited man.

Ha

 

[kevink]

I guess we're another kind of outlier, living on well under 2K per month for a couple. Only possible 'cause we live full-time in Mexico, albeit in a costly (due to many fellow gringos) area. Doing our best to make it on 3% SWR from a conservatively invested portfolio hard hit by the '08 meltdown - and still a long way from SS, with no pension or megacorp anything.

Health insurance @$600 per year for the two of us, good out-of-pocket care @ about 10 cents on the dollar, we rent rather than own (but property taxes here are ~$200 on a 300K house), food 1/3 of U.S. prices. We'd still prefer low-cost living in the U.S., but the health care and insurance situation and poor job market made this an okay Plan B. Lots of respect to all who have done and planned better.

 

[Onward]

Only possible 'cause we live full-time in Mexico, albeit in a costly (due to many fellow gringos) area.

kevin, are you in Chapala?

 

[52andout]

I've been watching this poll with interest and what it boils down to is that it doesn't matter what someone else lives on. It matters what you need to live a happy life. The only way to know this is to track every penny you spend for several years. Then add whatever taxes you would pay on top of that, as well as any change in health care costs. Add any travel or hobby costs, subtract commuting or work costs to get your best estimate.

We spend about the same as before retirement, but have swapped out commuting costs for travel and hobby costs. since our health care is increasing 68% this year I am thankful we did so much tracking and built in a healthy cushion.

 

[scrabbler1]

I've been watching this poll with interest and what it boils down to is that it doesn't matter what someone else lives on. It matters what you need to live a happy life. The only way to know this is to track every penny you spend for several years. Then add whatever taxes you would pay on top of that, as well as any change in health care costs. Add any travel or hobby costs, subtract commuting or work costs to get your best estimate.

We spend about the same as before retirement, but have swapped out commuting costs for travel and hobby costs. since our health care is increasing 68% this year I am thankful we did so much tracking and built in a healthy cushion.

I don't track every penny I spend, choosing instead to bundle the smaller ones into broader categories (i.e. I keep track of ATM cash withdrawals but not what I spend the cash on).

When creating my retirement spreadsheet, I noticed that in the expenses part I was for the most part swapping my commutation expenses and SS taxes for added medical (HI) costs. My cash expenses dropped slightly because the cost of expanding my hobbies one night a week was slightly less than the cost of buying lunch when I was working.

Your last point about building in a cushion (i.e. surplus) to my ER budget can't be overstated. This gives me peace of mind in case I have some unforseen expenses, a rise in existing expenses, or an unexpected drop in dividend income.

 

[Birdie Num Nums]

... The only way to know this is to track every penny you spend for several years. Then add whatever taxes you would pay on top of that, as well as any change in health care costs.

I am assuming you are referring to income taxes. If not, please ignore the following response.

Why would I need to add income taxes to the calculation of my annual expenses? Apart from interest/dividends that I hope to reap from my nest egg, and the resultant income tax I'll pay on that, such taxes are not an expense to me, particularly since I ER'd and no longer make as much as I did.

Let's pretend I have now looked over my past few years of expenses, figured in the new expense of individual health insurance premiums and other costs, and am predicting $30K annual expenses for the foreseeable future--which does not include any income taxes in my list of expenses. Let's also pretend that whether I plan to work part-time or have only interest/dividends as income, I'll pay taxes only on that extra income. Yet taxes are never 100% or more of income, but are less than a third of that income. In ER, it will be much, much less. Taxes are an expense, if you will, only on income I'll make. But I'll still have [income minus taxes=net $].

In summary, I just do not see the need to figure in income taxes when coming up with my annual expenses.

 

[youbet]

I am assuming you are referring to income taxes. If not, please ignore the following response.

Why would I need to add income taxes to the calculation of my annual expenses? Apart from interest/dividends that I hope to reap from my nest egg, and the resultant income tax I'll pay on that, such taxes are not an expense to me, particularly since I ER'd and no longer make as much as I did.

Let's pretend I have now looked over my past few years of expenses, figured in the new expense of individual health insurance premiums and other costs, and am predicting $30K annual expenses for the foreseeable future--which does not include any income taxes in my list of expenses. Let's also pretend that whether I plan to work part-time or have only interest/dividends as income, I'll pay taxes only on that extra income. Yet taxes are never 100% or more of income, but are less than a third of that income. In ER, it will be much, much less. Taxes are an expense, if you will, only on income I'll make. But I'll still have [income minus taxes=net $].

