Is this Amount of Income Enough to Retire Early On?

[nico08]

I would like your opinion as to whether you think there is anywhere in the Northeast USA that a single person could retire early with $20,000 a year gross income (adjusted for inflation) before taxes? This amount would have to cover all living expenses, including mortgage/property taxes/utilities/ or rent and health insurance.

Also, if you don't think this would work, what average amount do you think would be sufficient in a Northeast USA environment? Do you think that $20,000 per year would be sufficient to retire in any part of the USA? If so, where?

I imagine that the answer would depend in large part on the quality of life that the person is seeking. Assume that the person has a simple, frugal lifestyle for the sake of this thread.

 

[haha]

I would like your opinion as to whether you think there is anywhere in the Northeast USA that a single person could retire early with $20,000 a year gross income (adjusted for inflation) before taxes? This amount would have to cover all living expenses, including mortgage/property taxes/utilities/ or rent and health insurance.

Also, if you don't think this would work, what average amount do you think would be sufficient in a Northeast USA environment? Do you think that $20,000 per year would be sufficient to retire in any part of the USA? If so, where?

I imagine that the answer would depend in large part on the quality of life that the person is seeking. Assume that the person has a simple, frugal lifestyle for the sake of this thread.

If you mean in NYC or Boston or Connecticut, problably impossible even if the person had several roomates.

If you do it and succeed be sure to report back your strategies and experiences.

Ha

 

[FANOFJESUS]

No not in the Northeast but if you will move west then

Cheapest places to live in America – Topeka, KS for under $840 a month

 

[aaronc879]

I'm sure there are millions of people doing it right now. That doesn't mean it's ideal. You would likely have to have roommates and get by without a car. You'd also not be able to eat out much if at all or do much of anything for entertainment. If you are willing to go without health insurance then you may have a chance.

 

[REWahoo]

If you don't have company funded health insurance or Medicare, how much of your $20k do you expect to spend buying an individual policy? To aaron's point, medical insurance premiums could easily eat up $5K your $20k.

 

[youbet]

I imagine that the answer would depend in large part on the quality of life that the person is seeking. Assume that the person has a simple, frugal lifestyle for the sake of this thread.

This description is too lacking in detail to empower intelligent comments. There is a short list of retirement expenses and the retiree's tolerance to not being able to cover them that's critical to know.

1. Medical. What will you do for insurance? Do you have any health issues that generate periodic costs? Are you willing to receive medical care only through ER's (and stiff them for the bill) or charity? This alone could consume 25% - 50% or more of your $20k depending on your situation and how you're willing to deal with it over the balance of your life.

2. Housing. Are you willing to share accomodations?

3. Transportation. Would you be willing to live without a car?

4. Day to day life. Near zero dining out or entertainment that isn't free. Clothes from the thrift shop. Food from the bulk bins. Sound OK?

I think it could be done. It's just so on the edge that even a modest supplement of $100/wk from part time work would be a huge help.

As a point of reference, DW and I were at a campground in New Hampshire this autumn. While in a laundry running some clothes and bedding through the machines, I met an older gentlemen washing and drying a huge stack of towels in the commercial-sized machines. He was talkative (obviously lonely) and volunteered that he was living in a efficiency apartment in a motel in exchange for making a daily trip to the laundry to wash the towels......... That was how he got by on SS.

That isn't a lifestyle I'd head towards intentionally if I could help it. But, he was retired in the northeast!

 

[LOL!]

Live like a grad student near any major university. It won't matter where in the US it is: Washington, DC, New York City, Boston, San Francisco, etc.

No problem.

 

[REWahoo]

There is always CFB's 'baguette maneuver'...

 

[Coach]

According to Wikipedia, the poorest 20% of US households have a household income of $18,500 or less. And based on a nice county-by-county map they have, there are a substantial number of counties in the Northeast with median incomes in the bottom two quintiles. So it's certainly possible. But if it were me I'd build a budget and see how that life looks. I'm fairly frugal, no debt, and live in a paid off house, but living on $20,000 would have me giving up quite a bit.

Coach

 

[Free To Canoe]

Is West Virginia considered North East?

Free to canoe

 

[LARS]

I do not see how it is remotely possible any where in the US if you are purchasing health insurance in the individual market. Even the highest of deductible plans (assuming you are in your fifties and good health) are going to run mid-$200 a month and the NE tend to be more like in the $300 per month range.

