Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 09-19-2007, 05:21 PM   #141
Recycles dryer sheets
 
Join Date: Aug 2007
Location: Midwest
Posts: 109
Quote:
Originally Posted by TexasGal View Post
As a single person, I am living on about $2K net right now and it is just enough. [snip] I am 60 now and don't plan to get into any of my tax-deferred savings/investments until age 70 if I can wait that long.
Have you thought about converting some of your tax-deferred savings to Roth now while in the 15% bracket?
__________________

__________________
Engineering My Finances Blog
EngineeringMyFinances is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

3K supports two (Husband & Wife)
Old 09-19-2007, 05:45 PM   #142
Recycles dryer sheets
 
Join Date: Oct 2003
Location: Combined Locks
Posts: 62
Send a message via MSN to rjk514
3K supports two (Husband & Wife)

We have been doing just fine on this amount, (about 28k to 30k) now
and, suspect times are going to get tough here in the USA and 36K will look
pretty sweet in months, years to come...these corporate folks and companies are
building stuff no one will be able to afford...lets see, I think I'll go buy a
35K car or a 3K TV....I think not.. actually already have them but,.the 36K per year is after tax...net to live on...no debt....own house...new cars ;and its just Social Sec..(mine and my wifes) and 4% from the egg...when we cash in the chips, the kids can have whats left of the egg and the house, etc....thats why we sent them to college for, so they can figure out how to split it up....
Life is short, we are 62, and 59...so closer to the End of the Line, hmm good
song title...I don't expect to live to 90 as the actuaries should have some idea
to longevity....I think 78 is close and if I do live beyond that I'll be eating soup
with a straw....quality of life and all that ...love to golf and should be shooting
in the 200's by then anyway...there...done with my rant...RJK-out
__________________

__________________
RJ
rjk514 is offline   Reply With Quote
Old 09-19-2007, 07:35 PM   #143
Recycles dryer sheets
TexasGal's Avatar
 
Join Date: Jul 2007
Posts: 229
Quote:
Originally posted by EngineeringMyFinances: Have you thought about converting some of your tax-deferred savings to Roth now while in the 15% bracket?
I haven't considered taking anything out of my existing 401k plan which is with Vanguard. At 62 I have to tell them if I want to roll it over or leave it there, and I can leave it with them until 70-1/2. I have lots of investment options as long as I leave it where it is now so I never thought of touching it. I also have a Roth IRA with Vanguard, but the bulk of my portfolio is 401k. In order to start moving anything to a Roth, I'd have to roll all of it out and then begin the process. I don't understand the tax consequences of leaving the 401k untouched well enough to do it at this time, but I certainly read posts where others moving theirs

How much money could I save if I begin converting to Roth now as opposed to waiting until I am 70 and begin taking distributions from the IRA where I place my money after rolling it over from 401k?

As you can probably tell, I recognize that this issue is part of many financial plans, but I don't understand how to actually make the transition.

TG
__________________
TexasGal is offline   Reply With Quote
Old 09-19-2007, 10:17 PM   #144
Recycles dryer sheets
 
Join Date: Aug 2007
Location: Midwest
Posts: 109
Texas Gal:
Here's a post on my blog as to how the conversion process worked for me. Whether or not you have the option depends on the rules for your 401(k), I'd read the Summary Plan Description carefully and make sure you understand exactly what they say. If you're retired I can't imagine that you'd be prevented from rolling over part of it, but again read your SPD carefully. If you have other 401(k) plans from other employers you should be able to roll them over.

As to whether or not it's to your advantage to do the conversion depends on present tax rates Vs future tax rates. From your description, you probably have several thousand dollars that could be converted at a 15% marginal rate. Your marginal rate could be higher in the future due to taxation of SS benefits and RMDs, and even higher if as I believe is likely tax rates will be increased in the future.
__________________
Engineering My Finances Blog
EngineeringMyFinances is offline   Reply With Quote
Old 09-19-2007, 10:27 PM   #145
Moderator Emeritus
 
