Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
The Cost of Working
Old 03-25-2010, 04:53 AM   #1
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2007
Posts: 5,072
The Cost of Working

My planned ER date is not far off. I am studying our finances, to get a better understand of our Income while I am working versus after I ER.

One area I have been exploring is the cost of working. Those expenses that are related to earning a wage. I am just getting into it... but, I found over 8% gross reduction out of my gross pay in 3 areas:

  • SS Contribution
  • Medicare Contribution
  • Fuel cost reductions not driving to work.
I know when I look closer, I will probably find that savings on wear and tear on our vehicles, parking costs (work downtown), lower car insurance (because of reduced driving mileage), work clothes, etc... I will probably find that I will save upwards of 10%... perhaps 12% in (gross income) costs to work.

I will, of course have some expenses in ER that will offset some of those savings (most notable are Mega Corp ER Health Ins Premiums).

Has anyone on the forum done a detailed analysis of pre/post work cost differentials? That is expense of working versus new expenses in retirement?

I am also looking at our pure out of pocket cash flow after tax to better understand our pre/post working budget.

But I must admit, most of my ER expense assumptions (over the years) has been using a replacement of a percentage of gross wages.

It is almost like finding money. Whoopeeeeee!
__________________

__________________
chinaco 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!

Old 03-25-2010, 05:06 AM   #2
Moderator
Ronstar's Avatar
 
Join Date: Aug 2007
Location: A little ways southwest of Chicago
Posts: 9,337
I havent got into detailed analysis since I've cut back to part time, but my auto fuel costs seem to be reducing almost proportionally with hours worked. I was at $350 per month when working full time. At half time, I'm about $200. I expect to be about $100 per month in gas in full retirement
__________________

__________________
Ronstar is offline   Reply With Quote
Old 03-25-2010, 05:35 AM   #3
Full time employment: Posting here.
 
Join Date: May 2008
Posts: 589
Gas costs when working: About 200-250/month. Gas costs when not working, 10-20/month. Reason #9453 for retiring as soon as possible.
__________________
plex is offline   Reply With Quote
Old 03-25-2010, 06:13 AM   #4
Dryer sheet aficionado
 
Join Date: Mar 2010
Posts: 26
I would look at clothing costs, food cost if it would mean fixing your own instead of a restaurant or buying more preprocessed foods, fuel costs and vehicle wear and tear or possibly cutting loose a vehicle altogether, being able to do some things for yourself instead of hiring them out, probably many more.
__________________
billin is offline   Reply With Quote
Old 03-25-2010, 07:14 AM   #5
gone traveling
 
Join Date: Apr 2009
Location: Eastern PA
Posts: 3,851
A big item for me is elimination of state/local income tax on all retirement income, which combined is over 4%.

See the following for your indivudial state rules:

Taxes by State

Since I paid state/local tax on my retirement contributions while wor*ing, I don't need to do so now. All gains are tax-free. Additionally, I pay no state/local income tax on my SS income (once I draw it)...
__________________
rescueme is offline   Reply With Quote
Old 03-25-2010, 08:18 AM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
freebird5825's Avatar
 
Join Date: Feb 2008
Location: East Nowhere, 43N Latitude, NY
Posts: 9,017
My biggest savings in FIRE is Fed and NYS income taxes, hands down. I cringe when I go back and look at my tax burden when I was drawing a paycheck.
Add in FEGLI, FICA, and my TSP deferred contributions (a good "expense" of course).
Next is lunches out (I had to escape to see the daylight ) and w*rk clothes. dh2b still commutes so we still have the gasoline costs.
Then comes takeout food for days when I just forgot to set up something in the crockpot or had no time to do so in the rush to beat the AM get-to-w*rk clock.
__________________
"All our dreams can come true, if we have the courage to pursue them." - Walt Disney
freebird5825 is offline   Reply With Quote
Old 03-25-2010, 09:32 AM   #7
Thinks s/he gets paid by the post
IndependentlyPoor's Avatar
 
Join Date: Jul 2009
Location: Austin
Posts: 1,142
If you are willing to move, you might be able to find a cheaper house that serves your retirement needs as well or better than your current digs. Houses located near employment centers and good schools tend to command a premium, and those are two requirements that FIREd folks generally don't have. (OK, I know that you FIRREd (retired really early) folks may still have chilluns in school, but I think you are in the minority.)
__________________
IndependentlyPoor is offline   Reply With Quote
Old 03-25-2010, 09:43 AM   #8
Moderator Emeritus
CuppaJoe's Avatar
 