 

[aaronc879]

Assume that the person has a simple, frugal lifestyle for the sake of this thread.

The word "frugal" seems to have a different meaning to defferent people. There are people here who live on 4-5 times what I live on and claim to be frugal. I wouldn't know how to spend $50K/yr while others consider that roughing it.

To make the math easy, lets say $20K gross is $18K net. Thats's $1500/mo. If you pay $500 for healthcare that leaves $1000/mo. I'm living on <$800/mo right now so I know it's possible but I have no mortgage and live in small town Wisconsin which I think is lower cost than anywhere in the Northeast. Bottom line: It can be done but you'll have to give up a lot

 

[Purron]

Also, if you don't think this would work, what average amount do you think would be sufficient in a Northeast USA environment? Do you think that $20,000 per year would be sufficient to retire in any part of the USA? If so, where?

My immediate thought is it won't work. $20K per year isn't much to cover the basic costs of living. As others have pointed out, however, we really don't have enough information.

The Northeast USA is not the cheapest place to retire. Why are you focused on this area?

As far as where else it might work in the USA - I'm sure other places might be much cheaper, but again, lacking details, can't provide much advice.

 

[Rustic23]

Live, survive, exist, Yes, but, is that what you are really asking? Heck, you can most likely do it on ten grand, and there are some folks that live under a bridge that do it for even less. Twenty thousand would not be enough for me anywhere!

 

[ChrisC]

My parents were working poor from 1958 to 2007, in NYC. If you lived in a rent control, rent stabilized, or even owned your own house, it's a piece of cake to live in NYC under $20K. Go uninsured, like my parents, until you can become Medicare eligible, and then go under Medicaid when you get old, sick, and tired. And my parents did it without living on Food Stamps. This is abject poverty for a family, however.

I was a VISTA volunteer and my subsistence allowance was $134 per month from 1974-75; I lived in Upstate NY, where my monthly rent was $65 per month; I couldn't do it without living on Food Stamps, which VISTA did not encourage its volunteers to enroll (but when you gotta eat, you gotta eat). With VISTA, I felt my living standard had increased significantly from my impoverished childhood in NYC.

Being a college student and living below the poverty line in NYC is also a piece of cake. I did that between 1971-1974 and 1975-78. Friends of my kids have recently travelled that path too, in NYC and DC.

So, yes, in my opinion, this is certainly do-able. Cheap housing is the key and affordable housing is kinda of risky, unless you know the area well.

 

[kyounge1956]

Maybe in Maine?

 

[zinger1457]

If you were able to do it you would be living so miserly that it would be hard to enjoy, and you give yourself no room if something catastrophic happens. I'm originally from the northeast and know it's not the cheapest area in the country to live. For that kind of income you should expand your search area and find out where the total cost of living is the cheapest in the USA. I currently live in the 'high' desert in Arizona so temperatures are mild year-round. People in Phoenix probably spend more per month for their cooling bill during the summer then I do all year. Insurance is still relatively reasonable, I pay $350/year for property insurance ($275K full replacement) and $550 per year for auto insurance.

 

[Nords]

I would like your opinion as to whether you think there is anywhere in the Northeast USA that a single person could retire early with $20,000 a year gross income (adjusted for inflation) before taxes? This amount would have to cover all living expenses, including mortgage/property taxes/utilities/ or rent and health insurance.

You're asking us to build a budget from the bottom up. Maybe you could share your expenses and then decide what you're willing to cut to get to $20K.

I suspect you could do $20K/year in any number of small towns in Pennsylvania with a roommate. The problem is that you'd have a roommate and you'd be living in a small town in Pennsylvania.

But if you were willing to go the roommate route and dispense with a vehicle then you could probably even do it in Honolulu, although that may not get cold enough or humid enough for your climate preferences.

Perhaps this question would get a better answer on Jacob Lund Fisker's Early Retirement Extreme board, for example here:
Any Creative Ideas for Cheap City Living? « Early Retirement Extreme Forums

 

[NW-Bound]

The woman whose blog I provide below is a single full-time RV'er who leads a good life on $20K, but that's after income tax. Yes, that includes her health insurance of $4280/year.