Join Date: May 2007
Posts: 11,038
Once the house is paid for, it would be quite easy for my wife and I to retire on $3000 a month net. Our mandatory expenses (including health insurance, home and car maintenance, property taxes, insurance, food, gas and what not) right now amount to about $27,000 a year, so it would leave about 9K per year for fun stuff. That's $750 a month in disposible income, not bad in my opinion, but not nearly enough for DW. Our annual expenses break down as follows:
cars (repairs, insurance, taxes, gas, depreciation) $5500, Home (repairs, insurance, taxes) $5100, Health insurance and medical expenses $5500, Food $5400, Utilities $5500. Total $27,000.
__________________
FIREd is online now   Reply With Quote
Old 09-19-2007, 10:51 PM   #146
Recycles dryer sheets
 
Join Date: Nov 2005
Posts: 355
Upon retirement, 401ks are eligible to be rolled over into a traditional IRA which may have lower fees and usually has better fund choices. Any dollar amount of a T-IRA can be converted to a Roth IRA by transferring the money, then paying the extra taxes as though that amount was income. If your 401k is about $400,000 or more, you should expect to pay noticeable taxes after age 70.5 when your Required Minimum Distributions (RMDs) from your TIRA get added to your Social Security. If your RMD income plus half of your SS adds to more than $32K for couples, most of your SS is taxed. Find Scott Burns's articles about "torpedo tax" for a better explanation. So there is an advantage for someone with low early retirement income to convert some of a TIRA to a RIRA each year of retirement until the RMDs kick in on the remaining TIRA. One tries to stay in the same tax bracket, but run their income to the upper edge of the bracket. See Fairmark.com for much better info.
Joe
__________________
heyyou is offline   Reply With Quote
Old 09-20-2007, 08:43 PM   #147
Recycles dryer sheets
 
Join Date: Aug 2007
Location: Midwest
Posts: 109
I could live on $3K/month and am doing that now. Two things make me think that might not get me by in retirement:
(1) I'll have more free time to spend money. And no, my working costs are not that great.
(2) Health / long term care.
I've estimated I could spend that much at age 62, but think I should work a few more years to have a bit extra. But when I hit 62 I'll see what I think then.
__________________
Engineering My Finances Blog
EngineeringMyFinances is offline   Reply With Quote
Old 09-21-2007, 01:11 AM   #148
Full time employment: Posting here.
 
Join Date: Aug 2007
Posts: 892
I'm looking at our monthly budget and assuming that our mortgage is paid for, our fixed expenses are $1107/month. On top of that, we currently average around $2200/month for variable expenses (food/entertainment, etc), but that is including youngs kids. I expect this to be lower in retirement (only if it needs to be, of course).

Of course our numbers are higher right now, because we do have kids, in a private school no less, not to mention a mortgage. However, we try to keep our expenses low and are planning on being able to retire on around $50k/year after the kids, and mortgage, have moved on.

I'm always amazed that when I break down the numbers, it really doesn't take that much to get by and still live comfortably.
__________________
tulak is offline   Reply With Quote
Old 09-21-2007, 05:35 AM   #149
Thinks s/he gets paid by the post
 
Join Date: Nov 2005
Posts: 2,119
1000 dollars a week really is a fantastic number with a small or no mortgage and real estate taxes in the 3K range.
__________________
newguy88 is offline   Reply With Quote
High off the Hog
Old 09-21-2007, 07:51 AM   #150
Recycles dryer sheets
 
Join Date: Oct 2003
Location: Combined Locks
Posts: 62
Send a message via MSN to rjk514
High off the Hog

Some of you folks must not be very frugal if you can't get by on
3K per month...for 2-people with no debt....(operative term is
NO DEBT)....try harder...do less...walk more...if it means working
longer or doing a little less in retirement, its a easy choice...
__________________
RJ
rjk514 is offline   Reply With Quote
Old 09-21-2007, 10:39 AM   #151
Moderator Emeritus
Khan's Avatar
 
Join Date: Aug 2006
Location: Pine Island, Florida
Posts: 6,868
Send a message via AIM to Khan
As of this morning I have spent $17,000 so far this year (not including buying a car, which I last did in 1989).
__________________
"Knowin' no one nowhere's gonna miss us when we're gone..."
Khan is offline   Reply With Quote
Old 09-21-2007, 01:12 PM   #152
Administrator
Gumby's Avatar
 