Join Date: Jun 2007
Location: At The Cafe
Posts: 6,866
Quote:
Originally Posted by freebird5825 View Post
My biggest savings in FIRE is Fed and NYS income taxes, hands down. I cringe when I go back and look at my tax burden when I was drawing a paycheck.
Add in FEGLI, FICA, and my TSP deferred contributions (a good "expense" of course).
Next is lunches out (I had to escape to see the daylight ) and w*rk clothes. dh2b still commutes so we still have the gasoline costs.
Then comes takeout food for days when I just forgot to set up something in the crockpot or had no time to do so in the rush to beat the AM get-to-w*rk clock.
Exactly! I expect to continue paying zero in taxes until I'm well past age 65 when possibly my health insurance premiums will be less.
__________________
CuppaJoe is offline   Reply With Quote
Old 03-25-2010, 09:50 AM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 16,456
Clothing!!!!

And the occasional dry cleaning.

That was also a major cost reduction as my wardrobe got a lot simpler.

Car insurance - no longer driving to work, but recreation only usually gives a nice drop in your car insurance.

And as other said - the daily lunches/breakfasts. You tend to do more at home.

Audrey
__________________
audreyh1 is offline   Reply With Quote
Old 03-25-2010, 11:21 AM   #10
Thinks s/he gets paid by the post
Onward's Avatar
 
Join Date: Jul 2009
Posts: 1,664
A big cost of working is the cost of big-ticket items and trips that are required to relieve the stress and break up the grind of typical corporate life.
__________________
And if I claim to be a wise man, it surely means that I don't know.
Onward is offline   Reply With Quote
Old 03-25-2010, 11:33 AM   #11
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,616
Quote:
Originally Posted by chinaco View Post
Has anyone on the forum done a detailed analysis of pre/post work cost differentials? That is expense of working versus new expenses in retirement?
I've never found the study, but I've read that a 1980s analysis of work-related spending set it at 20%. This became the basis of the "retire on 80% of salary" sound bite.

It also depends on lifestyle: housecleaner, yard maintenance, in-home nanny/au pair, childcare, after-school care, pet walker, pooper-scooper services... all can be taken over by ERs.

After you've been ER'd for a year, the analysis you're doing now will seem superficial compared to the analysis you'll have the time & energy to do during the first six months of ER. A complete review of all insurance policies, a complete review of all utility expenses, a complete review of cooking & dining practices... you'll keep finding more things to check.
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Old 03-25-2010, 04:32 PM   #12
Full time employment: Posting here.
friar1610's Avatar
 
Join Date: Jun 2002
Posts: 820
Here's one more...if you travel. When you're retired you can more easily pick and choose when you travel to take advantage of lower airfares (e.g., midweek vs. weekends), hotel deals, etc. Also, although I haven't done it, I understand there are good deals to be had for people who are in a position to leave at the drop of a hat to fill seats still left unsold a couple of days before departure.

And another I did early in my ER...our washing machine crapped out and because I had the time to do it, I went to a bunch of different stores doing comparison shopping. Ended up saving at least $100 bucks, if I recall correctly. Wouldn't have had the time to do that when I was working. Yes, I did spend time doing the comparison shopping, but I looked at it as a challenge and really got into it.
__________________
friar1610
friar1610 is offline   Reply With Quote
Old 03-25-2010, 05:01 PM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
audreyh1's Avatar
 
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 16,456
Quote:
Originally Posted by Onward View Post
A big cost of working is the cost of big-ticket items and trips that are required to relieve the stress and break up the grind of typical corporate life.
Oooh! Good point!

Not only that, but you usually pay full price, because you don't usually have the schedule flexibility for discounts. And your time is limited, which means you pay to get somewhere as quickly as possible and can't extend your vacation to amortize the travel cost better.

Audrey
__________________
audreyh1 is offline   Reply With Quote
Old 03-25-2010, 05:48 PM   #14
Administrator
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 38,827
Quote:
Originally Posted by Onward View Post
A big cost of working is the cost of big-ticket items and trips that are required to relieve the stress and break up the grind of typical corporate life.
And don't forget the little-ticket stuff just to make life a little bit easier or as "good for me" presents to oneself.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities.

