How much is enough

I find $4 electric a month the bargain of the continent. :-*. Quebec with their massive hydroelectric dams still have overhead and minimum charges? Maybe I'm not reading you right? I know CA has much higher rates than ON........and I conserve too, but $4?? ::)
 
$4 a month? Duh! The only thing remotely close was $5/mo Seattle all electric when I first worked for Boeing in the 60's. In the 90's when I sold my mom's house in SW Washington, people were complaining because the PUD was to go over one cent/kilowatt hour - BPA(Bonneville Power Admin.).
 
Bob Smith:
Amazing that young man could live in the most expensive area in the U. S. on the amount he is reporting.
But I have absolutely no doubt that he is.
Real estate is the driving force for the expenses in the Bay area. (A two bedroom with no garage, 1000 sq feet would set you back at least $500,000. and probably get you bragging rights for the deal you made.
If you wanted to open a restaurant with about 1600 Sq feet you would have to pay a lease of over $5,000 a month. (Can't whip out $4.95 early bird specials at that overhead). When they factor in expensive places to live, this is the main reason for it.
The paradox is it is relatively inexpensive for this young man. (He has a small condo paid for. It, by the way, would be worth a pretty penny).
Utility costs are next to nothing, because air conditioning isn't required in the summer, and it rarely gets cold enough in the winter to worry about heat.
He has no car, and, although it wouldn't be for me, there is a lot to see and do in that beautiful city, if you are young and single.
Now, regarding you and me. Not much we can do pal.
My expenses are slightyly higher than yours, and I live in a relatively inexpensive area of Calif. (Sierra Mountains). I need cars for my transportation to and from fly streams, and the golf course. Not going to remove satellite TV and miss my sports fix.
Our net worth appears about combatable with yours.
(But I have one advantage, oh boy, I get to die before you. (Statistically).
Enjoy your retirement.
Regards, Jarhead
 
Bob Smith:
Amazing that young man could live in the most expensive area in the U. S. on the amount he is reporting.
But I have absolutely no doubt that he is.
Real estate is the driving force for the expenses in the Bay area. (A two bedroom with no garage, 1000 sq feet would set you back at least $500,000. and probably get you bragging rights for the deal you made.
If you wanted to open a restaurant with about 1600 Sq feet you would have to pay a lease of over $5,000 a month. (Can't whip out $4.95 early bird specials at that overhead). When they factor in expensive places to live, this is the main reason for it.
The paradox is it is relatively inexpensive for this young man. (He has a small condo paid for. It, by the way, would be worth a pretty penny).
Utility costs are next to nothing, because air conditioning isn't required in the summer, and it rarely gets cold enough in the winter to worry about heat.
He has no car, and, although it wouldn't be for me, there is a lot to see and do in that beautiful city, if you are young and single.
Now, regarding you and me. Not much we can do pal.
My expenses are slightyly higher than yours, and I live in a relatively inexpensive area of Calif. (Sierra Mountains). I need cars for my transportation to and from fly streams, and the golf course. Not going to remove satellite TV and miss my sports fix.
Our net worth appears about combatable with yours.
(But I have one advantage, oh boy, I get to die before you. (Statistically).
Enjoy your retirement.
Regards, Jarhead
 
Hi Jarhead,

I also need a car, air conditioning, heat in the winter, health insurance for a family, a bigger place to live (with 4 in the family), etc. It all adds up. And there's no way I'm parting with my high speed internet access - that would be one of the last things to go.

My family is visiting this weekend. We have a terrific fireworks display, and this year they changed the location and they'll be setting them off on the river about one block from my house. So I'm going to fire up the grill, visit with family, and we'll watch the fireworks from my yard. It doesn't get any better than this. Hope you have a good one Jarhead.
 
I used to live in Berkeley, across the bay from where the SF poster lives. I can concur that you dont need much environmental control. We used to have what amounted to a small gas burner with no fan on the wall in the living room and fired that up a few times in the winter at night. No matter how hot it is during the day it cools off directly when the sun goes down.

What an expensive area to live in though. Very pretty and a lot to do.

I'd be tempted to sell the place, reap the huge gain from it, and move to somewhere cheaper. But boy would the lifestyle be different. I like the city life, I lived and worked in boston for a while, but it wore me down after a time.
 
Urban/rural working/not

Working changes how we experience city life or country life.

I went to college in rural Vermont. I didn't own a car, and just put on lots of extra clothes for the half-hour walk between campuses (in the winter), which I made at least twice a day.

I couldn't understand people complaining all the time about the snow. It was lovely, it made for an incredible silence in the woods when we walked on the paths.

