Realistic expenses over the long haul rant

[seraphim]

Some excellent perspectives. As stated, everyone's different.

We lived frugally in our working years so we could retire early, and not have to be frugal for 30 years in retirement. We bought new cars, but inexpensive new cars which we kept until it was no longer feasible. Didn't spend much on entertainment - we entertained ourselves. Bought a larger house than necessary, but a private sale from a seller in distress and paid less than the other smaller homes we were looking at. Never kept up with the Jonses, but outperformed them over the years ( savings wise).

I'm not sure we could survive on $20k a year, though, without downsizing or such. I'd have to look at that. Our recurring expenses are about $1900 a month - not including food, clothing, entertainment, or fuel. I could quickly cut that down to about $1000 a month basic subsidy ( no truck payment, cable, cut cell package in half. Add $800 back for food, fuel, clothing... That would be close. Suppose I could get rid of life insurance policies at $65 a month (total). Cut my own grass during the summer, because I wouldn't camping across the country anymore...

Yea - we could survive on $20k. Wouldn't want to, though.


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[Walt34]

So what's the difference between you and I? Why is your $70k budget tight and ours generous? That's the important question. How do our lifestyles differ?

I've been wondering about this too. We have zero debt, a gross income of a hair over $50k/year and don't want for anything. Three years ago when I was still working at the post-retirement job we were a bit over $120k/year but were banking ~75% of the "unplanned-for" income. Also when I turned 62 the pension dropped by what I would have been eligible for SS then, about $1500/month or $18k/year.

We do virtually no travel. I'd like to do a bit more travel than DW but it isn't a major priority for me so it's not a big deal. When SS starts in a year and a half that will put us in the mid $70's gross and I don't have the foggiest idea of what we'll do with that but I'm sure we can think of something.

To go to a $20k/year income would be difficult to say the least. But DW's father did it and he was a very happy guy so we know it can be done.

 

[seraphim]

Shouldn't have wasted my time Walt. Balance hasn't responded here for some time it appears.


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[CaliforniaMan]

Oh now, come on, who does not like a good drive by shooting. However, I will not come spray the place then not stand my ground. My rant was directed at the 30 and early 40 somethings with young kids that are checking out of the rat race and professing to live on +/-40K but their budgets do not include capex. I question whether it is sustainable long term both without capex figured in. Also, what about lifestyle creep from the pressure of consumerism that occurs when kids get into grade school.

It is clear from the comments that many of you who have retired early (50 to 60 age), with kids no longer being factored, have mastered the ability to live comfortably and happily in the 30 to 50K range. It is the efficient living concepts you expound here in this forum that I have come to appreciate and in some cases adopt. For that I thank you.

As to those that feel my budget of 70+K is a little excessive, well, I guess you should know that I do succumb to some of the pressures of consumer world as my kids are provided music lessons, play on club sports teams (travel tournaments are not cheap). Summer international travel and summer education camps in marine biology, engineering and sports (surfing and sailing). I have owned a boat all my life to which my oldest has her captains license at 16 yrs old so she takes it out on her own. Great confidence builder. Where do I live? A little brain teaser for you, I have water front property, but I can also walk to the beach.

Yes, I am not going to win the frugal as sh*t award but I can live with that as long as I can look back at the memories and smile.

Shouldn't have wasted my time Walt. Balance hasn't responded here for some time it appears.


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Balance seems to be a guy who doesn't post much (he might actually have a life other than online) but I do think he was jumped on a bit for sharing his opinions. He seems to be the kind of guy who enjoys giving his kids some great experiences rather than showing off with the proverbial Maserati crowd, and that does cost some money. Is it essential? of course not. Is it nice, fun? of course.

I was lucky having enough to be able to spoil my kids a bit too and able to spend time with them. And they turned out pretty frugal anyway. Myself, my parents couldn't afford most of the things other kids in my middle class neighborhood had, vacations, latest toys, etc. I had a good childhood, but do wish it had not been so severe. So when my kids were young I pretty much enjoyed giving them the opportunities that I didn't have. And it seems that Balance wants to do that too.

As I have posted here before I think there is a fundamental difference between retiring with young kids and retiring as empty nesters. A BIG difference.

Do I believe all the happy talk from folks who retire early with very young kids on a very low budget? Well I have learned long ago that we all tend to like to paint a bit of a rosy color on whatever we are doing. So I take it with a grain of salt.

