Retire on 3k per month thoughts...

I could pay my rent and health insurance, keep my car on the road and buy food for this. But no money to pay taxes, and none for fun. And I am single.

It sounds grim to me.

Ha

Retired and easily living on $3k/mo

Neat thread!

My DW and I both about 64, and in good health.

House has long been paid for. Re-sided (steel), new Reveal windows,and upgraded to geothermal heat pump in the last 10 years(while I was still consulting)

Car and pickup in good shape, and paid for.

Income: about $26k SS, and $10k IRA distribution

Home, car, umbrella Ins: $1300/year
Electric (incl heat/AC): $1630/year
Groceries: $1500/year (cooking is one of my hobbies, also gardening)
Med Ins, and expense: $9500 ($397/mo major med - $10k ded.)

Spent about $11.5k on travel and booze this year (Yes - mostly travel), which could be curtailed, if necessary.

I fire up Taxact when it's available in the fall and convert IRA money to Roth up to the point where I would pay Income tax out of pocket. (only $2800 this year, but No tax on the distribution!)

We could live a lot higher on the hog, but this way the fact that the portion of our IRA's that are in cash would cover us for the next 25 years, ex inflation. Makes it easier not to worry about the portion in equities.

I'm sure I'd find a way to live on $3k/month (I've done it before) but I would probably have to move to the mainland to accomplish this feat. Another big "hit" would be to my kids Roth IRAs. I fund 4 "kid" Roths to the tune of about $1500/year each or more (depending upon their income and mine). Yes, I could stop that, but I never bought my kids the "big toys" when they were with us because I wanted them to learn how to earn the money for themselves. Now that they have learned the lesson and are living it, I am rewarding them (and making myself feel good!) I'd hate to give this up. But, yes, absolutely, (if you have health care eventualities covered) $3K is enough in the right US location. In many OUS locations, $3K would be a "princely" sum.

YMMV of course.

waltwill8 said:

Groceries: $1500/year (cooking is one of my hobbies, also gardening)

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What is your secret? The two of us spent more than $7000 on groceries this year. I don't think we eat anything fancy either, it just seems to add up! For the new year I would like to reduce our grocery budget so I would appreciate any tip!

haha said:

I could pay my rent and health insurance, keep my car on the road and buy food for this. But no money to pay taxes, and none for fun. And I am single.

It sounds grim to me.

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grim? you can still play on a budget, ya know. why do you think they make flasks?



it worked back in college & it works just as well today. bartender, could i have some more ice please.

my barebones south florida budget is under $34k including gym membership, all taxes &, at current prices, 100 gal/month to play in the stang.

$3,000/month? sounds like the life of riley to me.

lazygood4nothinbum said:

my barebones south florida budget is under $34k including gym membership, all taxes &, at current prices, 100 gal/month to play in the stang.

$3,000/month? sounds like the life of riley to me.

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Me too, but then we have a really broad spectrum of people here. Some probably spend more than Donald Trump and are used to that. Whatever you are used to might affect what seems possible and what doesn't.

We can live on as little as 1.3k a month but that is in the midwest with no debt. RJK it can be done easy the key is WHERE you do it.

FIREdreamer said:

The two of us spent more than $7000 on groceries this year. I don't think we eat anything fancy either, it just seems to add up! For the new year I would like to reduce our grocery budget so I would appreciate any tip!

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No filet mignon, no seafood dishes with saffron, no prosciutto, no jamón ibérico, no XO Cognac, no Belgian beer, nor "eau de vie"?

Instead, chuck steak for stew, fried tilapia, bacon, American ham, domestic brandy, beer on sales du jour, moonshine?

Just teasing...

Real chefs actually prefer cheaper cuts of meat, as it offers a challenge to turn them into tasty dishes. I kept reading that many NYC fancy restaurants now offer offals, and charge big bucks for some roasted marrow bone. My only problem is that those are rich in artery clogging cholesterol...

NW-Bound said:

No filet mignon, no seafood dishes with saffron, no prosciutto, no jamón ibérico, no XO Cognac, no Belgian beer, nor "eau de vie"?

Instead, chuck steak for stew, fried tilapia, bacon, American ham, domestic brandy, beer on sales du jour, moonshine?

Just teasing...

Real chefs actually prefer cheaper cuts of meat, as it offers a challenge to turn them into tasty dishes. I kept reading that many NYC fancy restaurants now offer offals, and charge big bucks for some roasted marrow bone. My only problem is that those are rich in artery clogging cholesterol...

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Times are tough. I had a peanut butter and banana sandwich for lunch. Almost time to feed the mutt. Might try a little of her food for dinner tonight. It's got chicken, lamb, potato's, carrots, brown rice, oatmeal and other good stuff in it. Damn dog eats better than me.

I suppose I could live with 3k a month. However, I enjoy things in life that cost more. Just depends on what you want to do and like someone else said where.

NW-Bound said:

No filet mignon, no seafood dishes with saffron, no prosciutto, no jamón ibérico, no XO Cognac, no Belgian beer, nor "eau de vie"?