In summary, I just do not see the need to figure in income taxes when coming up with my annual expenses.

Makes sense, since you'll have zero TIRA withdrawals, zero 401k/403b withdrawals, zero SS, zero pension, zero interest, divs or cap gains...... just no taxable income. Then, indeed, your expense for income taxes should be zero. Congratulations!

 

[Birdie Num Nums]

Makes sense, since you'll have zero TIRA withdrawals, zero 401k/403b withdrawals, zero SS, zero pension, zero interest, divs or cap gains...... just no taxable income. Then, indeed, your expense for income taxes should be zero. Congratulations!

On further thought, I wasn't considering the tax-deferred $ I now have in my nest egg. I am so new at ER (since June) that I have not had to consider taking out any tax-deferred $ from my IRAs, 401k, or 403(b)(7) accounts. Once I do take such money, far into the future, then I'll have to figure out the income tax due at that time.

(In the meantime, I also build in a cushion, calculating my yearly expenses then adding a 10% cushion--to predict what I'll need for the coming year.)

 

[52andout]

In summary, I just do not see the need to figure in income taxes when coming up with my annual expenses.

actually, that was part of what we figured in, not to say it is applicable to everyone. All of this 401K and IRA money has never been taxed so if you take out say $30,000 per year than you will have to pay tax on that money. Yes it will be way less than what you paid during the accumulating years but nonetheless must be accounted for even if only a few thousand dollars. With almost certainty I can say taxes will rise. Who is going to pay for all this money our government is spending?

When I read these polls I also wonder if the following expenses are included for example:
house repairs (roofs aren't cheap)
auto replacement and repair (I'm willing to drive an old car but not everyone is)
rising health care costs


One of our friends estimated $35,000 per year in retirement which I thought was low considering his lifestyle. Adding in some travel, a car breakdown, taxes and health care it rose to over $50,000 his first year much to his surprise.

It really isn't simple at all. Lots to consider when you are planning.

 

[Midpack]

Interesting distribution. Looks bimodal, but probably just a too narrow bin range. Some big spenders here...

 

[beowulf]

Interesting distribution. Looks bimodal, but probably just a too narrow bin range. Some big spenders here...

I would also say some some fairly big earners also. At least I don't think they are spending what they don't have.

I figure that, for us, total taxes will be about 30% even in retirement. That would include all the taxes we pay now except for SS. Since almost everything we have in assets, other than our home, is tax deferred, and we will still have to pay property and sales taxes, I don't see them dropping as a percentage of income, only in dollar amount as our income drops. SS benefits will be fully taxed at 85% as ordinary income. Unless people are able to live off large stashes of already taxed money, I don't understand how their taxes can be 0 or close to it. I may be wrong, but I think many of us use 401Ks, IRAs, I bonds, etc. for our primary savings - all have tax bills coming due when they are withdrawn. It would be nice to have lots of Roth money, but there are income limits and I, for one, don't see much benefit in paying taxes on a conversion now, rather than later when the money is withdrawn.

We try to live within our means, to include maxing out any income deferral opportunities we have as well as charitable giving, but we don't need to be frugal, so we aren't. If we had to be, we would economize. I never really understood being extremely frugal for the sake of it - like the millionaire woman in the late 1800s in NYC who stuffed her coats with newspapers to keep warm rather than buy decent quality clothing. I understand living within your means and only borrowing for major life items. I don't quite get having the money to live well (not outrageously) but being so frugal the nickels beg for mercy .

 

[NW-Bound]

A while back, we talked of a homeless man who left his $4M estate to charity. He was not even what people would call frugal; he simply did not care about money. Strangely, he appeared to be a decent investor.

Richard Leroy Walters: Homeless Millionaire (PHOTO, VIDEO) | Bitten and Bound

PS. Come to think of it, he might just be an average investor. His secret? 0% SWR

 

[devans0]

DW and I are in the $30K or slightly more range. We are in a quickly accumulating stage while living on future pension & DW's SS equivalent.
Completely debt free. Mortgage paid, health partly paid by employer, live in a lower cost Midwest state. Roof is a lifetime steel shingle roof. I won't spend time on THAT roof ever again. House was flooded two years ago and is now nearly completely rebuilt. We didn't have flood insurance. BIG mistake!
We enjoy low cost hobbies including DIYs, gardening, cooking, outdoors, hiking, and kayaking. (Sometimes NOT in circles!!!). My goal is for even a bad investment year, a 0-1% draw will be ample to feel extravagant. Later, we can cash in on my SS at a higher rate assuming some is still left.