Of course you do trade off some time being with your kids to make money, with time being spent with your kids. So there has to be a balance. Furthermore is it a bad idea to provide a model to your kids of actually working for a living and saving? After all at some point your kids will have to enter the job market, unless you plan to raise them as trust fund babies.

I think Balance had some good points, some balance you might say.

 

[Ally]

Having had a terrible couple of work weeks, which has confirmed my decision to retire next spring, I am comforted by the annual budgets here. We will have an annual budget of $76-86,000, depending on if we want to withdraw anything from our 403 b account. We don't owe anything and our area's cost of living is reasonable. Our biggest splurges are driving trips. Otherwise we are frugal. I wish I could get out of there tomorrow, but I am the director and need to tie up loose ends. Thankfully, our two children do much better financially than we did and never ask us for money, unlike our friends' adult children do. That has really hurt dome of our friends' retirement plans.


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[jerome len]

Having had a terrible couple of work weeks, which has confirmed my decision to retire next spring, I am comforted by the annual budgets here. We will have an annual budget of $76-86,000, depending on if we want to withdraw anything from our 403 b account. We don't owe anything and our area's cost of living is reasonable. Our biggest splurges are driving trips. Otherwise we are frugal. I wish I could get out of there tomorrow, but I am the director and need to tie up loose ends. Thankfully, our two children do much better financially than we did and never ask us for money, unlike our friends' adult children do. That has really hurt dome of our friends' retirement plans.


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Overall, I think my situation is like Balance and Ally.....my budget will be similar to their's or a little larger. This is Parents weekend for my youngest....we're flying, paying for a hotel, renting a car, going out to dinner 3 nights.....all of this isn't cheap....even if he is going to a State (were out of State residents) college....tuition is murder but we saved for it. And our kids had piano, dance, martial arts lessons.....we drive fairly new cars and our house is middle class which in our town is mid six figures. Now, my parents lived on a lot less....but I've had a good career, my DW worked.....a PHD educator....hasn't worked in years but we saved, lived LBYM and now are ready to enjoy or we'll leave it to the next generation. We give a fair share to charity....what would we have done different.....why should we not spend it? And, doing what we do.....we don't think we're rich or money wasters couldn't be done for much less. Yes, we have more than many.....but we believe we still have to budget, watch our expenses and have taught our kids to be frugal....in fact, I believe we are frugal as well. In closing, wish we had more, glad we don't have less!

 

[GTFan]

The stream of consciousness method of posting is REALLY hard to read. Use real sentences separated by periods if you want folks to take it seriously (please).

 

[seraphim]

Balance seems to be a guy who doesn't post much (he might actually have a life other than online) but I do think he was jumped on a bit for sharing his opinions. He seems to be the kind of guy who enjoys giving his kids some great experiences rather than showing off with the proverbial Maserati crowd, and that does cost some money. Is it essential? of course not. Is it nice, fun? of course.

I was lucky having enough to be able to spoil my kids a bit too and able to spend time with them. And they turned out pretty frugal anyway. Myself, my parents couldn't afford most of the things other kids in my middle class neighborhood had, vacations, latest toys, etc. I had a good childhood, but do wish it had not been so severe. So when my kids were young I pretty much enjoyed giving them the opportunities that I didn't have. And it seems that Balance wants to do that too.

As I have posted here before I think there is a fundamental difference between retiring with young kids and retiring as empty nesters. A BIG difference.

Do I believe all the happy talk from folks who retire early with very young kids on a very low budget? Well I have learned long ago that we all tend to like to paint a bit of a rosy color on whatever we are doing. So I take it with a grain of salt.

Of course you do trade off some time being with your kids to make money, with time being spent with your kids. So there has to be a balance. Furthermore is it a bad idea to provide a model to your kids of actually working for a living and saving? After all at some point your kids will have to enter the job market, unless you plan to raise them as trust fund babies.

I think Balance had some good points, some balance you might say.

I didn't 'jump on' Balance. I asked him a question. Having slightly spoiled my son, And still occasionally assisting him financially so he can pursue a dream, I have no difficulty with those who spend a lot of money on children. I noticed however, that Balance stopped responding to his post several days after initiating it, so I assume he is no longer interested in a discussion. Hence, I feel I wasted my time responding.

I'm still curious about an answer.


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[Balance]

Seraphim, I apologize as I see where you asked how are lifestyles differ.

