What is the most common ER budget?

[ESRBob]

We all know I have a spending problem. Lets just say we are living the double-loaded lifestyle.
High -expense NY City suburb. 2 kids. Public school. Health insurance (HMO) around 1k per month.

Lots of people here in our town and region are ER, with annual spending in the 200k per year range for a family. (Private school would add on an extra 25k per year per kid to that figure).

Thus the popularity of being early semi-retired around here.

ESRBob

 

[RockMiner]

Hmm, looks like we really need four ER categories:

Frugal, Modest, Loaded, and Stinkin' Loaded.

Well done, ESR. Anything beyond that, well it just ain't natural  

Keep those ER budgets coming folks!

 

[haha]

With only 2 weeks left in 2004, I can pretty accurately project my spending.

I am alone, I own my house, and these figures do not include income tax. They do include health insurance.

$25,500 cash expenses
$2700 auto maintenance and replacement sinking fund
$28,200 total budget

I don't use a sinking fund for appliances. I replaced one this year and $550 is included in cash expense. Appliances last pretty long. I only have 6, so the $550 that I spent this year should be a slight overstatement of usual annual costs.

This amount is about $5000 less than I used to spend. I have paid a lot more attention to getting control of costs since I started hanging around this board!

I feel good about this, as my SWR is comfortingly low.

mikey

 

[Cut-Throat]

I think, we spent around 65K this year. A few unplanned expenses. However this does not include medical ins. cost or income taxes.

 

[Martha]

I think, we spent around 65K this year. A few unplanned expenses. However this does not include medical ins. cost or income taxes.

Cut, how much time do you spend outside of Minnesota in the winter? You talk about going to the Bahamas each year and I know you have lots of fishing trips. If you don't mind, can you share about how much you spend on travel a year?

 

[JonnyM]

DW is ER now age 49 at Frugal-Modest. I'm going out in 2006 at Age 51 at Frugal-Modest. Two Frugal Modests equals one Modest-Loaded at 60k with Medical NOT coming out of that, fully paid as a separate benefit.

In stark contrast to my our budget peers the Beachbumz's we plodded along for 13 extra years in quiet public service jobs. We discovered late in the game that the inflation indexed pension plan we were both contributing towards at a rate of about 8 percent of salary (and this includes the years we made diddley up to the recent gravy years near the end of career) generated a "virtual" net worth of 1.5 million based on the infamous 4 percent rule. Downside? I started in 1983, so it took 23 years to accumulate. I'm content.

Should keep me in guitars.

 

[John Galt]

Hello Cut Throat! In spite of your liberal leanings, I think
your head is screwed on straight vis-a-vis ER
activities. I.E. , enjoy yourself now while being as sure
as you can that the money will not run out. Makes total
sense to me. Nice to find a liberal with some common sense.

JG

 

[AltaRed]

Okay, I'll bite on an estimate of annual expenses for 2 empty nesters of which one stays at home and one still works 50 hrs a week. Data taken straight from Quicken for 11.5 months of activity. Does not include property taxes, health premiums, or federal income taxes, FICA, etc.

I do not know how to use any of the codes, so this might be a mess.

Charity $1500
Credit Card $23000*
Memberships $460
Monetary Gifts $700
Home Maintenance $1580
Home and Auto Insurance $1500
ATM Withdrawal $12400**
Telephone (land line) $600
Cable and Broadband $1080
Electricity $1580
Gas $615
Water and Sewer $375

Appliance Renewal Accrual $300
(6 appliances $3600 for 12 years)

Auto Renewal Accrual $5000
(2 vehicles $60000 for 12 years)

Grand Total $50690

*Credit Card covers gas, auto repairs, entertainment, dining out (3-4 times a week). medical and dental co-pays, 2 vacations a year, clothing, etc

** ATM covers mostly grocery, drug store, lunch money and miscellaneous normally under $10

 

[John Galt]

We are 2 empty nesters with one at home and one
still working 32 hours a week. Couldn't help but notice that Altared's "credit card" category alone is not too far off from what we live on per year, and that includes everything.

JG

 

[MJ]

Hi,

Althought I haven't ER'd yet, my current expenses are pretty low as I am single and rather frugal.
My expenses are as follows,

Food (shopping and eating out) ...... $ 2,500
Personal Utilites ......................... $ 1,252
House expenses ......................... $ 8,942
Transportation expenses .............. $ 1,000
Medical expenses ....................... $ 3,752
Personal expenses ...................... $ 4,200
Total ....................................... $ 21,646

When I ER next year, my expenses will increase by about $25K for projected health insurance, travel and increased personal expenses. If I have to, in a pinch, I can easily reduce my projected expenses by $25k.

MJ

 

[John Galt]

Since we do not really budget, I do not have funds
(real or on paper) building to replace major item(appliances, cars, etc). I rely purely on creativity
when the need arises. How can that be you say?
Well, our vehicles won't last forever, but I can see
the end of my biker career coming up. So, I can sell
the bike and the older car and buy a newer used vehicle
with no extra out of pocket. Or, let's say a TV goes out
I still have 6, who needs 6 TVs? All
major appliances (except the computer) were bought used for cheap. If they die, I'll just go out to a second hand store or auction. We hardly ever buy anything new in clothing, appliances, vehicles, boats,
furniture, etc etc. In fact, quite a lot of this stuff
was basically free. (Oops, I forgot my recliner. Bought that new. Momentary lapse )

JG

 

[REWahoo]

 We hardly ever buy anything new in clothing, ... etc etc.  In fact, quite a lot of this stuff was basically free.  (Oops, I forgot my recliner.  Bought that new.  Momentary lapse    )

JG

JG, while I admire your frugality, the thought of wearing "pre-owned" underwear doesn't quite measure up to my standards. :-/

REW

 

[haha]

JG, while I admire your frugality, the thought of wearing "pre-owned" underwear doesn't quite measure up to my standards. :-/ REW

Amen, brother Wana!