However, I am sure that she would occasionally have to spend extra for major repairs or replacement of her RV trailer or her truck. She also boondocks or stays at Elk's or Moose Lodges where she is a member.

Life on the Open Road: How Much Did I Spend in 2009?

 

[veremchuka]

i doubt it. you don't want to live under a bridge or in a cradboard box dumpster diving for food i'm sure.

maybe if you moved way up into northern maine where land is cheap and live in a tent but winters are really cold in a tent in northern maine and you'll probably die. medical is a biggie if you can live w/o paying for any medical you might. cars cost a lot to insure and maintain, if you are in the boonies you need a car. you'd have to grow a lot of your food for year round use. taxes, electrical rates, gas, food, it's a very expensive part of the country tho living off the land is a cheap way to go but if you're 55+ this life is hard, it's not like when you were 22.

i've been living on $36k and i do lbym. now that i paid off the mortgage it will drop but not sure how much, maybe $25k a year. but i have inexpensive health care that is very good tho so far i seldom use it and a small pension. also i do grow a lot of the food i eat and i heat my house with wood for a mere $450 a year, most people pay that a month for natural gas or oil. you'll be hard pressed to pull it off with just $20k, it's possible but you'll make lbym look like donald trump's life style! if you do manage it i smell a great book!

 

[TomG]

If health coverage is included, it could be done without too many uncomfortable tradeoffs. Looking at college towns would be my main focus. Minimum acceptable housing and eating at home is still under $1 000 per month

Work just one day per week or two to three months per year on top of the $20 000 and there would be very little I felt like I was missing out on

 

[Midpack]

I would like your opinion as to whether you think there is anywhere in the Northeast USA that a single person could retire early with $20,000 a year gross income (adjusted for inflation) before taxes? This amount would have to cover all living expenses, including mortgage/property taxes/utilities/ or rent and health insurance.

Also, if you don't think this would work, what average amount do you think would be sufficient in a Northeast USA environment? Do you think that $20,000 per year would be sufficient to retire in any part of the USA? If so, where?

I imagine that the answer would depend in large part on the quality of life that the person is seeking. Assume that the person has a simple, frugal lifestyle for the sake of this thread.

Here's someone who will tell you could certainly retire on $20K/yr in an expensive region, he and his wife live in/near San Francisco on much less. He's probably more resourceful than most, but it appears they live better than you might guess. You might want to get a copy (I thought it was a great read) or visit his blog for insights (link below).

You can retire in the Northeast on $20K/yr - if you're willing to live the lifestyle your resourcefullness/abilities/sensibilities would afford. For example, live in a small modest home with roommates, ditch your car for a bicycle and be prepared to go back to work if the plan runs off the rails and you'll be well on your way. IOW, only you can answer..."average amounts" are meaningless.

Early Retirement Extreme: — written by Jacob Lund Fisker, Freelancer

 

[scrabbler1]

I am single, no kids, and live in the northeast (Long Island, NY, hardly a low-cost area). I am 47 and I retired 2 years ago at 45. My annual expenses are about $22k. I own a car and my co-op apartment outright. I have HI which is costly and rising fast. I don't eat out of dumpsters and enjoy the lifestyle I have had for years. I do volunteer work, have low-cost hobbies, and can eat out whenever I like (but I don't very often). I have a ladyfriend who lives nearby and I have helped her out financially at times. I have high-speed internet access and cable TV and a landline phone (no cell phone, I hate them).

Could I reduce my expenses to $20k if I needed to? Probably. But my dividend income is about $30k so I can more than cover my current expenses. I also have an IRA worth about $300k and a pension awaiting me when I turn 65.

So, yes, it can be done.

 

[Moemg]

Sure in any of these towns in Pa. you could do it but would you enjoy living in that area !
Frackville, Pennsylvania - Wikipedia, the free encyclopedia

 

[youbet]

Could I reduce my expenses to $20k if I needed to? Probably. But my dividend income is about $30k so I can more than cover my current expenses. I also have an IRA worth about $300k and a pension awaiting me when I turn 65.

So, yes, it can be done.

Your logic that it could be done by OP escapes me. You're spending more, own your home and are backed up by a FIRE portfolio that generates $30k in dividends alone.

How does that support your assertion that OP, without the home and dividend generating portfolio as back up in case of financial issues, could do it?