Two people....what do you spend?

[savedapile]

youbet, yes, if we did not have employer sponsored healthcare our expenses would be much higher. We had to stay in the workforce intentionally to keep it as DH has a cancer history (fortunately now cancer free x1.5 years and I need medication for a rheumatic condition).
Also, our house is paid for, but if we got in a pinch we could sell and downsize. We have a very nice house but could reduce taxes and save the difference in selling price if we moved to a less costly area. But our life and friends are here.

Old woman, I agree many spend more, I have figured our bare bones budget if we had to survive with no luxuries. We however plan on travel and hobbies and were willing to save more for those as well as stay in our house.

The only way to know your circumstances is to track and figure out your expenses.

 

[W2R]

2 of us in the UK. No mortgage. No kids.

Holidays (vacations) $15,000
Football tickets $700
Gym subs $800
cds/books $1,000
Gifts $2,300
Other entertainments $2,000
Other insurance $1,800
Groceries $3,600
Petrol(Gasolene) $3,700
Car (auto) repairs/servicing $3,100
Meals out $1,300
Clothes $3,000
House maintenance repair $3,500
Cash/miscellaneous $6,200
Heating/utilities/phone $4,700
Broadband & Satellite TV $1,200

So I guess about $53,000 a year. Usually varies between $50,000 and $60,000.

I think its cheaper to live over there in the USA (apart from medical insurance which i don't fully understand)

You have $21,000 devoted to vacations, sports tickets, gifts, books/CDs, and other entertainment, and that doesn't even count your TV/internet fees. I don't think that's due to cost of living differences. Many of us spend very little in these categories because we are saving for retirement (less than $50 for me this year, to cover Bernstein's and Swedloe's books, vs $21,000.00 for you this year)

I am allowing a little extra in my retirement budget for entertainment. I'm most definitely not spending much on that sort of thing now. I'm at work most of the time anyway, right now so I don't have time to entertain myself THAT much. Right now I'm spending about $16,000 after taxes (very roughly figured, my earlier post being more accurate). In retirement, my target income is $24,000 after taxes, so I am thinking I will need about $35,000.

 

[W2R]

youbet, yes, if we did not have employer sponsored healthcare our expenses would be much higher. We had to stay in the workforce intentionally to keep it

That is what I'm doing right now. I could probably afford to retire a little bit earlier than three years from now, but I will get lifetime medical if I stay in the workforce until that time (so I will). In a way, this is a good thing because it will allow me to build up a little safety net before I make the plunge.

 

[Moemg]

I think there is a middle of the road here between bare bones and luxuries.I cannot imagine having to live on a third less post retirement . Don't most of the books recommend at least 80% of pre-retirement income.I'm retired and the only expense that has gone away is the saving for retirement .I now have more time to travel ,take courses and work on house projects ,all of which cost money . I'm living very nicely on $46,000.

 

[youbet]

Generally, it seems like there is so much variation in (1) lifestyle choices, (2) terms and definitions and (3) non-monetary benefits, that I find it difficult to take any absolute numbers away from discussions like this. The discussions are still useful, however, in that ideas and concepts are raised that are very, very useful.

Lifestyle preferences are a huge variation. DW and I retired, in part, because we craved the time to travel and partake of leisure activities we had put off during our working lives. Without a hefty chunk of cash budgeted for vacations the first few years of RE, we probably wouldn't have RE'd. But that's just our choice and desire. We perfectly understand others lifestyle choices including a low cost, rural, self-sufficient life style. But, obviously, the lifestyle you chose is the predominant driver of your RE budget and what you want is what you want!

Terms and definitions seem to be all over the map. Some have said that the figures they stated are what it takes to cover only the minimum necessities. Others have included significant discretionary spending. Taxes, our single biggest expense, seem to be accounted differently by different posters. And on and on.

Non-monetary benefits and non-financial investments vary. Some have generous employer provided health care. Some have paid-for homes in good repair in low tax areas so housing costs (absent the opportunity cost of the money tied up in the house) are almost nil. Some have family situations, such as a parent-owned summer home, that will keep vacation costs minimal.

Bottom line........very interesting and worthwhile discussion but very difficult to walk away with an absolute number that's meaningful to compare against our own current budget/expenses. I'd advise OP to keep that in mind.

 

[tkp]

Wow, I'm impressed with this Board......

I'm fairly new here, but I'm impressed that the topic I originally posted has produced so many replies (and is still on-topic )

Anybody else......?

Thanks for your help!

 

[Billy]

We spend a net of $24K annually. We travel the world and have been doing so for 17 years.

Priceless Retirement: http://www.retireearlylifestyle.com/motley_fool_article_6.htm

We updated our figures as of end of 2006, and although our categories have shifted, the net annual spending came in at the same total.

Akaisha
Author, The Adventurer's Guide to Early Retirement

 

[chinaco]

We spend a net of $24K annually. We travel the world and have been doing so for 17 years.