 

[haha]

My goal is for even a bad investment year, a 0-1% draw will be ample to feel extravagant. Later, we can cash in on my SS at a higher rate assuming some is still left.

You have our attention now. Please continue.

Ha

 

[veremchuka]

i retired 3 years ago, modest pension, good medical coverage that costs a mere $150 a month and very healthy i spend almost nothing on medical, not old enough for ss, always lbym so saving money was not hard at all. 20 year old car, no vacations by choice, grow a lot of my food, heat with wood so i spend $450 per year on heat (!), i really do lbym. in the 1st 2 years of retirement i was living on a gross amount of $34k with a mortgage, my wr both years was less than 1.5% to supplement my pension.

starting at the end of 2009 i decided to pay off the mortgage and by june of this year i paid it off in year 7 of a 30 year note so i spent a LOT of money in 2009 and 2010 on the mortgage - way beyond normal in the way of expenses for those 2 years due to that.

2011 will be the 1st full year without a mortgage and i expect i'll need only about $20k a year and may well have a 0% withdrawal rate on portfolio unless an unexpected expense like a new roof or replace my car occurs.

 

[devans0]

I/we keep it simple. we work hard, live simply and extreme-save. Then we invest. After a while, it builds up more than I ever dreamed. A small pension, + SS and we can get by nicely. As I said, we are in the accumulation stage, so this is what we mostly live off of. Add in 1% SWR and extravagance! My role models were depression era people.
I really learned after losing our home to a flood. In one day, almost all possessions were ruined. We had some money, but it was locked away in 401Ks and thanks to certain jerk Republicans, couldn't use it without losing everything. We rolled up our sleeves, cleaned up what we could, tore out and rebuilt as money came in. I don't hire unless I can't do it myself nor easily learn how. I taught myself plumbing, electrical, mechanical, took exams and got licensed do do my own work. I refused to go into debt unless the rate was so low that I could earn more than I paid out.
The gift was learning self reliance and a craftsmanship and detail for a home that I could never afford. I also learned how great a partner I had married.
I also learned that you don't need money to have fun, and that a few simple and small indulgences can go a long way to feeling like I have an extravagant life. For example, tonight is pizza night. I've learned to make a better pizza than anyone in our city, save one. (When I retire, I'm getting a job there and learning their secret.)

 

[grasshopper]

We left the bright city lights behind. Ms G. and I moved to the bajada of a mountain range in SE AZ half a mile from a 88K acre wilderness area. One of my hobbies before ER is birdwatching. Where I moved to birdwatching is almost considered a j*b. The weather is perfect for mtn biking year round hiking, horseback riding. I can spend hours walking my property for indian artifacts, box turtles, rattlesnakes, and backpacks of dope. Just me mind you, but I hate going into the big city of 14K people to shop every other week 50 miles away. We live on 40K a year with medical and groceries(we eat a lot of organic foods) taking half of that. Even with acreage property taxes are cheap, gas 3 trucks 3K a year. We have 4 other couples over for wine and dining twice a month. I bought a new $45K truck last year. I count interest in my spending, but principal is a depreciating asset. Also not included is the 50K spent on the homestead that came out of the nice profit I made on my Phoenix home. No cable, no cell phone(no service), but have XM because there is no radio reception.

At this point I have 3 years before SS kicks in maybe we will get a little wild after that.

By the way my projected income is $65-95K. so even in retirement I am banking cash.

 

[NW-Bound]

We left the bright city lights behind. Ms G. and I moved to the bajada of a mountain range in SE AZ half a mile from a 88K acre wilderness area.... No cable, no cell phone(no service), but have XM because there is no radio reception.

Hi there fellow Arizonan. Five years ago, we bought a 2nd home on the Mogollon Rim at 7000ft, with the intention of living there full-time eventually. It is near the National Forest, still nowhere as isolated as your abode. But after living there on and off on a part-time basis, I found that we missed the amenities of the city life.

It has been years since we set foot in a shopping mall or a movie theater. However, I like to go to a "real" library, to get groceries at Trader Joe's, etc... And I am not sure that we would save money living in the boonies, because even when we are in the metropolitan area, our lifestyle is the same. Electric bills would be a bit less than in the hot low desert, but taxes are about the same. Living in the boonies means more gasoline costs just to get groceries as we are 30mi from the nearest town. So, for now, we keep both houses until we figure out what will work. Besides, we still have a son attending the local U, and he lives at home.