Then I graduated, bought a house, got a job. When the snow fell, we had to split lots of wood to try to keep the oil furnace from coming on (couldn't afford much oil). We had to get up extremely early to clear off the car and the truck and the driveway. We had to leave early on snowy days, to drive more slowly and try not to slide off the road. During winter and in mud season, our neighbors who lived at the tops of hills had to own 4-wheel drive vehicles if they ever hoped to get home. Rural life was a lot of WORK when I worked, while it was a delight when I was a student.

I can imagine, similarly, really enjoying a city if I didn't have the hassles of getting to and from work during rush hour, battling others for parking spaces, and suffering in traffic jams. I lived for a short time in Boston (no vehicle) and worked for part of that time. The non-working time was spent finding free things to do (there were many), and taking in the sights. When I worked, I remember being cold (dressed up for work and walking to the subway in freezing cold damp wind). I bicycled to and from work in the nice weather, inhaling quite a huge share of fumes from the automotive commuters.

No surprise to people here, I think. Life enslaved to a 40-hour week is worse no matter where you live it.

Anne, working part-time and grateful even for that
 
Bob Smith:

Regarding fireworks on the river next to your house.
4th. of July celebration in the heartland. Can't get more All-American than that.
The way you described the setting, reminds me of one of my favorite movies. "Picnic", with a young William Holden, and a younger Kim Novac.
Enjoy your day, and as you stated "doesn't get any better than that".
Regards, Jarhead
 
I have to get some fireworks.

My area allows them, as long as they fit certain rules, like they dont leave the ground. Now the good news is the definition of "leave" and "ground" arent very specific... :)
 
The "joy" of fireworks is something I've lost in becoming
an adult. In fact, I kind of just went through the motions when I had little kids, i.e. just went because
it was a "family" thing to do. When I was a kid, every
year my grandad bought a huge box of fireworks
(rockets, roman candles, cherry bombs, etc) and we spent
all day shooting them off over the river (same one we live on now). Anyway, now I neither buy any, nor do I attend any displays. In fact, I kind of resent any noise
thus produced. Bah humbug! :)

Re. a previous post about Vermont winters, I truly
don't understand (absent special circumstances) why
anyone chooses to live in winter weather like that.
I really hate it, although I will admit I didn't think about
it all that much when I was working. My aversion to
cold weather is probably due more to lots of leisure
time than to aging. For example, one of my favorite states is Michigan. Delightful most of the year, but
the winters are dreadful.

John Galt
 
I have not spent much time trying to fund for
replacing major "appliances" as they wear out.
Whenever we need something, we always buy used
and cheap, taking the view that we have so little
invested, if it craps out, we don't care. Come to think of it, I'll bet 75% of all the furnishings in this house were
acquired used.

I do have a plan for vehicle replacement. I own an
almost new motorcycle. I'm hoping that the end of
my "biker" days will correspond with our next
vehicle purchase so that I can use the bike as trade
bait.

BTW, looking back at large unanticipated spending
since ER, most of mine is related to legal problems.

John Galt
 
Happy Independence Day, everybody :D

Bobbee: Going all the way back to your first post, are you planning ER for one person or for two?

TH: A lot of these posts are about cutting costs in expensive cities or moving to places with a relatively high standard of living for not a whole lot of money.

Had dinner with friends last night who are looking to buy in or around Marysville/Yuba City (north of where I live in Sacramento). These two places have traditionally been the brunt of jokes as being among the worst towns to live in the country (according to Rand McNally's Places Rated guide awhile back). MY SO wants to stay in northern California but Sac is becoming too crowded and the foothills are too pricy. Your take on M'ville/Yuba City? What can I get for around $200K? Thoughts?
Like many posters here, I'd like to be close to a vibrant urban core within walking distance of my little paid-for house. (I can drive up the M'Ville myself but appreciate your input first.)

Thanks.
 
Traveler,

I live in Folsom and know what you mean about getting crowded and expensive.
I just looked up recently sold homes in Woodland, and the lower prices are 255,000 and up to around 400,000.

I couldn't find anything on Yuba city. I looked in the Sac Bee real estate section online. Here is the page with the Woodland homes.

http://ssl.sacbee.com/onboard/homes.html

My house has gone up about 65,000 since I put a 5,000 deposit on it last August so I'm thinking about cashing out of it (after 24 months) and moving to rural Florida and starting ER. Amazing how the prices of home have gone up in this area.

If I find anything on Yuba I'll post it.
 
Thanks KB! I constantly think about cashing out especially when I worry about prices having peaked here. I really like the Gulf Coast of Florida but have second thoughts about moving all the way across the country (having been born and raised in California--siblings are here and 80-year-old mom).