My best guess without comparing expense line items side by side probably lies in two or maybe three categories. 1) Insurance- We pay a total of 24K for Health, Home, Auto (3 cars), Boat, Life and Umbrella. This does not include any costs for Health deductibles. 2) Transportation - runs us $5,000 per year for gas, maintenance, etc on 3 cars and 3) Kids expenses - $9,000 per year for allowances, arts, athletics, and school extra curricular costs. As you can see I am at 38K before I add in Housing, Food and Travel/Entertainment which works out to 32K.

I have been following the responses and appreciate all who have contributed. Some, like California Man, have described my situation better than I could myself. Others like Fuego and Nords (both of whom I respect from following their posts the last several years) challenge me to look deeper at the cost benefit of my budget. All in all, I like the banter and it certainly has fostered me to do what I feel I do best and that is self evaluation and adjustment to create a better Balance.

 

[seraphim]

No problem I merely thought you lost interest. Turnabout is fair play lol:

Car (4 cars one truck - two are classics)/ RV/house insurance ( we cover our sons car insurance also) - $3840
Health and life ( we cover our sons health) - $10,400
Restaurants- about $6000 last year
Groceries - about $7200 last year
Diesel - about $6700 last year (estimated on 20k miles)
Gasoline - about $1000
Campgrounds - estimated $3750
Home taxes/maintenance - $3700
Assisting son - about $3600

This doesn't include a lot of incidental spending, additional money spent on our travels (about 5 months a year) gifts and donations, out of pocket health expenses. No mortgage.

About $46,100. In reality, we spend about $63k, which is why I said a $70k budget is excessive for us. We could drop $10k - minimum - by not traveling. We assume $1500 a month for travel.

Forgot truck loan - about $7200 a year. So about $54k. We still spend about $63k.


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[seraphim]

Overall, I think my situation is like Balance and Ally.....my budget will be similar to their's or a little larger. This is Parents weekend for my youngest....we're flying, paying for a hotel, renting a car, going out to dinner 3 nights.....all of this isn't cheap....even if he is going to a State (were out of State residents) college....tuition is murder but we saved for it. And our kids had piano, dance, martial arts lessons.....we drive fairly new cars and our house is middle class which in our town is mid six figures. Now, my parents lived on a lot less....but I've had a good career, my DW worked.....a PHD educator....hasn't worked in years but we saved, lived LBYM and now are ready to enjoy or we'll leave it to the next generation. We give a fair share to charity....what would we have done different.....why should we not spend it? And, doing what we do.....we don't think we're rich or money wasters couldn't be done for much less. Yes, we have more than many.....but we believe we still have to budget, watch our expenses and have taught our kids to be frugal....in fact, I believe we are frugal as well. In closing, wish we had more, glad we don't have less!

I don't think think anyone said you shouldn't spend it. We were discussing realistic expectations, specifically those of retirees who have budgeted a lower amount. Balance was concerned they were being unrealistic. Your lifestyle has been no different than ours - our son travelled the country and beyond since 5th grade singing with tour choirs, has individual vocal training since that time, went to a private expensive college we paid for out of our pay checks, and we now travel to various cities watching him perform, which includes nice hotels. Our portfolio grows n retirement. So spending your money isn't the point. I brought up lifestyle differences to argue that living on, let's say, a sub $40k income, is not unrealistic - assuming one has planned for it. Even $20k would be doable. We spend about $63k (see above post) but it's obvious we could do with much less. We could also spend a hell of a lot more without depleting our investments. Just no need to, as we already spend a great deal indiscriminately, and do everything we want to do.

So spend what you want, and be happy. You don't have to justify your lifestyle, and no one's questioning it. But, out of curiosity, what's the minimum you COULD live on? That's more to the point of the OP, I think....


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[daylatedollarshort]

With low housing and transportation costs and no kids to support, the retirees in the following story have realistically low expenses. One couple lives in a mortgage free $100K house (looks like maybe a park model?) and another retiree lives on a boat:

The Retiree Next Door: How Retirees Stretch Their Savings
http://finance.yahoo.com/news/the-r...etirees-stretch-their-savings--163042598.html

"This could be comforting news to many workers who are feeling behind on their retirement savings. A recent report by the Employee Benefit Retirement Institute found that only 11% of workers have managed to save more than $250,000 for retirement outside of their defined contribution plan."

The reality is many retirees are going going to have to find ways to live like this because most won't have pensions or huge amounts of investment income.

