Hello From Beautiful San Diego

[Susan]

Hello, my name is Susan, coming to you live from shaky Southern California…I’ve been lurking around for a couple of months and have decided to throw my two cents in…
I’m planning on retiring in about a year and a half at 55, although my better half will be retiring in about 7 years, give or take a few, depending on how his company is doing financially.
I am somewhat perplexed how so many of you can live on what you do…in San Diego, the cost of living is out of control. We spend about $6,000 per month for expenses and that does not include traveling, which we have decided to cut out altogether, does not include a car payment or a housekeeper. I realize that we could easily cut down our expenses by about $1,000/mo when I retire, but that’s still $5,000 per month, or about $2,500-$3,000 for me (yes, I spend more than my partner).
When I retire January 31, 2010, I will be receiving about $40,000 per year in income; however, that is pretaxed; I may have a “small business” on the side just to make sure that my taxes are very low; however, I don’t plan on spending a lot of time at it.
I know, stop complaining, living in paradise; but the real question is: how did you psychologically go from paying for what you wanted, to trying to live on a tight budget month after month after month?

 

[ProspectiveBum]

Hi Susan, welcome. I'm not sure I understand how/why you'll be on a tight budget when you retire. Do you and your SO keep your finances separate? Do you know where your money is going? Any areas that you could trim expenses without "feeling" it?

I know that everyone feels differently about this, but personally, I'd rather work a bit longer and maintain a lifestyle that I'm comfortable with instead of retiring earlier and pinching pennies. Of course, you can always move to Iowa and live like a queen!

 

[Rich_by_the_Bay]

Welcome, Susan.

It is true that many members here live on amazingly low amounts of money, by choice or by design. But there are many others whose resources and lifestyles call for higher retirement income. Or, like yourself, they live in an area where the cost of living is very high.

A couple of things to keep in mind: after you retire, your taxes usually go down a lot. In addition you are no longer setting aside for retirement, so right there you might free up 10s of thousands per year. Still, everyone has their limits and you would do well to assure that you can pull in that $6K per month plus fun money on your retirement income.

As mentioned, if it's tight then working just 1 or 2 more years can make a big difference (a dilemma I have often mulled over), if you don't despise your job. Finally, there's always semi-retirement which many here have chosen.

You've got some time, so reassessing in a year or so with an open mind should make things clearer for you.

Have you considered moving to a less expensive region?

 

[Susan]

Thanks for the great welcome.

Thank you so much for the nice welcome to the Forum. Yes, my partner and I keep our expenses separate and track where the money is going. I probably could cut some more when I retire, but I guess I'll cross that bridge when I get there. If I need more, I can either take it out of my accounts and/or do some part time work, so I'm not really worried. My health care is taken care of as I have Tricare with the military. I guess I was just complaining as I see so many people here in the Forum that live on much less in retirement than I plan on doing. Working longer is probably not an option as I hate the commute and the stress. And, after working 32 years in public accounting, I believe I'm getting really close to total burnout.

Susan

 

[ipatent]

I'd watch inflation carefully before making a final decision to retire, and have an inflation fighting strategy if you do.

 

[FIREd]

Hi Susan,

welcome to the board. You are facing the choice most people face when retiring: are you willing to trade less time and more money for more time and less money?

 

[CaseInPoint]

I am somewhat perplexed how so many of you can live on what you do…

but the real question is: how did you psychologically go from paying for what you wanted, to trying to live on a tight budget month after month after month?

Hi Susan,

I've joined this forum recently with similar questions: How can so many people retire early and still be financially independent?

The answer is that, for the most part, many of the "early" retirees are not retiring quite so early, and they are willing to live a lifestyle that borders on poverty. Of course not all, but many.

After a while, you'll also see certain patterns: Small houses that were bought a long, long time ago, no children (or no expectation of supporting children or anyone else for that matter), very few or no purchases beyond the absolute necessities, and ongoing fear of not making it financially as time goes on. The ability to pay for health care is another big concern.

In most cases, so far as I can see, the psychology behind the willingness to live so sparsely always boils down to unwillingness or inability to work. You'll often see people saying (although not in so many words) that they would rather live in poverty than go back to work for a living. The words 'work' and 'job' are often considered dirty words, and productive working people are called "worker bees," "desk jockeys," and plain "stupid."

