Two people....what do you spend?

[tkp]

Just wanting a little "gut check" as my wife and I pursue the "when" to ER decision.

We are 52 and 53, have a paid for house, no debts of any kind and enough assets to live a modest but NOT extravagent lifestyle. We will have to pay for our own health insurance until medicare, however.

People who meet these conditions (paid-for house, no debts of any kind, must pay for their own health insurance AND who are ALREADY retired....Here is my question --

How much do you find yourself spending per month on EVERYTHING....Living expenses, health ins, travel, taxes, etc. ??

Thanks in advance for any help you can provide as we would like to get a sense of things from people who are ALREADY DOING IT.

Thanks again, this board is a great service!

 

[W2R]

I'm not a couple, but I have a great exercise for anyone who hasn't done it yet and if you haven't done it, you might find it to be helpful. Try this. Once a year, I do my budget to see exactly what I've spent. I total up the utility bills separately, and I get my gas expenditures from my debit card records, and so on. I limit myself to a certain amount each month from the ATM, and that category is simply "miscellaneous"; I don't feel a need to break it down any further. With my bank statements it really doesn't take very long to do all of this. Then, I reconcile it with the amount I have saved, and my paycheck total.

Generally I average about $1300/mo, give or take $50. Of this, $800/mo is what I thought I was spending, and $500/mo is the unexpected stuff like fixing a broken A/C unit, buying a TV to replace the broken one, and a root canal and crown (all of which happened last year, for example, but other things happen other years). Like you, I have my house paid off, and also my car is paid off and I have no loans or credit cards to concern me.

Analyzing my past expenses has been a great help in retirement planning, because it gives me some idea of what I will need after taxes. I add the $150/mo that I will be required to pay for my lifetime medical from the federal govt. Then I add some for long term expenses, some more to figure out what I will WANT, and adjust everything for inflation.....

 

[RASAP]

We're not retired yet but we are very close. Here's some input that MAY help anyway.

I have been tracking our expenses for several years now in preparation for retirement. With the help of Quicken, I can filter out work expenses. We have then look at the remaining annual expenses and have make projections in other areas. At this time, it looks like $35k per year will do quite well for our lifestyle - minimal travel and low cost hobbies / activities. To this we will have to add taxes and health insurance. The health insurance part is the biggest unknown at this time as it could be anywhere from $7k to $15k per year depending on how the carriers view some of our minor preexisting conditions. Our situation is similar to yours - about the same age, house is paid for, no kids, no debts. It seems to me though that a lot depends on the cost of your optional activities during retirement.

 

[grumpy]

We are retired with similar circumstances except the gov't pays 70% of health insurance premiums. Our total monthly expenses average $7000. However, the "necessities" probably only run $5500. We live in a high cost of living area (D.C.)

Grumpy

 

[Sam]

This is a great topic. I can't contribute as I'm not qualified. Still have 2 kids in the house.

 

[SteveR]

The problem with asking an open-ended question like How much you you spend? is like asking How high is up? Everyone here has different expenses numbers and different investment mixes. Some have pensions, some COLA'd other not, some have 401ks, some not, some have $millions in investments, some not.

Good luck on getting an answer that will help you much. The only way to answer your question fully is for you to really know how much you will spend in ER including taxes and health insurance and then see if you have enough to pay for it; if not, then you will either have to lower your expenses or keep working.

There really is no magic number...our financial situation is not the same person to person. You can get a general idea of what people spend by doing a search of the older threads. There are a number of polls out there that have a lot of information on this.

Good luck.

 

[cute fuzzy bunny]

Couple of numbers that have a wide range of variability but are good starts...

I've budgeted down to the fine details on the elusive "miscellaneous" category...everything from toothpaste to rabies shots for the dogs to oil changes in the lawn mowers. With tax and a cushion...about $5k per year.

On capital items, like car replacements, car maintenance, home repairs and upgrades, appliances and so forth...also close to $5k per year.

I do all my own repairs, maintenance and installations unless it requires yanking stuff out of an electrical panel or blowing flames into an open gas main, so my costs are a good bit cheaper than someone who expects to pay others to do the work...yet I find many people severely underestimate their 'misc' bucket and then wonder where the bleeding is coming from. Many also dont draw back their future capital costs to assure they're generating the funds required on a yearly basis and accounting for those. More surprises that can hole-shot your ER.

