How much to do need to live off of in RE

[Eagle43]

Charlie, JG,
You both speak truth. And to think, I still have SS coming, first check in July. Life is good!!

[Spanky]

Quote:

Originally Posted by Eagle43 Charlie, JG, You both speak truth. And to think, I still have SS coming, first check in July. Life is good!!

Life is good when you have little. Life is also good when you have a lot. Therefore, you can be happy either way and really depends on you attitude.

Spanky

[preben]

Single (or with partner paying her share). Good living in Thailand. About $20k/year which include international health insurance.
I will use more if returns on investments allow same. Cheers!

[spike]

We stayed in a hotel in Thailand I think is was $400 per month, included food 3 squares, maid service and laundry. I love Thailand, a little warm for me, but very cheap living, nice people. I could of bought a decent house for 8 grand. The Thai massage is the best in the world also.

[cute fuzzy bunny]

In response to the original question of "how much does it cost", here are our budget numbers. My budget spreadsheet is fairly legendary (well...to me anyhow) in its detail, breadth and depth. It is very conservative...I go for the high end on ranges and add padding, tax and anything else I can think of.

Here are my particular parameters:

- Two adults, one baby. Baby costs about $1200 annually in incremental costs.
- Paid-for home, two paid-for cars
- Eat most meals at home, but we eat very good quality food
- No big vacations, mostly day trips to fun places
- Our "movie entertainment" is netflix and a cheap home theater setup
- No odd or unusually expensive hobbies
- I do about 98% of home and auto maintenance myself

These numbers include tires, oil changes, replacement cars and appliances, maintenance, painting, tissue paper, q-tips, soap...just about everything. We buy mostly at warehouse clubs and I while I use every manner of coupon, 10% off cose and zero payments/zero interest leverage, I dont include those in the budget.

It does not include medical insurance as thats paid out of my wifes paycheck, so you will need to add that in.

Monthly bills: $2382. This includes taxes, insurance, food, clothes, "stuff" I buy, utilities, cable tv, cable internet, etc. It also includes monthly 'miscellaneous' costs like soap, tp, paper towels, and all other manners of expenses. Even includes gas and oil for the lawn mower, bug spray, yada yada.

Annual capital costs (not inflation adjusted), including setting aside funds for cars, major appliances, furnaces, house painting and so forth: $5326

That makes our annual costs $2382x12 + $5326, or ~$34,000 a year. $93 a day.

So the bottom line is that a family of three can live in a very nice house with two very nice cars (initial capital outlay for those ~$300k) plus $34k a year if you do your own cooking, dont travel a lot, and do a lot of DIY work.

That means you can retire with $300k to pay off the house and cars and $850,000 @4% SWR to just squeak by. Fortunately I'm well ahead of the 'squeak by' numbers and the wifes monthly income more than covers our annual costs to boot.

As needed, add your medical insurance, your rent or mortgage, car payments and other debt, meals out and vacations you want to pay for, hobby expenses, expensive booze or other habits, and you should have a good approximate number to work with.

If you think I missed something, here are my 'categories':

Monthly bills:

Home Ins
Home Tax
Baby
Nat Gas
Water
Elec
Trash
CATV/BB
Phone
Car Tax
Car Ins
Gas
Food
Med
Misc
Movie rentals
"my misc crap that I buy"

The "misc" above breaks down to:

Shampoo
Conditioner
Soap
Lotion
Toothpaste
TP
Kleenex
Shaving Cream
Razors
Bandaids
Rubbing alcohol
Hydrogen peroxide
Deodorant
Wash cloths
Towels
Dog and Cat food
Dog biscuits and jerky
Costco/Sams memberships
Wormer/dog/cat meds/vet
Car maintenance
Bug killers
Fertilizer
Mower gas + oil
Drinking water
Books, music
Laundry det
Cleaners
Fireplace Logs
OTC meds
Vitamins etc
Paper towels
Foil
Plastic wrap
Small baggies
Big baggies
Dish soap
Dishwasher detergent
Garbage bags
Stamps
Batteries

I then add a 30% pad to this to cover little things, oversights, or occasional buys, plus 7.5% sales tax.