At the same time there is a support group to reassure each other that living on the edge of poverty is not so bad.

Again, not all early retirees fall into this category, but many will follow these patterns.

So that's the big mystery. Welcome to the forum.

 

[Susan]

Inflation is very important and I have included that in my financial projections until age 100; I hope I don't live longer than that. The question of do I work longer for more is still a valid one in that if I do work one year longer, I do not have to consider the possibility of having to work again, even part time; however, the toll on my physical as well as mental health is not worth the extra money. I am not so worred about how much money is enough; it's what that "enough" buys to have a good life in retirement. I can see, as CaseInPoint brought up, that some people choose to live very modestly, and that is fine; however, I cannot and will not live that way. If I find in retirement that costs are going up more rapidly than I predicted, I can always get part time work that pays pretty well, being in the tax accounting business for as long as I have. I truly appreciate the frank and insightful responses to my thread.

Susan

 

[aida2003]

I am somewhat perplexed how so many of you can live on what you do…in San Diego, the cost of living is out of control. We spend about $6,000 per month for expenses and that does not include traveling, which we have decided to cut out altogether, does not include a car payment or a housekeeper. I realize that we could easily cut down our expenses by about $1,000/mo when I retire, but that’s still $5,000 per month, or about $2,500-$3,000 for me (yes, I spend more than my partner).

Hi, Susan,

Just for my curiosity, would you mind sharing what you spend your money on? If it's OK, break down your expenses and then separately add a list of your DH's expenses to get a picture of $6k/mo. Do you have children to support or mortgage to pay?
I'm being nosy about other people's spending because I cannot imagine such big spending unless it includes house payments and kids.

 

[Moemg]

Welcome , I do not live any differently in retirement than I lived while working . large house , children , travel and minimal worry .Some people here do live on small amounts but a lot of them live that way my choice not necessity and a lot of us live on much larger amounts and spend freely . It is more a personality thing than a budget issue .

 

[Susan]

In resposne to Aida, below is our monthly spending, excluding travel as we have decided that we cannot afford it. This amount does not include children but does include a small house payment and a second (for renovations) that will be paid off on 12/1/2009.

$304 - HOA
$142 - Property taxes
$166 - Auto/house/jewelry insurance
$735 - Mortgage (will be paid off in 2034)
$774 - Second (which will be paid off on 12/1/2009)
$250 - Car repairs (average for two Audi vehicles)
$108 - Cable
$100 - San Diego Gas & Electric (sometimes lower, sometimes higher)
$600 - Gas (yes, that's right, for premium gas at $4.50/gallon)
$100 - medical insurance
$200 - parking at work
$400 - food out
$600 - food in/paper products/shampoos/other
$400 - Cash for misc stuff (sometimes lower, sometimes higher)
$150 - hair
$1000 - entertainment/clothing/gifts/other (sometimes lower, sometimes higher) for a total of
$6,029 per month

The above expenses are for an average month; we used to travel a lot and our expenses were much higher. We also used to do a lot of entertaining at home but we have also scaled that down. And, we are renting more movies and entertaining ourselves at home much more instead of going out to jazz venues and other types of expensive entertainment. In San Diego, there are not many free concerts; if they are around, they ususally happen in the summer months and wherever they are, there are tons of people and traffic, so we tend to avoid them. I realize when I retire, the second mortgage will be paid off; however, our HOA/property taxes/car repairs/utilities/food keep going up every year, and not by a couple of dollars per year. When I stop working, I will no longer pay $200/mo for parking, buy expensive clothes, my car insurance rate will probably go down a little, my gasoline bill will go from about $400/mo to about $150-$200/mo, we will be eating in more as I will cook and other expenses will probably go down. So, instead of $6,000 per month, our expenses should be about $5,000 per month. With traveling, who knows.

Susan

 

[haha]

Hi Susan,

I've joined this forum recently with similar questions: How can so many people retire early and still be financially independent?

The answer is that, for the most part, many of the "early" retirees are not retiring quite so early, and they are willing to live a lifestyle that borders on poverty. Of course not all, but many.