Join Date: Apr 2006
Posts: 10,142
My retirement budget assumes that the young wife and I will not want to change our standard of living. Not counting the mortgage P&I (which will stop coincident with our retirement), our actual current cash outlay is about $4.5k per month ($760/mo. for real property tax alone - yikes!). To this, we will add $2k per month for a sinking fund to be used for car purchases, larger home repairs (such as periodic painting, new roof, etc.) and vacations. We figure that the reduction in commuting expenses will be offset by health care costs. Accordingly, my retirement budget is $6.5 k per month (after taxes) for two.
__________________
Living an analog life in the Digital Age.
Gumby is online now   Reply With Quote
Old 09-21-2007, 02:12 PM   #153
Thinks s/he gets paid by the post
SecondCor521's Avatar
 
Join Date: Jun 2006
Location: Boise
Posts: 2,402
I spend right around $6K per month, but about 2/3 of that is direct kid expenses and mortgage interest, so with a paid off house and the kids grown, I think I can live comfortably on $2K per month.

2Cor521
__________________
"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
SecondCor521 is offline   Reply With Quote
Old 09-21-2007, 06:27 PM   #154
Dryer sheet wannabe
 
Join Date: Jul 2007
Posts: 11
Are most people assuming health care is covered. I am not sure how you can plan for health care. Sure, I could do $3k/month NOW paying for private insurance, but dont know what health care is going to be costing. We are in our 30's, and health care for people in their 60's is more expensive, as I can see when plugging numbers in esurance, plus its been going up at a higher rate of inflation. So being able to live on $3k now for me does not mean that I can leave on $3k plus inflation in the future.
__________________
haydee is offline   Reply With Quote
Old 09-21-2007, 07:09 PM   #155
Recycles dryer sheets
 
Join Date: Nov 2004
Posts: 283
The "Fog of Finances while saving for retirement" is slowly clearing... it is showing me that we are more like Gumby than the 3k/mo crowd. We live modestly in a 3 br condo and LBYM. Like Gumby, we planned to retire at the same level of living as we enjoyed while working - it has worked out that we've been able to successfully continue our lifestyle into retirement.

We're 64 and 66. This month is the first where we don't have income from a job and corresponding savings into tax deferred retirement accounts since DW has finished her part-time teaching stint. I've developed what I call my Cashflow Budget which now only has six major topics, Household, Insurance, Auto, Medical Out-of-pocket, Taxes and Personal. Everything is becoming easier since we are retired-retired, the mortage is paid and both cars are paid for.

Household includes all expenses to keep the doors open
Elect 70
Gas 120
Cable 55
Inter 25
Phone 80
HOA 320
Water 60
PropTx 450
Tot 1180/mo

Insurance includes recuring Ins expenses.
HC 300
LTC 200
Life Ins 100
Property 70
Medi Pt B 95
Vision 15
Tot 780/mo

Two Cars '98 and '01
Gas & Maint 400/mo

Out of Pocket Med 150/mo

Personal includes discretionary expenses -
Food, Clothes, Misc, Vacations 1200/mo

Total of 1180+780+400+150+1200= 3710/mo not incl Fed & State Tx

We usually have a 6-10k Vacation that isn't included here also - we went for the open-heart surgery and cardio rehab option instead - $6-10k Vacations to restart in 2008.

JohnP
__________________
Dad's Dream; to have enough money someday to live the kind of life my wife and kids do...
Life is what happens while you are making other plans... John Lennon...
the more you look, the more you see...
JohnP is offline   Reply With Quote
Old 09-22-2007, 05:51 PM   #156
Thinks s/he gets paid by the post
 
Join Date: Sep 2006
Posts: 1,318
It would be extremely difficult for us to live on 3k per month especially in the area we live in (the northeast). My ER budget is 5.5K per month including a couple of vacations per year.
__________________
Corporateburnout is offline   Reply With Quote
Old 09-22-2007, 06:52 PM   #157
Thinks s/he gets paid by the post
OAG's Avatar
 
Join Date: Jun 2006
Location: Central, Ohio, USA
Posts: 2,598
Our budget for 5 of the past 7 years has averaged less than $24K, last 2 years it has gone up to about $28.5K. Lived in Florida for 17 of the last 19 years and OHIO for the past two years. Increased budget due, primarily, to RE taxes on a fully paid for $350K condo. We travel a bit (last two years to Virginia twice, Chicago twice, Florida 3 times, and NY (Niagara Falls) once). We stay with friends, family or (in the case of NY) Military Lodging facilities, visit things that do not cost much like walking trails, parks, water falls, etc.,. I guess it is what you want to do and how much you want to "spend" doing it. We do this because it is what we want to do and not because we cannot afford to do more as we have budgeted expenses covered at about a 4:1 ratio (Income to Expenses).