I may take a drive up to Marysville today or tomorrow and will report back on my fact-finding trip.
 
I know what you mean about moving out of state. My parents are here and are in their 80s now.

My only sibling and her kids and grandkids are in Northern Florida, where I'm thinking of moving.

I'm leaving Tuesday morning to go check it out. I'll know more if I think I can uproot and move there in a couple of years.

I'm a 4th gen Californian so living elsewhere is not something I ever planned on doing. But the lure of ER is more interesting than living in my new house and working.
 
Maybe this budget will help. I'm just retiring in Wisconsin [note high real estate taxes] Family ages 63,58,21,and 17. No debt and no health insurance. The total budget is about $47000/y. Income taxes are not included because I won't pay any [hallelujah] until the mandatory withdrawal starts at 70 1/2.

Autos [3]
Insurance 2500
Maintenance 500
Gas 24000mi 2000
Deprec. for replacements 2000

Home
Ultilities inc phone,tv and computor 4500
Home insurance 800
Maintenance 1000
Deprec. for new roof etc 500
Taxes 4600

Living Expenses
Food 6000
Dining and entertainment 2000
Misc dog food, soap etc. 1200
Beer and cig. 1000

Misc.
Clothes 500
Gifts 600
Vet cost 200
Mag and books 500
Charities & church 2000
Vacations 3000

Medical
Premium [5000 deduct.] 8400
Doctor and drugs 1500
Eyeglasses 400
Dentist 1000

TOTAL 46700
 
I live in an area on the outskirts of yuba city that was just annexed into YC. Wife has a house in Marysville. I used to live in El Dorado Hills for 7 years and down in the south SF bay for 3.

YC/Marysville is still something like the 3rd biggest welfare town. Plenty of "unsavory" looking folks around. No more or less "trouble" than I had in EDH but shopping and eating out puts you with a sub working class crowd. Frankly doesnt bother me. I'm 30 minutes down route 65 or 99 to Roseville or Sacramento. There are some really nice middle class developments here and there where the living is similar to what you'd find in a typical Folsom neighborhood.

There are a number of new home construction developments being put up in older neighborhoods and a lot of old homes being knocked down in favor of new homes.

Prices have gone up a bit up here, and I'm not sure its commensurate with how far we are from the urban sprawl wave. My house would have sold for $175k 2 years ago, sold to me for $250 a year ago. Thats for a 6 year old 1900 sq. foot stucco house on a quarter acre in a cul de sac in a very nice neighborhood. There are a couple of similar properties listed for $300k today. The homes right behind me which are 1400 sq foot, about 15 years old, on .18 lots and on a main road that takes just a small amount of traffic run for about $200k. My wifes house will end up for sale sometime soon. 1500 sq ft 50 year old house, completely renovated, on a third of an acre. Somewhat crappy neighborhood thats starting to turn around. We'll get $170-180k for it. A new stucco house on a .15 lot in one of the new builders developments run about $300-350k for 1800-2500 sq ft homes, sort of like the Folsom Broadstone development.

Not cheap, but a lot less than Excramento for the same thing. In many ways it reminds me of what Folsom was like 8 years ago when I first moved there.

Food, restaurants and utilities are cheaper here.

For any listings anywhere, go to www.realtor.com for homes for sale. To see recent home sale transactions register at www.domania.com and do a search.

One other thought: I like my neighbors here a lot better than the ones I had in my old mcmansion neighborhood. I used to have overprivileged kids driving their bmw's through stop signs at twice the speed limit while chatting on their cell phones, and their hoighty-toighty parents who thought their money entitled them to do as they pleased without regard to their neighbors.

A fine example was the neighbor who had the dogs that barked 24x7, and the other one who was replacing some grass with a concrete pad - so his kid drove his pickup into the dirt and kicked it all over the place, then drove around the neighborhood leaving dirt clods everywhere.

In my new neighborhood I get bags of garden produce left on my doorstep, people stop by and apologize if they made a little too much noise or made a mess, and then clean it up. A couple of months ago my next door neighbors tree blew down in a storm and everyone in the cul de sac went out and helped him cut it up and haul it off.

Sometimes living with the rich and famous isnt as wholesome an experience as you might think. I'm considering my new neighbors and their kids a much better environment for my kids to grow up in than my old one. Of course, your mileage may vary...
 
They got off into real estate properties and living on berries.
Budget was for 2 with a more reasonable standard of living.
 
 No debt and no health insurance.  The total budget is about $47000/y.  

