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Old 03-20-2010, 02:37 PM   #21
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Originally Posted by Midpack View Post
I read about people here (and elsewhere) who are comfortable in retirement at $24K/yr and $36K/yr and I believe them, but I don't understand how it's done. So here's my actuals for 2009, I'd welcome suggestions on how I get to $36K/yr.
From my viewpoint here in the Chicago 'burbs, your $60k/yr post tax number looks very realistic. Some categories a little higher than me, some a little lower. Remember, one issue that accounts for many of the folks who post very low annual expense numbers is that they are single. Double what they say to get a estimate of how their number would apply to you. (Yeah, I know some couples who also post very low numbers, but that is another issue.)
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I realize the accrual is large, but we can't expect everything we own to last 30-40 years and many are big ticket items.
I like your accrual number and think many folks vastly underestimate this. I RE'd with a 30 yr old home, mid-aged cars and well worn hobby "stuff." A remodeled bathroom, new kayaks, a new camper and some other misc stuff over this first nearly 4 years of FIRE proved to me I was wise to allow for these items in my budgeting. Of course, you could say you'd buy everything new just prior to retirement and have a long time until replacement needs come around, but then your FIRE portfolio would be reduced by a chunk right at the start..... there's no free lunch. So, yes, your accrual schedual looks good and it's the right thing to do.

edit - just went back for another look. Your vacation amount is very low. It's your decision of course, but if I could only spend $1.2k/yr on vacations in retirement, I'd do some work to get some more $$$. Perhaps you and DW are traveling extensively for your jobs now and just want to stay home in retirement, I don't know. But your number sounds really low. It would support one decent domestic trip per year. I do see you have $4k - $5k per 3 yr period accruing for travel. Still, a spartan regular vacation schedule interrupted by a major trip every three years wouldn't be enough for us. We'd do something financially to allow a major trip every year. Again, up to you. It's a trade off between giving up other things and/or working longer and subject to your personal preferences.
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Old 03-20-2010, 02:51 PM   #22
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Well, I'm one of those $18k people (actually it is $9k since I'm a single, but I have one roommate with a similar budget). There aren't too many people on the board in the sub $20k range because it is difficult to get much more frugal than that without making unhealthy choices. People in this range almost never have children, or their children are grown up. People in this range won't have a mortgage, or they will be renting (I am renting, and rent is 66% of my budget). People in this range are usually young if they are self-insuring (or they are making the foolish decision to not insure their health for catastrophic occurrences).

That all said, I could probably stay around $9-12k/year in costs for most of my life. Mortgage/rent costs will go down as insuring my health costs would go up, but only because I classify paying down a mortgage as savings.

Anyways, I think people have covered the OPs question pretty well. While there is some fat in there, it mostly revolves around lifestyle choices. I don't have any expensive lifestyle choices (but I do have some fat), but the OP has many. I think it is very very hard to make big lifestyle changes, there needs to be some sort of strong driving force behind it. For me, the driving force is reducing the time I will have to work, once that is gone, I will likely lose most of my motivation, so there is no way I would choose to make negative lifestyle changes after that point. I think this is the same for most people.

Below are what areas you could cut, but by no means that you should cut, as you need to enjoy life:

These have been covered by the others. Very high allowance, you drive a lot (joyriding?), since you drive a lot, you appear to put 30-40K miles on your cars each year (or are not accounting for resale value at all), the wife's clothes budget seems reasonable, but the husband's is extremely high (I spend less and have a white collar work dress code, including dry cleaning), you dine out a lot (this is entertainment mostly), your Internet is high (I have near top of the line speeds+unlimited usage at $25/month), you have a TV when you can watch TV over the Internet now, your grocery bill for each person is 4x higher than mine, you actually have a whole separate liquor budget, gifts are a little high but fine, home insurance is fine, you have a large lawn, home repair budget without the accruals in it is extremely high, you actually have a home association fee, property taxes are about normal, Medical looks right, Postage is a little high, Gas is fine, Phone is high (get a prepaid cell at $10/month), sewer is extremely high, trash is fine, water is mostly fine but you have large yard to water, vacation is fine, additional travel costs are high, accrued home repair is high, furniture is high (use craigslist), PC is exactly right, bed is fine, appliances are fine, you keep buying TV's when this should be covered now by your PC budget.
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Old 03-20-2010, 03:10 PM   #23
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Remember, one issue that accounts for many of the folks who post very low annual expense numbers is that they are single. Double what they say to get a estimate of how their number would apply to you. (Yeah, I know some couples who also post very low numbers, but that is another issue.)
There was a pretty good thread here several years ago that brought some government data onto this question. I think typically it is considered that a couple needs 167% of what a single needs to live. Clearly a lot of assumptions will matter. Can the couple get by with one car? In the city, sure, in the suburbs or country likely not. How social are they? Typically singles go out more than couples, but some couples go out a lot, and it costs them about 200% of what a single costs to have a meal out.