Instead, chuck steak for stew, fried tilapia, bacon, American ham, domestic brandy, beer on sales du jour, moonshine?

Just teasing...

Real chefs actually prefer cheaper cuts of meat, as it offers a challenge to turn them into tasty dishes. I kept reading that many NYC fancy restaurants now offer offals, and charge big bucks for some roasted marrow bone. My only problem is that those are rich in artery clogging cholesterol...

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LOL!

I have never bought filet mignons (I prefer the cheaper NY strips, but even those I fix only 2-3 times a year for special occasions). I do buy Prosciutto a few times during the summer to eat with melon for a light and refreshing lunch. As for the cognac and eau de vie, I get those for free. I do have a weakness for Swiss chocolate, but I buy chocolate only around the holidays.

My typical menu is far less "luxurious". Lots of bread, pasta, rice, potatoes and dairy products, a good amount of veggies and fruits, and a reasonably small amount of meat. Very close to my "ancestral" diet.

Hum roasted marrow bones! My mom used to fix those when I was a kid. Nothing better!

What am I missing here - 36K/ yr difficult to spend - I spent $29,258 in '08.
In that number there were a couple of unusual items
$1,400 new computer
700 new truck tires
450 Dr. bills
Single
No debt

I went to Egypt, RV'd for about 4 months and broke a bone.

I'm estimating 30K in '09

Well Dex, our health insurance amounts to roughly $13,000 a year, plus add on other costs like deductibles and drugs we spend about $16,000-$17,000 a year on health care. That would leave only $19,000 to 20,000 a year on a $36,000 budget to pay for everything else.

Martha said:

Well Dex, our health insurance amounts to roughly $13,000 a year, plus add on other costs like deductibles and drugs we spend about $16,000-$17,000 a year on health care. That would leave only $19,000 to 20,000 a year on a $36,000 budget to pay for everything else.

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Well, two Vs one person does change the math.

If the 16K for two was divided in half that would be $36K - 8 = 28K for everything else for one or 2.33/month

My health ins. budget is $2,678 - 5K deductible.

dex said:

Well, two Vs one person does change the math.

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As does age and medical history.

A couple in their early 60s with histories of (say) cancer and diabetes will be a helluva lot more than double your budget.

ziggy29 said:

As does age and medical history.

A couple in their early 60s with histories of (say) cancer and diabetes will be a helluva lot more than double your budget.

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Without a doubt it will as would a whole host of things that could and make future planning a guess at best and an based upon individual circumstances and life viewpoint.

All things being equal; one person with cancer and or diabetes might say I need to stay working to insure I can pay for it. Another might say I think I have enough money to handle the costs - life is short and I want to enjoy it while I can.

+++++++
On the budgeting side I grow my total budget by 4% each year. Some line items will be lower and some higher. So I'm expecting my health care costs to rise more than 4% but others to rise less than 4%. Also, in my numbers I have a healthy amount for travel which I expect will decrease as I get older.

So far this year I've spent just under $25K (including taxes and insurance). Will send out $3K in donations next two weeks and finish at a bit under $30K ($2500/month).

Thinking about it to have $36,000 a year without pension or SS you have to have $900,000 in investments . That is a decent amount especially after this year . If you subtract a reasonable SS $1,600 a month you need $672,000 in investments still a decent amount so $36,000 a year is nothing to sneeze at . What I 'm wondering is what do you do if your budget is $36,000 all supported by investments and your investments drop by 30% or more which happened this year ?

Moemg said:

Thinking about it to have $36,000 a year without pension or SS you have to have $900,000 in investments . That is a decent amount especially after this year . If you subtract a reasonable SS $1,600 a month you need $672,000 in investments still a decent amount so $36,000 a year is nothing to sneeze at . What I 'm wondering is what do you do if your budget is $36,000 all supported by investments and your investments drop by 30% or more which happened this year ?

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You do this.

http://www.early-retirement.org/forums/showpost.php?p=759848&postcount=184

Living on 36K after you get medicare wouldn't be bad if you don't have debt. In my county if you make less than 30K you don't pay hardly any property taxes if you are elderly so my mom was living on $500 a month to cover all property related cost like insurance and utilities. No mortgage, car paid for and if you are over about 70 when you buy a car you may never need to replace it, she got a new one at 77. Clothing isn't so important when you are older, style may not mean much so just replace what wears out. She was living in a house with less than 30K income and her savings were still growing. She now sold the house so is getting 1,250 and saving the 500 she was spending to live there. She is paying room and board now so doesn't even pay for her food herself. I don't know what my brother charges her for room and board but it includes all utilities. I suggested to her she try to get him to accept 1,250 and she will still be $500 better off than being in her house plus not buy food.
I guess you could call the 1,250 she gets a month on the house income but it is part just selling an investment. I will tell her to increase her estimated taxes next year to take care of the extra taxable income so that is another expense.

Can you live on $3,000 per month? Oddly enough, that's pretty much what the median American couple spends (assuming a paid-for house). So it's certainly true that it can be done.