For capital costs, I include annual 'set-asides' for:

Car replacements
Water heater
Furnace
AC compressor
Housepaint
Refrigerator
Dishwasher
Range
Microwave
Washer and dryer
Car tires
Computers
Printers
Tivos/DVR's
Televisions
Living room set
Bedroom set
Gas grill
Clothes
Exercise equipment
Personal care tools (electric toothbrushes, etc)
Vacuum Cleaner
Steam Cleaner
Tools

[retire@40]

Quote:

Originally Posted by You dont know me That means you can retire with...$850,000 @4% SWR to just squeak by.* If you think I missed something, here are my 'categories': Monthly bills: Home Ins Home Tax Baby Nat Gas Water Elec Trash CATV/BB Phone Car Tax Car Ins Gas Food Med Misc Movie rentals "my misc crap that I buy" The "misc" above breaks down to: Shampoo Conditioner Soap Lotion Toothpaste TP Kleenex Shaving Cream Razors Bandaids Rubbing alcohol Hydrogen peroxide Deodorant Wash cloths Towels Dog and Cat food Dog biscuits and jerky Costco/Sams memberships Wormer/dog/cat meds/vet Car maintenance Bug killers Fertilizer Mower gas + oil Drinking water Books, music Laundry det Cleaners Fireplace Logs OTC meds Vitamins etc Paper towels Foil Plastic wrap Small baggies Big baggies Dish soap Dishwasher detergent Garbage bags Stamps Batteries I then add a 30% pad to this to cover little things, oversights, or occasional buys, plus 7.5% sales tax. For capital costs, I include annual 'set-asides' for: Car replacements Water heater Furnace AC compressor Housepaint Refrigerator Dishwasher Range Microwave Washer and dryer Car tires Computers Printers Tivos/DVR's Televisions Living room set Bedroom set Gas grill Clothes Exercise equipment Personal care tools (electric toothbrushes, etc) Vacuum Cleaner Steam Cleaner Tools

How about federal (and possibly state) income tax on the $34,000 you are drawing from your investments?* There may be another few hundred to a few thousand dollars to gross up the total amount needed to NET $34K a year.

[ShokWaveRider]

Quote:

Originally Posted by Sparky 2004 was our first full year of ER. We spent $34,000. We have catastrophic health insurance ($5,000 deductible) for >$2400 per year for both. We're 44 and 45 and pay outright for high blood pressure and high cholesterol meds. Otherwise we're healthy.

Sparky:

If you do not mind sharing, Who is you health provider? What are your Doctor visit deductables, and what area of the country do you live in?

Thanks

SWR

[retire@40]

Quote:

Originally Posted by You dont know me It does not include medical insurance as thats paid out of my wifes paycheck, so you will need to add that in.

And another thing, I don't think you can avoid including health insurance in your family budget if it is paid out of your working spouse's health insurance. *It has to be part of the retirement budget equation. *It would be like saying you're retired, but you go over your mother's house every night for dinner, so you don't have to include food in your retirement budget.

A pure retirement budget should not be commingled with income or benefits from a working spouse. *I would consider that more of a semi-retirement budget.

[Sparky]

Quote:

Originally Posted by ShokWaveRider Sparky: If you do not mind sharing, Who is you health provider? What are your Doctor visit deductables, and what area of the country do you live in? Thanks SWR

SWR:

Health insurance is through Golden Rule, recently bought up by United Healthcare. *Deductible $5,000, no doctor visit coverage, no prescription coverage. *Premium is $193 per month for both of us.

A doctor friend of ours recommended Golden Rule; he said, "they pay quickly and you'll save a fortune over other types of insurance by going with a high deductible".

We are in CT and pay outright for high blood pressure and high cholesterol meds (we buy from Canada and save about 40% over U.S. prices).

Sparky

[unclemick]

If you go to the FireCalc front page and read the blurb on 'Spending in ER' - that line of thinking rang so true for me - I joined this forum in 2003. The thread then was - 33% That's My Story.

Never budgeted 'that close' but concentrated on cranking down on frugal to the point of 'Cheap SOB' - with little 'luxuries' on occasion.

I haven't a clue what our budget is for this year - but I know frugal/not frugal when I see it.

We have a temporary cash flow problem - too much money coming in - so I have to wait till things stablize to - get back to a groove.

[cute fuzzy bunny]

Wow Mr "and another thing..."...what a set of demands on my budget!

I did say that another analytic would need to add health care. I think I said it twice. I just said it two more times...

I paid zero federal and state income taxes before I got married last year. We've been putting a huge % of my wifes income into tax deferred instruments. Since we're married filing jointly, I basically dragged her tax load down so far that even a high exemption witholding more than covers it.

