Would you retire at 30 with $1m?

[lhamo]

However, there is a couple with an ER blog (they probably have more than $1m, I don't know) and their plan for healthcare for their kid is to get free healthcare from Taiwan (the mother's home). Which is fine, except they live in the US and are a 15 hour flight from Taiwan. Would you fly a severely sick kid across the pacific? Or, what if you had an emergency where US care is required and then you are on the hook for $$$$ out of pocket. That plan is either unrealistic or just plain irresponsible.

Actually both their blog and the article that drew so many people to it (and into discussing their lifestyle choices) make it pretty clear that they have already moved to Taiwan (initially for much cheaper IVF treatments -- see Making a Baby - Go Curry Cracker!Go Curry Cracker!), and have subsequently stayed on to have the baby. They plan to continue travelling once the baby is about 6 months old.

Good international medical insurance can be relatively inexpensive if you exclude the US as a place for treatment, which they could do because if they needed serious medical care they could always return to Taiwan (which has one of the best medical/insurance systems in the world -- read TR Reid's book on national health insurance systems and be prepared to cry if you are from the US....). You can also buy international policies that cover short-term treatment in the US for a decent price.

 

[Moemg]

I think you are quite wrong but I don't want to dwell on scenarios of losing my spouse so I will let you think you are correct.

Actually I know I am right because I lived through this scenario . Food costs went down a little . Car costs stayed the same . House costs stayed the same . All in all I would say a small decrease but certainly not half or even 30% more like 10% or 15%. Of course if the spouse were in a nursing home or had a lot of medical bills it would be higher .

 

[FUEGO]

Expenses dropped a bit after she passed, but hardly by half, maybe 20% tops. Much of that was un-reimbursed medical expenses and much cheaper vacations.

That's about what I figured - somewhere in the 20-25% reduction since maybe half the expenses remain about the same and the other half of expenses would get cut in half (or close to it).

 

[harley]

Actually I know I am right because I lived through this scenario . Food costs went down a little . Car costs stayed the same . House costs stayed the same . All in all I would say a small decrease but certainly not half or even 30% more like 10% or 15%. Of course if the spouse were in a nursing home or had a lot of medical bills it would be higher .

No matter, you're still wrong. So there.

 

[Moemg]

No matter, you're still wrong. So there.

Ask my SO I am never wrong !

 

[Fermion]

The reduction to spending is minimal . You still have the same property taxes , utilities & maintenance on less income .

I don't think a 20% to 30% reduction is out of the question and certainly would not consider it minimal. I would not stay in a larger home if I were single, so housing would drop some (maybe from a 2 or 3bd place to a 1bd apartment for a 20% reduction in housing. Food would go down by 30% to 40%. Medical should be cut in half. Taxes are not a huge issue with Roths and lower spending...could negate *some* of the reductions in spending. Plane tickets go down by 50%. Hotels stay the same.

Anyway, we can't take one or two people's experience and declare that nobody notices a significant reduction in spending on death of a spouse.


Edit: And reviewing my previous post, I never said spending is cut in half, I said spending is reduced on some items.

 

[daylatedollarshort]

If something happened to one of us, we both agree that the surviving spouse would not want to live alone in a house the size we have now, so housing size and many of the expenses would be cut in half. Car expenses would go from one to two cars so those expenses would drop. Utilities would drop with a house half the size and one less person. Food, medical, dental, hair salons, clothes, hobby costs, cell phone would all be cut at least close to half.

The surviving spouse would lose the lower SS benefits, but keep the higher SS, all the pensions and asset income which would increase due to the money left to invest after downsizing. Taxes would go up, but for or particular circumstances I can't see overall expenses not dropping significantly especially, with a much smaller house and one less car.

 

[sengsational]

Larry Kotlikoff answered the question already, and he actually knows something

"Two can live for the price of 1.6"

 

[hnzw_rui]

If something happened to one of us, we both agree that the surviving spouse would not want to live alone in a house the size we have now, so housing size and many of the expenses would be cut in half. Car expenses would go from one to two cars so those expenses would drop. Utilities would drop with a house half the size and one less person. Food, medical, dental, hair salons, clothes, hobby costs, cell phone would all be cut at least close to half.

I reckon this is largely situational. My great-uncle and his wife downsized to a 1BR place when they retired. They also sold one of their cars and they only drive once or twice a week for groceries. There's really not a lot of fat to trim if/when one of them passes away unless the surviving spouse moves in with one of their children.

 

[W2R]

Larry Kotlikoff answered the question already, and he actually knows something

"Two can live for the price of 1.6"

Good one! On average that is probably true, although in individual cases of course the spending habits of each spouse may affect the ratio.

Anecdotally, after my divorce my expenditures dropped like a rock. In fact, in my case two could live for the price of 3.

 

[FUEGO]

Larry Kotlikoff answered the question already, and he actually knows something

"Two can live for the price of 1.6"

Put another way, dropping from 2 people (living for the price of 1.6 people) to 1 person (living for the price of 1 person) results in a 37.5% (0.6/1.6) reduction in living expenses. Sounds about right given some people will right size their house and auto consumption upon the demise of a spouse.