I looked at "two person units" in the Consumer Expenditure Survey. I took out payroll taxes and mortgage interest, and got the spending below. The first column is roughly the 45th percentile, the second is 55th percentile (the BLS doesn't provide a median). Note that this is mostly working age people - on average there are 1.5 workers per "unit".
I'd think that the big concern for retirees is health care expenses.

. 5,600 . 6,500 Food, Personal Care
10,000 11,200 Housing
. 1,400 . 1,800 Clothes
. 7,100 . 9,100 Transportation
. 3,600 . 3,600 Healthcare
. 4,000 . 5,200 Misc
. 2,000 . 1,800 Cash Contributions
33,700 39,200 Total

(This is for the 2006-2007 survey. "Misc" includes Entertainment, Alcohol, Tobacco, Reading materials, Education, and other.)
When I look at our actual spending, it's amazing how close we come to these numbers.

Lots more detail at: ftp://ftp.bls.gov/pub/special.requests/ce/CrossTabs/y0607/SIZbyINC/xtwo.TXT

Dawg54 said:

Times are tough. I had a peanut butter and banana sandwich for lunch. Almost time to feed the mutt. Might try a little of her food for dinner tonight. It's got chicken, lamb, potato's, carrots, brown rice, oatmeal and other good stuff in it. Damn dog eats better than me.

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OK...this is a start for Alpo recipes. I would first saute (in 1 teaspoon of olive oil) half a small onion chopped into strips until slightly brown, then add a medium sized tomato previously chopped up into quarter inch cubes. Let simmer for about 3 minutes, then get an ordinary can of Alpo (about 10 oz), and empty can into the saute, and stir occasionally for about 3 minutes.
Serves one (two if you want to share a little). Nutritious and tastes good.

MGYog said:

OK...this is a start for Alpo recipes. I would first saute (in 1 teaspoon of olive oil) half a small onion chopped into strips until slightly brown, then add a medium sized tomato previously chopped up into quarter inch cubes. Let simmer for about 3 minutes, then get an ordinary can of Alpo (about 10 oz), and empty can into the saute, and stir occasionally for about 3 minutes.
Serves one (two if you want to share a little). Nutritious and tastes good.

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You'll go broke living like that and feeding an extra mouth. for the price of that one can you could buy a couple pounds of rice, cook up the dog and eat for a week.

Considering I only take home $2200/mo I guess I can live on less than $3K/mo. In fact I wouldn't know how to spend that kind of money. My paychecks are ~$1100. Every other one goes into long-term savings so I only live on $1100/mo and that includes a mortgage and "fun money".

Mortgage(includes prop. taxes) - $375
Condo Fee(includes water) -$110
Electric(heat) avg. -$100
Groceries(general household items) -$200
Cell Phone/internet -$ 90
Car insurance,maint.,gas avg. -$150
Discretionary spending/
short-term savings -$ 75

TOTAL $1100/mo

This isn't scrimping too much for me because growing up this would've seemed like living in luxury.

aaronc879 said:

Considering I only take home $2200/mo I guess I can live on less than $3K/mo. In fact I wouldn't know how to spend that kind of money. My paychecks are ~$1100. Every other one goes into long-term savings so I only live on $1100/mo and that includes a mortgage and "fun money".

Mortgage(includes prop. taxes) - $375
Condo Fee(includes water) -$110
Electric(heat) avg. -$100
Groceries(general household items) -$200
Cell Phone/internet -$ 90
Car insurance,maint.,gas avg. -$150
Discretionary spending/
short-term savings -$ 75

TOTAL $1100/mo

This isn't scrimping too much for me because growing up this would've seemed like living in luxury.

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This isn't meant to doubt your figures, but few would be able to live on $1100 a month in the style you're alluding to. No doubt one can live on that amount, but this probably means renting a room in someone's home, owning no vehicle beyond perhaps a bicycle, using library computers for internet access, access to good/easy freecycle stuff like thrift shops/etc. Nothing wrong with all this, but the $13k a year lifestyle seldom includes cars and condos. You'd have to live a pretty ascetic life style to live on $1100 a month and most people aren't up for it.

So what's missing from your budget that many would include? (but granted not necessarily a requirement for living.)

Housing costs: insurance? maintenance (even condos need carpet replaced, walls painted, appliances)?
Groceries: ever eat out? Even the local $3.25 breakfast special I like ends up being a $6 bill with tip; once a week is 1/8 of your food budget.
Transportation: 1k miles month at $2.00/gal/25 mpg is $80 for gas alone. Let's say $30 month for insurance (liability only) and $30 month for maintenance (priced tires recently?)--amoritized replacement cost even for a $3k car over five years (assuming it's junk after that) is $50 a month and that brings costs to $190 a month.
The discretionary spending is quite low, given that haircuts run around $10, the occasional gift, coffee out, gas barbecue refill, and such can eat up $75 pretty quick.

Not even mentioned:

Health insurance/dental. Even if work provides 100 pct, at retirement there will be some costs, a filling today is $100.

Unfortunately I believe most of us underestimate our true spending.