Akaisha,

If you and Billy started with an expense of $24k 17 years ago, how have you been able to maintain the same standard of living? I ask because of inflation. It seems to me certain expenses had to be adjusted. I know the CPI indexes are based on a basket of goods and services. Have you ever done a backward look at your expenses by category to see if you backed off on spending in certain areas and spent more in other areas throughout retirement

 

[dex]

Thanks so far to everyone who has responded.....

My wife and I think that we will probably need about $3000/month to cover our basic living expenses, including taxes and health insurance.

We also want to budget about $500 per month for travel and another $500 for "large ticket, not in budget" items like occasional car, new roof, etc.

So we are looking at about 4 grand per month, adjusted upwards with inflation. And then a (hopeful) raise when Social Security kicks in at 62 or 66.

Anyone else under similar circumstances want to weigh in? Any help is appreciated?

Thanks!

I'd suggest going over all your past bills for 1 year or so. Then adjust for post RE life.

Here's my budget for a single person.
Basic Living
House
(2,800) House RE Tax
(2,496) House HOA
(840) House Gas & Electric
(439) House Ins.
(300) House Misc Purchases
- Misc
(6,875) Subtotal House

Car
(204) Car Routine Maintance
(820) Car Ins
(132) Car Registration
(1,200) Car Gas
(2,356) Subtotal Car

Personal Expenses
(1,200) Cash - Misc
(420) Health Club
(322) Cell Phone
(1,980) Food
(420) Wine
(127) Blockbuster
(631) Telephone/Internet Access
(1,800) Dining Out/Entertainment
(2,376) Health Ins.
(360) Clothes
(96) Misc
(9,732) Subtotal Personal Expenses

(18,963) Total Basic Living
Incremental Living
(191) Travel Trailer Reg
(18,000) Travel/Education/Etc
(275) Hobby Membership
(1,152) Misc Hobbies
(906) Furniture Loan - No Interest
(513) Storage
(21,037) Total Incremental Living

(40,000) Total Basic + Incremental

Accruals
(500) Auto Repair
(2,000) Auto Replacement
(500) House Repair
(400) House Appliance Replacement
(1,400) Unexpected
(200) Computer Replacement
(5,000) Total Accruals

(45,000) Total Budget

 

[73ss454]

DW and I moved to our retirement home in Fla. the end of last year. I started tracking our expenses Jan 1st and we've been spending about 5K a month. Not sure of the taxes that have to be paid as of yet.

 

[dumpster56]

DW and I moved to our retirement home in Fla. the end of last year. I started tracking our expenses Jan 1st and we've been spending about 5K a month. Not sure of the taxes that have to be paid as of yet.

Did you take a mortgage??

I remember when you sold your place. I do not remember.

We seem to be spending about 2,500 a month since we moved to NC.

 

[73ss454]

No mortgage, everything is paid except DW's car. I have the $ on the side to pay it off but the rate is only 3.75% so I'm up in the air about paying it. That cost is not part of the 5K a month.

 

[Billy]

Chinaco:

Akaisha,
If you and Billy started with an expense of $24k 17 years ago, how have you been able to maintain the same standard of living? I ask because of inflation. It seems to me certain expenses had to be adjusted. I know the CPI indexes are based on a basket of goods and services. Have you ever done a backward look at your expenses by category to see if you backed off on spending in certain areas and spent more in other areas throughout retirement

When we first were retired, we bounced all over the map with spending. Some years were $36,000 net spending and other years were $10K. It depended on how much we traveled, how much 'trade' we did, if we owned a vehicle, etc.

We tried to spend about 3%- 3.5% of our net worth, and of course, due to the dotcom bubble, things were looking pretty good sometimes!

In general, we have become very skilled with our spending, and we have made certain choices (see 'Worry-Free Housing: http://retireearlylifestyle.com/a_a_communities.htm ) some would find what we do in the housing category a hardship to their egos.

Also, we only own one vehicle (See Cost of Working: http://www.retireearlylifestyle.com/cost_of_working.htm

and Retire To Simplicity: http://www.retireearlylifestyle.com/retire_to_simplicity.htm )

We have taken control of our tax burden by selling shares when we need them instead of having income producing vehicles. We know folks who cannot do this, and prefer to have a set amount for income 'so they know where they are.' This amount of income automatically puts you into an income tax bracket that you cannot control.

In general, the areas of high spending in a 'normal' household are Housing, Transport, Taxes and Food - If you can modify those areas in any way, you save a good deal of money.

Since Billy and I owned a restaurant, we know how to make the most of fresh food. We don't buy packaged products (because you then pay for the packaging) and we enjoy the whole cooking process, including the socializing/teamwork aspect.

Regarding inflation -- As with anything - when a price of something is high, we purchase something comparable that is cheaper. We have not found inflation - so far - to have put the squeeze on us. We are easily entertained and do not have high priced hobbies. When airfare prices are high we stay in a country for longer periods. We don't drive a lot (on average of 1,500 miles per year) so gasoline prices affect us little.

Sure, the categories shift over the years, but the net annual spending amount stays pretty stable. Since we become local anywhere we travel, our expenses are pretty small.

I hope this helps.. If you have more questions, feel free to ask.

Be well,
Akaisha
Author, The Adventurer's Guide to Early Retirement