Another issue just comes from probability. Extreme frugality and self denial is a rare trait in society, if not on ER.org. What are the chances that both spouses will be as hawkish on expenses as the most frugal one?

Married people will spend some money just to avoid divorce. How many guys in their expensive opera boxes alongside their wives might be happier at home watching basketball?

I have never understood how a group that will not accept that any active money managers can have long time superior records will easily accept essentially unbelievably low living expenses. I remember one guy who claimed to live on about $10,000 per year. Then it came out that his roomate paid a lot of his expenses. Yeah, I guess that would work wouldn't it? Or believe assertions that spending more money does not improve the experience of life. Give me a break! Spending it unwisely is a mistake, but in my market I can guarantee that I would be happier living in an apartment that rents for $2000 than a $1000 apartment.

That said, I have improved my spending since logging on here for the first time. Attention to spending matters, even though it may not be as dramatic as what is sometimes reported. I spend about the same as before, but that means that I have defeated 5+ years of inflation.

Ha
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Old 03-20-2010, 03:13 PM   #24
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Well, I'm one of those $18k people (actually it is $9k since I a single, but I have one roommate with a similar budget). .
One of things you'll have to watch out for as you get older is medical costs. At 62 yo I'm realatively healthy yet spent about $8k in 2009 for my employer subsidized health insurance, deductibles and out of pocket expenses and some relatively minor dental bills. That's just me. DW's medical expenses were on top of those. Nothing unusual. A check-up, a few preventative tests typical for my age, some common prescriptions, etc. It adds up quickly and would eat up your $9k in a hurry.

Of course, if your income were only $9k, you'd likely qualify for a lot of welfare benefits but that's another thing altogether.
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Old 03-20-2010, 03:13 PM   #25
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I don't have anything to add to the many great suggestions on how to cut your spending.

$60K, with rather generous accruals, in an urban area is quite reasonable.

My question is - why do you want to cut your spending? You are obviously aware of your spending habits and yet spend $60K.

Are you ready to cut spending drastically to reach ER earlier only to find yourself (or DW) being miserable because of the low budget?

My advice: Continue to track your spending & check each category to make sure that the satisfaction you get matches the outlay. Reduce the ones that don't and see if it affects you adversely. For us, eating out was one such category.
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Old 03-20-2010, 03:19 PM   #26
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There was a pretty good thread here several years ago that brought some government data onto this question. I think typically it is considered that a couple needs 167% of what a single needs to live. Clearly a lot of assumptions will matter. Can the couple get by with one car? In the city, sure, in the suburbs or country likely not. How social are they? Typically singles go out more than couples, but some couples go out a lot, and it costs them about 200% of what a single costs to have a meal out.

Another issue just comes from probability. Extreme frugality and self denial is a rare trait in society, if not on ER.org. What are the chances that both spouses will be as hawkish on expenses as the most frugal one?

Married people will spend some money just to avoid divorce. How many guys in their expensive opera boxes alongside their wives might be happier at home watching basketball?

I have never understood how a group that will not accept that any active money managers can have long time superior records will easily accept essentially unbelievably low living expenses. I remember one guy who claimed to live on about $10,000 per year. Then it came out that his roomate paid a lot of his expenses. Yeah, I guess that would work wouldn't it? Or believe assertions that spending more money does not improve the experience of life. Give me a break! Spending it unwisely is a mistake, but in my market I can guarantee that I would be happier living in an apartment that rents for $2000 than a $1000 apartment.

That said, I have improved my spending since logging on here for the first time. Attention to spending matters, even though it may not be as dramatic as what is sometimes reported. I spend about the same as before, but that means that I have defeated 5+ years of inflation.

Ha
Excellent comments. And I agree there is room for a lot of variability. My DW wants all the things for herself as a married partner she'd have as a single. Her own car, space in the house, personal activities, etc. I feel pretty much the same. So my guesstimate is that our expenses are darn close to double what they would be for either of us as a single. But I can see where the 167% gov't number comes from and am sure it is correct for many. In fact, I'll wager that 167% average probably has a range stretching from 110% to 250%!
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Old 03-20-2010, 03:19 PM   #27
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After maxing out my retirement accounts, my spendable income is probably between $30K and $35K, and I'd sure like not to be on quite such a short leash, spending wise.
After maxing my retirement accounts, my spendable after-tax income is $17K/yr. I get by just fine even with a small mortgage. I'm single.

