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What's the smallest amount you can retire on?
Old 06-13-2007, 01:14 PM   #1
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What's the smallest amount you can retire on?

I'm interested to know the smallest annual income folks have retired on. I'm assuming that the big ticket items are paid for, ie. you've paid off the mortgage so that the only housing expense is taxes and repairs and you have no car payments. I'm single, 46, and excluding my mortgage, my annual expenses are
$24k so I calculate that I can think about retiring once I have $750k saved and the mortgage paid off. What do you think?
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Old 06-13-2007, 01:26 PM   #2
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Well, many on this board will tell you that is not enough, but we know innumerable people enjoying happy retirements on much less.

Recognizing that freedom is priceless and trumps pretty much any shiny thing you can buy is important. If you are a person who enjoys not having to go to work more than you enjoy buying stuff, you'll be fine.

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Old 06-13-2007, 01:26 PM   #3
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If you are benefitting from employer-provided health insurance, your expenses will be a LOT more than $24,000 a year if you retire. And rising faster than inflation, in all likelihood.
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Old 06-13-2007, 01:39 PM   #4
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If you are benefitting from employer-provided health insurance, your expenses will be a LOT more than $24,000 a year if you retire. And rising faster than inflation, in all likelihood.
Health insurance isn't an issue right now as I work for State Government and also have the option of retiring to the UK
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Old 06-13-2007, 01:40 PM   #5
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I've posted here before about how my "non big ticket" budget is about $10k per year. I'm 38 and single, and my big ticket items include my three kids, my mortgage interest, and income taxes. So I could retire on $250K in 2007 dollars.

There are expenses that I expect to go up in retirement and expenses I expect to go down, but I am currently assuming those will be a wash and I can retire on a budget of 100% of my expenses. I think I will try to find some way, even if it means being uncovered (gasp!), to avoid paying the ridiculously large sums of money for health care I have seen. But I will leave the US health care debate to other posters and other threads.

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Old 06-13-2007, 01:44 PM   #6
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Based on paid healthcare,expenses of $24k and a nest-egg of $750k you could think about retiring.

However there probably isn't much room in your budget for some unknown expense should it occur. For me I would want a bit more of a cushion.

Also have you factored in housing and transporation costs including periodic maintenance and replacements ?
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Old 06-13-2007, 01:46 PM   #7
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If you are single and can relocate to wherever necessary, I think it is possible to retire on relatively little money. Inside the US, healthcare is a major barrier to ER. Elsewhere, not so much.

I also look at people like Dream Catcher - Welcome! and figure that they probably live on a pretty small amount of money. Tioga George also obviously lives on a very small budget.
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Old 06-13-2007, 01:47 PM   #8
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My wife's grandmother retired with $0 saved up. She lived off her social security benefits.
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Old 06-13-2007, 02:01 PM   #9
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Does 24K include a new roof, new heat/air conditioning unit for your house? Does it include replacing your car? Does it include vacations you may want to take? If not I would put some of these things in my budget.
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Old 06-13-2007, 02:36 PM   #10
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There are many variables to that question, more information would be needed to give you a decent answer.
To start, where do you WANT to live? Many people retire to Mexico as the cost of living is so low. Do you get health care for life after you stop working for the state?
What type of 'big ticket' items will you want to replace or maintain in retirement. Do you like to travel? How do you like camping (enough to do it permanently??), as that can lower your expenses quite a bit
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Old 06-13-2007, 02:48 PM   #11
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The smallest amount is the one that can support your expense indefinitely. Since you already know your expense, just take that number and multiply by the inverse of your SWR. And you have already done that too. Congratulations, 3.2% is as safe as it can be.
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Old 06-13-2007, 02:55 PM   #12
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Originally Posted by LOL! View Post
My wife's grandmother retired with $0 saved up. She lived off her social security benefits.
N/K...a lot of people do this and I bet are happy enough.
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Old 06-13-2007, 03:05 PM   #13
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I've been working on a detailed spreadsheet, and since I am single, no kids, no payments, it all added up to $18k/year BARE minimum, which ain't a lot (that even budgeted in $250/month for health care). Now, granted I don't want to live like that of course, but It's nice to know what the amount is. I will have more than that of course.
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Old 06-13-2007, 05:26 PM   #14
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With health insurance and being healthy to boot. Plus no mortgage and if we downsized our house. Drop certain unnecessary expenses. Did not purchase any new cars (older used vehicles). I think we could get by on $30k/yr. But I have not confirmed the numbers, it is a gut opinion.
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Old 06-13-2007, 06:01 PM   #15
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The cost of a one way ticket to Switzerland and a baguette.
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barebones livable budget
Old 06-13-2007, 06:19 PM   #16
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barebones livable budget

