Supplementing Nicolette's question: How much do retirees live on a year?

[Martha]

My impression when I first joined the board was that there were many people who were retired or going to retire on three to four thousand a month. I remember once we had a poster who said he needed $100,000 to $120,000 a year and we kind of gave him a hard time. Now it seems like a regular occurrence for people to want/need that much and it seems quite rare to see people who claim to live on less than $50,000 a year.

Is my impression right? How have things changed? Is it just because more people are on the forum?

I know that nicolette has asked the question "how much do you want a year to live on when you retire?" I am asking the question pointed to actual retirees: How much money did you spend last year? Yes, taxes included. Everything included. If you had a big special expense, tell us about it.

 

[chinaco]

My vote includes an accelerated mortgage payment.

 

[harley]

Between $125-$150K (married). New house, new furniture, moving expenses, multiple trailer rentals, getting the other house ready to sell, etc. Plus the new mortgage, although that frees up equity to invest in more diversified investments. Next year is going to be significantly less.

 

[Meadbh]

I voted $60-70K. That's what I spend now, but when I retire I will have more time and will probably spend more money!

 

[Free To Canoe]

ERed last year. Spent $46k (included new car purchase). On track to spend $40k this year. Home improvements making it hard to stay under $40k.

Free to Canoe

 

[unclemick]

Single - 50,399 all included - sorta attached now.

8 trips - 4 to New Orleans, 3 to 'The Crappie Capital of The World.' ? 15k including gas/gifts/entertaining/etc. 1 to Georgia.

2006 - 89k - maybe 25k remodeling, Mexican cruise, 45th high school reunion PacNW plus visiting Sis/Bil south of Seattle plus Portland. 3trips to Alabama. One to Pensacola.

Probably keep it down to maybe 5 trips this year - only one left on the books - Nags Head in Sept - ? plus ? somewhere at Christmas?


heh heh heh - Even in expensive Kansas City - if I paid off the mortgage - could get into the 25-30k range and party locally.

P.S. For those new to the forum - I retired jan 1993 at 49 and used to be 'really cheap' as in perhaps one step beyond frugal - but I'm trying to make up for lost time.

All praise to Bogle and balanced index/time in the market - I renewed my Passport in 06 and do not plan to croak with money on the table.

heh heh heh - party on!

 

[explanade]

Are these figures after taxes?

 

[GoodSense]

Married, still w*rking. Last year our spending was just under $48K. I put in another $12K in the other poll to adjust for the need for more insurance after retirement (high-deductible sort, and not even sure if that's enough).

 

[unclemick]

Are these figures after taxes?

Nope - all included - taxes, dog license, including 2k added to in Vanguard Prime MM for emergency mad money/etc. Not total reserve - try to hold a one yr 'float' 30-50k.

heh heh heh -

 

[explanade]

So when someone says they spent $50k, that's before income taxes?

 

[Moemg]

I just checked and it was $55,000 . I took my daughter & her husband on a cruise for their birthdays . I furnished my grandson's nursery . We all went to Washington ,DC for Thanksgiving and I paid for my Mom's hme health aide . I think I did amazingly well . I'm going to JJill next week and reward myself.

 

[cute fuzzy bunny]

Trick question.

Someone with no mortgage payment, car payments or other debt payments might be living pretty well on 40k a year.

Someone with all of those might be eating a lot of rice and beans and watching tv with rabbit ears at 60k.

I think we've got a lot more people. Many probably are playing it close to the vest. Everybody's fibbing by 20-30% or more, because its the internet. People who want to spend too little or too much often get a tough time about it.

 

[Khan]

Single: 20,000 to 30,000

Spent ~$25K last year ('07)(including taxes) (and bought a car to replace 1989 vehicle(not part of $25K)).

 

[Martha]

Yeah bunny, we have other polls for net worth. I just wanted to get an idea of what people are claiming in the range of retirement spending. Which seems different from claims four years ago.

 

[cute fuzzy bunny]

You didnt get me. I dont mean net worth. If I had a mortgage and two car payments, I'd be spending about 20k more a year than I do.

So the spending depends on what you're arrangements are.

Someone with a two homes with mortgages in retirement would spend a lot more than me but their lifestyle could be the same.

The folks with 4-5 rental properties have huge spending demands, but their cash flow is excellent!

Now if you delineate it to be spending ex-housing/car/debt/other flim-flammy stuff and keep it to standard expenses, you might have somethin.

 

[dex]

I remember once we had a poster who said he needed $100,000 to $120,000 a year and we kind of gave him a hard time.

When I respond to post like the above I first ask if they track their current expenses and do they have a detailed budget for before and after retiring. How they answer tells me if their budget estimate for retiring is reasonable.

Assuming (single or married) no debt an no children; spending $100K a year and growing it by the 4% guideline is a very difficult spend rate to maintain. (Yes, I know it can easily be done - if you want to do it to prove a point)

I think the major error that those who have such a budget do is they plan for peak spending (e.g. doing a lot of international travel to expensive locals) and projecting that forward. Or they have not done the detail work and thought it out.

So, in my guess is that expenses would remain rather flat over time. Travel & Entertainment expenses would be a large part of the budget in the early years. Over time T&E expenses would decline and Health and other expense (inflation, home base expenses) would increase.

So; give those people with large budgets a hard time. Make them do the grunt work - It just might help them retire sooner.