Midpack: If you have the money, don't feel bad for spending it. If I recall correctly, you already have over 25X expenses saved so there's no need for you to reduce expenses.
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Old 03-20-2010, 03:33 PM   #28
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I don't have to, but would like to reduce outlay. Thought it might be helpful to see how folks at $36K/yr do it.

I see it as a lot less discretionary spending (it's all about lifestyle adjustments). My expenditures: $45-50k (BTW - live in Chgo area; much higher taxes + HOA; utilities also higher; square footage pretty equal with new energy star single family home). You have interestingly placed your discretionary expenses (itemized to the max) ahead of the base expenditures. Looks like a little tug of war will take place if/when you make those reductions
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Old 03-20-2010, 03:51 PM   #29
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The list is ordered alphabetically, so I don't think there's any notion of putting discretionary over base expenses.
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Old 03-20-2010, 04:00 PM   #30
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I am glad someone posted this - I read a lot about expenses reducing in retirement but ours are close to what the OP said. Our taxes are a little higher, travel is higher, but car expenses,food budget, entertainment and personal care like hair and nails lower. We travel abroad once a year for a few weeks and also do several domestic trips, on top of going to see the kids.

My car is 11 years old, DH car is 9 years old and we have no intention of replacing them until we have to. New car will be bought with cash, probably a few years old model. I can see your biggest savings in this category. Unless it makes you very happy to be riding in a new car, then if you have the money good for you.
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Old 03-20-2010, 04:15 PM   #31
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The list is ordered alphabetically, so I don't think there's any notion of putting discretionary over base expenses.
Just the way it came out.....
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Old 03-20-2010, 04:40 PM   #32
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A couple of years before DH retired, I put together three annual budgets. All of the budgets below include fed tax (no state tax in TX). We have no children.

bare bones $35k

regular $45k

maximum $55k


All of the above assumes we'll live in our mortgage free house and retain 3 vehicles.

For me, it is important I know how low/high we can go.
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Old 03-20-2010, 04:41 PM   #33
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Depending on how much your gross salary is/was, you might have actually more earned more than $803,000 since only a certain amount of your salary is subject to SS (~approximately 106k today but has been indexed for inflation).
I wish, but that figure was total gross salary from those years.
For me, there is no way that I could save enough for retirement to provide 60k/yr or spend 60k/yr now and save for retirement but if a person can then great. I'm assuming OP has enough to safely draw down the $60,000.
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Old 03-20-2010, 05:19 PM   #34
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Only $53 a month for booze What kind of teetotalling freaks are you?? I need a moment to grasp the enormity of such a thing. In 2009, the young wife and I went through $283 per month just for wine at home.
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Old 03-20-2010, 06:08 PM   #35
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One of things you'll have to watch out for as you get older is medical costs. At 62 yo I'm realatively healthy yet spent about $8k in 2009 for my employer subsidized health insurance, deductibles and out of pocket expenses and some relatively minor dental bills. That's just me. DW's medical expenses were on top of those. Nothing unusual. A check-up, a few preventative tests typical for my age, some common prescriptions, etc. It adds up quickly and would eat up your $9k in a hurry.

Of course, if your income were only $9k, you'd likely qualify for a lot of welfare benefits but that's another thing altogether.
Right, that is why I said in the next paragraph

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That all said, I could probably stay around $9-12k/year in costs for most of my life. Mortgage/rent costs will go down as insuring my health costs would go up, but only because I classify paying down a mortgage as savings.
Health costs for me, now, including all dental, health, and insurance costs, are $600/year. This will certainly go up (at least under the current system, which may be quite different by the end of the year), until they reach something like $8-10K right before I reach Medicare, averaged out, this means I will have about 3.5K-4K/year (but only while I am self-insuring, which isn't the case when I am working). However, as I mentioned, my rental/mortgage costs will go also go down, at a pace that offsets health insurance increases for the most part, at least for the purposes of very long term planning.
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Old 03-20-2010, 07:00 PM   #36
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I can't compare costs with you because you are near civilization and I exist way outside it.
All joking aside...here's something you might want to consider for yourselves if that is your goal.
Repeating something I posted elsewhere and cannot find...Last year dh2b and I were able to take a 12 day Grand Mediterranean cruise. We could do that ONLY because we cut out all eating out except maybe once a month, and did some drastic cost cutting on our grocery bills. It was an easily achieved cost/benefit tradeoff for us.
I am still practicing the same cost cutting habits, but not quite as tightly. We haven't had to do any last minute panic money transfers to our joint account in ages. We have adapted to the lower spending habits AND both lost weight in the bargain.