If there is one thing in today's world that is close to free, it is clothing. Brand new cootie-free clothing from Walmart or Target. Maybe not fashion, or Italian silk ties, but then I don't think that is what Ol' John is talking about.

My mother used to take me to buy a new sweater in 1950- $20. I buy a new sweater today- $20. But boy those are different dollars.

Mikey

 

[John Galt]

Hey folks............I draw the line at buying anything which has
touched others privates. I'm cheap, but not that cheap.
Anyway, let me give an example of how this works.
I needed a casual winter jacket. Found a military
issue U.S. Army jacket in excellent condition at the local
resale shop. Because my wife is a regular there, they
gave it to her for $8.50. Warm , fits great, I love it.
Before my wife got me completely converted, I bought
my last casual jacket in an upscale leather goods store.
Around $250-$275 as I recall. I like my army surplus
jacket just as much. There is a message there.

JG

 

[Zipper]

Hey AltaRed, come home to the Alberta beef.

Mrs. Zipper and I just settled into a Prime Rib Premium Oven Roast (C$4.99 lb.). with PEI potatoes, Holland Marsh onions, and carrots.

Mrs. Zipper joked, "this is what the rich people eat"!

As long as the ranchers down your way have the politicians in their pockets, we have way too much beef up here.

Unfortunately, you probably know some AB ranchers.........and they're not happy.

 

[Zipper]

So John, you're the dude wearing camouflage, driving a 4x4, shotgun in the door, ammo belts over your shoulder, and rabbits and squirrels on the roof-rack.

 

[John Galt]

Close enough!

 

[Zipper]

 

[AltaRed]

Zipper, it truly is unfortunate how partisan politics has worked to keep Canadian beef out of the USA. No longer any bonafide basis to do so but we all know which states are Red. Will be returning to and retiring to Alberta (summers only maybe) in 6-18 months.

Following up on John's comment regarding my $23k credit card category being almost equal to his whole budget, we are intentionally incurring more costs now (perhaps ~$5-8k) in certain areas before retirement:
1) getting more dental and medical work done here stateside before reduced benefits come retirement and to take advantage of accessible health care (MRI's, etc. available here on a week or two's notice)
2) the Missus has been overhauling her wardrobe in a big way to take advantage of better prices in south Texas (I won't win that argument)
3) taking the opportunity to see a lot of the South, Southwest and Southeast we wouldn't normally do from a Northern location.

Our goal is to comfortably live on $50-55k per year including appliance and vehicle accruals, health care, property taxes and 2-3 months in a warm climate condo in winter. We think that is doable while still enjoying the lifestyle we do now.

 

[John Galt]

Just a quick note re. MRI's and "accesssible health care".
I had an MRI recently and when I called to make the
appointment, I honestly think I could have called in
the morning and gotten in that same day. Maybe a
local aberration.

JG

 

[Delawaredave5]

Maybe this is already obvious in previous postings, but are "budgets" posted here assumed BEFORE tax or AFTER tax ?

My retirement withdrawls from 401K I'm assuming will be mostly/all taxable. So I'm assuming I'l need 75K of withdrawls to equal 50K of post-tax consumable income.

Is this consistent with postings/common thought ?

Thanks !

 

[RockMiner]

Maybe this is already obvious in previous postings, but are "budgets" posted here assumed BEFORE tax or AFTER tax ?

My retirement withdrawls from 401K I'm assuming will be mostly/all taxable.   So I'm assuming I'l need 75K of withdrawls to equal 50K of post-tax consumable income.

Is this consistent with postings/common thought ?

Thanks !

Good point DD, my intent was to find out actual post-tax spending or living expenses. You can't be too specific around here...

 

[AltaRed]

I purposely said in my post that the budget did not include income taxes. Income taxes can vary a lot for different reasons and that judgement should be made by the reader for his or her own situation.

 

[Spanky]

We have 4 members in our family - me, wife, 2 kids.

Our expense is $50K per year. This will go up when the kids start college.

Spanky

 

[ESRBob]

If you are taking all your living expenses as SWR from your portfolio (as opposed to pension income), then I'll bet most ERs could keep federal taxes at least to a bare minimum -- less than 5% of the SWR, and probably zero.

The reason is that over the years you organize your taxable fixed income and other stuff into the 401k part of your portfolio, or just let it ride in the normal taxable savings but keep interest to a level low enough to keep you in the low tax brackets after your exemptions, deductions etc.

You sell appreciated assets for long term capital gains if you need to raise more cash for your SWR, and you let the bulk of your capital gains ride, unsold.  (since you only trade to rebalance once a year).  You should never assume you are paying income or even Cap Gains tax on 100% of your SWR.  Some of the SWR willl be return of capital, untaxed (when you sell an appreciated asset.) If your cash flowing out of taxable bonds is enough to live off (SWR) your bond allocation is probably too high, but even so, you have deductions/exemptions which lower overall tax.

You'll have some distributions from the funds, but hopefull they won't kill you. (although this year they probably are high.)  Anyway, since you do pay income tax on those distributions, it means you can take that money out and spend it, without paying more tax on it.  So you might choose to have those distributions funnel into a money market account all year, instead of always reinvesting in the fund.  Or you can just let it raise your basis.

Any Divs or LT Capgains you pay should be taxed at 5% in any case-- the special minimum category for those with under 75k (approx) of taxable income (married couple), who still qualify for the 15% tax bracket.

State taxes are a separate issue, but often fall in line with Federal tax.

All this is legal realignment within the current tax code.  You get taxed like the 'working poor'.