 

[Martha]

You didnt get me. I dont mean net worth. If I had a mortgage and two car payments, I'd be spending about 20k more a year than I do.

So the spending depends on what you're arrangements are.

Someone with a two homes with mortgages in retirement would spend a lot more than me but their lifestyle could be the same.

The folks with 4-5 rental properties have huge spending demands, but their cash flow is excellent!

Now if you delineate it to be spending ex-housing/car/debt/other flim-flammy stuff and keep it to standard expenses, you might have somethin.

I did get you, I just jumped too many steps, waiting for someone to say that what is really important is how much income you are generating.

The poll is FWIW. You might pay rent. You might have a mortgage. You might own a million dollar home mortgage free. Nevertheless, it is still interesting to hear whether someone is living on 20,000 or 200,000.

I don't imagine we have too many people with huge cash outlays for rental property mortgages and are reporting that spending here. If they do, I trust they will report the oddity as I asked people to report any big "special" expense.

 

[OAG]

2007: Total spent $24,096 (all expenses, including all taxes). Two people, traveled to NY, VA, Chicago, FL and spent the winter in Mid-west.

 

[happy2bretired]

Single but my daughter lives with me. Last year was NOT a typical year. I spent $111K. Fifty thousand of that was federal and state income tax and $7K was for travel and some new furniture. I did get about $13K back this year in income taxes due to over paying last year. Things are much different this year and I expect to spend about $50K by the end of the year.

 

[Rich_by_the_Bay]

The tax thing can be confusing for me. Obviously taxes will be less than now, but with part-time work, maybe not that much less. Second, if I use post-tax savings to live on first, that mean no taxes on that part, but when that runs dry, I have to gross everything up by 20% or whatever (ouch).

Anyhow, I didn't reply since I wasn't retired but for future reference, it would be interesting to know what folks spend after taxes, that is, true living expenses only.

 

[Rustward]

Seems to me that we sometimes get out of alignment on details like before taxes or after taxes ...

Nicolette's original question #1 asked for an after tax figure.
This poll includes taxes. Just an observation.

Looks like Rich posted while I was composing.

 

[UncleHoney]

Retirement for two this year will top out about $47K for us. That includes Uncle Sam's stimulating donation.

Some unusual expenses this year were almost $4K for dental implants for DW, beyond what insurance covered. We spent several thousand $$ doing some house work and I built a number of pieces of furniture with granite tops, probably spent $1100 for the tops alone. And then there was the BIG SCREEN TV, all 52 inches of it.

I started retirement last October 1, with $8193.73 in the check book so the final tally this year will give us the real number, including all taxes. So far we haven't touched any of the nest egg, except to polish it.

 

[calmloki]

Really don't know. We have a $1918 home mortgage payment to PenFed, but that was to retire a mortgage on a rental house and to pay off a mortgage we had on our home to payoff some apartments. Quarterly Fed and State taxes run about $9300 for the two of us. We don't have any car payments - driving '89 and '93 BMWs. A fair chunk goes to Alaska Air so the gal can ping-pong back and forth to 29 Palms every month to care for her Momma. Current clothes budget is pretty non-existant - second hand stores, and i really don't wear many garments out - the gal is not swayed by the latest fashion breeze. Kids = 0. Costco frozen foods for most of our diet. When i broke down the last year's expenses figured $1440 for a mortgage payment and added utilities, Dish, phone w/ DSL, $700 for insuring 2 people, $48 for 7 dental cleanings/year, $800/month for 2 car payments, $200 for auto gas, $450 for fun, $500 for supplies and gifts, $176/month for property taxes, $72 for house maint., $128 for home and auto ins. ... I came up with a budget in today dollars of $5510/month - not including anything for Fed or state taxes - figure maybe $90k total desired/year? Lots of known unknowns in there and no unknown unknowns. Druther have a cushion for those. Too much guessing: never had a new car, but if my shoulders are telling me the truth i probably won't feel like rolling the dice with old cars much longer - so figure new car payments. Health insurance cost at 60? Figuring a mortgage somewhere, but who knows how much?

 

[grumpy]

When I was planning for retirement, my target was to have $90,000 for the initial year and to increase by inflation in subsequent years. In the first year we actually spent $88,000. After 5 years of retirement I have stopped bothering to track expenses in detail. Now we spend what we need/want and I just track our net worth, which has stayed about the same despite the fall in home values.

 

[unclemick]

You didnt get me. I dont mean net worth. If I had a mortgage and two car payments, I'd be spending about 20k more a year than I do.

So the spending depends on what you're arrangements are.

Someone with a two homes with mortgages in retirement would spend a lot more than me but their lifestyle could be the same.

The folks with 4-5 rental properties have huge spending demands, but their cash flow is excellent!

Now if you delineate it to be spending ex-housing/car/debt/other flim-flammy stuff and keep it to standard expenses, you might have somethin.

Yep - pre Katrina paid off fish camp, cars, no health insurance - I coulda checked off under 20k(quite a bit under) for a number off yrs.

Now -mortgage, car payment until this year, health insurance and as you pointed out on another thread - take out more tax deferred on occasion to pay the the resulting higher taxes as you drift up in spending.

It is amazing how much you can vary your spending if need be in ER - up or down.

heh heh heh - We've had some ancient threads on budget's on this forum - which usually ended with walking barefoot to school uphill both ways or the John Cleese sketch.