- - H. Melville, 1851
W2R is offline   Reply With Quote
Old 03-25-2010, 06:15 PM   #15
Thinks s/he gets paid by the post
IndependentlyPoor's Avatar
 
Join Date: Jul 2009
Location: Austin
Posts: 1,142
Maybe somebody already said this, but cooking dinner can be a very pleasant thing to do when you are retired. You amble down to the market, look around for whatever looks fresh, good, or inspires you, pour a glass of wine, put your favorite playlist on the iPod and cook.

Cooking dinner after a hard day's work can seem like the last straw and eating out seems like a reasonable expense (and it may be) to reward yourself.

No matter how much you spend at the grocer's, it is hard to even come close to the expense of eating out.
__________________
IndependentlyPoor is offline   Reply With Quote
Old 03-25-2010, 06:28 PM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Moemg's Avatar
 
Join Date: Jan 2007
Location: Sarasota,fl.
Posts: 10,031
Quote:
Originally Posted by IndependentlyPoor View Post
Maybe somebody already said this, but cooking dinner can be a very pleasant thing to do when you are retired. You amble down to the market, look around for whatever looks fresh, good, or inspires you, pour a glass of wine, put your favorite playlist on the iPod and cook.

Cooking dinner after a hard day's work can seem like the last straw and eating out seems like a reasonable expense (and it may be) to reward yourself.

No matter how much you spend at the grocer's, it is hard to even come close to the expense of eating out.

That is so true ! When I worked cooking was a chore . Now it's enjoyable especially with a glass of wine !
__________________
Moemg is offline   Reply With Quote
Old 03-25-2010, 06:28 PM   #17
Full time employment: Posting here.
Retire Soon's Avatar
 
Join Date: Nov 2005
Posts: 655
Once you retire, you'll no longer be saving for retirement in a 401k, 403b, etc. This will be money freed up to spend elsewhere.
__________________
"I went to the woods because I wished to live deliberately... and not, when I came to die, discover that I had not lived."

--Henry David Thoreau
Retire Soon is offline   Reply With Quote
Old 03-25-2010, 07:39 PM   #18
Thinks s/he gets paid by the post
Onward's Avatar
 
Join Date: Jul 2009
Posts: 1,664
Quote:
Originally Posted by audreyh1 View Post
And your time is limited, which means you pay to get somewhere as quickly as possible
And because you're rushing to get there as quickly as possible, the stress-reducing vacation you've overpaid for actually further stresses you out. The only lasting effect is the cost of the trip on your credit card, which makes you even more indentured to the j*b you were trying to escape in the first place.

Quote:
Originally Posted by W2R View Post
And don't forget the little-ticket stuff just to make life a little bit easier or as "good for me" presents to oneself.
Definitely. The latte factor!
__________________
And if I claim to be a wise man, it surely means that I don't know.
Onward is offline   Reply With Quote
Old 03-25-2010, 08:01 PM   #19
Administrator
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 38,827
Quote:
Originally Posted by Onward View Post
Definitely. The latte factor!
"That meeting was so rough but I pulled it off like a champ! I DESERVE a latte!"

"That meeting was so rough and I'm lucky to even have a job after that! I DESERVE a latte!"

"I didn't even get invited to the meeting!!! Something must be up! I DESERVE a latte!"
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities.

- - H. Melville, 1851
W2R is offline   Reply With Quote
Old 03-25-2010, 08:31 PM   #20
Thinks s/he gets paid by the post
Onward's Avatar
 
Join Date: Jul 2009
Posts: 1,664
"This j*b has been kicking the crap out of me for longer than I can remember. I DESERVE a latte!"

Cha-ching.
__________________

__________________
And if I claim to be a wise man, it surely means that I don't know.
Onward 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
50 and working (and will be for a while..) tmm99 Hi, I am... 15 07-23-2008 01:10 AM
Cost of working, tax brackets, and living off income jIMOh FIRE and Money 4 05-13-2007 09:56 PM
Cost of working dm Other topics 8 07-01-2005 06:24 PM
Keep on working? FunGoals Other topics 17 02-01-2005 07:47 AM

 

 
All times are GMT -6. The time now is 04:43 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.