So 10k plus your food, utilities, debt servicing, medical care, travel and vacations, insurance, taxes...you've probably got a decent baseline there. Add eating out costs because we almost never do, and add a bunch to both expense categories and capital categories if you're going to pay someone to do all the work for you.

Then its a useful exercise to pare that down to the bare necessities, see what your baseline number is that you may wish to employ should we hit a great depression type scenario, and be realistic with yourself on how many years you could live like that.

 

[unclemick]

Then its a useful exercise to pare that down to the bare necessities, see what your baseline number is that you may wish to employ should we hit a great depression type scenario, and be realistic with yourself on how many years you could live like that.

Work in progress here - SWAG in Missouri 3k/mo - new stuff is health insurance, mortgage, and yuck taxes cause I'm now single and tapping trad IRA. Ran well under 2k/mo(except for two remodeling years) first eleven years in Louisiana(3 people). Smearing out capital replacement costs and misc going forward is going to be a number pulled out of my you know what - a fish camp to an 1100 sq ft house in da burbs is a new ball game for me.

heh heh heh - and yes I made one year in the 90's for 12k - she didn't call me a cheap bastard for nothing.

 

[donheff]

I do all my own repairs, maintenance and installations unless it requires yanking stuff out of an electrical panel or blowing flames into an open gas main, so my costs are a good bit cheaper than someone who expects to pay others to do the work...

I enjoy fixing stuff - when I can. But my dad couldn't screw in a light bulb and passed his genes to me so I suck as a handy man. I end up paying the pros for most stuff. When I was in college I had a similar problem with my junker cars so I took an adult ed shop course at a local HS and ended up getting pretty good - rebuilt carburetors, replaced starters and generators, dropped and engine or two, etc. (I wouldn't touch a car today)

But, what about adult ed courses on general fixit stuff. Do they exist? Are they any good? I would probably do well at something designed for the stereotypical helpless woman.

 

[cute fuzzy bunny]

Your local lowes and home depot usually have regular classes on how to do stuff yourself.

As far as cars go, except for oil changes and tire rotations, I dont think you can do too much yourself without some expensive equipment.

But I saved about 4000 on delivery and installation fees for all my appliances and my water heater. Painted my house exterior for about $250 worth of paint instead of $2200.

It adds up...

 

[FinanceDude]

Two of us (DW and I): $3000 a month

Two rugrats? $3000 a month

SO I need $6k a month now, and $3k a month when they leave home...........

Just kidding.............

 

[Sam]

As far as cars go, except for oil changes and tire rotations, I dont think you can do too much yourself without some expensive equipment.

You can still change the spark plugs, alternator, belts, starter, coolant, oil switch; Replace bulbs, headlights, dash board console; Upgrade the stereo; Clean, wash, and wax. Altogether, those represents 50% to 75% of maintenance/repair cost.

Most importantly, you can diagnose your car problem to determine the root cause, then have a mechanic fix exactly what you want. When you bring your car in for service and have absolutely no idea what the problem is, your chance of getting a correct/honest diagnosis and repair is pretty slim.

 

[frayne]

Approx. $3500 a month. We are both in our mid fifties, retired, no debt, own our home but have retiree health coverage that costs about $75 a month.

 

[tkp]

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!

 

[Sam]

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!

Count me in. I will be in an almost identical situation a few years from now. The only difference is that I will take SS at 62, not one single day later. My biggest issue right now is health insurance in this country. I'm not willing to pay the current exorbitant premium. And if it keep getting more expensive, I might not be able to afford it at all.

However, I have a backup plan. I can always retire outside of the US, where my expense will be lower, my standard of living will be the same or higher, and health insurance is so affordable that it's not even worth mentioning.

 

[Sparky]

We are in our mid-40s, retired for 3 years (which nobody knows about), own home and vehicle outright, no debt, pay $220 per month for catastrophic ($5,000 deductible) health insurance, buy high blood pressure meds from Canada. We spend around $3,000 per month. However, we sold and bought and renovated in 2006 and spent about $80-$100,000 and we are still well within the 4% withdrawal rate.

 

[Sparky]

And we also drink decent wine and try to eat whole (expensive) foods and go out here and there for lunch and/or dinner. What we learned during the sale and purchase of our homes is "don't sweat the small stuff".