1eng--
thx for the detailed budget -- my read of the national statistics on median income/spending suggest that this is right around the US average, so you probably speak for a lot of us. I did however see 8400 for health insurance-- is this extra or part of the 44k budget? I guess this also includes your 21 year-old -- presumably living at home? I also liked that you have depreciation in there for cars and roof etc which is something a lot of us try to gloss over... My only other pet peeve: we should probably be counting our investment management fees as an annual expense -- it is no less real for being snicked away from us before we even see it... :mad:

ESRBob
 
I was in the same ballpark. I shopped around on car insurance and cut the cost in half. If you are in a state with a large group of AARP members, their insurance rate is very reasonable.
 
My estimates are:
  • $19.3K for number 1: Amount needed to exist in retirement - food, clothing, shelter, gas, cable TV, telephone, internet, health ins., taxes, etc
  • $25.7K for number 2:extra ...needed for enjoying life - travel, hobbies, wine etc
  • $45.0K total - Grow at 5% per year
The above assumes no debt, house & car paid etc.
Well, I like your figures, but mine are much less. 2092 per month covers it all. A little tight sometimes (like when a trip to Zion National Park popped up this morning just when I got back from Lake Tahoe, and New England looms around the corner). Now if I had an additional 25.7k to spend on travels etc I'd be sitting sweet! :D As it is, the 2092 has to cover it all. And it will.

Posted by: KB Posted on: Jul 4th, 2004, 1:05pm
I live in Folsom and know what you mean about getting crowded and expensive.   I just looked up recently sold homes in Woodland, and the lower prices are 255,000 and up to around 400,000.
I wish they'ld come down. Dtr bought in Stockton last year and it has gone up 50%. Son isn't in yet and he'll never ER at these prices! Residing in Clayton, Contra Costa County -- outside Walnut Creek.

1eng, informative budget ... seems to have plenty of wiggle room

:confused: Question for all: what is your definition of ER? I retired at 52, but that hardly feels early any more (been free 4.5 months :D)
 
Hello gayl...........I felt like I was ERed when I semiretired
in 1993, even though I was still working part time.
Of course I went from gross workaholism to a kind
of a laid back, part time, relaxed situation. Anyway,
I was 49 in 1993 amd 54 in 1998 when I retired
completely. Quite a few of my contemporaries
still work. I am in the minority, but no longer unusual
at age 59.

John Galt
 
So you decide on a budget that covers every foreseeable cost. You are dept free.
How much over that budget would provide reasonable comfort zone.
i.e. your budget is 45K, on the low end you anticipate a 5.5% return with 3% inflation. How much over the 45K should this result in ?
 
Bobbee,
Others may calculate differently, but here is how I do it to be what I consider conservative: Assumes you don't have a pension.

I assume a 4% SWR- based on all the studies and my analysis, for a younger person (ER by definition) who statistically will live 40 years or so longer, I believe it is too long to think about drawing down assets, so 4% is a level which should preserve assets in real terms over longer periods. I assume about a 7-8% nominal return after investment fees, or 4-5% real return. (maybe a little higher than your 5.5%? but should be doable with a diversified blend of stocks and bonds.)

Doing the math, you would then need a $1,125,000 financial portfolio to support a 4% SWR and produce 45,000 a year. (Use the reciprocal of 4%, 25, for an easy way to calculate this -- 45k x 25 - 1125k)

If you don't have 1125k, and you don't have a pension coming, then you dig deeper and figure that you only need to have your 45k until you collect SS, at which point you need your living expenses in excess of SS to be supported by the portfolio. SO you can draw down between now and age 65, withdrawing more than 4%, and seeking to get to a smaller portfolio which will support the 20 or 30k additional you think you will need in retirement (if your SS is going to be 15 to 25k per year, for instance.)

FireCalc should do these calcs for you all rolled up inside its 'black box'. as well as take account of sale of assets, changes in living expenes etc. Very useful tool.

The point is you should think in terms of using a safe withdrawal rate (SWR) percent of your portfolio, not a simple annual earning amount with a cushion. Why? Because assets rise and fall in value, and inflation will ravage you over time, too. It also might push you to invest mostly in bonds, to get the 'sure return', which can leave you short in the long run.

I'm guessing everybody on this board will have a slightly different answer to your question-- something we all grapple with in our ER planning -- but that is my approach. I don't have a pension, won't get much SS and currently spend a little more than my 4% SWR, which I make up for with a bit of part time work. I figure the SS will replace my part time work income 20 years down the road, so for me the whole deal revolves around 4%, withdrawn forever, with the idea of downsizing the house (which we own outright) as the cushion if something awful happens in the markets, or in my spending, at some point.

ESRBob



So I don't think in terms of annual cushion, but in terms of
 
Back
Top Bottom