So for my purposes, factoring taxes into my budget is unnecessary. If you're smart enough to ER and manage your own finances, you'd probably figure that out from looking at my budget and work that out for yourself.

As far as medical care, we take out a chunk of my wifes income as a health savings account and pay pretty much all of our out-of-pocket costs from that, so I dont need to budget for that either. Everything else is covered by her insurance and as she works in health care. we get discounts and all sorts of nice extras most people wouldnt get. But then I did say you should add in your own health care. Thats if you insist on health care, as some people live in countries that provide it and some people "go bare".

As far as the whole thing being a farce because my wife works...well, I suppose. I did have a viable plan before getting married, and it did work for 4 years through the worst bear market in the last few decades. My financial status meant we could live with no debt, she could cut her working hours in half (and she just wont quit), and she doesnt have to worry about money anymore. As her income covers our monthly bills and pretty much all of our capital spends, I can turn the portfolio to longer term growth from current income.

But then again, I thought the original question involved the actual costs of living in early retirement. I provided those, along with caveats and what you needed to add to make it suit your own particular needs. If that doesnt work for you, I greatly and humbly apologize :

[MRGALT2U]

Quote:

Originally Posted by unclemick2 If you go to the FireCalc front page and read the blurb on 'Spending in ER' - that line of thinking rang so true for me* - I joined this forum in 2003. The thread then was - 33% That's My Story. Never budgeted 'that close' but concentrated on cranking down on frugal to the point of 'Cheap SOB' - with little 'luxuries' on occasion. I haven't a clue what our budget is for this year - but I know frugal/not frugal when I see it. We have a temporary cash flow problem - too much money coming in - so I have to wait till things stablize to - get back to a groove.

Wow unclemick!........we have a "temporary cash flow problem" too,
but in the opposite direction. Lke you, we don't budget either.
I'm still loafin' and DW is still workin'. LIfe is good!

JG

[unclemick]

The old take in boarders trick - aka 'step daughter in spare room with income' bounced against the nugget - housing, utilities, and transportation is one jump. SO started taking interest/divs from IRA. I'm starting(mini Roth conversion) and will be 62 this year(SS).

When they threw away my webtv and bought a Thinkpad and later got Direct TV - it's been downhill ever since.

Even at 2% for me and 3% for her - ballpark div/interest from Lifestrategy mod and cons - layed against the prior ten yrs of being frugal - well - adjustments must be made.

[MRGALT2U]

Quote:

Originally Posted by You dont know me Otherwise, two can play at that game* * I have to sit home all day waiting for a refrigerator delivery, so I can probably catch you by late this afternoon... Besides, I've deleted at least 300-400 of my posts over time.* Can I have those back now?*

I MAY have deleted 2...............all my stuff contains pearls of wisdom
and wonders of insight. It would be akin to heresy if any of this was lost. I sometimes feel like my pearls
are "cast before swine". Never on this board of course

JG

[retire@40]

Quote:

Originally Posted by You dont know me As far as medical care, we take out a chunk of my wifes income as a health savings account and pay pretty much all of our out-of-pocket costs from that, so I dont need to budget for that either.* Everything else is covered by her insurance and as she works in health care. we get discounts and all sorts of nice extras most people wouldnt get.* But then I did say you should add in your own health care.* Thats if you insist on health care, as some people live in countries that provide it and some people "go bare".

This is the point I am trying to make.* If you are using funds from a working spouse's income from her job to pay for out-of-pocket medical, then I don't consider that a pure retirement budget.

In other words, if you AND she were retired, there would be no earned income and you would have to put all out-of-pocket medical expenses in your retirement budget.* There would also be no employee health insurance coverage, so you would also have to put health insurance into the budget.

I don't think most rational couples with a child would want to "retire early" and go without health insurance, so I don't think it's optional.

I know you said this is "your" budget and you need to add in health care cost.* I even wanted to emphasize that so I made it part your quote in my prior post.

My beef isn't against your budget since it clearly works for you.* I just think it could be dangerous to say a family of 3 can retire with a budget of $34K when that budget is dependent on one spouse working providing some benefits that would otherwise be included in that budget.* Health insurance for a family can reasonably be estimated at about $1000 per month, so now that budget becomes $46K.* If you elect to do some traveling maybe you could add another $4K to that, so now you are at $50K.* You may not have any income taxes on your $50K withdrawal, but chances are you will have some, so tack the income taxes on to that and a "pure" retirement budget goes from $34K a year to over $50K a year. And that's a budget that assumes your house and car is paid off and you do a lot of the house and car repair work yourself.