After a while, you'll also see certain patterns: Small houses that were bought a long, long time ago, no children (or no expectation of supporting children or anyone else for that matter), very few or no purchases beyond the absolute necessities, and ongoing fear of not making it financially as time goes on. The ability to pay for health care is another big concern.

In most cases, so far as I can see, the psychology behind the willingness to live so sparsely always boils down to unwillingness or inability to work. You'll often see people saying (although not in so many words) that they would rather live in poverty than go back to work for a living. The words 'work' and 'job' are often considered dirty words, and productive working people are called "worker bees," "desk jockeys," and plain "stupid."

At the same time there is a support group to reassure each other that living on the edge of poverty is not so bad.

Again, not all early retirees fall into this category, but many will follow these patterns.

So that's the big mystery. Welcome to the forum.

Hey, what you doing? Trying to make moderator?

Ha

 

[rs0460a]

After a while, you'll also see certain patterns: Small houses that were bought a long, long time ago, no children (or no expectation of supporting children or anyone else for that matter), very few or no purchases beyond the absolute necessities, and ongoing fear of not making it financially as time goes on. The ability to pay for health care is another big concern.

Uh - no

Of course, I'm only speaking about me/DW ...

- Ron

PS - Welcome Susan. San Diego is great (especially the drinks in old town ). However, when I/DW were last there 5+ years ago, we went across the border. I understand you are having problems in that area right now (gang/drugs). How sad.

 

[NW-Bound]

Hey, what you doing? Trying to make moderator?
Ha

Maybe he was just trying to scare away newbies with tales of poverty?

During the early period on this board people more or less knew one another's status. But there are so many people now that it gets confusing.
Ha

 

[CaseInPoint]

Hey, what you doing? Trying to make moderator?

Heh.

I like your new avatar.

 

[haha]

I like your new avatar.

Run with the Dogg

Ha

 

[CaseInPoint]

$304 - HOA
$142 - Property taxes
$166 - Auto/house/jewelry insurance
$735 - Mortgage (will be paid off in 2034)
$774 - Second (which will be paid off on 12/1/2009)
$250 - Car repairs (average for two Audi vehicles)
$108 - Cable
$100 - San Diego Gas & Electric (sometimes lower, sometimes higher)
$600 - Gas (yes, that's right, for premium gas at $4.50/gallon)
$100 - medical insurance
$200 - parking at work
$400 - food out
$600 - food in/paper products/shampoos/other
$400 - Cash for misc stuff (sometimes lower, sometimes higher)
$150 - hair
$1000 - entertainment/clothing/gifts/other (sometimes lower, sometimes higher) for a total of
$6,029 per month

Susan,

Very reasonable for a place like SD.

You're lucky to have such a low mortgage payment and super-low health insurance cost, actually.

Just as a thought, let's say that your retirement expenses would total $5k/mo (60k/yr). That would require a gross income of about $75-80k, considering Fed, State and local tax to net the $60k.

FWIW, keep in mind that many other people tend to view retirement as costing around approx. $30k/yr, so they will view certain items on your list as extravagant.

 

[REWahoo]

Hi Susan,

I've joined this forum recently with similar questions: How can so many people retire early and still be financially independent?

The answer is that, for the most part, many of the "early" retirees are not retiring quite so early, and they are willing to live a lifestyle that borders on poverty. Of course not all, but many.

After a while, you'll also see certain patterns: Small houses that were bought a long, long time ago, no children (or no expectation of supporting children or anyone else for that matter), very few or no purchases beyond the absolute necessities, and ongoing fear of not making it financially as time goes on. The ability to pay for health care is another big concern.

In most cases, so far as I can see, the psychology behind the willingness to live so sparsely always boils down to unwillingness or inability to work. You'll often see people saying (although not in so many words) that they would rather live in poverty than go back to work for a living. The words 'work' and 'job' are often considered dirty words, and productive working people are called "worker bees," "desk jockeys," and plain "stupid."

At the same time there is a support group to reassure each other that living on the edge of poverty is not so bad.

Again, not all early retirees fall into this category, but many will follow these patterns.

So that's the big mystery. Welcome to the forum.