Conclusion: Pick any discretionary category of your own, agree to cut spending in that area for a few months, and then see if you really miss it.

PS I'll take a raincheck on the "Abuse Me" part.
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Old 03-20-2010, 07:16 PM   #37
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Your 60k also looks good to me for the Chicago suburbs. I have almost the same total expenses as you. My condo and real estate taxes combined about equal your medical and real estate taxes combined. Other than that, we have almost identical line item spending.

The only thing I can point out is as others have mentioned - accrual for a car for each of you at every 10 years instead of 5. It is possible for vehicles to last 10 years in Chicagoland - I have a 2000 Jeep with 150k miles that I just replaced and DW has 2001 Acura with 120k miles that will last a few more years. But maintenance costs tend to creep up in years 7-10
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Old 03-20-2010, 07:54 PM   #38
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I live alone, so some of your expenses will be double mine. I found four areas that you might be able to trim back.

1. I have edited your list below, to illustrate something about what I think of as miscellaneous spending money:

Quote:
CategoryMonthly
Allowance (pocket money DW & DH)$272 (divided by 2 = $136)
DH Clothes/Personal$71
DH Haircuts$25
Entertain Dining$318 (divided by 2 = $159)
Entertain Internet$50 (divided by 2 = $25)
Entertain Movies/Plays$67 (divided by 2 = $33)
Home Lawncare$41
Home Misc/Repairs$59
Misc Off Supplies$8 (divided by 2 = $4)
Misc Postage$18 (divided by 2 = $9)
Vacation$100 (divided by 2 = $50)
Accrual*$260 (divided by 2 = $130)
* travel (every 2-3 yrs) $1565, (divided by 36 months = $260)
What I would like to point out is that the above, hopefully corrected to the equivalent were you single by dividing relevant quantities in two, comes to around $742/month for you as a "single". It comes to $400/month for me so far in ER ($500/month before ER), including my half of our dining out, entertaining, and vacation costs, and my lawn guy who costs more than your lawn care costs. Yet, I feel I live a very pleasant, even self-indulgent lifestyle, so I am thinking that perhaps you could push yourself to cut back just a wee little bit in one or two of these areas.

2. Also I think your budget suffers due to house size (I would bet it is quite a bit larger than the 1500 square feet or less that many couples find to be sufficient). House size leads to lifestyle creep, as well as higher energy use, property tax, homeowners' association, and maintenance costs.

3. Your budget suffers due to location. Parking? I haven't paid for parking in a very long time, mostly because I live where I live and because I always seem to have the option of choosing not to use valet parking. Also your sewage/water/trash are very high in your location - - you pay $129/month for those three together, but here they add up to $20/month, assuming twice my present water usage. Frank says a men's haircut costs $12 around here (he goes to conventional men's barbers, and I spend $12 every 2-3 months at Supercuts).

4. Some of us choose not to drink and not to have a pet. For me the effect on my budget is pleasant, saving me $114/month in comparison, but not the reason for these choices.
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Old 03-20-2010, 08:20 PM   #39
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Midpack,

You have helped me with my schoolwork and I would not dream of abusing you. I don't like to abuse people anyway although I will pull their chains on occasion and accept a certain amount of chain-pulling in return.

I saw 2 ways that, if I were your DW, I could save you $$. I do a lot of our yard work. As a result, we don't pay someone else for the work, and I don't have nails worth doing! Any kind of nail-decoration would be destroyed instantly.

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Old 03-20-2010, 08:59 PM   #40
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Only $53 a month for booze What kind of teetotalling freaks are you?? I need a moment to grasp the enormity of such a thing. In 2009, the young wife and I went through $283 per month just for wine at home.
I thought the same thing. We lump food and beer together, since we buy it all at the local grocery. I've been really only tracking our spending in detail this year. It's crazy how much we spend on grocery/alcohol. Yet, still, I sit here and drink my beer.
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(49, married; DH 53. I am fully retired as of 2015 (well ok, I still work part-time but only because I love the job and have complete freedom to call off if I want to travel with hubby for work), DH hopes to fully retire 2018 when he turns 55 to access 401K penalty-free...although he may decide to do part-time consulting)
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