 

[Fermion]

With low housing and transportation costs and no kids to support, the retirees in the following story have realistically low expenses. One couple lives in a mortgage free $100K house (looks like maybe a park model?) and another retiree lives on a boat:

The Retiree Next Door: How Retirees Stretch Their Savings
http://finance.yahoo.com/news/the-r...etirees-stretch-their-savings--163042598.html

"This could be comforting news to many workers who are feeling behind on their retirement savings. A recent report by the Employee Benefit Retirement Institute found that only 11% of workers have managed to save more than $250,000 for retirement outside of their defined contribution plan."

The reality is many retirees are going going to have to find ways to live like this because most won't have pensions or huge amounts of investment income.

A few things in that stand out. They say 2/3 of retirees manage to live on less than $100,000 annual income. This implies that 1/3 of retirees have more than $100,000 a year to live on. I had NO idea current retirees were that rich.

Also, what does it really matter if you have not saved more than $250,000 for retirement outside of your defined contribution plan? Our 401K already has $600,000 in it and we are in our early 40s. Exactly how much would you need by age 59 in your 401K such that you do not need outside investments? If we kept working until 59 and did nothing but continue our 401K, it would be near $2,000,000.

 

[Mulligan]

A few things in that stand out. They say 2/3 of retirees manage to live on less than $100,000 annual income. This implies that 1/3 of retirees have more than $100,000 a year to live on. I had NO idea current retirees were that rich.

Also, what does it really matter if you have not saved more than $250,000 for retirement outside of your defined contribution plan? Our 401K already has $600,000 in it and we are in our early 40s. Exactly how much would you need by age 59 in your 401K such that you do not need outside investments? If we kept working until 59 and did nothing but continue our 401K, it would be near $2,000,000.

Maybe it's true, but I can't fathom that a third of all retirees live on above 100k a year. The median SS benefit is $16k for a man and less for a woman and fat pensions aren't that common. Too many poor people here for a third of population to be six figures a year. Maybe I am wrong but I won't admit it until we line up every retiree and ask individually their annual spend rate.


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[CaliforniaMan]

Maybe it's true, but I can't fathom that a third of all retirees live on above 100k a year. The median SS benefit is $16k for a man and less for a woman and fat pensions aren't that common. Too many poor people here for a third of population to be six figures a year. Maybe I am wrong but I won't admit it until we line up every retiree and ask individually their annual spend rate.

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33% live on 100k or more a year but only 20% do not have SS as their main source of income. Something doesn't seem quite right here.

 

[seraphim]

The article doesn't say what people were in the parameters of the survey, and it did not say 2/3 of all retirees, it said 2/3 of those surveyed. There are lies, there are bigger lies, and then there are statistics...


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[daylatedollarshort]

The specific stats in the article may be debateable, but it doesn't change the general issue with a lack of retirement savings for many households, dwindling and underfunded pensions, etc. Many future retirees in the general population are going to have to start thinking outside the box and get creative in retirement, like the boat or mobile home options, to keep expenses low to match expected retirement income.

Here is an article on net worth from Forbes:
Money Scorecard: How Do You Rate? - Forbes

Retirement Crisis: A Looming Catastrophe
http://money.usnews.com/money/blogs...ment-crisis-a-looming-catastrophe-for-boomers

I think kudos are in order to the people in the article for finding ways to fund fulfilling retirements while keeping expenses low and well within their means.

 

[BellBarbara]

I read an article that basically said that the number of people without enough money for retirement (whoever defines that amount?) has not changed. There are always a huge number of people without money, look at how many people live in poverty. I think the difference now is that the financial services companies want to tell everyone (save and invest more with them!) and some people with conspicuous consumption are not prepared and will experience a world of hurt.

I will look for that article. My mom did not have much money when she retired, and only $1500 a month in SS (no pension). She did fine in her paid off condo. My family is full of people like this (blue collar, middle class) who did just fine - no pensions. But I am absolutely sure that if Fidelity got a hold of them they would have been told they were not prepared.

They did not live fancy lives, but they were fine and happy. Maybe I should have added unreal expectations as anther issue - like that hysterical commercial from Fidelity that talks about what you will do in retirement and mentions opening a new business. Cracks me up! (editorial note: my DH worked there, and saw it up close)

 

[BellBarbara]

We love travel and budget 15K and are gone 10-12 weeks every year. We plan to increase that in the next 5 years to almost 25K when we downsize and the dog joins the big kennel in the sky. But we could cut that out if disaster hit with no issue. We could camp, and enjoy ourselves, stay with family, etc. I have a friend who hates to travel - ever! So his budget is so much less. It's all valid.