Here is a subsistence budget that I put together before semi-retiring -- one that I could actually live on for a long time, not a real subsistence budget which would be much lower. This assumes a single person with no house. I was inspired by Cut-Throat's suggestion to come up with a bare bones budget and make sure that it represents a very low SWR.

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275 EatOut/Groceries/Entertainment
040 Gas/transit
000 Auto principal (public transport if car dies)
075 Auto maintenance/insurance (I am driving less, too)
040 CellPhone (and only cell phone)
075 Internet/CableTV
080 Utilities [electric/laundry] (water/garbage included in rent)
080 Travel
400 Health (wildcard)
650 Housing/Rent 1 br apartment
200 Misc/Cash/Gifts
===============

$1915/month = $22980/year

projected taxes (for me, it's divvies/cap-gains) = $1200/year

Total = $24180/year

So let's say $25K to add a little fudge factor (extra $75 month)

$25K at 2% SWR = 1.25M
$25K at 2.25%SWR = 1.11M
$25K at 2.5% SWR = 1.0M
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Old 06-13-2007, 06:35 PM   #17
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i could next to bare bone it for $30k/yr while living in this relatively expensive area. but as brewer mentioned, being single, i could always just take off to where even that $30k will buy me a pretty comfy lifestyle and if i could move there then, well, i probably wouldn't even need that much money.

my friend who goes out every night and probably spends $500 or more each week just on booze, he needs more than $30k/year. but fortunately, he wouldn't need it for long. see how it all works out in the wash?
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Old 06-13-2007, 06:40 PM   #18
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It would seem to matter how little or how much I need to retire. I could have retired on about a third of what we spend, however, I would have to live in a one room apt., use public transportation or walk everywhere, never travel, never eat out, and pray we never get sick. As is we spend about $50,000 a year, live on a lake, and drive a new car. Travel when we want, and eat out when ever we want. Which may be more or less than others on this board.

The answer is not what others could retire on, but what will you be willing to settle for. I believe worse case would be to retire, have a medical problem, not be able to go back to work, and not have enough money to live the life style you desire. Only you will know how much that is.

I subscribe to the theory that your current life style is most likely close to what you will want in retirement. So what does it cost you to live?
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Old 06-13-2007, 07:30 PM   #19
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I'm spending less than $25,000 a year. However I have a little under $400,000 in untouched IRA/TSP/CDs (for whatever pops up).
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Old 06-13-2007, 08:08 PM   #20
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Quote:
Originally Posted by Bikerdude View Post
Does 24K include a new roof, new heat/air conditioning unit for your house? Does it include replacing your car? Does it include vacations you may want to take? If not I would put some of these things in my budget.
The $24k/year is what I spend right now, excluding the mortgage, so that's what I'm basing my requirements on. If I was retired I'd probably spend less as
I'd save on gas and car costs as I wouldn't be commuting. Also I use my bike
for short trips. I don't think I live a particularly frugal life, I go out most weekends with friends and blow a fair amount of cash and go to the theatre and cinema regularly. But I don't spend much on consumer goods or clothes eg I just replaced my 16 year old car because it died after $220k miles of happy motoring. I'm just interested to see what other folks think they need to live well.
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