We own one car (3 years old that cost $50K when we bought it new), do not carry any type of life insurance (to old and do not need to give anyone a windfall to waste) with the exception of one small paid up policy and have medical insurance covered at no cost.

So to OP yes you should be able to do it fine on $3K per month even considering medical expenses.
__________________
Vietnam Veteran, CW4 USA, Retired 1979
OAG is offline   Reply With Quote
Old 09-22-2007, 07:23 PM   #158
Recycles dryer sheets
 
Join Date: Jun 2007
Posts: 377
Quote:
Originally Posted by JohnP View Post
The "Fog of Finances while saving for retirement" is slowly clearing... it is showing me that we are more like Gumby than the 3k/mo crowd. We live modestly in a 3 br condo and LBYM. Like Gumby, we planned to retire at the same level of living as we enjoyed while working - it has worked out that we've been able to successfully continue our lifestyle into retirement.

We're 64 and 66. This month is the first where we don't have income from a job and corresponding savings into tax deferred retirement accounts since DW has finished her part-time teaching stint. I've developed what I call my Cashflow Budget which now only has six major topics, Household, Insurance, Auto, Medical Out-of-pocket, Taxes and Personal. Everything is becoming easier since we are retired-retired, the mortage is paid and both cars are paid for.

Household includes all expenses to keep the doors open
Elect 70
Gas 120
Cable 55
Inter 25
Phone 80
HOA 320
Water 60
PropTx 450
Tot 1180/mo

Insurance includes recuring Ins expenses.
HC 300
LTC 200
Life Ins 100
Property 70
Medi Pt B 95
Vision 15
Tot 780/mo

Two Cars '98 and '01
Gas & Maint 400/mo

Out of Pocket Med 150/mo

Personal includes discretionary expenses -
Food, Clothes, Misc, Vacations 1200/mo

Total of 1180+780+400+150+1200= 3710/mo not incl Fed & State Tx

We usually have a 6-10k Vacation that isn't included here also - we went for the open-heart surgery and cardio rehab option instead - $6-10k Vacations to restart in 2008.

JohnP
Wow John, I cannot imagine having to pay 450+ a month just for property tax, I just pay 400 per year. That just blows my mind.
__________________
Bigritchie is offline   Reply With Quote
Old 09-22-2007, 08:31 PM   #159
Dryer sheet wannabe
 
Join Date: Jul 2007
Posts: 11
Where do you live? I pay $4,000+/year and I thought I was doing good. I am in Seattle.

Quote:
Originally Posted by Bigritchie View Post
Wow John, I cannot imagine having to pay 450+ a month just for property tax, I just pay 400 per year. That just blows my mind.
__________________
haydee is offline   Reply With Quote
Old 09-23-2007, 09:36 AM   #160
Thinks s/he gets paid by the post
 
Join Date: Sep 2006
Posts: 1,318
Quote:
Originally Posted by haydee View Post
Where do you live? I pay $4,000+/year and I thought I was doing good. I am in Seattle.
I wondered about that myself. I pay $4800 in property tax as well.

Living in Boston, Seattle or San Diego is much more expensive that the mid western or southern states. That is why 3k per month does not work for everybody.
__________________

__________________
Corporateburnout is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
New and Looking to Retire Young Sommie Hi, I am... 19 07-22-2005 04:39 PM
Retire Early – “When you come to a fork in the road take it.” dex Other topics 24 07-07-2005 10:25 AM
Looking to Retire rluetgenau Hi, I am... 19 06-15-2005 04:02 PM
How people find us... asian carp?? dory36 Forum Admin 4 05-27-2005 01:07 PM
Spouse Retire At Same Or Different Time yakers Other topics 6 05-23-2005 04:21 PM

 

 
All times are GMT -6. The time now is 10:47 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.