Honestly, I would feel pretty unhappy if I had to live on 40K - I would propably go back to work, even some retail job or something to supplement.

 

[Balance]

BellBarbara, your comments regarding your mom and other family members matches what I have seen in some members of my extended family and also a couple older retired friends. They all worked into their sixties (Jobs were low stress), they had a couple 100K put away, a paid off Home (Condo/TH) and then they went on Medicare and took SS. They are living comfortable lives as their expenses are low. They have a good social life, enjoy local activities and in some cases get to travel with their kids whereby the kids pick up most of the tab.

At the end of the day, frugal LBYM people will make whatever adjustments they need to make to get by. I fully believe the most important thing one can do to reduce financial risk in retirement is to live as healthy as possible. Yes, there is always the one off situation (cancer, etc) that one can not control, but my experience with these situations is, the better the health the better the outcome, even if that outcome is end of life.

 

[BellBarbara]

Yes good points about health. I am keenly aware that my hub and I are lucky enough to have such a large next egg that we can retire in a really good way 10 years earlier than our friends and family. But that doesn't make our friends any less prepared. I only feel badly for them for the fear that is being drummed into them by both financial services companies and those telling them SS will not be there in any form when they retire.

People find ways to make their retirements enjoyable - just the other day I was at Lowe's and the cashier was maybe 65 or so and I asked her how she liked working there. She said she liked it, that she didn't need the job, but she felt like she wanted to be able to spoil her grandchildren more so took this part time job. I thought that was really nice.

 

[Balance]

Classic story of the person at Lowes. I had the same conversation with a incredibly positive and lively older person working at a local grocery store. He was a retired exec who had a nice pension, but was a very social man. He decided to take the job at the Grocery store because he just enjoyed the social aspects. He said he only worked 3 days a week, but that was just the right amount to scratch that social itch. I talked with a younger full time employee for a few moments and he told me that his job was so much more enjoyable when that older man was in the store. Very heartwarming. I can only hope to be that kind of inspiration to the younger generation later in my life.

 

[Sea Kayaker]

I am only a week into ER - it's very early on, yes... but so far I find that my desire to spend money on things (especially alcohol and food of the "fast" variety) is massively diminished. My job made me so miserable at times I would buy "stuff" in an attempt to distract myself from this fact. I mentioned in another post that I used alcohol as a method to cope with work stress. That is completely a non factor now. The monetary (and obvious health benefits) savings has been immense. I think I had the blinders on in terms of how much I spent of booze in a month. I now shudder to think of it.

Early on my days are spent learning Spanish, working out at the gym, cooking delicious and healthy meals, monitoring my investments, reading library books etc... I thought my 30k post ER budget might be a bit "pie in the sky", but now... I really don't think so. 24k is probably realistic - not that I am targeting that as a goal right now.

There was some initial nervousness about leaving my job, but I feel great about the decision now. After only a week, I feel like a new man. No exaggeration.

 

[BellBarbara]

SeaKayaker

Us too on the alcohol! We have a drink maybe once every other week now? Or at social occasions. We spent money on expensive resorts in warm locations not worrying too much about the cost. We definitely needed the treats to keep us going.

Congrats!

 

[Theseus]

I am only a week into ER - it's very early on, yes... but so far I find that my desire to spend money on things (especially alcohol and food of the "fast" variety) is massively diminished.

To start - congrats! I've been somewhat surprised myself by the change in my desire for imbibing in sprits of the distilled variety. I didn't drown myself in the stuff while w**king, but wow, since ER I have very little desire for the quick elixir method of relaxation. Nor the fast food equivalent of "comfort food." Now light and modest home-cooked meals are quite satisfying. And well, now I enjoy wine or beer perhaps a bit more than before, as savoring the flavor is easier when more relaxed. Enjoying a rare restaurant meal, but not scrimping on the quality or whatever else makes the experience worthwhile once a month or so will hardly be a budget buster.

There was some initial nervousness about leaving my job, but I feel great about the decision now. After only a week, I feel like a new man. No exaggeration.

I'm just seven weeks in myself, but "liberating" is probably the one word that best describes the overall feeling.