 

[modhatter]

Many of us approaching possible retirement have probably spent hours penciling out future living costs while retired. It is really difficult for us to to acuratly say if we will be able to live on this budget, as we are not living on it now.

As my retirement will require that I spend considerably less than I do now while still working, I can only guess at that "miscellaneous" cost. I can figure my taxes, utilities, phone, cable, etc, etc., but have a hard time putting a number on that "miscellaneous" You know- the one for buying stuff for the house or clothes or Christmas presents, or repairs, root canal, vet bills, new washer and dryer. Those are the unknown to me. When I do pencil out my new proposed spending allowance I put in a $1,000 miscellaneous figure down. Sometimes I think that's too much and sometimes I think it is not enough. How about you.

 

[W2R]

Many of us approaching possible retirement have probably spent hours penciling out future living costs while retired. It is really difficult for us to to acuratly say if we will be able to live on this budget, as we are not living on it now.

As my retirement will require that I spend considerably less than I do now while still working, I can only guess at that "miscellaneous" cost. I can figure my taxes, utilities, phone, cable, etc, etc., but have a hard time putting a number on that "miscellaneous" You know- the one for buying stuff for the house or clothes or Christmas presents, or repairs, root canal, vet bills, new washer and dryer. Those are the unknown to me. When I do pencil out my new proposed spending allowance I put in a $1,000 miscellaneous figure down. Sometimes I think that's too much and sometimes I think it is not enough. How about you.

Why does your working budget have to be so much higher? I suppose you might need a little more for clothing or gas, but surely you can estimate that. You could try living on your retirement budget now, while you are still working. That way you can see if it works, you can add the excess to your retirement nestegg, and it won't be such a jolt when you reach retirement.

 

[haha]

Last year, for myself only, I spent cash of $2650 per month. No accruals or sinking funds for unusual expenses.

I live fairly low on the hog, so I figure a lot of you guys must be doing some shoplifting to come up with the figures you do.

Ha

 

[SecondCor521]

If I subtract out Mortgage Interest, Taxes, Child Support, and Kids, in the last month the rest of my expenditures were at an annual run rate of $9,085. Single person.

2Cor521

 

[Khan]

One person with paid for house
After taxes and health insurance: Pension ~$26K/year
Still saving

 

[spncity]

Yes, yes, yes!

This is exactly the kind of info I'm looking for. Of course, I realize that, yes, it depends on your lifestyle and spending habits. And everybody is different.

But - hearing about after ER spending is very helpful to me.

We track pretty much everything we spend (less than 1 percent in that "not accounted for misc cash spending" category).

But I still am trying to find that elusive figure for ER annual requirement. Hard to visualize what life will be like when college bills are over and kids are gone. When you don't need to drop off a ton of stuff at the dry cleaners anymore. Needing to visualize what the minimum, middle and max range is.

I'd see us eating out less after ER - more time to cook. Cut out the commute. We already do all our own repairs and car work, cutting firewood, etc. (Um, "we" is an overstatement as DH does the work and I'm available to - ahem - 'supervise' whenever needed).

Travel would increase some, hopefully. Might do the RV thing for a year or two.

Sounds like health insurance is the wild card here (we're in good health). I'd need a laptop and a cell phone as they would no longer be supplied by work.

Keep the info coming.

Thanks,

spncity

 

[spncity]

Curious about this:

We are in our mid-40s, retired for 3 years (which nobody knows about),

Nobody knows about? Do you mean your neighbors? Friends? Family that live far away?

So do you leave the house during the day so that they think you've gone to work?

 

[ExHermit]

Two people. We both quit our jobs eleven years ago, but DW was offered a job-share situation and went back to work for three six-month stints ending in 2000.

Our total yearly budget for 2007 is $43,644. We allocate $31,416 to ordinary ongoing expenses, $7207 to amortization of large infrequent expenses and $5021 to optional fun stuff (mainly travel).

We adjust each of these categories for inflation each year. The odd values are the result of applying inflation adjustments to our budget since 2000.

We usually end the year on budget or very close in the ordinary expense and fun categories. The infrequent large expenses are obviously wildly variable. The $7207 is our current best estimate of the long term yearly average.

Factors that help to hold down our spending are free health insurance from my wife's prior employer, a small house owned free and clear, and a net state and local tax bill close to zero.