[cute fuzzy bunny]

Sorry, but our health care if purchased on the open market would cost ~ 450-500 a month for our family...since health care obviously varies greatly including that in a standard budget is fruitless, just like factoring in taxes. My individual health care when I was single was $180 a month, and my annual budget was around $24k! If I had to pay that healthcare bill, I could easily slim down some other expenses and keep us in the <$40k range. We eat a lot of expensive food, have a very high electric bill, and I buy a fair amount of toys to play with.

There are also a number of 'rational' people here who 'go bare'. Thats a personal choice. Excepting the birth of our child, I could have gone without healthcare my entire life and been just fine. My dads 71 and he's never had a serious medical condition or had to take any expensive drugs. However I wouldnt recommend it to a retiree at all...one major medical problem would wipe you out and at that point, going back to work probably wouldnt be an option.

There are also a surprising number of people here where one spouse made a big bunch of money and quit working and the other keeps going, so seeing how that financial interaction works should be a plus. In our case, a few shifts keeps us in group health care, funds my wifes retirement accounts, and keeps some income flowing into the bank account. In a few years she might finally want to quit, we'll cobra/hippa the health care and start paying that ourselves...I dont expect a huge upswing in our total budget costs.

And yep, my budget did and didnt include a lot of things other people want to figure in, and it was so noted.

I thought there was some value in providing a good detailed set of core costs for people who may not have taken the time to consider the extent of those - in that I thought I was reducing a 'danger'. I pointed out what was and wasnt in there so people could add their own condiments to the mix. I still think if you take my 'miscellaneous' and 'capital' numbers, and add your own monthly fixed and variable costs, you have a pretty good budget.

But I guess if you want to find the negatives in the info I offered, even though I pointed them out myself, thats been done.

A single person can live a good debt free ER life on 24k a year. A couple with a child where one spouse works a few days a week can do it on $35k comfortably. A couple with a child with no job involved can do it under $40k. You might have to move to a new area to keep your cost of living rational, but we're not exactly living in podunk here...

[unclemick]

Yep

Not being a budgeteer - but with 11 years under our belt - the ballpark numbers ring true as reasonable - perhaps a tad 'fat' when I was in my super frugal mode. And I liked the budget list.

[cute fuzzy bunny]

Glad its interesting Unclemick...the misc is going to be a bit fat because as noted I add a 30% fudge factor and high california taxes. I also figure on the high side on the capital items just to play it safe. When my numbers with these fatter, conservative numbers plugged in still worked, I felt pretty good.

As it turns out, some months we approach the fat numbers when I do something like buy an extra external disk drive, a color laser printer, or an expensive toy for the baby. But so far we're running under over quarterly and yearly periods.

If it helps the peeps still twisting about a working spouse, even though we've been married about a year and living together slightly longer, all my wifes income has still gone into her bank account where I think she's tapped about $35 over the last year. The rest has still been paid from my old dividend cranking portfolio. I'm still pondering how to change that to produce less income and greater intermediate term returns. I still love high dividend paying stocks for the next few years for total return...but I'd like to cut back on the potential taxes.

[JohnP]

In honor of receiving my very first SS check today (all $227/mo of it, a victim of the dreaded WEP clause) I thought I'd post my estimate of expenses for a retired couple with a 19 year old living with them.*

To do this estimate, I took our quicken expenses for the past year and deducted house & car payments, investment payments,* etc to get to a basic living expenses spreadsheet.* The bottom line is that we spend about $3,800/month for basic living without factoring in state and federal taxes.* The $3,800/month does not include a factor for replacing appliances, etc but does includes property taxes, family health care, and LTC ins for us.* *

I've concluded that we're 'in the pack' , maybe on the slightly high side, in terms of costs for a retired couple LBYMing.

JohnP

[yakers]

Quote:

Originally Posted by JohnP In honor of receiving my very first SS check today (all $227/mo of it, a victim of the dreaded WEP clause) I thought I'd post my estimate of expenses for a retired couple with a 19 year old living with them.* JohnP

JohnP,

Any of that money include college costs for the 19 year old? We will have that situation when my soon to be 16 presumably year old goes away to college and we retire.