A 2007 poll* on the forum indicated more than 75% of the 267 who responded had net worths in the seven figure range. Add the fact that many also have very nice pension benefits, and I think it shows you are attempting to make a "case-in-point" where the evidence does not offer support.

*http://www.early-retirement.org/forums/f28/net-worth-2007-a-24852.html

 

[Moemg]

Susan ,looking at your budget the $250.00 a month for car repairs seems high & of course the $1,000 a month for gifts ,clothes & entertainment . I give a lot of gifts so I know it can add up but I'd try to trim that area to free some money . Also if you really want to travel you'll trim back in other areas to make it happen.

 

[rs0460a]

the evidence does not offer support.

There you go again - trying to be factual/logical ...

- Ron

 

[Susan]

Yes, I know I can spend less and I will have to start doing that once I retire. I grew up with nothing and have supported myself since I was 18, including supporting two husbands who were in school or ill so I can be pretty disciplined (when I want). And, moving to somewhere other than San Diego is not an option as my family and friends are here and that’s important to me.
It’s rather interesting what is important to some people is not really important to other people. I starting saving for my own retirement when I was about 30 years old and thought I would be by myself when I retired. I have actually worked for pocket money since I was 12 so working is not a foreign idea to me either. I know that having an all wheel drive vehicle in San Diego is very important because people, in general, do not know how to drive (my Audi has saved my life on more than one occasion. I grew up in Los Angeles where people, in general, do know how to drive.) Having good health insurance is a VERY GOOD THING and I am lucky that my second husband, who is deceased, was a retired Marine Corp officer and left me with excellent health insurance. I know that having good house insurance is important as I live in an area of San Diego that was close to the fires of 2003 and 2007. I know that good food is important because it keeps you healthy and your health is the most valuable asset one as (in my opinion). I know that good hygiene is important and that is why I pay for good manicures and pedicures. I know that keeping your mind and body fit is a good thing so that spending more money to do that is worth it. So, what I am saying is that yes, I will spend less in retirement but I will also weigh more closely what is really important, getting rid of spending habits that were built up over the years; buying things at the last minute because of time constraints, will shop for items on sale instead of whenever, comparing prices instead of just buying to get out of the store quicker, etc. Just rambling here.
Ron, my late husband was in Vietnam, Chu Lai from 1967-1968; was a RIO; flew F-4 Phamtom jets, in Thailand from 1970-71; flew 467 sorties in 13 months. Thanks for your service.

Thanks.
Susan

 

[laurence]

Welcome Susan,

I too am in San Diego and know all about the expenses.

What's your retirement account balances look like? Have you run FireCalc on your portfolio yet?

My plan involves a paid off house, about $2 million in accounts and a non-cola'd pension at 55, and I'll retire earlier if I can. But that's 21 years away for me, so things can change.

In theory we could wait for housing to come back, sell at the next peak and move someplace super cheap and retire in my late 40's...but that just ain't going to happen since DW's family is way to tight to break up that band.

 

[Marquette]

A 2007 poll* on the forum indicated more than 75% of the 267 who responded had net worths in the seven figure range. Add the fact that many also have very nice pension benefits, and I think it shows you are attempting to make a "case-in-point" where the evidence does not offer support.

*http://www.early-retirement.org/forums/f28/net-worth-2007-a-24852.html

Keep in mind that he pretty much views anything with less than $11mm, a staff, and private school for the kids to be poor... one man's poverty is another man's wealth.

 

[rs0460a]

Thanks for your service.

Susan

Your comment is greatly appreciated ..

- Ron

 

[aida2003]

Thanks for sharing your expenses . After a quick review they look reasonable to me considering West Coast. And like you said if/when you WANT you'll cut your spending (because, yes there're areas you could do trimming). Afther the 2nd mortgage is paid off, that's almost $800 savings right there. Trim misc. and entertainment/gift spending and you've got $1,300 or so for your traveling budget after 2009. You could make small trips now if you trimmed your discretionary spending now. You just make different choices that's all, it doesn't mean you cannot afford traveling .
Overall it sounds you're very in control of your living standard.
If you don't have kids who need your support and your retirement portfolio is decent, it sounds you're ready for your retirement and its adventures.